{"input":"On 26 October 2010 this Court issued its judgment in Cadder v HM Advocate [2010] UKSC 43, 2010 SLT 1125.\nIt held that the Crowns reliance on admissions made by an accused without legal advice when detained under section 14 of the Criminal Procedure (Scotland) Act 1995 gave rise to a breach of his right to a fair trial, having regard to the decision of the European Court of Human Rights in Salduz v Turkey (2008) 49 EHRR 421.\nThis was because the leading and relying on the evidence of the appellants interview by the police was a violation of his rights under article 6(3)(c) read in conjunction with article 6(1) of the European Convention on Human Rights: see Cadder v HM Advocate, para 63.\nThe evidence that was in question in Cadder had been obtained when the appellant was being questioned while in detention at a police station.\nThe applicant in Salduz too had been taken into custody before he was interrogated during his detention by police officers of the anti terrorism branch of the Izmir Security Directorate.\nBut the facts of those cases by no means exhaust the situations in which the prosecution may seek to rely on answers to questions that have been put to the accused by the police.\nThe Court now has before it four references by judges of the High Court of Justiciary which have been required by the Lord Advocate under paragraph 33 of Schedule 6 to the Scotland Act 1998.\nCommon to them all is the fact that incriminating answers were given to questions put by the police when the accused did not have access to legal advice.\nIn three of them the evidence that is objected to was obtained by the police otherwise than by questioning at a police station following detention under section 14 of the 1995 Act.\nThey can be grouped together and are the subject of this judgment.\nThe fourth is concerned with the question whether the ratio of the decision in Salduz extends to lines of enquiry to which the accuseds answers to questions while in detention have given rise.\nThat reference is dealt with in a separate judgment: P v HM Advocate [2011] UKSC 44.\nThe issues that the first three references raise are (1) whether the right of access to a lawyer prior to police questioning, which was established by Salduz, applies only to questioning which takes place when the person has been taken into police custody; and (2) if the rule applies at some earlier stage, from what moment does it apply.\nThe first reference is of a case which is the subject of an appeal against conviction.\nThe second is of a case which is before the Appeal Court in an appeal against a ruling by a sheriff on the admissibility of evidence.\nThe third is of case which is the subject of a devolution minute which was referred by the trial judge to the Appeal Court under paragraph 9 of Schedule 6 to the Scotland Act 1998.\nThe cases that are the subject of the second and third references that have not yet gone to trial, so the names of the parties involved have been anonymised.\nIn each case the reference has been made by the Appeal Court at the request of the Lord Advocate.\nThe first reference\nThe appellant in the first case, John Paul Ambrose, was prosecuted on summary complaint at Oban Sheriff Court on a charge of contravening section 5(1)(b) of the Road Traffic Act 1988 as being in charge of a motor vehicle whilst having consumed a level of alcohol in excess of the prescribed limit.\nHe had been found by two police officers sitting in the passenger seat of a car parked by the roadside.\nA female was sitting in the drivers seat.\nA member of the public had expressed concerns to the police about them because they were thought to be drunk.\nAs there was vomit beside the drivers door and the female was seen to be upset, the police officers decided to speak to the appellant.\nHaving formed the view that he had been drinking, one of the police officers cautioned the appellant but did not give him any specification about the offence which he was suspected of having committed.\nThe appellant made no reply when cautioned.\nHe was then asked three questions, to which he gave answers, by the police.\nThey were as follows: Q Where are the keys for the vehicle? A In my pocket.\nQ Do you drive the car? A Yes.\nQ Are you going to drive the car? A Ah, well she wisnae well or Aye, well she wisnae well.\nThe appellant then removed the car keys from his trouser pocket.\nHe was asked whether he had anything to drink in the last 20 minutes and replied that he had not.\nHe was then given a roadside breath test which he failed.\nHe was taken to Oban police station where he gave a breath\/alcohol reading that was well in excess of the prescribed limit.\nThe appellant pled not guilty to the complaint.\nHe went to trial before a\nSheriff on 31 May 2010 and 2 July 2010.\nThe evidence of the questions and answers was led without objection from his solicitor.\nAfter the Crown had closed its case the appellants solicitor challenged the admissibility of this evidence on the ground that the police had not informed the appellant of the offence of which he was suspected before he was questioned.\nThe sheriff repelled this submission.\nAfter hearing evidence from the appellant and a defence witness, he found the appellant guilty.\nHe was fined 375, was disqualified from driving for two years and had his licence endorsed.\nThe appellant then lodged an appeal against his conviction.\nAmong the grounds on which he applied for a stated case was the submission that the act of the Lord Advocate in seeking a conviction in reliance on the evidence of the police interview was incompatible with his right to a fair trial under article 6(1).\nLeave to appeal having been refused at the first sift, he appealed to the second sift and then lodged a devolution minute in which it was stated that for the Lord Advocate to support the conviction would be incompatible with his rights under article 6(1) and article 6(3)(c).\nIn a note which he lodged on 12 October 2010 in support of the appeal he submitted, with reference to the decision in Salduz, that the use of the evidence of the interview was unfair as he did not have access to legal representation before or during the police interview.\nOn 3 November 2010 leave to appeal was granted at the second sift.\nFollowing a procedural hearing on 26 January 2011 and at the request of the\nLord Advocate, the Appeal Court referred the following question to this court: Whether the act of the Lord Advocate in leading and relying on evidence obtained in response to police questioning of the appellant conducted under common law caution at the roadside and without the appellant having had access to legal advice was incompatible with the appellants rights under article 6(1) and 6(3)(c) of the European Convention on Human Rights, having regard in particular to the decision of the Supreme Court of the United Kingdom in Cadder v HM Advocate 2010 SLT 1125.\nThe second reference\nThe accused in the second case, referred to as M, has been indicted in the\nsheriff court on a charge of assault to severe injury, permanent disfigurement and permanent impairment.\nShortly after the assault took place on 30 August 2008, in the course of initial inquiries, the police took the accuseds details from him but allowed him to leave the locus.\nOn 4 September 2008 however he was traced to his home address where, after administering a common law caution to the effect that he was not required to say anything but that anything he did say might be used in Page4 evidence, a police officer asked a total of seven questions, each of which was answered by the accused.\nThey were as follows: Q I am investigating a serious assault which happened on Saturday night there, within a bar named [X].\nThere was a large disturbance in there too.\nWere you there? A Yes, aye.\nQ Were you involved in the fight? A Aye.\nQ Who were you with? A My dad and just boys fae [Y] where I used to work.\nQ Were they involved too? A I think so, the other boys started it.\nI got punched a couple of times on the eyebrow.\nIts still sair.\nQ OK, what were you wearing? A Pale blue t shirt, jeans, trainers.\nQ OK [M], I will stop there.\nI need to speak to you further except it will be recorded in a taped interview format.\nCan you be at [Z] Police Office tomorrow night at 8 pm? A Yes.\nQ I need to take your t shirt you had on, is that OK? A Aye.\nAt this point the police officer concluded his questions because he felt that it had become obvious that the accused had some involvement on the incident and that it was not appropriate to carry out an interview there.\nThe accused attended the police office the next day.\nHe was then detained and interviewed under section 14 of the 1995 Act, in the course of which he made further admissions.\nThe accused was indicted for trial, and after sundry procedure he lodged a minute raising the issue whether the Crown had power to lead evidence of the admissions which he had made.\nWhen the minute was argued before the sheriff on 9 November 2010 the Crown conceded that the evidence of the admissions made during the section 14 interview was inadmissible.\nBut the sheriff ruled that evidence relating to the questions and answers at the accuseds home on 4 September 2008 was admissible.\nThe accused appealed against that decision to the High Court of Justiciary, contending that by failing to allow him access to legal advice prior to interview and there being no compelling reasons to justify this, his admissions allegedly obtained under caution had been unfairly obtained and were therefore inadmissible.\nFollowing a procedural hearing on 26 January 2011 and at the request of the Lord Advocate, the Appeal Court referred the following question to this court: Whether the act of the Lord Advocate in leading and relying on evidence obtained in response to police questioning of the accused, conducted under common law caution at his home address and without the accused having had access to legal advice would be incompatible with the accuseds rights under article 6(1) and 6(3)(c) of the European Convention on Human Rights, having regard in particular to the decision of the Supreme Court of the United Kingdom in Cadder v HM Advocate 2010 SLT 1125.\nThe third reference\nThe accused in the third case, referred to as G, has been indicted in the High Court of Justiciary with offences including the possession of controlled drugs under the Misuse of Drugs Act 1971 and possession of prohibited firearms and ammunition under the Firearms Act 1968.\nThe police had obtained a search warrant under the 1971 Act for the search of a flat where on 4 June 2008, having forced entry, they found the accused.\nBefore commencing the search in terms of the warrant the accused, who had been handcuffed following a struggle, was cautioned in these terms: A systematic search will be carried out in your presence.\nI must caution that you are not obliged to say anything or make any comment regarding any article that may be found, but anything you do say will be noted and may be used in evidence.\nThe accused was then detained and searched.\nPrior to being searched he admitted to having drugs in his jeans pocket, from which a bag of brown powder was recovered that was later found to be heroin.\nHe was then arrested for contravention of section 23(4) of the 1971 Act.\nHe was not arrested or charged with any other offence in the course of the search of the premises.\nDuring the search he was asked questions about the items which were found.\nHe was not offered access to legal advice or to a solicitor before being asked these questions.\nAfter the search was concluded he was removed to a police station where he was detained under section 14 of the 1995 Act and again interviewed by the police in connection with alleged offences involving controlled drugs and firearms.\nHe was not allowed access to legal advice before or during this interview.\nThe Crown does not seek to rely on answers which the accused gave while he was being interviewed in the police station, but it seeks to rely on the statements and answers which he made at the premises in the course of the search.\nThey are set out in a schedule which was completed as the search of the flat was carried out.\nWithout that evidence there would not be sufficient evidence to convict the accused.\nThe accused has lodged a devolution minute in which he contends that the leading of evidence of the statements and answers which he made at the premises would be incompatible with his Convention right to a fair trial.\nThe trial judge decided to refer this issue to the Appeal Court under paragraph 9 of Schedule 6 to the Scotland Act 1998.\nOn 18 January 2011 at the request of the Lord Advocate the Appeal Court referred the following question to this court: Is it incompatible with the Panels Convention rights for the Lord Advocate to lead evidence of his statements and answers made during the course of the search conducted under warrant granted in terms of section 23(3) of the Misuse of Drugs Act 1971 as recorded in the Search Production Schedule?\nIn each of these three cases the circumstances differ from those that were before the court in Cadder and before the Grand Chamber in Salduz.\nThe evidence that is objected to was obtained, in Ambroses case before he was taken to the police station for further procedures to be carried out under section 7 of the Road Traffic Act 1988 following his failure of a road side breath test, and in the cases of M and G before they were detained and questioned at a police station under section 14 of the 1995 Act.\nIt is precisely because the issue that the references raise was not the subject of decision in either case that the courts guidance is now sought by the Lord Advocate.\nHis position is that three features determine whether an individual has a right to legal advice under article 6 in accordance with the principle in Salduz.\nThese features are all taken from words used by the Grand Chambers judgment in that case: see paras 55 and 56.\nFirst, he must be a suspect.\nSecond, he must be in police custody.\nThird, he must be the subject of police interrogation.\nUnless all three features are present, he has no right of access to legal advice under article 6.\nThese propositions all assume, of course, that the court finds that article 6(1) was engaged when the incriminating statements were made.\nThis is because the protection of articles 6(1) and 6(3)(c) is afforded only to those who have been charged, as that word has been interpreted by the Strasbourg court.\nEach of these expressions will need to be analysed in the discussion that follows.\nBackground\nTwo very important points need, however, to be made at the outset.\nThe first is that the jurisdiction of this court is limited to a consideration of the devolution issue which is raised by each of these references.\nThat is plain from the wording of paragraph 33 of Schedule 6 to the Scotland Act 1998 under which the references have been made, but it needs to be emphasised yet again.\nThe High Court of Justiciary is the court of last resort in all criminal matters in Scotland: see section 124(2) of the Criminal Procedure (Scotland) Act 1995; McInnes v HM Advocate [2010] UKSC 7, 2010 SLT 266, para 5, Fraser v HM Advocate [2011] UKSC 24, 2011 SLT 515, para 11.\nIt is not our function to rule on how the circumstances referred to in each case would fall to be dealt with under domestic law, although this does form part of the background.\nThe second point is that a decision by this court that there is a rule that a person who is suspected of an offence but is not yet in custody has a right of access to a lawyer before being questioned by the police unless there are compelling reasons to restrict that right would have far reaching consequences.\nThere is no such rule in domestic law: see para 22, below.\nIf that is what Strasbourg requires, then it would be difficult for us to avoid holding that to deny such a person access to a lawyer would be a breach of his rights under articles 6(1) and 6(3)(c) of the Convention.\nBut the consequences of such a ruling would be profound, as the answers to police questioning in such circumstances would always have to be held in the absence of compelling reasons for restricting access to a lawyer to be inadmissible.\nThe effect of section 57(2) of the Scotland Act 1998 would be that the Lord Advocate would have no power to lead that evidence.\nI agree with Lord Matthew Clarke that this would have serious implications for the investigation of crime by the authorities: see para 116, below.\nThis suggests that a judgment pointing unequivocally to that conclusion would be required to justify taking that step.\nIf Strasbourg has not yet spoken clearly enough on this issue, the wiser course must surely be to wait until it has done so.\nSection 126(1) of the Scotland Act 1998 provides that the Convention rights has the same meaning as in the Human Rights Act 1998.\nSection 2(1) of the Human Rights Act requires this court in determining any question which has arisen in connection with a Convention right to take into account any relevant Strasbourg case law.\nIn R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23, [2003] 2 AC 295, para 26 Lord Slynn of Hadley said that, although the Human Rights Act did not provide that a national court is bound by these decisions, it is obliged to take account of them so far as they are relevant: In the absence of some special circumstances it seems to me that the court should follow any clear and constant jurisprudence of the European Court of Human Rights.\nIf 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.\nIn R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323, para 20 Lord Bingham of Cornhill said that Lord Slynns observations in that case reflected the fact that the Convention is an international instrument, the correct interpretation of which can be expounded only by the Strasbourg court.\nFrom that it followed that a national court should not without strong reason dilute or weaken the effect of the Strasbourg case law.\nIt was its duty to keep pace with it as it evolved over time.\nThere is, on the other hand, no obligation on the national court to do more than that.\nAs Lord Bingham observed, it is open to member states to provide for rights more generous than those guaranteed by the Convention.\nBut such provision should not be the product of interpretation of the Convention by national courts.\nLord Kerr says that it would be wrong to shelter behind the fact that Strasbourg has not so far spoken and use that as a pretext for refusing to give effect to a right if the right in question is otherwise undeniable: para 130, below.\nFor reasons that I shall explain later, I do not think that it is undeniable that Strasbourg would hold that any questions put to a person by the police from the moment he becomes a suspect constitute interrogation which cannot lawfully be carried out unless he has access to a lawyer, which is the principle that Lord Kerr derives from his consideration of the mainstream jurisprudence: see para 146, below.\nBut his suggestion that there is something wrong with what he calls an Ullah type reticence raises an important issue of principle.\nIt is worth recalling that Lord Binghams observations in Ullah were not his first pronouncements on the approach which he believed should be taken to the Convention.\nIn Brown v Stott 2001 SC (PC) 43, 59 he said: In interpreting the Convention, as any other treaty, it is generally to be assumed that the parties have included the terms which they wished to include and on which they were able to agree, omitting other terms which they did not wish to include or on which they were not able to agree.\nThus particular regard must be had and reliance placed on the express terms of the Convention, which define the rights and freedoms which the contracting parties have undertaken to secure.\nThis does not mean that nothing can be implied into the Convention.\nThe language of the Convention is for the most part so general that some implication of terms is necessary, and the case law of the European Court shows that the court has been willing to imply terms into the Convention when it was judged necessary or plainly right to do so.\nBut the process of implication is one to be carried out with caution, if the risk is to be averted that the contracting parties may, by judicial interpretation, become bound by obligations which they did not expressly accept and might not have been willing to accept.\nAs an important constitutional instrument the Convention is to be seen as a living tree capable of growth and expansion within its natural limits (Edwards v Attorney General for Canada ([1930] AC 124) at p 136 per Lord Sankey LC), but those limits will often call for very careful consideration.\nThe consistency between this passage and what he said in Ullah shows that Lord Bingham saw this as fundamental to a proper understanding of the extent of the jurisdiction given to the domestic courts by Parliament.\nLord Kerr doubts whether Lord Bingham intended that his discussion of the issue should have the effect of acting as an inhibitor on courts of this country giving full effect to Convention rights unless they had been pronounced upon by Strasbourg: para 128, below.\nI, for my part, would hesitate to attribute to him an approach to the issue which he did not himself ever express and which, moreover, would be at variance with what he himself actually said.\nLord Binghams point, with which I respectfully agree, was that Parliament never intended to give the courts of this country the power to give a more generous scope to those rights than that which was to be found in the jurisprudence of the Strasbourg court.\nTo do so would have the effect of changing them from Convention rights, based on the treaty obligation, into free standing rights of the courts own creation.\nThat is why, the courts task in this case, as I see it, is to identify as best it can where the jurisprudence of the Strasbourg court clearly shows that it stands on this issue.\nIt is not for this court to expand the scope of the Convention right further than the jurisprudence of the Strasbourg court justifies.\nThe background in domestic law\nThe powers of the police to detain a person and to subject him to questioning depend on the category into which the person falls at the time these powers are being exercised.\nThey differ according to whether the person is a witness, a suspect or an accused.\nWhere a person is not under suspicion, the police have no power to take him into custody or to compel him to submit to police questioning.\nSuch a person is classified, at most, as a witness.\nA person who is in that category can be asked to provide personal information, such as his name and address.\nFurther questions may be put as part of a routine investigation into the events that have happened.\nSo long as he is being questioned as a potential witness rather than as a suspect, the right to protection against self incrimination is not in play.\nThere is no obligation to advise him of his rights, such as the right to silence or his right to seek legal advice.\nAs Lord Justice Clerk Thomson said in Chalmers v HM Advocate 1954 JC 66, 81, a person ultimately accused may be interviewed as part of the ordinary routine investigation of the police into the circumstances of the crime.\nIt would unduly hamper the investigation of crime if the threat of inadmissibility were to tie the hands of the police in asking questions at this stage.\nThe position changes if the stage is reached when suspicion begins to fall on the person who is being questioned.\nOnce suspicion has begun to fall on him the need to protect him against self incrimination comes into play.\nAs Lord Justice General Cooper explained in Chalmers v HM Advocate 1954 JC 66, 78: The theory of our law is that at the stage of initial investigation the police may question anyone with a view to acquiring information which may lead to the detection of the criminal; but that, when the stage has been reached at which suspicion, or more than suspicion, has in their view centred upon some person as the likely perpetrator of the crime, further interrogation of that person becomes very dangerous, and, if carried too far, eg to the point of extracting a confession by what amounts to cross examination, the evidence of that confession will almost certainly be excluded.\nIt was for a time thought that this passage was to be taken to establish that answers by suspects to police questioning were inadmissible by virtue of the persons position as a person under serious consideration as the perpetrator of the crime.\nBut, as the law has developed, the position is less easy to define: see Renton and Brown, Criminal Procedure, 6th ed looseleaf (1996), para 24 38.\nIn Miln v Cullen 1967 JC 21 it was held that the incriminating answers which the driver of a car gave when questioned by police officers who had formed the opinion that he was under the influence of drink were admissible in evidence.\nLord Justice Clerk Grant said at p 25 that the constable, in asking the simple question whether he was the driver, was not merely acting reasonably, properly and fairly but was acting in accordance with the duties incumbent upon him.\nLord Wheatley said at pp 30 31 that it was difficult to define with exactitude when a person becomes a suspect in the eyes of a police officer, as it may vary from a very slight suspicion to a clearly informed one, and that what happened after that had to be judged by the test of fairness.\nIn Lord Advocates Reference (No 1 of 1983) 1984 JC 52, 58 Lord Justice General Emslie said that Lord Wheatleys statement in Miln v Cullen, at p 31 that in each case the issue is whether the question was in the circumstances a fair one was a sound statement of the law: A suspects self incriminating answers to police questioning will indeed be admissible in evidence unless it can be affirmed that they have been extracted from him by unfair means.\nThe simple and intelligible test which has worked well in practice is whether what has taken place has been fair or not? (see the opinion of the Lord Justice General (Clyde) in Brown v HM Advocate 1966 SLT 105 at 107).\nIn each case where the admissibility of answers by a suspect to police questioning becomes an issue it will be necessary to consider the whole relevant circumstances in order to discover whether or not there has been unfairness on the part of the police resulting in the extraction from the suspect of the answers in question.\nHe went on to say that, where the words interrogation and cross examination were used in the decided cases in discussing unfair tactics on the part of the police, they were to be understood to refer only to improper forms of questioning tainted with an element of bullying or pressure designed to break the will of the suspect or to force from him a confession against his will.\nThe current position as described in Renton and Brown, para 24 39 is therefore that the fact that the accused was at the time under suspicion or even under arrest is not in itself crucial.\nIt is merely a circumstance like any other to be taken into account in assessing the fairness of the police questioning.\nThe legal basis for detaining and questioning a suspect was clarified by section 2 of the Criminal Justice (Scotland) Act 1980 which was consolidated as section 14 of the Criminal Procedure (Scotland) Act 1995.\nThe background to the legislation was described with characteristic skill and attention to detail by Lord Rodger in Cadder, para 74 86.\nAs he explained in para 86, one aim was to put an end to the doubts about the legal basis for holding suspects for questioning when they had not been arrested.\nAnother was to clarify the law as to the power of the police to question suspects and as to the admissibility of any answers that the suspects gave to such questions.\nA person may be detained for the purpose of carrying out investigations where a constable has reasonable grounds for suspecting that he has committed or is committing an offence punishable by imprisonment: section 14(1).\nWhere a person has been detained under section 14(1) a constable may, without prejudice to any relevant rule of law as regards the admissibility in evidence of any answer given, put questions to him in relation to the suspected offence: section 14(7).\nThe effect of the decision in Cadder is that the Lord Advocate has no power to lead and rely on answers by a detainee who was subjected to questioning by the police while he was without access to legal advice.\nIn none of the situations described in each of the references was the person who was being questioned a detainee under section 14 of the 1995 Act.\nThe domestic law test for the admissibility of the answers that were given to the questions put by the police is whether or not there was unfairness on the part of the police.\nThe fact that the person did not have access to legal advice when being questioned is a circumstance to which the court may have regard in applying the test of fairness, but it is no more than that.\nThere is no rule in domestic law that says that police questioning of a person without access to legal advice who is suspected of an offence but is not in custody must always be regarded as unfair.\nThe question is whether a rule to that effect is to be found, with a sufficient degree of clarity, in the jurisprudence of the Strasbourg court.\nThe reasoning in Salduz\nThe starting point for an examination of this question must be the reasoning of the Grand Chamber in Salduz.\nSome of the propositions that are set out in its judgment are expressed in a way that might suggest that the right of access to a lawyer is not confined to persons who are subjected to police questioning while they are in custody.\nPara 55 of the judgment is in these terms: Against this background, the Court finds that in order for the right to a fair trial to remain sufficiently practical and effective article 6(1) requires that, as a rule, access to a lawyer should be provided as from the first interrogation of a suspect by the police, unless it is demonstrated in the light of the particular circumstances of each case that there are compelling reasons to restrict this right.\nEven where compelling reasons may exceptionally justify denial of access to a lawyer, such restriction whatever its justification must not unduly prejudice the rights of the accused under article 6.\nThe rights of the defence will in principle be irretrievably prejudiced when incriminating statements made during police interrogation without access to a lawyer are used for a conviction.\nRead on its own, and without taking full account of the context in which these sentences were written, that paragraph suggests that the features which determine whether access to legal advice is to be provided are (a) that the person is a suspect, and (b) that he is subject to police interrogation.\nNo mention is made in this paragraph of his being in police custody.\nThe fact is, however, that the applicant was in police custody when he was interrogated by the police.\nThe narrative of the facts in paras 12 14 shows that it was not until after he had been taken into custody by police officers from the Anti Terrorism Branch of the Izmir Security Directorate that he was interrogated.\nThat being so, it is necessary to look elsewhere in the judgment to see whether the court was contemplating anything other than an interrogation in police custody when it came to set out what it did in para 55 of the judgment.\nIn Part II A of the judgment, under the heading Domestic law, the court referred to legislation in force at the time of the application which provided that anyone suspected or accused of a criminal offence had a right of access to a lawyer from the moment they were taken into police custody.\nThe reason why this had not been provided to the applicant was that the legislation did not apply to persons accused of offences falling within the jurisdiction of the state security courts, which his offence did.\nThe challenge, therefore, was to a systematic departure from the right of access to a lawyer which the law gave to everyone else.\nIn its examination of recent amendments in paras 29 31 of the judgment too its focus was on provisions that deal with juveniles taken into police custody.\nThat continued to be its focus in its examination of the relevant international law materials in Part IIB.\nChapter 1 of that Part refers to materials from the Council of Europe and the United Nations dealing with procedure in juvenile cases where the child had been deprived of his liberty by means of pre trial detention.\nThe heading of Chapter 2 is Right of access to a lawyer during police custody.\nReference is made in para 37 of the judgment to rule 93 of the Standard Minimum Rules for the Treatment of Prisoners adopted by the Council of Europe Ministers, which states that an untried prisoner shall be entitled as soon as he is imprisoned to choose his legal representatives and to receive visits from his legal adviser, and, in para 38, to a recommendation of the Committee of Ministers to Member States of the Council of Europe dealing with the right of prisoners to legal advice.\nThere is no sign here or in its examination of the United Nations materials in paras 41 42 that the Grand Chamber was interested in the position of suspects who were questioned by the police when not in custody.\nNor is there any sign of an international consensus that there is a right of access to a lawyer at that stage.\nThe part of the judgment which deals with the alleged violation of article 6 of the Convention begins at para 45.\nThe first section, which is headed Access to a lawyer during police custody, continues to para 63.\nIt includes para 55, which I have already quoted: see para 26, above.\nIn para 45 it is stated that the applicants allegation was that his defence rights had been violated as he had been denied access to a lawyer during his police custody.\nThe parties submissions, as narrated in paras 47 49 were directed to this issue.\nThere then follows a discussion of the general principles which were applicable to the case: paras 50 55.\nIn this passage, to which I will return, the court does not, at least in so many words, limit its scrutiny of the principles to what they require in cases where the person concerned is in police custody.\nBut in the next section, where it applies the principles to the case of applicant, the fact that he was in police custody lies at the heart of the discussion; paras 56 62.\nThe holding in para 80 states that there had been a violation of the applicants rights under article 6(1) in conjunction with article 6(3)(c) on account of the lack of legal assistance while he was in police custody.\nBut for the discussion of the relevant principles in paras 50 55, which is not so limited, there would be no doubt at all that the Grand Chambers declaration in the last sentence of para 55 that the rights of the defence will in principle be irretrievably prejudiced when incriminating statements made during police interrogation without access to a lawyer are used for a conviction was directed to the situation where that interrogation took place while the person was in police custody.\nThat is the conclusion that one would naturally draw from the context.\nThe concurring opinions of Judge Bratza and Judge Zagrebelsky lend further support to this conclusion.\nJudge Bratza said in para O I2 that, like Judge Zagrebelsky, he thought that the court should have used the opportunity to state in clear terms that the fairness of criminal proceedings under article 6 required that, as a rule, a suspect should be granted legal advice from the moment he is taken into police custody or pre trial detention.\nNo mention is made in either of these opinions of any rule to the effect that the suspect should be granted legal advice at any earlier stage.\nIt may be, as Lord Rodger suggested in Cadder, para 70, that what these judges were contemplating was legal assistance for other purposes such as support for an accused who was distressed or to check on the conditions of detention.\nWhatever the reason, they were plainly not addressing their remarks to situations such as those described in the references where the questioning took place before the suspect was taken into police custody.\nThe discussion of the general principles in paras 50 55 is not limited in this way.\nAs para 50 makes clear, the fact that the applicants case was concerned with pre trial proceedings did not mean that article 6 had no application.\nThe point is made that the fairness of a trial may be seriously prejudiced by an initial failure to comply with its provisions.\nIn para 51 reference is made to the right of everyone charged with a criminal offence to be effectively defended by a lawyer, the choice of means of ensuring this being left to the contracting states.\nThe paragraph ends with a warning that assigning counsel does not in itself ensure the effectiveness of the assistance he may afford an accused.\nSo far there is nothing to suggest that the Grand Chamber was searching for a basis for a ruling that the right of access to a lawyer arose at a stage before the suspect was taken into police custody.\nIn para 52 reference is made for the first time to the attitude of the accused at the initial stages of police interrogation and to the fact that article 6 will normally require that the accused be allowed to benefit from the assistance of a lawyer at this stage.\nNo mention is made of where he was assumed to be when he is being questioned, but the cases referred to in the footnote to this paragraph are all cases where the applicant was in custody when he was subjected to interrogation by the police: Murray v United Kingdom (1996) 22 EHRR 29, Brennan v United Kingdom (2001) 34 EHRR 507 and Magee v United Kingdom (2000) 31 EHRR 822.\nIn para 53 it is stated that the principles outlined in the previous paragraph are also in line with the generally accepted international human rights standards which, as the footnote to this paragraph indicates, are those set out in Part B of the judgment: see para 28, above.\nThese are said to be at the core of the concept of a fair trial.\nTheir rationale relates in particular to the protection of an accused against abusive coercion on the part of the authorities.\nThe language used and the international materials referred to suggest that what the Grand Chamber had in mind here was the need for protection of the accused against abusive coercion while he was in custody.\nIn para 54 it underlined the importance of the investigation stage for the preparation of criminal proceedings and referred to the fact that the accused often finds himself in a particularly vulnerable position at that stage of the proceedings and to the fact that early access to a lawyer was part of the procedural safeguards to which the court will have particular regard.\nThe stage in the proceedings that the court had in mind is not specified other than by reference to the accuseds vulnerability.\nThis is said to be amplified by the fact that legislation in criminal procedure tends to become increasingly complex.\nIt seems that what the Grand Chamber had in mind here was a stage when the accused was being subjected to detailed questioning of the kind that, under the inquisitorial systems, will invariably take place after the accused has been taken into custody.\nThis impression is reinforced by the reference in the third last sentence of the paragraph to the recommendations of the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment about the right of a detainee to have access to legal advice as a fundamental safeguard against ill treatment to which, I would infer, it was thought a detainee might be vulnerable.\nThis analysis of the reasoning of the Grand Chamber in Salduz suggests that the judgment was concerned only with establishing a rule that there was a right of access to a lawyer where the person being interrogated was in police custody.\nThe alternative view is that in para 55 it recognised a broader principle that the rule applies as soon as the person has been charged so that article 6 is engaged.\nThis alternative has a certain logical appeal for the reasons that Lord Kerr has identified.\nThe prejudice suffered by the accused is the same irrespective of the stage at which an incriminating statement is made in answer to questions put by the police.\nBut the base on which this proposition rests is not that the Convention prohibits absolutely any reliance on incriminating statements.\nThe privilege against self incrimination is not an absolute right: Murray v United Kingdom (1996) 22 EHRR 29, para 47.\nIt is primarily concerned with respecting the will of the person to remain silent: Saunders v United Kingdom (1996) 23 EHRR 313, para 68.\nEveryone is entitled to respect for the right not to incriminate himself, irrespective of whether or not he is in police custody.\nNevertheless a person can confess if he is willing to do so, and his confession will be admissible if it is truly voluntary.\nThe underlying principle therefore is that there is a right against self incrimination which in some circumstances must be protected by special measures to protect the person against the risk that a confession may be obtained from him against his will by unfair tactics by the police.\nThat is why the court recognised in its application of those principles to Salduzs case, as it had already done in para 54, that an interview which takes place in police custody has particular features which require the provision of an especially strong protection to protect the rights of the defence against a forced confession.\nIt is that aspect of Salduzs case which seems to have informed the whole of the courts judgment.\nIt seems to me that the Grand Chambers judgment, when taken as a whole, does not indicate with a sufficient degree of clarity or indeed, I would suggest, in any way at all that the ruling in para 55 about incriminating statements made without access to a lawyer applies to questions put by the police before the accused is taken into custody.\nThe context would have required this to be stated expressly if it was what was intended, as the rule which the judgment laid down can be departed from only where there are compelling reasons to justify its restriction.\nIt would have had to have been stated precisely to what situations outside police custody the rule was to apply, and it was not.\nThe jurisprudence since Salduz\nThe Grand Chambers judgment has, not surprisingly, been referred to many times by the Strasbourg court since the judgment in that case was delivered.\nThe question is whether there is an indication in any of the cases that the right of access to a lawyer arises, as a rule, as soon as a person whose rights under article 6 are engaged is subject to questioning by the police.\nThere are passages in some of the cases which indicate that Salduz is regarded as having been concerned only with the need for legal advice while the person was in custody.\nIn Dayanan v Turkey (application no 7377\/03) (unreported) given on 13 October 2009, which is a decision of the Second Section and is available only in French, the applicant was arrested and detained as part of an operation against the Hizbullah.\nHe was informed of his right to silence and exercised it, as he refused to answer the questions put to him by the police.\nIt was held nevertheless that there had been a breach of article 6(3)(c) in conjunction with article 6(1) because he did not have access to a lawyer while he was being interrogated.\nThe court said: 31.\nElle estime que lquit dune procdure pnale requiert dune manire gnrale, aux fins de larticle 6 de la Convention, que le suspect jouisse de la possibilit de se faire assister par un avocat ds le moment de son placement en garde vue ou en dtention provisoire. 32.\nComme le souligne les normes internationales gnralement reconnues, que la Cour accepte et qui encadrent sa jurisprudence, un accus doit, ds quil est priv de libert, pouvoir bnficier de lassistance dun avocat et cela indpendamment des interrogatoires quil subit (pour les textes de droit international pertinents en la matire, voir Salduz, prcit, paras 37 44) The proposition in para 32 that an accused must have access to a lawyer from the moment he is deprived of his liberty (un accus doit, ds quil est priv de libert, pouvoir bnficier de lassistance dun avocat) seems to go further than what the Grand Chamber itself said in Salduz.\nIt is more in keeping with the concurring opinions of Judge Bratza and Judge Zagrebelesky.\nHowever that may be, the passages which I have quoted indicate the importance that appears to have been attached by Strasbourg to the fact that the person was in police custody when he was being interrogated.\nIt is especially significant that this is what the court saw the international consensus (les normes internationales gnralement reconnues) to be on this issue.\nThree other cases from Turkey are to the same effect.\nIn Arzu v Turkey (application no 1915\/03) (unreported) given on 15 September 2009 the applicant, who was arrested and placed in custody, complained that he had been denied access to a lawyer during the initial stages of the criminal proceedings against him.\nThe court said that Salduz had considered the grievance of a lack of access to a lawyer whilst in police custody: para 46.\nIn Duman v Turkey (application no 28439\/03) (unreported) given on 23 March 2010 the court said in para 46 that the use of statements obtained at the stage of the police inquiry and the judicial investigation is not inconsistent with article 6(1), provided that the rights of the defence are respected.\nOn that point the court said that it relied on the basic principles laid down in its judgments, including Salduz, para 55, concerning the notion of a fair procedure.\nIn Takin v Turkey (application no 5289\/06) (unreported) given on 1 February 2011 the applicant complained that he had had no legal assistance before he made his police statement or during his interrogation before the public prosecutor while in custody.\nThe court observed that it had already examined the issue concerning the lack of legal assistance in police custody in Salduz, paras 56 62.\nIn all these cases, as in Salduz itself, there was a systemic restriction on access to legal advice by anyone held in police custody in connection with proceedings that were to be taken in the state security courts.\nIn Pishchalnikov v Russia (application no 7025\/04) (unreported) given on 24 September 2009 the applicant, who had been arrested, was interrogated while he was in police custody.\nThe pattern of the First Sections judgment followed that of the Grand Chamber in Salduz.\nIt repeated many of the propositions in paras 50 55 of Salduz in its assessment of the case under the heading Restrictions on access to a lawyer in the police custody, and referred in para 71 to the fact that the right to silence and the right not to incriminate oneself are generally recognised international standards which lie at the heart of a fair procedure under article 6.\nBut, as it was a custody case, it does not examine the question whether these propositions require access to a lawyer at any earlier stage.\nIn Sharkunov and Mezentsev v Russia (application no 75330\/01) (unreported) given on 10 June 2010 the question before the court was again directed to the lack of legal assistance while in police custody and the use at the trial of incriminating statements that had been made at that stage.\nIn para 97 the court repeated the proposition that was first stated in Salduz, para 55 that the rights of the defence will in principle be irretrievably prejudiced when incriminating statements made during police interrogation without access to a lawyer are used for a conviction.\nBut once again the police interrogation in the course of which these statements were made took place while the applicant was in police custody.\nIn Borotyuk v Ukraine (application no 33579\/04) (unreported) given on 16 December 2010 the applicant was, once again, in police custody during the pre trial investigation.\nHere too the propositions on which the court based its judgment are closely modelled on what the Grand Chamber said in para 55 of Salduz.\nIn para 79 it summarised the general principles that are to be found there.\nIt stated that, as a rule, access to a lawyer must be provided as from the first questioning of a suspect by the police, unless it can be demonstrated in the light of the particular circumstances that there are compelling reasons to restrict that right.\nAs in para 55 of Salduz, no indication is given that the principles are restricted to cases where the accused was in police custody.\nBut, as in Salduz, that was the background against which the case was heard.\nOnce again it is unclear whether the general propositions on which the judgment was based must equally be applied, as a rule, to cases where the accused was not in custody when the questioning took place.\nZaichenko v Russia\nThe First Section had the opportunity to clarify where the court stood on this issue in Zaichenko v Russia (application no 39660\/02) (unreported) given on 18 February 2010.\nThis appears to have been the only case to date in which the complaint was of lack of legal assistance during questioning by the police when the applicant was not in custody.\nHe was stopped while he was driving home from work and his car was inspected by the police as there had been reports of workers stealing diesel from their service vehicles.\nTwo cans of diesel were discovered in the car.\nThe applicant made self incriminating statements in reply to questions put to him by the police at the roadside.\nHe was charged with stealing the cans, and he was convicted.\nHis complaint was that he had not been advised of the privilege against self incrimination when he made his admission to the police.\nHis position at the trial was that he had purchased the diesel at a petrol station and that he did not give this explanation to the police because he felt intimidated and did not have a receipt to prove the purchase.\nIn its assessment the court set out the general principles that are relevant to a consideration of whether there has been a violation of the right to a fair trial.\nIt noted that article 6(3)(c) especially might be relevant before a case is sent to trial if and in so far as the fairness of the trial is likely to be seriously prejudiced by a initial failure to comply with its requirements.\nIn para 36 it recalled, as the Grand Chamber did in Salduz, the proposition that the court set out in Imbrioscia v Switzerland (1993) 17 EHRR 441, para 38 that the manner in which articles 6(1) and 6(3)(c) were to be applied during the preliminary investigation depended on the special features of the proceedings and on the circumstances of the case.\nAccount was taken in para 37 of the principles set out in Salduz, para 55 and in para 38 of the fact that the right to silence and the right not to incriminate oneself are generally recognised standards which lie at the heart of the notion of a fair procedure.\nPara 38 then contains these important propositions which did not receive the same attention in Salduz: The right not to incriminate oneself presupposes that the prosecution in a criminal case seek to prove their case against the accused without resort to evidence obtained through methods of coercion or oppression in defiance of the will of the accused (see, inter alia, J B v Switzerland, no 31827\/96, para 64, ECHR 2001 III).\nIn this sense the right is closely linked to the presumption of innocence contained in article 6(2) of the Convention.\nIn examining whether a procedure has extinguished the very essence of the privilege against self incrimination, the Court must examine the nature and degree of the compulsion, the existence of any relevant safeguards in the procedures and the use to which any material so obtained is put (ibid).\nApplying these propositions to the applicants case, the court noted in para 42 that in criminal matters article 6 comes into play as soon as a person is charged and that this may occur on a date prior to the case coming before the trial court, such as the date of arrest, the date when the person concerned was officially notified that he would be prosecuted or the date when the preliminary investigations were opened.\nEckle v Germany (1982) 5 EHRR 1, para 73 was referred to, which includes the proposition taken from cases such as Deweer v Belgium (1980) 2 EHRR 439, para 46 that the test as to whether a person has been charged for the purposes of article 6(1) is whether the situation of the person has been substantially affected.\nThe court concluded that, given the context of the road check and the applicants inability to produce any proof of the diesel purchase at the moment of his questioning by the police, there was a suspicion of theft against him from that moment and that, although he was not yet accused of any criminal offence, his situation in the proceedings at the roadside was substantially affected.\nSo article 6(1) was engaged at that point.\nBut the fact that article 6(1) was engaged did not mean that a right of access to a lawyer arose at that point.\nThe court observed in para 47 that the case was different from previous cases concerning the right to legal assistance in pre trial proceedings.\nThis was because the applicant was not formally arrested or in police custody but was stopped for a roadside check which was carried out in the presence of two attesting witnesses.\nIn para 48 it said: Although the applicant in the present case was not free to leave, the Court considers that the circumstances of the case as presented by the parties, and established by the Court, disclose no significant curtailment of the applicants freedom of action, which could be sufficient for activating a requirement for legal assistance already at this stage of the proceedings.\nIn para 49 it noted that the role of the police in such a situation was to draw up an inspection record and receive the applicants explanation as to the origin of the cans in his car.\nHaving done so, the police transferred the documents to the inquirer who submitted a report to his superior which prompted him to open a criminal case against the applicant.\nIn para 51 it held that the absence of legal representation at the roadside check did not violate his right to legal assistance under article 6(3)(c).\nIn a partly dissenting opinion Judge Spielmann said that the interview took place in circumstances that could in no way be compared to those normally observed during routine road checks and he could not agree that the circumstances of the case disclosed no significant curtailment of the applicants freedom of action such as to require legal assistance.\nHe did not take issue with the principle formulated in para 48.\nHis dissent was as to its application to the facts of the case.\nMr Scott for Ambrose submitted that it was wrong to look at the courts reasoning in Salduz through what it decided in Zaichenko.\nMr Shead for M submitted that Zaichenko was so out of line with the other cases, and so hard to reconcile with the basic principles that were stated in Salduz, that it should be regarded as having been wrongly decided.\nI would reject these arguments.\nThe President of the Court, Judge Rozakis, was a member of the Grand Chamber in Salduz, as was Judge Spielmann.\nThe importance of the question that the case raised, which was whether the ruling in Salduz applied to questioning where the applicant was not in police custody, would not have been overlooked.\nThe reasoning shows that the reasoning in Salduz was fully taken into account.\nThe finding in para 48 that the circumstances did not disclose a sufficient curtailment of the applicants freedom of action which could be sufficient for activating a requirement for legal assistance indicates that the court was well aware that it had to give reasons for reaching a different result.\nThat it did so in the way that it did shows that this is a judgment which must be taken into account in the search for an answer to the question where the jurisprudence of the Strasbourg court stands on the question we have to decide.\nAbdurahman v United Kingdom\nThe question whether the right of access to a lawyer applies at a stage before the person is taken into custody is now before the Strasbourg court in an application by Ismail Abdurahman, application no 40351\/09.\nHe was questioned by the police as a witness in connection with the attempt to detonate four bombs at separate points in the London public transport system two weeks after the bombings that took place on 7 July 2005.\nHe had been approached by two police officers who took him to a police station.\nAccording to their evidence at the voir dire at the applicants trial, this was with a view to his assisting the police as a potential witness.\nThey began interviewing him, but after about 45 minutes of questioning they considered that, as a result of the answers that he was giving, he was in danger of incriminating himself and should be cautioned.\nOn instructions from a senior officer they continued nevertheless to interview him as if he were a witness.\nIt was not until after he had completed and signed his witness statement, which contained statements that were incriminating and was made without access to legal assistance, that they were told to arrest him and he was then taken into custody.\nThis case is still awaiting a hearing in Strasbourg.\nIt has reached the stage of the court posing questions to the parties, which are whether there has been a violation of article 6(1) together with article 6(3)(c) arising from (a) the failure to caution the applicant before he gave his witness statement (Aleksandr Zaichenko v Russia, no 39660\/02, 18 February 2010); and\/or (b) the failure to provide him with legal assistance before he gave the witness statement? In particular, were the rights of the defence irretrievably prejudiced by the use of the witness statement at trial (Salduz v Turkey [GC], no 36391\/02, para 55, 27 November 2008)? It is, of course, too early to say what view will be taken of this case when the facts have been assessed by the court in the light of the relevant principles.\nBut it is at least likely that its judgment will provide some useful guidance as to the approach that is to be taken to a persons rights under article 6(1) together with article 6(3)(c) where the prosecution seeks to rely on answers given to questions by the police before he is formally taken into custody.\nThe key issue, so far as the references that are before the court in this case are concerned, is whether, as a rule, access to a lawyer must always be provided when a person is questioned at any stage in the proceedings after he has become a suspect and must be taken to have been charged for the purposes of article 6 (see paras 62 63, below), or whether access to a lawyer is required, as a rule, only where the person has been taken into custody or his freedom of action has been significantly curtailed.\nThe fact that this application is still pending suggests that, if there was any doubt as to where the jurisprudence of the Strasbourg court stands, it would have been wise to wait for its judgment in Abdurahman before holding that there is a rule that access must be provided in any situation that is not analogous on its facts to that which was before the court in Salduz.\nBut that is for another day, as the delivery of the judgment in that case cannot be taken to be imminent.\nMiranda v Arizona\nThe Lord Advocate placed considerable weight in support of his argument on the judgment of the Supreme Court of the United States in Miranda v Arizona 384 US 436 (1966).\nIn that case the Supreme Court held that the prosecution may not use statements, whether incriminatory or exculpatory, stemming from custodial interrogation of a defendant unless it demonstrated the use of procedural safeguards which were sufficient to secure the privilege against self incrimination.\nThese safeguards require that, unless other fully effective means are devised to inform the accused person of the right to silence and to assure continuous opportunity to exercise it, he must be warned that he has a right to remain silent, that any statement that he does make may be used as evidence against him, that he has the right to consult with an attorney and that, if he cannot afford one, a lawyer will be appointed to represent him.\nCustodial interrogation for the purposes of this rule means questioning initiated by law enforcement officers after a person has been taken into custody or otherwise deprived of his freedom of action in any significant way: p 444.\nMiranda has been referred to in a number of individual opinions given by judges of the Strasbourg court.\nJudge De Meyer referred to it in his dissenting opinion in Imbrioscia v Switzerland (1993) 17 EHRR 441.\nThe applicant in Imbrioscia had been questioned several times without access to a lawyer while he was in police custody but the court held, considering the proceedings as a whole, that there had been no breach of article 6(1) read with article 6(3)(c).\nJudge De Meyer said that the court had failed to recognise the rules governing the right to legal advice during custodial interrogation which the Supreme Court has summarised in its Miranda judgment and which he said belonged to the very essence of fair trial.\nIn Murray v United Kingdom (1996) 22 EHRR 29 the applicant had been denied legal advice for 48 hours after he had been taken into custody.\nThe court held that there had been a violation of article 6(1) read with article 6(3)(c).\nThe partly dissenting judges, Judge Pettiti, joined by Judge Valticos, and Judge Walsh, joined by Judges Makarczyk and Lhmus, also referred to the Miranda judgment in this context.\nJudge Walsh pointed out that the Supreme Court had affirmed that the constitutional protection against self incrimination contained in the Fifth Amendment guarantees to the individual the right to remain silent unless he chooses to speak in the unfettered exercise of his own free will whether during custodial interrogation or in court.\nMuch more recently, but prior to the Grand Chambers decision in Salduz, Judge Fura Sandstrm joined by Judge Zupani referred to Miranda in Galstyan v Armenia (2007) 50 EHRR 618 when, in para 0 I5, she described the right to be assisted by a lawyer as a bright line rule which nobody should cross and said that its purpose was to neutralise the distinct psychological disadvantage that suspects are under while dealing with the police.\nThe Strasbourg court has not referred to Miranda in any of its judgments, and Imbrioscia, Murray and Galstyan are the only cases where it has been referred to in a dissenting opinion in the context of what is described in Miranda as custodial interrogation.\nBut it can be assumed that the court will not have overlooked it in its search for generally accepted international human rights standards.\nThe dissenting judgments in Imbrioscia and Murray which drew attention to it were given before the Grand Chamber considered the issue in Salduz, and those cases were cited to it in that case.\nAs T A H M van der Laar and R L de Graaf, Salduz and Miranda: is the US Supreme Court pointing the way? [2011] 3 EHRLR 304, 315 have pointed out, the test that the Strasbourg court described in paras 47 and 48 of Zaichenko when it considered that the applicant was neither formally arrested nor interrogated in police custody and that there was no significant curtailment of his freedom of action echoes the statement in Miranda, p 477 that the rule of access to a lawyer that it describes applies when the suspect is subjected to police interrogation while in custody or otherwise deprived of his freedom of action in any significant way.\nIt is not unreasonable to think that Miranda and subsequent cases that the ruling in that case have given rise to in the United States will influence the thinking of the Strasbourg court as it develops the principles described in Salduz.\nThe significance of Miranda is that it follows the custodial approach to the question as to when access to a lawyer is required.\nThe core of that decision, as der Laar and de Graaf have described it in [2011] EHRLR 304, 310, is that a suspects statement made as a result of interrogation initiated by the interrogating authorities while he is in custody cannot be used in evidence unless the prosecutor can prove that the procedural safeguards that were used were effective enough to secure the suspects right not to incriminate himself.\nThe underlying reason is that the circumstances in which such an interrogation takes place are inherently intimidating.\nAs Chief Justice Warren explained at p 445, an understanding of the nature and setting of the in custody interrogation was essential to the courts decision: incommunicado interrogation in a police dominated atmosphere.\nBut it was noted that an interpretation of the requirement that the right to legal advice arose at an earlier stage would hamper the traditional function of the police in investigating crime.\nGeneral on the scene questioning as to facts surrounding the crime or other general questioning of citizens was not affected.\nThe right to legal advice was held not to extend that far because the compelling atmosphere inherent in the process of in custody interrogation was not necessarily present: Miranda, pp 477 478.\nThe accused in that position is protected by the rule that only statements voluntarily made are admissible.\nI think that there is an indication here about the way the Strasbourg courts jurisprudence may develop, if there are doubts as to the significance of the courts decision in Zaichenko.\nMiranda shows that reasons can be given which, at the very least, the court has not yet said are irrelevant for thinking that it would be going too far to hold that there is a rule that there must be access to a lawyer irrespective of whether the person who is being questioned by the police is being held in custody.\nThe basis for the ruling in Miranda is that police custody or its equivalent creates particular pressures which mean that the persons will is more likely to be overcome when he is being questioned under conditions of that kind.\nThe observation in Salduz, para 53 that the rationale of the generally recognised international human rights standards relates in particular to the protection of the accused against abusive coercion on the part of the authorities fits in with this line of reasoning.\nThis feature is likely to be absent when questions are being put at the locus or in the persons home simply with a view to deciding whether the person being questioned is to be treated as a suspect and, as such, to be subjected to further procedures.\nThe case for police custody or its equivalent\nI should like, before stating my conclusions, to say a bit more about why I would hold that in principle the line as to when access to legal advice must be provided before the person is questioned should be drawn as from the moment that he has been taken into police custody, or his freedom of action has been significantly curtailed as it was put in Zaichenko, para 48.\nI return to the points I made in para 34, above.\nThe privilege against self incrimination is not an absolute right: Murray v United Kingdom (1996) 22 EHRR 29, para 47; Brown v Stott 2001 SC (PC) 43, 64, per Lord Steyn.\nAt p 60 Lord Bingham said that while it could not be doubted that such a right must be implied, there is no treaty provision which expressly governs the effect or extent of what is to be implied.\nAt p 74 I said that implied rights are open, in principle, to modification or restriction so long as this is not incompatible with the right to a fair trial.\nWe do know however that the right is primarily concerned with respecting the will of the person to remain silent: see Saunders v United Kingdom (1996) 23 EHRR 313, para 68.\nA person is therefore free to speak to the police and to answer questions if he is willing to do so, even after he has been cautioned.\nHe can provide them with self incriminating answers if he is willing to do this, and his answers will be admissible if they are truly voluntary.\nThis approach to the problem is familiar in domestic law: see para 22, above.\nSo long as it is applied the fundamental right under article 6 to a fair trial will be guaranteed.\nThe test is whether the will of the person to remain silent, if that is his will, has been respected.\nAnswers cannot be extracted from him by unfair means, and he must be protected against the risk that they may be forced out of him.\nIt is well understood that in some circumstances merely to caution the person that he has the right to remain silent will not be enough to protect him against the risk of a forced confession.\nThe paradigm case is where he is in police custody.\nIn such a situation the circumstances surrounding his questioning are likely to be oppressive and intimidating.\nThe questioning is likely to be prolonged, and the atmosphere is likely to be coercive.\nIn such circumstances it is reasonable to assume that he will be vulnerable to having a confession extracted from him against his will and to insist that special measures are needed to ensure that his rights are respected.\nAs Lord Kerr points out, common experience tells us that a coercive atmosphere can exist independently of custody: para 147, below.\nThat is why it was recognised in Miranda and in Zaichenko that a persons freedom of action to act as he wishes may be significantly impaired in other circumstances.\nBut it does not follow that this will be so in every case when the police engage in conversation with a suspect.\nCircumstances will vary, and questioning which may become objectionable as the process continues may not be so during its initial stages.\nThat is why I believe that a more flexible approach to the problem is called for than the rigid principle that Lord Kerr would adopt, which would involve laying down a rule that access to lawyer must always be provided before any police questioning can take place: see para 146, below.\nLord Kerr says in para 148 that there is no reason to suppose that a person questioned by the police while not in detention would not experience the same need to acquiesce in the power of the police to require answers to potentially highly incriminating questions.\nThe important question, he says, is whether the questions asked are liable to be productive of incriminating answers, not the circumstances in which they are being asked.\nThat leads him to say that whenever questions of that kind are being put to a suspect they must be asked in the presence of a lawyer.\nI do not think that there is any support in the Strasbourg cases, or in such international authorities as we have been shown, for that proposition.\nThe point that was being made in the Canadian case of R v Grant 2009 SCC 32; [2009] 2 SCR 353 to which he refers in para 147 was that there are situations in which psychological constraint amounting to detention have been recognised: the majority judgment of McLachlin CJ and LeBel, Fish, Abella and Charron JJ at para 30.\nThese are where the subject is legally required to comply with a direction or command and where there is no such obligation but a reasonable person in the subjects position would feel so obligated.\nNot every conversation that takes place between the police and a suspect in which questions are asked is of that character.\nA demand or direction by a police officer is one thing.\nQuestioning under caution is another.\nIt is understandable that a person who is confronted by a direction or a demand by a police officer to provide information will feel that he has to comply with it.\nIt is understandable too if the circumstances are such that he feels that he has no real choice in the matter.\nThat is why the law requires that before questions are put to him by the police the suspect must be cautioned.\nIn that way a fair balance is struck between the interests of the individual and the public interest in the detection and suppression of crime.\nThe search for that balance is inherent in the whole of the Convention: Sporrong and Lnnroth v Sweden (1982) 5 EHRR 35, para 69.\nThe whole point of the caution is to make it clear to the person that he is under no obligation to answer the questions that are being put to him.\nThe requirement would be pointless if it is to be assumed that he will nevertheless feel, whatever the circumstances, that he has no alternative but to answer them.\nWhether the caution is enough to ensure that the person will have a fair trial will depend on the circumstances.\nConclusion\nI return to the Lord Advocates submission that three features determine whether an individual has a right to legal advice under article 6 in accordance with the principle in Salduz.\nFirst, he must be a suspect.\nSecond, he must be in police custody.\nThird, he must be the subject of police interrogation.\nThe submission is that, unless all three features are present, he has no right of access to legal advice under article 6.\nThe correct starting point, when one is considering whether the persons Convention rights have been breached, is to identify the moment as from which he was charged for the purposes of article 6(1).\nThe guidance as to when this occurs is well known.\nThe test is whether the situation of the individual was substantially affected: Deweer v Belgium (1980) 2 EHRR 439, para 46; Eckle v Germany (1982) 5 EHRR 1, para 73.\nHis position will have been substantially affected as soon as the suspicion against him is being seriously investigated and the prosecution case compiled: Shabelnik v Ukraine (application no 16404\/03) (unreported) given on 19 February 2009, para 57.\nIn Corigliano v Italy (1982) 5 EHRR 334, para 34 the court said that, whilst charge for the purposes of article 6(1) might in general be defined as the official notification given to the individual by the competent authority of an allegation that he has committed an criminal offence, as it was put in Eckle, para 73, it may in some instances take the form of other measures which carry the implication of such an allegation.\nIn ubinski v Slovenia (application no 19611\/04) (unreported) given on 18 January 2007, paras 62 63 the court said that a substantive approach, rather than a formal approach, should be adopted.\nIt should look behind the appearances and investigate the realities of the procedure in question.\nThis suggests that the words official notification should not be taken literally, and that events that happened after the moment when the test is to be taken to have been satisfied may inform the answer to the question whether the position of the individual has been substantially affected.\nIt is obvious that the test will have been satisfied when the individual has been detained and taken into custody.\nIt must be taken to have been satisfied too where he is subjected to what Salduz, para 52 refers to as the initial stages of police interrogation.\nThis is because an initial failure to comply with the provisions of article 6 at that stage may seriously prejudice his right to a fair trial.\nThe moment at which article 6 is engaged when the individual is questioned by the police requires very sensitive handling if protection is to be given to the right not to incriminate oneself.\nThe mere fact that the individual has been cautioned will not carry the necessary implication.\nBut, when the surrounding circumstances or the actions that follow immediately afterwards are taken into account, it may well do so.\nThe moment at which the individual is no longer a potential witness but has become a suspect provides as good a guide as any as to when he should be taken to have been charged for the purposes of article 6(1): Shabelnik v Ukraine, para 57.\nThe Lord Advocate submitted that the protection of article 6(3)(c) was not engaged until the individual was actually taken into custody.\nBut this cannot withstand the emphasis that the Strasbourg court puts on the consequences of an initial failure to comply with its provisions, as in Salduz, para 50; see also Zaichenko v Russia, para 42.\nAs for the requirement that the individual must be in police custody, I would hold that the Strasbourg court has not said, or at least has not said with a sufficient degree of clarity, that a person who has become a suspect and is not in custody must, as a rule, have access to a lawyer while he is being questioned.\nI would attach particular importance to the judgment in Zaichenko v Russia, for the reasons given in para 46, above.\nThat is not to say that the fact that the individual had no access to legal advice in that situation is of no consequence.\nIf it was practicable for access to legal advice to be offered, this will be one of the circumstances that should be taken into account in the assessment as to whether the accused was deprived of a fair hearing, as he is entitled to respect for the right not to incriminate himself.\nBut it is no more than that.\nThe fact that the incriminating statements were made without access to a lawyer does not of itself mean that the rights of the defence are irretrievably prejudiced, as was held to be the case in Salduz on account of the lack of legal assistance while the applicant was in custody.\nThe phrase police interrogation appears frequently in the cases where the applicant was detained in custody.\nIt was suggested that, for the purposes of the rule about access to a lawyer, it means something more than just asking questions of an individual.\nThese words are, however, extremely fact sensitive.\nAny questioning of an individual who has been detained in custody by persons who are referred to in the Strasbourg cases as representing the investigating authorities with the aim of extracting admissions on which proceedings could be founded will amount to interrogation for the purposes of the rule: for a statement to that effect in England, see R v Absolam (1989) 88 Cr App R 332, 336, per Bingham LJ.\nThe same could be said of questioning that takes place at the roadside or in the persons home, depending on the circumstances.\nIt is not necessary, if access to a lawyer is needed for the right to a fair trial to remain practical and effective (see Salduz, para 55), that the questioning should amount to an interrogation in the formal sense.\nIt need not be a detailed and sustained course of questioning.\nQuestions that the police need to put simply in order to decide what action to take with respect to the person whom they are interviewing are unlikely to fall into this category.\nBut they are likely to do so when the police have reason to think that they may well elicit an incriminating response from him.\nWith that introduction, I now turn to the questions that have been referred to this court.\nAs I understand them, they invite us not only to deal with the situations that they describe as raising issues of principle but also to express our own view as to the answers that the Appeal Court should give on the facts as presented to us in each case.\nThe answers to the questions referred\nThe question in Ambroses case is whether the act of the Lord Advocate in leading and relying on evidence obtained in response to police questioning of the appellant conducted under common law caution at the roadside and without the appellant having had access to legal advice was incompatible with the appellants rights under article 6(1) and 6(3)(c).\nI would answer this question in the negative.\nApplying the test that I have described in para 62, above, I would hold that Ambrose was charged for the purposes of article 6 when he was cautioned and that the police officer had reason to think that the second and third questions were likely to elicit an incriminating response from him.\nThis conclusion is supported by the way the question whether the applicant was charged was dealt with in Zaichenko v Russia, para 41, where the court said that, given the context of the road check and the applicants inability to produce proof that he had purchased the diesel, there should have been a suspicion of theft against the applicant at the moment of his questioning by the police.\nThe context in Ambroses case was that, when he was approached by the police, he was drunk and sitting in the car.\nSuspicion that he was committing an offence fell on him as soon as he told the police that the keys were in his pocket.\nBut I would hold it would be to go further than Strasbourg has gone to hold that the appellant is entitled to a finding that this evidence is inadmissible because, as a rule, access to a lawyer should have been provided to him when he was being subjected to this form of questioning at the roadside.\nThis leaves open the question whether taking all the circumstances into account it was fair to admit the whole or any part of this evidence.\nThere may, perhaps, still be room for argument on this point.\nSo I would leave the decision as to how that question should be answered to the Appeal Court.\nThe question in Ms case is whether the act of the Lord Advocate in leading and relying on evidence obtained in response to police questioning of the accused, conducted under common law caution at his home address and without the accused having had access to legal advice was incompatible with the accuseds rights under article 6(1) and 6(3)(c).\nI would hold that M was charged for the purposes of article 6 when he was cautioned by the police officer at his home address.\nAlthough he did yet not have enough information as that stage to detain him as a suspect under section 14 of the 1995 Act, his actions were sufficient to carry the implication that the purpose of his visit was to establish whether M was in that category.\nEven if that was not so at the moment when M was cautioned, the first question which the police officer put to him carried that implication.\nI also think that the police officer had reason to think that the second question that he asked (Were you involved in the fight?) was likely to elicit an incriminating response from him.\nBut I would answer the question in this reference also in the negative, as it would be to go further than Strasbourg has gone to hold that the accused is entitled to a ruling that this evidence is inadmissible because, as a rule, access to a lawyer should have been provided to him when he was being asked these preliminary questions in his own home with a view to determining what further steps should be taken to deal with him in connection with the offence.\nAs in Ambroses case, this leaves open the question whether, taking all the circumstances into account, it would be fair to admit the whole or any part of this evidence.\nI would leave it to the sheriff to answer that question.\nThe question in Gs case is whether it is incompatible with the Panels Convention rights for the Lord Advocate to lead evidence of his statements and answers made during the course of the search conducted under warrant granted in terms of section 23(3) of the Misuse of Drugs Act 1971 as recorded in the Search Production Schedule.\nThe Lord Advocate conceded that G was a suspect from the time of his first admission to possession of a quantity of heroin in his jeans.\nIn must follow that he had been charged for the purposes of article 6 by the time the police began their search.\nThe feature of this case which distinguishes it from the other two is that, although G had not yet been formally arrested and or taken into police custody, there was a significant curtailment of his freedom of action.\nHe was detained and he had been handcuffed.\nHe was, in effect, in police custody from that moment onwards.\nSo I would answer the question in the affirmative.\nThe circumstances were sufficiently coercive for the incriminating answers that he gave to the questions that were put to him without access to legal advice about the items to be found to be inadmissible.\nI would hold however that the same result need not follow in every case where questions are put during a police search to a person who is to be taken to have been charged for the purposes of article 6.\nIt would be to go further than Strasbourg has gone to hold that a person has, as a rule, a Convention right of access to a lawyer before answering any questions put to him in the course of a police search.\nIt is not because there is a rule to this effect that I would answer the question in the affirmative.\nRather it is because it is plain from the particular circumstances of the case that G was, in effect, a detainee when he was being questioned by the police.\nIn the absence of such indications of coercion the question, as in the other cases, will be whether, taking all the circumstances into account, it would be fair to admit the whole or any part of the evidence.\nI am in full agreement with Lord Hopes judgment in this case and there is\nLORD BROWN\ncomparatively little that I want to say in addition.\nCadder is authority for an absolute rule, derived from the European Court of Human Rightss decision in Salduz v Turkey (2008) 49 EHRR 421, that the Crown cannot lead and rely upon evidence of anything said by an accused without the benefit of legal advice during questioning under detention at a police station.\nFor convenience I call this the Cadder rule and refer to it as absolute notwithstanding the Courts recognition in Salduz itself (at para 55) that compelling reasons may exceptionally justify denial of access to a lawyer (providing always that such a restriction does not unduly prejudice the defence) since for present purposes those possible exceptional cases can safely be ignored.\nThe critical issue arising for our determination on these references is whether the Cadder rule applies equally to anything said by an accused in answer to police questioning even before he is detained at a police station, providing only that at the time of such questioning he is already a suspect and charged within the meaning of article 6(1) of the Convention (his situation substantially affected as explained by Lord Hope at para 39).\nAlthough these are, of course, Scottish references and, rather to my regret, we have not had the benefit of any intervention on behalf of English and Welsh prosecuting authorities to assist us as to the legal position south of the border, I cannot but notice that on their face the statutory provisions governing the position in England and Wales sit a little uneasily even with the absolute rule in Cadder, let alone with the substantial extension to that rule now proposed by the respective accused in these references.\nSection 76(2) of the Police and Criminal Evidence Act 1984 (PACE) provides: If, in any proceedings where the prosecution proposes to give in evidence a confession made by an accused person, it is represented to the court that the confession was or may have been obtained (a) by oppression of the person who made it; or (b) in consequence of anything said or done which was likely, in the circumstances existing at the time, to render unreliable any confession which might be made by him in consequence thereof, the court shall not allow the confession to be given in evidence against him except in so far as the prosecution proves to the court beyond reasonable doubt that the confession (notwithstanding that it may be true) was not obtained as aforesaid.\nBy section 82(1) of PACE, confession is defined to include any statement wholly or partly adverse to the person who made it and by section 76(8) oppression is defined to include torture, inhuman or degrading treatment, and the use or threat of violence (whether or not amounting to torture).\nThe only absolute statutory rule, therefore, is that confessions are inadmissible under PACE if obtained by oppression or in consequence of anything said or done likely to render them unreliable.\nGenerally speaking the court would not regard a confession elicited during questioning under detention at a police station as unreliable merely because the suspect had not at the time had the benefit of legal advice (unless, of course, by reason of youth or mental frailty or for any other reason the suspect may be regarded as having been particularly vulnerable to such questioning see, for example, R v McGovern (1990) 92 Cr App R 228).\nNevertheless the principle established in Salduz that underlies the Cadder rule is, I apprehend, properly given effect in England and Wales by the appropriate application of sections 58 and 78 of PACE which provide respectively: 58(1) A person arrested and held in custody in a police station or other premises shall be entitled, if he so requests, to consult a solicitor privately at any time. 78(1) In any proceedings the court may refuse to allow evidence on which the prosecution proposes to rely to be given if it appears to the court that, having regard to all the circumstances, including the circumstances in which the evidence was obtained, the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it.\nConsistently, therefore, with the operation of the Cadder rule in Scotland, the discretion to exclude evidence under section 78(1) is, I apprehend, routinely exercised in England and Wales in the case of significant and substantial breaches of the right to legal advice conferred by section 58 and the related rights arising under Code C of the Codes of Practice established under PACE.\nIn England and Wales, however, suspects do not, as I understand it, have a right to free legal advice before their arrest and admission into custody.\nThe polices only obligation at this earlier stage is to caution the suspect before questioning begins.\nOnce, however, a decision to arrest is made and once grounds for arrest exist it cannot then be delayed so as to defer the suspects right to legal advice the police are required to stop the questioning and to resume it only at the police station.\nOn arrival at the police station the detainee must be advised about his right to free legal advice, including a right to speak to a solicitor on the telephone, and he must be asked if he wishes to do so.\nOnce the interview begins he must again be reminded of his right to free legal advice.\nSo much for the position obtaining under English law.\nSomewhat to my surprise, my own brief judgment in Cadder is sought to be prayed in aid in support of the respondents contention on these references that the principle against self incrimination requires a suspect to be given access to legal advice before he is first questioned whatever may be the circumstances of that questioning providing only that article 6(1) is engaged (as indeed it was held to be engaged even in the situation that arose in Zaichenko v Russia (application no 39660\/02) (unreported) (judgment given 18 February 2010) see paras 41 44 of Lord Hopes judgment).\nWith the best will in the world, however, I cannot recognise my judgment in Cadder as offering the least support for any such contention.\nOn the contrary, the whole context of that judgment was interrogation in a police station and in the last sentence I was endeavouring to explain the principal considerations which seem to me to underlie the principle against self incrimination, namely the importance of guarding against both inadequate police investigation and the exploitation of vulnerable suspects.\nStrasbourgs evident core concern in Salduz (see in particular para 53 of the Courts judgment) is that suspects should be protected against abusive coercion and that miscarriages of justice should be prevented.\nQuintessentially such risks arise in the very situation under consideration in Salduz: the interrogation of a terrorist suspect in police custody.\nSmall wonder that the court (at para 53) saw its decision as in line with the generally recognised international human rights standards, standards which may be seen from the instruments referred to in the footnotes to relate specifically to rights of access to a lawyer during, rather than before, suspects are taken into police custody.\nAnother decision relied upon by the respondents is that of the Supreme Court of Canada in R v Grant [2009] 2 SCR 353 and true it is that the court there, having given a wide meaning to the concept of detention, concluded on the particular facts of that case (which involved the kerbside questioning of a suspect leading to his being searched and found to be carrying a loaded firearm) that the police had breached section 10(b) of the Canadian Charter of Rights and Freedoms by failing before questioning the suspect to advise him of his right to speak to a lawyer.\nSection 10(b) provides: Everyone has the right on arrest or detention . (b) to retain and instruct counsel without delay and to be informed of that right .\nImportantly, however, the Supreme Court concluded that, the breach of section 10(b) notwithstanding, the trial judge had been entitled pursuant to section 24(2) of the Charter to admit the incriminating evidence and in the result upheld the conviction.\nSection 24(2) provides: Where . a court concludes that evidence was obtained in a manner that infringed or denied any rights or freedoms guaranteed by this Charter, the evidence shall be excluded if it is established that, having regard to all the circumstances, the admission of it in the proceedings would bring the administration of justice into disrepute.\nFor present purposes, two paragraphs only from the head note to the courts immensely long judgments must suffice: When faced with an application for exclusion under section 24(2), a court must assess and balance the effect of admitting the evidence on societys confidence in the justice system having regard to: (1) the seriousness of the Charter infringing state conduct, (2) the impact of the breach on the Charter protected interests of the accused, and (3) societys interest in the adjudication of the case on its merits.\nAt the first stage, the court considers the nature of the police conduct that infringed the Charter and led to the discovery of the evidence.\nThe more severe or deliberate the state conduct that led to the Charter violation, the greater the need for the courts to dissociate themselves from that conduct, by excluding evidence linked to that conduct, in order to preserve public confidence in and ensure state adherence to the rule of law.\nThe second stage of the inquiry calls for an evaluation of the extent to which the breach actually undermined the interests protected by the infringed right.\nThe more serious the incursion on these interests, the greater the risk that admission of the evidence would bring the administration of justice into disrepute.\nAt the third stage, a court asks whether the truth seeking function of the criminal trial process would be better served by admission of the evidence or by its exclusion.\nFactors such as the reliability of the evidence and its importance to the Crowns case should be considered at this stage.\nThe weighing process and the balancing of these concerns is a matter for the trial judge in each case.\nWhere the trial judge has considered the proper factors, appellate courts should accord considerable deference to his or her ultimate determination.\nHere, the gun was discovered as a result of the accuseds statements taken in breach of the Charter.\nWhen the three stage inquiry is applied to the facts of this case, a balancing of the factors favours the admission of the derivative evidence.\nThe Charter infringing police conduct was neither deliberate nor egregious and there was no suggestion that the accused was the target of racial profiling or other discriminatory police practices.\nThe officers went too far in detaining the accused and asking him questions, but the point at which an encounter becomes a detention is not always clear and the officers mistake in this case was an understandable one.\nAlthough the impact of the Charter breach on the accuseds protected interests was significant, it was not at the most serious end of the scale.\nFinally, the gun was highly reliable evidence and was essential to a determination on the merits.\nThe balancing mandated by section 24(2) is qualitative in nature and therefore not capable of mathematical precision.\nHowever, when all these concerns are weighed, the courts below did not err in concluding that the admission of the gun into evidence would not, on balance, bring the administration of justice into disrepute.\nThe significant impact of the breach on the accuseds Charter protected rights weighs strongly in favour of excluding the gun, while the public interest in the adjudication of the case on its merits weighs strongly in favour of its admission.\nHowever, the police officers were operating in circumstances of considerable legal uncertainty, and this tips the balance in favour of admission.\nIn short, the position in Canada, just as in England and Wales, is that no absolute rule applies to exclude incriminating evidence obtained in breach of a constitutional right to legal advice although it may be supposed that in flagrant cases equivalent to those where the Cadder rule itself would apply directly (where a suspect in police custody is denied access to a lawyer during interrogation) the Canadian courts would invariably strike the section 24(2) balance in the accuseds favour.\nIt follows from all this that I share Lord Hopes view that the court in Salduz ought not to be understood to be laying down an absolute rule of exclusion with regard to admissions made without the opportunity to take legal advice irrespective of whether or not the suspect was at the time actually in police custody.\nThe contention that Salduz requires the Cadder rule to be extended in this way to my mind founders on a proper understanding both of what the Strasbourg Court was there saying in the particular factual context of that case, and of the recognised international human rights standards underlying that decision.\nIt also seems to me inconsistent both with the terms of Judge Bratzas concurring opinion in that case (implicit in which was a recognition that under the majority judgment the very earliest time at which a suspect could be found entitled to legal advice is when he is taken into police custody or pre trial detention) and with Strasbourgs post Salduz jurisprudence (helpfully analysed by Lord Hope in great detail), most notably the judgment in Zaichenko v Russia itself.\nAlso like Lord Hope (see paras 50 53 above) I find some assistance here in the decision of the Supreme Court of the United States in Miranda v Arizona 384 US 436 (1966).\nAs Lord Hope observes (at para 53), the significance of Miranda is that it adopts a custodial approach to the question as to when access to a lawyer is required, the fundamental reason being that it is at that point that the circumstances in which [the suspects] interrogation takes place are inherently intimidating, because [of] the compelling atmosphere inherent in the process of in custody interrogation.\nAs, however, Lord Hope also observes: It was noted that an interpretation of the requirement that the right to legal advice arose at an earlier stage would hamper the traditional function of the police in investigating crime.\nI have already indicated (at para 80 above) my own understanding of the central considerations underlying the principle against self incrimination: the importance of guarding against the exploitation of vulnerable suspects and also against inadequate police investigation.\nIn the intimidating circumstances of custodial interrogation there are undoubtedly some suspects who confess to crimes of which in truth they are innocent.\nAnd undoubtedly too, once a suspect has confessed, the police are likely to become less inclined to pursue other useful avenues of investigation that may identify the actual offender.\nThus it is that miscarriages of justice can occur.\nAs Miranda suggests, however, the introduction of a right to legal advice (and what, of course, is being contended for here is an absolute right to free legal advice) at some pre custodial stage, so far from encouraging proper police investigation into crime, would in fact tend to inhibit it.\nIt is, in short, one thing to require of the police that they caution a suspect before questioning him, quite another to require that he be provided with legal assistance as a precondition of any self incriminating answers later becoming admissible in evidence against him.\nThis is the critical distinction which Zaichenko v Russia so clearly illustrates.\nThe Court there considered quite separately the applicants article 6 complaints as to (i) legal assistance and (ii) the privilege against self incrimination and the right to remain silent and in the event it found no violation of article 6 (3)(c) in respect of the former but a violation of article 6(1) in respect of the latter (the applicants self incriminatory answers to the polices roadside questioning having been elicited without his first being cautioned).\nLike Lord Hope, I too would in the present context give full weight to what has come to be known as the Ullah principle see para 20 of Lord Binghams judgment in R (Ullah) v Special Adjudicator [2004] 2 AC 323.\nIt would seem to me quite wrong for this court now to interpret article 6 of the Convention as laying down an absolute exclusory rule of evidence that goes any wider than Strasbourg has already clearly decided to be the case.\nAnd whatever else one may say about the Strasbourg jurisprudence, it can hardly be regarded as deciding the present issue clearly in the respondents favour.\nIn the result I agree with the answers proposed by Lord Hope to the questions posed in the respective references.\nEssentially it comes to this.\nIn the cases of Ambrose and M there is no absolute rule such as that laid down in Cadder which precludes reliance on the evidence in question.\nRather it must be for the trial court to decide just as an English court must decide under section 78(1) of PACE whether the evidence ought fairly to be admitted or excluded.\nIn Gs case, however, because he was, as Lord Hope puts it (para 71), in effect, in police custody from the time when, following his arrest, he was handcuffed and detained, the Cadder rule should be held to apply to his questioning during the subsequent search.\nThat said, I also agree with Lord Hope (para 72) that the Cadder rule would by no means routinely apply to exclude answers to questions put to a suspect without his having been given the opportunity to seek legal advice during a search.\nThat too would be to go further than Strasbourg has yet gone.\nLORD DYSON\nI agree with the answers proposed by Lord Hope for the reasons that he gives as well as those given by Lord Brown.\nIn Salduz v Turkey (2008) 49 EHRR 421 (applied by this court in Cadder v HM Advocate [2010] UKSC 43, [2010] SLT 1125), the ECtHR decided that article 6 of the European Convention on Human Rights (the Convention) requires that, as a rule, access to a lawyer should be provided to a suspect when he is interrogated by the police while he is in detention; and that there will usually be a violation of article 6 if incriminating statements made by a suspect during a police interrogation in such circumstances are relied on to secure a conviction.\nI shall refer to this as the Salduz principle.\nThe central question that arises in the present proceedings is whether the Salduz principle also applies to interrogations of a suspect that are conducted before he is placed in detention.\nLord Hope says that there is no sufficiently clear indication in the Strasbourg jurisprudence of how the ECtHR would resolve this question and that we should not apply the Salduz principle to situations to which the ECtHR has not clearly stated that it applies.\nLord Kerr says that (i) even if the ECtHR has not clearly decided whether article 6 requires the Salduz principle to be applied to statements obtained from a suspect when he is not in detention, that is not a sufficient reason for this court to refuse to do so (paras 126 to 130); (ii) to draw a distinction between evidence obtained before and after a suspect is detained is not only arbitrary, it is illogical (para 136); and (iii) in any event, an analysis of the Strasbourg jurisprudence clearly shows that it draws no distinction between the two cases (paras 146 and 148).\nIt is convenient to start with explaining why I cannot accept Lord Kerrs third proposition, since, if it is clear from the Strasbourg jurisprudence that the Salduz principle applies whether or not the evidence is obtained from the suspect while he is in detention, then the premise on which the judgments of Lord Hope and Lord Brown are based falls away.\nAs Lord Hope explains at paras 26 to 33, the judgment in Salduz was concerned with whether there was or should be a rule that there was a right of access to a lawyer where the person being interrogated was in police custody.\nOn its facts, it was a case about a suspect who had been interrogated by the police while he was in custody.\nThe references in para 53 to generally recognised international human rights standards (which are concerned with the position of suspects who are in custody) and to abusive coercion strongly suggest that the court was only considering the position of suspects who are in custody.\nParas 37 to 44 contains a discussion of the international law materials relating to a suspects right of access to a lawyer during police custody.\nUnsurprisingly, the judgment says nothing explicitly about the position of a suspect who is not in custody.\nI agree with Lord Hope that the concurring opinions of Judge Bratza and Judge Zagrebelski lend further support to the conclusion that the court was only considering the position of suspects who are in custody.\nLord Kerr says that Salduz is authority for the broad proposition that a suspect is entitled to have access to a lawyer at the investigation stage (because he is in a particularly vulnerable position at that stage of the proceedings) and that there is nothing in the reasoning of the decision to indicate that the investigation stage only begins after the suspect has been detained.\nBut the judgment should be read as a whole.\nIn my view, the better interpretation is that, for the reasons I have already given, the court was only addressing the issue of police interrogation of a suspect in custody.\nIt was making the point that for such a suspect the investigation stage takes place while he is in custody, where there is the risk of abusive coercion and he is in a particularly vulnerable position of making self incriminating statements.\nFurther, the decision of the First Section in Zaichenko provides clear support for the view that the Strasbourg jurisprudence draws a distinction between the fruits of police questioning of a suspect who is in detention and one who is not.\nI agree with the reasons given by Lord Hope at para 46 for rejecting the arguments that Zaichenko was wrongly decided.\nI note that Lord Kerr does not suggest that it was wrongly decided.\nHe analyses the reasoning of Zaichenko closely at paras 24 to 40.\nHe says that the basis for the courts decision that there had not been a violation of article 6(3)(c) is the cumulative effect of a number of factors (which he identifies at para 33) and that none of them, if taken in isolation, would have been sufficient to support the courts conclusion.\nI cannot accept this interpretation of the courts reasoning in Zaichenko.\nIt is true that at para 46, the court notes at the outset that the applicant waived his right to a lawyer.\nBut the court went on to give other reasons for its decision at para 47.\nIt said that the present case is different from previous cases concerning the right to legal assistance in pre trial proceedings (see Salduz. .) because the applicant was not formally arrested or interrogated in police custody.\nHe was stopped for a roadcheck. (emphasis added).\nThe court was, therefore, fully alive to the difference between police questioning of a suspect at the roadside and police questioning of a suspect who has been taken into custody.\nIt was in the context of this difference that the court made express reference to Salduz.\nPlainly and explicitly it did not apply the Salduz principle and it gave its reasons for not doing so.\nThe principal reason was given at para 48 which Lord Kerr has set out at para 160 below.\nI agree with Lord Kerr that this paragraph is not easy to follow.\nBut what is clear is that the court considered that, whatever restrictions faced the suspect when he was being questioned at the roadside, they did not amount to a significant curtailment of [his] freedom of action sufficient to entitle him to legal assistance at this early stage of the proceedings.\nThis is an essential part of the courts reasoning.\nIt is clear that the court considered that the fact that the questioning took place before the suspect had been formally arrested or detained was critical.\nI conclude, therefore, that the Strasbourg jurisprudence does not clearly show that the Salduz principle applies to statements made by a suspect who is not in detention when he is questioned by the police.\nThe only case to which our attention has been drawn in which the Salduz principle has been considered in relation to statements made by a suspect who is not in detention is Zaichenko.\nFor the reasons that I have given, Zaichenko strongly suggests that the Salduz principle does not apply in that situation.\nI turn to Lord Kerrs second proposition.\nHe says that the animation of the right under article 6(1) cannot be determined in terms of geography (para 133) and that it is arbitrary and illogical to hold that a suspect has no right to access to a lawyer if he is questioned by the police until he is taken into custody: the suspect is as likely to make incriminating statements outside as inside a police station and is therefore in equal need of the protection of article 6(3)(c) in both situations.\nThe essential question is at what stage of the proceedings access to a lawyer should be provided in order to ensure that the right to a fair trial is sufficiently practical and effective for the purposes of article 6(1).\nWhat fairness requires is, to some extent, a matter of judgment.\nI accept that opinions may reasonably differ on whether the line for providing a suspect with access to a lawyer should be drawn at the point when the person being questioned becomes a suspect or at the point when he is taken into custody.\nI do not doubt that being interrogated by the police anywhere can be an intimidating experience and that a person may make incriminating statements to the police wherever the interrogation takes place.\nThis can occur in a situation of what the majority of the Canadian Supreme Court described as psychological detention in R v Grant 2009 SCC 32 ; [2009] 2 SCR 353, at para 30.\nOn the other hand, the arresting of a suspect and placing him in custody is a highly significant step in a criminal investigation.\nThe suspect cannot now simply walk away from the interrogator.\nFor most suspects, being questioned after arrest and detention is more intimidating than being questioned in their home or at the roadside.\nThe weight of the power of the police is more keenly felt inside than outside the police station.\nAs was said in Miranda v Arizona 384 US 436 (1966) at p 478, there is a compelling atmosphere inherent in the process of in custody interrogation.\nNo doubt, it is also present to the mind of the suspect that the possibility of abusive coercion is greater inside than outside the police station.\nWhether the difference between interrogation inside and outside the police station is sufficient to justify according the suspect access to a lawyer in one situation but not the other is a matter on which opinions may differ.\nBut I do not see how it can be said to be arbitrary or illogical to recognise that there is a material difference between the two situations.\nI can agree with Lord Kerr (para 167) that one should be careful about making assumptions about the Miranda experience or believing that it can be readily transplanted into European jurisprudence.\nBut this counsel of caution is hardly consistent with the assertion that the adoption of the distinction made in Miranda is arbitrary and illogical.\nSo what should this court do in these circumstances? This brings me to Lord Kerrs first proposition.\nAs I have said, to the extent that the ECtHR has spoken on the question at all, Zaichenko contains a clear statement that the Salduz principle does not apply to statements made by a suspect during police questioning while the suspect (i) is not in custody or (ii) is not deprived of his freedom of action in any significant way.\nI derive (ii) from para 48.\nThat paragraph echoes the language of p 477 of Miranda: The principles announced today deal with the protection which must be given to the privilege against self incrimination when the individual is first subjected to police interrogation while in custody at the station or otherwise deprived of his freedom of action in any significant way (emphasis added).\nI accept, however, that there is no clear and constant Strasbourg jurisprudence on the point.\nSo the obligation in section 2 of the Human Rights Act 1998 to take account of judgments of the ECtHR does not compel a decision one way or the other: see R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23; [2003] 2 AC 295 para 26.\nNor is this a case where, although Strasbourg has not expressly decided the point, it can nevertheless clearly be deduced or inferred from decisions of the ECtHR how the court will decide the point if and when it falls to be determined.\nLord Kerr has referred to para 20 of Lord Binghams speech in R (Ullah) v Special Adjudicator [2004] 2 AC 323 and the dictum that the duty of national courts is to keep pace with the Strasbourg jurisprudence as it evolves over time: no more, but certainly no less.\nLord Brown extended this in R (Al Skeini and others) v Secretary of State for Defence [2008] 1 AC 153 at para 106 by saying that Lord Binghams dictum could as well have ended: no less, but certainly no more.\nAt para 107 Lord Brown said that the Convention should not be construed as reaching any further than the existing Strasbourg jurisprudence clearly shows it to reach.\nLady Hale said much the same at para 90.\nThis approach was explicitly endorsed in R (Smith) v Oxfordshire Assistant Deputy Coroner [2010] UKSC 29; [2011] 1 AC 1 by Lord Phillips at para 60, Lord Hope at para 93 and Lord Brown at para 147.\nBut these statements are not entirely apposite where Strasbourg has spoken on an issue, but there is no clear and constant line of authority.\nThat is the case here because there is only one case in which the ECtHR has expressly decided that the Salduz principle does not apply in relation to the interrogation of a suspect who is not in detention (Zaichenko).\nMoreover, despite the view I have expressed earlier in this judgment, I accept that it is arguable that the language of para 55 of the judgment in Salduz can and should be interpreted as holding that the Salduz principle does apply in such circumstances.\nSo what should a domestic court do in this situation? Recognising that it is our duty to give effect to the domestically enacted Convention rights, I think that the correct approach was suggested at para 199 of the judgment of Lord Mance in Smith: However, it is our duty to give effect to the domestically enacted Convention rights, while taking account of Strasbourg jurisprudence, although caution is particularly apposite where Strasbourg has decided a case directly in point or, perhaps, where there are mixed messages in the existing Strasbourg case law and, as a result, a real judicial choice to be made there about the scope or application of the Convention.\nThe position here is that Strasbourg has decided a case which is directly in point (Zaichenko).\nThe most that can be said on behalf of the accused in these three cases is that by reason of (i) the broad terms in which para 55 of the judgment in Salduz is expressed and (ii) the decision in Zaichenko, it is arguable that there are mixed messages in the Strasbourg case law as to whether the Salduz principle applies to evidence obtained from a suspect who has been interrogated without access to a lawyer outside the police station.\nTo use the words of Lord Mance, it follows that there is a real judicial choice to be made.\nWhether fairness requires the Salduz principle to apply in both situations raises questions of policy and judgment on which opinions may reasonably differ and as to which there is no inevitable answer.\nTo demonstrate this, it is sufficient to contrast the approach of the US Supreme Court in Miranda with that of the Canadian Supreme Court in Grant.\nIn these circumstances, I consider that caution is particularly apposite and that the domestic court should remind itself that there exists a supranational court whose purpose is to give authoritative and Europe wide rulings on the Convention.\nIf it were clear, whether from a consideration of the Strasbourg jurisprudence or otherwise, that the Salduz principle applies to statements made by suspects who are not detained or otherwise deprived of their freedom of action in any significant way, then it would be our duty so to hold.\nBut for the reasons that I have given, it is not clear that this is the case.\nIn these circumstances, we should hold that the Salduz principle is confined to statements made by suspects who are detained or otherwise deprived of their freedom in any significant way.\nLORD MATTHEW CLARKE\nI refer to Lord Hopes judgment for his detailed description of the references and the background to them which I gratefully adopt.\nIn R v Samuel [1988] QB 615 at p 630 Hodgson J, delivering the judgment of the Court of Appeal, described the right of a suspect to consult and instruct a lawyer as one of the most important and fundamental rights of a citizen.\nHis Lordship did so in the context of section 58(1) of the Police and Criminal Evidence Act 1984 (PACE).\nThe present references have raised the question as to when, and in what circumstances, such a right emerges as part of Scots law by virtue of the application of Article 6 ECHR.\nThe Grand Chamber of the European Court of Human Rights in Salduz v Turkey (2008) 49 EHRR 421 held that the rights of the defence will in principle be irretrievably prejudiced when incriminating statements made during police interrogation without access to a lawyer are used for a conviction (para 55).\nIn Cadder v HM Advocate 2010 SLT 1125 this court applied that decision to the existing law of Scotland and, in particular, to the operation of the powers of detention of persons then contained in sections 14 and 15 of the Criminal Procedure (Scotland) Act 1995.\nAs a result of the courts decision in Cadder the Scottish Parliament enacted certain provisions in the Criminal Procedure (Legal Assistance, Detention and Appeals) (Scotland) Act 2010.\nIn particular a new section 15A to the 1995 Act was enacted which is in the following terms: 15A Right of suspects to have access to a solicitor (c) (a) (a) (b) (1) This section applies to a person (the suspect) who is detained under section 14 of this Act, attends voluntarily at a police station or other premises or place for the purpose of being questioned by a constable on suspicion of having committed an offence, or is (i) arrested (but not charged) in connection with an offence, and (ii) being detained at a police station or other premises or place for the purpose of being questioned by a constable in connection with the offence. (2) The suspect has the right to have intimation sent to a solicitor of any or all of the following the fact of the suspects (i) detention (ii) attendance at the police station or other premises or place, or (iii) arrest (as the case may be), (b) the police station or other premises or place where the suspect is being detained or is attending, and (c) that the solicitors professional assistance is required by the suspect. (3) The suspect also has the right to have a private consultation with a solicitor (a) before any questioning of the suspect by a constable begins, and (b) at any other time during such questioning. (4) Subsection (3) is subject to subsections (8) and (9). (5) In subsection (3), consultation means consultation by such means as may be appropriate in the circumstances, and includes, for example, consultation by means of telephone. (6) The suspect must be informed of the rights under subsections (2) and (3) (a) without delay, or (b) (a) on arrival at the police station or other premises or place, and (b) in the case where the suspect is detained as mentioned in subsection (1)(a), or arrested as mentioned in subsection (1)(c), after such arrival on detention or arrest, (whether or not, in either case, the suspect has previously been informed of the rights by virtue of this subsection). (7) Where the suspect wishes to exercise a right to have intimation sent under subsection (2), the intimation must be sent by a constable if some delay is necessary in the interest of the investigation or the prevention of crime or the apprehension of offenders, with no more delay than is necessary. (8) In exceptional circumstances, a constable may delay the suspects exercise of the right under subsection (3) so far as it is necessary in the interest of the investigation or the prevention of crime or the apprehension of offenders that the questioning of the suspect by a constable begins or continues without the suspect having had a private consultation with a solicitor. (9) Subsection (3) does not apply in relation to the questioning of the suspect by a constable for the purpose of obtaining the information mentioned in section 14(10) of this Act.\nPrior to that enactment, and the decision in Cadder, the position was that the courts in Scotland had never recognised a suspects right to have access to a solicitor before or during questioning of him by the police.\nThe position was, as stated in pre Cadder versions of Renton and Browns Criminal Procedure, 6th edition at para 24 39 as follows: any statement by a suspect in answer to police questions will be inadmissible in evidence at the subsequent trial of that suspect unless it has been obtained fairly, and that all the circumstances of the questioning (apart from whether or not a caution was given to a person accused of a crime) are relevant in so far, and only in so far, as they indicate the presence or absence of unfairness.\nThat passage continued later: The current situation is that the fact that the accused was at the same time under suspicion or even under arrest is not in itself crucial, but is merely a circumstance like any other to be taken into account in assessing the fairness of the police, in the same way as the fact that he.did not have the services of a solicitor Reference was made to, inter alia, Law v McNicol 1965 JC 32, HM Advocate v Whitelaw 1980 SLT (Notes) 25 and HM Advocate v Anderson 1980 SLT (Notes) 104.\nAs was also noted in Renton and Brown at para 24 39 There are no legal rules in Scotland governing the questioning of a suspect such as the Judges Rules and Administrative Directions issued by the Home Office.\nNor were there, until the 2010 Act, any provisions similar to those provided in England and Wales under PACE.\nIn HM Advocate v Cunningham 1939 JC 61 Lord Moncrieff at page 65 noted that after the accused had been charged and had replied, he subsequently received an incidental intimation that he might, if he so desired, require and obtain the assistance of a law agent.\nHis Lordship continued: I think it would have been desirable that that intimation should have been made formally and should have been made at the very outset before the making of any charge, but I am satisfied that, in not making it, the police officers followed their usual practice and acted with an intention of complete fairness.\nNonetheless, any such practice, in my opinion, ought to be reformed The later full bench decision in Chalmers v HM Advocate 1954 JC 66 gave some support for the view that all answers given by a suspect to a police officer were inadmissible and nothing was said about a suspects right to have a solicitor present when he was being questioned.\nAlthough that decision was never over ruled its influence was considered to have been virtually removed by subsequent case law, concerned, it seems, with rising crime rates, which made the criterion of admissibility, fairness see Lord Advocates Reference (no. 1 of 1983), 1984 JC 52.\nThe decision in the case of Cadder, in applying the law as set out in Salduz, can be seen as truly innovative as regards what had been understood to be the domestic law of Scotland up until that time.\nThe present references raise, in the first place, the question as to how far the innovation goes having regard to the relevant Strasbourg jurisprudence.\nThe focus of the hearing before this court was concerned, to a significant extent, with how the suspects right to access to a lawyer has been defined to date by the Strasbourg court, either expressly, or by necessary implication, whatever other arguments there may be in principle, or policy, for defining it otherwise.\nThe defence in the cases before us sought to take from the language of the ECtHR, in discussing the right in the decided cases on the topic, a broad approach to its nature and its extent.\nThey had some basis for doing so having regard to how the court expressed itself in Salduz at para 55 where the Grand Chamber was to the effect Article 6(1) requires that, as a rule, access to a lawyer should be provided as from the first interrogation of a suspect by the police.\nAt para 52 of the judgment one finds the following Article 6 will normally require that the accused be allowed to benefit from the assistance of a lawyer already at the initial stages of police interrogation.\nThat language, it was submitted, focused on the status of the person as a suspect when determining his rights rather than his position being that of a person in custody.\nSimilar language can be seen in previous judgments of the Court.\nFor example in Panovits v Cyprus (Application No 4268\/04) (unreported) given 11 December 2008 the Court, at para 66, observed that the concept of fairness enshrined in Article 6 requires that the accused be given the benefit of the assistance of a lawyer already at the initial stages of police interrogation see also Borotyuk v Ukraine (Application No 33579\/04) (unreported) given 16 December 2010 at para 79.\nIt should, however, be noted that Panovits was a case which concerned the questioning of a child when the child had gone to the police station with his father, as requested by the police, and was thereafter arrested.\nBorotyuk was also a custody case.\nIn Panovits, at para 65, the court, having said that it was reiterating that the right to silence and the right not to incriminate oneself were generally recognised international standards, which lay at the heart of the notion of a fair procedure under Article 6, went on to say: Their rationale lies, inter alia, in the protection of the accused against improper compulsion by the authorities, thereby contributing to the avoidance of miscarriages of justice and to the fulfilment of the aims of Article 6.\nIn Salduz similar remarks were made by the court at paragraph 53: These principles, outlined at para 52 above, are also in line with the generally recognised international human rights standards which are at the core of the concept of a fair trial and whose rationale relates in particular to the protection of the accused against abusive coercion on the part of the authorities.\nThey also contribute to the prevention of miscarriages of justice and the fulfilment of the aims of Article 6, notably equality of arms between the investigating or prosecuting authorities and the accused.\nThose remarks would tend, in my judgement, to support the contention that the focus of the courts concern in Salduz, and other cases, has been in relation to those situations where methods of coercion or oppression might be more readily, and effectively, employed upon a suspect person, namely when his liberty has been curtailed by the authority detaining him.\nSignificant support for that being the focus of such a rule is to be found in the jurisprudence of the United States, and particularly the seminal decision of the US Supreme Court in Miranda v State of Arizona 384 US 436 (1966), where at p 467, para 23 the court said: Today, then, there can be no doubt that the Fifth Amendment privilege is available outside of criminal court proceedings and serves to protect persons in all settings in which their freedom of action is curtailed in any significant way from being compelled to incriminate themselves.\nWe have concluded that without proper safeguards the process of in custody interrogation of persons suspected or accused of crime contains inherently compelling pressures which work to undermine the individuals will to resist and to compel him to speak where he would not otherwise do so freely.\nIn order to combat these pressures and to permit a full opportunity to exercise the privilege against self incrimination, the accused must be adequately and effectively apprised of his rights and the exercise of those rights must be fully honoured.\nThe court then at pp 478 479, paras 66, 67 defined the right and its extent, together with its rationale in the following way: To summarise, we hold that when an individual is taken into custody or otherwise deprived of his freedom by the authorities in any significant way and is subjected to questioning the privilege against self incrimination is jeopardised.\nProcedural safeguards must be employed to protect the privilege and unless other fully effective means are adopted to notify the person of his right of silence and to assure that the exercise of the right will be scrupulously honoured, the following measures are required.\nHe must be warned prior to any questioning that he has the right to remain silent, that anything he says can be used against him in a court of law, that he has the right to the presence of an attorney, and that if he cannot afford an attorney one will be appointed for him prior to any questioning if he so desires.\nOpportunity to exercise these rights must be afforded to him throughout the interrogation.\nAfter such warnings have been given, and such opportunity afforded him, the individual may knowingly and intelligently waive these rights and agree to answer questions or make a statement.\nBut unless and until such warnings and waiver are demonstrated by the prosecution at trial, no evidence obtained as a result of interrogation can be used against him.\nThe Miranda decision has informed international legal discussion of the right of the suspect to have access to a lawyer, since the decision was given.\nAnother factor pointing towards the more restrictive extent of the right in question is that the Strasbourg court, in defining it, has done so by referring to the context of what are described as pre trial proceedings, see para 50 of the Salduz judgment.\nThe person taken into detention who, in due course, may face being tried for a crime, might well be said to be involved, at the stage of any questioning, while detained, to be in pre trial proceedings for the purposes of Article 6.\nThat that is the context in which the Strasbourg court has been considering the right in question under Article 6 is, I think, supported by what the court had to say recently in Affaire Brusco c France (Requete No 1466\/07) (unreported) given 14 October 2010, at para 45: La Cour rappelle galement que la personne place en garde vue a le droit dtre assiste dun avocat ds le dbut de cette mesure ainsi que pendant les interrogatoires, et ce a fortiori lorsquelle na pas t nforme par les autorits de son droit de se taire.\nThat passage also, to my mind, points to the phrases in Salduz early access to a lawyer and from the first interrogation of a suspect by the police as being references to the earliest point in time after the person is taken into custody with his liberty having been restricted by the investigating authorities.\nThe reference by the Strasbourg court to equality of arms, at para 53 of its judgment in Salduz, also, in my opinion, supports that approach.\nOnce a persons liberty is curtailed by the authorities, the balance of power between him and the representatives of the state shifts significantly and, it might be said, requires to be redressed by his having access to a lawyer.\nAll of these considerations, taken together, with what Lord Hope has to say in his analysis of the Salduz decision, and other Strasbourg jurisprudence, ultimately persuades me that the proper understanding of those decisions is that the right to have access to a lawyer emerges at the point when the suspect is deprived of his liberty of movement, to any material extent, by the investigating authorities and is to be questioned by them.\nIt follows that I am in agreement with Lord Hope that the Strasbourg jurisprudence, to date, does not support the defence contention in these references that the ECtHR has gone as far as to say that the right emerges as soon as a suspect is to be questioned by the police in whatever circumstances.\nAs to whether this court should go further than the ECtHR seems to have gone so far, certain important considerations lead me to the conclusion that it should not.\nThe first is the difficulty that can arise in relation to defining precisely at what point in time someone becomes a suspect, as opposed to being a witness or a detained person.\nThe second is that the broader version of the right, contended for by the defence in these cases, could have serious implications for the proper investigation of crime by the authorities.\nIf the police are to be required to ensure that a person who they wish to question about the commission of a crime (in a situation where the circumstances point to the person being a possible suspect) should have access to a lawyer, if he so wishes, then such a requirement could hamper proper and effective investigations in situations which are often dynamic, fast moving and confused.\nThe unfortunately regular street brawls in city and town centres, or disturbances in crowded places like night clubs, which, on occasions, result in homicide, are simply examples of situations which highlight the problems that might be involved.\nIn relation to the first of these considerations I note that the limits of the Miranda rights have been, very recently, (16 June 2011) re visited by the US Supreme Court in JDB v North Carolina 564 US 2011.\nThat case involved the questioning of a 13 year old.\nThe majority of the court held that the childs age was a relevant factor to be taken into account in addressing the question as to whether he had been in custody at the time of questioning.\nThe majority did not depart from the test being whether or not the person was in custody at the relevant time and at page 18 of the opinion of the court they directed the state court to address that question, taking account of all of the relevant circumstances of the interrogation, including the childs age at the time.\nThe disagreement between the majority and minority was with regard to the relevance of the childs age in judging of the question as to whether or not he was in custody at the relevant time.\nIn giving the dissenting judgment, with which the rest of the minority concurred, Alito J at pp 1 2 said Mirandas custody requirement is based on the proposition that the risk of unconstitutional coercion is heightened when a suspect is placed under formal arrest or is subjected to some functionally equivalent limitation on freedom of movement.\nAlito J, then, at page 8 of his judgment, under reference to previous authorities remarked that a core virtue of the Miranda rule has been the clarity and precision of its guidance to police and courts.\nAgain at page 13 he remarked that a core virtue of Miranda was the ease and clarity of its application.\nI am persuaded that the value of clarity and certainty in this area are relevant factors in deciding the extent of the right.\nAs to the second consideration, I recall what was said by Lord Wheatley in Miln v Cullen 1967 JC 21 at pp 29 30: While the law of Scotland has always very properly regarded fairness to an accused person as being an integral part of the administration of justice, fairness is not a unilateral consideration.\nFairness to the public is also a legitimate consideration, and in so far as police officers in the exercise of their duties are prosecuting and protecting the public interest, it is the function of the Court to seek to provide a proper balance to secure that the rights of individuals are properly preserved, while not hamstringing the police in their investigation of crime with a series of academic vetoes which ignore the realities and practicalities of the situation and discount completely the public interest.\nThat dictum is, of course, of its time and pre dates the experience of examples of convictions obtained on false confessions which have caused justifiable public concern.\nNevertheless it is difficult, even now, to contradict the substance of what his Lordship said.\nAs was said by Binnie J in the Canadian case of R v Grant 2009 SCC 32 [2009] 2 SSC 353 at para 180 It is not controversial that in the early stages of a criminal investigation the police must be afforded some flexibility before the lawyers get involved.\nThe police do have the right to ask questions and they need to seek the co operation of members of the public, including those who turn out to be miscreants.\nIt seems to me that the balancing of legitimate interests referred to by Lord Wheatley is a further justification for restricting the right to have access to a lawyer to situations in which the suspect is in custody.\nThe law in formulating a right designed to protect and support a legitimate interest, such as the right to silence, should seek to avoid defining that right in such a way, as to damage, or unduly inhibit another legitimate interest such as the efficient investigation of crime.\nThe task, which may be a delicate and difficult one, is to produce a result which strikes a rational balance between the two interests.\nI consider the balance struck in the US Miranda jurisprudence achieves that end.\nFor the foregoing reasons I agree entirely with Lord Hope as to the way in which references in the cases of Ambrose and M should be answered.\nIn relation to these two cases the admissibility or otherwise of the replies to questioning will fall to be determined by the Appeal Court and the trial judge respectively in accordance with the rules as to fairness.\nIn the passage in his judgment in Miln v Cullen, cited above, Lord Wheatley continued: Even at the stage of routine investigations, where much greater latitude is allowed, fairness is still the test, and that is always a question of circumstances.\nAs regards Gs case I consider that the right to access to a lawyer, before questioning, arises not only when the suspect is taken into the physical surroundings of a police station.\nThe focus should be on whether, at the commencement of the proposed questioning, the individuals liberty is significantly restricted by the police.\nThe location where that occurs is not in itself conclusive.\nIn relation to rights of this kind matters should be judged in accordance with what the substance of the position is rather than its form.\nIt follows that I, therefore, also agree with Lord Hope in the way in which the reference in Gs case should be answered.\nI also agree with Lord Hope, for the reasons given by him, that the Cadder rule would not necessarily routinely apply to exclude answers to questions, put to a suspect, without his having been given the opportunity to seek legal advice, during a search.\nThere is no justification in the Strasbourg jurisprudence, as I read it, for the right to be so interpreted.\nBy way of a footnote I would add this.\nOur attention was drawn by the defence, in support of their position, to a Proposal for a Directive of the European Parliament and of the Council on the right of access to a lawyer in criminal proceedings and on the right to communicate upon arrest recently published by the European Commission Brussels, XXX COM (2011) 326\/3.\nArticle 3(1) of the draft of the proposed Directive, attached to that document is in the following terms: 1.\nMember States shall ensure that suspects and accused persons are granted access to a lawyer as soon as possible and in any event: (a) before the start of any questioning by the police or other law enforcement authorities; (b) upon carrying out any procedural or evidence gathering act at which the persons presence is required or permitted as a right in accordance with national law, unless this would prejudice the acquisition of evidence; (c) from the outset of deprivation of liberty.\nThe proposed Article 3 appears to envisage three discrete situations where the right of access to a lawyer should arise.\nThe authors of the proposal appear to believe that those draft provisions reflect the settled jurisprudence of the Strasbourg court see para 13.\nIt follows from what I have said above that their apparent understanding of the Strasbourg jurisprudence does not coincide with my own.\nLORD KERR\nIntroduction\nThe well known aphorism of Lord Bingham in para 20 of R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323 that the duty of national courts is to keep pace with the Strasbourg jurisprudence as it evolves over time: no more, but certainly no less has been given a characteristically stylish twist by Lord Brown in R (Al Skeini and others) v Secretary of State for Defence [2007] UKHL 26; [2008] 1 AC 153 at para 106 where he said that the sentence could as well have ended: no less, but certainly no more.\nIn keeping with this theme, some judges in this country have evinced what might be described as an Ullah type reticence.\nOn the basis of this, it is not only considered wrong to attempt to anticipate developments at the supra national level of the Strasbourg court, but there is also the view that we should not go where Strasbourg has not yet gone.\nThus, in the present case Lord Hope says that this courts task is to identify where the jurisprudence of the Strasbourg court clearly shows that it currently stands and that we should not expand the scope of the Convention right further than the current jurisprudence of that court justifies.\nLord Binghams formulation of the principle expressed in para 20 of Ullah was prompted by his consideration of the effect of section 2 of the Human Rights Act 1998 by which the courts of this country are enjoined to take into account Strasbourg case law.\nTherefore, said Lord Bingham, although such case law was not strictly binding, where a clear and constant theme of jurisprudence could be detected, it should be followed because the Convention, being an international instrument, had as the authoritative source of its correct interpretation the Strasbourg court.\nA refusal to follow this would dilute or weaken the effect of the Strasbourg case law.\nI greatly doubt that Lord Bingham contemplated much less intended that his discussion of this issue should have the effect of acting as an inhibitor on courts of this country giving full effect to Convention rights unless they have been pronounced upon by Strasbourg.\nI believe that, in the absence of a declaration by the European Court of Human Rights as to the validity of a claim to a Convention right, it is not open to courts of this country to adopt an attitude of agnosticism and refrain from recognising such a right simply because Strasbourg has not spoken.\nThere are three reasons for this, the first practical, the second a matter of principle and the third the requirement of statute.\nIt is to be expected, indeed it is to be hoped, that not all debates about the extent of Convention rights will be resolved by Strasbourg.\nAs a matter of practical reality, it is inevitable that many claims to Convention rights will have to be determined by courts at every level in the United Kingdom without the benefit of unequivocal jurisprudence from ECtHR.\nMoreover, as a matter of elementary principle, it is the courts duty to address those issues when they arise, whether or not authoritative guidance from Strasbourg is available.\nThe great advantage of the Human Rights Act is that it gives citizens of this country direct access to the rights which the Convention enshrines through their enforcement by the courts of this country.\nIt is therefore the duty of this and every court not only to ascertain where the jurisprudence of the Strasbourg court clearly shows that it currently stands but to resolve the question of whether a claim to a Convention right is viable or not, even where the jurisprudence of the Strasbourg court does not disclose a clear current view.\nFinally, section 6 of the Human Rights Act leaves no alternative to courts when called upon to adjudicate on claims made by litigants to a Convention right.\nThis section makes it unlawful for a public authority, including a court, to act in a way which is incompatible with a Convention right.\nThat statutory obligation, to be effective, must carry with it the requirement that the court determine if the Convention right has the effect claimed for, whether or not Strasbourg has pronounced upon it.\nIn this context, it would be particularly unsatisfactory, I believe, if, because of an Ullah type reticence, we should feel constrained not to reach a decision on the arguments advanced by the respondents to these references just because those very arguments are likely to be ventilated on behalf of the applicant in ECtHR in Abdurahman v United Kingdom application no 40351\/09 and we cannot say how Strasbourg will react to them.\nIf the much vaunted dialogue between national courts and Strasbourg is to mean anything, we should surely not feel inhibited from saying what we believe Strasbourg ought to find in relation to those arguments.\nBetter that than shelter behind the fact that Strasbourg has so far not spoken and use it as a pretext for refusing to give effect to a right that is otherwise undeniable.\nI consider that not only is it open to this court to address and deal with those arguments on their merits, it is our duty to do so.\nThe nature of the right under article 6(1) taken in conjunction with article 6(3)(c)\nThe true nature of the right under article 6(1), taken in conjunction with article 6(3) (c), can only be ascertained by reference to its underlying purpose.\nWhat is its purpose? The respondents argue that its purpose is that when a person becomes a suspect, because of the significant change in his status that this entails; because of the potential that then arises for him to incriminate himself or to deal with questions in a way that would create disadvantage for him on a subsequent trial; and because of the importance of these considerations in terms of his liability to conviction, the essential protection that professional advice can provide must be available to him.\nThe right, it is argued, should not be viewed solely as a measure for the protection of the individuals interests.\nIt is in the interests of society as a whole that those whose guilt or innocence may be determined by reference to admissions that they have made in moments of vulnerability are sufficiently protected so as to allow confidence to be reposed in the reliability of those confessions.\nFor reasons that I will develop, I consider that these arguments should prevail.\nIf it has taught us nothing else, recent experience of miscarriage of justice cases has surely alerted us to the potentially decisive importance of evidence about suspects reactions to police questioning, whether it is in what they have said or in what they have failed to say, and to the real risk that convictions based on admissions made without the benefit of legal advice may prove, in the final result, to be wholly unsafe.\nThe role that a lawyer plays when the suspect is participating in what may be a pivotal moment in the process that ultimately determines his or her guilt is critical.\nThus understood, the animation of the right under article 6(1) cannot be determined in terms of geography.\nIt does not matter, surely, whether someone is over the threshold of a police station door or just outside it when the critical questions are asked and answered.\nAnd it likewise does not matter whether, at the precise moment that a question is posed, the suspect can be said to be technically in the custody of the police or not.\nIf that were so, the answer to a question which proved to be the sole basis for his conviction would be efficacious to secure that result if posed an instant after he was taken into custody but not so an instant before.\nThat seems to me to be a situation too ludicrous to contemplate, much less countenance.\nTwo supremely relevant, so far as these appeals are concerned, themes run through the jurisprudence of Strasbourg in this area.\nThe first is that, in assessing whether a trial is fair, regard must be had to the entirety of the proceedings including the questioning of the suspect before trial see, for instance, Imbrioscia v Switzerland (1993) 17 E.H.R.R. 441, Murray v United Kingdom (1996) 22 E.H.R.R. 29; Averill v United Kingdom (2000) 31 E.H.R.R. 839; Magee v United Kingdom (2000) 31 E.H.R.R. 822; and Brennan v United Kingdom (2001) 34 E.H.R.R. 507.\nThe second theme is that, although not absolute, the right of everyone charged with a criminal offence to be effectively defended by a lawyer, assigned officially if need be, is one of the fundamental features of a fair trial Poitrimol v France (1993) 18 E.H.R.R. 130 and Demebukov v Bulgaria (Application No 68020\/01) (unreported) given 28 February 2008 at para 50.\nTaken, as they must be, in combination, these features of a fair trial lead inexorably to the conclusion that where an aspect of the proceedings which may be crucial to their outcome is taking place, effective defence by a lawyer is indispensable.\nWhen one recognises, as Strasbourg jurisprudence has recognised for quite some time, that the entirety of the trial includes that which has gone before the actual proceedings in court, if what has gone before is going to have a determinative influence on the result of the proceedings, it becomes easy to understand why a lawyer is required at the earlier stage.\nThere is no warrant for the belief that vulnerability descends at the moment that one is taken into custody and that it is absent until that vital moment.\nThe selection of that moment as the first occasion on which legal representation becomes necessary is not only arbitrary, it is illogical.\nThe need to have a lawyer is not to be determined on a geographical or temporal basis but according to the significance of what is taking place when the later to be relied on admissions are made.\nThis much, I believe, is clear from paras 54 and 55 of the judgment in Salduz v Turkey (2008) 49 EHRR 421.\nIt is worth setting out para 54 to examine its constituent parts and in order to draw together the various strands of guidance that it contains.\nThis is what the court said in that para: the Court underlines the importance of the investigation stage for the preparation of the criminal proceedings, as the evidence obtained during this stage determines the framework in which the offence charged will be considered at the tria1.\nAt the same time, an accused often finds himself in a particularly vulnerable position at that stage of the proceedings, the effect of which is amplified by the fact that legislation on criminal procedure tends to become increasingly complex, notably with respect to the rules governing the gathering and use of evidence.\nIn most cases, this particular vulnerability can only be properly compensated for by the assistance of a lawyer whose task it is, among other things, to help to ensure respect of the right of an accused not to incriminate himself.\nThis right indeed presupposes that the prosecution in a criminal case seek to prove their case against the accused without resort to evidence obtained through methods of coercion or oppression in defiance of the will of the accused.\nEarly access to a lawyer is part of the procedural safeguards to which the Court will have particular regard when examining whether a procedure has extinguished the very essence of the privilege against self incrimination.\nIn this connection, the Court also notes the recommendations of the CPT [European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment], in which the committee repeatedly stated that the right of a detainee to have access to legal advice is a fundamental safeguard against ill treatment.\nAny exception to the enjoyment of this right should be clearly circumscribed and its application strictly limited in time.\nThese principles are particularly called for in the case of serious charges, for it is in the face of the heaviest penalties that respect for the right to a fair trial is to be ensured to the highest possible degree by democratic societies.\nThe first question that arises from this passage concerns the meaning of the investigation stage.\nThat stage is stated to be particularly important for two related reasons.\nThe first is that evidence obtained at that stage determines the framework in which the offence with which the defendant is charged will be considered at trial.\nIn other words, evidence obtained during the investigation stage can significantly influence the outcome of the proceedings and on that account it requires close attention as to its reliability.\nThe second reason is that at that very time (viz when evidence capable of influencing the trials outcome is being obtained) the accused finds himself in a vulnerable position.\nIt may seem trite to ask why he should be vulnerable at that time but the answer, it seems to me, is both plain and significant.\nHe is vulnerable because at this investigation stage, evidence which may be instrumental in securing a finding of guilt against him is being obtained and collated.\nThe way that he reacts during the collection of that evidence may prove to be of critical importance in his subsequent trial.\nHis vulnerability may be enhanced, moreover, because increasingly complex legislation permits the evidence to be obtained and used in ways that were not previously possible.\nI return then to the anterior question.\nWhat is meant by the investigation stage? It must surely include any point or juncture at which evidence which is potentially inculpatory of an accused is being obtained.\nThis is of especial importance when the investigation stage provides the setting for a statement by the accused person that might incriminate him.\nECtHR recognised in para 54 of Salduz that an incriminating statement might occur at an early stage of the investigation and it was for this reason that early access to a lawyer was considered to be necessary.\nThat early access is expressly required so that the very essence of the right not to incriminate oneself is not destroyed.\nBut extinction of the essence of the right, it seems to me, is precisely what may happen if statements tending to incriminate, made without the benefit of legal advice, are admitted in evidence against their maker on his or her trial.\nAnd that conclusion reinforces my view that it is not the place at which admissions are made nor whether the individual making the statements has been detained that is important.\nWhat is important is the use to which such statements may subsequently be put.\nThe same message is provided by the opening words of para 55 of Salduz: Against this background, the Court finds that in order for the right to a fair trial to remain sufficiently practical and effective\" article 6(1) requires that, as a rule, access to a lawyer should be provided as from the first interrogation of a suspect by the police, unless it is demonstrated in the light of the particular circumstances of each case that there are compelling reasons to restrict this right.\nOnce more, it is noteworthy that the court here does not refer to the place at which the first interrogation takes place nor whether the person who is answering questions has been detained.\nIt is from the moment of the first interrogation that the need for the presence of a lawyer is deemed to be required and that point is chosen because that is precisely when self incriminating statements may begin to be made.\nIn this connection I should say that I do not construe the judgments of Judge Bratza and Judge Zagrebelsky in Salduz as seeking to link the need for a lawyers presence inextricably with the moment that a suspect is taken into custody.\nAt O I2 Judge Bratza said: At para 55 of the judgment, the Court states as a general principle that in order for the right to a fair trial to remain sufficiently, practical and effective, article 6 requires that, as a rule, access to a lawyer should be provided, as from the first interrogation of a suspect by the police.\nThis principle is consistent with the Court's earlier case law and is clearly sufficient to enable the Court to reach a finding of a violation of article 6 on the facts of the present case.\nHowever, I share the doubts of Judge Zagrebelsky as to whether in appearing to hold that the right of access to a lawyer only arises at the moment of first interrogation, the statement of principle goes far enough.\nLike Judge Zagrebelsky, I consider that the Court should have used the opportunity to state in clear terms that the fairness of criminal proceedings under article 6 requires that, as a rule, a suspect should be granted access to legal advice from the moment he is taken into police custody or pre trial detention.\nIt would be regrettable if the impression were to be left by the judgment that no issue could arise under article 6 as long as a suspect was given access to a lawyer at the point when his interrogation began or that article 6 was engaged only where the denial of access affected the fairness of the interrogation of the suspect.\nThe denial of access to a lawyer from the outset of the detention of a suspect which, in a particular case, results in prejudice to the rights of the defence may violate article 6 of the Convention whether or not such prejudice stems from the interrogation of the suspect.\nIt is immediately obvious from this passage that Judge Bratzas concern was that the judgment of the court did not go far enough.\nIt is clear that his assumption was that the first interrogation of a suspect would normally take place after he had been taken into custody.\nHe felt that to prescribe that the presence of a lawyer was only then required might not be sufficient.\nStatements could be made or events could occur which might prove incriminating after the suspect was taken into custody but before the first formal interrogation began.\nThat was why Judge Bratza suggested that a lawyer was required when the accused was taken into custody.\nBut his statement to that effect does not betoken a view that the moment that custody begins should be invested with some special significance.\nOn the contrary, it reflects concern that the suspects vulnerability and his need for a lawyer should not be seen as inevitably coincident with the opening of the formal interview.\nStatements made or events occurring before that time are just as likely to require the presence of a lawyer if the fairness of the trial is to be assured.\nThe cases decided in Strasbourg post Salduz and discussed by Lord Hope in paras 36 40 of his judgment do not appear to me, with respect, to contribute much to the debate except for the case of Borotyuk v Ukraine (Application no. 33579\/04).\nAll of the cases concerned suspects who were already in custody when the questioning began.\nLord Hope has suggested that importance was attached by Strasbourg in some of these cases to the fact that the person was in custody when he was being interrogated.\nI do not so read them.\nIt seems to me that the cases are at least as consistent with the view that the important factor in play was that the interrogation was the occasion when inculpatory statements might be made and on that account a lawyers presence was considered an indispensable concomitant of a fair trial.\nIn Borotyuk an interesting passage appears at para 79.\nThere the court said: The Court emphasises that although not absolute, the right of everyone charged with a criminal offence to be effectively defended by a lawyer, assigned officially if need be, is one of the fundamental features of fair trial (see Poitrimol, cited above, para 34).\nAs a rule, access to a lawyer should be provided as from the first questioning of a suspect by the police, unless it can be demonstrated in the light of the particular circumstances of each case that there are compelling reasons to restrict this right.\nThe rights of the defence will in principle be irretrievably prejudiced when incriminating statements made during police questioning without access to a lawyer are used to secure a conviction (see Salduz vs Turkey [(2008) 49 EHRR 421], para 55.\nQuite apart from the observation that access to a lawyer was deemed necessary as from the first questioning of a suspect, the emphasis in this passage seems to be on the inevitable prejudice that will occur if questioning takes place at a time and in circumstances where incriminating statements might be made.\nThis, as it seems to me, is entirely consonant with the underlying philosophy of article 6(1) taken in conjunction with article 6(3)(c).\nThe essential question is: when the questioning is taking place, is the suspect in a position where the advice of a lawyer is essential if a fair trial is to occur.\nIf he is liable to incriminate himself at that time, a lawyers presence is required so that he may be fully advised as to how he may or should respond to the interrogation.\nLikewise, if he requires advice as to how he should react to questioning, for example by giving information that may subsequently emerge at the trial, he needs to have proper guidance.\nRemaining silent when a perfectly innocent explanation is available may fatally undermine a subsequently proffered defence.\nI would therefore express the principle, to be derived from a consideration of the mainstream Strasbourg jurisprudence, in this way: where a person becomes a suspect, questions thereafter put to him or her that are capable of producing inculpatory evidence constitute interrogation.\nBefore such interrogation may be lawfully undertaken, the suspect must be informed of his or her right to legal representation and if he or she wishes to have a lawyer present, questions must be asked of the suspect, whether or not he or she is in custody, in the presence of a lawyer.\nThe Lord Advocate in the present appeal submitted that the touchstone should be the taking into custody of the individual because this marked the start of the coercive atmosphere in which the vulnerability of the suspect was aroused.\nI cannot accept that argument.\nCommon experience tells us that a coercive atmosphere can exist independently of custody.\nThe subject was also helpfully considered, albeit in a different context, in the Canadian case of R v Grant 2009 SCC 32; [2009] 2 S.C.R. 353.\nIn that case the Supreme Court of Canada held that what it described as psychological detention such as to give rise to rights under section 9 of the Canadian Charter of Rights and Freedoms was established where an individual has a legal obligation to comply with a restrictive request or demand, or where a reasonable person would conclude by reason of the state conduct that he or she had no choice but to comply.\nAlthough the right under section 9 of the Charter is one that entitles an individual not to be arbitrarily detained or imprisoned, as opposed to the right not to incriminate oneself, the relevance of the decision to the present appeal lies in the courts analysis of when the interaction between a police officer and the person he has stopped and questioned assumes a coercive quality.\nAt para 30 of the majority judgment of McLachlin CJ and LeBel, Fish, Abella and Charron JJ it was stated: we find that psychological constraint amounting to detention has been recognized in two situations.\nThe first is where the subject is legally required to comply with a direction or demand, as in the case of a roadside breath sample.\nThe second is where there is no legal obligation to comply with a restrictive or coercive demand, but a reasonable person in the subject's position would feel so obligated.\nThe rationale for this second form of psychological detention was explained by Le Dain J. in [R v Therens [1985] 1 SCR 613, 644] as follows: In my opinion, it is not realistic, as a general rule, to regard compliance with a demand or direction by a police officer as truly voluntary, in the sense that the citizen feels that he or she has the choice to obey or not, even where there is in fact a lack of statutory or common law authority for the demand or direction and therefore an absence of criminal liability for failure to comply with it.\nMost citizens are not aware of the precise legal limits of police authority.\nRather than risk the application of physical force or prosecution for wilful obstruction, the reasonable person is likely to err on the side of caution, assume lawful authority and comply with the demand.\nThe element of psychological compulsion, in the form of a reasonable perception of suspension of freedom of choice, is enough to make the restraint of liberty involuntary.\nDetention may be effected without the application or threat of application of physical restraint if the person concerned submits or acquiesces in the deprivation of liberty and reasonably believes that the choice to do otherwise does not exist.\nThere is no reason to suppose that a person questioned by police while not in detention would not experience the same need to acquiesce in the power of the police to require answers to potentially highly incriminating questions.\nIn as much, therefore, as a coercive atmosphere is required in order to stimulate the need for the protection that a lawyers presence brings, I consider that it is just as likely that this will occur outside a police station as within.\nAs I have said, the important question is whether the circumstances in which questions are asked are liable to be productive of incriminating answers, not whether those questions are being asked in a police station or whether the suspected person can be said to be in custody.\nZaichenko v Russia\nThis decision needs to be examined because of the possibly discordant note that it strikes in what I consider to be the clear message of what I have described as the mainstream European jurisprudence on the subject.\nThe applicant had been stopped by police when driving away from his place of work on 21 February 2001.\nHe was asked to account for two cans of diesel that were discovered in his car.\nHe replied that he had poured the fuel from the tank of a service vehicle that he drove as an employee into the containers that the police had found in his car.\nHe said that he intended to use it for his own personal purposes in other words, he admitted to having stolen it.\nA vehicle inspection record was prepared by a police officer at the scene in which it was stated that the applicant had explained that he had poured out the fuel from the company premises.\nThe applicant signed that document.\nHe also signed another document entitled explanations in which his statement to the following effect was recorded: Since 1997 I have been employed as a driver by a private company.\nOn 21 February 2001 I arrived to my workplace at 9 am.\nDuring the day I was repairing my service vehicle.\nIn the evening I poured out thirty litres of fuel from the tank of my service vehicle.\nI have previously brought the cans, ten and twenty litres each, from home.\nAfter work, at around 8 pm, I was driving home in my car and was stopped by the police.\nThe car was inspected in the presence of the attesting witnesses.\nI poured out the fuel for personal use.\nOn 2 March 2001 an official known as an inquirer compiled a report on the events of 21 February 2001.\nIt was recorded that the applicant had intentionally stolen thirty litres of diesel from his service vehicle.\nThe report was stated to have been based on, among other things, the inspection record compiled by the police at the scene and the applicant's written statement.\nThe accusation section of this statement read, At 8 pm on 21 February 2001 [the applicant] . being at work intentionally stole from his service vehicle the diesel in the amount of thirty litres.\nThereby, he caused to the company pecuniary damage in the amount of 279 roubles.\nThe applicant appended his signature to the following certificates that appeared at the foot of the statement: I have been informed of the nature of the accusation, the right to have access to the case file, the right to legal representation, the right to make requests and challenge the inquiring authorities' actions. and I have studied the case file and have read this document.\nI have no requests or motions.\nI do not require legal assistance; this decision is based on reasons unrelated to lack of means.\nI will defend myself at the trial.\nAt his trial the applicant retracted the confession and instead advanced a defence that he had purchased the fuel.\nHe maintained that evidence of his admissions to police officers when his car was stopped should not have been admitted because he had not been informed of his right against self incrimination.\nAt para 19 of ECtHRs judgment it is recorded that the appeal court in Russia had decided that the applicant's allegation of self incrimination had been rightly rejected by the trial court as unfounded.\nAt paras 42 and 43 of its judgment, ECtHR dealt with the question of whether the applicant had been charged during the events of 21 February 2001.\nAs to that the court said this: 42.\nThe Court reiterates that in criminal matters, Article 6 of the Convention comes into play as soon as a person is charged; this may occur on a date prior to the case coming before the trial court, such as the date of arrest, the date when the person concerned was officially notified that he would be prosecuted or the date when preliminary investigations were opened (see Eckle vs Germany, 15 July 1982, 73, Series A no. 51, and more recently, O'Halloran and Francis vs the United Kingdom [GC], nos. 15809\/02 and 25624\/02, 35, ECHR 2007. ).\nCharge, for the purposes of Article 6 1, may be defined as the official notification given to an individual by the competent authority of an allegation that he has committed a criminal offence, a definition that also corresponds to the test whether the situation of the [person] has been substantially affected (see Shabelnik vs Ukraine, no. 16404\/03, 57, 19 February 2009; Deweer vs Belgium, 27 February 1980, 46, Series A no. 35; and Saunders vs the United Kingdom, 17 December 1996, 67 and 74, Reports of Judgments and Decisions 1996 VI).\nGiven the context of the road check and the applicant's inability to produce any proof of the diesel purchase at the moment of his questioning by the police, the Court considers that there should have been a suspicion of theft against the applicant at that moment. 43.\nApplying these principles to the facts of the case, the Court notes that the trial court's use made of the admissions made on 21 February 2001, which led to the institution of criminal proceedings against the applicant and then served for convicting him of theft, is at the heart of the applicant's complaints under Article 6 of the Convention (compare Saunders, cited above, 67 and 74; and Allen vs the United Kingdom (dec.), no. 76574\/01, 10 September 2002).\nIt is also noted that the inspection record itself indicated Article 178 of the RSFSR Code of Criminal Procedure as the legal basis for the inspection (see paragraph 26 above).\nThus, although the applicant was not accused of any criminal offence on 21 February 2001, the proceedings on that date \"substantially affected\" his situation.\nThe Court accepts that Article 6 of the Convention was engaged in the present case.\nNor was there any disagreement on this point between the parties.\nThe substantial effect which prompted the finding that article 6 was engaged appears to comprise the suspicion which the court felt the police must have had that the applicant had been guilty of theft and the fact that the events that occurred at the roadside check led to his subsequent prosecution and conviction.\nOn that basis the same conclusion (that article 6 is engaged) is irresistible in the three cases involved in these references.\nIn each of the cases it is clear that, at the time that the relevant admissions were made, the police either did have or should have had a suspicion that the persons to whom they were posing questions were guilty of the offences that were under investigation and that the statements made in answer to those questions were or were likely to be highly incriminating of all three.\nBut why in Zaichenko, if article 6 was engaged, was the applicant not entitled to the protection of article 6(3)(c), taken in conjunction with article 6(1)? For an answer to this, one must conduct a probe of the later passages of the judgment which, I should confess in advance, has not led me to an entirely clear understanding of the rationale underlying the courts conclusion on the issue.\nAt para 46 the court said this: 46.\nThe Court notes at the outset that the applicant only complained that he had not been afforded enough time to contact a lawyer in a nearby town.\nThe Court cannot but note that, as confirmed by the applicant's representative in his letter to the European Court dated 26 July 2002, both on 21 February and 2 March 2001 the applicant chose not to exercise his right to legal representation with the hope that the court would give him a fair trial even without counsel.\nIt is difficult to be sure that, in using the phrase, the court cannot but note, the judgment at this point was indicating that, because the applicant had elected not to have legal representation, this was a basis on which it could be concluded that there had not been a violation of article 6(3)(c).\nObservations that appear later in the judgment would tend to support that view, however.\nIn the first instance, the para following (para 47) opens with the word moreover which suggests that the decision of the applicant not to seek legal representation was, at least, one of a number of reasons for the finding that article 6(3)(c) had not been breached.\nSecondly, at para 50 of the judgment, the court refers to the applicants election not to seek legal assistance either on 21 February or on 2 March 2001 as a waiver of his right to legal assistance.\nSome of the other reasons for finding that there had not been a violation of article 6(3)(c) appear in para 47: 47.\nMoreover, the Court observes that the present case is different from previous cases concerning the right to legal assistance in pre trial proceedings because the applicant was not formally arrested or interrogated in police custody.\nHe was stopped for a road check.\nThis check and the applicant's self incriminating statements were both carried out and made in public in the presence of two attesting witnesses.\nIt is true that the trial record contains a statement by the applicant suggesting that the writing down of the inspection record and\/or his subsequent statement were started on the spot but were completed in the village of Birofeld.\nNevertheless, the Court concludes on the basis of the materials in the case file that the relevant events, namely the drawing of the inspection record and the taking of the applicant's explanation, were carried out in a direct sequence of events.\nThe distinction between Zaichenkos case and earlier decisions that is highlighted here viz that the applicant had not been arrested or interrogated while in police custody is not expressly stated to be a reason that alone would warrant a finding that there had not been a violation of article 6(3)(c) taken in conjunction with article 6(1).\nIt seems to me impossible to say, on the basis of the statements in this paragraph, that ECtHR has concluded that formal arrest and interrogation in custody are essential prerequisites to the invocation of the right.\nRather, it appears that the court treated the cumulative effect of factors that were peculiar to this particular case as the basis for the finding that there had not been a violation of article 6(3)(c).\nThese factors can be enumerated as follows: (1) the applicant had waived his right to a lawyer and had explicitly stated that he did not want a lawyer to represent him despite having been told on 2 March 2001 that he was entitled to legal representation; (2) he had not been formally arrested or interrogated in police custody; (3) the initial questioning of the applicant took place at a road check and not in any formal setting; (4) the applicant was questioned in a public place with other witnesses present who could attest to a lack of coercion on the part of the police; and (5) the checking of the applicants car and his questioning as to the source of the diesel all occurred as part of a seamless process.\nI do not believe that any one of these factors can be elevated to a position of pre eminence nor does it appear to me that it can be said with confidence that any single factor, taken in isolation, would be sufficient to support the finding that there had not been a breach of article 6(3)(c).\nThe succeeding paragraphs in the judgment repeat the matters dealt with in paras 46 and 47 or expand on them to some extent.\nIt is not necessary to consider these in any detail but I should mention para 48, if only to say that I have had a little difficulty in following the reasoning that it contains.\nIt reads: Although the applicant in the present case was not free to leave, the Court considers that the circumstances of the case as presented by the parties, and established by the Court, disclose no significant curtailment of the applicant's freedom of action, which could be sufficient for activating a requirement for legal assistance already at this stage of the proceedings.\nIt is not immediately clear why someone who was not free to leave the scene could be said not to have had any significant curtailment of his freedom of action.\nBe that as it may, it appears to be the case that if the court had found that there had been a significant curtailment of the applicants freedom of action, it would have regarded this as a sufficient basis for a finding of a violation of article 6(3)(c).\nWhat would constitute such a curtailment of freedom of action has not been made clear, however.\nAltogether, it is not easy to distil any obvious principle from this paragraph and I would be reluctant to ascribe to it any significance beyond that relevant to the circumstances of the case of Zaichenko itself.\nAlthough ECtHR concluded that Mr Zaichenko had waived his right to legal assistance, it decided that there had not been a waiver of his right not to incriminate himself.\nAt para 52 the court held that it was incumbent on the police to inform the applicant of the privilege against self incrimination and the right to remain silent.\nTheir failure to do so at the roadside check before putting questions to him constituted a violation of article 6(1), therefore.\nIn a partly dissenting opinion, Judge Spielmann (who, as Lord Hope pointed out in para 46 of his judgment, was a member of the Grand Chamber in Salduz) addressed forthrightly the question of when the right to legal representation arose and, relating it directly to the decision in Salduz, came down firmly in favour of what I believe to be the logical position, namely, that it began when police questioning started.\nIn para 3 of his opinion, Judge Spielmann said: 3.\nIn Salduz vs Turkey the Court held that as a rule, access to a lawyer should be provided as from the first interrogation of a suspect by the police (see Salduz vs Turkey [GC], no. 36391\/02, 55, ECHR 2008 . ).\nThe Court also held that the lack of legal assistance during a suspect's interrogation would constitute a restriction of his defence rights and that these rights would in principle be irretrievably prejudiced when incriminating statements, made during police interrogation without access to a lawyer, were used for a conviction.\nThe Court took a similar approach in the equally important judgment in Panovits (Panovits vs Cyprus, no. 4268\/04, 66 and 70 73, 11 December 2008). (original emphasis)\nJudge Spielmann also questioned the reasoning of the majority that is contained in para 48 of the courts judgment.\nAt para 6 he said: 6.\nContrary to what is said in para 48 of the judgment, I cannot agree that the circumstances of the case disclose no significant curtailment of the applicant's freedom of action.\nI am of the opinion that those circumstances were sufficient to activate a requirement for legal assistance.\nI do not understand Judge Spielmanns dissent necessarily to indicate that there was a divergence of views between him and the majority about the nature of the principle at stake.\nThe principle which I believe can be said to be common to both is that when a suspect is interrogated by police he is entitled to legal assistance.\nWhere Judge Spielmann parted company with the majority was in its conclusion as to whether the principle applied.\nBecause of the accumulation of factors that the court had identified (see para 158 above) and because it concluded that there had not been a curtailment of Mr Zaichenkos freedom of action, it held that the principle did not apply.\nJudge Spielmann, by contrast, did not attach the weight to the factors that the majority had considered militated against a finding of violation of article 6(3)(c) and he disagreed (in my view, quite properly) with the suggestion that someone who was not free to leave the scene nevertheless had not suffered any curtailment of his freedom of action.\nMiranda v Arizona\nAs Lord Hope has said in para 52, curtailment of freedom of action carries echoes from Miranda v Arizona 384 US 436 (1966).\nAnd as Lord Hope suggests, it may well be that Miranda will influence the thinking of Strasbourg, it having featured in a number of prominent dissenting judgments in that court already.\nBut I question whether this will lead to the adoption of the custodial approach to the question as to when access to a lawyer is required.\nCurtailment of an individuals freedom of action can arise even when he has not been taken into custody.\nThe important question must surely be whether the suspect feels constrained to answer the questions posed to him by the police officer.\nAs the Grant case illustrates, this can arise either because of the manner in which the police officer manages the exchange with the suspect or because of the latters belief that he has no option but to answer the questions put to him.\nQuite apart from these considerations, however, I believe that one must be careful about making assumptions about the Miranda experience or believing that it can be readily transplanted into European jurisprudence in any wholesale way.\nThe implications of that decision must be considered in the context of police practice in the United States of America.\nNothing that has been put before this court establishes that it is common practice in America to ask incriminating questions of persons suspected of a crime other than in custody.\nIndeed, it is my understanding that as soon as a person is identified as a suspect, police are trained that they should not ask that person any questions until he or she has been given the Miranda warnings.\nCustody was identified in Miranda as one of the features necessary to activate the need for legal representation but custody has been held to mean either that the suspect was under arrest or that his freedom of movement was restrained to an extent associated with a formal arrest Stansbury vs California, 511 US 318 (1994); New York vs Quarles, 467 U.S. 649, 655 (1984).\nSo it is clear that the rule that custody is required before entitlement to legal representation arises is not inflexible or static and that its underlying rationale is closely associated with the question whether the person questioned feels under constraint to respond.\nHampering police investigation\nOne of the principal practical arguments advanced against the requirement that a suspect be informed that he is entitled to legal representation before incriminating questions are put to him is that this will hamper police investigations.\nThe argument is a venerable one.\nIt has been deployed in reaction to various proposals for safeguards intended to protect suspects rights including the right to have a solicitor present during interviews and the audio recording or the videotaping of interviews.\nThere is no evidence that the introduction of those measures brought about any widespread impediment to police investigations nor is there, in my view, any convincing evidence that this would be the result of recognising the right of a suspect to be informed that he or she is entitled to legal representation before being required to provide potentially incriminating answers to police questioning.\nAs the respondents have pointed out, in the final analysis, these cases are about the admissibility of evidence.\nThere is no legal prohibition on police asking questions of a suspect that may produce incriminating answers.\nThe legal consequence of doing so without first informing the suspect of his or her right to be legally represented will be, in my opinion, that the answers produced will be inadmissible in evidence unless compelling reasons such as were discussed in para 55 of Salduz exceptionally justify denial of access to a lawyer.\nOne can anticipate, therefore, that police may decide in appropriate circumstances to proceed with questions in order to further the investigation but have to accept that if they are capable of producing incriminating answers from someone who is a suspect, the replies will be inadmissible.\nA balance will always have to be struck between unfettered police investigatory powers and the complete safeguarding of suspects rights.\nThe history of criminal jurisprudence shows how that balance has been struck in different ways and at different times, reflecting, no doubt, changing attitudes as to what properly reflects contemporary standards.\nIt is my belief that the proper balance to strike for our times is the one that I have suggested in para 146 above.\nConclusions\nFor the reasons given in para 153 above, I consider that article 6 of ECHR was engaged in each of the respondents cases at the time that the relevant questions were asked.\nI have no doubt that when they were asked those questions each of them was suspected of having committed an offence.\nI agree with Lord Hope that the administration of a caution is not necessarily determinative of this issue but, in the particular circumstances of these cases, I do not believe that any other conclusion is possible.\nThe second and third questions that were put to the respondent, Ambrose, were clearly capable of producing incriminating responses.\nIn fact they did so and it is evident that the answers have been relied on in order to establish his guilt, (although that might well have been possible simply by proving that he was in the car and in possession of the keys).\nIn these circumstances, I am of the view that he had a right under article 6(3)(c) taken in conjunction with article 6(1) of ECHR to be informed, after his reply to the first question, that he was entitled to legal representation before answering further questions, and that, absent such a warning, the incriminating answers given by him to the second and third questions were not admissible.\nThe questions put to the respondent who has been referred to as M, apart from the first question, were also clearly capable of producing incriminatory replies although whether they would in fact be probative of guilt would be a matter for trial, if indeed the answers were held to be admissible.\nSince they clearly had the capacity of producing inculpatory responses, however, I consider that the questions put to M at his home, apart from the first question, are inadmissible.\nIn the case of the respondent referred to as G, for the reasons given by Lord Hope (with which I agree), it is indisputable that, at the time the impugned questions were put to him, he was in custody and, whatever view one takes of the effect of the European jurisprudence, the incriminating answers that he gave are inadmissible.\nBut, for the same reasons that I have given in the cases of Ambrose and M, I would have held that they were inadmissible, regardless of whether G was in custody at the time that the answers were given.\n","output":"In Cadder v HM Advocate [2010] UKSC 43, the Supreme Court held, having regard to the decision of the European Court of Human Rights in Salduz v Turkey (2008) 49 EHRR 421, that the Crowns reliance on admissions made by an accused who had no access to a lawyer while he was being questioned as a detainee at a police station was a violation of his rights under Article 6(3)(c), read with Article 6(1) of the European Convention on Human Rights.\nThe issues in these cases are whether the right of access to a lawyer prior to police questioning, which was established by Salduz, applies only to questioning which takes place when the person has been taken into police custody; and, if the rule applies at some earlier stage, from what moment does it apply.\nThe accused in the first case, John Paul Ambrose, was prosecuted on a charge of contravening section 5(1)(b) of the Road Traffic Act 1988 as being in charge of a motor vehicle while over the alcohol limit.\nHe was questioned by two police officers by the roadside, who cautioned him but did not give him any specification about the offence he was suspected of having committed.\nIn response to their questions, he confirmed that he was in possession of the car keys, and that he might be intending to drive the car.\nBreath tests indicated that he was substantially over the prescribed limit.\nIn his trial the Crown led evidence of the questions and answers at the roadside.\nIn M, the accused was charged with assault to severe injury, permanent disfigurement and permanent impairment.\nA few days after the incident, the police visited him at his home, cautioned him, and asked him a number of questions, in response to which he confirmed his attendance at the locus on the night in question and his involvement in the fight.\nHe was detained the following day, and questioned further while he was in custody.\nAt trial, he objected to the Crowns reliance upon the admissions he had made in his home, on the basis that he had not had access to legal advice prior to interview.\nIn G, the accused was indicted with offences including the possession of controlled drugs under the Misuse of Drugs Act 1971 and possession of prohibited firearms and ammunition under the Firearms Act 1968.\nThe police had obtained a warrant to search the accuseds flat.\nThey forced entry and found him there.\nHe struggled, and was handcuffed and cautioned.\nHe admitted to having drugs in his pocket, and responded to a number of questions about items found in the flat.\nHe was subsequently arrested and taken to a police station where he answered further questions.\nHe objected to the Crowns reliance at trial on the statements he made during the course of the search of the flat.\nIn each of the three cases, the Appeal Court of the High Court of Justiciary referred to this Court the question whether the act of the Lord Advocate in leading and relying on the evidence in question would be incompatible with the appellants rights under Article 6(1) and (3)(c) of the European Convention on Human Rights.\nThe Supreme Court, by a majority of 4 to 1, finds that, in the cases of Ambrose and M, the act of the Lord Advocate in leading and relying at the trial on the evidence that was obtained from them in response to police questioning without having had access to legal advice was not incompatible with the Article 6(1) and (3)(c) right; and in the case of G that it was incompatible.\nIn Ambrose and M, the question whether, taking all the circumstances into account, it would be fair to admit this evidence, is left open for decision by the Appeal Court and Sheriff Court respectively.\nLord Hope gives the leading judgment.\nLord Kerr gives a separate dissenting judgment finding in all three cases that the evidence would be inadmissible.\nIn each of these three cases, the circumstances differ from those before the Supreme Court in Cadder and before the Grand Chamber in Salduz, in that the evidence in question was obtained through police questioning before the individuals were detained at a police station.\nThe Supreme Court notes, firstly, that the jurisdiction of this court is limited to a consideration of the devolution issue which is raised by each of these references, and does not extend to ruling on how the circumstances referred to in each case would fall to be dealt with under domestic law.\nSecondly, it notes that a decision by this court that there is a rule that a person who is suspected of an offence but is not yet in custody has a right of access to a lawyer before being questioned by the police would have far reaching consequences for the investigation of crime by the authorities.\nTherefore, if Strasbourg has not yet spoken clearly on this issue, the court would be wise to wait until it has done so [14 15].\nThe duty of the domestic court in interpreting the Convention is to keep pace with the Strasbourg case law as it evolves over time.\nThere is no obligation upon domestic courts to do more than that (R (Ullah) v Special Adjudicator [2004] UKHL 26, para 20 per Lord Bingham of Cornhill) [17].\nThe courts task in this case is to identify where the Strasbourg court stands on this issue.\nIt is not for this court to expand the scope of the Convention right further than the jurisprudence of the Strasbourg court justifies [20].\nIn domestic law, where an individual has not yet been detained under section 14 of the Criminal Procedure (Scotland) Act 1995, the test for the admissibility of answers given to questions put by police is whether or not there was unfairness on the part of the police.\nThe fact that the person did not have access to legal advice when being questioned is a circumstance to which the court may have regard in applying the test of fairness, but it carries no more weight than that.\nThere is no rule in domestic law that provides that police questioning of a person without access to legal advice who is suspected of an offence but is not in police custody must always be regarded as unfair.\nThe question is whether a rule to that effect is to be clearly found in the jurisprudence of the Strasbourg court [25].\nThe Grand Chamber in Salduz had in mind the need to protect an accused against abusive coercion while in custody.\nThe judgment appears to have been concerned only with establishing a rule that there was a right of access to a lawyer where the person being interrogated was in police custody [33].\nThat assessment is supported by subsequent Strasbourg case law, in particular Zaichenko v Russia (Application no.39660\/02), the only case to date in which the complaint was of lack of legal assistance during police questioning when the applicant was not in custody [46].\nIf the Salduz judgment were to apply to statements made by a person in response to police questioning before being taken into custody, the court would have had to have said so expressly.\nIt did not do so [35].\nThe privilege against self incrimination is not an absolute right (Murray v United Kingdom (1996) 22 EHRR 29, para 47).\nIt is primarily concerned with respecting the will of the person to remain silent (Saunders v United Kingdom (1996) 23 EHRR 313, para 68), and a person is free to confess if he is willing to do so.\nPolice custody or its equivalent creates a need for protection of the accused against abusive coercion.\nThe same is not the case for questioning at the locus or in a persons home [54].\nIn principle, the line as to when access to legal advice must be provided before the person is questioned should be drawn as from the moment that he has been taken into police custody, or his freedom of action has been significantly curtailed [55].\nThe correct starting point when considering whether the persons Convention rights have been breached is to identify the moment at which he is charged for the purposes of Article 6(1); that is whether his situation is substantially affected (Deweer v Belgium (1980) 2 EHRR 439, para 46; Eckle v Germany (1982) 5 EHRR 1, para 73).\nThat will be the case as soon as the suspicion against him is being seriously investigated and the prosecution case compiled [62].\nThe fact that a person who has become a suspect and is not in\ncustody is questioned without access to legal advice will be a relevant factor in the assessment whether the accused was deprived of a fair hearing, but it will be no more than that.\nIn Ambrose and M, the question is whether the act of the Lord Advocate in leading and relying on evidence obtained in response to police questioning, conducted under common law at the roadside or at the accuseds home, without the accused having had access to legal advice, was incompatible with Article 6(1) and (3)(c).\nThis is answered in the negative.\nAmbrose was charged for the purposes of Article 6 when he was cautioned.\nSuspicion that he was committing an offence fell on him as soon as he told the police that the keys were in his pocket [67].\nM was charged when he was cautioned by the police officer at his home [69].\nBut it would be to go further than Strasbourg has gone to hold that the appellants are entitled to a finding that this evidence is inadmissible because, as a rule, access to a lawyer should have been provided to him when he was being subjected to questioning at the roadside [68 & 70].\nThe question whether, taking all the circumstances into account, it would be fair to admit this evidence, is left open for the Appeal Court and Sheriff Court respectively.\nIn G, the question whether it is incompatible with his Convention rights for the Lord Advocate to lead evidence of his statements made during the course of the search is answered in the affirmative.\nHe was charged for the purposes of Article 6 by the time the police began their search.\nThe difference with this case was that there was a significant curtailment of Gs freedom of action.\nHe was detained and had been handcuffed, and was, in effect, in police custody from that moment onwards.\nThe circumstances were, therefore, sufficiently coercive for the incriminating answers that he gave to the questions that were put to him without access to legal advice to be inadmissible [71].\nThe same result need not, however, follow in every case where questions are put during a police search to a person who is to be take to have been charged for the purposes of Article 6; that, again, would be going further than Strasbourg has gone [72].\nLord Kerr would have found the evidence in question to be inadmissible in all three cases.\nIt is not open to courts of this country to refrain from recognising a claim to a Convention right simply because Strasbourg has not spoken clearly on the matter [128].\nIn practice, it is inevitable that many claims to Convention rights will have to be determined by the UK courts without the benefit of unequivocal jurisprudence from Strasbourg.\nIt is the duty of every domestic court to resolve the question of whether a claim to a Convention right is viable or not, even where the jurisprudence of the Strasbourg court does not disclose a clear current view [129].\nAs regards the right of access to a lawyer, the selection of the moment of being taken into custody as the first occasion on which legal representation becomes necessary is both arbitrary and illogical.\nThe judgment in Salduz indicates that the need to have a lawyer is not to be determined on a geographical or temporal basis but according to the significance of what is taking place when the admissions in question are made [136].\nThe essential question is: when the questioning is taking place, is the suspect in a position where the advice of a lawyer is essential if a fair trial is to occur.\nIf he is liable to incriminate himself at that time, a lawyers presence is required [145].\nThe judgment in Zaichenko is not clear, but does not indicate that formal arrest and interrogation in custody are essential prerequisites to the invocation of the right to legal assistance [158].\n","id":0}
{"input":"The question for decision in this appeal is whether there has been good service of the claim form in this action on the respondent.\nThis is an appeal against an order of the Court of Appeal (Arden, Longmore and McFarlane LJJ) made on 15 December 2011 in which they set aside the orders of a number of judges and, in particular, an order of Sir Edward Evans Lombe (the judge) made on 28 January 2011 in which he declared, pursuant to CPR 6.37(5)(b) and\/or 6.15(2), that the steps taken on 22 October 2009 to bring the claim form to the attention of the respondent amounted to good service of the claim form.\nThe Court of Appeal held that the judge should not have made that declaration, that various extensions of the validity of the claim form for service should not have been granted, that the respondent had not been properly served with the claim form and that it followed that the claim must be dismissed.\nThe principal issue in this appeal is whether the Court of Appeal was correct to hold that the judge should not have declared that the events of 22 October 2009 amounted to good service of the claim form.\nThe claims\nAs stated in the agreed statement of facts and issues, the underlying claim is for damages for fraud in connection with a contract for the purchase of shares in an Italian company called Gama SpA (Gama), made in March 2002, between the third appellant, as purchaser, and the respondent and Cicines Holdings Ltd (Cicines), as vendors, for a total consideration of US$14m.\nThe contract expressly provided that it was governed by English law and contained a non exclusive English jurisdiction clause.\nThe appellants claim that the shares were worthless or worth far less than the amount paid for them.\nThe claim alleges that the fraud involved corruption on the part of a Mr Haan, a lawyer for the appellants, who acted for them in connection with the sale and is said also to have acted secretly for the respondent without the appellants knowledge.\nThe claim form in this action was issued on 30 April 2009, following the settlement of an action (the Haan action) by the appellants against Mr Haan and a firm of solicitors (Hammonds) who were said to be vicariously liable for the torts of Mr Haan, in order to recover such part of the moneys paid under the contract as were not recovered in that action.\nThe background facts are set out in some detail by the judge at paras 2 to 12 of his judgment of 28 January 2011, [2011] EWHC 116 (Ch).\nIt is not necessary to set them out here, save to note that the action against Mr Haan and Hammonds came to trial on 11 March 2009 and was settled after eight days by a payment by the defendants in that action to the appellants of a sum which included costs.\nThe claims in this action mirror those in the Haan action, although, if this action were to succeed, credit would presumably have to be given for sums recovered in the Haan action.\nThe causes of action pleaded in this action are fraudulent misrepresentation and\/or conspiracy and\/or dishonest assistance and\/or unconscionable bargain and\/or undue influence, arising out of the alleged bribery and corruption of Mr Haan in order to bring about the contract for the purchase of shares in Gama in March 2002.\nThey are summarised by the judge at para 19 of his judgment.\nThe claims were brought against both the respondent and Cicines, but Cicines is not a party to this appeal.\nPermission to serve the proceedings out of the jurisdiction and the claimants\nattempts to serve them\nIt follows from the fact that the claim form was issued on 30 April 2009 that its validity for service out of the jurisdiction would expire after six months, on 29 October 2009.\nThe appellants took no steps for some three and a half months until they instructed counsel to settle the particulars of claim in mid August 2009.\nThe particulars of claim were signed on 9 September 2009 and on 14 September 2009 an application for permission to serve the proceedings on the respondent outside the jurisdiction was made to Morgan J, without notice to the respondent.\nBoth the particulars of claim and a detailed skeleton argument were put before the court.\nMorgan J was satisfied that there was a good arguable case for service out of the jurisdiction and for the extension of the validity of the claim form.\nBy an order made on 14 September 2009, he gave permission under CPR 6.36 and 6.37 to serve the claim form and all other documents upon the respondent at an address at Farid Trad Street in Beirut in Lebanon (the Farid Trad Street address).\nHe extended the time for serving the claim form from 29 October 2009 until 31 December 2009 and, to the extent required, gave permission to serve the claim form and documents by alternative means, namely by personal service of an untranslated copy of all the documents at the Farid Trad Street address.\nThe evidence before Morgan J comprised the first and second witness statements of Mr Mascarenhas of the appellants solicitors and the first witness statement of the appellants' Lebanese lawyer, Mr Houssami.\nThe evidence in support of the application included the following.\nThe address in the claim form was in fact that of the respondents lawyer in Beirut.\nThe respondents home address was believed to be the Farid Trad Street address, which was the appropriate address for service if he was to be served personally.\nThat belief was based on what Mr Houssami had been told by individuals not identified in his witness statement and, more importantly, on the fact that he had previously effected service of legal proceedings there in late 2006 or early 2007 by leaving the documents with the respondents wife.\nLebanon was not a party to any bilateral convention on service of judicial documents and, in particular, the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (1965) (Cmnd 3986) (the Hague Service Convention) did not apply.\nService of originating process through the judicial authorities or the British Consulate would be likely to take several months.\nThe appellants evidence is that Mr Houssami used a notary to seek to serve the respondent by causing a service agent or clerk to attend at the Farid Trad Street address over a period of four consecutive days between 7 am and 4 pm, which were official working hours.\nThe respondent could not be located at that address.\nThe respondent denies that he lived there.\nHowever, on 22 October 2009, an untranslated copy of the claim form, which was in English, together with other relevant documents were delivered to the offices of Mr Azoury, who was the respondents Lebanese lawyer in Beirut.\nThis was not the method of service authorised by the order of Morgan J, although on the respondent's application to set aside the various orders of the court, including the order of Morgan J, which came before the judge, the appellants contended that it amounted to good service on the respondent under Lebanese law.\nHowever, the Court of Appeal resolved this issue against the appellants, and there is no appeal against that decision.\nThe appellants continued to try to effect service through diplomatic channels at the Farid Trad Street address.\nThey also obtained Arabic translations of the documents for service and a request for service out was delivered to the Foreign Process Section of the High Court on 19 November 2009 together with certified translations.\nThere were some delays and, shortly before a hearing before Sales J on 16 December 2009, the appellants' solicitors were told by the Foreign and Commonwealth Office that service through diplomatic channels in Lebanon might take a further three months from receipt of the documents.\nOn 16 December Sales J heard a further without notice application and granted a four month extension of the validity of the claim form from 31 December 2009 until 30 April 2010 so as to enable service to take place at the Farid Trad Street address through diplomatic channels.\nThe use of diplomatic channels caused further delays.\nUnder cover of a letter dated 11 February 2010, Mr Azoury communicated with the appellants' solicitors and returned the documents received by him on 22 October 2009.\nIn the letter he noted that the address for service in the order of 14 September 2009, namely the Farid Trad Street address, was not that of the respondent, who had not to his knowledge ever lived there or had any connection with it.\nHe further said that he had never had instructions to accept service of documents other than in connection with the Lebanese proceedings (referred to in para 15 below) and that the respondent had confirmed that that was the case.\nHe gave no indication where the respondent could be served.\nOn 17 February 2010, the appellants solicitors, PCB Litigation (PCB), replied to the letter dated 11 February asserting that Mr Azoury held a general power of attorney to act on behalf of the respondent in any legal proceedings, that the respondent had expressly elected Mr Azourys office as a domicile in the power of attorney and that the proceedings were validly served under Lebanese law.\nIf that was not accepted, they asked Mr Azoury to provide them with the respondents usual address and to agree a date and time for service on the respondent.\nMr Azoury replied that the general power of attorney could only be used to authorise him to represent the respondent when expressly instructed to do so.\nHe did however add that the respondent would instruct English solicitors, which he did in the form of M&S Solicitors (M&S).\nCorrespondence ensued between PCB and M&S during which M&S made it clear that it was the respondents case that he had no obligation to accept service of the proceedings, to make himself available for service or to provide an address for service.\nNo agreement was reached.\nBy an application notice dated 22 March 2010, the appellants applied without notice under CPR 6.15 and\/or 6.37(5)(b) for an order (1) that the steps already taken to serve the claim form amounted to good service; and\/or (2) that the appellants be permitted to serve the claim form and other documents by alternative means, namely upon the respondents English or Lebanese solicitors; and (3) that the time for service of the claim form be extended.\nCorrespondence between the parties ensued and the application was adjourned by David Richards J.\nThe adjourned application came on for hearing before Lewison J on 14 April 2010 on notice to M&S, who wrote a detailed letter dated 25 March which was put before the court at their request.\nLewison J made a number of orders on 14 April 2010.\nThey included, by paragraph 1, (without prejudice to paragraph 2) a further extension of the time for serving the claim form to 30 June 2010 and, by paragraph 2 (without prejudice to paragraph 1) an order permitting the appellants to serve the claim form by alternative means, that is by service on the respondent's English or Lebanese solicitors.\nThe order extending time for service was made in case the alternative service order was set aside.\nIn addition the judge adjourned the appellants application for an order that the steps already taken on 22 October 2009 to bring the claim form to the attention of the respondent amounted to good service.\nHe adjourned that application generally but gave the appellants permission to restore it.\nLewison J gave a short judgment, to which I will refer below, which is of some importance because it was subsequently incorporated in extenso into the judgment of the judge on the subsequent hearing inter partes.\nIn the event, service was duly effected by alternative means on the respondent's English solicitors in accordance with the order of 14 April 2010 and the respondent acknowledged service on 1 May 2010.\nInter partes hearing\nOn 21 May 2010 the respondent issued an application to set aside the various orders that had been made in the action.\nThe application came before the judge, who heard it over four days from 7 December 2010.\nHe gave judgment on 28 January 2011.\nHe set out the background facts in detail between paras 1 and 19.\nHe considered first the respondents application to set aside the order of Morgan J giving permission to serve out of the jurisdiction.\nHe first rejected the respondents submission that there was no real issue between the parties which it is reasonable for the court to try under CPR 6.37(2).\nThe respondent relied on two grounds, first that the effect of the settlement of the Haan action was to settle the appellants claims against the respondent and, second, that the claims were time barred.\nThe judge held at paras 28 and 29 that the settlement agreement did not have that effect.\nAs to limitation he held that, although the cause of action accrued on 26 March 2002 and would thus be time barred as being more than six years before the issue of the claim form on 30 April 2009, the appellants had a good arguable case that they did not discover the fraud until 26 June 2003 or, alternatively May 2003, and that they could not have discovered it with reasonable diligence before 1 May 2003.\nIt followed that the judge held that the appellants had a good arguable case that the claims were not time barred when the claim form was issued on 30 April 2009.\nThe judge discussed this point in detail between paras 30 and 37 of his judgment.\nThe judge further rejected the respondents case that England was not the forum conveniens and that permission to serve out should be refused under CPR 6.37(3).\nThe judge discussed this point, again in detail, at paras 38 to 56.\nHe concluded the point in favour of the appellants.\nHe noted at para 54 that the appellants had given an undertaking to Morgan J not to pursue the claims in these proceedings in an action in Lebanon, which was both criminal and civil and (as explained by the judge at para 11) included the claims advanced in this action.\nNone of these issues is relevant to this appeal.\nThe judge thus did not reach the service issues until para 57 of his judgment.\nThe respondent applied for orders setting aside the various orders extending time for service of the claim form, by Morgan J from 29 October to 31 December 2009, by Sales J from 31 December 2009 to 30 April 2010 and by Lewison J from 30 April 2010 to 30 June 2010.\nHe also applied for an order setting aside Lewison Js order permitting service by alternative means on the respondents Lebanese and English lawyers.\nThe appellants cross applied for a declaration that in the events which had happened there had been good service of the claim form on the respondent and for an order further extending the time to enable the claim form to be served through British Consular channels should the previous extensions of time stand but the order for alternative service made by Lewison J be set aside.\nThe judge considered first the appellants cross application for a declaration.\nThis was in effect the restoration of the appellants' application for a declaration that the steps already taken amounted to good service which Lewison J had adjourned.\nThe judge granted the application and, as stated above, made a declaration, pursuant to CPR 6.37(5)(b) and\/or 6.15(2), that the steps taken on 22 October 2009 to bring the claim form to the attention of the respondent amounted to good service of the claim form.\nThe CPR\nThe provisions of the CPR that are relevant for present purposes are these: Service of the claim form by an alternative method or at an alternative place 6.15 (1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place. (2) On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service. (3) An application for an order under this rule (a) must be supported by evidence; and (b) may be made without notice. (4) An order under this rule must specify (a) the method or place of service; (b) the date on which the claim form is deemed served; and (c) the period for (i) filing an acknowledgment of service; (ii) filing an admission; or (iii) filing a defence.\nPower of the court to dispense with service of the claim form 6.16 (1) The court may dispense with service of a claim form in exceptional circumstances.\nApplication for permission to serve the claim form out of the jurisdiction 6.37 (5) Where the court gives permission to serve a claim form out of the jurisdiction (b) it may (i) give directions about the method of service; and (ii) give permission for other documents in the proceedings to be served out of the jurisdiction.\nMethods of service general provisions 6.40 (1) This rule contains general provisions about the method of service of a claim form or other document on a party out of the jurisdiction.\nWhere service is to be effected on a party out of the United Kingdom (3) Where a party wishes to serve a claim form or other document on a party out of the United Kingdom, it may be served (a) by any method provided for by (i) rule 6.41 (service in accordance with the Service Regulation); (ii) rule 6.42 (service through foreign governments, judicial authorities and British Consular authorities); or (iii) rule 6.44 (service of claim form or other document on a State); (b) by any method permitted by a Civil Procedure Convention or Treaty; or (c) by any other method permitted by the law of the country in which it is to be served. (4) Nothing in paragraph (3) or in any court order authorises or requires any person to do anything which is contrary to the law of the country where the claim form or other document is to be served.\nService of a claim form 7.5(2) Where the claim form is to be served out of the jurisdiction, the claim form must be served in accordance with Section IV of Part 6 within 6 months of the date of issue.\nExtension of time for serving a claim form 7.6 (1) The claimant may apply for an order extending the period for compliance with rule 7.5. (2) The general rule is that an application to extend the time for compliance with rule 7.5 must be made (a) within the period specified by rule 7.5; or (b) where an order has been made under this rule, within the period for service specified by that order. (3) If the claimant applies for an order to extend the time for compliance after the end of the period specified by rule 7.5 or by an order made under this rule, the court may make such an order only if (a) the court has failed to serve the claim form; or (b) the claimant has taken all reasonable steps to comply with rule 7.5 but has been unable to do so; and (c) in either case, the claimant has acted promptly in making the application. (4) An application for an order extending the time for compliance with rule 7.5 (a) must be supported by evidence; and (b) may be made without notice.\nAs the judge noted at para 66, before him the question was raised whether rule 6.15(2) could be used, as it is used in respect of issues as to service in proceedings where the parties are within the jurisdiction, retrospectively to accept the parties' actions as constituting good service where the defendant is outside the jurisdiction.\nIt was conceded before this court that rule 6.15(2) can be so used.\nFor my part, I would accept that that concession was correctly made.\nThe judge was to my mind correct to hold in para 71 that, just as the power under rule 6.15(1) prospectively to permit alternative service in a service out case is to be found in rule 6.37(5)(b)(i) or is to be implied generally into the rules governing service abroad (because that must have been the intention of the drafter of the 2008 amendments to CPR rule 6), so rule 6.37(5)(b)(i) is to be construed as conferring the power, via rule 6.15(2), retrospectively to validate alternative service in such a case, or such a power is to be implied generally into the rules governing service abroad.\nIn any event, the contrary was not contended before this court.\nIn para 72 the judge, in my opinion correctly, added that the power\nretrospectively to validate alternative service in a service out case involves consideration of whether events in the foreign country in question were capable of constituting proper service of the proceedings in the sense that the court can be satisfied that the proceedings have been properly brought to the attention of the defendant.\nAs I will explain, that is an important point in the context of this appeal.\nThe appellants argument is that the court had power under rule 6.15(2) to make an order that steps already taken to bring the claim form to the attention of the respondent by an alternative method constituted good service.\nThe steps taken were the delivery of the claim form and other documents, including the particulars of claim, at Mr Azourys office in Beirut on 22 October 2009, which was within the initial six months validity of the claim form.\nOrders under rule 6.15(1) and, by implication, also rule 6.15(2) can be made only if there is a good reason to do so.\nThe question, therefore, is whether there was a good reason to order that the steps taken on 22 October 2009 in Beirut to bring the claim form to the attention of the respondent constituted good service of the claim form upon him.\nThe judge held that there was.\nIn doing so, he was not exercising a discretion but was reaching a value judgment based on the evaluation of a number of different factors.\nIn such a case, the readiness of an appellate court to interfere with the evaluation of the judge will depend upon all the circumstances of the case.\nThe greater the number of factors to be taken into account, the more reluctant an appellate court should be to interfere with the decision of the judge.\nAs I see it, in such circumstances an appellate court should only interfere with that decision if satisfied that the judge erred in principle or was wrong in reaching the conclusion which he did.\nIt is important to note that rule 6.15 applies to authorise service by a method or at a place not otherwise permitted by CPR Part 6.\nThe starting point is thus that the defendant has not been served by a method or at such a place otherwise so permitted.\nIt therefore applies in cases (and only in cases) where none of the methods provided in rule 6.40(3), including any other method permitted by the law of the country in which it is to be served (see rule 6.40(3)(c)), has been successfully adopted.\nThe only bar to the exercise of the discretion under rule 6.15(1) or (2), if otherwise appropriate, is that, by rule 6.40(4), nothing in a court order must authorise any person to do anything which is contrary to the law of the country where the claim form is to be served.\nSo an order could not be made under rule 6.15(2) in this case if its effect would be contrary to the law of Lebanon.\nAlthough it was held that delivery of the claim form was not permitted service under Lebanese law, it was not suggested or held that delivery of the documents was contrary to Lebanese law or that an order of an English court that such delivery was good service under English law was itself contrary to Lebanese law.\nThe judgment at first instance\nAs stated above, the judge set out Lewison Js judgment in extenso.\nAt para 59 the judge identified the parts of the evidence which had been before Lewison J and he then quoted paras 2 to 4 of the judgment as follows: 2.\nThe underlying claim raises serious allegations of fraud against the Defendant, Mr Baadarani; who is a Lebanese national.\nAttempts have been made to serve via the Consular authorities in the Lebanon in accordance with CPR Part 6, rule 42.\nThose attempts have proved very difficult, not least, because there is considerable uncertainty about the method by which service should be effected which, according to the evidence, goes back to a Treaty of the 1920s between the Lebanon and France.\nNonetheless, the claim form and its accompanying documents were, to use a neutral word, delivered to Mr Baadaranis Lebanese lawyer, who holds a power of attorney, which enables him to conduct proceedings, including proceedings in this jurisdiction. on Mr Baadarani's behalf.\nThat lawyer signed for the papers and retained them for some four months before returning them.\nAccording to the claimant's Lebanese expert, that amounts to good service under Lebanese law.\nNonetheless, Mr Baadarani appears to be denying that he has been properly served and has declined to provide an address for service. 3.\nIn addition to delivery of those papers to the Lebanese lawyer, Mr Baadarani has instructed a firm of English solicitors called M & S Solicitors Ltd, who have taken up the cudgels on his behalf and so far as the evidence goes, have themselves at least had sight of the claim form and the other relevant documents.\nThey have written a long letter of 25 March 2010, which has been placed before me and to which Mr Penny, who appears on behalf of the claimant, has quite properly referred.\nThe points made in that letter have been addressed in the fifth witness statement of Mr Mascarenhas, which I have read. 4.\nThe purpose of service of proceedings, quite obviously, is to bring proceedings to the notice of a defendant.\nIt is not about playing technical games.\nThere is no doubt on the evidence that the defendant is fully aware of the proceedings which are sought to be brought against him, of the nature of the claims made against him and of the seriousness of the allegations.\nThe provisions of CPR rule 6.37(5) say that the court may, in giving permission to serve out of the jurisdiction: Give directions about the method of service.\nThat is a quite general provision and, as it seems to me, would ordinarily mean that the court would make directions, which did not involve one of the prescribed methods of service dealt with by rule 6.40 and following.\nIn other words, it is inherent in rule 6.37(5)(b)(i) that the court may make directions about alternative methods of service.\nWhere the court is dealing with service of proceedings within the jurisdiction the court also has the power to declare that steps already taken to bring the proceedings to the notice of a defendant should count as good service.\nMr Penny did at one stage submit that the same power applied to service out of the jurisdiction, but in the light of an interchange between him and me he is not pressing that submission and I am not ruling for or against it.\nI will adjourn that part of the application notice in case it becomes a live issue at a later date.\nIn para 60 the judge noted a number of points derived from Lewison Js\njudgment which he observed were based, not on the appellants evidence, but on the evidence of Mr Azoury and on the respondents solicitors letter of 25 March 2010.\nIn particular Lewison J found, not only that Mr Azoury retained the documents delivered on 22 October 2009, but that they or a copy of them had been in the hands of the respondents English lawyers prior to writing their long letter of 25 March 2010.\nLewison J found that the respondent must have been fully aware of the contents of the claim form.\nThe judge concluded that such a finding of fact seemed to him inevitably to follow from Lewison Js other findings, which, because of their source, were in his judgment unchallengeable.\nFor present purposes, the critical part of the reasoning of the judge is in paras 73 and 74 of his judgment.\nThey are in these terms: 73.\nIn my judgment, the declaration sought by the claimants in this case should be made.\nThe evidence before Lewison J and before me is sufficient to demonstrate that this is an appropriate case for the use of the power.\nThe principal reasons for doing so are that the method of service through diplomatic channels in Lebanon has proved impractical and any attempt to pursue it further will lead to unacceptable delay and expense.\nB has demonstrated that he is unwilling to co operate with service of the proceedings by disclosing his address in the Lebanon, but, and most importantly, it is clear that B, through his advisers, is fully apprised of the nature of the claim being brought. 74.\nThe delivery of the claim form and supporting documents to Bs Lebanese lawyer on 22 October 2009, which I have found is to be treated as good service of the proceedings, took place during the initial six month period of validity of the claim form.\nAccordingly, my conclusion means that the three orders for extension of the validity of the claim form were unnecessary and I need not deal with the question of whether those orders are to be set aside as the first defendant contends.\nNor need I deal with the claimants application for a yet further extension of that validity.\nThe judge thus determined the issue of service on the basis that there was good reason for making the declaration sought under CPR rule 6.15(2).\nIn short he held that there was a good reason to order that the steps taken to deliver the documents to Mr Azourys offices in Beirut on 22 October 2009 and thus to bring the documents to the respondents attention amounted to good service on him.\nThe Court of Appeal discussion\nThe respondent appealed to the Court of Appeal against the making of that declaration.\nIt appears to me that the central question on that appeal ought to have been whether the judge was entitled to make the declaration and that the appeal should have turned on the question whether, having afforded the decision of the judge appropriate respect, the Court of Appeal concluded that he erred in principle or was wrong in reaching the conclusion which he did.\nHowever, that does not seem to have been the focus of the argument in the Court of Appeal.\nIn the Court of Appeal Longmore LJ, with whom McFarlane and Arden LJJ agreed, first considered and, at paras 5 to 8, rejected the first ground of appeal, which again asserted that England was not the appropriate forum for these proceedings.\nThe respondent has not sought to argue that point in this court.\nAs to service, Longmore LJ referred to some of the evidence in detail at paras 11 to 16.\nHe then referred to the judgment and, in particular, to the declaration at para 17.\nAt para 18 he said this: It would be unusual (to say the least) for a judge to validate a form of service which was not valid by local law.\nIt must follow that, although he does not spell it out, the judge must by implication be taken to have decided that the service which took place was valid by Lebanese law because he also decided that he would and should retrospectively validate the service that had taken place.\nIt was submitted by Mr Freedman QC on behalf of the appellants that the judge did not hold, either expressly or by implication, that the delivery of the documents on 22 October 2009 was good service under Lebanese law.\nI would accept Mr Freedmans submission.\nThe judge did not hold in paras\n73 and 74 that there was good service under Lebanese law.\nIf he had so held, there would have been no need for the declaration granted by the judge because the service would have been good service as service by any other method permitted by the law of the country in which it is to be served (see rule 6.40.(3)(c)), which in this case was of course Lebanon.\nAs already explained, an order under rule 6.15(2) may only be made where there is a good reason to authorise service by a method or at a place not otherwise permitted by Part 6.\nThe judge could, therefore, not have made the declaration if he had taken the view that the delivery of the documents on 22 October was good service under Lebanese law.\nMoreover, it is in my opinion clear from the first sentence of para 74 that the judge was not holding that the delivery was good service under Lebanese law but that it was to be treated as good service under English law pursuant to CPR 6.15(2).\nThe question is whether the judge was entitled to hold that there was a good reason to order that the delivery of the documents to Mr Azoury on 22 October 2009 was to be treated as good service.\nWhether there was good reason is essentially a matter of fact.\nI do not think that it is appropriate to add a gloss to the test by saying that there will only be a good reason in exceptional circumstances.\nUnder CPR 6.16, the court can only dispense with service of the claim form in exceptional circumstances.\nCPR 6.15(1) and, by implication, also 6.15(2) require only a good reason.\nIt seems to me that in the future, under rule 6.15(2), in a case not involving the Hague Service Convention or a bilateral service treaty, the court should simply ask whether, in all the circumstances, there is good reason to order that steps taken to bring the claim form to the attention of the defendant is good service.\nThis is not a case in which the Hague Service Convention applies or in which there is any bilateral service convention or treaty between the United Kingdom and Lebanon.\nIn the courts below, the case was argued throughout on that basis and, although there was a hint in the argument before this court that that might not be the case, it was accepted that the appeal should be determined on that basis.\nIt follows that an alternative service order does not run the risk of subverting the provisions of any such convention or treaty: cf the reasoning of the Court of Appeal in Knauf UK GmbH v British Gypsum Ltd [2002] 1 WLR 907, paras 46 to 59 and Cecil v Bayat [2011] EWCA Civ 135, [2011] 1 WLR 3086, paras 65 to 68 and 113.\nIn particular, Rix LJ suggested at para 113 of the latter case that it may be that orders permitting alternative service are not unusual in the case of countries with which there are no bilateral treaties for service and where service can take very long periods of up to a year.\nI agree.\nI say nothing about the position where there is a relevant convention or treaty.\nAs stated above, in a case of this kind the court should simply ask itself whether, in all the circumstances of the particular case, there is a good reason to make the order sought.\nIt should not be necessary for the court to spend undue time analysing decisions of judges in previous cases which have depended upon their own facts.\nThe mere fact that the defendant learned of the existence and content of the claim form cannot, without more, constitute a good reason to make an order under rule 6.15(2).\nOn the other hand, the wording of the rule shows that it is a critical factor.\nAs the editors of the 2013 edition of the White Book note (vol 1, para 6.15.5), rule 6.15(2) was designed to remedy what were thought to be defects as matters stood before 1 October 2008.\nThe Court of Appeal had held in Elmes v Hygrade Food Products plc [2001] EWCA Civ 121 that the court had no jurisdiction to order retrospectively that an erroneous method of service already adopted should be allowed to stand as service by an alternative method permitted by the court.\nThe editors of the White Book add that the particular significance of rule 6.15(2) is that it may enable a claimant to escape the serious consequences that would normally ensue where there has been mis service and, not only has the period for service of the claim form fixed by CPR 7.5 run, but also the relevant limitation period has expired.\nService has a number of purposes but the most important is to my mind to ensure that the contents of the document served, here the claim form, is communicated to the defendant.\nIn Olafsson v Gissurarson (No 2) [2008] EWCA Civ 152, [2008] 1 WLR 2016, para 55 I said, in a not dissimilar context, that the whole purpose of service is to inform the defendant of the contents of the claim form and the nature of the claimant's case: see eg Barclays Bank of Swaziland Ltd v Hahn [1989] 1 WLR 506, 509 per Lord Brightman, and the definition of service in the glossary to the CPR, which describes it as steps required to bring documents used in court proceedings to a person's attention.\nI adhere to that view.\nIt is plain from paragraph 73 of his judgment quoted above that the judge\ntook account of a series of factors.\nHe said that, most importantly, it was clear that the respondent, through his advisers was fully apprised of the nature of the claim being brought.\nThat was because, as the judge had made clear at para 60, the respondent must have been fully aware of the contents of the claim form as a result of it and the other documents having been delivered to his lawyers on 22 October in Beirut and communicated to his London solicitors and to him.\nAs Lewison J said at para 4 of his judgment (quoted above): The purpose of service of proceedings, quite obviously, is to bring proceedings to the notice of a defendant.\nIt is not about playing technical games.\nThere is no doubt on the evidence that the defendant is fully aware of the proceedings which are sought to be brought against him, of the nature of the claims made against him and of the seriousness of the allegations.\nI agree.\nIn addition the judge had regard to the fact that service through diplomatic channels in Lebanon had proved impractical and that any attempt to pursue it further would lead to unacceptable delay and expense.\nFurthermore, the judge noted that the respondent was unwilling to co operate with service of the proceedings by disclosing his address in the Lebanon.\nWhile I accept the submission made on behalf of the respondent that he was not under a duty to disclose his address, his refusal to co operate does seem to me to be a highly relevant factor in deciding whether there was a good reason for treating as good service the delivery of the documents in Beirut within the six months validity of the claim form in circumstances in which the documents came to his knowledge.\nIt was submitted that the judge did not have regard either to the three and a half month delay between the time the appellants issued the claim form and the time they instructed counsel to settle particulars of claim or to the fact that the claim was time barred.\nI would not accept those submissions.\nIt is true that he did not expressly refer to either point in the part of his judgment dealing with service but I do not think that he can have been unaware of either point.\nAs to the time bar, the judge was plainly well aware of it.\nIndeed, he discussed the limitation defence in detail between paras 30 and 33.\nThe significance of the time bar defence was in the minds of the parties and the judge throughout.\nThe judge thought that there was good reason for making an order under rule 6.15(2) notwithstanding that defence and was, in my view, entitled to take that view.\nAs to the three and a half months delay, the judge must have been aware of it.\nIt seems to me to be likely that he took the view that, given the difficulties which faced the appellants in serving the claim form, the delay made no difference.\nHe was entitled to do so.\nThe critical points were that the documents were delivered within the six months validity of the claim form and brought to the respondents attention and that service via diplomatic channels had proved impracticable.\nIn these circumstances I do not think that the judge made an error of principle.\nHe correctly directed himself that the question was whether there was a good reason to order under rule 6.15(2) that the steps already taken to bring the claim form to the attention of the respondent constituted good service.\nHe answered that question in the affirmative and was entitled to reach that conclusion.\nThe Court of Appeal did not focus on the reasoning of the judge.\nThe essential reasoning of the Court of Appeal is set out in the judgment of Longmore LJ at paras 22 to 32.\nHe considered first (between paras 22 and 28) whether service on Mr Azoury was good service under Lebanese law and concluded at para 29 that it was not.\nAs I indicated above, the appellants do not challenge that conclusion.\nThere are five respects in which I respectfully disagree with the conclusions reached by the Court of Appeal.\nThe first is that referred to in paras 31 and 32 above, namely that the judge did not decide that there had been valid service of the claim form under Lebanese law.\nThe second is related to the first.\nIn paras 22 and 23 Longmore LJ said this: 22. [CPR 6.37(5)(b)(i)] authorises the court therefore to make an order for alternative service pursuant to CPR 6.15(1) and also to make such an order with retrospective effect pursuant to CPR 6.15(2).\nNevertheless the exercise of this power is liable to make what is already an exorbitant power still more exorbitant and I am persuaded by Mr Greatorex that it must indeed be exercised cautiously and, as Stanley Burnton LJ said in Cecil v Bayat [2011] 1 WLR 3086, para 65, should be regarded as exceptional.\nIt would, therefore, usually be inappropriate to validate retrospectively a form of service which was not authorised by an order of an English judge when it was effected and was not good service by local law.\nCPR 6.40 permits three methods of service including service through the British Consular authorities and any additional method of service should usually not be necessary.\nThe fact that CPR 6.40(4) expressly states that nothing in any court order can authorise or require any person to do anything contrary to the law of the country in which the document is to be served does not mean that it can be appropriate to validate a form of service which, while not itself contrary to the local law in the sense of being illegal, is nevertheless not valid by that law.\nIt follows that a claimant who wishes retrospective validation of a method of service in a foreign country must (save perhaps where there are adequate safeguards which were not present in this case) show that the method of service which is to be retrospectively validated was good service by the local law.\nService on Mr Azoury would not be regarded as good service on Mr Baadarani as a matter of English law merely because Mr Azoury was clothed with a general power of attorney.\nCan Mr Freedman show that the position is any different in Lebanese law? 23.\nI do not agree that for the court to make an order under rule 6.15(2) is to\nmake what is already an exorbitant power still more exorbitant.\nI recognise of course that service out of the jurisdiction has traditionally been regarded as the exercise of an exorbitant jurisdiction.\nThat is a consideration which has been of importance in determining whether permission to serve out of the jurisdiction should be granted, although in this regard I agree with the approach set out by Lord Sumption in his judgment.\nIn any event, in this case, it is now accepted that it was proper to serve the claim form out of the jurisdiction.\nThe rules as to the method of service set out above seem to me to have the legitimate sensibilities of other states in mind.\nIt is for that reason that CPR 6.40(4) provides that nothing in CPR 6.40(3) or in any court order authorises or requires any person to do anything which is contrary to the law of the country of service.\nI have already expressed my view that the order recognising the delivery of the claim form as alternative service under English law is not contrary to Lebanese law.\nMoreover it was not in breach of any convention or treaty but merely recognised that the claim form (and other documents) had been brought to the attention of the respondent.\nI do not think, therefore, that in a case not involving the Hague Service Convention or a bilateral service treaty, an order under rule 6.15(2) must be regarded as exceptional or, indeed as suggested in para 29 of Longmore LJs judgment, that there must be a very good reason for it.\nAs already stated, the CPR do not so provide.\nThey merely require good reason.\nMy third reason for disagreeing with the Court of Appeal concerns para 23 of Longmore LJs judgment, where he says that a claimant who wishes the court retrospectively to validate alternative service abroad must (save perhaps where there are adequate safeguards which were not present in this case) show that the method used was good service under the local law.\nAs noted above, that would render rule 6.15(1) and (2) otiose.\nWithout the words in brackets, the proposition in para 23 would not be correct.\nIt is not however clear to me what safeguards the court had in mind.\nIn any event, for the reasons already stated, Longmore LJ was wrong in my view to suggest that a court needs a very good reason to make an order under rule 6.15(2) where the steps taken did not constitute valid service under local law.\nThe fourth reason arises out of the Court of Appeals reliance upon the fact that the appellants did not issue the claim form until nearly the end of the limitation period.\nAt para 29 of his judgment, Longmore LJ stated: 29.\nSince, therefore, Mr Azoury had no authority in fact to accept service and since he did not, in any event, purport to do so, the delivery of the claim form and associated documentation to him did not, in my view, constitute good service in Lebanese law.\nI do not, therefore, think that the judge should have retrospectively validated that service as alternative service to that directed by Morgan J unless there was very good reason to do so.\nThe only reason to do so was to avoid the claim becoming time barred, which is not in itself a good reason (let alone an exceptional reason) for preserving a stale claim.\nMr Freedman submits that both personal service and service through diplomatic channels had become impossible, but that impossibility (as to which there was very little evidence) has only arisen as a result of the dilatory way in which the claimants have pursued the English claim.\nThey were asking for trouble by only issuing their claim form shortly before the limitation expired.\nIf the claim form had been issued say four years earlier, and a diligent process server had been instructed, Mr Baadarani might well have been served at one of the three address identified by Mr Houssami in his witness statement and the order of Morgan J would have been complied with.\nFour years might even have been long enough for diplomatic channels to be effective but it is not suggested that Mr Baadarani could only be served in that manner.\nIf it really was proving impossible to effect service over that long period, an application for alternative service could still have been made well before the six year period had expired and no retroactive gymnastics would have been necessary.\nAs I read para 29, the delay prior to the issue of the claim form was a significant part of the reasoning of the Court of Appeal, although, as I understand it, it was not a point taken on behalf of the respondent.\nI would accept the submission that (save perhaps in exceptional circumstances) events before the issue of the claim form are not relevant.\nThe focus of the inquiry on an issue of this kind is not and (so far as I am aware) has never been on events before the issue of the writ or claim form.\nThe relevant focus is upon the reason why the claim form cannot or could not be served within the period of its validity.\nThe judge held that there was an issue to be tried on the question whether the appellants claim was time barred.\nIn resolving the issues of service, the court had therefore to treat the claim form as issued in time.\nThis brings me to a consideration of the facts and to the fifth respect in which I respectfully disagree with the Court of Appeal.\nIn para 31 Longmore LJ said this: 31.\nIn the present case both the evidence of the fact (if it be a fact) that Mr Baadarani did in fact reside at the suggested address and the evidence of the attempt to serve him there was very meagre.\nThat evidence does not, in my judgment, show that there was such an ineffective attempt at service to constitute a good reason for not serving him at that address in such a way as to justify even an original order for alternative service pursuant to CPR 6.15(1) let alone an order that a form of service unilaterally chosen by the claimants should be deemed to be good service pursuant to CPR 6.15(2).\nIt appears that the respondent did not in fact reside at the Farid Trad Street address.\nHowever, there is no reason to think that the appellants did not genuinely think that he did.\nMoreover there is no evidence that they could have found out what his address was, especially in circumstances where he was refusing to tell them where he lived.\nIf he did not live at the Farid Trad Street address, further attempts to serve him there would have proved fruitless.\nIn these circumstances, the judge was entitled to reach the conclusions of fact which he did.\nAs the judge explained, there were difficulties in serving the claim form, the appellants cannot be blamed for failing to ascertain his address, especially in circumstances in which the respondent instructed his lawyers to refuse to tell the appellants what it was.\nMoreover, the claim form was delivered to Mr Azourys office within the period of its validity, with the result that it came to the attention of the respondent.\nIn all these circumstances he held that there was a good reason to grant the declaration.\nIn my opinion there is no legitimate basis on which to interfere with that decision.\nCONCLUSION\nFor these reasons I would allow the appeal and restore the declaration made by the judge.\nIn these circumstances the other issues argued on the appeal do not arise.\nLORD SUMPTION (with whom Lord Neuberger, Lord Reed and Lord Carnwath agree)\nIn his judgment in the Court of Appeal, Longmore LJ described the service of the English Courts process out of the jurisdiction as an exorbitant jurisdiction, which would be made even more exorbitant by retrospectively authorising the mode of service adopted in this case.\nThis characterisation of the jurisdiction to allow service out is traditional, and was originally based on the notion that the service of proceedings abroad was an assertion of sovereign power over the Defendant and a corresponding interference with the sovereignty of the state in which process was served.\nThis is no longer a realistic view of the situation.\nThe adoption in English law of the doctrine of forum non conveniens and the accession by the United Kingdom to a number of conventions regulating the international jurisdiction of national courts, means that in the overwhelming majority of cases where service out is authorised there will have been either a contractual submission to the jurisdiction of the English court or else a substantial connection between the dispute and this country.\nMoreover, there is now a far greater measure of practical reciprocity than there once was.\nLitigation between residents of different states is a routine incident of modern commercial life.\nA jurisdiction similar to that exercised by the English court is now exercised by the courts of many other countries.\nThe basic principles on which the jurisdiction is exercisable by the English courts are similar to those underlying a number of international jurisdictional conventions, notably the Brussels Convention (and corresponding regulation) and the Lugano Convention.\nThe characterisation of the service of process abroad as an assertion of sovereignty may have been superficially plausible under the old form of writ (We command you).\nBut it is, and probably always was, in reality no more than notice of the commencement of proceedings which was necessary to enable the Defendant to decide whether and if so how to respond in his own interest.\nIt should no longer be necessary to resort to the kind of muscular presumptions against service out which are implicit in adjectives like exorbitant.\nThe decision is generally a pragmatic one in the interests of the efficient conduct of litigation in an appropriate forum.\nFor these reasons I cannot share the starting point from which the Court of Appeal approached the present case.\nI consider that the appeal should be allowed for the reasons given in the judgment of Lord Clarke.\n","output":"This case concerns the circumstances in which a court may make an order retrospectively declaring that steps taken by a claimant to bring a claim form to the attention of a defendant should be treated as good service.\nOn 30 April 2009, Mr Abela and his two companies brought a claim for damages for fraud against Mr Baadarani in connection with a contract for the purchase of shares in an Italian company which the appellants contend were worthless, or were worth far less than the amount for which they were purchased.\nIn September 2009, permission was granted for the claim form and all other documents to be served on Mr Baadarani at an address at Farid Trad Street in Beirut, Lebanon.\nNo relevant bilateral treaty on service of judicial documents existed between the UK and Lebanon, and the Hague Service Convention was not applicable.\nTime for serving the claim form was extended until 31 December 2009 and permission was granted, if necessary, to serve Mr Baadarani personally at the Farid Trad Street address.\nThe appellants gave evidence that they had used a notary to seek to serve Mr Baadarani at the Farid Trad Street address by instructing a service agent or clerk to attend that property over a period of four consecutive days.\nMr Baadarani could not, however, be found.\nHe denies that he has ever lived at the Farid Trad Street address.\nOn 22 October 2009 a copy of the claim form and other relevant documents were delivered to the offices of Mr Baadaranis Lebanese lawyer in Beirut, Mr Azoury.\nThat method of service had not been authorised by the judge and it is accepted it that was not good service under Lebanese law; Mr Azoury said that he had never been given instructions to accept service of documents on behalf of Mr Baadarani save in connection with certain Lebanese proceedings.\nMr Azoury gave no indication of where Mr Baadarani could be served.\nArabic translations of the relevant documents were delivered to the Foreign Process Section of the High Court in November 2009 together with certified translations.\nThe appellants were informed in December 2009 that service on Mr Baadarani in Lebanon via diplomatic channels could take a further three months.\nIn April 2010, Lewison J extended time for service of the claim form and granted permission for the claim form to be served on Mr Baadarani by alternative means, namely via his English or Lebanese solicitors.\nAn application by the appellants that the steps already taken to serve Mr Baadarani be treated as good service was adjourned.\nService was subsequently effected by alternative means on Mr Baadarnis English solicitors in May 2010.\nMr Baadarani applied to set aside the various orders that had been made to extend time for service of the claim form and also sought to set aside the order permitting alternative service via Mr Baadaranis English and Lebanese solicitors.\nThat application did not need to be determined because Sir Edward Evans Lombe made a declaration at the request of the appellants, pursuant to rules 6.37(5)(b) and\/or 6.15(2) of the Civil Procedure Rules (CPR), that the steps taken on 22 October 2009 constituted good service of the claim form.\nThe Court of Appeal reversed that decision and held that the various extensions of time for service of the claim form should not have been granted.\nThe claim was, therefore, dismissed.\nMr Abela and the other appellants appealed to the Supreme Court.\nThe Supreme Court unanimously allows the appeal.\nLord Clarke gives the leading judgment.\nCPR 6.15(2) can be used retrospectively to validate steps taken to serve a claim form even if the defendant is not within the jurisdiction [21, 22].\nOrders under CPR 6.15(1) and (2) can be made only if there is good reason to do so.\nThe judges conclusion that there was a good reason to make an order under 6.15(2) constituted a value judgment based on an evaluation of a number of different factors.\nAn appellate court should be reluctant to interfere with such a decision [23].\nThe Court of Appeal was wrong to say that the making of an order under CPR 6.15(2) in a service out case is an exorbitant power.\nIt is not appropriate to say that such an order may only be made in exceptional circumstances, at any rate in a case in which there is no danger of subverting any international convention or treaty.\nThe test under CPR 6.15(2) is simply whether there is good reason to make such an order. [33, 34, 45, 53].\nCPR 6.15(2) applies only in cases where none of the methods of services permitted by CPR 6.40(3) have been successfully adopted, including any method of service permitted by the law of the country in which the defendant is to be served.\nA claimant seeking an order under CPR 6.15(2) is not, therefore, required to show that the method of service used was good service under local law.\nThe Court of Appeal was, in any event, wrong to say that the judge had concluded that service of the documents on Mr Azoury was good service under Lebanese law; if the judge had reached that conclusion, there would have been no reason for him to make an order under CPR 6.15(2) [24, 32, 46].\nThe only bar to the use of CPR 6.15(2), if otherwise appropriate, is the rule, under CPR 6.40(4) that nothing in a court order may authorise any person to do anything which is contrary to the law of the country where the claim form is to be served.\nAlthough delivery of the claim form and other documents to Mr Azoury was not good service on Mr Baadarani under Lebanese law, it has not been suggested that it was contrary to Lebanese law [24].\nThe mere fact that the defendant learned of the existence and content of the claim form cannot without more, constitute a good reason to make an order under CPR 6.15(2).\nThat is, however, a critical factor.\nService has a number of purposes, but the most important is to ensure that the contents of the document served are communicated to the person served. [36].\nThe fact that a claimant has delayed before issuing the claim form is not, save perhaps in exceptional circumstances, relevant when determining whether an order should be made under CPR 6.15(2).\nThe focus must be on the reason why the claim form cannot or could not be served be served within the period of its validity [48].\nThe judge was entitled to conclude that an order under CPR 6.15(2) was appropriate.\nThe judge correctly took account of the fact that Mr Baadarani, through his English and Lebanese lawyers, was fully apprised of the nature of the claim being brought against him.\nThe claim form and other documents were delivered to him within the initial period of validity of the claim form.\nHe also took account of the fact that service in Lebanon via diplomatic channels had proved impractical and that Mr Baadarani was unwilling to cooperate by disclosing his address to the appellants.\nWhilst Mr Baadarani had no obligation to disclose his address, his refusal to cooperate was a highly relevant factor in determining whether there was a good reason to make an order under CPR 6.15(2).\nThe judge was entitled to take the view that an order under CPR 6.15(2) was appropriate notwithstanding the three and a half month delay between the issue of the claim form and the application for permission to service the claim out of the jurisdiction, and despite the fact that the claim against Mr Baadarani may be time barred [37, 39, 40].\n","id":1}
{"input":"This appeal is concerned with the operation of the disciplinary procedures for doctors and dentists in the National Health Service, which the Secretary of State for Health introduced over eight years ago.\nIt raises an important question about the roles of the case investigator and the case manager when handling concerns about a doctors performance.\nThe relevant procedures\nIn December 2003 the Secretary of State for Health exercised his powers under section 17 of the National Health Service Act 1977 to give directions called the Restriction of Practice and Exclusion from Work Directions 2003.\nThese required all NHS bodies to comply with a document which set out new procedures for the initial handling of concerns about doctors and dentists in the NHS (Health Service Circular 2003\/12).\nThose procedures became parts I and II of the framework for disciplinary procedures for doctors and dentists in the NHS which was agreed by the Department of Health, the British Medical Association and the British Dental Association and was issued in February 2005.\nBy the Directions on Disciplinary Procedures 2005 the Secretary of State directed all NHS bodies in England and Wales to implement the full version of the framework contained in a document called Maintaining High Professional Standards in the Modern NHS (MHPS).\nThe principal relevant innovations in MHPS were: (1) An employing trust took on responsibility for disciplining doctors and dentists whom it employed; (2) Doctors and dentists were made subject to the same locally based misconduct procedures as other staff members; (3) The same disciplinary procedures applied to all doctors and dentists employed in the NHS; (4) The new disciplinary procedure replaced the disciplinary procedures contained in circular HC(90)9, which I discuss in paras 16 and 17 below; and (5) There was a single process for dealing with concerns about the professional capability of a doctor or dentist, which tied in with the work of the National Clinical Assessment Authority (NCAA).\nThis involved the preparation of an action plan to address the concerns about capability.\nBut if that plan had no realistic chance of success, there would be a capability hearing before a panel.\nMHPS recognised the importance of doctors and dentists keeping their skills and knowledge up to date.\nIt expressed a preference for tackling concerns about the performance of a doctor or dentist by training and other remedial action rather than solely through disciplinary action.\nBut it did not seek to weaken accountability or avoid disciplinary action where there was genuinely serious misconduct.\nIt recognised that, where serious concerns were raised, the paramount duty was to protect patients.\nMHPS provided that where concerns arose about a practitioners performance, the medical director was to liaise with the head of human resources to decide the appropriate course of action.\nThis involved the identification of the nature of the problem or concern and consideration whether it could be resolved without resort to formal disciplinary procedures.\nWhere the concerns related to clinical directors or consultants, the medical director was to be the case manager and was responsible for appointing a case investigator.\nIt was the task of the case investigator to investigate the allegations or concerns and report within four weeks.\nParagraph 12 of Part I of MHPS stated: The case investigator is responsible for leading the investigation into any allegations or concerns about a practitioner, establishing the facts and reporting the findings.\nIt was the responsibility of the case investigator to decide what information needed to be gathered and how it should be gathered.\nIt was envisaged that this could involve both written statements and oral evidence.\nThe practitioners who were the subject of investigations were entitled to see a list of the people whom the case investigator would interview.\nThe practitioners were to be given an opportunity to put their view of events to the case investigator and were to have the opportunity to be accompanied when they did so.\nThe case investigators report was to give the case manager sufficient information to enable him or her to decide whether, among other things: (i) there was a case of misconduct which should be considered by a disciplinary panel; (ii) there were concerns about performance that should be explored by the NCAA; (iii) there was a need to consider restrictions on the practice of the practitioner or his or her exclusion from work; and (iv) there were intractable problems about performance which should be put before a capability panel.\nPart III of MHPS provided guidance on conduct hearings and disciplinary procedures.\nEvery NHS employer was to have a code of conduct or staff rules which set out acceptable standards of behaviour.\nBreaches of those rules were to be treated as misconduct.\nIssues of misconduct were to be dealt with by the employing NHS body under its own conduct procedures.\nEmployers were advised to seek the advice of the NCAA particularly in cases of professional misconduct.\nIn 2005 the NCAA changed its name to the National Clinical Assessment\nService (NCAS) when it became part of the National Patient Safety Agency.\nIt is now an operating division of the NHS Litigation Authority.\nThe Trusts implementation of MHPS In March 2007 the West London Mental Health NHS Trust (the Trust)\nimplemented the Secretary of States directions by introducing a policy for handling concerns about a doctors performance (policy D4A) and by amending the disciplinary policy (D4) which it introduced in July 2001.\nThe latter policy set out guidance on the conduct of staff in its staff charter (appendix 3 of policy D4).\nThat guidance included as a value Preserve Confidentiality and stated as example behaviour the following: Uphold the Trusts policies on freedom of and disclosure of information.\nDo not abuse knowledge.\nUse appropriate private locations for discussions of a personal nature and use e mail correspondence cautiously.\nThe disciplinary policy (D4), as amended, applied to all of the Trusts employees.\nIt stated, at para 3.1: It is a fundamental principle of all disciplinary action that employers and managers must act in a way which an objective observer would consider reasonable It provided that the member of staff had to be told in writing of the complaint in advance of any disciplinary hearing (para 3.6) and stated that no formal hearing should be convened until there was sufficient evidence to suggest that there was potentially a case to answer (para 3.8).\nIn para 13 it identified misconduct which might result in disciplinary action under three categories: minor, serious and gross.\nSerious misconduct was defined as misconduct which is not so severe as to warrant dismissal but is too serious to be considered as minor.\nIn para 13.4.1 it described gross misconduct in the following terms: Some instances of misconduct\/poor performance will be so serious as to potentially make any further relationship and trust between the Trust and the employee impossible.\nIt listed typical examples of such conduct.\nIn January 2011, after the events which gave rise to disciplinary proceedings in this case, the Trust amended that list with effect from 28 March 2011 to include: serious breaches of information governance with regard to data protection, confidentiality and information security.\nThe policy also set out in section 15 and appendix 5 a fair blame procedure which could apply when the potential conduct or performance issues do not constitute serious or gross misconduct.\nAppendix 6 set out guidance for managers for investigations under the disciplinary policy.\nIn para 1.1 it stated Before disciplinary action is taken, it is essential to establish the facts through an investigation.\nIn para 2, it answered the question Why is the investigation important? thus: 2.1 to establish as far as practicable what has happened and why. 2.2 to ensure future decisions are rational and made on the basis of evidence. 2.3 to meet the requirement to demonstrate that natural justice has been observed. 2.4 to form the basis of any case presented to a Disciplinary Panel. 2.5 to ensure decisions made by the trust are capable of scrutiny either through an internal appeal or by an Employment Tribunal or court of law.\nThe appendix advised the manager carrying out the investigation on how to conduct and record interviews and on the preparation and content of the investigatory report.\nPara 5 stated that the investigatory officer would be required to present findings to a formal hearing if there is a prima facie case of misconduct and their report would form the basis of their verbal presentation.\nIn para 9 the guidance stated that the report should contain conclusions, including whether there was a disciplinary case to answer at a formal hearing.\nIt stated that the conclusion might suggest whether the misconduct (if proven) could constitute serious or gross misconduct, or whether the Fair Blame procedure should apply.\nThe report was to have appendices including records of witness interviews and statements (para 10).\nPara 11 instructed the investigatory officer to ensure that key witnesses were available for the hearing before the disciplinary panel to enable their evidence to be scrutinised by the employee and the panel.\nPolicy D4A, which related to doctors and dentists, replaced the disciplinary procedures in circular HC(90)9.\nIt provided in section 1 that where a serious concern arose about the conduct or capability of a doctor or dentist, the chief executive would appoint a case manager, whose first task was to identify the nature of the problem and assess the seriousness of the issue on the information available.\nIn deciding how to proceed, the chief executive was to consult the director of human resources, the medical director and the NCAS (para 1.8).\nWhere it was decided to follow a formal route, the medical director was to appoint an appropriately experienced person as case investigator.\nPara 1.13 provided that the case investigator was responsible for leading the investigation into any allegations or concerns about a practitioner, establishing the facts and reporting the findings.\nThe case investigator was charged with collecting sufficient written statements and oral evidence to establish a case before it was decided whether to convene a disciplinary panel.\nHe or she had to keep a written record of the investigation, the conclusions reached and the course of action agreed by the director of human resources and the medical director.\nThe case investigator did not decide on what action should be taken and would not be a member of a disciplinary panel in the case (para 1.14).\nThe purpose of the investigation was to ascertain the facts in an unbiased manner (para 1.17).\nThe case investigator was to complete an investigation within four weeks and thereafter to submit a report to the case manager, giving sufficient information to enable the latter to decide, among other things, whether there was a case of misconduct that should be put to a conduct panel (para 1.19).\nPart 3 of policy D4A provided that Misconduct matters for doctors and dentists, as for all other staff groups, are dealt with under the trusts disciplinary policy and procedure, D4, but that the Trust was to contact the NCAS for advice before proceeding when the concerns related to a medical practitioner.\nPara 3.2 spoke about alleged misconduct being investigated under the Trusts disciplinary policy.\nIn my view, the succinct provisions in policy D4A relating to the investigation need to be read alongside the provisions relating to investigations in policy D4, and in particular in appendix 6, which I have summarised in para 11 above and which cover the same ground in more detail.\nIf there are any inconsistencies between the two policies, D4A will govern as the policy specific to doctors and dentists.\nPart 4 of policy D4A set out procedures for dealing with concerns about capability, such as incompetent clinical practice, inability to communicate effectively with colleagues and ineffective clinical team working skills.\nIn short, the policy provided for consultation with the NCAS and, where possible, the remediation of any lack of capability identified in an assessment through an agreed action plan to provide education and support.\nWhere problems of capability were so serious that no such action plan had a realistic prospect of success, the case manager, informed by the investigation report and the advice of the NCAS, would have to decide whether there should be a capability hearing before a panel (para 4.12).\nSuch a hearing could result in the termination of the practitioners employment (para 4.23).\nPara 4.5 gave guidance on how to proceed where issues of conduct and capability were involved.\nIt provided: It is inevitable that some cases will cover both conduct and capability issues.\nIt is recognised that these cases can be complex and difficult to manage.\nIf a case covers more than one category of problem, they should usually be combined under a capability hearing although there may be occasions where it is necessary to pursue a conduct issue separately.\nAlthough it is for the Trust to decide upon the most appropriate way forward having consulted the NCAS[,] [i]n the event of a dispute the practitioner may make representations to the designated board member.\nThe individual is also entitled to use the Trusts grievance procedure if they consider that the case has been incorrectly classified.\nThe new investigative procedures were materially different from those in the previous disciplinary procedure set out in circular HC(90)9.\nThe earlier procedure involved first a decision by the chairman of a public health authority whether there was a prima facie case against the practitioner.\nIf the chairman decided that there was a prima facie case but the facts were disputed, the authority responsible for appointing the practitioner could set up an investigating panel, normally of three persons and with a legally qualified chairman who was not an officer of the Department of Health or the authority.\nThe task of the investigating panel was to establish all the relevant facts of the case (para 11).\nThe practitioner had a right to appear and be legally represented at the hearing.\nA lawyer would adduce the evidence on behalf of the authority; the practitioners lawyer would cross examine the authoritys witnesses; and the practitioner could call his own witnesses, who would be subjected to cross examination.\nThe investigating panel produced a report, making findings of fact, and determining whether the practitioner was at fault.\nThe panel was entitled to recommend disciplinary action.\nAlthough policy D4A used similar language to circular HC(90)9 when it spoke of the case investigator establishing the facts, the case investigators role is more limited than that of the investigating panel under circular HC(90)9, which could be described as quasi judicial in nature.\nThe latter made findings of fact after hearing evidence which would often have been tested by cross examination.\nThe authority then acted on the facts which the investigating panel had determined.\nBy contrast, under policies D4A and D4 the case investigator enquires into the facts by interviewing people, and the practitioner is not able to test their accounts of events during the investigation.\nThe outcome of the investigation is a report on whether there is a prima facie case of misconduct.\nThereafter, if the case manager decides that it is appropriate, the facts are determined at a hearing before a conduct panel, where the practitioner may be represented, test the evidence of the management witnesses, and call his or her own witnesses (policy D4 appendix 8).\nThe events in this case\nDr Chhabra was first employed by the Trust as a consultant forensic psychiatrist at Broadmoor Hospital, which is a high security unit, on 3 September 2009.\nThere was a written contract of employment dated 26 October 2009.\nClause 3 of that written contract provided: Whilst it is necessary to set out formal employment arrangements in this contract, we also recognise that you are a senior and professional employee who will usually work unsupervised and frequently have the responsibility for making important judgements and decisions.\nIt is essential therefore that you and we work in a spirit of mutual trust and confidence.\nThe clause then listed several mutual obligations, including cooperation and maintaining goodwill.\nIt was common ground that policies D4 and D4A were incorporated into the contract of employment so far as they were apt for incorporation.\nShortly after her appointment, problems emerged in her relationship with her clinical team.\nIn October 2009, negative feedback from members of her team caused her line manager to have concerns about her clinical team working skills.\nAs a result of the continued expression of concerns it was arranged in October 2010 that Dr Chhabra should undergo a 360 appraisal process.\nDr Chhabra contended that her case load had been increased contrary to her agreed job plan and that she had been deprived of the support of a senior house officer and a secretary for a number of months.\nHer line manager, Dr Bhattacherjee, warned her that there might be a formal process if people continued to express concerns about her.\nIn dealing with those issues her line manager took advice from Mr Alan Wishart, the Trusts associate human resources director.\nOn 1 October 2010 a solicitor of one of Dr Chhabras patients submitted a complaint against her.\nOn 1 December 2010, Ms Jo Leech, who was the Head of Secure Services Policy at the Department of Health and had previously worked at Broadmoor Hospital, complained that Dr Chhabra had breached patient confidentiality when travelling by train in the company of another doctor on 24 November 2010.\nThe allegation was that Dr Chhabra, whilst seated opposite Ms Leech in a busy carriage, discussed an incident involving a patient in the secure unit and was reading a medical report on a patient whose name and personal details could be clearly identified.\nAs a result, the Trust suspended her from work.\nAfter Dr Chhabra brought proceedings seeking an injunction against her suspension, the Trust allowed her to resume her work at another location in March 2011.\nMeanwhile, on 15 December 2010 Dr Nicholas Broughton, the Trusts medical director, who was the case manager in relation to the concerns raised about Dr Chhabra, decided to commission an investigation into those concerns.\nHe appointed Dr Amanda Taylor, a consultant forensic psychiatrist from another trust as case investigator.\nHe instructed Dr Taylor to investigate the following four matters: (1) The allegation of breach of patient confidentiality during the train journey on 24 November 2010; (2) An allegation that Dr Chhabra had dictated patient reports when travelling on a train; (3) The concerns about Dr Chhabras working relationship with her clinical team; and (4) The solicitors complaint dated 1 October 2010.\nAfter Dr Chhabra expressed concerns that Mr Wishart should not be involved in the investigation, solicitors acting on behalf of the Trust wrote a letter to her solicitors dated 24 February 2011 in which they undertook that Mr Wishart would take no part in the investigation.\nDr Taylor carried out her investigation, which included an interview with Dr Chhabra.\nUnknown to Dr Chhabra, Dr Taylor communicated with Mr Wishart during the investigation.\nIn an email to him dated 29 March 2011, Dr Taylor recorded that Dr Chhabra had admitted the breach of patient confidentiality on the train journey on 24 November 2010 (allegation (1) in para 21 above) and expressed the view that she was unlikely to make the same mistake again.\nMore significantly, Dr Taylor sent Mr Wishart a draft of her report and Mr Wishart prepared suggested amendments to the draft.\nThe amendments, which were extensive, had the effect of stiffening the criticism of Dr Chhabra.\nDr Taylor accepted some of the suggested amendments but not others.\nAmong those she accepted was the characterisation as serious of breaches of confidentiality she had described in her report.\nIn June 2011 Dr Taylor completed and signed her report.\nShe found that Dr Chhabra had breached patient confidentiality by having patient documents clearly visible in a public environment during the train journey on 24 November 2010 and by dictating reports, which included patient sensitive information, on a train on other occasions.\nShe recorded Dr Chhabras admission of those breaches.\nHer report also recorded Dr Chhabras unchallenged account that she had not appreciated at the time that her practice compromised patient confidentiality and that she believed that she had ensured that no other passengers were close by when she dictated the reports.\nDr Taylor also reported on an allegation by Dr Chhabras former secretary, which had not been expressly included in her terms of reference, that she had made telephone calls when travelling by train to work in which she had discussed patient information.\nDr Taylor did not make any finding on the accuracy of this allegation but recorded that there was a difference of opinion between Dr Chhabra and her secretary.\nIn relation to the third concern (in para 21 above), Dr Taylor stated that there were difficulties within Dr Chhabras clinical team which were issues of capability that needed to be addressed.\nShe concluded that the fourth issue, the solicitors complaint, did not have merit.\nOn 12 August 2011 Dr Broughton wrote two letters to Dr Chhabras solicitors.\nIn one, he informed her that he regarded the concerns about her team working to be matters of capability.\nHe said that he intended to seek the guidance of the NCAS on whether an assessment was needed or whether the Trust would be justified in proceeding to a capability hearing.\nIn the other letter, Dr Broughton stated that the breaches of confidentiality set out in the investigation report were potentially very serious allegations of misconduct which fell within para 8.4 (sic) of policy D4, and he quoted an extract from para 13.4.1 of the January 2011 revision of policy D4 (para 10 above).\nThe charges which he proposed to put to a disciplinary panel included not only the admitted breaches of confidentiality but also (i) the allegation, on which Dr Taylor had noted there had been a conflict of opinion, that Dr Chhabra, while travelling by train, had telephoned her secretary to discuss patient related information, and (ii) an allegation, which was not within Dr Taylors remit and on which she had not reported, that Dr Chhabra had breached patient confidentiality by disclosing information via email to her medical protection society and legal advisers.\nDr Broughton expressed the view that the charges were considered to be potential gross misconduct and that dismissal was a possible outcome of the hearing before the disciplinary panel.\nHe also stated his view that the issues of conduct and capability were unrelated and that the conduct allegations were straightforward and discrete.\nDr Chhabras solicitors objected to the charge of breach of patient confidentiality by disclosing information to her protection society and her legal advisers, which had not been the subject of Dr Taylors investigation.\nAt their request, the Trust agreed to instruct Dr Taylor to investigate that allegation.\nDr Taylor carried out this further investigation and reported that there was no complaint to answer.\nAs a result, on 17 January 2012 Dr Broughton informed Dr Chhabra by letter that that charge would not be pursued at the disciplinary hearing.\nOn 22 December 2011 the Trust referred the teamwork issues (the third matter in para 21 above) to the NCAS.\nDr Chhabra invoked the Trusts grievance procedure to complain about the decision to deal with the breaches of confidentiality in advance of the NCAS assessment.\nMr Wishart prepared the management case for the grievance hearing.\nDr Chhabras grievance was not upheld on first consideration.\nThe panel accepted that there was a possible relationship between the conduct and capability matters but concluded that issues of capability could be presented in mitigation at a conduct hearing.\nIt concluded that the decision to separate the conduct matters from the capability matters was appropriate and necessary.\nShe appealed that decision but her grievance appeal was rejected by letter dated 29 February 2012.\nThe appeal panel concluded that it was necessary to deal with the conduct matters separately because they were discrete and needed to be determined, whatever was the outcome of the capability process.\nOn 6 February 2012 a case conference was held to consider the Trusts capability concerns.\nThe Trust, Dr Chhabra and the NCAS entered into a tripartite agreement under which the Trust referred its concerns to the NCAS for an assessment.\nMeanwhile, the disciplinary process continued on a separate track.\nA conduct hearing was fixed for 9 March 2012, but that hearing was discharged after Dr Chhabra sought declaratory and injunctive relief from the High Court on 2 March 2012.\nThat started the legal process which has led to this appeal.\nThe legal proceedings\nOn 1 June 2012 Judge McMullen QC, sitting as a judge of the High Court, granted Dr Chhabra a declaration and injunctive relief, preventing the disciplinary panel from investigating the confidentiality concerns as matters of gross misconduct under the Trusts disciplinary policy.\nThe judge held that Dr Broughton had failed to re assess the gravity of the charges after he received Dr Taylors second report.\nThe Trust had erred and had breached its contract with Dr Chhabra in treating the matters as gross misconduct for which she could be dismissed.\nHe also held that Dr Broughton had broken the contract by referring to the conduct panel charges which were not grounded in Dr Taylors report.\nThe judge also held that the Trust was bound to deal with the matters through the capability procedures under para 4.5 of policy D4A.\nHe expressed the view that, as Dr Chhabra had admitted her mistakes, the case cried out to be dealt with under the fair blame procedure.\nOn 25 January 2013 the Court of Appeal (Pill, Jackson and Treacy LJJ) upheld the Trusts appeal and set aside the order of the judge at first instance.\nThe court held that policies D4 and D4A should be read together and that the applicable rules and procedures had contractual force.\nThe Trust had a discretion whether to combine capability and conduct issues under para 4.5 of policy D4A. Use of the fair blame procedure was encouraged but the Trust had a power to refer disciplinary matters to a conduct panel.\nThe case investigators role was to establish and report the available evidence.\nThe case manager in deciding what action to take was not confined to the findings of fact of the case investigator but could consider complaints supported by evidence reported by the case investigator, even if denied by the practitioner.\nThe conduct panel would resolve issues of disputed fact.\nIt was the task of the case manager to exercise judgement as to the seriousness of the misconduct, having regard to the evidence reported and findings made by the case investigator.\nThe central question was whether the case manager was justified in the circumstances in convening a disciplinary hearing.\nThe court concluded that Dr Broughton was entitled to regard the breach of confidentiality as a potentially serious offence and as a result was justified in deciding to convene the conduct panel.\nDr Chhabra appeals to this court.\nDiscussion of the legal challenges\nThe first and most significant issue is the roles of the case investigator and the case manager.\nThe procedures, which MHPS envisaged and which the Trust has set out in policy D4A and the amended policy D4, do not give the case investigator a power to determine the facts.\nThis is, as I have said (paras 16 and 17 above), radically different from the role of the investigating committee under circular HC(90)9.\nThe aim of the new procedure is to have someone, who can act in an objective and impartial way, investigate the complaints identified by the case manager to discover if there is a prima facie case of a capability issue and\/or misconduct.\nThe case investigator gathers relevant information by interviewing people and reading documents.\nThe testimony of the interviewees is not tested by the practitioner or his or her representative.\nIn many cases the case investigator will not be able to resolve disputed issues of fact.\nHe or she can only record the conflicting accounts of the interviewees and, where appropriate, express views on the issue.\nWhere, as here, the practitioner admits that she has behaved in a certain way or where there is otherwise undisputed evidence, the case investigator can more readily make findings of fact.\nIf the case investigator were to conclude that there was no prima facie case of misconduct, there would normally be no basis for the case manager to decide to convene a conduct panel.\nBut if the report recorded evidence which made such a finding by the case investigator perverse, the case manager would not be bound by that conclusion.\nWhere the case investigators report makes findings of fact or records evidence capable of amounting to misconduct, the case manager may decide to convene a conduct panel.\nThe case manager can make his or her own assessment of the evidence which the case investigator records in the report.\nThe procedure before the panel enables the practitioner to test the evidence in support of the complaint and any findings of fact by the case investigator.\nIt would introduce an unhelpful inflexibility into the procedures if (i) the case investigator were not able to report evidence of misconduct which was closely related to but not precisely within the terms of reference (as in the former secretarys allegations) or (ii) the case manager were to be limited to considering only the case investigators findings of fact when deciding on further procedure.\nSimilarly, it would be unduly restrictive to require the case manager to formulate the complaint for consideration by a conduct panel precisely in the terms of the case investigators report.\nI do not interpret MHPS or the Trusts policies in D4 and D4A as being so inflexible or restrictive.\nThe case manager has discretion in the formulation of the matters which are to go before a conduct panel, provided that they are based on the case investigators report and the accompanying materials in appendices of the report, such as the records of witness interviews and statements.\nBut the procedure does not envisage that the case manager can send to a conduct panel complaints which have not been considered by the case investigator or for which the case investigator has gathered no evidence.\nThus I consider that the Trust was correct in acceding to Dr Chhabras request for a second report from Dr Taylor in relation to the new allegation of breach of confidentiality in her communications with the protection society and her solicitors.\nIn reaching this view, I am in general agreement with the judgment of the Court of Appeal.\nI also agree with the Court of Appeal that Dr Broughton would have been entitled to take the view that there was evidence in Dr Taylors report which could amount to serious misconduct and that he could properly have convened a conduct panel on that basis.\nThere is no doubt that patient confidentiality is an overriding principle and is central to trust between patients and doctors (General Medical Council, Good Medical Practice (2006) page 5 and paras 21 and 37, Guidance on Confidentiality (2009), para 6).\nIn my view the evidence in Dr Taylors report on the matters (1) and (2), which I set out in para 21 above, was capable of supporting a complaint of serious misconduct.\nWhere I respectfully differ from the Court of Appeal is that I consider that there have been a number of irregularities in the proceedings against Dr Chhabra which cumulatively render the convening of the conduct panel unlawful as a material breach of her contract of employment.\nI have four concerns about the procedure which the Trust followed.\nFirst, I do not think that the findings of fact and evidence, which Dr Taylor recorded, were capable when taken at their highest of supporting a charge of gross misconduct.\nParagraph 13.4.1 of policy D4 speaks of conduct so serious as to potentially make any further relationship and trust between the Trust and the employee impossible.\nThis language describes conduct which could involve a repudiatory breach of contract: Dunn v AAH Ltd [2010] IRLR 709, para 6; Wilson v Racher [1974] ICR 428.\nThere is no material in Dr Taylors report to support the view that the breaches of confidentiality which she recorded, including the former secretarys allegations, were wilful in the sense that they were deliberate breaches of that duty.\nIn my view they were qualitatively different from a deliberate breach of confidentiality such as speaking to the media about a patient.\nSecondly, in reaching the view that Dr Chhabras behaviour could amount to gross misconduct, Dr Broughton founded on the words added to para 13.4.1 with effect from 28 March 2011, after the incidents in this case.\nThe list of misconduct in para 13.4.1 comprised only typical examples of what the Trust saw as amounting to gross misconduct and was not a comprehensive statement of the concept.\nBut Dr Broughton relied on the amended provision in support of his view that the complaints might amount to gross misconduct and quoted it in his letter of 12 August 2011 relating to the disciplinary procedure (para 24 above).\nThirdly, I consider that the Trust breached its contract with Dr Chhabra when Mr Wishart continued to take part in the investigatory process in breach of the undertaking which the Trusts solicitors gave in their letter of 24 February 2011 (para 21 above).\nIn particular, when Mr Wishart proposed extensive amendments to Dr Taylors draft report and Dr Taylor accepted some of them, which strengthened her criticism of Dr Chhabra, the Trust went outside the agreed procedures which had contractual effect.\nPolicies D4 and D4A established a procedure by which the report was to be the work of the case investigator.\nThere would generally be no impropriety in a case investigator seeking advice from an employers human resources department, for example on questions of procedure.\nI do not think that it is illegitimate for an employer, through its human resources department or a similar function, to assist a case investigator in the presentation of a report, for example to ensure that all necessary matters have been addressed and achieve clarity.\nBut, in this case, Dr Taylors report was altered in ways which went beyond clarifying its conclusions.\nThe amendment of the draft report by a member of the employers management which occurred in this case is not within the agreed procedure.\nThe report had to be the product of the case investigator.\nIt was not.\nFurther, the disregard for the undertaking amounted to a breach of the obligation of good faith in the contract of employment.\nIt was also contrary to para 3.1 of policy D4 as it was behaviour which the objective observer would not consider reasonable: Dr Chhabra had an implied contractual right to a fair process and Mr Wisharts involvement undermined the fairness of the disciplinary process.\nFourthly, Dr Broughton did not re assess the decision in his letter of 12 August 2011 that the matters were considered as potential gross misconduct after he departed from the additional complaint once he had received Dr Taylors second report.\nIn my view he was obliged to do so under para 3.1 of policy D4: an objective observer would not consider it reasonable to fail to do so.\nI am persuaded that the cumulative effect of those irregularities is that it would be unlawful for the Trust to proceed with the disciplinary procedure and that the court should grant relief.\nAs a general rule it is not appropriate for the courts to intervene to remedy minor irregularities in the course of disciplinary proceedings between employer and employee its role is not the micro management of such proceedings: Kulkarni v Milton Keynes Hospital NHS Foundation Trust [2010] ICR 101, para 22.\nSuch intervention would produce unnecessary delay and expense.\nBut in this case the irregularities, particularly the first and third, are of a more serious nature.\nI also bear in mind that any common law damages which Dr Chhabra might obtain if she were to succeed in a claim based on those irregularities after her employment were terminated might be very limited: Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2012] 2 AC 22 and Geys v Socit Gnrale [2013] 1 AC 523, para 73, Lord Wilson.\nI do not think that the second irregularity on its own could have justified this courts intervention.\nI have some doubt whether the fourth irregularity, if it were the only complaint, would in the circumstances have justified injunctive relief.\nI acknowledge that Dr Chhabra did not plead Mr Wisharts involvement as a ground of her challenge to the decision either at first instance or in the Court of Appeal.\nHad this been the only successful ground of challenge, I would have viewed it as coming too late as the Trust might have led different evidence in answer before Judge McMullen.\nBut the categorisation of Dr Chhabras conduct as gross misconduct is itself a sufficient ground for injunction.\nFurther, the facts relating to Mr Wisharts involvement were before Judge McMullen, and in the Court of Appeal Pill LJ discussed them in para 62 of his judgment.\nWhere I differ from the judge at first instance is that, like the Court of Appeal, I do not consider Mr Wisharts involvement to be a minor irregularity.\nWhere I differ from the Court of Appeal, is that I do not think that Dr Taylors acceptance of some of his suggested amendments and her good faith materially reduce the seriousness of the procedural irregularity.\nI deal briefly with three further submissions which Mr Sutton advanced on behalf of Dr Chhabra.\nFirst, I consider that the Trust was not obliged to consider the operation of the fair blame procedure in appendix 5 of policy D4 (para 10 above) because the Trust was entitled to view the allegations against Dr Chhabra, if established, as constituting serious misconduct.\nSecondly, the Trust had a discretion under para 4.5 of policy D4A (para 15 above) whether to combine issues of capability and conduct in a capability hearing.\nThe Trusts decision that it was appropriate to convene a conduct panel for the discrete complaints about Dr Chhabras conduct was within its discretion.\nI construe the guidance in that paragraph, when it speaks of there being occasions when it is necessary to pursue a conduct issue separately, as referring to what is appropriate in the circumstances rather than a test of strict necessity.\nSuch a test would not be consistent with the subsequent reference to the Trust deciding upon the most appropriate way forward.\nIt is not necessary for me to decide whether these clauses are apt for incorporation into the contract of employment or are mere guidance.\nThirdly, I consider the irregularity of the proposed inclusion of the additional complaint in the reference to the conduct panel (para 24 above) was cured by the Trusts decision on 17 January 2012 not to pursue that complaint.\nI would allow the appeal and substitute for Judge McMullens orders an order restraining the Trust from (a) pursuing any of the confidentiality concerns contained in the Trusts letter of 12 August 2011 as matters of gross misconduct and (b) pursuing any confidentiality concerns without first re starting and completing an investigation under its policy D4A.\n","output":"This appeal is concerned with the roles of the case investigator and the case manager when handling concerns about a doctors performance under the disciplinary procedures introduced over eight years ago for doctors and dentists in the National Health Service.\nThe national policy framework is known as Maintaining High Professional Standards in the Modern NHS (MHPS), which the Trust has implemented through its own policies D4 and D4A. Dr Chhabra was employed by the Trust as a consultant forensic psychiatrist at Broadmoor Hospital, which is a high security unit, on 3 September 2009.\nFollowing concerns about Dr Chhabras performance, Dr Nicholas Broughton, the Trusts medical director and case manager for these concerns, appointed Dr Amanda Taylor, a consultant forensic psychiatrist from another trust, as case investigator on 15 December 2010.\nHe instructed Dr Taylor to investigate the following: (1) an allegation that Dr Chhabra, travelling on a busy train, discussed an incident involving a patient and read a medical report on a patient whose name and personal details could be clearly seen; (2) an allegation that Dr Chhabra had dictated patient reports when travelling on a train; (3) concerns about Dr Chhabras working relationship with her clinical team; and (4) a complaint from one of Dr Chhabras patients, made through a solicitor.\nDr Taylor found, in her report of June 2011, that Dr Chhabra had breached, and admitted breaching, patient confidentiality (1) by having patient documents clearly visible and (2) by dictating sensitive reports on the train.\nShe also found that there were difficulties within Dr Chhabras clinical team which were issues of capability that needed to be addressed; and that the solicitors complaint did not have merit.\nHer report also recorded Dr Chhabras unchallenged account that she had not appreciated at the time that her practice compromised patient confidentiality and that she believed that she had ensured that no other passengers were close by when she dictated the reports.\nDr Taylor also reported on an allegation by Dr Chhabras former secretary, which had not been expressly included in her terms of reference, that she had made telephone calls when travelling by train to work in which she had discussed patient information.\nDr Taylor did not make any finding on the veracity of this allegation.\nIn response to a concern raised by Dr Chhabra, the Trust had undertaken that Mr Wishart, its associate human resources director, could take no part in the investigation.\nBut, unknown to Dr Chhabra, Dr Taylor had communicated with Mr Wishart during the investigation.\nMost significantly, Dr Taylor had sent Mr Wishart a draft of her report and Mr Wishart prepared suggested amendments to the draft.\nThe extensive amendments had stiffened the criticism of Dr Chhabra.\nDr Taylor had accepted some of the suggested amendments but not others.\nAmong those she had accepted was the characterisation as serious of breaches of confidentiality she had described in her report.\nOn 12 August 2011 Dr Broughton wrote two letters to Dr Chhabras solicitors.\nOne informed her that he regarded the concerns about her team working to be matters of capability.\nThe other stated that he proposed to put to a disciplinary panel not only the admitted breaches of confidentiality but also (i) the allegation, on which Dr Taylor had noted there had been a conflict of opinion, that Dr Chhabra, while travelling by train, had telephoned her secretary to discuss patient related information, and (ii) an allegation, which was not within Dr Taylors remit and on which she had not reported, that Dr Chhabra had breached patient confidentiality by disclosing information via email to her medical protection society and legal advisers.\nDr Broughton expressed the view that the charges were potential gross misconduct and that dismissal was a possible outcome of the hearing before the disciplinary panel.\nDr Chhabras solicitors objected to the charge of breach of patient confidentiality by disclosing information to her protection society and her legal advisers, which had not been the subject of Dr Taylors investigation.\nAt their request the Trust agreed to instruct Dr Taylor to investigate that allegation.\nDr Taylor carried out this further investigation and reported that there was no complaint to answer.\nAs a result, on 17 January 2012 Dr Broughton informed Dr Chhabra by letter that that charge would not be pursued at the disciplinary hearing.\nOn 1 June 2012 Judge McMullen QC granted Dr Chhabra a declaration and injunctive relief preventing the disciplinary panel from investigating the confidentiality concerns, including those not grounded in Dr Taylors report, as matters of gross misconduct.\nOn 25 January 2013 the Court of Appeal upheld the Trusts appeal.\nThe case manager was not confined to the findings of fact of the case investigator but could consider complaints supported by evidence reported by the case investigator, even if denied by the practitioner.\nThe conduct panel would resolve issues of disputed fact.\nDr Broughton was entitled to regard the breach of confidentiality as a potentially serious offence and as a result was justified in deciding to convene the conduct panel.\nDr Chhabra appeals to this court.\nThe Supreme Court unanimously allows Dr Chhabras appeal and orders the Trust not to pursue any of the confidentiality concerns contained in the Trusts letter of 12 August 2011 as matters of gross misconduct; and not to pursue any confidentiality concerns without first re starting and completing an investigation under its policy D4A.\nThe first and most significant issue is the roles of the case investigator and the case manager.\nThe procedures do not allow the case investigator to determine the facts.\nTheir aim is to have someone, who can act in an objective and impartial way, investigate the complaints identified by the case manager to discover if there is a prima facie case of a capability issue or misconduct.\nIt would introduce an unhelpful inflexibility into the procedures if (i) the case investigator were not able to report evidence of misconduct which was closely related to but not precisely within the terms of reference (as in the former secretarys allegations) or (ii) the case manager were to be limited to considering only the case investigators findings of fact when deciding on further procedure.\nSimilarly, it would be unduly restrictive to require the case manager to formulate the complaint for consideration by a conduct panel precisely in the terms of the case investigators report.\nNeither MHPS or the Trusts policies in D4 and D4A are so inflexible or restrictive.\nBut the procedure does not envisage that the case manager can send to a conduct panel complaints not considered by the case investigator or for which the case investigator has gathered no evidence.\nThe Trust was therefore correct in acceding to Dr Chhabras request for a second report from Dr Taylor in relation to the new allegation of breach of confidentiality in her communications with the protection society and her solicitors.\nThere were number of irregularities in the proceedings against Dr Chhabra that cumulatively render the convening of the conduct panel unlawful as a material breach of her contract of employment.\nFirst, Dr Taylors findings were not capable, taken at their highest, of supporting a charge of gross misconduct, defined in the policy as so serious as to potentially make any further relationship and trust between the Trust and the employee impossible.\nThe breaches of confidentiality she recorded, including the former secretarys allegations, were qualitatively different from a deliberate breach of confidentiality such as speaking to the media about a patient.\nSecondly, in reaching the view that Dr Chhabras behaviour could amount to gross misconduct, Dr Broughton founded on the words added to para 13.4.1 with effect from 28 March 2011, after the incidents in this case.\nThe list of misconduct in para 13.4.1 comprised only typical examples of what the Trust saw as amounting to gross misconduct and was not a comprehensive statement of the concept.\nBut Dr Broughton relied on the amended provision in support of his view that the complaints might amount to gross misconduct and quoted it in his letter of 12 August 2011 relating to the disciplinary procedure.\nThirdly, the Trust breached its contract with Dr Chhabra when Mr Wishart continued to take part in the investigatory process in breach of the undertaking the Trust had given.\nIn particular, when Mr Wishart proposed extensive amendments to Dr Taylors draft report and Dr Taylor accepted some of them, which strengthened her criticism of Dr Chhabra, the Trust went outside the agreed procedures which had contractual effect in ways going beyond clarifying its conclusions.\nThe report had to be the product of the case investigator.\nIt was not.\nFurther, the disregard for the undertaking amounted to a breach of the obligation of good faith in the contract of employment.\nIt was also contrary to policy D4s principle that managers act in a way that an objective observer would consider reasonable: Dr Chhabra had an implied contractual right to a fair process, which Mr Wisharts involvement undermined.\nFourthly, Dr Broughton did not re assess the decision in his letter of 12 August 2011 that the matters were considered as potential gross misconduct after he departed from the additional complaint once he had received Dr Taylors second report.\nHe was obliged to do so under para 3.1 of policy D4: an objective observer would not consider it reasonable to fail to do so.\nThe cumulative effect of those irregularities is that it would be unlawful for the Trust to proceed with the disciplinary procedure and that the Court should grant relief.\nThe categorisation of Dr Chhabras conduct as gross misconduct is itself a sufficient ground for injunction.\n","id":2}
{"input":"This is a more than usually anxious case.\nIt concerns the death penalty.\nThe United Kingdom is party to the Thirteenth Protocol to the European Convention on Human Rights (2004).\nIn its preamble, the contracting states state that they are convinced that everyones right to life is a basic value in a democratic society and that the abolition of the death penalty is essential for the protection of this right and for the full recognition of the inherent dignity of all human beings.\nThe UK Parliament had already demonstrated this conviction by finally abolishing the death penalty for murder in 1969 and for the few remaining offences to which it applied in 1998.\nAs Lord Dyson MR put it, in R (Sandiford) v Secretary of State for Foreign and Commonwealth Affairs [2013] EWCA Civ 581; [2013] 1 WLR 2938, the death penalty is (in my view) rightly regarded by the Government as immoral and unacceptable (para 61).\nBut it is not enough to think the death penalty immoral and unacceptable.\nThe issue in this case is the legality of the Governments decision to provide mutual legal assistance to the United States in the shape of the product of police enquiries to facilitate the prosecution of the claimants son in the United States for very serious offences, some carrying the death penalty, without seeking assurances that the death penalty would not be imposed or, if imposed, would not be carried out.\nWhat is immoral and unacceptable is not necessarily unlawful.\nAs judges, our role is to uphold the law.\nIt is understandable, therefore, that this judgment has taken a long time to emerge, as members of the court hold different views about the current state of the law.\nBecause of that, I have prepared this short guide to the judgments which follow.\nThe decision is attacked on two grounds (the questions certified by the Divisional Court are set out at para 19 of Lord Kerrs judgment): (i) it is unlawful at common law for the Government to facilitate the carrying out of the death penalty in a foreign state, not only by deporting or removing a person from the United Kingdom to be tried in that state, but also by providing information which may be used by that state in the trial of a person who is not currently in the United Kingdom; (ii) the decision to provide such information, insofar as it consists of personal data within the meaning of the Data Protection Act 2018 (the 2018 Act), was unlawful under Part 3 of that Act.\nThe leading judgment in this case is given by Lord Kerr.\nIt contains a comprehensive account of the facts, the issues, the competing arguments and the relevant national and international materials.\nIt is essential reading.\nThe crimes of which the claimants son is accused are the worst of the worst.\nNevertheless, having surveyed the development of the law in great detail, Lord Kerr concludes that the decision was unlawful both at common law and under the 2018 Act.\nThe majority of the Justices are unable to share his view of the common law.\nThe reasons for considering that the common law has not (at least yet) developed so far are explained by Lord Reed and Lord Carnwath.\nLord Reed also explains that the decision might be open to challenge on the more conventional ground that it lacked rationality.\nHe refers to two aspects of the Secretary of States reasoning: first, that prosecution in a foreign state was necessary to ensure that justice is done, even though there is insufficient evidence to prosecute him in the UK for an offence under UK law and UK law might regard his prosecution as an abuse of process; and second that possible execution in the US was regarded as preferable to detention in Guantanamo Bay.\nWhere the right to life is at stake, even decisions taken under prerogative powers may be subject to more anxious scrutiny than they otherwise would be, given the value which UK law attaches to the sanctity of all human life.\nLord Reed does not express a view on either point.\nIt is not open to the court to decide the case on this basis, as the claimant did not argue that the decision was irrational for these reasons and the Secretary of State has not had the opportunity of responding to it in this appeal.\nThe issue of whether the allegations could be tried in the UK has been the subject of separate judicial review proceedings.\nThe court is, however, unanimous in holding that the decision was unlawful under the 2018 Act.\nWe have had the benefit, not only of very full argument on the matter from Richard Hermer QC on behalf of the claimant, but also of a very helpful intervention by Gerry Facenna QC on behalf of the Information Commissioner.\nThe 2018 Act is discussed by Lord Kerr at paras 152 to 159 of his judgment and by Lord Carnwath at paras 207 to 228 of his judgment.\nThe short point is that, insofar as the information provided, or to be provided, to the US authorities consisted of personal data (which much of it did) the processing of such data by the Secretary of State as data controller required a conscious, contemporaneous consideration of whether the criteria for such processing were met.\nSubstantial compliance with those criteria, as found by the Divisional Court, is not enough.\nIt is not in dispute that the Secretary of State, when making the decision in question, did not address his mind to the 2018 Act at all.\nThere is, moreover, a further point under the 2018 Act (referred to by Lord Carnwath at para 220 of his judgment) which raises the question of whether such processing in these circumstances could ever be lawful.\nThis question was explored in the argument before us but in the light of our decision on the main point it is unnecessary for us to express a concluded view.\nNevertheless, it is worth some fuller explanation because it would undoubtedly merit further consideration if a similar issue were to arise in future.\nPart 3 of the 2018 Act makes provision about the processing of personal data by competent authorities for the law enforcement purposes and implements the European Unions Law Enforcement Directive (Directive (EU) 2016\/680) (the LED) (section 1(4)).\nThat Directive is therefore a legitimate aid to the interpretation of the 2018 Act.\nThe law enforcement purposes listed in section 31 include the investigation, detection and prosecution of criminal offences.\nChapter 5 of Part 3 deals with the transfer of personal data to third countries or international organisations.\nSections 73 to 76 set out the general conditions which apply to such transfers (section 72(1)(a)).\nThe data controller cannot transfer personal data unless three conditions are met (section 73(1)(a)).\nCondition 3 need not concern us, because Condition 1 was not met and it is arguable that Condition 2 could never be met.\nCondition 1 is that the transfer is necessary for any of the law enforcement purposes (section 73(2)).\nIn Guriev v Community Safety Development (UK) Ltd [2016] EWHC 643 (QB), Warby J held (in the context of restricting the subjects right of access to his personal data) that: The test of necessity is a strict one, requiring any interference with the subjects rights to be proportionate to the gravity of the threat to the public interest (para 45).\nThe parties agree that the same test applies in this context.\nThis obviously requires the data controller to address his mind to the proportionality of the transfer.\nCondition 2 is that the transfer (a) is based on an adequacy decision of (at that time) the European Commission (see section 74); (b) if not based on an adequacy decision, is based on there being appropriate safeguards; transfers must be documented (see section 75); or (c) if not based on an adequacy decision or appropriate safeguards, is based on special circumstances (see section 76) (section 73(3)).\nThis transfer was not based on an adequacy decision or on there being appropriate safeguards, because there were none.\nIn this connection, it is instructive that recital (71) to the LED contemplates among those safeguards that personal data will not be used to request, hand down or execute a death penalty or any form of cruel and inhuman treatment.\nIn the absence of an adequacy decision or appropriate safeguards, Condition 2 could only be met if there were special circumstances.\nOnce again, it is instructive that recital (72) to the LED regards these as derogations from its requirements and as such they should be interpreted restrictively and limited to data which are strictly necessary.\nA transfer to a third country or international organisation is based on special circumstances if it is necessary for any of the five purposes listed in section 76(1).\nOnly two could be relevant here: (d) in individual cases for any of the law enforcement purposes; or (e) in individual cases for a legal purpose.\nOnce again, the test of necessity is a strict one, requiring the controller to address his mind to the proportionality of the transfer.\nCrucially, however, section 76(2) provides: But subsection (1)(d) and (e) do not apply if the controller determines that fundamental rights and freedoms of the data subject override the public interest in the transfer.\nOnce again, this obviously requires the controller to address his mind to the fundamental rights and freedoms of the data subject and to whether they override the public interest in the transfer.\nRecital (1) to the LED states that the protection of natural persons in relation to the processing of their personal data is a fundamental right.\nRecital (17) makes it clear that the protection it affords should apply to natural persons whatever their nationality or place of residence.\nCrucially in this connection, recital (46) states that any restriction on the rights of data subjects must comply with the Charter of Fundamental Rights of the European Union and the European Convention on Human Rights and in particular respect the essence of those rights.\nClearly, therefore, the fundamental rights and freedoms of the data subject referred to in section 76(2) must include the rights protected by the European Convention.\nThese are to apply even where the data are to be transferred to a third country outside the European Union and whatever the nationality or place of residence of the data subject.\nThe most fundamental of the rights protected by the European Convention is the right to life.\nThis is an absolute right, not qualified by the possibility of restrictions or interferences which are necessary in a democratic society.\nArticle 2.1 prohibits the state from taking anyones life intentionally: the former exception for the death penalty when provided by law has gone following the Sixth and Thirteenth Protocols to the European Convention.\nThere are three limited exceptions in article 2.2, none of which apply to the infliction of the death penalty as such.\nHowever, article 2.2(a) does allow for a death which results from the infliction of force which is no more than absolutely necessary in defence of any person from unlawful violence.\nAnd recital (73) to the LED acknowledges that there may be an urgent need to transfer personal data to save the life of a person who is in danger of becoming a victim of a criminal offence or in the interest of preventing an imminent perpetration of a crime, including terrorism.\nThe Government did not engage directly with the argument.\nCollectively, these provisions point towards an interpretation of section 76(2) which would not allow the transfer of personal data to facilitate a prosecution which could result in the death penalty; but which would allow such a transfer if it was urgently necessary to save life or prevent an imminent crime.\nHad it been necessary, I would have been prepared so to hold.\nLORD KERR:\nIntroduction\nShafee El Sheikh is the son of the appellant, Maha Elgizouli.\nMr El Sheikh and another, Alexanda Kotey, are suspected of involvement in heinous offences committed in Syria.\nThe enormity of those offences was rightly accepted by Mr Edward Fitzgerald QC who appeared on behalf of Mrs Elgizouli on this appeal.\nIndeed, Mrs Elgizouli also admits that these crimes are of the most awful nature.\nShe accepts without question that her son should face trial for his alleged involvement in those dreadful offences.\nBut she considers that that trial should take place in this country rather than in the United States of America, where, at the time of the hearing of this appeal, it was contemplated that Mr El Sheikh and Mr Kotey would be tried.\nSo that there be no doubt as to the monstrous nature of the crimes of which it is claimed Mr El Sheikh and Mr Kotey are guilty, one may refer to the summary of those offences in the witness statement of Mr Graeme Biggar, the Director of National Security in the Home Office.\nHis account of those crimes has not been disputed by any of the parties to this appeal.\nMr El Sheikh and Mr Kotey are believed to be part of a group which was responsible for extremely grave offences committed against several individuals.\nThese include the beheadings of 27 men.\nThe US citizens James Foley, Steven Sotloff and Peter Kassig and the British citizens David Haines and Alan Henning are believed to be amongst those killed.\nThese killings came to global attention by all, except one, being filmed and posted on the internet.\nIt is difficult to imagine more horrific murders than those which Mr El Sheikh and Mr Kotey are alleged to have carried out.\nIt is entirely understandable, therefore, that Mr Biggar should aver that the deaths suffered by those men who were brutally killed have brought untold anguish to their families.\nIt is equally understandable that the families affected wish to see those responsible brought to justice.\nThat aim, Mr Biggar says, is strongly supported by HM Government.\nIt is an aim which must surely be shared by all right thinking members of our society.\nThe proceedings so far\nThis appeal raises the issue whether it was lawful for the Secretary of State for the Home Department to provide evidence to the United States that could facilitate the imposition of the death penalty.\nThe appellant brought a judicial review of the provision of mutual legal assistance (MLA) relating to her son after the Daily Telegraph published a letter from the Secretary of State to the US Attorney General revealing that such assistance had been provided.\nThe Divisional Court dismissed her claim on the merits, but certified two questions of law of public importance: (i) Whether it is unlawful for the Secretary of State to exercise his power to provide MLA so as to provide evidence to a foreign state that will facilitate the imposition of the death penalty in that state on the individual in respect of whom the evidence is sought; and (ii) Whether (and if so in what circumstances) it is lawful under Part 3 of the Data Protection Act 2018, as interpreted in light of relevant provisions of European Union data protection law, for law enforcement authorities in the UK to transfer personal data to law enforcement authorities abroad for use in capital criminal proceedings.\nJihad in Syria and Mr El Sheikhs suspected involvement\nThousands of extremists wishing to engage in violent jihad have travelled to Syria from around the world.\nA significant number of these have joined the Islamic State of Iraq and the Levant (Daesh).\nThe nature of the conflict in Syria and the presence of these terrorists have made that country a significant source of threat to United Kingdom and United States interests.\nThe activities of Daesh in Syria have put civilian life there at considerable risk.\nThey also constitute a wider risk to the stability of the region.\nAdherents to the terrorist cause of Daesh have been involved in the most abhorrent of crimes, including murder, rape, kidnap and the enslavement of people.\nA number of persons from the United Kingdom have joined Daesh and other terrorist organisations in Syria.\nThey present particular challenges for this country.\nThey pose risk to life by (among other things) radicalising, inspiring, enabling or directing potential terrorists in the UK.\nThe government has responded to this phenomenon in three ways.\nIn the first place, attempts are made to prevent UK citizens from leaving this country to fight abroad.\nWhere those attempts are not successful, the government seeks to stop those who have engaged in fighting abroad from returning to the UK, where it is appropriate and lawful to do so per Mr Biggars witness statement.\nWhere, despite those efforts, terrorists manage to return, a range of measures is deployed designed to minimise the risk that they might present to the public.\nThe effort to defeat Daesh has resulted in many foreigners who are suspected of having been terrorist fighters being detained by, among others, the Syrian Democratic Forces.\nMr El Sheikh and Mr Kotey were captured by these forces in northern Syria in January 2018.\nIt is believed that both were members of a notorious group nicknamed the Beatles on account of their British accents.\nIt is also suspected that this group was responsible for many unspeakable crimes against UK and US citizens.\nSince this appeal was heard, the court has been informed that Mr El Sheikh and Mr Kotey have been taken into US custody.\nNo information has been given as to their current whereabouts.\nAlthough he had been a British citizen, on 22 December 2014 Mr El Sheikh was deprived of his citizenship under section 40(2) of the British Nationality Act 1981.\nThis provides that the Secretary of State may deprive a person of a citizenship status if satisfied that the deprivation is conducive to the public good.\nIt may not be ordered, however, if the subject is rendered stateless.\nIt was determined that Mr El Sheikh was entitled to Sudanese citizenship.\nThe decision to deprive him of his British citizenship is not under challenge in these proceedings.\nThe request for mutual legal assistance\nA treaty between the governments of the United Kingdom and the United States on mutual legal assistance in criminal matters was made in 1994.\nIt came into force in 1996.\nUnder its terms, the governments agreed to provide mutual assistance in the form, inter alios, of documents, records and evidence (article 1(2)(b)) for the purposes of criminal and other proceedings.\nProceedings are defined in article 19 of the treaty as including proceedings related to criminal matters and any measure or step taken in connection with the investigation or prosecution of criminal offences .\nIn June 2015 the United States made a request to the United Kingdom under the treaty for MLA in respect of a criminal investigation that it was conducting into the activities of terrorists who had a connection with the UK, who were operating in Syria, and who were suspected of involvement in the murders of United States citizens there.\nThe US request was for materials which had been gathered by UK police as part of a UK investigation into this group.\nTwo of the offences which the US was investigating (homicide and hostage taking resulting in death) carried the death penalty.\nThe Rt Hon Theresa May MP, who was then the Home Secretary, was prepared to accede to the mutual legal assistance request.\nBut, as was customary, she sought a number of assurances from the US.\nThese were outlined in a letter sent on her behalf to the US Department of Justice on 29 October 2015.\nIt stated: As you will be aware, the UK will not provide formal mutual legal assistance in cases where the death penalty is a likely or possible punishment without a written assurance from the Requesting State that they would not seek to impose or, if imposed, carry out such penalty.\nAs two of the offences for which the suspects are sought (homicide and hostage taking) carry the death penalty, we require, as a pre condition to the provision of the assistance requested by you, that you provide a written undertaking that the death penalty will not be sought or imposed or, if imposed, will not be carried out against anyone found guilty of any criminal offence arising from this investigation and\/or UK assistance provided.\nThis request was precisely in line with the long standing policy of steadfast opposition by successive UK governments to the imposition of the death penalty in any circumstances whatever.\nThe unequivocal terms of the letter are significant.\nIt is firmly stated that the UK will not provide MLA where the death penalty is a possible punishment without the normal death penalty assurances.\nThe letter makes it plain that a written undertaking to that effect is required as a pre condition to the supply of the information.\nThe imperative tone of the letter reflects the circumstance that not only has the death penalty been abolished in this country (capital punishment was suspended for murder in 1965 and finally abolished in 1969 (1973 in Northern Ireland)), governments since then have refused to countenance its imposition on UK citizens.\nMoreover, in 2004 the Thirteenth Protocol to the European Convention on Human Rights (ECHR) became binding on the United Kingdom, prohibiting the restoration of the death penalty for as long as the UK is a party to the Convention.\nThe abhorrence with which our law regards the imposition of this most dire penalty is also reflected in the jurisprudence of the Judicial Committee of the Privy Council which shall be referred to below.\nThe US response to the Home Secretarys letter was given in a letter from the Department of Justice of 21 March 2016 which said: With regard to potential application of the death penalty to any person found guilty of an offense arising from this investigation, we can respond as follows: While no persons have yet been charged in connection with this conduct, persons charged with offenses arising from such conduct could be subject to the federal death penalty.\nThe United States provides the assurance that it will introduce no evidence obtained in response to this request in a proceeding against any person for an offense that is subject to the death penalty.\nIn the event the evidence were to be so introduced, the United States would take a decision not to seek the death penalty, a decision which in the federal system absolutely precludes the death penalty from being imposed.\nWhile, therefore, the evidence actually supplied by the UK would not be directly used in order to seek the death penalty, on the basis of this letter, that penalty could have been sought by recourse to other material which might have been generated as a result of the information which the authorities in this country had provided.\nThis point was made in a letter from the Home Office dated 10 August 2017: The contents of your letter of 21 March 2016 have been carefully considered.\nHowever, it is our view that the assurance provided in respect of the death penalty falls short of that which was requested In light of this [we invite] you to reconsider your response to our request for assurances as provided by article 3(2) and article 7(3)(a) of the UK US Mutual Legal Assistance Treaty.\nAs stated in our earlier letter, the UK will not provide mutual legal assistance in cases where the death penalty is a likely or possible punishment without a written assurance that the Requesting State would not seek to impose or, if imposed, would not carry out such a penalty.\nAs offences for which the suspects are sought carry the death penalty, we require, as a pre condition to the provision of the requested assistance, that you provide a written undertaking that the death penalty will not be sought or imposed or, if imposed will not be carried out against anyone found guilty of any criminal offence arising from this investigation and\/or UK assistance provided.\nIn any event, the assurance proposed by you in March 2016 would, in our view, allow UK assistance to be used for the purposes of another investigation to obtain other evidence which would not be caught by the assurance and which could lead to the death penalty being imposed and carried out.\nThe UK wishes to provide the widest measure of assistance in this case but regrets that we will only be in a position to accede to your request if you are able to give the undertakings as requested above.\nNo official response to this letter was received.\nIt was informally indicated that the assurances sought would not be given.\nThe terms of the correspondence from the British government are important and significant.\nThey reflect the deep seated nature of this countrys opposition to the death penalty.\nIndeed, it is noteworthy that some of the families of the victims of the alleged depredations of Mr El Sheikh and Mr Kotey have publicly stated that they do not wish to have that penalty imposed upon them.\nThese considerations, while in no way determinative, are indications as to whether our common law should now be recognised as having developed to the point where there is a right enshrined in the law of this country that our government will not act to facilitate in any way the possibility of the imposition of that most extreme punishment.\nMr El Sheikhs detention in January 2018 marked what Mr Biggar described as a profound shift in the importance of the request for assistance.\nAs he explained, it brought immediate political reality and urgency to the question of where he could and should be brought to justice.\nThis prompted greater focus on the request which the British authorities had made for assurances and the reaction of the US Department of Justice to that request.\nImportantly also, there had been a change in the administration in America since the original request for assurances had been made.\nMr Biggar explained the significance of this in his witness statement: It was the strong (and publicly stated) view of senior members of the new US administration that those states from which [foreign terrorist fighters] had originally come ought to try those individuals.\nThe US position was that other states should not assume that it would take up responsibility for non US terrorists apprehended in Syria or Iraq.\nIn the aftermath of the capture of El Sheikh in January 2018, set against the wider issues of responsibility for [foreign terrorist fighters] in detention in Syria, US representatives strongly reiterated this message to the UK.\nThe new US administration also had different views on the US military detention facility at Guantanamo Bay.\nPresident Trump had been elected on, among other things, a commitment to reverse his predecessors\ndecision to close Guantanamo\nIt was made clear that the strong preference of the US government was that the UK should assume responsibility for Mr El Sheikh and that he should be prosecuted in this country.\nThe Crown Prosecution Service had determined, however, in January 2016 that the evidence available was not sufficient to warrant charging Mr El Sheikh.\nThat position was reviewed in February 2018 and it was again concluded that there was insufficient evidence to charge him.\nThe authorities in the US and the UK decided, however, that there should be a joint review of the prospects of a successful prosecution in either jurisdiction.\nThis took place in March 2018.\nPolice officers from the Counter Terrorism Command and specialist prosecutors from the CPS visited the US at the end of March 2018 and were given access to the evidence which the US investigators had gathered.\nFBI agents had already visited the UK and had seen and considered the evidence gathered by UK investigators.\nAt the time of the hearing of the appeal it was not considered feasible to prosecute Mr El Sheikh in this jurisdiction.\nThat decision by the CPS was the subject of a separate challenge which need not be referred to further here.\nThe court has learned, however, that, in light of Mr El Sheikhs being in the custody of US authorities, the feasibility of his being tried in this country may be revisited.\nAny prosecution of Mr El Sheikh in the US depends critically on the evidence which has been obtained by the British authorities.\nAccording to Mr Biggar, following the meeting between US and UK officials in March 2018, the clear view of the UK officials was that a prosecution of Mr El Sheikh in the US federal court system, which included the UK evidence, represented the only realistic prospect of securing justice for the victims and their relatives.\nDespite this, again according to Mr Biggar, senior members of the US administration continued to state their opposition to foreign terrorist fighters, including Mr El Sheikh, being tried in the US.\nThis reflected the ongoing concern of the US that it should not fall to that country to bring within its criminal justice system those such as Mr El Sheikh for whom it felt other states bore responsibility.\nIn particular, the US considered that the UK ought to set an example to the wider international community by accepting responsibility for bringing foreign terrorist fighters such as Mr El Sheikh and Mr Kotey to trial.\nAnother factor that was present to the mind of the British authorities was the prospect that the US might transfer Mr El Sheikh to Guantanamo Bay.\nThe assessment made in this country was that the US was more likely to do that than to try him in the federal criminal system.\nIn March 2018, the then Home Secretary visited Washington and spoke to US Attorney General Sessions.\nAs well as expressing his clear view that all foreign terrorist fighters should be prosecuted in their home countries, the Attorney General referred to them as prisoners of war and suggested that transfer to Guantanamo Bay was therefore appropriate (its purpose, in the Attorney Generals view, being the detention of prisoners of war).\nThe UK has consistently opposed the regime in Guantanamo Bay.\nIn this case, an additional consideration, according to Mr Biggar, was that the families of those kidnapped and killed have a strong desire to ensure that those suspected of involvement should be tried before a civilian court.\nThe UK, he has said, was conscious that a number of families of those killed by terrorist acts in Syria opposed the transfer of those suspected of involvement in those killings to Guantanamo Bay, because they felt that this would end any prospect of securing justice for the murder of their loved ones.\nA third consideration was the apprehension that Mr El Sheikh might be released from custody in Syria.\nThis was not believed to be likely, but it nevertheless played some part in the governments deliberations.\nIt seems clear, however, that the factor of overwhelming importance was what Mr Biggar described in his witness statement as the strong message from the US administration, relayed directly by US officials as well as through the UK Embassy, that it was strongly opposed to the UK seeking death penalty assurances, in the event that the UK, itself, decided that it could or would not prosecute; and that, if the UK was pressing the US to prosecute because a UK prosecution was not viable.\nMr Biggar has averred that in early March 2018 the UKs lobbying on the death penalty had been described as an irritant by a very senior US official.\nThis statement is both enlightening and concerning.\nIt indicates how the UK authorities were coming under (and might become susceptible to) political pressure from the US.\nFor reasons discussed below that pressure does not appear to have taken into account, much less reflected, either the UKs longstanding policy in this area nor the joint experience of the UK and the US in the request for and the furnishing of such assurances.\nThe statement also raises questions as to whether pragmatic considerations, at the expense of a principled approach, might begin to influence the UKs reaction to the demand that it should cease its lobbying in relation to the death penalty assurances.\nOn 16 April 2018, the Office for Security and Counter Terrorism in the Home Office and the UK Central Authority (UKCA) each provided submissions to the then Home Secretary, the Rt Hon Amber Rudd MP, and the Security Minister, the Rt Hon Ben Wallace MP.\nUKCA recommended that the Home Secretary should maintain her predecessors decision to accede to the request dated 19 June 2015, but only on the basis that a full death penalty assurance would be provided.\nIt also suggested that she should endorse the UKCA decision to reject the current direct use death penalty assurance offered by the US. (It should be noted that this submission was made on the premise that the earlier direct use assurance was still available, although UK officials understanding was that later contact with the Department of Justice had cast some doubt on the continued availability of this assurance.)\nThe Security Minister responded to this advice on 17 April 2018 saying that he agreed with the first recommendation but disagreed with the second.\nHe indicated that the views of the Foreign Secretary should be sought on whether the assurance, then believed still to be on offer, should be accepted.\nThe Home Secretary did not consider this submission before she resigned on 29 April.\nMr Wallace had talks with Department of Justice officials on 20 April 2018.\nA theme of those exchanges was that senior officials in the US administration did not consider that Mr El Sheikh and Mr Kotey should be tried in the US federal courts.\nMr Wallace was also told that if the US was required to deal with them, their transfer to Guantanamo Bay was more likely if the UK imposed restrictions on the release of information to the US authorities.\nThe picture which emerges from these exchanges is one of increasing and applied pressure by the US on the UK to minimise any restrictions on the use of the released evidence.\nThat pressure was two pronged.\nFirst that a trial in the federal courts of America might be refused on the basis that the UK should undertake their trial.\nSecondly, that if Mr El Sheikh and Mr Kotey were transferred to the US, the chances of their being incarcerated in Guantanamo Bay increased, if assurances from the US authorities about the use of the evidence were sought.\nThe US authorities must have known that these indications would put pressure on the UK to dilute or eliminate the request for assurances.\nIndeed, it seems highly likely that this was their purpose.\nAnd, as it proved, before long the pressures began to have effect.\nMr Biggars assessment of the exchanges between the Americans and the British was that if the UK wanted to obtain support for a US prosecution, it would be critical that evidence provided by the UK came with the [fewest number] of restrictions possible.\nThe US authorities position was put bluntly by Attorney General Sessions when he gave evidence at a Senate panel hearing on 25 April 2018.\nHe expressed disappointment that the British are not willing to try the cases but tend to tell us how to try them and they have certain evidence that we need .\nHe also indicated that he was supportive of sending Mr El Sheikh and Mr Kotey to Guantanamo Bay.\nInasmuch as this statement might be taken to indicate that the British authorities considered that Mr El Sheikh could have been tried in the UK but preferred to transfer that responsibility to the US, it is plainly wrong.\nAs pointed out in para 32 above, the CPS had decided that it was not feasible to prosecute Mr El Sheikh in this country and that decision had been confirmed after a review in February 2018.\nThe Rt Hon Sajid Javid MP became Home Secretary on 30 April 2018.\nHe spoke to Attorney General Sessions on 4 May 2018.\nMr Biggar gives the following account of the conversation in para 39 of his statement: This was their first conversation and it was regarded as significant that this case was one of the first topics that the US Attorney General raised with the Home Secretary.\nThe US Attorney General indicated that he was concerned that the UK had said that it was not interested in prosecuting El Sheikh; that the death penalty should not be an issue for the UK and that he did not want the UK to tie his hands in relation to the use of the material.\nThe US Attorney General also referred favourably to Guantanamo Bay.\nThe Home Secretary indicated that a formal decision would be taken shortly.\nThere is no reference in Mr Biggars account of that conversation to the Attorney General having been told of the longstanding practice of the British authorities to seek assurances in relation to the death penalty.\nIt does not appear that Mr Sessions was told that a decision not to follow that practice would represent a very significant departure from the UKs policy over very many years.\nNor was he told of the Death Penalty Assistance Policy which provides that, in general, where there is a significant risk of the death penalty being imposed, before it is agreed that assistance be provided, assurances should be sought that that penalty will not be imposed. (It is, of course true that the policy does contemplate that in certain exceptional circumstances, the request for assurances may be foregone but the pre eminence of the general rule it appears at para 1 of the policy is testament to how deeply embedded is the practice of seeking assurances.)\nIn May 2018 the UK ambassador in Washington was asked for his opinion as to the likely reaction of the US authorities if the request for assurances was persisted in.\nHe replied that Department of Justice career officials would not be surprised; indeed, it is what they would expect.\nBut he advised that this did not apply to senior political figures in the administration.\nHis advice continued: Their reaction is likely to be something close to outrage.\nThey already feel that we are dumping on them a problem for which we should take responsibility.\nThey have been signalling to us for weeks now that we are in no position to attach any conditions to this.\nAt best they will think we have tin ears.\nAt worst, they will wind the President up to complain to the PM and, potentially, to hold a grudge.\nWe might argue that the UK position on this is well known and that we were simply behaving in a way consistent with our long term policy.\nThere might be some understanding of this.\nBut I have to warn that there might also be some damage to the bilateral relationship. (Emphasis added)\nIn the italicised sentences above, it had been suggested that it could be pointed out that the UK position was not only familiar but that it reflected this countrys longstanding policy.\nThere is nothing in Mr Biggars statement or in the evidence presented to the Divisional Court to indicate that this suggestion was taken up.\nThe ambassador considered that seeking death penalty assurances might prompt the US not to pursue a prosecution.\nSome officials had suggested as much.\nAnd it would point the way towards transfer to Guantanamo.\nIf the well established practice of requiring death penalty assurances in all but exceptional cases was not drawn to the attention of the senior political figures in the administration, this is surely surprising.\nIf their anticipated reaction was one of outrage, is it not to be expected that information about this practice would or, at least, should have been mitigated by a patient and well marshalled account of how this practice had operated in the past? Attorney General Sessions, in his presentation to the Senate panel hearing in April 2018, had portrayed the UK stance as one of unwillingness to try Mr El Sheikh, while seeking to dictate how he should be tried in the US.\nThat is a portrayal which it should have been easy to correct.\nThis was not a case of the UK being unwilling to have Mr El Sheikh tried in this jurisdiction.\nRather, it was considered by the CPS, an institution entirely independent of government, that such a trial was not feasible.\nEqually, the UK did not seek to dictate how Mr El Sheikh should be tried in the US.\nThe assurances sought were directed solely to the question of penalty, not the mode of trial.\nIndeed, the assurances sought did not even preclude the possibility that the death penalty might be imposed (although that was the preliminary request).\nUltimately, the request was for an undertaking that, if imposed, the death penalty would not be carried out.\nThe absence of direct evidence as to what passed between senior political figures in the US administration and the UK authorities cannot be deemed to establish that there was a failure on the part of the latter adequately to make the case for acceptance of or the need for compliance with the assurances, however.\nThere may well have been exchanges which are not referred to in the evidence which was presented to the Divisional Court and relied on before this court.\nIn any event, it would have been a matter for political judgment as to whether representations along those lines would have been availing.\nAbsent a glaring and obviously irrational failure on the part of the UK government to make pertinent representations to the US administration, the courts are powerless to intervene.\nOn 18 May 2018 UKCA made a further submission to ministers.\nThey maintained their advice that the Home Secretary should continue to require a full death penalty assurance.\nIn a telling passage in the submission, the following appears: [The need for a comprehensive assurance that the suspects will not be subject to the death penalty] is critical to the consistency with which we apply HMGs policy on Overseas Security and Justice Assistance Were we not to apply this practice to this case, it could undermine all future efforts to secure effective written death penalty assurances from the US authorities for future UK security and justice assistance.\nThe exception made for the US in this case could also undermine future efforts to secure similar assurances from other countries with which we have a security relationship particularly if as seems likely there is litigation which leads to the disclosure of the level of assurance.\nIt could leave HMG open to accusations of western hypocrisy and double standards which would undermine HMGs Death Penalty Policy globally, including in the US.\nThese were formidable arguments in favour of maintaining the long standing policy of the UK and of resisting the pressure from the US authorities.\nBut, in a note of 24 May 2018, the director of Home Office International declined to accept them: Although it clearly runs the risk of creating a precedent for the future and with other countries, taken in the round I am comfortable that proceeding with no assurances is appropriate in securing justice for the families; notwithstanding the fact [that] we understand the families wish to avoid application of the death penalty.\nThere appears to me to be an inherent illogicality in this statement.\nAs the director had observed, the families wished to avoid the application of the death penalty.\nYet, the mooted justification for the decision not to seek assurances concerning the death penalty was the securing [of] justice for the families.\nThe species of justice that the families wished to have was one where there was not the possibility of the imposition of the death penalty.\nThe decision not to seek assurances opened up that very possibility.\nTo fulfil their wishes, it was surely required that the hallowed practice of seeking death penalty assurances be observed.\nOn 24 May 2018, the Security Minister notified Home Office officials that his final position was to make a strong recommendation, in this exceptional case, that HMG does NOT seek assurances (either full or direct use) around the death penalty, when sharing evidence for a Federal Prosecution only.\nThe Home Secretarys private secretary confirmed on 29 May that both ministers had concluded that no assurances should be sought from the US.\nA meeting took place between the Home Secretary and Attorney General Sessions on 30 May 2018.\nMr Sessions repeated his view that the US should not be left to assume responsibility for other nations terrorist fighters.\nHe said that if the US were to [be] willing to try Mr El Sheikh in a civilian court as opposed to a military one, he could not see how the US could do that without the UK evidence or without recourse to the death penalty.\nMr Biggar described Mr Javids reaction to this approach in the following passage of his witness statement: It became clear to the Home Secretary during the course of [that] meeting that the position of the US remained unchanged and that there was no prospect of the Attorney General offering any form of undertaking whatsoever.\nHe assessed that, if he asked for assurances (whether full or partial), it was likely to prompt the sort of outrage he had been advised of, and would damage the prospects of a US criminal prosecution.\nHe judged that the question of assurances was critical to whether Attorney General Sessions consented in due course to such a prosecution.\nInto his calculation about pressing the assurances point during the meeting, he also considered the wider UK government interests at stake, including co operation on security issues and potential damage to the bilateral relationship.\nAgain, it is not suggested that the Home Secretary raised the point that the seeking of assurances about the death penalty was a traditional feature of this type of exchange.\nNor does it appear to have been suggested that the UK was opposed, as a matter of entrenched principle, to the taking of any step that would facilitate the imposition and carrying out of the death penalty.\nOne may not assume, however, (largely for the reasons given at para 51 above) that these matters were not drawn to the attention of the Attorney General.\nStill less may one assume that it was not decided that it was either pointless or impolitic to do so.\nOn either basis, the omission to raise these matters, however cursorily surprising, does not warrant judicial interference.\nThe Home Secretary made it clear, however, that the UK could not provide material to be used in a military court or any process at Guantanamo Bay.\nThis is somewhat perplexing.\nWhy was the prospect of detention so much less favourable than the possibility of Mr El Sheikh being executed? This has not been explained.\nThe day after the Home Secretarys meeting with the American Attorney General, a submission was made by civil servants to the Secretary of State for Foreign and Commonwealth Affairs.\nThree options were identified: first, to seek a full death penalty assurance; secondly, to seek a partial death penalty assurance; and thirdly to seek no assurance.\nThe advice to the Foreign Secretary was to urge the Home Secretary to seek a full assurance.\nSeeking comprehensive assurances was consistent, the submission stated, with the general expectations set out in UK policy on overseas security and justice assistance and with all past practice when dealing with US mutual legal assistance requests.\nThe submission accepted that sharing information without assurances provided the greatest chance that the US would pursue a federal prosecution.\nIt then continued: A successful prosecution will serve as a deterrent to others and give the public confidence in our ability to see justice served.\nHowever, there are wider national security risks if the prosecution results in execution as this could be used by radicalisers in the UK.\nThe Home Secretary wrote to the Foreign Secretary on 11 June 2018, indicating that significant attempts had been made to obtain full assurances but that the time had arrived to accede to the request for information without seeking any assurance.\nHe acknowledged that there was a serious risk that Mr El Sheikh and Mr Kotey would, if prosecuted and convicted, face execution as a direct result of UK assistance.\nThe Foreign Secretary replied on 20 June 2018.\nHis letter concluded, On a balanced assessment of the key risks , I agree that as this is a unique and unprecedented case, it is in the UKs national security interests to accede to an MLA request for a criminal prosecution without death penalty assurances for Mr Kotey and Mr El Sheikh.\nThe Home Secretary duly informed Attorney General Sessions on 22 June 2018 that the UK would not seek death penalty assurances.\nMany witness statements were then supplied to the US authorities.\nAs the Divisional Court has pointed out, however, this does not render the present challenge academic.\nFurther material may be sought and it is, in any event, entirely possible that the UK would refuse to permit witnesses employed by the state, such as police officers, to travel to the US to give evidence without adequate assurances.\nThe appellants arguments (i) There is a common law principle that the UK will not give mutual legal assistance where there is a risk that this would lead to the imposition of the death penalty.\nThe appellant submits that the UK, by signing two death penalty protocols to the ECHR, in 1999 and 2004, is committed to the abolition of the death penalty in all circumstances.\nIn particular, since the signing of the Sixth Protocol to the European Convention in 1999, the UK has maintained a firm policy of refusing extradition or deportation to countries that impose the death penalty, no matter how serious the offence, and no matter how repellent the offender.\nThe appellant argues that this is not just some alien obligation imposed on us by the European Court.\nTo the contrary, the UK has taken that stance as a legal principle and it now forms part of the common law of this country.\nThat claim is fortified, the appellant claims, by the circumstance that the UK has signed the Second Optional Protocol to the United Nations International Covenant on Civil and Political Rights (ICCPR) on the abolition of the death penalty in December 1989.\nIt is further suggested that the UK has adopted a policy of not providing evidence that might give rise to the risk of the imposition of the death penalty unless assurances are given by the requesting state that that penalty will not be carried out.\nAt the Thirteenth Special Session of the UN General Assembly on 19 April 2016, the UK declared: The United Kingdom has a proud history of championing human rights, and we oppose the use of the death penalty in all circumstances as a matter of principle.\nThe United Kingdom does not provide criminal justice or other assistance that may result in a death sentence being applied.\nWe will hold international agencies funded by the United Kingdom to account for compliance with that principle and all other human rights obligations.\nThe appellant points out that the policy of seeking assurances has been repeatedly referred to by UK authorities as the logical consequence of this countrys position of rejecting the death penalty as wrong in all circumstances everywhere.\nIt was reflected in the statement to the UN in April 2016, and in the Foreign Office recommendation recorded in the UKCA briefing of 18 May 2018 (para 52 above).\nThe policy accords, the appellant claims, with the obligation imposed on abolitionist states by the ICCPR, as authoritatively interpreted by the Human Rights Committee in its General Comment No 36, para 63, which says, inter alia, that states who are parties to the covenant have an obligation to respect and to ensure the rights of all persons who are subject to its jurisdiction, that is, all persons over whose enjoyment of the right to life it exercises power or effective control.\nThe appellant argues that the frequently declared policy of the UK government, reflecting as it does the obligation in the ICCPR, to which it has subscribed, gives effect to a principle of law.\nThat principle is that, in the exercise of its formal powers in the criminal justice field, the government of this country should not act in any way that is directly instrumental in the imposition of the death penalty.\nThe appellant accepts that, in providing evidence to the United States, the Home Secretary was exercising a prerogative power.\nBut she argues that that power must be exercised in accordance with the fundamental principles of the common law, the dictates of humanity, and the requirements of international human rights law.\nIt is argued that the death penalty offends against the evolving requirements of humanity enshrined in the common law.\nIt is also argued that the death penalty (and any facilitation of it) is contrary to article 10 of the Bill of Rights 1688 which prohibits the infliction of cruel and unusual punishments.\nThe Bill of Rights is, the appellant says, an always speaking statute and its prohibition of cruel and unusual punishments must be interpreted dynamically in accordance with evolving standards of decency.\nFor these reasons, the appellant contends that it is an unlawful exercise of public power to impose the death penalty, or knowingly and directly to facilitate its imposition.\n(ii) The non facilitation argument\nThe appellant submits that it cannot be lawful or rational to facilitate a penalty that the UK regards as inhuman.\nAt para 34 of the Human Rights Committees General Comment No 36 (see para 65 above) it is stated: States parties that abolished the death penalty cannot deport, extradite or otherwise transfer persons to a country in which they are facing criminal charges that carry the death penalty, unless credible and effective assurances against the imposition of the death penalty have been obtained.\nThe facilitation of inhuman treatment, it is suggested, is contrary to the fundamental principles of the common law and the European Convention.\nThe appellant accepts that Strasbourg case law on the non facilitation principle has not yet been expressly extended beyond cases involving extradition or expulsion.\nIt has not yet been applied to cases where the facilitation takes the form of the provision of mutual legal assistance which is likely to contribute causally to the imposition of the death penalty in a foreign state.\nBut, as a matter of logic, it should be, the appellant says.\nIf it is wrong to extradite or deport persons who would face execution in the countries to which they are extradited or deported, it is equally wrong to supply information or evidence which would lead to their execution in the country to which the evidence has been provided.\nThe practical reason for the fact that Strasbourg jurisprudence and the case law of this country founded on the Human Rights Act 1998 (HRA) have not addressed this question is, the appellant says, that the person who invokes Convention protections must be within the jurisdiction of a Convention state at the time of the injustice he complains of.\nBut this, it is claimed, should not inhibit the development of the common law.\nThe appellant is herself in this jurisdiction and therefore within the jurisdiction of the Convention.\nIt might have been argued that, as the close relative of Mr El Sheikh, she could claim to be a victim of a potential breach of her sons right to life (see Rabone v Pennine Care NHS Trust (INQUEST intervening) [2012] UKSC 2; [2012] 2 AC 72).\nThis is not the basis of the appellants case, however, which is that the common law prohibition on facilitation applies regardless of the location of any individual.\nIt is therefore not necessary for this court to consider any alternative route under the Convention.\nThe domestic law principle on which the appellant relies is said to be founded on the duty of the state not knowingly to contribute to the imposition of an inhuman punishment through the exercise of its formal powers.\nThat duty, it is claimed, cannot rationally or justly be limited to cases where the individual in question is in the UK.\nThe person who is extradited to face the death penalty is in precisely the same position as he whose execution has been facilitated by the provision of mutual legal assistance.\nIn both instances there is in play an underlying principle that it is inconsistent with a fundamental common law principle of justice for the government to facilitate the imposition of a cruel and inhuman punishment in a foreign state. (iii) Should the common laws development outstrip the limits of Strasbourg case law?\nThe Divisional Court held that the HRA set the limits of any development in this area when it gave effect to the European Convention, with the accompanying territorial limits to the application of the Convention.\nIt then held that it was wrong to develop the common law in a manner not sanctioned by the relevant statutory provisions.\nIn challenging these conclusions, the appellant argues that the HRA contains no express or considered limitation to the developments of common law principles in respect of the non facilitation of the death penalty.\nIt is too general a statute to serve such a function.\nIt is pointed out that in such cases as R (Osborn) v Parole Board [2013] UKSC 61; [2014] AC 1115, Kennedy v Information Comr (Secretary of State for Justice intervening) [2014] UKSC 20; [2015] AC 455 and A v British Broadcasting Corpn (Secretary of State for the Home Department intervening) [2014] UKSC 25; [2015] AC 588 this court has asserted that the HRA does not remove or limit the power of the common law to develop so as to protect fundamental rights.\nIt was further submitted that the HRA should not be regarded as providing the sum of common law wisdom on the death penalty.\nThe jurisdictional limits of that Act and the Convention were the product of the way in which the Convention was drafted nearly 70 years ago.\nThere was no reason, the appellant argued, that domestic principles of public law should not go further, particularly when they give effect to the underlying rationale of the extradition cases, namely that the UK should not make itself complicit in the imposition of the death penalty by positively facilitating it.\nThe Divisional Court held that the decisions in R (Sandiford) v Secretary of State for Foreign and Commonwealth Affairs [2014] UKSC 44; [2014] 1 WLR 2697 and R (Zagorski) v Secretary of State for Business, Innovation and Skills [2010] EWHC 3110 (Admin); [2011] HRLR 6 presented obstacles to the recognition of the common law right claimed by the appellant.\nIt was submitted that these decisions were readily distinguishable.\nThat submission will be considered in the discussion section of this judgment. (iv) Does the US death penalty regime give rise to cruel and inhuman punishment?\nRelying on, among other cases, the decision of Pratt v Attorney General of Jamaica [1994] 2 AC 1, the appellant argued that the death penalty regime in the US gave rise to a specific risk of inhuman and cruel punishment.\nThis was because inevitably execution was delayed many years after the death penalty had been imposed.\nProlonged delay by itself violates the protection against cruel, inhuman or degrading treatment, the appellant argued.\nThe Divisional Court rejected this argument, observing that the decision in Pratt turned on the interpretation of the Jamaican Constitution and that it did not establish a rule of the common law, either in Jamaica or generally, that particular periods of delay made the enforcement of the death penalty unlawful.\nThe appellant contended that this constituted a misunderstanding of the Pratt decision.\nIt was also argued that what was described as the death row phenomenon was contrary to customary international law.\nIn this context, the appellant relied on article 5 of the Universal Declaration of Human Rights 1948, which provides: No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment, and article 7 of the UN International Covenant on Civil and Political Rights and the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment.\nAgain, these arguments will be considered in the discussion section of this judgment. (v) Does the provision of mutual legal assistance breach the Data Protection Act 2018 (DPA)?\nFinally, the appellant argued that the provision of mutual legal assistance in the form of various statements from witnesses etc was in breach of the 2018 Act as interpreted in light of relevant provisions of European Union data protection law.\nThe DPA was intended to give effect to the UKs obligations under the EU Law Enforcement Directive 2016\/680 (the LED).\nIt was argued that the DPA should be interpreted by reference to the EU Charter of Fundamental Rights (the Charter).\nOn that basis, the appellant claimed that it was unlawful for law enforcement authorities in the UK to transfer personal data to law enforcement authorities abroad for use in capital criminal proceedings.\nIt was common ground between the appellant and the respondent that the transfer of material by the Home Secretary to the US in July 2018 pursuant to the mutual legal assistance request involved processing of personal data for a law enforcement purpose by a controller which is a competent authority for the purposes of Part 3 of the Act.\nOn this account, the appellant claimed, the Home Secretarys decision to transfer personal data to authorities in the US without seeking and obtaining a death penalty assurance was an unlawful breach of (1) the first data protection principle in section 35 of the Act; (2) the second data protection principle in section 36; (3) the provisions governing international transfers of personal data for law enforcement purposes in sections 73 to 76; and (4) the special processing restrictions in section 80.\nIt is claimed, moreover, that the Home Secretary paid no regard to the duties imposed on him by the 2018 Act.\nThese arguments will also be considered below.\nThe respondents case\nThe respondent submits that there is no support as a matter of ECHR law or international law for the existence of an obligation not to provide legal assistance to another state on the basis that it may be used to charge an individual and then, if convicted and so sentenced, lead to the imposition of the death penalty.\nThe essence of the appellants case is, the respondent says, that, despite her sons being excluded from the protection of the ECHR\/HRA and, having elected to go abroad to engage in terrorist activities, he is nonetheless entitled to rights which extend well beyond any ECHR rights recognised to date.\nThe second principal submission of the respondent was that there is no recognised common law prohibition on the provision of legal assistance to a foreign state, where such assistance might be used in proceedings leading to the death penalty in that state.\nIndeed, the respondent claims, the case law indicates that, aside from those established categories of case in which a duty of care is imposed, there is no general common law duty on the Secretary of State to take positive steps to protect an individuals life from the actions of a third party.\nNor should, the respondent says, the common law be developed to recognise such a contemporaneous principle.\nThe common law develops incrementally.\nThe recognition of a right prohibiting the provision of mutual legal assistance to a country whose legal system permits (in appropriate cases) the imposition of the death penalty would not be an incremental change.\nSuch a development would be a considerable and controversial step.\nThere were, the respondent claimed, specific reasons for particular caution here: the creation of the prohibition would take effect in the context of a treaty with a state with whom the UK co operates closely and which adheres to the rule of law; the UK is equally a beneficiary of that co operation; the provision of mutual legal assistance relates to extremely serious crimes (with international ramifications); it risked having a significant, adverse impact upon UK relations with a most important international partner, the US (and indeed on relations with any other state which continues to impose the death penalty).\nThe respondent submitted that the recognition of a common law principle forbidding mutual legal assistance in all circumstances where that might lead to the imposition of the death penalty would carry the prospect of it being applied in a myriad of circumstances with consequences which could not be foretold.\nThe principle has the potential to be expanded into spheres where it would risk creating real damage, for example, to public protection and national security, as Hughes LJ acknowledged in R v Ahmed (Rangzieb) [2011] EWCA Crim 184; [2011] Crim LR 734.\nThe respondent poses the questions, what degree of causal connection to the death penalty would suffice? To what forms of cruel, degrading or inhuman treatment would the principle extend would it extend to the provision of assistance in a case in which there were serious concerns about the state of prisons in the foreign jurisdiction?.\nThese issues, the respondent claims, illustrate that the extension of the common law in the way contended for by the appellant would be no small step and are powerful factors in favour of not extending the common law.\nOn the question of facilitation, the respondents overarching submission was that there is nothing in the jurisprudence of the ECHR, international law or the common law which supported the notion of an obligation going beyond not removing an individual from within the jurisdiction to another state where there exist substantial grounds for believing the individual will be subject to the death penalty.\nThe concept of facilitation has not been extended beyond this.\nIn particular, the respondent relied on the circumstance that the contracting states had ceded to the European Court of Human Rights (ECtHR) a jurisdiction with well defined territorial limits.\nUnless an individual was within the jurisdiction of one of the member states of the Council of Europe, he or she was not entitled to have recourse to rights arising under the ECHR.\nThe domestic transposition of the ECHR into the HRA gave rise to a similar restriction.\nIn any event, the respondent says, relying on the decision of the Strasbourg court in Khan v United Kingdom (2014) 58 EHRR SE15, the ECtHR does not consider that the substantive protections of the ECHR apply to prevent or control decisions or steps taken by the state (within its jurisdiction) which may expose persons to ill treatment at the hands of a foreign state.\nIn this connection, the respondent also relied on the decision of this court in Sandiford.\nIt had been held in that case that there was no general Convention principle that the United Kingdom should take steps within the jurisdiction to avoid exposing persons, even United Kingdom citizens, to injury to rights which they would have if the Convention applied abroad para 23.\nOn the question of customary international law, the respondent submitted that, while some multilateral international conventions oblige state signatories not to impose the death penalty within their own jurisdictions, this was by no means a universal prescription.\nThe example of the ICCPR was cited.\nSubject to the conditions enshrined in article 6 of that Convention (which provides, inter alia, that no one is to be arbitrarily deprived of life and that the sentence of death may only be imposed in those countries where that penalty has been retained for the most serious crimes) the death penalty continues to be permitted.\nThe respondent points out that the UN Human Rights Committees (UNHRC) General Comment No 36 (2018) on article 6 ICCPR at para 34 does not stipulate that mutual legal assistance cannot be provided by states where the death penalty has been abolished to states where it remains a possible penalty.\nThe material part of the relevant paragraph reads, States parties that abolished the death penalty cannot deport, extradite or otherwise transfer persons to a country in which they are facing criminal charges that carry the death penalty, unless credible and effective assurances against the imposition of the death penalty have been obtained.\nIt is therefore plain, the respondent says, that UNHRC regards the obligations which apply to state parties to the ICCPR that have abolished the death penalty as limited to deportation, extradition or transfer to a state which carries the death penalty.\nThe omission of mutual legal assistance in this General Comment is reflective, it is claimed, of there being no authority or state practice supporting the extension of the concept of facilitation to the provision of mutual legal assistance in the international law sphere.\nThe case for the existence of a right under customary international law forbidding the provision of mutual legal assistance without death penalty assurances is, the respondent claims, further undermined by the absence of specific reference to the death penalty in important mutual legal assistance treaties and the absence of any state practice preventing this type of assistance.\nIn particular, the respondent has referred to the 1994 Treaty on Mutual Legal Assistance in Criminal Matters between the UK and the US (as amended); the Agreement between the US and the European Union (both of which are silent on the question of obtaining death penalty assurances where mutual legal assistance is sought and provided); and the Agreement between the EU and Japan on mutual legal assistance in criminal matters (article 11 of which expressly recognises that the death penalty should be a discretionary rather than a mandatory ground for the refusal of assistance).\nAustralia has made express reference (in the Mutual Assistance in Criminal Matters Act 1987, as amended, section 8(1A) and (1B)) to the question whether mutual legal assistance should be provided in death penalty cases.\nThe relevant provisions require that a request by a foreign country for assistance must be refused if it relates to the prosecution or punishment of a person charged with, or convicted of, an offence in respect of which the death penalty may be imposed in the foreign country, unless the Attorney General is of the opinion, having regard to the special circumstances of the case, that the assistance should be granted.\nIn relation to the argument that the inevitable delay in carrying out a sentence of death gave rise to a distinct basis for concluding that the regime in the US constituted cruel and inhuman punishment, the respondent contended that there was no consensus in international law to support that claim.\nMoreover, it was expressly disavowed by the jurisprudence of UNHRC see LaVende v Trinidad and Tobago, (Communication No 554\/1993) (unreported) 14 January 1998.\nIndeed, said the respondent, the UNHRC had consistently rejected the contention that delay in applying the death penalty amounts to a breach of either article 7 or article 10 of the ICCPR.\nFinally on the question of international law, the respondent submitted that, even if any support could be discerned from that source for a prohibition on the provision of mutual legal assistance in circumstances such as arise in the present case, the question of transposition or incorporation into domestic law as a controlling principle of public law provides an insuperable barrier.\nAny state obligation under customary international law does not automatically become a domestically enforceable public law obligation.\nThe constraints on transposition are constitutional.\nThe translation of a particular international obligation into domestic law was something for Parliament to consider.\nIt was not one for the courts to impose.\nThe respondent presented several arguments in reaction to the case made by the appellant on data protection.\nIt is unnecessary to rehearse all of them here.\nIn broad summary, the respondent submitted firstly that neither the Charter nor EU law in fact contains the prohibition the appellant claimed arose from the DPA.\nSecondly, the respondent says that, whether or not the Home Secretary gave separate consideration to the DPA, there was substantive compliance with its provisions, and it was the substantive lawfulness of the transfer of the information which was critical.\nThirdly, it was common ground between the parties that the transfer of evidence in the present case was outside the scope of EU law.\nIn particular, on 1 December 2014, the UK exercised its right under article 10(4) of Protocol 36 to the EU Treaties to opt out of acts of the Union in the field of police cooperation and judicial cooperation in criminal matters which have been adopted before the entry into force of the Treaty of Lisbon.\nThe opt out included the EU US MLA agreement.\nSince the opt out, mutual legal assistance between the UK and the US has been governed exclusively by the 1994 Treaty on Mutual Legal Assistance in Criminal Matters between the UK and the US (as amended), the respondent argues.\nDifferent interpretational approaches apply to Part 3 of the DPA depending on whether the LED applies to the processing in question.\nWhere the LED does apply, the full purposive approach of EU law (including the Charter) will apply to the implementing measures.\nWhere it does not apply, the LED is of more attenuated relevance, although the respondent accepts that it may still be a legitimate aid to construction as a matter of domestic law.\nBut this is no warrant for introducing the Charter through the back door.\nIn any event, the respondent says, the Charter has never been interpreted to\npreclude transfer of evidence in a case such as the present.\nArticle 19(2) provides: No one may be removed, expelled or extradited to a state where there is a serious risk that he or she would be subjected to the death penalty, torture or other inhuman or degrading treatment or punishment.\nThat formulation simply reflects the jurisprudence of the ECtHR.\nIt is dealing with a situation in which the individual concerned is within the jurisdiction of the member state and is removed, expelled or extradited.\nIt does not deal with a situation in which information or evidence is transferred.\nAs to the appellants claim that the transfer of information offended the first data protection principle in section 35 of the DPA, the respondent argued that the transfer was both lawful and fair as the section required.\nIt was also necessary in the sense of being necessary for the performance of a task carried for [the law enforcement purpose] by a competent authority section 35(2)(b).\nOn the appellants argument relating to the various conditions which must be met for the transfer of personal data for law enforcement purposes, the respondent challenged the appellants claim that section 73 established a hierarchy of steps to be taken sequentially by the data controller at least to the extent that it is argued that the final step, namely, where there are special circumstances which justify the transfer, may only be invoked as a last resort.\nIt is common case that the decision was not based on a European Commission adequacy decision, the first condition under section 73(3).\nThe second step is to consider whether there were adequate safeguards in place.\nThe respondent disputes the suggestion that this gave rise to an obligation on the part of the controller to investigate whether adequate safeguards existed, and in all cases refrain from transferring unless it was deemed that the safeguards were inappropriate.\nIn any event, the respondent says that section 35 of the Act (which deals with sensitive processing) did not apply in the case of Mr El Sheikh.\nThe respondent disputed that there had been a breach of the second data principle. (It arises where personal data collected for a law enforcement purpose may be processed for any other law enforcement purpose section 36(3)).\nEven if the decision to transfer the evidence to the US constituted a different law enforcement purpose, such that the second data protection principle applied, it was patently authorised by law, necessary and proportionate to that other purpose, the respondent argued.\nAs to the appellants argument based on section 80 of the Act, the respondent submitted that this provision simply did not apply to Mr El Sheikhs case.\nDiscussion\n(i) How the common law develops\nArticle 10 of the Bill of Rights 1688 prohibits the infliction of cruel and unusual punishments.\nOf course, at that time, and for almost three centuries afterwards, the carrying out of the death penalty continued without its being thought to offend article 10.\nBut, for the reasons set out below, the death penalty is now recognised by the common law as constituting such punishment.\nThe Bill of Rights may be considered to provide the backdrop to contemporary consideration of whether the facilitation of the imposition of the death penalty is contrary to what should now be recognised as the common law of the United Kingdom.\nWhat is conceived to be cruel and unusual punishment adjusts, like so many other societal perceptions, to changes in the standards and values of society which develop over time with the growth of knowledge and the evolution of attitudinal changes.\nThe common law of the UK rises to the challenge of those changes.\nAs long ago as 1800, Lord Kenyon uttered these celebrated words in R v Rusby (1800) 2 Pea 189, 192: The common law, though not to be found in the written records of the realm, yet has been long well known.\nIt is coeval with civilised society itself, and was formed from time to time by the wisdom of man.\nGood sense did not come with the Conquest, or at any other one time, but grew and increased from time to time with the wisdom of mankind.\nIn A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221, para 152, Lord Carswell picked up that theme when he said: We have long ceased to give credence to the fiction that the common law consists of a number of preordained rules which merely require discovery and judicial enunciation.\nTwo centuries ago Lord Kenyon recognised that in being formed from time to time by the wisdom of man it grew and increased from time to time with the wisdom of mankind: R v Rusby Sir Frederick Pollock referred in 1890 in his Oxford Lectures, p 111 to the freshly growing fabric of the common law and McCardie J spoke in Prager v Blatspiel, Stamp and Heacock Ltd [1924] 1 KB 566, 570 of the demand of an expanding society for an expanding common law.\nSimilarly, in the US Supreme Court 121 years ago Matthews J said in Hurtado v California (1884) 110 US 516, 531 that: as it was the characteristic principle of the common law to draw its inspiration from every fountain of justice, we are not to assume that the sources of its supply have been exhausted.\nOn the contrary, we should expect that the new and various experiences of our own situation and system will mould and shape it into new and not less useful forms.\nAs Peter du Ponceau said of the common law (A Dissertation on the Nature and Extent of the Jurisdiction of the Courts (1824), Preface): Its bounds are unknown; it varies with the successions of ages, and takes its colour from the spirit of the times, the learning of the age, and the temper and disposition of the judges.\nIt has experienced great changes at different periods, and is destined to experience more.\nIt is by its very nature uncertain and fluctuating; while to vulgar eyes it appears fixed and stationary.\nThe common law will not develop in an area where Parliament has legislated definitively.\nBut that is not the case here.\nThe HRA does not prevent the common law from upholding rights or obligations that are outside the scope or jurisdiction of the ECHR.\nMoreover, nothing can be inferred from the fact that Parliament has not legislated to prohibit the provision of assistance without death penalty assurances.\nThe respondent makes the point that section 16 of the Crime (Overseas Production Orders) Act 2019 (the 2019 Act) does not require the obtaining of an assurance, only the seeking of one, before designating an agreement under section 52 of the Investigatory Powers Act 2016 (IPA).\nBut section 52 of the IPA does not concern the transfer of information to another country.\nIt deals only with the obtaining of information by interception of communications.\nIt may be considered appropriate for the Secretary of State to designate an agreement without a general assurance, as later a specific assurance can be requested before transferring specific information collected.\nThis is emphatically not a case of Parliament stepping into the arena.\nIt has said nothing about the legality of transferring information without a death penalty assurance.\nThe only relevance of the 2019 Act is, as the appellant has contended, that it shows Parliaments general support for seeking death penalty assurances in the context of MLA.\n(ii) ECHR jurisprudence\nDevelopment of the common law is not immune from nor does it disavow external influence.\nIn R (Osborn) v Parole Board [2013] UKSC 61; [2014] AC 1115, this court endorsed the view that the courts of the United Kingdom are able to (and should where appropriate) take account of obligations arising under the ECHR in the development of the common law see per Lord Reed at para 57.\nTo like effect, the remarks of Lord Mance in Kennedy v Information Comr (Secretary of State for Justice intervening) [2014] UKSC 20; [2015] AC 455, para 46 where he said, Convention rights represent a threshold protection; and, especially in view of the contribution which common lawyers made to the Conventions inception, they may be expected, at least generally even if not always, to reflect and to find their homologue in the common or domestic statute law.\nAnd in Lin v Comr of Police of the Metropolis [2015] EWHC 2484 (QB), applying Kennedy and relying also on Pham v Secretary of State for the Home Department (Open Society Justice Initiative intervening) [2015] UKSC 19; [2015] 1 WLR 1591, Green J at para 51 stated that it was perfectly plain . that the common law, EU law and the Convention can walk side by side when protecting rights.\nWhat then are the external influences which ought to bear on the question whether there should now be recognised a common law principle that the UK government will not facilitate the imposition of the death penalty? First, the jurisprudence of the Strasbourg court. The case law relating to Protocol 13 does not exactly constitute an external influence, since the UK has ratified this in October 2003, with it coming into force on 1 February 2004. (Ratification of Protocol 6, which expressed a general tendency in favour of abolition of the death penalty, had taken place in 1999.\nBut Protocol 13 is of greater contemporary relevance.)\nProtocol 13 in article 1 abolished the death penalty.\nArticle 2 forbade any derogation from the provisions of the Protocol under article 15 of the Convention and article 3 stipulated that no reservation may be made under article 57 of the Convention in respect of the provisions of the Protocol.\nIt is therefore a comprehensive charter forbidding the death penalty in all circumstances.\nThe Protocol was considered by the ECtHR in Al Saadoon v United Kingdom (2010) 51 EHRR 9.\nIts nature and extent and the background to its introduction are described in paras 115 118 of the judgment.\nThese are of significance when considered in the context of the claim that it is now a principle of the common law that there should not be any facilitation of the imposition of the death penalty either by the extradition or deportation of an individual to a foreign country where such a sentence might be carried out or by the provision of legal assistance to such a country where the individual is already located.\nThe paragraphs therefore merit quotation in full: 115.\nThe court takes as its starting point the nature of the right not to be subjected to the death penalty.\nJudicial execution involves the deliberate and premeditated destruction of a human being by the state authorities.\nWhatever the method of execution, the extinction of life involves some physical pain.\nIn addition, the foreknowledge of death at the hands of the state must inevitably give rise to intense psychological suffering.\nThe fact that the imposition and use of the death penalty negates fundamental human rights has been recognised by the member states of the Council of Europe.\nIn the preamble to Protocol No 13 the Contracting States describe themselves as convinced that everyones right to life is a basic value in a democratic society and that the abolition of the death penalty is essential for the protection of this right and for the full recognition of the inherent dignity of all human beings. 116.\nSixty years ago, when the Convention was drafted, the death penalty was not considered to violate international standards.\nAn exception was therefore included to the right to life, so that article 2(1) provides that 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.\nHowever, as recorded in the explanatory report to Protocol No 13, there has subsequently been an evolution towards the complete de facto and de jure abolition of the death penalty within the member states of the Council of Europe.\nProtocol No 6 to the Convention, which abolishes the death penalty except in respect of acts committed in time of war or of imminent threat of war, was opened for signature on April 28, 1983 and came into force on March 1, 1985.\nFollowing the opening for signature of Protocol No 6, the Parliamentary Assembly of the Council of Europe established a practice whereby it required states wishing to join the Council of Europe to undertake to apply an immediate moratorium on executions, to delete the death penalty from their national legislation and to sign and ratify Protocol No 6.\nAll the member states of the Council of Europe have now signed Protocol No 6 and all save Russia have ratified it. 117.\nIn October 1997 the Council of Europe Heads of State and Government called for the universal abolition of the death penalty.\nResolution II adopted at the European Ministerial Conference on Human Rights on 3 November 2000 invited the Committee of Ministers to consider the feasibility of a new additional protocol to the Convention which would exclude the possibility of maintaining the death penalty in respect of acts committed in time of war or of imminent threat of war.\nProtocol No 13, which abolishes the death penalty in all circumstances, was opened for signature on May 3, 2002 and entered into force on July 1, 2003.\nAt the date of adoption of the present judgment, Protocol No 13 has been ratified by 42 member states and signed but not ratified by a further three.\nAzerbaijan and Russia are alone in not having signed the Protocol.\nIt was signed by the United Kingdom on May 3, 2002, ratified on October 10, 2003 and entered into force in respect of that State on February 1, 2004. 118.\nThe court considers that, in respect of those states which are bound by it, the right under article 1 of Protocol No 13 not to be subjected to the death penalty, which admits of no derogation and applies in all circumstances, ranks along with the rights in articles 2 and 3 as a fundamental right, enshrining one of the basic values of the democratic societies making up the Council of Europe.\nAs such, its provisions must be strictly construed.\nA number of features should be noted from this passage.\nFirst, how attitudes to the death penalty have evolved over the period since the drafting of the Convention, and, indeed since the ratification of Protocol 6.\nSecondly, the all embracing reach of Protocol 13.\nNo derogation from it is permitted.\nThe right not to be subjected to the death penalty applies in all circumstances.\nThirdly, it is to be regarded as a fundamental right, ranking alongside article 2 (the right to life) and article 3 (the right not to be subject to torture or inhuman or degrading treatment).\nFourthly, the near universal subscription to this charter by the countries which comprise the Council of Europe is testament to the widespread abhorrence to the imposition of the death penalty, whatever the prevailing circumstances or conditions.\nThe respondent dismissed the relevance of the ECtHR jurisprudence, relying on Khan v United Kingdom (see para 88 above) and Sandiford and Zagorski (para 74 above).\nIt was submitted that the ECHR\/HRA jurisprudence is positively against the concept of the state being responsible for any broader concept of facilitation extending beyond the physical removal of the individual.\nSpecifically, the case law was said to be against the state being under an obligation not to take steps within its jurisdiction which might expose an individual who is not within the jurisdiction to the risk of treatment that would or might otherwise be contrary to the ECHR.\nI will examine those decisions presently but, by way of preliminary comment, one may observe that the purpose of referring to ECtHR jurisprudence is not to suggest that the Strasbourg court has endorsed the notion that there is an extra territorial dimension to the obligation not to facilitate the death penalty.\nTo the contrary, the significance of the Strasbourg case law and Protocol 13 lies in its illustration of the practically unanimous opposition to the death penalty in any circumstances whatever.\nThe jurisprudence is thus important and noteworthy as an influencer to the conclusion that the contended for common law right should be recognised, rather than as providing any directly binding decision to that effect.\nIn Khan at paras 25 and 26, the court said: 25.\nA states jurisdictional competence under article 1 is primarily territorial.\nHowever, the court has recognised two principal exceptions to this principle, namely circumstances of state agent authority and control and effective control over an area (see Al Skeini v United Kingdom (2011) 53 EHRR 18, paras 130 141).\nIn the present case, where the applicant has returned voluntarily to Pakistan, neither of the two principal exceptions to territorial jurisdiction apply.\nThis is particularly so when he does not complain about the acts of British diplomatic and consular agents in Pakistan and when he remains free to go about his life in the country without any control by agents of the United Kingdom.\nHe is in a different position, both to the applicants in Al Saadoon (who were in British detention in Iraq and thus, until their handover to the Iraqi authorities, were under British authority and control) and to the individuals in Al Skeini (who had been killed in the course of security operations conduct by British soldiers in South East Iraq). 26.\nMoreover, and contrary to the applicants submission, there is no principled reason to distinguish between, on the one hand, someone who was in the jurisdiction of a Contracting State but voluntarily left that jurisdiction and, on the other, someone who was never in the jurisdiction of that state.\nNor is there any support in the courts case law for the applicants argument that the states obligations under article 3 require it to take this article into account when making adverse decisions against individuals, even when those individuals are not within its jurisdiction.\nFrom these passages it is clear that the courts principal preoccupation was with the territorial reach of the Convention, not with opposition to the death penalty.\nLikewise, in Sandiford and Zagorski, although in the latter case observations were made concerning the nature of a common law obligation to take positive steps to protect an individuals life from the actions of a third party.\nThese observations will require close consideration.\nIn Sandiford, as the respondent in the present case submitted, the appellant had argued unsuccessfully that the UK was obliged to fund legal representation for a person facing a capital charge in Indonesia; or had applied too rigid a policy against doing so.\nThe Supreme Court concluded that the claimant was not within the jurisdiction of the UK so as to engage any ECHR\/HRA rights.\nBut that is nothing to the present point.\nThe appellant does not argue that she or her son are entitled to rely directly on a Convention right.\nMr El Sheikh is not within the territorial jurisdiction of the ECHR.\nThe purpose of referring to ECtHR jurisprudence and Protocol 13 is to demonstrate the almost complete ubiquity of opposition in the countries which comprise the Council of Europe to the imposition of the death penalty in any circumstances whatever.\nObservations by Lord Dyson MR in Sandiford when it was before the Court of Appeal ([2013] EWCA Civ 581; [2013] 1 WLR 2938) are, however, worthy of note.\nAt para 7 of his judgment he said: It is the longstanding policy of the UK to oppose the death penalty in all circumstances as a matter of principle.\nIts strategy and policy in relation to the death penalty is set out in the HMG Strategy on Global Abolition of the Death Penalty: 11 October 2010.\nThe strategy confirms that the goals of the UK government are to increase the number of abolitionist countries or countries where a moratorium exists on the use of the death penalty; to seek further restrictions on the use of the death penalty in countries where it is used and a reduction in the number of executions; and to ensure that EU minimum standards are met in countries which retain the death penalty. (Emphasis added) and at para 61: The death penalty is (in my view) rightly regarded by the government as immoral and unacceptable.\nNo challenge was made by the respondent to the correctness of these statements.\nThe appellant therefore submits that they provide powerful support for the recognition of a common law principle that the death penalty should not be facilitated by the government of this country.\nI shall examine EU law on this issue later.\nBut in the meantime, Lord Dyson MRs statement, that one goal of the governments strategy was to ensure that EU minimum standards [were] met in countries which retain the death penalty must be viewed against the background that both EU and ECHR law have a consistent theme, viz that the death penalty is to be condemned and opposed in every circumstance.\nHow could compliance with that position be reconciled with a decision to provide material to a country which retains the death penalty when the very provision of that material could lead to the imposition of that penalty?\nIn Zagorski the claimants were citizens of the US who had been sentenced to death in that jurisdiction.\nThey were due to be executed by lethal injection consisting of an anaesthetic, sodium thiopental, followed by other injections.\nThey applied for judicial review to challenge the decisions of the Secretary of State for Business, Innovation and Skills refusing to impose a control pursuant to the Export Control Act 2002 on the export of sodium thiopental from the United Kingdom to the United States.\nIt was held that the claimants were not entitled to the protection of ECHR.\nThe obligation of the United Kingdom under the Convention did not extend to securing Convention rights to these claimants as they had never been, at any material time, within the territorial jurisdiction of the United Kingdom.\nThe Divisional Court acknowledged that the common law can act to protect human rights independently of the HRA but there was no general common law duty on the government to take positive steps to protect an individuals life from the actions of a third party.\nAt para 80 Lloyd Jones J said: I require no persuading that the common law can act to protect human rights quite independently of the Human Rights Act 1998.\nHowever, the extent of such protection and the relationship of the common law to the statutory rights conferred by the Human Rights Act require careful consideration.\nFor example, beyond the established categories of case where a duty of care is imposed, there is no general, common law duty on Her Majestys Government to take positive steps to protect an individuals life from the actions of a third party.\nMoreover, the common law has shown a reluctance to remedy apparent lacunae in the ECHR regime.\nThe appellant in the present case argues that the ratio in Zagorski was that there was no general common law duty on the Secretary of State to take positive steps to protect an individuals life from the actions of a third party.\nHere, by contrast, the position is not one of abstaining from taking an action that could prevent the US from carrying out the death penalty.\nIn this case the respondent has authorised the provision of assistance which, on his own admission, has created a serious risk that the individuals concerned will, if prosecuted and convicted, face execution as a direct result of UK assistance in this matter.\nIf there is a common law principle that the UK should not facilitate the carrying out of the death penalty in any circumstances whatever, there should not be a valid distinction between taking positive steps to prevent an execution and taking an action that facilitates the execution.\nBut it ought to be noted that, although originally the claimants in Zagorski had argued that the common law must step in to impose the fundamental principle of the right to life, where for purely jurisdictional reasons the Human Rights Act does not protect that fundamental right, that argument was substantially modified in the course of the hearing see paras 78 and 79 of the judgment.\nAt para 83, Lloyd Jones J outlined the change of position of the claimants: Miss Lieven came to accept in her oral submissions that the essence of her case on the common law in this context was that the importance the common law attaches to fundamental rights means that they have to be given very considerable weight in any decision making process where they are in play.\nShe accepted that that would not mean that a decision refusing to impose a ban on the export of the drug to the United States would necessarily be unlawful.\nHowever, the standards which the court would apply to such a decision would be intensified and an increased level of justification would be required.\nIt was therefore unnecessary for the court in Zagorski to address the question whether there existed a common law principle that the government should not facilitate the imposition or the execution of the death penalty in a foreign state.\nTrue it is that Lloyd Jones J said (at para 84) that there was no free standing, common law ground for challenging the decisions in issue but that observation must be seen against the modification which the claimants had made to their original case.\nI do not consider that Zagorski can be regarded as authority for the proposition that the common law should not now be regarded as having evolved to the point where there should be no facilitation of the death penalty.\nMoreover, the case in Zagorski had been framed as one where the court should act to fill what was regarded as a lacuna in ECHR law.\nFor the reasons given earlier, I consider that the principal significance of Convention jurisprudence is as an indicator of the prevalence throughout the countries of the Council of Europe of settled opposition to the death penalty.\nI do not accept that it is an appropriate exercise to seek to identify gaps in ECHR law and then consider whether those should be filled by the development of the common law.\nRather, I believe that the common law should be seen as an autonomous organism, open to external influence but developing on its own initiative rather than in response to perceived deficiencies in other systems of law.\n(iii) European Union law\nArticle 2 of the European Charter provides in para 1 that everyone has the right to life and in para 2 that no one shall be condemned to the death penalty or executed.\nThe Divisional Court (at para 181 of its judgment) rejected a submission made on behalf of the appellant that the absolute objection to the death penalty contained in the Charter permeates all aspects of EU decision making at both the political and legislative level.\nBefore this court, the appellant submits that the Divisional Court was wrong to reject her argument as to the effect of EU law.\nIn addition to the absolute prohibition on the death penalty reflected in various articles in the Charter, the EUs absolute opposition to the death penalty is, the appellant says, reflected in an array of other instruments including: (1) the EU Guidelines on Death Penalty (2013), which set out the EUs strong and unequivocal opposition to the death penalty in all times and in all circumstances; (2) Council Regulation (EC) No 1236\/2005 of 27 June 2005 concerning trade in certain goods which could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment; (3) Parliament and Council Regulation (EU) 2016\/2134 of 23 November 2016 concerning trade in certain goods which could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment (which specifically focuses on the death sentence rather than the generalised prohibition on torture and inhumane treatment); (4) numerous Resolutions of the European Parliament; and (5) recital (71) to the LED, which requires a data controller to take into account that the personal data will not be used to request, hand down or execute a death penalty or any form of cruel and inhuman treatment before transferring data to a foreign law enforcement authority.\nOn 10 October 2018 the EU and the Council of Europe issued a Joint Declaration marking the European and World Day against the Death Penalty.\nThe Joint Declaration stated: On the European and World Day against the Death Penalty, the Council of Europe and the European Union (EU) reiterate their strong opposition to capital punishment in all circumstances and for all cases.\nThe death penalty is an affront to human dignity.\nIt constitutes cruel, inhuman and degrading treatment and is contrary to the right to life.\nThe death penalty has no established deterrent effect and it makes judicial errors irreversible Member states should continue taking effective measures to prevent their involvement, however indirect, in the use of the death penalty by third countries, such as by adopting measures that prevent the trade in goods that could\nsubsequently be used to carry out executions\nThe reason that the Divisional Court concluded that there was no absolute EU law prohibition against the death penalty was the provision in article 11(1)(b) of the EU Japan MLA agreement.\nThe Divisional Court considered that this indicated that the existence of the death penalty in Japan is treated as a discretionary, rather than a mandatory, ground for the refusal of assistance para 89.\nThe appellant submitted that these conclusions were erroneous for the following reasons: (1) Article 11(1)(b) of the EU Japan MLA agreement makes it clear that member states may provide mutual legal assistance in connection with an offence punishable by death under the laws of the requesting state if the requested state and the requesting state agree on the conditions under which the request can be executed.\nIn other words, it permits member states to make the provision of MLA conditional upon exactly the sort of death penalty assurance which the appellant submits the Home Secretary was required to obtain in this case.\nNothing in the EU Japan MLA agreement qualifies or detracts from the EUs longstanding and consistent stance of absolute opposition to the death penalty in all circumstances. the EU Japan agreement (2) The suggestion that demonstrates that EU law is not absolutely opposed to the death penalty is also inconsistent with: (a) The travaux preparatoires of the agreement, which record that the EUs specific objective in negotiating the agreement was to allow for effective mutual legal assistance but at the same time ensure that evidence transmitted by a member state, could in no circumstances be used to impose a death sentence (b) the European Parliaments resolution of 16 February 2012 on the death penalty in Japan; and (c) the statement of the European Union Delegation to Japan and the Heads of Mission of EU member states dated 6 July 2018, which stated that the European Union is strongly and unequivocally opposed to the use of capital punishment under all circumstances and we aim at its universal abolition and which called on the Japanese Government to abolish capital punishment.\nThe respondent disputes all of this.\nIt is submitted that article 11 of the EU Japan MLA agreement leaves it to the discretion of the member state to decide whether to refuse to provide data on the basis that it relates to a capital offence.\nReliance on the travaux preparatoires of the agreement was misguided the respondent says.\nThe document demonstrates that the EUs line to take in respect of the provision of MLA in a death penalty case was open to negotiation: The aim of a possible agreement between the European Union and Japan on mutual legal assistance would be to enhance and facilitate mutual legal assistance between Japan on the one hand and the 27 member states of the EU on the other hand based, while safeguarding fundamental rights and guaranteeing that the death penalty could not be imposed on the basis of evidence submitted by the EU member states. it has been made clear to Japan that the issue of death penalty\/life imprisonment is of crucial importance to the EU.\nIt appears that a satisfactory solution to this issue could be found in the negotiations.\nThis, the respondent says, clearly indicates that the arrangement was one that was open to negotiation as regards its implementation.\nThe respondent also claims that the appellants reliance on the European Parliaments resolution of 16 February 2012 on the death penalty in Japan [AB\/99] (para 12.4(2)(b)) and the statement on executions in Japan of the EU Delegation to Japan and the Heads of Mission of EU member states dated 6 July 2018 was misconceived.\nThese do not constitute a legally binding prohibition on the provision of MLA to Japan in the context of an offence punishable by death.\nReliance on various non binding statements of policy opposition to the death penalty is likewise misconceived, the respondent says.\nThese do not amount to a legal prohibition on the provision of MLA in a case such as the present.\nI find it unnecessary for present purposes to resolve the dispute as to whether the EU Japan agreement precluded completely the provision of MLA.\nIt is relevant to the data protection issue which I shall turn to later in this judgment.\nThe context for the present examination of EU law is to assess its influence on the possible development of the common law.\nWhether it is technically possible under the EU Japan agreement for mutual legal assistance to be provided without death penalty assurances is not directly germane in this context.\nI find it impossible to resist the conclusion that the overwhelming character of EU law is one of settled, unmistakable opposition to the death penalty in every circumstance.\nIt cannot be irrelevant to the development of our common law that the UK was a member of the EU for more than 40 years.\nThe influence that EU law in general and its hostility to the death penalty in particular has on a decision as to the current state of the common law is undeniable.\n(iv) Delay in carrying out the death penalty\nIn Pratt v Attorney General for Jamaica [1994] 2 AC 1 the Judicial Committee of the Privy Council held that a state which wished to retain capital punishment must ensure that execution followed as swiftly as practicable after sentence, allowing a reasonable time for appeals.\nTo execute a prisoner years later, after long delays caused by his legitimate use of all the appellate procedures available, was to subject him to an inhuman or degrading punishment.\nThe appellant in the present case, drawing on the reasoning in Pratt and observing that the inevitable delay in carrying out any execution of her son after the imposition of the death penalty by a US court was unchallenged, submitted that to facilitate such a process would involve complicity in the infliction of punishment which was cruel and inhuman.\nThe Divisional Court dealt with the Pratt case at para 86 of its judgment: There is undoubtedly support in international jurisprudence for the contention that prolonged delay in carrying out a sentence of death may be unlawful.\nFor example, in Pratt v Attorney General of Jamaica [1994] 2 AC 1, the Privy Council held that section 17(2) of the Jamaican Constitution authorised the death penalty but that did not prevent the court investigating the circumstances in which the executive intended to carry out the sentence.\nIt held that execution should take place as soon as reasonably practicable after sentence; to carry out executions after a delay of 14 years would constitute inhuman punishment contrary to section 17(1) of the Constitution.\nBut that case turned on the construction of the Jamaican Constitution.\nIt did not establish a rule of the common law, either in Jamaica or generally, that particular periods of delay made the enforcement of the death penalty unlawful.\nThe appellant criticised this passage, submitting that in reaching its decision, the Privy Council had to address the question of whether delayed execution was contrary to the common law.\nThat was necessary in order to establish that the practice of execution after long delay was already unlawful pre independence.\nThat practice was therefore not rescued by the savings clause in section 17(2) of the Constitution, which only protected from constitutional challenge treatment and punishment that had been lawful prior to independence.\nI consider that the appellants submissions on this point must be accepted.\nAt p 19C D, Lord Griffiths, who delivered the judgment of the Board, said, Prior to independence, applying the English common law, judges in Jamaica would have had the power to stay a long delayed execution (emphasis added).\nLord Griffiths relied on statements to like effect by Lord Diplock in Abbott v Attorney General of Trinidad and Tobago [1979] 1 WLR 1342, 1348 and Lord Templeman in Bell v Director of Public Prosecutions [1985] AC 937, 950.\nMoreover, at p 20G H and p 28F G of the judgment, the Board expressly stated that execution after long delay could have been stayed as an abuse of process before independence by the application of common law principles.\nFinally, in a telling passage at p 29G H, Lord Griffiths said: There is an instinctive revulsion against the prospect of hanging a man after he has been held under sentence of death for many years.\nWhat gives rise to this instinctive revulsion? The answer can only be our humanity; we regard it as an inhuman act to keep a man facing the agony of execution over a long extended period of time.\nThe case therefore did not turn on the construction of the Jamaican Constitution, as the Divisional Court held.\nOn the contrary, it was because the common law before the enactment of the Constitution condemned a long extended period between the passing of a sentence of death and execution that the Jamaican Constitution could not save the situation.\nThat this was the product of the common law was confirmed in the later case of Guerra v Baptiste [1996] AC 397, 409G H, where the Privy Council again held that the prohibition on execution after long delay was consonant with the tradition of the common law.\nAnd in Henfield v Attorney General of the Commonwealth of the Bahamas [1997] AC 413, 425B C, where a lesser period of three and a half years was deemed inhuman.\nThat prolonged delay by itself violates the protection against cruel, inhuman or degrading treatment was confirmed by the decision of the Caribbean Court of Justice in the case of Attorney General for Barbados v Boyce [2006] CCJ 1 (AJ), which pronounced that Pratt was rightly decided and that: the practice of keeping persons on death row for inordinate period of time is unacceptable, and infringes constitutional provisions that guarantee humane treatment at para 47.\nThe same approach has been taken by a number of the highest courts in the Commonwealth India (Singh v State of Punjab (1983) 2 SCR 583, 593); Zimbabwe (Catholic Commission for Justice and Peace in Zimbabwe v Attorney General (2001) AHRLR 248 (ZwSC 1993), paras 119 120) and Uganda (Attorney General v Kigula [2009] UGSC 6, pp 47 48), where three years from confirmation of sentence was regarded to be the maximum period.\n(v) Factors favouring recognition of the common law principle\nThe factors and strands of influence which tell in favour of a common law right not to have ones trial in a foreign state facilitated where there is a prospect that such a trial would lead to the death penalty being carried out may now be assembled and enumerated. 1.\nThe Bill of Rights, an always speaking statute, forbade cruel and unusual punishment.\nIt is surely now beyond controversy that the death penalty is regarded by the common law to constitute such punishment. 2.\nBritish contemporary values are reflected in the abolition of the death penalty for murder in 1965 and the resolute refusal of government and Parliament to countenance any change to that position.\nThe Death Penalty Project (DPP), an intervener in this appeal, has submitted that the UKs consistent and long standing approach to the death penalty is clear and supports the assertion that the death penalty is now regarded by this country as a cruel and unusual punishment.\nTo that end the DPP points out that for more than 15 years, it has been funded by the Foreign and Commonwealth Offices Human Rights and Democracy Department in its work to promote restriction of the use of the death penalty worldwide.\nDPPs work furthers the FCOs Human Rights and Democracy Programme, which lists one of its priority targets to be the abolition of the death penalty abroad.\nThe FCO recognises that the death penalty is an inhuman punishment and has stated that: Our ambition remains a world free of capital punishment and torture and that: [we] oppose the death penalty in all circumstances as a matter of principle, because we consider that its use undermines human dignity, that there is no conclusive evidence of its deterrent value, and that any miscarriage of justice leading to its imposition is irreversible and irreparable. (Human Rights and Democracy: The 2014 Foreign & Commonwealth Office Report, dated 12 March 2015, Executive Summary, and Human Rights and Democracy: The 2017 Foreign and Commonwealth Report, updated 5 October 2018, chapter 1.) 3.\nECHR jurisprudence.\nAlthough it does not arise directly in this case because of jurisdictional restrictions, it can and should inform the development of the common law see paras 107 124 above.\nMoreover, the UKs ratification of the Thirteenth Protocol is an unequivocal statement of this countrys stance on the death penalty.\nDevelopments in international human rights law are significant pointers to the interpretation of the common law.\nAs Lord Hoffmann said in R v Lyons [2002] UKHL 44; [2003] 1 AC 976, para 27, there is a strong presumption in favour of interpreting English law (whether common law or statute) in a way which does not place the United Kingdom in breach of an international obligation.\nAnd in A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221, para 27 Lord Bingham of Cornhill said that where development of the common law is called for, such development should ordinarily be in harmony with the United Kingdoms international obligations and not antithetical to them. 4.\nEU jurisprudence.\nThe European Union has categorically condemned the death penalty as absolutely wrong in all circumstances.\nThis declamation chimes exactly with UK standards and values as described in the DPPs intervention. 5.\nThe fundamental illogicality of, on the one hand, refusing to extradite or deport individuals for trial in a foreign state where there was a risk of the imposition of the death penalty, without requisite assurances, and, on the other hand, facilitating such a trial when precisely the same outcome is in prospect without demanding assurances.\nThe irrationality of this approach can be illustrated by a decision of the Constitutional Court of South Africa Mohamed v President of the Republic of South Africa [2001] ZACC 18.\nThe court identified a principle of non complicity as a justification for the refusal to extradite without a death penalty assurance.\nThe court referred to the commitment implicit in the Constitution that South Africa will not be party to the imposition of cruel, inhuman or degrading punishment (para 59).\nThe rationale was not confined to the fact that the person to be extradited was within the jurisdiction of the courts of South Africa.\nIt extended to any complicity in the imposition of cruel, inhuman or degrading punishment.\nIf it is objectionable to be complicit in exposing an individual to the risk of execution by extraditing him, it is surely equally objectionable to be complicit in facilitating that result by providing material which has the same result.\nAs the appellant submitted, what matters is whether the state whose actions are impugned has, by its actions, established the crucial link in the causal chain that would make possible the execution of the author: per the decision of the UNHRC in Judge v Canada (2005) 40 EHRR SE4, para 10.6.\nThe anomaly created by the difference in approach was well captured by Professor Christof Heyns, a former UN Special Rapporteur and currently a member of the UNHRC, in Report of the Special Rapporteur on extrajudicial, summary or arbitrary executions, A\/70\/304, 7 August 2015, para 102: A dilemma emerges when abolitionist states provide assistance to retentionist states in criminal matters and that assistance leads to the use of the death penalty.\nEven though the individual facing the death penalty in such cases may never have been in the jurisdiction of the abolitionist state, such assistance could amount to complicity in the death penalty.\nThe same legal principles apply here as in the case of transfer of persons: states that have abolished capital punishment may not assist in bringing about the death penalty in other countries.\nJCPC jurisprudence and case law from Commonwealth countries 6. paras 135 140 above.\nAlthough the cases discussed in this section relate to delays in carrying out execution, rather than objection to the death penalty itself, they carry unmistakable evidence of the growing revulsion for that punishment felt by many throughout the world.\nDrawing all these factors together, I believe that the time has arrived where a common law principle should be recognised whereby it is deemed unlawful to facilitate the trial of any individual in a foreign country where, to do so, would put that person in peril of being executed.\nThis is not a conclusion of the considerable and controversial variety suggested by the respondent.\nIt is a natural and inevitable extension of the prohibition (in the common law as well as under the HRA) of extradition or deportation without death penalty assurances.\nIf it appears to be an incremental step, that is only because this is the first time the matter has come before the courts for consideration, largely because the two previous occasions since 2001 on which according to the respondent MLA was provided without a death penalty assurance, that was done without public knowledge and so without the possibility of judicial scrutiny.\nI have therefore decided that the combination of the above factors (beginning with the recognition in Pratt that delayed execution was contrary to common law) leads inexorably to the conclusion that it is unlawful at common law for the state to facilitate the execution of the death penalty against its citizens or others within its jurisdiction anywhere in the world.\nLaw, whether enacted or developed through the common law, if it is operating as it should, must be responsive to societys contemporary needs, standards and values.\nIt is a commonplace that these are in a state of constant change.\nThat is an essential part of the human condition and experience.\nAs a deeper understanding of the human psyche and the enlightenment of society increase with the onward march of education, tolerance and forbearance in relation to our fellow citizens, the law must march step by step with that progress.\nI am convinced that the adjustment to the common law which I propose reflects the contemporary standards and values of our society.\nThere is no evidence that the insistence on assurances in the case of extradition or deportation has led to any rupture in the relations between the two countries.\nMoreover, several other countries have required assurances without any evidence of negative consequences (for example, Germanys requiring an assurance before providing MLA for the federal prosecution of Zacarias Moussaoui, one of the 9\/11 conspirators).\nIn any event, the reaction of the US has no bearing on the existence of the common law principle.\nNor is there any warrant for suggesting that the recognition of the proposed common law principle would forbid mutual legal assistance in all circumstances.\nIt would be applied precisely as is the rule relating to deportation and extradition.\nMutual legal assistance can continue when the appropriate assurances are given.\nI likewise do not accept that the principle has the potential to be expanded into spheres where it would risk creating real damage, for example, to public protection and national security.\nThe principle will only apply in cases where proceedings are either in train or contemplated and where a possible outcome is the infliction of the death penalty.\nThe free flow of information on matters of public protection and national security between this country and its allies will continue unimpeded.\nIt is suggested by Lord Carnwath in para 191 of his judgment that there is as yet no established principle (under the common law, the Convention or any other recognised system of law), which prohibits the sharing of information relevant to a criminal prosecution in a non abolitionist country.\nSince the passing of the Human Rights Act 1998, there may have been a tendency to see the law in areas touched on by the Convention solely in terms of Convention rights.\nBut ECHR rights represent a threshold protection; and, although they may be expected to reflect and to find their homologue in the common or domestic statute law, they should not be regarded as an inhibitor to the development of the common law.\nLord Goff of Chieveley in Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, 282 284 expressed the view that in the field of freedom of speech there was no difference in principle between English law and article 10 of ECHR.\nBut, in some areas, the common law may go further than the Convention, and in some contexts it may also be inspired by the ECHR rights and jurisprudence (the protection of privacy being a notable example).\nAnd in time, of course, a synthesis may emerge.\nBut the natural starting point in any dispute is to begin with domestic law, and it is certainly not to focus exclusively on the Convention rights, without surveying the wider common law scene.\nAs Toulson LJ said in R (Guardian News and Media Ltd) v City of Westminster Magistrates Court [2012] EWCA Civ 420; [2013] QB 618, para 88: The development of the common law did not come to an end on the passing of the Human Rights Act 1998.\nIt is in vigorous health and flourishing in many parts of the world which share a common legal tradition.\n(vi) Customary international law\nIn his intervention in this case Professor Heyns suggested that there is an emerging norm of customary international law that the death penalty as such is a violation of the absolute right against torture and cruel, inhuman and degrading treatment of punishment, and that a norm against the facilitation of the death penalty follows from that.\nProfessor Heyns accepts that in order to determine the existence and content of a rule of particular customary international law, it is necessary to ascertain whether there is a general practice among the states concerned that is accepted by them as law among themselves Celiberti de Casariego v Uruguay: (1981) 68 IRL 41, paras 10.1 10.3.\nIn my opinion, the material on which one could reasonably conclude that there is such a general practice has not been produced.\nThe arguments advanced by the respondent (and set out between paras 88 and 92 above) do not establish that customary international law is not in the process of evolving to the point where the death penalty as such is a violation of the absolute right against cruel and inhuman punishment.\nBut those arguments and the material on which they were based are sufficient to cast sufficient doubt on that proposition.\nAs Professor Heyns has pointed out, the United Nations Special Rapporteur on torture and other cruel, inhuman or degrading treatment or punishment, concluded in 2012: there is an evolving standard whereby states and judiciaries consider the death penalty to be a violation per se of the prohibition of torture or cruel, inhuman or degrading treatment The Special Rapporteur is convinced that a customary norm prohibiting the death penalty under all circumstances, if it has not already emerged, is at least in the process of formation.\nInterim Report of the Special Rapporteur on torture and other cruel, inhuman or degrading treatment or punishment, 9 August 2012, (A\/67\/279), para 72.\nIn the absence of firm, tangible evidence that the process of evolution has been completed or that there is a general practice such as is referred to in para 144 above, it is impossible to accept the appellants argument based on customary international law.\n(vii) Data protection\nThe starting point on this subject is the agreement between the parties that the provision of material by the Home Secretary to the United States in July 2018 involved processing of personal data for a law enforcement purpose by a controller which is a competent authority for the purposes of Part 3 of the Act.\nIt is also agreed that the Home Secretary did not expressly consider his duties under the Act.\nThe respondent argues, however, that there was substantial compliance with the Act.\nSection 34 of the DPA provides an overview and general duty of the data controller.\nIt summarises six data protection principles.\nThe appellant complains that the first two of these were breached.\nSo far as relevant to this case they are (i) that the processing of personal data for any law enforcement purposes must be lawful and fair section 35(1) and (ii) that the law enforcement purpose for which personal data is collected on any occasion must be specified, explicit and legitimate section 36(1)(a).\nSince I have concluded that the transfer of material to the US authorities without obtaining death penalty assurances was contrary to law, it follows that neither condition can be said to have been met.\nThe processing of the material was not lawful.\nNor was the law enforcement purpose for which it was collected legitimate, since it was to be used in the prosecution of Mr El Sheikh in a trial where he was at risk of being sentenced to death and executed in consequence.\nThat purpose cannot be legitimate in light of my view as to the current state of the law of this country.\nOn that account, it is unnecessary for me to consider the elaborate arguments deployed by the parties on the proper approach to the interpretation of the DPA, beyond paying tribute to the ingenuity of those arguments and the skill with which they were presented.\nSections 73 to 76 set out the general conditions that apply to the transfer of personal data to third countries or international organisations.\nA controller may not transfer personal data to a third country or to an international organisation unless the three conditions set out in subsections (2) to (4) of section 73 are met.\nThe second condition is the relevant one for the purposes of this case.\nIt is contained in section 73(3) and is in these terms: (3) Condition 2 is that the transfer is based on an adequacy decision (see section (a) 74), (b) if not based on an adequacy decision, is based on there being appropriate safeguards (see section 75), or (c) if not based on an adequacy decision or on there being appropriate safeguards, is based on special circumstances (see section 76).\nIt is not in dispute that the transfer was not based on an adequacy decision.\nIn view of my finding in relation to the need to obtain proper death penalty assurances, I am bound to find that the decision to transfer the material to US authorities was not based on there being appropriate safeguards.\nSection 76 deals with transfers on the basis of special circumstances.\nIn material part it provides: (1) A transfer of personal data to a third country or international organisation is based on special circumstances where the transfer is necessary to safeguard the legitimate interests of the data to protect the vital interests of the data subject or (a) another person, (b) subject, (c) for the prevention of an immediate and serious threat to the public security of a member state or a third country, (d) enforcement purposes, or (e) in individual cases for any of the law in individual cases for a legal purpose.\nThe Divisional Court held that the transfer could be justified on the basis of special circumstances.\nThe appellant submits that the court was wrong to characterise the transfer as being necessary for any purpose.\nAccordingly, the condition in section 76(1) was not met.\nSecondly, the appellant submits that, since section 76 refers to a transfer which is based on or takes place in reliance on the existence of special circumstances, conscious and contemporaneous reliance on the gateway by the transferor at the time of the transfer is required and there was no such reliance in this case.\nThirdly, the narrowness of this residual gateway is reinforced by recital (72) to the LED which states that the gateway should be interpreted restrictively and should be limited to data strictly necessary.\nI consider that the requirement that the data be limited to that which is strictly necessary behoves the data controller to make an assessment of what, in the context of the DPA, is strictly necessary and, since it is accepted that the Home Secretary did not have regard to his duties as data controller, the special circumstances gateway was not available.\nMoreover, it is not enough to say that the data protection provisions were substantially met, where direct, personal evaluation was required.\nThe appellants final argument in relation to the DPA was based on section 80 (regarding special processing restrictions where, for a law enforcement purpose, a controller transmits or otherwise makes available personal data to an EU recipient or a non EU recipient).\nI am inclined to accept the respondents argument that this provision does not apply to Mr El Sheikh but, in light of my other conclusions, it is unnecessary for me to reach a final conclusion on it.\nI refrain from making a finding on that argument, therefore.\nConclusions\nI have concluded that a common law principle should now be recognised to the effect that it is unlawful to facilitate by the provision of material to be used in the trial of a person in a foreign country where there is a risk that, as a result of those proceedings, that person would be at risk of execution.\nOn that account the Home Secretary should not have supplied the material to the US authorities in July 2018 without having obtained the customary death penalty assurances.\nIt matters not that the Home Secretary was exercising a prerogative power.\nThis court is required by long established law to examine the nature and extent of the prerogative power and to determine whether the respondent has transgressed its limits particularly where the prerogative power may be being used to infringe upon an individuals rights.\nThe courts have carried out a similar examination in several earlier cases, including Sandiford (considered above) see also the recent decision of this court in the associated cases of R (Miller) v Prime Minister (Lord Advocate intervening) [2019] UKSC 41; [2019] 3 WLR 589, paras 30 32 and, in particular, para 35.\nIt might be said that the limit on the prerogative is grounded in the private law right to life and freedom from cruel and unusual treatment but this does not mean that a private law claim could be brought against a private individual choosing to give evidence in a death penalty trial, as the focus here is on the public law principle regarding the use of executive powers.\nThe challenge here may be said to stem from the asserted right that Mr El Sheikh should not be exposed to the risk of having the death penalty imposed on him.\nAnd it is possible to characterise that as a private law right.\nBut the decision to release papers and other material without obtaining death penalty assurances involves the exercise of the prerogative which is rooted firmly in the public law domain.\nIf there is recognised a common law principle that the death penalty should not be facilitated (save in wholly exceptional circumstances which I shall discuss in the next paragraph and which do not obtain in this instance), then the exercise of the prerogative must yield to that principle and be exercised in accordance with it.\nThe restraint on the power to exercise the prerogative in the way that the authorities have done and wish to do in this case derives from such a common law principle, not from the assertion of a private law right.\nIt lies emphatically therefore in the sphere of public law.\nThe only circumstances in which I conceive that the common law principle should not apply are these: if the relay of information or intelligence was absolutely necessary as a matter of urgency in order to save lives or to protect the security of the nation, the possibility of facilitating the imposition of the death penalty on someone whose identity or activities would thereby be revealed would be outweighed by those momentous considerations.\nThere is nothing of the kind here.\nNo one has suggested that the information was required because of any imminent threat.\nHad I not held that it was unlawful to facilitate the trial of a person in a foreign country where there was a risk of his being executed, I would nevertheless have held that facilitating his trial in the US with the attendant and inevitable considerable delay between the passing of the sentence of death and its being carried out would be unlawful.\nFor the reasons earlier given, the respondent failed to comply with the requirements of a number of the provisions in the DPA.\nOn that account also his decision to supply the material was unlawful.\nIt follows that no further assistance should be given for the purpose of any proceedings against Mr El Sheikh in the United States of America without the appropriate death penalty assurances.\nLORD REED: (with whom Lady Black and Lord Lloyd Jones agree)\nI agree with Lord Carnwath, for the reasons which he gives, and with the other members of the court, that the Secretary of States decision is vitiated by his failure to comply with the requirements of the Data Protection Act 2018.\nThe second ground of appeal should therefore be upheld, and the appeal must be allowed.\nI also agree with Lord Carnwath that the first ground of appeal should be dismissed, for the reasons which he gives, and for also the additional reasons given below.\nI regret that I am unable to agree with Lord Kerrs conclusion that individuals (including citizens of foreign states) possess a common law right under English law not to have their trial in a foreign jurisdiction facilitated where there is a prospect that such a trial would lead to the death penalty being carried out.\nOut of respect for Lord Kerrs careful judgment, I should briefly explain the additional reasons, besides those given by Lord Carnwath, for my taking a different view.\nI fully accept that the common law is subject to judicial development, but such development builds incrementally on existing principles.\nThat follows from two considerations.\nThe first is that judicial decisions are normally backward looking in the sense that they decide what the law was at the time which is relevant to the dispute between the parties.\nIn order to preserve legal certainty, judicial development of the common law must therefore be based on established principles, building on them incrementally rather than making the more dramatic changes which are the prerogative of the legislature.\nFollowing that approach, new rules may be introduced, or existing rules may be reformulated or departed from, but the courts continue to apply principles which formed an established part of the law at the time of the events in question.\nThe judges are then faithful to their oath to do right to all manner of people after the laws and usages of this Realm.\nSecondly, that constraint on judicial law making is also compatible with the pre eminent constitutional role of Parliament in making new law, and with the procedural and institutional limitations which restrict the ability of litigation before the courts to act as an engine of law reform.\nThe development of the law proposed by Lord Kerr does not appear to me to be an incremental step.\nI do not find in the sources cited by Lord Kerr an established principle, of which a right having the characteristics he describes can be regarded as an incremental development, largely for the reasons given by Lord Carnwath.\nFor example, the principal domestic source on which Lord Kerr relies is article 10 of the Bill of Rights 1688.\nThat article appears under the heading The Subjects Rights, and states that excessive Baile ought not to be required nor excessive Fines imposed nor cruel and unusual Punishments inflicted.\nIts prohibition of cruel and unusual punishments concerns the infliction of punishment by the Crown.\nThat is not the subject matter of the present case.\nNevertheless, there is no doubt that, as Lord Bingham of Cornhill observed in R (Amin) v Secretary of State for the Home Department [2003] UKHL 51; [2004] 1 AC 653, para 30, [a] profound respect for the sanctity of human life underpins the common law.\nThere are many areas of the law which reflect that respect, including the criminal law relating to homicide, the law of tort and the law relating to coroners.\nThe present case is not, however, concerned with a deprivation of life which would constitute a crime or a tort under English law, or would call for a coroners inquest.\nIt is concerned with a decision by the Secretary of State, taken (it is accepted) in the exercise of prerogative powers, to provide mutual legal assistance to a foreign government, in the form of information concerning a foreign citizen for use in a criminal investigation, and possibly at a trial, in that jurisdiction.\nThe special feature of the case is that it is possible that the person under investigation may be tried on charges for which the death penalty is an available punishment.\nIf he were to be convicted of such charges, a trial could result in his judicial execution.\nIt also appears from the evidence before this court that a prosecution overseas would be reliant on the material provided by the Secretary of State.\nThe consequence of the Secretary of States decision is therefore to place a person at risk of execution.\nIn my opinion, Sir James Eadie was correct in submitting on behalf of the Secretary of State that the common law rights and obligations which are relevant to that situation are to be found in public law.\nThere is however a risk of over simplification if one says, as Sir James put it, that public law goes no further than to recognise that rational and proper judgments have to be made.\nIt is necessary to bear in mind that the context of a decision, and in particular, its potential implications for the life of the person concerned, may affect the application of the familiar grounds of judicial review of administrative action to which Sir James was referring.\nIn that regard, it is relevant to consider the idea of a right to life, which is included among the common law constitutional rights listed in De Smiths Judicial Review, 8th ed (2018), eds Woolf et al, para 11 054, and has been discussed in a number of authorities.\nThose authorities do not vouch the existence of a right in the sense in which that term is used in the law of obligations, and the idea that there might be a right of that character is absent from leading cases concerned with questions of life and death, such as Airedale NHS Trust v Bland [1993] AC 789, R v Cambridge Health Authority, Ex p B [1995] 1 WLR 898, In re A (Children) (Conjoined Twins: Surgical Separation) [2001] Fam 147 and R (Nicklinson) v Ministry of Justice (CNK Alliance Ltd intervening) [2014] UKSC 38; [2015] AC 657.\nNevertheless, the authorities support the recognition of what might more aptly be described as a value to which the courts attach great significance when exercising their supervisory jurisdiction.\nJudicial recognition of the right to life, understood in that sense, can have an important influence on adjudication.\nA well known example is the case of R v Secretary of State for the Home Department, Ex p Bugdaycay [1987] AC 514, which concerned the approach which should be adopted to the consideration of applications for asylum, where it was claimed that the asylum seekers life would be at risk if his application were refused.\nLord Bridge of Harwich, in a speech with which the other members of the Appellate Committee expressed agreement, referred to the limitations on judicial review of the exercise of discretion, and continued at p 531: Within those limitations the court must, I think, be entitled to subject an administrative decision to the more rigorous examination, to ensure that it is in no way flawed, according to the gravity of the issue which the decision determines.\nThe most fundamental of all human rights is the individuals right to life and when an administrative decision under challenge is said to be one which may put the applicants life at risk, the basis of the decision must surely call for the most anxious scrutiny.\nTo similar effect, Lord Templeman stated at p 537: In my opinion where the result of a flawed decision may imperil life or liberty a special responsibility lies on the court in the examination of the decision making process.\nOn that basis, the House of Lords carried out a more searching review of the Secretary of States consideration of the facts of the case than would be usual on an application for judicial review.\nAnother example is the case of R v Cambridge Health Authority, Ex p B [1995] 1 WLR 898, concerned with a challenge to a health authoritys refusal to provide what was argued to be potentially life saving medical treatment.\nSir Thomas Bingham MR, with whom Sir Stephen Brown P and Simon Brown LJ agreed, stated at pp 904 905: [I]t is important that I should state very clearly, as the judge did, that this is a case involving the life of a young patient and that that is a fact which must dominate all considerations of all aspects of the case.\nOur society is one in which a very high value is put on human life.\nNo decision affecting human life is one that can be regarded with other than the greatest seriousness.\nThis approach is now firmly established.\nFor example, in R (Sandiford) v Secretary of State for Foreign and Commonwealth Affairs [2014] UKSC 44; [2014] 1 WLR 2697, para 66, Lord Carnwath and Lord Mance stated: Irrationality is a high threshold, but it may be easier than otherwise to surmount in a case involving an imminent risk of death by execution of a British citizen deprived of financial support abroad.\nThe courts role is given added weight in a context where the right to life is at stake (see R v Secretary of State for the Home Department, Ex p Bugdaycay [1987] AC 514).\nA keen scrutiny of the policy and its application must on any view be required in such circumstances.\nIn the more recent case of Pham v Secretary of State for the Home Department [2015] UKSC 19; [2015] 1 WLR 1591, Bugdaycay was cited as one of a number of authorities demonstrating that the intensity of rationality review depends on the context, and that a more rigorous approach is required when the courts are reviewing the exercise of discretion in contexts where fundamental rights are at stake: see paras 105 106 and 114.\nSir James Eadie submitted that the Secretary of States decision in the present case complied with that standard.\nThere was, he said, no irrational change of position by the Secretary of State.\nThe decision was subjected to the most anxious scrutiny.\nSir James also emphasised that the decision was taken in the conduct of foreign affairs, in an area shot through with diplomatic judgement.\nThis was an area where the courts recognised the institutional competence and democratic legitimacy of the executive.\nI fully accept that in reviewing a decision such as that in issue, the court has to take full account of the considerations to which Sir James referred.\nI also accept that, contrary to the submission made on behalf of the appellant, the fact that the Secretary of States decision represented a departure from the Governments usual approach in death penalty cases did not in itself render it irrational: the Governments policy in this area was more nuanced than was acknowledged in those submissions.\nPostscript\nHowever, I should not leave this matter without observing that, examining the decision with the intense care which its potential consequences require, there are some other aspects which might have given rise to a question as to whether it complied with the common law requirement of rationality, if they had been raised.\nI should make it clear that, as these matters were not raised on behalf of the appellant, I do not express any view on them, and they have played no part in my decision as to the outcome of the appeal.\nI mention them only because they might be relevant if a similar issue were to come before the Secretary of State on some future occasion.\nOne such aspect is the Secretary of States conclusion that the provision of the information in question was justified because it was in the interests of justice that Mr El Sheikh should be tried in the United States.\nAccording to a witness statement of Mr Graeme Biggar, a senior official in the Home Office whose statement was said by Sir James to set out the Secretary of States reasoning, the Crown Prosecution Service (the CPS) considered that there was insufficient evidence for a prosecution to take place in the UK, even taking into account the cumulative effect of the evidence available in both the UK and the US.\nAgainst that background, Mr Biggar stated, [t]he Home Secretarys priority was to ensure insofar as possible that Mr El Sheikh faced justice before a criminal court.\nThe Secretary of State himself wrote, in the relevant letter dated 22 June 2018: The UKs aim is for these individuals to face justice in the most appropriate jurisdiction which maximises our collective chances of a successful prosecution.\nTo this end the (operationally independent) Counter Terrorism Command of the Metropolitan Police (S015) and Crown Prosecution Service (CPS), have been engaged in a dispassionate assessment of the evidence available and likelihood of prosecution in the UK.\nIn parallel our investigators have also been working with the FBI to explore the likelihood of prosecution in the US or other jurisdictions Regretfully, as a result of this process, the CPS have determined there is insufficient evidence to prosecute Shafee El Sheikh in the UK Ensuring foreign fighters face justice raises a real challenge for all our jurisdictions, however in this instance we believe a successful federal prosecution in US is more likely to be possible because of differences in your statute book and the restrictions on challenges to the route by which defendants appear in US courts.\nThe US currently has additional charges for terrorism offences which are not available under UK criminal law, and those offences carry long sentences.\nWe are therefore committed to assisting the US with a federal prosecution of Alexanda Kotey and Shafee El Sheikh, and after careful consideration I have decided to accede to your current request for mutual legal assistance which is with the UK Central Authority.\nThis letter implies that the problem faced by the CPS was not merely that there was insufficient evidence to convict Mr El Sheikh of any offence under UK law.\nTwo other matters were mentioned: the need to create new offences, and possible challenges to the route by which defendants appear in court.\nIn relation to the second point, Sir James Eadie explained that there was a concern that Mr El Sheikh could challenge the procedure by which he might be brought before a UK court as an abuse of process, on the basis of R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42.\nThe Secretary of States reasoning appears therefore to be based on the view that the prosecution of a person in a foreign jurisdiction is necessary to ensure that justice is done, notwithstanding that (a) the conduct for which he might be prosecuted does not constitute an offence under the law in force in the UK, (b) there is insufficient evidence to establish that he has committed any offence under UK law, and (c) the law in force in the UK might treat his prosecution as an abuse of process.\nA second aspect of the reasoning is that the Secretary of State seemingly regarded the prospect of Mr El Sheikhs possible execution as preferable to the prospect of his detention at Guantanamo Bay.\nIn relation to that matter, Mr Biggar states: The second issue was the prospect that the US might transfer El Sheikh to Guantanamo Bay The UK has consistently and publicly opposed Guantanamo Bay; and considers that it is a radicalising factor in the UK It was the Home Secretarys assessment in his meeting with the US Attorney General that to press for an assurance would be to imperil the prospect of prosecution (and instead pave the way for a transfer to Guantanamo).\nTo view the risk of Mr El Sheikhs execution as preferable to the risk of his detention at Guantanamo Bay is understandably described by Lord Kerr as perplexing.\nLORD CARNWATH:\nI am grateful for Lord Kerrs comprehensive account of the legal and factual background to this troubling case.\nTaken with the similarly complete judgment of the Divisional Court, it enables me to express my own views relatively briefly.\nThe appellants submissions fall under two main headings: (i) Unlawfulness of facilitating the death penalty; (ii) Violations of the Data Protection Act 2018.\nIn short, I would dismiss the appeal under the first heading, substantially for the reasons given by the Divisional Court; but in agreement with Lord Kerr I would allow the appeal under the second heading.\nOn the latter issue we have had helpful submissions, not available to the Divisional Court, from Mr Facenna QC on behalf of the Information Commissioner.\nFacilitating the death penalty\nThe citations given by Lord Kerr leave no doubt as to the strength of the opposition to the death penalty in this and many other countries.\nThe issue is how far that is reflected in a rule of law applicable to the present facts.\nCertain principles of law or policy are not in doubt: (i) It is the clear policy of the UK to oppose the death penalty in all circumstances as a matter of principle, to seek to increase the number of abolitionist countries and to seek further restrictions on the use of the death penalty in countries where it is used (see the citations in R (Sandiford) v Secretary of State for Foreign and Commonwealth Affairs [2013] EWCA Civ 581; [2013] 1 WLR 2938 CA, para 7). (ii) Within countries subject to the European Convention on Human Rights the right not to be subjected to the death penalty (article 2 and the Thirteenth Protocol) is now recognised as a fundamental right and as one which admits of no derogation and applies in all circumstances (Al Saadoon v United Kingdom (2010) 51 EHRR 9, para 118). (iii) There is as yet no settled rule of customary international law to like effect (Lord Kerr para 149). (iv) It is an established principle both of the common law and other jurisprudence (including the European Convention) that prolonged delay in carrying out the death penalty (the death row phenomenon) may be unlawful as violating protections against cruel, inhuman or degrading treatment (Pratt v Attorney General of Jamaica [1994] 2 AC 1, Soering v United Kingdom (1989) 11 EHRR 439; and other cases cited by Lord Kerr at paras 138 140).\nI agree with Lord Kerr that the Divisional Court in this respect took too narrow a view of the principle. (v) Convention law (under article 2) also prohibits In addition to prohibiting the death penalty in member states, the extradition or deportation of an individual to another state where substantial grounds have been shown for believing that he or she would face a real risk of being subjected to the death penalty there. (Al Saadoon at para 123) The same principle applies under article 3 where there is a real risk of prolonged exposure to the death row phenomenon (Soering at para 111). (vi) To similar effect UN Human Rights Committees (UNHRC) General Comment No 36 (2018) on article 6 of the International Covenant on Civil and Political Rights provides (para 34): States parties that abolished the death penalty cannot deport, extradite or otherwise transfer persons to a country in which they are facing criminal charges that carry the death penalty, unless credible and effective assurances against the imposition of the death penalty have been obtained.\nThese points are not in dispute.\nHowever, so far as appears from the materials before the court, there is as yet no established principle (under the common law, the European Convention or any other recognised system of law), which prohibits the sharing of information relevant to a criminal prosecution in a non abolitionist country merely because it carries a risk of leading to the death penalty in that country.\nAgainst that background Mr Fitzgerald QC faced an uphill task in seeking to persuade the court that it should now fashion a common law rule to that effect.\nHe sought to do so, first, by invoking Lord Carswells well known affirmation in A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221, para 152, of the evolving character of the common law, citing for example Matthews J in Hurtado v California (1884) 110 US 516, 531: as it was the characteristic principle of the common law to draw its inspiration from every fountain of justice, we are not to assume that the sources of its supply have been exhausted.\nOn the contrary, we should expect that the new and various experiences of our own situation and system will mould and shape it into new and not less useful forms.\nSecondly, he relied on recent statements in this court as to the ability of the common law to respond to developments in European Convention law: R (Osborn) v Parole Board [2013] UKSC 61; [2014] AC 1115, para 57 per Lord Reed; Kennedy v Information Comr (Secretary of State for Justice intervening) [2014] UKSC 20; [2015] AC 445, para 46 per Lord Mance.\nNeither reference seems to me to assist his case.\nAs the Divisional Court said, the power of the courts to develop the common law is not in doubt, but it is a power to be exercised with caution.\nThe recent statements in this court support the development of the common law in line with the European Convention, but not beyond as here proposed.\nSo far as concerns Lord Carswells comments in the A case, he was speaking in the context of an issue as to the admissibility of evidence obtained by torture, against a background in which from its very earliest days the common law of England set its face firmly against the use of torture (per Lord Bingham of Cornhill at para 11, citing authorities dating from the 15th century).\nAs Lord Carswell acknowledged, other members of the House had accepted the view that the common law as it stands would forbid the reception in evidence of any statement obtained by the use of torture.\nIn that context his proposal represented at most a very limited development of the law.\nBy contrast, as the Divisional Court pointed out (para 94), the death penalty as such has never attracted the attention of the common law.\nIt is notable that the developments of the law have come relatively recently, from Parliament or the European Court of Human Rights, rather than the domestic courts.\nIt was not until 1965 that the death penalty was abolished for murder (Murder (Abolition of Death Penalty) Act 1965); abolition of the penalty for the remaining offences had to wait until the Crime and Disorder Act 1998.\nMuch more recently Parliament has made express provision in respect of death penalty assurances in one context.\nSection 16 of the Crime (Overseas Production Orders) Act 2019, which amends section 52 of the Investigatory Powers Act 2016 (interception of communications in accordance with overseas requests) to provide, in the case of agreements with non abolitionist countries, a prohibition on designation unless the Secretary of State: has sought a written assurance, or written assurances, relating to the non use of information obtained by virtue of the agreement in connection with proceedings for a death penalty offence in the country or territory.\nThe possible relevance is two fold.\nFirst it confirms that this is an area in which Parliament remains directly involved.\nSecondly, where the statute applies, the Secretary of State is required to seek assurances, but there is no specific prohibition on the exchange of material where no such assurance is ultimately obtained.\nAs regards the European Convention, the right to life under article 2 of the Convention in its original form included an exception for the execution of a sentence of a court following his conviction of a crime for which this penalty is provided by law.\nIt was not until 2004 that the Thirteenth Protocol to the European Convention was adopted excluding the death penalty in all circumstances.\nNor can it be assumed that the domestic courts unaided by Strasbourg would have developed a rule of law corresponding to the Soering principle.\nThe principle itself was not uncontroversial.\nIn the later Grand Chamber decision in Chahal v United Kingdom (1997) 23 EHRR 413 there was strong minority support for a more flexible approach when dealing with removal on security grounds.\nIn a dissenting judgment, seven judges (including the British judge Sir John Freeland) said: We agree with the majority that national security considerations could not be invoked to justify ill treatment at the hands of a Contracting State within its own jurisdiction, and that in that sense the protection afforded by article 3 is absolute in character.\nBut in our view the situation is different where, as in the present case, only the extra territorial (or indirect) application of the article 3 is at stake.\nThere, a Contracting State which is contemplating the removal of someone from its jurisdiction to that of another state may legitimately strike a fair balance between, on the one hand, the nature of the threat to its national security interests if the person concerned were to remain and, on the other, the extent of the potential risk of ill\ntreatment of that person in the state of destination\nUnder domestic law, powers to deport or extradite are conferred by statute and as such subject to review on public law grounds, including, where the right to life is at stake the anxious scrutiny principle (R v Secretary of State for the Home Department, Ex p Bugdaycay [1987] AC 514).\nHowever, it is difficult to see how, under established common law principles of statutory construction (apart from the European Convention), the discretion conferred on the Secretary of State by the relevant statutes could have been construed as subject to an absolute prohibition on removal by reference to the possible consequences in the receiving state, as opposed to a discretion along the lines of that proposed by the minority in Chahal.\nIn any event, even if such a common law principle relating to physical removal could be made out, I am unpersuaded that the references given by Mr Fitzgerald could properly lead the court to recognise as part of the common law a broader non facilitation principle: that is a principle (in his words) that it cannot be lawful or rational to facilitate a penalty that we ourselves regard as inhuman.\nI take them in turn.\nHe relies first on the words of Lord Kerr in R (Ismail) v Secretary of State for the Home Department [2016] UKSC 37; [2016] 1 WLR 2814 to describe the basis of the Soering principle: It was because the actions of the UK authorities, in extraditing the applicant to a country where he faced the possibility of suffering the death penalty, facilitated that outcome that a violation of article 3 was held to be present.\nIn effect, the UK would have been directly instrumental in exposing Soering to the risk of being executed (para 35 emphasis added) As I understand that passage in context, Lord Kerr was giving no more than shorthand description of the basis of the Soering principle, with a view not to extending it, but to distinguishing it as applied to the facts of the case before him.\nTo similar effect is the reference by the Constitutional Court of South Africa in Mohamed v President of the Republic of South Africa [2001] ZACC 18 to the states commitment under its Constitution not to be party to the imposition of cruel, inhuman or degrading punishment (para 59).\nThe full paragraph shows that again it was concerned with physical removal rather than other forms of assistance: For the South African government to cooperate with a foreign government to secure the removal of a fugitive from South Africa to a country of which the fugitive is not a national and with which he has no connection other than that he is to be put on trial for his life there, is contrary to the underlying values of our Constitution.\nIt is inconsistent with the governments obligation to protect the right to life of everyone in South Africa, and it ignores the commitment implicit in the Constitution that South Africa will not be party to the imposition of cruel, inhuman or degrading punishment. (para 59 emphasis added)\nThe same can be said of Mr Fitzgeralds reference to the UNHRC decision in Judge v Canada (2005) 40 EHRR SE4, para 10.6.\nThe full paragraph reads: 10.6 For these reasons, the Committee considers that Canada, as a state party which has abolished the death penalty violated the authors right to life under article 6, para 1, by deporting him to the United States, where he is under sentence of death, without ensuring that the death penalty would not be carried out.\nThe Committee recognizes that Canada did not itself impose the death penalty on the author.\nBut by deporting him to a country where he was under sentence of death, Canada established the crucial link in the causal chain that would make possible the execution of the author.\nMr Fitzgerald relies on the reference to a causal chain, but that again was in the narrow context of physical removal to a country where he was already under sentence of death.\nFinally Mr Fitzgerald relies on the report of the UN Special Rapporteur (Professor Christof Heyns) on extrajudicial, summary or arbitrary executions, A\/70\/304, 7 August 2015, which states: A dilemma emerges when abolitionist states provide assistance to retentionist states in criminal matters and that assistance leads to the use of the death penalty.\nEven though the individual facing the death penalty in such cases may never have been in the jurisdiction of the abolitionist state, such assistance could amount to complicity in the death penalty.\nThe same legal principles apply here as in the case of transfer of persons: states that have abolished capital punishment may not assist in bringing about the death penalty in other countries. (para 102 emphasis added)\nThe report goes on (para 106) to refer to the possible need for further guidance on what sort of assistance might constitute unlawful complicity in the death penalty, supported by a non exhaustive list drawn up by OHCHR detailing what assistance might be proximate enough to engage responsibility.\nWhile the earlier passage might be thought to imply a more general principle aimed at any form of assistance, the report does not suggest that it has achieved the status of a binding rule of law by virtue of any legal instrument or judicial pronouncement, national or international.\nIt is also relevant that we are not here considering facilitation in general, but facilitation by the transfer of information.\nThe development of a common law rule would have to take account of the fact that, at least as respects the transfer of personal data, Parliament has recently legislated in this field, in the 2018 Act.\nThat provides a detailed and carefully calibrated regime for the transfer of such information to third countries.\nIt is difficult to reconcile that scheme with the development of an absolute common law prohibition of transfer of information in defined circumstances.\nNotably, even where transfer would otherwise be prohibited, for example because of the lack of appropriate safeguards, transfer may be allowed in special circumstances, including in section 76(1)(c) for the prevention of an immediate and serious threat to the public security of a member state or a third country.\nIt is not difficult to envisage circumstances where urgent exchange of information with the US security forces might be required relating to an immediate threat to public security, which should not be inhibited by concerns that it might ultimately lead to a risk of the death penalty.\nFor these reasons I would dismiss the appeal under the first heading.\nData Protection Act 2018\nThe provisions of the Data Protection Act 2018, which regulates the processing of personal data, are set out and discussed in detail in the Divisional Courts judgment (paras 141ff).\nIt is not in dispute that the data transmitted to the US authorities include personal data relating to Mr El Sheikh together with personal data relating to any other suspect, to witnesses and possibly others, along with other material not falling within the definition of personal data.\nIt is also not in dispute that in the course of their consideration of the question whether to provide the US authorities with the material, the UK authorities gave no separate consideration to the requirements of the 2018 Act (Divisional Court paras 141 142).\nIt is Part 3 of the Act that is of particular relevance in the present case.\nAs the Divisional Court explains (paras 143, 175), Part 3 is designed to implement the EUs Law Enforcement Directive (Directive (EU) 2016\/680) or LED, which accordingly is a legitimate aid to construction.\nThe appellant argues that the authorities breached the provisions of the 2018 Act in a number of respects.\nI propose to turn straight to the arguments that she advances in relation to the provisions governing transfers of personal data to a third country (sections 72 to 78 of Part 3), because it is these provisions which, to my mind, provide the answer to the data protection issues in this case.\nSection 73 sets out general principles for such transfers.\nIt prohibits transfer of personal data unless the three conditions set out in subsections (2) to (4) are met.\nCondition 1 is that the transfer is necessary for any of the law enforcement purposes.\nIt is common ground that the test of necessity is a strict one (Guriev v Community Safety Development (UK) Ltd [2016] EWHC 643 (QB), para 45).\nThe law enforcement purposes are: the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, including the safeguarding against and the prevention of threats to public security. (section 31)\nis based on an adequacy decision (see section\nCondition 2 is that: the transfer (a) 74), (b) if not based on an adequacy decision, is based on there being appropriate safeguards (see section 75), or if not based on an adequacy decision or on there (c) being appropriate safeguards, is based on special circumstances (see section 76).\nCondition 3 concerns the status of the intended recipient of the data.\nThere is no dispute that it is satisfied, and it need not concern us further.\nIt is upon Condition 2 that the argument in the instant case has centred.\nEach of the three limbs of this condition directs the reader on to a further section of Part 3.\nThere was no adequacy decision in this case (Condition 2(a)), so section 74 need not be considered.\nHowever, there is debate as to the applicability of both Condition 2(b) and Condition 2(c), and it is therefore necessary to turn to sections 75 and 76.\nSection 75 defines the circumstances in which a transfer is based on there being appropriate safeguards, and sets out procedural requirements which must be complied with, including as to documentation and as to providing information to the Information Commissioner.\nRelevant also to appropriate safeguards is recital (71) of the LED: Transfers not based on such an adequacy decision should be allowed only where appropriate safeguards have been provided in a legally binding instrument which ensures the protection of personal data or where the controller has assessed all the circumstances surrounding the data transfer and, on the basis of that assessment, considers that appropriate safeguards with regard to the protection of personal data exist In addition, the controller should take into account that the personal data will not be used to request, hand down or execute a death penalty or any form of cruel and inhuman treatment (Emphasis added)\nThe Divisional Court rejected the appellants submission based on recital (71) that in the absence of an assurance as to use, the safeguards would necessarily be inadequate.\nThey said: if this recital were intended to be a red line prohibition it (a) would be expressed clearly as such, (b) would be expressed in imperative terms (must rather than should and not merely take into account), and (c) would be in an article rather than a recital. (para 182)\nThe court (paras 202ff) also rejected the submission that the section required express consideration of the applicability of the requirements before transfer takes place: What matters is whether, in substance, appropriate safeguards for the protection of the data existed; whether, in other words, the decision proceeded in circumstances where there were appropriate safeguards in place.\nIt was evident, in the Divisional Courts view, that ministers and officials took account of the potential use of the data in respect of the death penalty: in fact, that was central to the assessment.\nThe terms on which the data were transferred to the US authorities were set out in the letter under challenge, and the careful consideration by ministers and officials of the question whether to make the transfer in the absence of death penalty assurance met the requirement that the data controller must assess all the circumstances surrounding transfer of that type of personal data to the US as required by section 75(1)(b).\nAs to the lack of communication with the Information Commissioner as required by section 75(2) the court accepted the submission of counsel for the Secretary of State that a failure in that regard cannot operate to undermine a transfer which in substance is lawful.\nMr Facenna for the Information Commissioner submits that the Divisional Court erred in its understanding of the applicable gateway under sections 73 to 76.\nSection 73 requires, as he puts it, conscious and contemporaneous consideration of the statutory tests prior to any transfer taking place.\nFurther, the record keeping requirement, including the requirement to set out the justification for the transfer (which features in both section 75 and section 76) cannot sensibly be read as requiring no more than ex post facto consideration of whether a transfer was justified.\nHe submits also that the court was wrong to focus on the extent to which ministers took account of the potential use of the data in respect of the death penalty, and he emphasises the particular reference in the LED to the consideration that the data will not be used to request, hand down or execute a death penalty.\nIn my view, Mr Facenna is correct to submit that section 73 requires specific consideration by the relevant controller of the statutory tests, including the strict test of necessity.\nThe clear purpose of the provisions is to set out a structured framework for decision making, with appropriate documentation.\nThis did not happen in this case, and to that extent there was a clear breach of the Act.\nI also agree that the issue under Condition 2 is not what matters the controller took into account, but whether the decision was based on there being appropriate safeguards or (when we come to sections 73(3)(c) and 76) special circumstances.\nIt is true that recital (71) is no more than an interpretative aid, and that its wording could be clearer.\nHowever, the words will not be used seem to leave little room for discretion.\nThe expectation is that the appropriate safeguards will be designed to achieve that objective.\nThat is also consistent with the governments long standing policy of seeking full death penalty assurances in all cases.\nGiven that in this case the information was transferred without any safeguards at all, I am unable to see how (if the question had been considered) the Secretary of State could have regarded this condition as satisfied.\nThe Divisional Court was wrong in my view to find otherwise.\nThe lawfulness of the transfer therefore stands or falls on the special circumstances condition contained in section 73(3)(c).\nThe circumstances in which a transfer is based on special circumstances are defined in section 76, which, like section 75, also includes procedural requirements.\nAccording to section 76(1), a transfer is based on special circumstances where it is: necessary (a) another person, to protect the vital interests of the data subject or to safeguard the legitimate interests of the data (b) subject, (c) for the prevention of an immediate and serious threat to the public security of a member state or a third country, (d) enforcement purposes, or (e) in individual cases for any of the law in individual cases for a legal purpose.\nIt is upon paragraphs (d) and (e) that the Secretary of State relies. [L]aw enforcement purposes (paragraph (d)) are defined in section 31, see para 210 above.\nA legal purpose (paragraph (e)) includes the purpose of any legal proceedings (including prospective legal proceedings) (section 76(4)(a)).\nParagraphs (d) and (e) do not apply if the controller determines that fundamental rights and freedoms of the data subject override the public interest in the transfer (section 76(2)).\nAlso relevant to section 76 is recital (72) of the LED, which states: Where no adequacy decision or appropriate safeguards exist, a transfer or a category of transfers could take place only in specific situations, if necessary [inter alia] in an individual case for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, including the safeguarding against and the prevention of threats to public security Those derogations should be interpreted restrictively and should be limited to data strictly necessary.\nSuch transfers should be documented and should be made available to the supervisory authority on request in order to monitor the lawfulness of the transfer. (Emphasis added)\nThe Divisional Court held that if necessary the Secretary of State was entitled to rely on the special circumstances condition: 207.\nThe transfer here was necessary in an individual case for any of the law enforcement purposes (section 76(1)(d)) or, alternatively, in an individual case for a legal purpose: section 76(1)(e).\nGiven the specific nature of the evidence transferred in the present case it cannot be said to fall within the categories of frequent, massive and structural transfers of person data, or large scale transfers of data (which recital (72) suggests would not be permitted under this head). 208.\nThe controller had not determined that the fundamental rights and freedoms of the data subject overrode the public interest in the transfer: section 76(2).\nAlthough no specific document was created to meet the requirements of section 76(3) the details of the transfer were documented by UKCA and the justification for the transfer is reflected in various contemporaneous documents.\nI agree with Lord Kerr (para 158), in line with the submission of the Information Commissioner, that the Act requires a specific assessment under section 73, and that this did not take place.\nInsofar as reliance might be placed on the derogation for the prosecution of criminal offences (recital (72)), the Secretary of State would need to be satisfied that that the transfer of any personal data was strictly necessary for that purpose.\nA convenient summary of the thinking at the time is set out in the email of 6 June 2018 from the Home Secretarys private office (referred to by Mr Biggar, para 68): a. He was extremely mindful of the greater imperative of ensuring the prosecution of these individuals.\nThat must be the highest priority in this instance given their shocking crimes. b. He weighed the decision of seeking assurances against the likelihood of being able to agree them with American counterparts.\nAgain the priority must be to ensure prosecution in the US system, as there was insufficient evidence for prosecution in the UK. c.\nHe also judged that by not assisting the US in bringing this to trial, it ran the risk of the two being moved to Guantanamo.\nHe was aware of the victims families clear wish for a criminal prosecution to take place.\nIt was his judgment that prosecution was most likely in a US court and therefore this was the best course of action to meet the families wishes. d. Lastly he was mindful of the UKs international obligation to tackle [foreign terrorist fighters].\nThis course of action was best judged to achieve that commitment.\nHe felt we must send a clear message that people who commit these acts will be brought to justice, and they cannot be allowed back on the streets to radicalise others.\nIt is apparent that the decision was based on political expediency, rather than strict necessity under the statutory criteria.\nThere was no consideration as to whether transfer of personal data as such was required.\nThere was also a notable lack of any assurance, if the information were made available, as to the prospects of a prosecution in fact taking place in the US.\nGiven that there was insufficient evidence to prosecute in the UK, it is not clear why the legal position was thought to be any different in the US.\nSo long as the prospects of any prosecution was uncertain, it would seem premature to say that any particular information was strictly necessary for that purpose.\nOf course, if there were no prosecution, concerns about the risk of the death penalty would fall away, but that in itself could not affect the need for the transfer to be justified under the statutory criteria.\nAs Lady Hale explains, a further issue arises under section 76(2) relating to special circumstances.\nAlthough I would have welcomed fuller argument on the point, I see the force of her comments.\nAt the least, failure to consider this point is a further reason for holding that the decision cannot stand.\nConclusion\nFor these reasons I would allow the appeal on the second issue only.\nIt seems that circumstances may have changed since the hearing of the appeal, in that the Crown Prosecution Service is understood to be reconsidering the possibility of a prosecution in this country.\nThat would clearly be relevant to any reconsideration of the issues by the Secretary of State, in particular the necessity of the transfer.\nI would seek further submissions on the appropriate form of order.\nLORD HODGE:\nI agree that the appeal must be allowed.\nThe Secretary of States decision cannot stand because in reaching that decision he did not comply with the requirements of the Data Protection Act 2018 (the 2018 Act).\nIn this regard I agree with Lady Hale, Lord Reed, Lord Kerr and Lord Carnwath, essentially for the reasons given by Lord Reed and Lord Carnwath.\nI see the force of Lady Hales point in relation to section 76(2) of the 2018 Act, but, as it was not fully argued, would reserve my position on it.\nBut, for the reasons given by Lord Reed and Lord Carnwath, I agree that the first ground of appeal must be dismissed.\nI am satisfied that the common law does not recognise a right to life which can be used to bar the Secretary of State, in his exercise of prerogative powers in the conduct of foreign affairs, from providing information to a foreign country concerning a foreign citizen in the context either of mutual legal assistance or the sharing of intelligence.\nIn the domestic laws of the United Kingdom it is Parliamentary legislation rather than the common law which has created and delimits the right to life by the abolition of the death penalty for all offences and the enactment of the Human Rights Act 1998 (the 1998 Act).\nIt is in the 1998 Act that the right to life has become part of our domestic laws.\nFurther protection has been provided, indirectly, by data protection legislation, now the 2018 Act, and, as far as it goes, by section 16 of the Crime (Overseas Production Orders) Act 2019 (the 2019 Act), which amends section 52 of the Investigatory Powers Act 2016.\nIt is not difficult to envisage circumstances in which the Secretary of State might want to provide intelligence to the government of another country to avert serious loss of life in a planned terrorist attack and that intelligence might expose a person in the custody of the foreign state to criminal charges which may carry the death penalty.\nThe United Kingdoms international obligation to protect the right to life under article 2 of the European Convention on Human Rights, which section 1 of the 1998 Act introduced into our domestic laws, would, it appears to me, require the Secretary of State to balance the necessity of providing information to save lives against the possibility of facilitating the imposition of the death penalty on that person.\nWere the courts to recognise a parallel common law right to life and similar qualifications to that right, that would not be the incremental development of the law building on established principles of the common law; it would amount to judicial legislation.\nIt is for Parliament to decide whether it wishes to go beyond the amendment which it made in the 2019 Act.\nOur public law reflects the very high value which our society places on human life by requiring the courts to adopt an especially intense scrutiny when reviewing the legality of a decision which may imperil a persons life.\nHaving regard to the arguments advanced in this appeal, that scrutiny involves the review of the exercise of prerogative powers against the common law criterion of reasonableness (in relation to the Secretary of States change of position) and against the requirements which Parliament has imposed in the 2018 Act.\nWhile the appeal fails on the former basis, it succeeds on the latter.\n","output":"The appellants son is alleged to have been one of a group of terrorists operating in Syria, involved in the murder of US and British citizens.\nIn June 2015, the US made a mutual legal assistance (MLA) request to the UK in relation to an investigation into the activities of that group.\nThe Home Secretary requested an assurance that the information would not be used directly or indirectly in a prosecution that could lead to the imposition of the death penalty.\nThe US refused to provide a full death penalty assurance.\nUltimately, in June 2018, the Home Secretary agreed to provide the information to the US without requiring any assurance whatever.\nThe appellant challenged the Home Secretarys decision by way of judicial review.\nHer claim was dismissed by the Divisional Court, which certified two questions of law of public importance: (i) whether it is unlawful for the Secretary of State to exercise his power to provide MLA so as to supply evidence to a foreign state that will facilitate the imposition of the death penalty in that state on the individual in respect of whom the evidence is sought; and (ii) whether (and if so in what circumstances) it is lawful under Part 3 of the Data Protection Act 2018 (DPA), as interpreted in the light of relevant principles of EU data protection law, for law enforcement authorities in the UK to transfer personal data to law enforcement authorities abroad for use in capital criminal proceedings.\nThe Supreme Court allows the appeal.\nThe majority of the Justices (Lord Reed, Lord Carnwath, Lord Hodge, Lady Black and Lord Lloyd Jones) dismiss the challenge to the decision brought under the common law, but the Court unanimously holds that the decision failed to comply with the DPA.\nLord Kerr would have allowed the appeal on both grounds.\nLady Hales judgment acts as a short guide to the other judgments.\nGround (i): Has the common law evolved to recognise a principle prohibiting the provision of MLA that will facilitate the death penalty? The majority answer this question no.\nThe reasons for considering that the common law has not developed so far are explained by Lord Reed and Lord Carnwath.\nLord Carnwath finds that the power of the courts to develop the common law must be exercised with caution [193].\nThe death penalty as such has never attracted the attention of the common law: the key legal developments have come from Parliament and the ECHR, not from the domestic courts [194].\nOne recent development is section 16 of the Crime (Overseas Production Orders) Act 2019.\nThis section confirms: (i) that this is an area in which Parliament remains directly involved; and (ii) that, where the Act applies, there is nothing that specifically prohibits the Home Secretary from exchanging material in cases whether they have sought but have not received assurances that the information they\nexchange will not be used to facilitate the death penalty.\nThis suggests that the common law has not developed as suggested by Lord Kerr [195].\nLord Carnwath also finds that powers to deport or extradite under domestic law are subject to review on public law grounds, but are not subject to an absolute prohibition on removal by reference to the possible consequences in the receiving state [198].\nFinally, it is difficult to reconcile the DPA scheme with the development of an absolute common law prohibition as advanced by Lord Kerr [205].\nLord Reed agrees with Lord Carnwath for the reasons given in his judgment and for additional reasons.\nHe finds that the common law is subject to judicial development, but such development must build incrementally on existing principles.\nThis is necessary to: (i) preserve legal certainty; and (ii) ensure compatibility with the pre eminent constitutional role of Parliament in making new law [170].\nThe development of the law proposed by Lord Kerr does not seem to Lord Reed to be an incremental step [171].\nLord Reed adds that judicial recognition of the value of life can have an important influence on adjudication in this context.\nThis is because the courts are required to take a more rigorous approach when reviewing the exercise of discretion where life may be at stake [176 178].\nLord Reed refers to the respondents submissions that the Home Secretarys decision making complied with that higher standard of review [179].\nHe notes that the Home Secretarys decision might have been open to challenge on the ground that it failed to comply with the common law requirement of rationality, but declines to express a view on this [181 182].\nLord Hodge agrees with Lord Reed and Lord Carnwath that the common law does not recognise a right to life which can be used to prevent the Home Secretary from providing information to a foreign country in the context either of MLA or the sharing of intelligence [231 234].\nLord Kerr underlines the steadfast opposition by successive UK governments to the imposition of the death penalty in any circumstances, and the related long standing policy not to provide MLA unless death penalty assurances are received [26].\nHe notes that the common law is not immutable but develops over time to reflect the changing values of society [102].\nLord Kerr summarises six factors favouring recognition of the common law principle in question at [141]: (i) the Bill of Rights; (ii) British contemporary values; (iii) European Court of Human Rights (ECHR) jurisprudence (discussed at [107 124]); (iv) EU jurisprudence (discussed at [125 134]); (v) the fundamental illogicality of refusing to extradite or deport individuals for trial where there is a risk of the imposition of the death penalty, on the one hand, and facilitating precisely such an outcome by the provision of MLA without requiring assurances, on the other; and (vi) Judicial Committee of the Privy Council jurisprudence (discussed at [135 140]).\nLord Kerr concludes that a common law principle should be recognised whereby it is deemed unlawful to facilitate the trial of any individual in a foreign country where, to do so, would put that person in peril of being executed [142].\nThis principle should be disapplied only if MLA is absolutely necessary as a matter of urgency in order to save lives or protect the nations security [164].\nLaw must be responsive to societys contemporary needs, standards and values, which are in a state of constant change.\nThat is an essential part of the human condition and experience.\nThe adjustment to the common law proposed reflects the contemporary standards and values of our society [144].\nGround (ii): Is it lawful under Part 3 of the DPA to transfer personal data to law enforcement authorities abroad for use in capital criminal proceedings? The Court is unanimous in holding that the Home Secretarys decision was unlawful under the DPA.\nThe DPA requires the data controller to address his mind to the specific requirements of the Act and this was not done.\nThe DPA is discussed by Lady Hale at [6 15], Lord Kerr at [152 159] and Lord Carnwath at [207 228].\nLady Hale outlines the basic structure of the DPA at [8 12].\nShe explains that Part 3 of the DPA makes provision about the processing of personal data by competent authorities for law enforcement purposes.\nSections 73 to 76 set out the general conditions that apply to such transfers.\nThe data controller cannot transfer data unless the three conditions in section 73(1)(a) are met [8].\nCondition 1 is that\nthe transfer is necessary for any of the law enforcement purposes [9].\nCondition 2 is that the transfer is (a) based on an adequacy decision of the European Commission; (b) if not based on an adequacy decision, is based on there being appropriate safeguards; or (c) if not based on an adequacy decision or appropriate safeguards, is based on special circumstances [10].\nShe notes that this transfer was not based on an adequacy decision or appropriate safeguards, because there were none [10].\nNor does the transfer meet the special circumstances requirement: a transfer is based on special circumstances only if it is necessary for any of the five purposes listed in section 76(1).\nThis condition is not met [12].\nLord Carnwath agrees that there has been a breach of the DPA.\nHe focuses on the provisions governing transfers of personal data to a third country in sections 72 to 78 of Part 3. section 73 deals specifically with transfers of personal data to a third country and prohibits such transfers unless a number of conditions are met.\nAs Lady Hale, he notes that Condition 2 is that the transfer must be based on an adequacy decision, or on there being appropriate safeguards, or on special circumstances.\nThere was no adequacy decision here, hence the discussion centres upon whether there were appropriate safeguards or special circumstances sanctioning the transfer [209 213]. section 75 defines the circumstances in which a transfer is based upon there being appropriate safeguards, discussed at [214 219].\nLord Carnwath concludes that the information in question was transferred without any safeguards at all [220].\nThe lawfulness of the transfer therefore stands or falls on the special circumstances condition [221].\nThe circumstances in which a transfer is based on special circumstances are defined in section 76, discussed at [221 224].\nLord Carnwath concludes that the Act requires a specific assessment under the section, and that this did not take place [225].\nThe decision was based on political expediency, rather than consideration of strict necessity under the statutory criteria [227].\nIt was consequently unlawful under the DPA.\nLady Hale raises a further issue under section 76(2) DPA, which concerns the special circumstances gateway. section 76(2) provides that: subsection (1)(d) and (e) do not apply if the controller determines that fundamental rights and freedoms of the data subject override the public interest in the transfer [12].\nLady Hale finds that these fundamental rights and freedoms include the rights protected by the European Convention on Human Rights, the most fundamental of which is the right to life [13 14].\nThis points towards an interpretation of section 76(2) which would not allow the transfer of personal data to facilitate a prosecution which could result in the death penalty [15].\nLord Carnwath sees the force of Lady Hales comments.\nHe concludes that, at least, failure to consider this point is a further reason for holding that the Home Secretarys decision cannot stand [228].\nLord Hodge also sees the force of Lady Hales comments, but as the point was not fully argued, he reserves his position on it [230].\nLord Kerr agrees that there is a breach of the DPA, but for different reasons.\nHe notes that it is common ground that provision of MLA involved the processing of personal data falling within Part 3 DPA.\nSuch processing is only lawful where it complies with the data protection principles in section 34 DPA.\nUnlike the other justices, Lord Kerr held, under ground 1, that the transfer of material to the US authorities without obtaining death penalty assurances was contrary to the common law.\nHe therefore concludes that it follows that the first and second data protection principles in section 34 requiring processing that is lawful and fair are not met [152 153].\nLord Kerr goes on to discuss section 73 DPA [154].\nHe agrees that there was no adequacy decision and no appropriate safeguards [155].\nTransfer on the basis of special circumstances can only occur following an assessment of what is strictly necessary.\nSuch an assessment was not made [158], hence the transfer of data breached section 73.\n","id":3}
{"input":"On Saturday 15 June 1974, in the late morning, an army patrol consisting of two military vehicles was travelling towards Benburb, County Tyrone.\nThe vehicles contained members of the Life Guards regiment.\nThe lead vehicle had six men on board.\nThe commander of the patrol, who was travelling in that vehicle, was Dennis Hutchings, the appellant in this case.\nAs 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.\nHe appeared to be looking into the hedge at the side of the road.\nHis name was John Paul Cunningham.\nMr Cunningham appeared startled and confused.\nHe ran across the road in front of the lead vehicle and climbed a gate into a neighbouring field.\nHe then ran towards a metal fence which bordered the field.\nThe patrol came to a halt on the appellants command.\nMost of the soldiers dismounted from the vehicles and took up defensive positions.\nThree members of the patrol, the appellant and two others, who have been referred to as B and E, pursued Mr Cunningham.\nMr Hutchings and soldier E went towards the same gate that Mr Cunningham had climbed over.\nSoldier B went to a gateway further down the road.\nA number of shouted commands to Mr Cunningham to stop went unheeded.\nIt later transpired that he had limited intellectual capacity.\nHis mental age was judged to be between six and ten years.\nIn 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.\nThe 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.\nAt the time that he fell, he was close to the metal fence.\nIt has been established that he was running towards his home.\nHET 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.\nBackground\nIn 1974 there was much terrorist activity in Northern Ireland.\nA large part of that activity was generated by the Provisional Irish Republican Army (PIRA).\nThere were regular attacks on the security forces, including the British Army.\nThe attacks frequently involved the use of firearms and explosives.\nThe Life Guards regiment was responsible in 1974 for security force operations in Cookstown, Dungannon and Armagh and surrounding districts.\nCookstown and Dungannon are in County Tyrone, as are Benburb and Eglish.\nBenburb is some 18 miles from Cookstown and about eight miles from Dungannon.\nEglish is a small village that lies between Dungannon and Benburb.\nIt is about five miles from Dungannon to Eglish and approximately the same distance from Eglish to Benburb.\nAn army report about the time that Mr Cunningham was killed stated that the threat level in these areas was particularly high.\nThere were frequent army patrols of the roads between these various locations.\nIndeed, 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.\nOne of those attacks resulted in the death of a soldier in the Life Guards regiment.\nTwo 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.\nA firefight, as it was described in the reports of the incident, ensued.\nArms and explosives were discovered in the vehicle.\nThis had occurred about three and a half miles from where Mr Cunningham was killed.\nFollowing the killing of Mr Cunningham, a joint inquiry by the Royal Ulster Constabulary (RUC) and the Royal Military Police took place.\nThe 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.\nHET 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.\nIt conducted an inquiry into Mr Cunninghams death.\nIt concluded that this was an absolute tragedy that should not have happened.\nIt recommended, however, that no further action be taken in relation to the incident.\nIn 2015 a new body, the Legacy Investigation Branch, conducted a new investigation into Mr Cunninghams death.\nAs a result of this, the appellant was arrested and taken to a police station in Northern Ireland where he was interviewed.\nHe answered no comment to all questions put to him.\nHe was subsequently charged with two offences: the attempted murder of Mr Cunningham and attempting to cause him grievous bodily harm.\nOn 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.\nIt is accepted that the certificate was issued without prior notice to the appellant.\nHe was not given an opportunity to make representations as to whether it should be issued.\nThe material and information which led to the issue of the certificate have not been disclosed to him.\nHe was not informed of its having been issued until 5 May 2017.\nThe statutory provisions relating to the issue of certificates and challenges to their\nThe 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.\nThe breadth of the power to direct that a trial be before a judge without a jury is immediately apparent from these provisions.\nThe 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.\nThe 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.\nIt can only be supposed that these matters were deliberately left open ended.\nThe type of decision which the Director must take can be of the instinctual, impressionistic kind.\nWhilst 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.\nIt may partake of supposition and prediction of a possible outcome, rather than a firm conclusion drawn from established facts.\nThe 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.\nOffences 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.\nThe PIRA campaign in Northern Ireland in the 1970s was based on that organisations political hostility to continuing British rule in that country.\nThe incident that occurred a few days before Mr Cunningham was killed bore all the hallmarks of a PIRA operation.\nWhen 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.\nThat 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.)\nSection 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).\nThe 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.\nThese 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.\nBy 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.\nThe offences with which the appellant has been charged are therefore covered by those provisions.\nCounsel for the appellant, Mr Lewis QC, drew our attention to the Explanatory Notes which accompany the 2007 Act.\nHe 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.\nThese paragraphs read: 22.\nCondition 4 is set out in subsection (6).\nThis covers circumstances where the offence occurred as a result of, or in connection with, sectarianism (ie in connection with religious belief or political opinion).\nSubsection (7) clarifies that religious belief and political opinion includes their absence and any assumptions made about religious beliefs or political opinions.\nSubsection (8) provides that the persons and groups of persons referred to in subsection (6) need not include the defendant or victim. 23.\nA 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.\nThe 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.\nBut 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.\nMr 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.\nIn 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.\nThey may be admitted for what logical value they have.\nUsed 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.\nAfter 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.\nI 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.\nThose provisions invest the Director of Public Prosecutions with wide powers for the reasons earlier discussed.\nIf anything, the actual provisions are more precise in their formulation than the Explanatory Notes.\nRecourse to the latter is unnecessary for the proper interpretation and application of the pertinent parts of the statute.\nAs 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.\nMr 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.\nI do not accept that argument.\nSectarianism can, of course, have the connotation of bigoted adherence to a particular sect but that is by no means its only possible meaning.\nThe 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.\nIf 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.\nAnd 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.\nFurthermore, 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.\nMr 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.\nIt was permissible, indeed necessary, Mr Lewis argued, to look at ministerial statements in order to ascertain the legislative intent of the 2007 Act.\nHe 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.\nThe 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.\nI find it unnecessary to set out the passages from Mr Goggins statements to which Mr Lewis referred us.\nIt is quite clear that the minister was responding to particular issues on which other members of the House had expressed concern.\nHe did not attempt to outline a comprehensive charter of all the circumstances in which the Directors powers might be invoked.\nTrue 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.\nIn any event, for the reasons given earlier, the legislative intent of the provisions of that section is abundantly clear from its terms.\nIt 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.\nAs 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.\nOn 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).\nThe 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.\nMr 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.\nThe 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.\nAt 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.\nIt is necessary to confront directly the need to ensure that jury verdicts emerge unconstrained by tribal loyalties.\nA coroner must be satisfied that there will be a sensitively constructed distance between prejudice and justice.\nThe existence of a real risk of a biased juror or jury will outweigh any other factor.\nMere reduction of the risk is insufficient.\nThe coroner must be satisfied that the steps taken have reduced that risk to a remote or fanciful possibility.\nOther 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.\nThe 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.\nMr Lewis suggested that an inquest and a criminal trial were not analogous in relation to the need to avoid jury bias.\nIn the former, he suggested, a unanimous verdict was required, whereas a majority verdict could be returned in a criminal trial.\nMoreover, 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.\nI do not accept these arguments.\nThe 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.\nLikewise, the abolition of peremptory challenges and disclosure of jury panel members names and addresses.\nOn 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.\nIt was the prospect of a partisan outcome to the case which underlay the Directors decision.\nThe McParland case to which the Director referred is In re an application by Patrick McParland and John McParland for Judicial Review [2008] NIQB 1.\nIt 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.\nIt 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.\nThe Divisional Court rejected that argument.\nAt 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 .\nDiscussion of the statutory provisions relating to the issue of certificates\nThe powers available to the Director of Public Prosecutions are unquestionably far reaching.\nIt is unsurprising that this should be so.\nWhen 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.\nWhat were described by that court as tribal loyalties present a particular problem.\nThese are often difficult to detect and may routinely be disavowed by most of the population.\nBut experience has shown that they can operate to bring about unexpected, partisan outcomes.\nThe dangers that they present to the achievement of a scrupulously fair trial are undeniable.\nTaking effective precautions against jury bias presents, as the Court of Appeal in Jordan said, formidable difficulties.\nThese difficulties are particularly acute in cases which involve attacks on the security forces or where members of the security forces have fired on individuals.\nSuch cases are almost invariably highly charged, and they give rise to strong feelings in both sides of the community.\nApprehension that jury trial in such cases might put the goal of a fair trial in peril is unavoidable.\nIt is important to focus on the need for a fair trial.\nTrial by jury is, of course, the traditional mode of trial for serious criminal offences in the United Kingdom.\nIt should not be assumed, however, that this is the unique means of achieving fairness in the criminal process.\nIndeed, 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.\nSo called Diplock trials took place in Northern Ireland between 1973 and 2007.\nNo 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.\nAlthough 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.\nAs 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.\nIt 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.\nAnd 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.\nThese remain features of trials without a jury since the 2007 Act section 5(6) and (7).\nThe 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.\nIn 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.\nSecondly, and self evidently, the right has in fact been restricted by the express provisions of the 2007 Act.\nFinally, 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.\nIn 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.\nHe 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.\nAnd it is in the interests of everyone that serious crime should be effectively investigated and prosecuted.\nThere must be fairness to all sides.\nIn a criminal case this requires the court to consider a triangulation of interests.\nIt involves taking into account the position of the accused, the victim and his or her family, and the public.\nThe requirements of a fair trial are not determined by having regard to a defendants interests exclusively.\nAs Lord Steyn said, it is in the interests of everyone that serious crime be properly investigated and effectively prosecuted.\nNotably, 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.\nSuch 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.\nConsideration 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.\nThis 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.\nThat is an argument to which I shall turn in paras 53 and following.\nThe 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.\nMr 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.\nThat 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.\nMr 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.\nAt 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.\nThat is the criminal standard.\nOf 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.\nBut, 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.\nThe 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.\nThe 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.\nThere is certainly an argument that, contrary to the Divisional Courts view, the Directors assertion was at odds with what Girvan LJ said in Arthurs.\nBut 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.\nOn the true ambit of the Directors powers, what matters is the interpretation placed on the section by the courts.\nAnd the Divisional Court is unquestionably right that the wording of condition 4 invests the Director with a wide range of powers.\nWhether the section requires to be construed narrowly or broadly, the intrinsic breadth of the powers remains intact.\nEven 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.\nOn 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.\nIf, 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.\nAs 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.\nIt 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.\nIn this way the Director formed the requisite suspicion.\nIn 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.\nThis risk arises from the possibility of a biased juror or jury, having regard to the particular circumstances of this case.\nThe 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.\nThe 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.\nOne 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.\nQuite 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.\nMr 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.\nHe 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.\nThis 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.\nI should say, however, that I do not accept the argument.\nThe nature of the risk is plainly stated in the second paragraph quoted above.\nIt is that the possibility of a biased juror or jury existed.\nIt 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.\nIt 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.\nOn the question whether the Director acted within his powers, the letter sets out a clear basis on which to conclude that he did.\nHe formed the necessary suspicion on the basis of information received from the police and commentary on that information.\nHe also took the advice of senior counsel.\nThese are all entirely conventional steps to allow him to consider the question whether he suspected that condition 4 was met.\nLikewise, the risk that the administration of justice would be impaired was directly addressed by the Director and a clear conclusion was arrived at.\nFor the reasons given earlier, that conclusion was entirely unsurprising, in light of the circumstances described in the Jordan and McParland cases.\nIndeed, it is difficult to envisage how any other view could have been formed.\nThe reasons for reaching his decision were again set out in two affidavits filed by the Director in the proceedings.\nIn 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.\nHe pointed out that the legislative framework makes it clear that references to persons and groups of persons need not include the defendant.\nHe 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.\nIn other words, the Director followed faithfully the wording and essence of the legislative provisions.\nThis is completely in keeping with the terms of section 1 of the Act.\nOn 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.\nAll of this is unexceptionable and in compliance with the legislation.\nThere 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.\nIt 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.\nThe procedural argument\nThe 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.\nFurther, 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.\nSection 7 of the 2007 Act sets the scene for any discussion of this argument.\nThe exceptionality of a permissible challenge to the decision of the Director is prominent in the terms of the section.\nA curtailment of the full spectrum of judicial review challenge was obviously intended.\nIt was expressly provided that a challenge was only admissible on grounds of bad faith, dishonesty or other exceptional circumstances.\nBad faith and dishonesty clearly do not arise here.\nWhere, then, does the appellants challenge find its place in the exceptional circumstances category?\nMr Lewis seeks to place it there by reference to what he claims is the fundamental right to a jury trial.\nBut, for the reasons earlier discussed, this will not do.\nThe fundamental right is to a fair trial.\nThere 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.\nThis 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.\nThis point is reinforced by the examples of exceptional circumstances given in section 7(1)(c) of lack of jurisdiction or error of law.\nThere 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.\nTo 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.\nI consider that he has failed to do that.\nQuite 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.\nUnlike most decisions taken in the public law arena, it is not founded exclusively on the evaluation and weighing of hard evidence.\nIt will usually be motivated by sensitive information which cannot be disclosed.\nIt 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.\nIn 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.\nMany of these factors were in play in the Arthurs and Shuker cases.\nArthurs was a case in which a challenge similar to that involved in the present appeal had been made.\nGirvan LJ, delivering the judgment of the Divisional Court, drew an analogy between this species of decisions and decisions whether to prosecute.\nAt 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.\nThe 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.\nThe 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.\nIt is apparent that the statutory language in section 7 is inspired by the principle of exceptionality applicable in the context of prosecutorial decisions.\nSection 7 gives statutory recognition to the common law reticence in the scrutiny of decisions made in the field of prosecutorial decision making.\nThe 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.\nThe 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.\nIt 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.\nWhile 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.\nA 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.\nA 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.\nBoth decisions may involve consideration of material which is not only non disclosable but which may be of a highly sensitive nature.\nAs Girvan LJ said in para 24 of Arthurs, the parallels between the two species of decision are obvious.\nMoreover, 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.\nIn any event, I should say that at least three of the appellants vaunted points of distinction are not, in my view, valid.\nFirst, the question of whether the decision is made on foot of a statutory provision or on a non statutory basis is irrelevant.\nSecondly, 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.\nTo 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.\nThis 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.\nFinally, the decision whether to issue a certificate is no more adjudicatory in nature than is the decision to prosecute.\nNeither 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.\nIn 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.\nThis is especially so since it is open to the appellant even now to make representations to the Director of Public Prosecutions.\nMr Simpson, on behalf of the Director, confirmed to this court that if representations were received, these would be considered.\nOf 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.\nQuite 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.\nFirst, 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.\nSecondly, 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.\nBut the truly important point to make here is that section 1 qualifies, if not indeed removes, the right to trial by a jury.\nHence, the issue of a certificate does not itself remove the right (it is the statute which has done that).\nIn 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.\nViewed 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.\nIt is, no doubt, with this consideration in mind that section 7 circumscribed the opportunity for judicial review challenge.\nSuch 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).\nThat 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.\nI refrain from speculation as to how or when such an occasion might arise.\nI am entirely satisfied, however, that it does not arise in the present case.\nConclusion\nThe 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?\nThe 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.\nBut, for the reasons that I have given, I would answer the certified question, yes and dismiss the appeal.\n","output":"In 1974, there was much terrorist activity in Northern Ireland, a large part of which was generated by the Provisional Irish Republican Army (PIRA).\nOn 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.\nA firefight ensued and arms and explosives were discovered in the vehicle.\nOn 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.\nThey saw a man, Mr Cunningham, who appeared startled and confused.\nMr Cunningham climbed a gate into a field and ran towards a fence.\nThe appellant ordered the patrol to halt and three members, including the appellant, pursued Mr Cunningham.\nAfter shouting a number of commands to stop, the appellant and another soldier fired shots and Mr Cunningham was killed.\nIt later transpired that he had limited intellectual capacity, that he was unarmed, and that he had been running towards his home.\nIn 2015, the appellant was charged with the attempted murder of Mr Cunningham and with attempting to cause him grievous bodily harm.\nOn 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.\nSection 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.\nCondition 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.\nSection 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).\nThe appellant was not made aware of the issue of the certificate until 5 May 2017.\nHe sought to challenge the DPPs decision to issue the certificate by way of judicial review.\nHe 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.\nThe 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.\nHe 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.\nThe Supreme Court unanimously dismisses the appeal.\nIt 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.\nLord Kerr writes the judgment.\nThe breadth of the power under section 1 of the Act is immediately apparent.\nThe 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.\nThese decisions can be of the instinctual, impressionistic kind.\nWhilst 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].\nThe circumstances covered by condition 4 are also extremely wide.\nThis 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.\nThe 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.\nWhen 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].\nThe 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.\nThese are clear indications that the full panoply of judicial review superintendence is generally not available to challenge decisions under section 1 [16].\nThere 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].\nTrial by jury should not be assumed to be the unique means of achieving fairness in the criminal process.\nTrial 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].\nFurther, although trial by jury has been referred to as a right, it is not an absolute right.\nMoreover, 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].\nAlthough 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.\nOn 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].\nAs 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].\nHe also addressed whether there was a risk that the administration of justice would be impaired and his conclusion was entirely unsurprising [48].\nAs 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.\nThis is not a case of bad faith or dishonesty [54].\nWhilst 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.\nWhilst 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].\nThere 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].\n","id":4}
{"input":"This appeal is about the distribution of European Structural Funds among the regions of the United Kingdom.\nIt arises out of the complaint of a number of local authorities in Merseyside and South Yorkshire about the way in which it is proposed to distribute funds allocated to the United Kingdom for the years 2014 to 2020.\nThe appellants say that they should receive more and other regions correspondingly less.\nArticle 174 of the Treaty on the Functioning of the European Union requires the European Union to aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions.\nArticle 175 requires Member States to conduct their economic policy in such a way as to further this objective and the Union to support it by distributions from the European Structural and Investment Funds (or ESI Funds).\nThese funds are the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund.\nFor present purposes the most significant of them are the Social Fund and the Regional Development Fund.\nThe Social Fund was established under article 162 of the Treaty, whose terms identify its purpose: In order to improve employment opportunities for workers in the internal market and to contribute thereby to raising the standard of living, a European Social Fund is hereby established in accordance with the provisions set out below; it shall aim to render the employment of workers easier and to increase their geographical and occupational mobility within the Union, and to facilitate their adaptation to industrial changes and to changes in production systems, in particular through vocational training and retraining.\nArticle 176 established the Regional Development Fund.\nThis fund, which is much the largest of the Structural Funds, is intended to help to redress the main regional imbalances in the Union through participation in the development and structural adjustment of regions whose development is lagging behind and in the conversion of declining industrial regions.\nThe distribution of money from the EU Structural Funds is a shared responsibility of the Commission and the authorities of the Member States.\nThe Commission is solely responsible for the allocation of funds to each Member State.\nThe money is then used to co finance programmes, the Union contribution currently varying between 50% and 85% and the rest being met from national budgets.\nThe expenditure of sums allocated by the Commission within a Member State is jointly determined by the Commission and the Member State.\nIn the United Kingdom this is the responsibility of the Secretary of State for Business, Innovation and Skills.\nRegulation (EU) 1303\/2013\nFunds are allocated from the EU budget to programmes co financed by the European Structural Funds for successive seven year funding periods.\nThe transition to a new funding period will commonly involve a measure of disruption.\nFunding budgets rise and fall.\nStrategic priorities both at Union and at national level change.\nThe number and definition of the various categories of region entitled to funding support also change.\nStatistical tests for funding support, which commonly depend on the relationship between indices of regional development and the corresponding EU averages, may be significantly affected by the accession of new Member States.\nThere may or may not be transitional provisions to ease the passage from one funding period to the next.\nThe allocation of funds for programmes co financed by the European Structural Funds for 2014 2020 is governed by Regulation (EU) 1303\/2013, which I shall call the 2013 Regulation.\nThe legal base of the 2013 Regulation is article 177 of the Treaty on the Functioning of the European Union, which requires the European Parliament and the Council to make regulations to define the tasks, priority objectives and the organisation of the Structural Funds.\nSo far as the current period is concerned, these objectives are summarised in the recitals to the 2013 Regulation.\nThe overall objective is succinctly expressed in Recital (3).\nIt is to provide a framework within which the Union and Member States should implement the delivery of smart, sustainable and inclusive growth, while promoting harmonious development of the Union and reducing regional disparities.\nThis recital reflects one of the main features of the scheme, which is that it has been designed on the footing that there is a close interaction between the reduction of regional imbalances and the promotion of growth generally.\nThis is reflected in the drafting of the 2013 Regulation, which is directed not just to the reduction of regional disparities but to economic development in its broadest sense.\nUnder article 89(1) of the 2013 Regulation, the Structural Funds are required to contribute to two missions.\nOne is the actions of the Union leading to strengthening of its economic, social and territorial cohesion in the broad sense envisaged in article 174 of the Treaty.\nThe other is the delivery of the Union strategy for smart, sustainable and inclusive growth.\nBoth missions are to be fulfilled by pursuing two goals identified in article 89(2), namely investment for growth and jobs in Member States and regions, and European territorial co operation.\nOf the two goals, the first is much the most important.\nArticle 91 provides for an overall budget of (in round figures) EUR 322 billion, representing the global resources allocated for the years 2014 2020 to the Social Fund and the Regional Development Fund (together with the Cohesion Fund from which the United Kingdom does not benefit).\nUnder article 92, 96.33% of this global amount is allocated to the Investment for growth and jobs goal and of this, specified proportions are allocated to three categories of region: less developed, transition and more developed.\nThe regions in question are standard geographical units used for statistical purposes by the Commission and known as NUTS2 regions (Nomenclature of Territorial Units for Statistics, Level 2).\nThe categorisation of regions depends on the ratio of their average GDP per capita to that of the Union as a whole: see article 90 of the 2013 Regulation.\nLess developed regions have a GDP per capita below 75% of the EU average; transition regions have a GDP per capita between 75% and 90% of the EU average; and more developed regions have a GDP per capita over 90% of the EU average.\nTo calculate a Member States allocation from the Structural Funds, the Commission notionally allocates an annual amount of funding to each region within that state in accordance with a methodology prescribed for each of the three categories of region by Annex VII of the 2013 Regulation.\nIn each category, the calculation is based mainly on the regions GDP per capita relative to the EU average.\nThe Commission uses the resulting figures to calculate an aggregate amount for each of the three categories of region in that Member State.\nThe sum of the three categories is then allocated to the Member State, plus a sum from the Cohesion Fund in the case of those Member States (not including the United Kingdom) which are supported by that fund.\nIn contrast to the allocation of Structural Funds among Member States, which is prescribed by the 2013 Regulation in detail, there is no formula for the allocation of funds among regions within Member States.\nInstead, what is prescribed is a detailed administrative procedure for arriving at the internal regional allocations under a scheme of shared management involving the Commission, the Member States, and local entities.\nThe initiative, or right of proposal, belongs to the Member State.\nArticle 4.4 provides:\nMember States, at the appropriate territorial level, in accordance with their institutional, legal and financial framework, and the bodies designated by them for that purpose shall be responsible for preparing and implementing programmes and carrying out their tasks, in partnership with the relevant partners referred to in Article 5, in compliance with this Regulation and the Fund specific rules.\nThe critical instrument is the Partnership Agreement, which determines the allocation of resources between regions and programmes to be co financed.\nIt is defined by article 2.20 as a document prepared by a Member State with the involvement of partners in line with the multi level governance approach, which sets out that Member State's strategy, priorities and arrangements for using the ESI Funds in an effective and efficient way so as to pursue the Union strategy for smart, sustainable and inclusive growth, and which is approved by the Commission following assessment and dialogue with the Member State concerned.\nThe function of the Partnership Agreement is described by Recital (20).\nIt is to translate the elements set out in the [Common Strategic Framework] into the national context and set out firm commitments to the achievement of Union objectives through the programming of the ESI Funds.\nThe Partnership Agreement should set out arrangements to ensure alignment with the Union strategy for smart, sustainable and inclusive growth as well as with the Fund specific missions pursuant to their Treaty based objectives, arrangements to ensure effective and efficient implementation of the ESI Funds and arrangements for the partnership principle and an integrated approach to territorial development.\nA distinction should be made between the essential elements of the Partnership Agreement which are subject to a Commission decision and other elements which are not subject to the Commission decision and can be amended by the Member State.\nThe preparation of the Partnership Agreement is governed by article 14.\nThe agreement shall cover all support from the ESI funds in the Member State\nconcerned.\nIt is to be prepared by Member States in dialogue with the\nCommission and in accordance with their institutional and legal framework, and then submitted to the Commission in draft by 22 April 2014.\nThe Commissions functions in relation to the draft are to be found in article 16.\nThe Commission is required to assess the consistency of the Partnership Agreement with this Regulation and with other Union instruments, and to make observations within three months of submission.\nThe Member State is required to provide any additional information required of it and to make such revisions as are required in the light of the Commissions observations.\nFinally, the Commission must within four months of submission adopt a decision by means of implementing acts, approving all the elements of the Partnership Agreement which are required by the 2013 Regulation to be included.\nA similar process governs the Commissions approval of any amendments that may subsequently be proposed by a Member State.\nIn the absence of specified criteria for the internal allocation of strategic funding, it is clear that the role of the Commission, as a party to the dialogue leading to the submission of the draft Partnership Agreement and the body charged with commenting on and approving it, is not simply to rubber stamp the proposals of Member States.\nIt calls for a scrutiny of the proposals which is at once expert and exacting.\nIt constitutes the main machinery of compliance envisaged by the legislator.\nIt is an important feature of the 2013 Regulation that the criteria to be applied by both the Commission and the Member States in finalising the Partnership Agreement are not based on the amounts calculated by the Commission for each region when arriving at their national allocations.\nIndeed, these amounts are not even published, although they can be estimated from the methodology described in Annex VII of the 2013 Regulation.\nNor are allocations within a Member State based, as the Commissions calculations are, on GDP per capita or other measures of deprivation.\nInstead, the proposals in the Partnership Agreement are governed by broadly based criteria that are purely qualitative.\nRecital (21) declares that Member States should concentrate support to ensure a significant contribution to the achievement of Union objectives in line with their specific national and regional development needs.\nThe Union objectives are identified by article 9.\nThe overall objective is to support the Union strategy for smart, sustainable and inclusive growth.\nThis is defined by article 2.1 as meaning the targets and shared objectives guiding the action of Member States and the Union identified in three documents adopted by the European Council.\nThe first is the Strategy for Jobs and Growth at Annex I of the Conclusions of the European Council of 17 June 2010.\nThis identifies a number of Headline Targets, which can be summarised as an increase in the rate of employment, an improvement in the conditions for research and development, a reduction in greenhouse gas emissions, the improvement of educational levels and the promotion of social inclusion.\nThe second is the Council Recommendation of 13 July 2010 on guidelines for the economic policies of Member States.\nThese deal with the quality and sustainability of public finances, macroeconomic imbalances, research and development, resource efficiency and the reduction of greenhouse gas emissions, and the business and consumer environment.\nThe third document is Council Decision 2010\/707\/EU on guidelines for the employment policies of Member States.\nThese deal with labour market participation, skills, education and social inclusion.\nThe thematic objectives mentioned in article 9 are set out in the article itself, which provides as follows: Thematic objectives In order to contribute to the Union strategy for smart, sustainable and inclusive growth as well as the Fund specific missions pursuant to their Treaty based objectives, including economic, social and territorial cohesion, each ESI Fund shall support the following thematic objectives: (1) strengthening research, technological development and innovation; (2) enhancing access to, and use and quality of, ICT; (3) enhancing the competitiveness of SMEs, of the agricultural sector (for the EAFRD) and of the fishery and aquaculture sector (for the EMFF); (4) supporting the shift towards a low carbon economy in all sectors; (5) promoting climate change adaptation, risk prevention and management; (6) preserving and protecting the environment and promoting resource efficiency; (7) promoting sustainable transport and removing bottlenecks in key network infrastructures; (8) promoting sustainable and quality employment and supporting labour mobility; (9) promoting social inclusion, combating poverty and any discrimination; (10) investing in education, training and vocational training for skills and lifelong learning; (11) enhancing institutional capacity of public authorities and stakeholders and efficient public administration.\nThematic objectives shall be translated into priorities that are specific to each of the ESI Funds and are set out in the Fund specific rules.\nThe thematic objectives are complemented by strategic guiding principles contained in a Common Strategic Framework at Annex I, which provide guidance as to how they are to be achieved, and by certain conditions (ex ante conditionalities) to be satisfied by Member States in relation to each thematic objective, which are identified in articles 18 and 19 and Annex XI.\nIt will be apparent that, as foreshadowed by Recital (3), not all of the thematic objectives are directly concerned with reducing regional disparities.\nA few of these criteria are directed to traditional indices of deprivation such as employment and skill levels.\nMost are directed to specific developmental needs such as technical research capacity, training, information technology, business start ups or transport infrastructure, the need for which will vary even among regions with comparable levels of poverty or deprivation.\nSome are directed to more general policy objectives with no necessary connection to either deprivation or developmental needs, such as climate change adaptation.\nArticles 14 and 15, which lay down the required contents of the Partnership Agreement, closely reflect the objectives identified in article 9 and its incorporated instruments.\nThe treatment of the United Kingdom NUTS2 regions\nThere are 37 NUTS2 regions in the United Kingdom.\nThirty are in England, four in Scotland, two in Wales and one in Northern Ireland, which constitutes a region in itself.\nIn order to understand the way that Merseyside and South Yorkshire have been treated in the current Partnership Agreement, it is necessary to refer to the way that they had been treated in the two previous periods, 2000 2006 and 2007 2013.\nIn 2000 2006, there were three categories of region called Objective 1, Objective 2 and Objective 3 regions.\nObjective 1 corresponded to the current less developed category, comprising regions with a GDP per capita less than 75% of the EU average.\nRegions in this category received the most generous funding.\nMerseyside and South Yorkshire were both Objective 1 regions in 2000 2006.\nThe allocations for the next period, 2007 2013, were fixed shortly after the enlargement of the European Union by the admission of ten new members, mostly in Eastern Europe.\nThe new members had lower levels of GDP per capita, which depressed the EU average and meant that a number of regions which had previously been in the bottom category of development and received the most generous treatment were now in a higher category.\nThe Regulation for 2007 2013 ((EC) 1083\/2006), which I shall call the 2006 Regulation, provided for two main categories of region: convergence regions, which broadly corresponded to the current less developed regions with a GDP per capita less than 75% of the EU average, and competitiveness regions which were above the 75% threshold and broadly corresponded to the current transition and more developed categories.\nArticle 8 of the 2006 Regulation carved out of the competitiveness category two intermediate categories of region which had previously had a GDP per capita below 75% and would have been particularly badly affected by the move into a higher category.\nThese came to be known as phasing in regions and phasing out regions, although the terms themselves are not used in the 2013 Regulation.\nPhasing out regions were regions which would have been convergence regions in 2007 2013 (the least developed category) but for the expansion of the EU, but moved above the 75% threshold because of the statistical impact of enlargement: see article 8.1.\nPhasing in regions were regions which had moved from less than 75% to more than 75% of the EU average GDP per capita and would have done so even without enlargement.\nThat is their development status had improved.\nTo ease their passage into the competitiveness category, phasing in and phasing out regions were both eligible for additional financial support on what was described as a transitional and specific basis, over and above the support that they would have received as competitiveness regions.\nIn the United Kingdom, the only phasing in regions in 2007 2013 were Merseyside and South Yorkshire.\nThey were entitled under Annex II, para 6(b) of the 2006 Regulation to an allocation of 75% of the 2006 level in 2007, tapering down to the national average level for competitiveness regions by 2011.\nThe only phasing out region was Highlands & Islands.\nIt was entitled under Annex II, para. 6(a) to an allocation of 80% of the 2006 level in 2007, tapering down to the national average level of funding support for competitiveness regions in 2013.\nThe new categorisation for 2014 2020 had three categories, as we have seen.\nIn effect, the old competitiveness category for regions with a GDP per capita over 75% of the EU average was divided into two new categories, transition and more developed.\nAccording to the Secretary of States evidence, the transition category was devised against the background of tight budgetary constraints to provide an increased level of funding notwithstanding the reduction of the overall budget for the Structural Funds.\nBut in the course of negotiations in the European Council, the budget for transition regions originally proposed by the Commission was cut, thus reducing the value of the new category to those whom it was intended to benefit.\nIn the current categorisation, the United Kingdom has two less developed regions, West Wales and Cornwall.\nThere are 11 transition regions: Northern Ireland; Highlands & Islands in Scotland; and nine English regions including Merseyside and South Yorkshire.\nThe other 24 regions are all classified as more developed.\nThe Commissions allocation to the United Kingdom for 2014 2020 represented a 5% reduction at 2011 prices on the allocation for the previous funding period.\nThe Secretary of States proposals for its allocation were formulated in two stages.\nThe first covered the distribution of the United Kingdoms national allocation between its four component countries and the second covered allocations to regions within each country.\nAt each stage the Secretary of States approach was to assess the allocation of each country or region by reference to its allocation for the previous funding period.\nThis approach was adopted so as to limit as far as possible the scope for disruptive change in the new period.\nIt was possible because the governments regional allocations for the previous period had been carried out using a basket of economic and social indicators, and the Secretary of State considered that there had been no significant change of the economic and social geography of the country in the interval.\nThe Secretary of States first decision, which was announced on 26 March 2013, was that each of the four countries comprising the United Kingdom would have its overall allocation reduced by the same proportion, about 5%.\nThe second decision, which was announced on 27 June 2013, distributed the allocations of each country among its NUTS2 regions.\nIn the case of Northern Ireland, the allocation automatically followed from the first decision, because it was a region in itself.\nFor present purposes, the critical points decided on the second occasion were that the nine English transition regions should receive an allocation per year for the current funding period representing an increase of 15.7% (at 2011 prices) on its allocation for 2013, the last year of the previous funding period, while Highlands & Islands (the only Scottish transition region) should receive an allocation per year of 95% of its average annual allocation over the whole of the previous funding period.\nThe applicants have two fundamental complaints about this way of doing things.\nThe first complaint is that although the allocation for Merseyside and South Yorkshire had risen by 15.7% from the base year of 2013, this represented a 61% reduction (at 2011 prices) on its allocation for the previous funding period as a whole.\nThis was because in the previous funding period, although they would otherwise have ranked as competitiveness regions, they had received the special transitional and specific support provided for by article 8 of the 2006 Regulation.\nUnder the terms of the 2006 Regulation it had tapered down to nil by 2011.\nIn 2007 2013 as a whole, Merseyside and South Yorkshire had received substantially more than competitiveness regions because of the article 8 funding.\nBut by taking 2013 as the base year for the uplift of 15.7%, the Secretary of State chose the year in which Merseyside and South Yorkshire had been entitled to no special transitional funding and had received no more than the national average for competitiveness regions.\nBy comparison, the other English transition regions had received no special article 8 funding in the previous period and their allocations profile in that period had been flat in real terms.\nThe second complaint is that Merseyside and South Yorkshire have done badly by comparison with Highlands & Islands and Northern Ireland.\nThis, it is said, is because the first decision had protected the allocations to Scotland and Northern Ireland by guaranteeing them 95% of their allocations in the previous funding period.\nHighlands & Islands had then been allowed by the second decision to base the calculation of the 95% on its average annual allocation in the previous period, notwithstanding that, as a phasing out region in the previous period, part of its allocations in 2007 2013 had also represented transitional additional funding tapering down to zero over the period.\nIn other words, Highlands & Islands was not limited to the relevant proportion of its last and lowest year in 2007 2013.\nThe net result, the appellants say, was that their regions fared worse than other transition regions in spite of having higher levels of deprivation than most of them.\nWhat they want is a principle of allocation more closely related to levels of relative deprivation.\nPreliminary observations\nThree points should be made at the outset.\nThe first is that the Secretary of States allocation is a discretionary decision of a kind which the courts have traditionally been particularly reluctant to disturb.\nThere is no right answer prescribed by the EU Treaty or the 2013 Regulation to the question how EU Structural Funds should be distributed within a Member State.\nThere is not even any clear principle on which this should be done.\nInstead, the Secretary of State was required to make a complex evaluation of a wide range of overlapping criteria, all of which involved difficult and sometimes technical judgments about matters of social and economic policy.\nSecondly, it was a judgment of a particularly delicate kind, involving the distribution of finite resources, including domestic taxpayers funds as well as EU funds, between the four countries and the distinctive regions of the United Kingdom.\nIn such cases, the Secretary of State is in reality arbitrating between different public interests affecting different parts of our community.\nIt is an exercise in which the legitimacy of the decision making process depends to a high degree on the fact that ministers are answerable politically to Parliament.\nAs Lord Hoffmann observed in a lecture given in 2001, Separation of Powers, 7 JR 137 (2002)), at paras 19 20: there are certain areas in which, although the decision is formally justiciable because it involves the interpretation of statute or the common law, the outcome is likely to have an important impact upon public expenditure.\nThe allocation of public expenditure whether we should spend more or less on defence, health, education, police and so forth, whether at a national or local level is very much a matter for democratic decision.\nFurthermore, a court deciding a case which will affect one form of public expenditure for example, impose a burden of expenditure upon education authorities has no way of being able to decide whether such expenditure should or should not have a prior claim over other forms of expenditure.\nIt may consider that, viewed in isolation, it is fair and reasonable that children in schools should receive certain benefits or financial compensation for not having received other benefits.\nBut because it can only view the matter in isolation, it has no way of knowing whether this means that other people dependent upon social security, police protection and so on will have to make sacrifices because there is less money for them.\nThe only people who can make such decisions are the democratically elected bodies who are in charge of the budget as a whole.\nThis means that even when a case appears to involve no more than the construction of a statute or interpretation of a common law rule, the courts are very circumspect about giving an answer which would materially affect the distribution of public expenditure.\nThe third preliminary observation is that the disputed allocations are not a matter for the sole decision of the United Kingdom or the Secretary of State as its representative.\nUnder the 2013 Regulation, the United Kingdom has the right of proposal, but its proposals must be embodied in a Partnership Agreement before they can be adopted.\nThe Partnership Agreement is made with the Commission, acting as the relevant organ of the European Union.\nOnce approved by the Commission it is implemented by a Commission decision.\nIt then takes effect as an instrument of the Union.\nAt the time when the present proceedings were brought, there was no Partnership Agreement in existence.\nThere were only proposals which had been announced by the Secretary of State.\nAt a number of stages (I shall return to this point) these had been prepared in consultation with the Commissions officials.\nUltimately, they were embodied in a draft Partnership Agreement which was submitted by the Secretary of State to the Commission on 22 April 2014.\nIt is a long, elaborate and highly technical document.\nWe were referred to it in the form published on the United Kingdom governments website.\nThe Commission was certainly aware of these proceedings and in general terms of the nature of the appellants complaints, not least because according to Mr Eyres evidence they lobbied the relevant commissioner about them.\nThe Commission made a number of observations on the draft, which have not been disclosed because the Commission regards them as confidential.\nFinally the document was agreed by a Commission decision notified on 29 October 2014, shortly after this appeal was argued.\nI make these points not in order to suggest that the present issues are beyond the scope of judicial review in the English courts.\nThe Secretary of States proposals are amenable to judicial review like any other decision of the executive.\nIf his proposals were unlawful, he may be obliged to reconsider them and if necessary to propose an amendment.\nI am prepared to assume that the Commission would adopt the amendment, as it has indicated that it is in principle willing to do if it is consistent with the objectives of the Funds.\nHowever, the Commissions involvement has a broader significance.\nIt is, as I have pointed out, the main mechanism of compliance envisaged in the 2013 Regulation.\nThe Commission is an expert administrative body at arms length from the Secretary of State, with considerable experience of the economic and social issues involved.\nIt is able to review the economic merits of the Secretary of States judgments and if necessary substitute its own evaluation in a way that is beyond the institutional competence of any court, let alone a national court.\nThe Commission is evidently satisfied that the Partnership Agreement complies with the 2013 Regulation.\nThat does not rule out the possibility that it may be equally satisfied with some alternative proposal.\nBut a national court should be extremely cautious before accepting that a proposal is inconsistent with the 2013 Regulation which the Commission charged with applying it has found to be consistent with it.\nGrounds of review\nThe appellants case is that taking the Secretary of States two decisions together, the allocation to Merseyside and South Yorkshire which resulted was unlawful.\nMr Coppel QC, who appeared for them, submitted that the Secretary of State treated Merseyside and South Yorkshire differently from Northern Ireland and Highlands & Islands when they were for practical purposes in the same position, and in the same way as other English transition regions when they were in a materially different position.\nThis, he said, was contrary to the general principle of equality in EU law as well as ordinary principles of English public law which require a decision maker to have regard only to legally relevant considerations.\nHe submits that to make his case good, it is enough to demonstrate that Merseyside and South Yorkshire were comparable to Highlands & Islands or different from the other English transition regions.\nThe Secretary of State had no discretion or margin of judgment on that question.\nHis discretion or margin of judgment related only to the question whether the discrimination was objectively justifiable, and according to Mr Coppel QC the Secretary of State has never set out to satisfy that test.\nBefore turning to the Secretary of States decisions, I should make it clear that I do not accept the rigid scheme of analysis by which Mr Coppel QC seeks to confine us.\nThe general principle of equality in EU law is that comparable situations are not to be treated differently or different situations comparably without objective justification.\nThis is not a principle special to the jurisprudence of the European Union.\nIt is fundamental to any rational system of law, and has been part of English public law since at least the end of the nineteenth century.\nAs Lord Hoffmann pointed out when delivering the advice of the Privy Council in Matadeen v Pointu [1999] 1 AC 98, para 109: Is it of the essence of democracy that there should be a general justiciable principle of equality? Their Lordships do not doubt that such a principle is one of the building blocks of democracy and necessarily permeates any democratic constitution.\nIndeed, their Lordships would go further and say that treating like cases alike and unlike cases differently is a general axiom of rational behaviour.\nIt is, for example, frequently invoked by the courts in proceedings for judicial review as a ground for holding some administrative act to have been irrational.\nUnequal treatment, Baroness Hale explained in Ghaidan v Godin Mendoza [2004] 2 AC 557, para 132, is the reverse of the rational behaviour we now expect of government and the state.\nPower must not be exercised arbitrarily.\nIf distinctions are to be drawn, particularly upon a group basis, it is an important discipline to look for a rational basis for those distinctions.\nThe two stage process by which courts in discrimination cases distinguish between comparability and objective justification is a useful tool of analysis and probably indispensable in dealing with allegations of discrimination on ground of gender, race or other personal characteristics.\nMore generally, a rigid distinction between the two stages was implicit in the four stage test proposed by Brooke LJ in Wandsworth London Borough Council v Michalak [2003] 1 WLR 617, para 20, for cases arising under article 14 of the European Convention on Human Rights.\nBut a tool of analysis should not be transformed into a rule of law.\nAs Lord Hoffmann pointed out in R (Carson) v Secretary of State for Work and Pensions [2006] 1 AC 173, paras 29 31, the question whether two situations are comparable will often overlap with the question whether the distinction is objectively justifiable: If an analogous situation means that the two cases are not relevantly different (no two cases will ever be exactly the same) then a relevant difference may be the justification for the difference in treatment [T]his division of the reasoning into two stages is artificial.\nPeople don't think that way.\nThere is a single question: is there enough of a relevant difference between X and Y to justify different treatment? [T]he invocation of the rational and fair minded person (who is, of course, the judge) suggests that the decision as to whether the differences are sufficient to justify a difference in treatment will always be a matter for the judge.\nBaroness Hale, making a very similar point in Ghaidan v Godin Mendoza at para 134, deprecated a formulaic approach for precisely this reason.\nThe problem about Mr Coppel QCs scheme of analysis as applied to the allocation within a Member State of EU Structural Funds is that there is no clear measure of comparability, whether between different regions or between different ways of treating them.\nThe appellants say that Merseyside, South Yorkshire, Highlands & Islands and Northern Ireland are comparable by virtue of being transition regions under the classification, and that they have been treated differently by virtue of receiving an allocation for 2014 2020 which represents a smaller proportion of what they received in 2007 2013 than the rest.\nBut neither proposition is coherent in the context of this\nparticular scheme.\nThe four regions are transition regions only because they\nall have an average GDP per capita between 75% and 90% of the EU average.\nBut that only means that they are all eligible to participate in the pool of money allocated by the Commission for United Kingdom transition regions.\nThe mere classification by GDP per capita is consistent with significant differences in other respects which are relevant to the allocation of EU Structural Funding.\nThe criterion for the allocation is not GDP per capita but contribution to the EUs policy objectives as set out in article 9 and its incorporated instruments.\nTo paraphrase Lord Hoffmann, there is only one question: is there enough of a relevant difference between Merseyside and South Yorkshire on the one hand and the remaining transition regions on the other to justify any difference in their treatment? The answer to that question may ultimately be for the court, but the nature of the question requires a particularly wide margin of judgment to be allowed to the decision maker.\nThat is partly because the questions posed by the 2013 Regulation, whether they come under the heading of comparability or justification, call for a complex policy judgment based on a broad range of economic and social factors which the court is not competent to carry out and could not legitimately carry out.\nAnd it is partly because the discretion allowed to Member States and the Commission by the 2013 Regulation is itself very wide, and the courts cannot confine it more narrowly.\nThere are many solutions consistent with the Regulation, none of which is any more right than the next.\nIt follows, in my opinion, that the appellants cannot succeed on this appeal simply by pointing to the classification of Merseyside and South Yorkshire as transition regions, and denouncing the outcome of the Secretary of States two decisions as more burdensome to them than to others in the same category.\nThey must show that there was something unlawful about the process or reasoning by which that outcome was arrived at.\nAgainst that background, I turn to the Secretary of States two decisions.\nThe first decision\nThe first decision was to allocate to each of the four countries comprising the United Kingdom 95% of what they had received from the Structural Funds in the previous funding period (at 2011 prices).\nInstead of applying the 5% reduction in the United Kingdoms national allocation to the United Kingdom as a whole, he applied it separately to each component country.\nThe Secretary of States reasons for this decision are explained in a witness statement of Dr Susan Baxter, a senior official in his department.\nIt is clear from her evidence that Ministers chief concern was that the radical reclassification of European regions in the current Regulation should not lead to an excessively abrupt change in the funding allocated to the United Kingdoms regions.\nAlthough the Commission had not disclosed how much it had allowed for each region when calculating its allocations to Member States, the department was able to estimate the Commissions regional figures from the formula in the 2013 Regulation.\nThis revealed that if the Secretary of State were to allocate funds to regions according to the same GDP based methodology as the Commission had used to allocate funds to the United Kingdom, England would have received an increase of 7% on its allocation for 2007 2013 (at 2011 prices), with the largest increases going to the south of England.\nThe three other countries comprising the United Kingdom would have received substantially less than their allocation for 2007 2013: 22% in the case of Wales, 32% in the case of Scotland and 43% in the case of Northern Ireland.\nThe Secretary of State considered allocating funds within the United Kingdom on this basis, but rejected the idea in order to protect the devolved administrations from sudden and significant cutbacks to funding.\nHis reasons were described by Dr Baxter as follows: 41.\nMinisters were aware that the decision to equalise the cuts meant that there was proportionately less for England than the EUs notional calculation methodology would have rendered.\nAccordingly Ministers were fully aware that both (a) that this approach to the allocation of funds (rather than allocation on the basis of the EU Commissions approach) would reduce the amount of money available for regions in England; and (b) that it would limit the funding available for distribution for the Transition regions in England and the allocation for Northern Ireland and Highlands & Islands regions would come out of the transition budget.\nHowever, this was seen in the context of an overall cut in the funding for Northern Ireland and Scotland. 42.\nThere were a number of reasons for applying the cut equally as between the nations, including: Transparency a decision that was easy for non experts to understand; Simplicity a single number applied to each Devolved Administration; Consistency the same approach was taken to all four\nDevolved Administrations; and\nBalanced it took account of the status of the Devolved Administrations under the UK's constitutional settlement. 43.\nThe Government was not, at this stage, looking at the detailed effects at NUTS 2 level.\nMinisters were aware that increasing the funding for the Devolved Administrations would mean less for certain regions in England, as allocations had be [sic] made from a set budget category for each category of region.\nHowever, it was decided that this would be dealt with at the next stage of the allocation process and that only the big picture within the UK would be looked at when trying to distribute the cut fairly as between the UK nations.\nIn these passages, references to the English regions getting less mean less than they would have got if the Secretary of State had replicated the notional regional allocations which it was estimated that the Commission had made.\nIn my opinion the Secretary of State was entitled to adopt this approach.\nThe EU Structural Funds are primarily concerned with economic development, which is a devolved responsibility.\nIt is true that the relevant entity in international law is the United Kingdom, and that, as regards the institutions of the European Union, the United Kingdom is the Member State.\nEngland and the devolved administrations of Scotland, Wales and Northern Ireland have no formal status in the EU legal order.\nBut it does not follow that their status within the United Kingdom is irrelevant.\nEU law is not insensitive to the relationship between Member States and their internal federal or regional units of government and will not necessarily treat regional variations arising from the distribution of constitutional responsibility within a Member State as discriminatory.\nIn (Case C 428\/07) R (Horvath) v Secretary of State for the Environment, Food and Rural Affairs [2009] ECR I 6355, the Court of Justice was concerned with the Memorandum of Understanding between the United Kingdom government and the Scottish Government which assigned to the devolved administration of Scotland responsibility for the implementation of Community law concerning the common agricultural policy.\nThe relevant EC Regulation empowered Member States to set minimum standards of compliance at national or regional level.\nMr Horvath complained that regulations requiring the maintenance by landowners of public rights of way over agricultural land infringed the Community law principle of equality because equivalent obligations had not been imposed by the devolved administration in Scotland.\nThe Advocate General, in her Opinion, had advised that differences in the way that Community obligations were implemented by different devolved administrations could not be regarded as discriminatory because they cannot be attributed to the conduct of the same public authority (para 112).\nThe Grand Chamber reached the same conclusion, but on a broader basis, namely that such differences were inherent in the distribution of responsibility for implementing Community law among distinct territorial units of government within a Member State.\nThey were therefore no more discriminatory than differences in the way that EU law was implemented by different Member States: 48.\nAs a preliminary point, it should be pointed out that, in conferring on Member States the responsibility of defining minimum GAEC requirements, the Community legislature gives them the possibility of taking into account the regional differences which exist on their territory. 49.\nIt should be recalled that, when provisions of the Treaty or of regulations confer power or impose obligations upon the States for the purposes of the implementation of Community law, the question of how the exercise of such powers and the fulfilment of such obligations may be entrusted by Member States to specific national bodies is solely a matter for the constitutional system of each State (Joined Cases 51\/71 to 54\/71 International Fruit Co and Others [1971] ECR 1107, para 4). 50.\nThus, it is settled case law that each Member State is free to allocate powers internally and to implement Community acts which are not directly applicable by means of measures adopted by regional or local authorities, provided that that allocation of powers enables the Community legal measures in question to be implemented correctly (Case C 156\/91 Hansa Fleisch Ernst Mundt [1992] ECR I 5567, para 23). 51.\nThe Court has, in addition, held that, where a regulation empowers a Member State to take implementing measures, the detailed rules for the exercise of that power are governed by the public law of the Member State in question (see (Case 230\/78) Eridania Zuccherifici nazionali and Societ italiana per lindustria degli zuccheri [1979] ECR 2749, para 34, and Case C 313\/99 Mulligan and Others [2002] ECR I 5719, para 48). 54.\nIt must nevertheless be examined whether, in those circumstances, the mere fact that the rules establishing GAEC laid down by the regional authorities of the same Member State differ constitutes discrimination contrary to Community law. 57.\nWhere, as in the main proceedings, it is the devolved administrations of a Member State which have the power to define the GAEC minimum requirements within the meaning of article 5 of and Annex IV to Regulation No 1782\/2003, divergences between the measures provided for by the various administrations cannot, alone, constitute discrimination.\nThose measures must, as is clear from para 50 of this judgment, be compatible with the obligations on the Member State in question which stem from that regulation. 58.\nIn the light of the foregoing, the answer to the second question is that, where the constitutional system of a Member State provides that devolved administrations are to have legislative competence, the mere adoption by those administrations of different GAEC standards under article 5 of and Annex IV to Regulation No 1782\/2003 does not constitute discrimination contrary to Community law.\nThe decision is significant not just for the answer that was given to the particular question posed by the High Court, but because it necessarily followed from the reasoning that the mere fact that the United Kingdom was a unitary state in international law did not mean that regional differences in the way that Community law was applied called for objective justification.\nThe present case differs from Horvath.\nThe sole decision maker was the Secretary of State.\nIt was not the devolved administrations.\nHowever, this seems to me to be a largely formal distinction which avoids the substance of the matter.\nThe 2013 Regulation requires a Partnership Agreement to be agreed between the Commission and the United Kingdom.\nProposals for inclusion in that agreement are therefore necessarily prepared for submission to the Commission on behalf of the United Kingdom.\nBut internally, the Secretary of State was entitled to give effect to the wishes of the devolved administrations in areas such as these where they would be constitutionally responsible for implementation, notwithstanding that that might introduce differences between the different countries of the United Kingdom.\nArticle 5(1) of the 2013 Regulation provides that a Member State must in accordance with its institutional and legal framework organise a partnership with the competent regional and local authorities.\nArticle 5(2) provides: In accordance with the multi level governance approach, the partners referred to in para 1 shall be involved by Member States in the preparation of Partnership Agreements and progress reports and throughout the preparation and\nimplementation of programmes\nWhat the Secretary of State did when making his first decision was to treat the four countries comprising the United Kingdom as if they were separate entities for the purpose of implementation of the 2013 Regulation, and to divide the United Kingdoms allocation from the Structural Funds between them on a consistent basis, pro rata to their allocations in the previous funding period.\nIn my opinion, he was entitled to have regard in this way to the constitutional settlement of the United Kingdom, provided (i) that the basis on which he did so did not unjustifiably discriminate between the four countries, and (ii) that the financial implications for the individual regions of the United Kingdom were consistent with the 2013 Regulation.\nThe Secretary of States first decision was in my opinion within his margin of judgment in both of these respects.\nThere is no material before us to suggest that the relative positions of England, Wales, Scotland and Northern Ireland had changed so radically since the last funding period that a distribution between them proportionate to their previous allocations could be regarded as in itself discriminatory.\nThe argument of Merseyside and South Yorkshire is directed entirely to the financial impact of the decision on individual regions within the four countries, in other words to the second of the two provisos which I have mentioned.\nBut the first decision did not mean that English transition regions such as Merseyside and South Yorkshire would necessarily fare worse than Highlands & Islands or Northern Ireland.\nThe appellants do not suggest that the first decision necessarily meant that Highlands & Islands and Northern Ireland would get a larger proportion of the United Kingdoms transition region pot than they would have done if the 5% reduction, instead of being applied to the four countries separately, had been applied to the United Kingdom as a whole.\nThat would depend on how the allocations to individual regions were dealt with in the second decision, both in Scotland and in England.\nIndeed, Mr Eyres, whose witness statements constitute the appellants evidence, says that Merseyside and South Yorkshire assumed in the light of the first decision that they would receive a similar degree of protection to that received by the devolved regions when it came to allocating funds among the regions of England at the second stage.\nThe appellants evidence is not that the first decision reduced the total amount available for allocation to English transition regions below what it would have been if the 5% reduction had been applied across the United Kingdom as a single entity.\nIt is that it reduced the total amount below what it would have been if the Secretary of State had simply allocated funds between the regions in accordance with the notional regional allocations made by the Commission when calculating the allocation of the United Kingdom.\nBut that could not possibly make the first decision unlawful.\nThis is because under the 2013 Regulation the calculation of national allocations by the Commission depended on a precise formula based primarily on regional GDP per capita, whereas the allocation of the funds within a Member State are based on criteria that are qualitative and altogether wider.\nDevelopmental needs in the respects covered by the thematic objectives cannot be measured simply by reference to general measures of poverty such as GDP per capita.\nThe Secretary of State cannot therefore have been obliged to replicate the methodology of the Commission or to employ some other GDP based formula in his decision about how to allocate the funds among the regions of the United Kingdom, provided that he respected the thematic objectives and that his proposals were agreed by the Commission in the Partnership Agreement.\nIt is not suggested that he failed to respect the thematic objectives, and the Partnership Agreement has been agreed by the Commission.\nThe second decision\nThe appellants, as I have pointed out, recognised that the first decision did not prevent the Secretary of State from protecting them against a sudden and significant cutback.\nTheir real target is the Secretary of States second decision in which he failed to do so.\nTheir complaint is that it did not protect them against a sudden and significant cutback by comparison with the 2007 2013 allocations, because the selection of 2013 as the base year meant that their uplift was based on the year in which their funding in the previous funding period had been lowest.\nThis was because under article 8.1 and Annex II, para 6(b), their funding had been tapered down by 2013 to the national average level for competitiveness regions.\nMoreover, the national average for competitiveness regions was exactly that, an average.\nIt did not take account of the special needs of those competitiveness regions in the north and midlands of England which were below the average and had relatively low GDP per capita and high levels of deprivation.\nThe appellants argue that in order to avoid unjustifiable discrimination the Secretary of State should, when making his second decision, have based the uplift of the English transition regions for 2014 2020 on their average allocations over the whole of the previous funding period.\nAs it was, his decision to use 2013 as the base year discriminated against them, (i) by comparison with other English transition regions, which had had a flat annual allocations profile in the previous period, and (ii) by comparison with Highlands & Islands whose annual allocations for the new period were calculated by reference to the average of its annual allocations in 2007 2013 instead of just 2013. 39.\nThe Secretary of State did not overlook these factors.\nHe considered that Merseyside and South Yorkshire were not comparable to other English transition regions or to Highlands & Islands.\nI shall deal first with the question of comparability to the other English transition regions.\nIn her witness statement (at paras 47 55), Dr Baxter says that ministers considered four main options: Option A was to replicate the notional regional allocations made by the Commission in arriving at the national allocation of the United Kingdom.\nThis would have resulted in allocations which were proportionate to regional GDP per capita, but would have resulted in a significant shift of funding from the north of England to the south.\nThey considered that there had been no fundamental change in the economic landscape in the last few years such as to justify a shift of allocations of this kind, which would have reduced the funding available for the poorest parts of England.\nOfficials consulted the Commission.\nThe Commission said that it would be uncomfortable about the use of their methodology, which had been designed for the calculation of national, not regional allocations.\nOption B was to apply a standard uplift to each regions allocations for 2013.\nOption C was the same as Option B, but with the allocations of Merseyside and South Yorkshire being based on their average allocations over the whole of the period 2007 2013. (This was already the case for the other English transition regions, whose allocations profile had been flat over the previous funding period).\nOption C would have resulted in Merseyside and South Yorkshire receiving a higher allocation than under Option B, but it would have involved a reduction of 22% in the allocations of all English transition regions, including Merseyside and South Yorkshire, compared to 2007 2013.\nThis was because the high cost of funding Merseyside and South Yorkshire on the basis of their allocations over the whole of the previous funding period would have had to come out of the pot available to transition regions generally.\nIt was considered that for this reason Option C would be inconsistent with the thinking which lay behind the creation of the transition category for 2014 2020, and would have caused difficulty in agreeing the allocations with the Commission.\nThis was because the transition category had been specifically introduced to provide enhanced levels of funding for regions at an intermediate stage of development notwithstanding the reduction of the total budget.\nOption D was a hybrid scheme using the Commissions notional allocations for all transition regions combined with what is described as a UK specific formula for more developed regions.\nFor transition regions this would have been the same as Option A. Ministers also considered a fifth method, which involved using a basket of economic indicators together with a suitable safety net.\nThey thought that there was a strong case for this, but rejected it because, like Option A, it would have produced a large drop in funding for the midlands and north of England, in favour of the south. 40.\nAs Dr Baxter points out, no solution was wholly satisfactory from every point of view: 48.\nGiven the funding reductions to the overall programme, and the limitations imposed by the EU Regulations, there was no outcome possible which would not have resulted in funding reductions to some regions.\nThe advantages and disadvantages of a range of options had to be considered and Ministers had to take a range of considerations into account in determining their preferred solution.\nMinisters, she notes, had to make difficult decisions: 87.\nOfficials presented them with a range of options after undertaking very detailed and comprehensive analysis and Ministers chose those options which they felt in sum were fairest to all.\nThe available budget was set by the EU and so it was always unlikely that a single option would satisfy all regions.\nGiving Merseyside and South Yorkshire a larger allocation would have meant reducing the allocations to the other UK Transition regions.\nDecisions over the Transition allocations were particularly problematic as the negotiations in the European Council had resulted in significant cuts to the budget for Transition regions compared to the European Commission proposal.\nThis level of reduced funding at EU meant that any decision was going to come as a disappointment for some. 41.\nThe Secretary of State chose Option B, fixing the uplift at 15.7%.\nHis reasons are described as follows by Dr Baxter: 54.\nA key aspect of the decision, of course, was the status of Merseyside and South Yorkshire as phasing in regions for the 2007 2013 period, thus receiving additional payments in 2007, 2008, 2009, 2010 on a specific and transitional basis, as explained above.\nMinisters decided to make the allocations using 2013 allocations as a baseline because such a baseline: maintained higher levels of funding in the North of England, where need is greatest; avoided large drops in funding levels as between 2013 and 2014 (even in relation to South Yorkshire and Merseyside); treated all English Transition regions in the same way, whilst taking account of the phased in status of South Yorkshire and Merseyside by basing allocations on the jumping off point from the 2007 2013 allocation; and treated all More Developed regions in the same way. 55.\nHad allocations been calculated based on a 2007 2013 average or overall quantum, then Ministers felt that Merseyside and South Yorkshire would have been unduly advantaged in relation to other English Transition areas, in so far as their boosted allocations in the period 2007 2010 were expressly intended to be transitional and specific rather than to be enshrined into future allocations. 42.\nIn the light of this reasoning it is impossible to say that the Secretary of States decision was outside the broad range of decisions that he could lawfully make.\nMerseyside and South Yorkshire had already received additional funding over and above that available to other regions with a GDP per capita exceeding 75% of the EU average during the previous funding period.\nArticle 8.2 and Annex II, para 6(b) of the 2006 Regulation had provided for the level of funding to taper down to the national average for competitiveness regions by 2011.\nMr Eyres, the appellants witness, says that this had not been enough to lift Merseyside and South Yorkshire into the category of competitiveness regions (in the 2007 2013 categorisation) or the category of more developed regions (in the categorisation of 2014 2020).\nThat is so, but it misses the point, which is that it was of the essence of the transitional and specific additional funding allowed by article 8 of the 2006 Regulation that it was temporary.\nOnce it had expired, the 2006 Regulation 43. envisaged in terms that the regions which had benefitted should be funded only at the national average aid intensity level for competitiveness regions.\nIn the new categorisation for 2014 2020, these regions would be assisted by being included in the intermediate category of transition regions created for regions with a GDP per capita between 75% and 90% of the EU average.\nHowever, the budget for transition regions was tight.\nIf the Secretary of State had based the uplift in 2014 2020 on the average allocations for the whole of the previous period, the effect would have been to continue the impact of the transitional additional funding provided for the years 2007 2011 into 2014 2020.\nThis represented a very significant difference between Merseyside and South Yorkshire on the one hand and the other English transition regions on the other.\nIn practice it is difficult to see what else the Secretary of State could have done.\nUnlike pay discrimination cases, where it is possible to level up to match the highest paid, the distribution of EU Structural Funds within each category of regions is a zero sum game.\nOne regions gain is anothers loss.\nSince the fund available for transition regions is ring fenced the additional cost of providing Merseyside and South Yorkshire with allocations based on the whole of the previous period would have had to come out of the allocations of the other English transition regions and would have left all of them with 22% less than they had had in 2007 2013 instead of 15.7% more.\nThe Secretary of State was entitled to take the view that this would be contrary to the purpose for which this intermediate category had been created.\nI do not find it in the least surprising that the Secretary of State anticipated difficulty in getting the Commissions agreement to such a scheme, and I can see no basis on which his judgment of the Commissions likely reaction can be challenged. 44.\nMuch of the evidence before the court is devoted to a technical and ultimately inconclusive dispute arising from Mr Eyres assertion that if, hypothetically, Merseyside and South Yorkshire had been competitiveness regions in 2007 2013 rather than phasing in regions, they would have received a higher allocation in 2013, and therefore a higher allocation in 2014 2020 as well.\nDr Baxter challenges his methodology and produces alternative figures of her own, based on rerunning the original calculations made for 2007 2013 on Mr Eyres hypothesis.\nThe value of this exercise is diminished by the fact that both witnesses agree that if Merseyside and South Yorkshire had actually been competitiveness regions in 2013, the methodology used to calculate allocations in 2014 2020 would in fact have been different.\nThey disagree about what the differences would have been.\nIt is neither necessary nor possible for a court of review to resolve this issue.\nIt is not in fact true that Merseyside and South Yorkshire were at the bottom of the transition category.\nAt 80.14% of the EU average GDP per capita, Merseyside was the third poorest of the nine English transition regions, according to the 45. 46. governments figures, while South Yorkshire at 84.46% was somewhere in the middle of the range.\nBut it is unquestionably true that the result of the allocations process was to inflict a very large reduction on two of the poorer regions of the United Kingdom.\nHowever, the only way that that problem could have been addressed on a common basis for all transition regions would have been to use a formula based on GDP per capita, as the Commission had done when calculating national allocations, or else some other formula more closely related to measures of poverty and deprivation.\nIt is impossible for this court to say that the Secretary of State was bound in law to adopt some such formula.\nIn the first place, under the 2013 Regulation allocations within Member States are not based on GDP per capita and are only to a limited extent based on other measures of deprivation.\nSecondly, the evidence is that the Commission when approached discouraged the use of their own methodology as inappropriate to an internal allocation.\nAnd, third, concentration on GDP per capita would have produced an overall shift of funding towards the south which the Secretary of State was entitled to regard as even more anomalous.\nI turn to the argument that the appellants allocation was discriminatory by comparison with Highlands & Islands.\nIt is correct that Highlands & Islands funding was reduced by 5% (at 2011 prices) by comparison with 2007 2013, as against a much larger reduction for Merseyside and South Yorkshire, even though as a phasing out region it had also received transitional additional funding on a tapered basis in the earlier period.\nDr Baxter draws attention to three differences between former phasing in regions like Merseyside and South Yorkshire and a former phasing out region like Highlands & Islands.\nAs a phasing out region, Highlands & Islands had previously been funded under the convergence objective in recognition of its greater developmental challenges.\nIts tapering profile had been more gradual in 2007 2013.\nAnd its co financing rate had been higher (75% against 50% for phasing in regions) so that allocations to it represented better value for money for UK taxpayers.\nI doubt whether the different tapering profile really differentiates Highlands & Islands from the two English phasing in regions.\nThere may be more in the other two points.\nSo far as the Secretary of State attached weight to these factors, it was very much a matter of judgment for him.\nIn fact, however, the evidence suggests that the treatment of Highlands & Islands was not due to these factors.\nIt was the combined result of the first decision, which treated Scotland as a separate territorial unit with its own 5% reduction, and of wishes of the Scottish Government, which naturally preferred to base Highlands & Islands allocations on the average of its annual allocations in the previous period than to limit it to 95% of its 2013 allocation and spend the rest on its more developed regions.\nSo far as it arose from the treatment of Scotland as a separate territorial unit, I have already explained why I regard that treatment as defensible.\nSo far as the decision about Highlands & Islands arose from the preferences of the Scottish Government, it seems to me to be the natural and legitimate result of the decentralisation of the United Kingdom under its current constitutional settlement.\nNo doubt if the 5% reduction had been applied to the United Kingdom as a whole, Highlands & Islands would have got less than in the event they did, and the saving would have left a bit more in the pot for the nine English transition regions.\nBut there is nothing in the evidence to suggest that the dilemmas affecting allocations to English transitional regions, which I have already discussed, would have been any less acute or that the outcome for Merseyside and South Yorkshire would have been significantly better.\nProportionality 47.\nThe appellants advance an alternative case based on proportionality, which I can deal with quite shortly, for I agree with the Court of Appeal that it adds nothing to the case based on alleged discrimination.\nThe appellants say that the effect of the Secretary of States decision was to impose upon them a disproportionate burden.\nThe problem about this submission is that it fails to answer the question: disproportionate to what? Proportionality is a test for assessing the lawfulness of a decision makers choice between some legal norm and a competing public interest.\nBaldly stated, the principle is that where the act of a public authority derogates from some legal standard in pursuit of a recognised but inconsistent public interest, the question arises whether the derogation is worth it.\nIn this case the only legal standard by which the treatment of Merseyside and South Yorkshire can be regarded as disproportionately onerous to them is provided by the terms of the 2013 Regulation and the principle of equality.\nThe two regions have no entitlement to support from the Structural Funds except what they can derive from these two sources.\nIf the Secretary of States decisions are consistent with both, as I consider them to have been, their treatment cannot be regarded as disproportionate.\nLord Mances judgment 48.\nI have naturally revisited my views in the light of the judgments of Lord Mance and Lord Carnwath.\nTo some extent, the differences between us relate to the supposedly anomalous consequences of the first decision, in particular on the different treatment of Merseyside and South Yorkshire on the one hand and Highlands and Islands on the other.\nI do not feel that I can usefully add anything to what I have already said about the first decision, which I regard as justifiable.\nTwo other differences do, however, call for further comment.\nThe first concerns the purpose of the structural funds, which is central to the analysis of Lord Mance.\nThe second is his analysis of the relationship between the allocations for 2014 2020 and those of the previous funding period. 49.\nWe may all agree that the distribution within the United Kingdom of EU structural funds must be consistent with their purpose.\nWhere I part company with Lord Mance is that he appears to me to take too narrow a view of the purposes of the funds and the means by which those purposes may legitimately be achieved.\nThe Social Fund is not directly concerned with the reduction of regional imbalances, but with the promotion of employment and geographical and occupational mobility.\nThe Regional Development Fund is concerned with the reduction of regional imbalances, but not only by the direct improvement of GDP per capita and other measures of deprivation.\nThe purpose of both funds is to support the action of the Union in these areas.\nThe action of the Union is guided by the targets and shared objectives referred to in the three Council policy documents of 2010 identified in article 2.1, and summed up generally in the concept of smart, sustainable and inclusive growth.\nThis concept runs through the whole of the 2013 Regulation, and the thematic objectives in article 9 are mainly directed to promoting it.\nThey involve a wide range of economic criteria, which will not directly diminish regional divergences, even if they can be expected to do so indirectly in the long term.\nLord Mance and Lord Carnwath both consider that the allocations to Merseyside and South Yorkshire were not based on their actual needs.\nBut that is a conclusion which they appear to have reached solely by reference to standard measures of deprivation such as GDP per capita.\nThis assumes that there must necessarily be a close correlation between these measures of relative deprivation and the distribution of EU structural funds.\nBut since the reduction of such differences is only one purpose of the structural funds, and even that purpose may be achieved indirectly by promoting growth through the thematic objectives, that assumption is on the face of it unjustified. 50.\nThe second major difference arises out of Lord Mances rejection of the view of both the judge and the Court of Appeal about the justification for taking allocations for 2013 as the reference point for the uplift applied in 2014 2020.\nThe same point appears to be implicit in the analysis of Lord Carnwath.\nIn the absence of any complaint about the distribution of allocations in the previous funding period, and in the absence of any material change in the economic geography of the United Kingdom since then, the mere fact that allocations were made for 2014 2020 by reference to those in the previous period is unobjectionable.\nThe objection is specifically to the choice of 2013 as the reference year.\nIt is in my opinion clear that it was this decision which accounts for the differences between Merseyside and South Yorkshire on the one hand, and the remaining transition regions in the current funding period on the other.\nIt was certainly not the decision to reduce the allocations to the four countries comprising the United Kingdom by a flat 5%.\nThis first decision did not in fact, as Lord Mance suggests, diminish the pot available for the nine English transition regions.\nThe government could have distributed the overall allocation to the English transition regions in such a way as to ensure that all of them received a flat 5% reduction on their total allocations for the previous period.\nIt could have distributed them in such a way as to ensure that Merseyside and South Yorkshire received no more than a 5% reduction even if the others did not.\nSome such solution is what the appellants say that they hoped and expected would happen after the first decision had been announced.\nTheir real complaint is that it did not happen.\nThe reason why it did not is that the purpose of the 2013 Regulation in dividing the former competitiveness category into a transition category and a more developed category was to enable the former to receive an uplift.\nThe reason why Merseyside and South Yorkshire did worse than that was that their uplift, although the same as that of the other transition regions, was based on the 2013 funding allocation and ignored the fact that they had been receiving tapered transitional funding between 2007 and 2011.\nThe same problem would have existed, and would have been equally acute, if the 5% reduction in the total funds for distribution had been applied across the whole of the United Kingdom, instead of to each of the four countries separately.\nI have set out earlier in this judgment my reasons for agreeing with the courts below that disregarding the tapered transitional funding was justifiable.\nLord Mance disagrees (i) because he considers that the tapered transitional funding which they received under article 8 of the 2006 Regulation in that period should be regarded as no different in character from the rest of their funding in that period; and (ii) because the allocation for the previous period had tapered down to the average for allocations for competitiveness regions, and Merseyside and South Yorkshire were worse off than the average competitiveness region.\nThe problem about the first of these points is that but for article 8 of the 2006 Regulation, they would have been competitiveness regions in 2007 2013.\nThe tapered funding was a temporary increase in their allocations designed to ease their path from Objective 1 status in 2000 2006 to competitiveness status in 2007 2013.\nIts function could properly be treated as spent by 2013.\nThe problem about the second point is one that I have already pointed out in another context, namely that it assumes a more precise correlation between relative deprivation and allocations than anything required by the 2013 Regulation.\nConclusion 51.\nI would dismiss the appeal.\nLORD NEUBERGER: Introductory: the background and the issues 52.\nThis appeal arises out of a challenge to the decision of the Secretary of State relating to the distribution between various regions of the United Kingdom of money allocated by the European Commission to the UK.\nThe money in question (the UK allocated funds) emanates from the European Structural Funds, and is payable in respect of the years 2014 2020, pursuant to Regulation (EU) 1303\/2013 (the 2013 Regulation). 53.\nThe background to the appeal is set out by Lord Sumption in paras 2 19, 30 31 and 37 41, and by Lord Mance in paras 113 148 below, and it is unnecessary to repeat much of what they have said.\nIn particular, the relevant provisions of the 2013 Regulation are explained by Lord Sumption in his paras 5 to 13. 54.\nThe Secretary of State for Business, Innovation and Skills decided to distribute the UK allocated funds by reference to a two stage process.\nFirst, they were apportioned between each territory (for want of a better word) of the United Kingdom.\nThis apportionment was effected on the basis that, for 2014, Northern Ireland (which was one region), Wales (which was divided into two regions), Scotland (which was divided into four regions) and England (which was divided into 30 regions) would each receive an annual sum which was 5% less than the they had received in the last year of the previous period, 2013.\nThis was because the UK allocated funds for 2014 were 5% less than they had been for 2013 (in 2011 prices).\nSecondly, the distribution of the English portion between the 30 English regions involved each of the nine English regions designated under the 2013 Regulations as transition regions, (ie regions which have a GDP between 75% and 90% of the average of the 27 EU member states) receiving a 15.7% increase in their distribution over 2013.\nIt is to be noted in this connection that, while there is practically no freedom to distribute funds allocated by the Commission for transition regions to other regions (and vice versa), there are no specific provisions in the 2013 Regulations as to how the funds allocated for transition regions of a member state should be distributed between those regions. 55.\nThe grounds upon which the decision of the Secretary of State is challenged can be expressed in a number of ways.\nI have found the most helpful approach to analyse the challenge as having four lines of attack, the first two of which are aimed at the procedure whereby the UK allocated funds were distributed amongst the 37 regions of the UK, and the third and fourth of which are aimed at the outcome.\nEach of the attacks has been advanced on the grounds of (i) breach of the EU principles of equality or proportionality and\/or (ii) breach of domestic public law principles.\nHowever, the essence of each of the attacks is that the process adopted by the Secretary of State and\/or the outcome of that process was unlawful on the grounds that it was (i) not in accordance with the 2013 Regulation, and\/or (ii) so unreasonable as to be unlawful.\nIn practice, these two grounds march together very closely, and it is hard to envisage circumstances in which only one of them was satisfied (cf Kennedy v The Charity Commission [2014] UKSC 20, [2014] 2 WLR 808, paras 51 56 in relation to domestic law and Human Rights law). 56.\nThe four attacks all effectively involve contending that the approach that the Secretary of State adopted to the distribution of the UK allocated funds wrongly failed to have proper regard to the relative economic stages of development of the 37 regions of the UK, or the nine transition regions of England.\nIt may seem somewhat artificial to treat the attacks as having separate procedural and substantive aspects, but I have found it helpful to consider whether each of the two stages of the process was in accordance with the law as a matter of principle, before addressing the question of whether the outcome of those processes was in accordance with the law.\nIf the procedure is not in accordance with the law, then it would be very difficult, but probably not inconceivable, for the outcome of the procedure to stand.\nOn the other hand, if the procedure was lawful, it would nonetheless be quite possible for the outcome to be unlawful.\nAfter all, one could expect a person responsible for the allocation of such funds to consider, where appropriate, the outcome of the procedure which was proposed before finally adopting it.\nSuch an exercise of distribution may frequently involve a degree of iteration in terms of determining a procedure, considering the outcome, and then adjusting the procedure if appropriate. 57. 58.\nThe procedural attack on the first stage is based on the proposition that, in the light of the terms of the 2013 Regulation, there can be no justification for apportioning the UK allocated funds on the basis that the four territories, England, Scotland, Wales and Northern Ireland, should each suffer the same reduction in funding from 2013.\nSuch a division, runs the argument, pays no regard to the disparities in the stages of development between individual regions, or groups of regions, and it is that with which the 2013 Regulation is concerned. 59.\nThe procedural attack on the second stage is based on the proposition that, by adopting a 2013 baseline for all nine English transition regions, the Secretary of State wrongly disregarded the status of Merseyside and South Yorkshire (regions which for convenience I will call the appellants) as phasing in regions in the previous, 2007 2013, period.\nBecause of the tapering provisions applicable to such regions during that period, it is said that the appellants are significantly and unjustifiably disadvantaged as against the other seven transition English regions, as those other regions had not been phasing in regions during the 2007 2013 period. 60.\nThe two attacks on outcome are founded on what are said to be indefensible discrepancies between the 2014 2020 payments to the appellants and those made to a number of other transition regions in the UK.\nThe first such attack relies in particular on Highlands & Islands in Scotland (as well as on Northern Ireland) and essentially arises from the first procedural stage.\nThe second attack on outcome focuses on the difference between the appellants and most of the other seven transition regions in England, and arises only from the second procedural stage.\nThe proper approach for the court to adopt 61.\nThe courts have no more constitutionally important duty than to hold the executive to account by ensuring that it makes decisions and takes actions in accordance with the law.\nAnd that duty applies to decisions as to allocation of resources just as it applies to any other decision.\nHowever, whether in the context of a domestic judicial review, the Human Rights Act 1998, or EU law, the duty has to be exercised bearing in mind that the executive is the primary decision maker, and that it normally has the information, the contextual appreciation, the expertise and the experience which the court lacks.\nThe weight to be given to such factors will inevitably depend on all the circumstances.\nThat is clear from a number of cases, including the decisions of this court in Bank Mellat v Her Majestys Treasury (No 2) [2013] UKSC 39, [2014] AC 700, paras 20 21 and 68 76, and in R (Lord Carlile of Berriew QC) v Secretary of State for the Home Department [2014] UKSC 60, [2014] 3 WLR 1404, paras 19 22, 67 68, and 111, where the judicial review and Human Rights aspects were considered.\nIn the EU law context, the same sort of point was made in R (Sinclair Collis Ltd) v Secretary of State for Health [2011] EWCA Civ 437, [2012] QB 394, para 200. 62.\nThe importance of according proper respect to the primary decision making function of the executive is particularly significant in relation to a high level financial decision such as that under consideration in the present case.\nThat is because it is a decision which the executive is much better equipped to assess than the judiciary, as (i) it involves an allocation of money, a vital and relatively scarce resource, (ii) it could engage a number of different and competing political, economic and social factors, and (iii) it could result in a large number of possible outcomes, none of which would be safe from some telling criticisms or complaints. 63.\nTherefore, like Lord Carnwath, I agree with the Court of Appeal that the Secretary of States decision under consideration in this case is in the classic territory where the courts afford the decision maker a wide margin of discretion [2014] EWCA Civ 1080, [2014] PTSR 1387, para 57.\nThis is a particularly forceful factor in the present case, which concerns a decision which involves the distribution of funds between different parts of the United Kingdom, in respect of which the relevant legislation is very imprecise as to the criteria to be adopted.\nI am not so sure that I get much assistance from the test of manifestly wrong (although I acknowledge that it is used by the Court of Justice), unless the expression means that no reasonable government could have taken the decision.\nI agree with the thrust of what Lord Sumption says on this aspect in his paras 22 23, but, although there is obvious force in the passage which he quotes from Lord Hoffmanns speech, I think the issue is susceptible to somewhat more subtle and discriminating analysis than might be inferred from reading that passage.\nTo say that the allocation of public expenditure is very much a matter for democratic decision takes matters very little further at least in connection with a decision made by the executive.\nThe fact that the legislature assigns such a decision to the executive does not alter the fact that it is the executives decision and not that of the legislature.\nIn any event, the legislature will obviously have intended the rule of law to apply, so that such a decision, as with any executive decision, must be susceptible to judicial oversight. 64. 65.\nNonetheless, a court should be very slow about interfering with a high level decision as to how to distribute a large sum of money between regions of the UK.\nBut the degree of restraint which a court should show must depend on the purpose of the allocation, the legal framework pursuant to which the resources are allocated, and the grounds put forward to justify the allocation.\nThe line between judicial over activism and judicial timidity is sometimes a little hard to tread with confidence, but it is worth remembering that, while judicial bravery and independence are essential, the rule of law is not served by judges failing to accord appropriate respect to the primary policy making and decision making powers of the executive.\nSome other preliminary points 66.\nParticularly in the light of the differences of opinion in this court, I think it is right to mention that the statutory purpose of the distribution of the UK allocated funds does not appear to me to be by any means solely to reduce imbalances or inequalities between different UK regions.\nThe 2013 Regulation refers in article 2.1 to three documents adopted by the European Council, which are identified by Lord Sumption in his para 11, and recital (3) states that the Structural Funds are intended to achieve economic growth, promote harmonious development, and reduc[e] regional disparities, which, according to article 89 are to be achieved through strengthening [of the EUs] economic, social and territorial cohesion and the delivery [of] smart, sustainable and inclusive growth, by investing in growth and jobs and working towards EU wide co operation.\nAccordingly, while the reduction of inter regional imbalances is an important factor when deciding on distribution, a point which is underlined by article 176 of TFEU (which is directed to cohesion), it is by no means the only factor and it is a long term one.\nThe 2013 Regulation is concerned not only with articles 174 176, but also article 162 (which is concerned with promoting employment), a point underlined by the thematic objectives in article 9 of the 2013 Regulations, which also demonstrate that economic convergence is simply one of the purposes of the Funds. 67.\nTurning to the exercise of distributing the UK allocated funds for the 2014 2020 period, each of the two stages of that exercise was based on the distribution which had taken place in the previous, 2007 2013, period.\nThis approach was apparently adopted partly for reasons of transparency, convenience and simplicity, but there were two further reasons.\nThe first was to minimise the risk of a disruptive change in any region or territory in 2014, by ensuring that it did not receive a substantial reduction compared with the payment it received for 2013.\nThe second reason was that the distribution for the 2007 2013 period had been effected by reference to a number of different indicators, and the Secretary of States view was that there had not been any significant change from 2006\/2007 to 2013\/2014 in the economic or other relevant differentials between the regions of the UK.\nIt is significant that there has, rightly in my view, been no challenge to this approach as a matter of broad principle (although, for the reasons discussed below, the two specific stages, and their consequences, are challenged).\nTo take the payments for the previous period as the baseline may well not be the ideal basis for distribution of funds for the current period, but I find it hard to see how it could be said to be unreasonable, unless it can be shown to be so by reference to specific facts or reasons. 68.\nAnother point that should be mentioned is that, as Lord Sumption says, the Commission appears to be content with the Secretary of States distribution process, and has, we were told, adopted it.\nThat is a point which has some traction, particularly in the context of a regulation which envisages (in articles 14 17) that a member states proposed distribution between its regions will be submitted to the Commission for the purpose of its entering into a partnership agreement with the member state, and that, before adopting the proposed agreement the Commission will assess [its] consistency with this Regulation.\nHowever, that does not alter the fact that the courts of this country have a fundamental constitutional duty to apply their view of the law to a decision or action of the executive, when it is challenged.\nIn addition, of course, the attack made by the appellants is not only based on EU law, but also on domestic common law. 69.\nTwo other factors deserve comment.\nFirst, the absence of any prior consultation between the Secretary of State and individual regions (as opposed to the devolved governments).\nIn my view, if such consultation had occurred and the Secretary of State had taken what had been said into account in a reasonable way (even if he had ultimately rejected it), that would have assisted his case.\nHowever, the fact that there were no such consultations does not undermine his case as a matter of principle, although it may, of course, in practice have assisted him in avoiding errors.\nIn that sense, it makes it easier for the appellants to attack his decision, but in the end the decision has to be assessed on its own merits.\nIn some circumstances, a failure to consult can of itself render a decision unlawful, but that will, at least normally, only be where there is a specific obligation or commitment to consult (see for instance R (Bhatt Murphy) v The Independent Assessor [2008] EWCA Civ 755).\nHowever, it has not been suggested that such an argument could be advanced here. 70.\nSecondly, it is clear from the evidence that a fair amount of thought was involved in the decision making process and four options were considered in relation to the second stage see paras 30 31 and 39 41 of Lord Sumptions judgment.\nThat is of some assistance to the Secretary of State, because (i) a considered decision deserves more judicial respect than a relatively unconsidered one, and (ii) it underlines the reasons why the court should be very reluctant to overturn the decision.\nHowever, it is not very likely to be a determinative point.\nThe ultimate decision is either in accordance with the law or it is not.\nFurthermore, the fact that the process adopted is better than three others which were rejected merely shows that there are worse processes, not that the adopted process is acceptable.\nThe procedural attack on the first stage: distribution between the four territories 71.\nThe first stage of the Secretary of States decision involved distributing the UK allocated funds between the four territories in precisely the proportions which reflected their respective shares in 2013.\nAccordingly, as already explained, because the UKs allocation in 2014 2020 was reduced by 5% from what it had been in 2007 2013, each territorys share was reduced by 5%.\nThis aspect of the decision is attacked by the appellants because (i) it was not based on consideration of the relative economic and development demands and needs of individual regions, or even of the four individual territories, and (ii) it limited the Secretary of States freedom of manoeuvre so far as distributions to individual regions were concerned. 72.\nThe concern of the appellants, as English regions, is easy to understand.\nIt is not really in dispute that, if the approach of the Commission to the assessment of the UK allocated funds had simply been reflected by the Secretary of State when effecting the distribution of those funds between the four territories in 2014 2020, England as a whole would have seen an overall increase of about 7% over 2007 2013, whereas Scotland, Wales and Northern Ireland would respectively have seen decreases of around 32%, 22% and 43%.\nHowever, these percentages have been arrived at by retrospective, informal analysis of the sum allocated.\nThe Commission has been anxious to emphasise that the basis upon which each member states allocation was fixed should not be disclosed and that any guesses as to how the allocations were fixed should be avoided.\nIn my view, the appellants objection to the first stage adopted by the Secretary of State should be rejected.\nIn the first place, it is inappropriate to equate the function of the Secretary of State, when deciding how to distribute the UK allocated funds among the regions, with the function of the Commission, when deciding how to allocate the funds among the member states.\nThe terms of the 2013 Regulation, and the documents to which it refers, are obviously relevant when considering the Secretary of States approach to distribution.\nHowever, in contrast to the position relating to the assessment of the funds to be allocated to a member state, the 2013 Regulation includes no formula as to how those funds should be distributed among the regions of a member state. 73. 74.\nThus, Annex VII to the 2013 Regulation sets out a detailed Allocation Methodology governing the allocation of funds by the Commission among member states.\nThe allocation is assessed by aggregating a sum for each region, which sum is assessed on a per capita basis, with the per capita amount being greatest for regions with less than 75% of the EU average GDP per capita and least for those with more than 90%, with the transition regions being in the middle (see paragraphs 1 4 of the Annex).\nHowever, this rather precise methodology does not apply to the distribution of those funds within member states.\nAnd the fact that the Commission refuses to say how a member states allocation was determined serves to show that no specific approach by a member state to the distribution of its funds among its regions is encouraged in practice. 75.\nThere is no provision which expressly limits the freedom of a member state when deciding how to distribute its allocated funds between regions.\nIt is true that article 176 TFEU refers to redress[ing] the main regional imbalances and structural adjustments of regions whose development is lagging behind, but it does not require convergence and it has nothing to say about timing.\nHaving said that, in the light of the terms of the 2013 Regulation, I accept that the level of economic development of each of its regions must be a point of real relevance when a member state decides how to distribute its allocated funds between them.\nThus, if it could be shown that it was treated as irrelevant by a state, then the decision would be likely to be held unlawful.\nHowever, as I have sought to explain in para 66 above, it appears clear that a member state is not required to base the distributions of its allocated funds between regions solely by reference to their relative stages of economic development, let alone to their GDP per capita.\nFurther, the thematic objectives referred to in article 9 of the 2013 Regulation have to be taken into account. 77. 76.\nThe fact that, by contrast with the detailed directions with regard to allocation between member states, there are no express constraints on member states as to how they should distribute their allocated funds renders it difficult to justify a substantial degree of constraint as to the manner of distribution.\nWhile article 93 of the 2013 Regulation limits transfers between the three types of region, it does nothing to limit transfers between regions of the same type, which again suggests a relatively high degree of freedom when the state is deciding how to distribute allocated funds between regions with the same status.\nThe fact that such transfers would be notional, as the Commission does not reveal the split between individual regions in its allocation, itself suggests that it cannot have been intended that member states were to be very limited in their scope for deciding how to distribute between regions.\nIn the course of his impressive judgment, Stewart J said that, essentially for the reasons discussed in paras 73 76 above, the appellants attack on the Secretary of States decision to adopt what I have called the first stage falls at first base [2014] EWHC 232, [2014] LGR 389, para 73.\nI agree that those reasons establish that the attack faces an insurmountable problem in so far as it relies on the point that the distribution of payments among the regions of the United Kingdom does not simply reflect their relative state of economic development.\nHowever, it can still be argued that the apportionment between the four territories is arbitrary and inconsistent with the purpose of the 2013 Regulation, because the UK allocated funds were a lump sum for the United Kingdom as a whole, and the apportionment between the four territories pays no regard to the relative claims of the 37 regions of the United Kingdom, and unjustifiably ties the hands of the Secretary of State in relation to the distribution of the funds between those individual regions.\nI accept that there is real force in that point, but the decision that the 5% reduction in the United Kingdoms allocation should be visited equally on, or pro rata between, England, Scotland, Wales and Northern Ireland is very much a policy decision, or a politically based decision, which is therefore 78. particularly difficult for a court to evaluate and therefore to criticise, and therefore to condemn.\nThe decision reflects both the increasingly decentralised nature of UK administration and the political realities of the devolution process.\nAs I see it, neither of those two features is an illegitimate factor for the Secretary of State to take into account, and neither is a factor whose importance a court is well placed to assess, let alone to dispute.\nI agree with Lord Sumption that the decision of the Grand Chamber in (Case C 428\/07) R (Horvath) v Secretary of State for the Environment, Food and Rural Affairs [2009] ECR I 6355 supports the notion that the first stage of the decision was justifiable under EU law. 79.\nApportioning the UK allocated funds between the four territories on this pro rata approach based on the 2007 2013 payments may not be a course which most people would expect, or even which many ministers would have adopted.\nBut I do not consider that it can be said that it is contrary to the 2013 Regulation, particularly as it contains no express restriction as to how nationally allocated funds are distributed; nor do I consider that it could be said to be irrational.\nIndeed, I think that there is some force in the point that the Secretary of States view that each territory should be protected in the 2014 2020 period against a substantial overall reduction from the amount it received in the 2007 2013 period accords with the inclusion in Appendix VII of a ceiling on any increase (para 13), and a floor on any decrease (para 16), in a member states allocation in the 2014 2020 period as against the 2007 2013 period.\nThe procedural attack on the second stage: distribution between English regions 80.\nThe complaint of the appellants about the second stage of the distribution process is that they should not have been treated in the same way as the other seven English transition regions because, unlike the other seven regions, the appellants were phasing in regions in the 2007 2013 period.\nThis means that, although the appellants will receive a 15.7% increase in 2014 on what they had received the previous year, they are due to receive in the 2014 2020 period around 61% less than they received over the previous 2007 2013 period, whereas the seven other transition regions will receive rather more in the 2014 2020 period than they received for the 2007 2013 period. 81.\nThe explanation for the fact that the appellants will receive a year on year increase between 2013 (the last year of the previous period) and 2014 (the first year of the current period), but a substantial overall aggregate decrease between the two periods, is that they were phasing in regions for the 2007 2013 period.\nIn other words they were regions, which during the 2000 2006 funding period had had GDPs per capita of below 75% of the average of the EU member states (and hence were Objective 1 regions), but by 2007 were no longer in that category, but were competitiveness regions (ie regions having GDPs per capita of between 75 90% of the EU average), owing to their relative economic growth.\nThis meant that during the 2007 2013 period their allocation of funds had started at a higher level than the other competitiveness regions, which had had GDPs per capita of 75 90% of the average of the member states during the 2000 2006 period (and therefore had been Objective 2 regions in that period).\nHowever, as the name suggests, the level of funds allocated to phasing in regions in 2007 tapered down over the next four years, so that by 2011 it was at the national average level per capita as other competitiveness regions. 83. 82.\nBy contrast, the seven other English regions were not only competitiveness regions during the 2007 2013 period, but they were effectively in the same category (namely Objective 2 regions) during the 2000 2006 period, as they each had a GDP per capita between 75 90% of the EU average in 2000.\nIn my view, the attack on the second stage should also be rejected.\nThe appellants cannot logically invoke the fact that they received more in the 2007 2013 period than other competitiveness regions to justify their being treated more favourably than the other competitiveness regions for the 2014 2020 period.\nThis is because the only reason that they were treated better in the earlier period was to smooth the passage from having been Objective 1 regions in the 2000 2006 period to being competitiveness regions in the 2007 2013 period.\nFrom 2011, when the tapering stopped, the appellants received aid at the average rate per capita for competitiveness regions between 2011 and 2013, and there is no reason why the Secretary of State should be expected to treat them any differently for the 2014 2020 period.\nAs Stewart J said in para 78(iii) of his judgment, if the Secretary of State had adopted the approach suggested by the appellants, it would have unduly advantaged the [appellants] in relation to the other English transition regions. 84.\nHowever, the appellants raise a separate argument based on the point that the annual payments for the 2007 2013 period made to the appellants, as phasing in regions, were, exceptionally and unlike the payments to other competitiveness regions, determined by the Commission rather than by the UK government.\nAccordingly, runs the argument, using the payment received in 2013 as the base for determining the 2014 payment for each transition region in England involved treating the appellants differently from the other seven English transition regions.\nThere is undoubted force in this argument, particularly given that (reflecting the UK governments distribution decision in 2006) the 2013 payments to the other transition regions in the north and midlands of England were increased above what they would otherwise have been, owing to the UK governments decision to favour the north and midlands over the south, whereas this did not apply to the 2013 payments to the appellants. 85.\nThis point has force.\nNone the less, given (i) the fact that it was a reasonable decision in principle to take the 2013 payments for each region as the basis for calculating the 2014 payments, (ii) the wide margin of discretion accorded to member states when deciding how to distribute allocated funds nationally, (iii) the large number of factors which are potentially relevant, (iv) the long term nature of the aims of the 2013 Regulation and its predecessors, (v) the fact that the Secretary of State appreciated and addressed the level of payment per capita received by the appellants, and (vi) the perceived desirability of maintaining a degree of continuity for each region, I have reached the conclusion that this point should also be rejected.\nThe relevant Ministers and civil servants in the Department of Business, Innovation and Skills were aware of the fact that the proposed distribution would result in the appellants receiving a relatively low sum per capita when compared with other transition regions, they considered the possibility of increasing the appellants share of the UK allocated funds.\nHowever, they decided that such a course would be unfair on other transition regions, especially as the appellants had fared better than those other regions, as competitiveness regions, thanks to phasing, during the years 2007 2010.\nThe procedural attacks: summary 86.\nFor the reasons given in paras 71 85 above, I consider that the appellants attacks on the two stages adopted by the Secretary of State for deciding how to distribute the UK allocated funds in 2014 2020 fail, in so far as they are considered as a matter of principle.\nHowever, as explained in paras 56 60 above, the fact that the procedure adopted by the Secretary of State was defensible in principle is not the end of the matter.\nIt is still necessary to examine the outcome in the light of the criticisms raised by the appellants.\nThe attack on outcome: Highlands & Islands and Northern Ireland 87.\nThe first attack on outcome is primarily based on a comparison between the appellants and the Scottish region of Highlands & Islands, and it largely results from the first stage.\nAs explained above, although the appellants will receive a 15.7% increase in 2014 on what they had received in 2013, the total amount they are due to receive in the 2014 2020 period would be over 60% less than they received over the previous 2007 2013 period, whereas Highlands & Islands would suffer no decrease in the 2014 2020 period as against the 2007 2013 period.\nIn actual euros per capita, Highlands & Islands will receive about three times as much as the appellants will receive (around 400 per capita as against around 130 per capita). 88.\nThe status of the appellants as phasing in regions in the period 2007 2013 is explained in para 81 above.\nThe status of Highlands & Islands is slightly different.\nLike the appellants, it is a transition region under the current, 2014 2020, regime, but, unlike the appellants, it was a phasing out (rather than phasing in) region, during the 2007 2013 period.\nThis meant that (i) like the appellants, it had been an Objective 1 region, with a GDP per capita of below 75% of the average of the EU member states in the 2000 2006 period, and by 2007 it was no longer in that category, but (ii) unlike the appellants, its exit from the category arose not because of an improvement in GDP per capita, but because of the accession of ten new (and, on average, poorer) member states to the EU between 2000 and 2007.\nAccordingly, Highlands & Islands was subject to a rather different tapering regime under the allocation arrangements for 2007 2013, which only reached the level for competitiveness regions in 2013. 89.\nOn that ground, the courts below considered that it was simply inappropriate to compare Highlands & Islands with the appellants, and therefore that any attack by the appellants on the outcome of the Secretary of States decision based on the Highlands & Islands 2014 2020 payment was misconceived.\nThat may be right, but, at least if one confines oneself to the reason for, and consequences of, the difference between phasing in and phasing out regions, I am not particularly impressed with that view, because all three regions were competitiveness regions, and any phasing had ended by 2013.\nHowever, the differences in co financing (ie the extent of the domestic contribution, as briefly explained by the Judge in para 50(c) of his judgment) may conceivably justify the view taken by the courts below.\nIt is unnecessary to decide that rather nice point: even if one assumes that it is relevant that Highlands & Islands had a different status from the appellants in the 2007 2013 period, the difference in outcome between its 2014 2020 aggregate payment and those for the appellants is striking.\nAs already mentioned, the appellants will receive around 130 per capita, whereas Highlands & Islands will receive around 400 per capita.\nThis follows from the combination of (i) the fact that Scotland was more favourably treated than England at the first stage, and (ii) the fact that Highlands & Islands is the only transition region in Scotland, and it was thought to be wrong to reduce its 2014 payment to bring it more into line with the English transition regions as that would benefit the other three, richer, regions in Scotland. 90. 91.\nA somewhat similar, if less forceful, point can be made by the appellants about Northern Ireland, also a transition region in 2014 2020, which is to receive around 260 per capita in 2014.\nAgain, it is true that it was a competitiveness region in 2006 2013 period, and therefore was not strictly comparable with the appellants (or with Highlands & Islands), but I doubt that that point has much force (subject to the co financing point referred to at the end of para 89 above).\nBut, even if it does, the fact that in 2014 Northern Ireland receives twice the amount per capita that the appellants receive is rather striking. 93. 92.\nThese disparities do give one pause for thought.\nMany people in the position of the Secretary of State might well have taken the view that the disparities such as those discussed in paras 90 91 above would have justified making adjustments as between the payments which would otherwise be made to each region, or even reconsidering the whole methodology.\nHowever, bearing in mind the wide margin of discretion which should be accorded to the Secretary of State in the distribution of the funds, I do not consider that this justifies the conclusion that the distribution scheme which he adopted was unlawful.\nI start with the point that the disparities arise primarily from the first stage of the distribution process, which, as already mentioned, does not seem to me to be objectionable in principle.\nThe first stage almost inevitably will result in a degree, and no doubt often a significant degree, of disparity between a region in one territory and a very similar region in another.\nThe same sort of problem could arise between similarly developed (or undeveloped) regions in different member states.\nParticularly bearing in mind that the apportionment of the UK allocated funds between the four territories of the UK was based on a high level political decision which is lawful in principle, it would require a compelling case on the outcome before a court could rule the decision unlawful in practice.\nI do not consider that a compelling case has been made. 94.\nWhen considering the disparities relied on by the appellants, it is a mistake to assume that, merely because a region has in 2014 and\/or had in 2013 the same status as, or had reached the same stage of economic development as, another region, that the two regions should be accorded a similar level of distribution.\nThe purpose of distributing the funds is not only to improve the growth, or relative growth, of poorer regions: it is also to achieve the multifarious thematic objectives.\nAccordingly, it is dangerous to focus, and inappropriate to focus exclusively, on GDP per capita when comparing different regions. 95.\nThe selection of a regions GDP per capita figure as governing the appropriate level of payment may well reflect the Commissions overall assessment of the UK allocated funds under the provisions of the 2013 Regulation.\nHowever, as already mentioned, (i) the Regulation has no such provisions in relation to the distribution of the UK allocated funds between individual regions, and (ii) the payments in 2007, on which the 2014 payments are based, were arrived at by reference to a basket of indicators, which were assumed to be equally valid in 2013, on the basis that there had been no significant shift in the social geography of the United Kingdom.\nTo take obvious examples which are admittedly speculation on my part, Highlands & Islands with its low population density and its meteorological and geographical character must be a relatively expensive region to service, and Northern Ireland has unique social issues. 96.\nThe danger of focussing on GDP per capita can be demonstrated by comparing two sets of regions which were both English competitiveness regions in 2007 2013 and are both English transition regions in 2014 2020, and have very similar GDP per capita.\nFirst, Devon receives a payment for 2014 2020 of 67 per capita, whereas Cumbria receives 166; secondly, Lincolnshire receives 137 per capita, whereas Tees Valley & Durham receives 280 per capita.\nGiven that these two examples do, on any view, involve comparing like with like, and that the 2014 payments are based on those for the 2007 2013 period, it underlines the point that the Secretary of State has not based his distribution, even within a territory, simply on the basis of a regions GDP per capita.\nIndeed, that is clear from the Secretary of States evidence, which, as mentioned in para 67 above, explains that the distribution for the 2007 2013 period, on which the 2014 payments were based, (i) was not effected simply by reference to a regions GDP per capita but was based on much more material, and (ii) was intentionally loaded in favour of regions in the north and midlands of England as against those in the south (hence Devons payment per capita is much lower than Cumbrias). 97.\nFurthermore, as is clear from what I have just said and is discussed more fully in paras 100 103 below, it is not by any means necessarily the case that the appellants would have been treated better, or that Highlands & Islands or Northern Ireland would have been treated worse, than they have been treated, if there had been no first stage.\nThere are many ways in which the distribution of the UK allocated funds could have been effected. 98.\nParticularly in the light of these features, I consider that the Secretary of State was entitled to take the view that, whatever scheme he adopted would prove objectionable to some regions, and that if he adhered to the two stage system he did adopt and made adjustments, that too would cause problems and give rise to complaints.\nAccordingly, he was entitled to decide that it was simpler and politically advisable to stick with the scheme and not make adjustments. 99.\nThis brings one back to the point that the Secretary of States decision involved a substantial measure of political judgment.\nAccordingly, his decision to adhere to a distribution scheme which was clear, simple and transparent, rather than one which was nuanced, subjective and complex is one which it is difficult for a court to challenge unless of course the outcome appears to be inconsistent with the 2013 Regulations or simply unreasonable.\nWhen one considers the figures mentioned in paras 90 91 above together with the reasons summarised in paras 94 98 above, it appears to me that it cannot fairly be said that the appellants have managed to establish either ground.\nThe attack on the outcome: the other English transition regions 100.\nThe second attack on outcome is based on a comparison between the 2014 payments to the appellants and the other seven English transition regions in the light of their relative stages of economic development.\nThis attack is effectively based solely on the second stage of the distribution decision in relation to the 2014 2020 period.\nIn my opinion, the attack should be rejected for very similar reasons to those given in paras 93 99 above.\nHowever, it is fair to say that the starting point, namely the nature of the decision in principle, is somewhat less of a formidable hurdle for the appellants.\nThe decision how to distribute the UK allocated funds between the English transition regions was a more workaday, relatively less high level political, decision than the first stage decision.\nNonetheless, as already explained, it was a defensible policy decision at least in principle and it must inevitably carry with it a degree of inevitable rough justice. 101.\nHowever, although the initial hurdle may be lower for the appellants attack on the outcome for English transition regions than it is in relation to Highlands & Islands and Northern Ireland, I consider that, when one examines the appellants case on this fourth aspect, it should be rejected. 102.\nIn a nutshell, the principal criticism raised by the appellants is that, given that he based the 2014 2020 distributions on the distributions in the previous period, the Secretary of State should have assessed the allocation for the English transition regions by reference to the average annual distribution which they received for the 2007 2013 period rather than the 2013 distribution which they received.\nOn the face of it, at least, I do not consider that the Secretary of States decision on this point can be criticised.\nThe difference arising from the choice of the 2013 distribution only affects regions which were phasing in regions during the 2007 2013 period, and the appellants are the only English regions which can claim to suffer in this way.\nHowever, there is, at the very least a real argument that it would be wrong to take the benefit of their tapering payments for the years 2007 2013, into account when assessing their 2014 distributions, given that these payments were intended to soften the blow of their having become competitiveness regions, a softening which was intended to be spent by 2013, and therefore, a fortiori, by 2014. 103.\nQuite apart from this, as already mentioned, it is apparent that there is no direct or simple correlation between the level of economic development of an English transition region and its 2014 payment, and there is no clear reason to think that the appellants would be better off under another scheme. 104.\nThe relevant figures for the nine English transition regions are set out in para 55.4.2 of Stewart Js judgment, and I have already discussed some of the figures in para 96 above.\nMore specifically, the appellants, each of whom receive around 130 per capita during 2014 2020 (123 in the case of South Yorkshire, and 135 in the case of Merseyside), fare better than Devon (67 per capita, as already mentioned), but worse than five of the other six English transition regions, if one looks simply at the payment per capita and the level of the regions GDP per capita.\nIgnoring Devon, the other six English transition regions received between (i) slightly more than the appellants, Lincolnshire at 137 per capita, and (ii) a little more than twice as much as the appellants, Tees Valley & Durham at 280 per capita.\nIgnoring the two outliers, Devon and Tees Valley & Durham, the figures vary between 137 per capita for Lincolnshire and 167 for Shropshire & Staffordshire.\nLincolnshires GDP per capita is lower than either South Yorkshires or Merseysides, whereas Shropshire & Staffordshires is a little lower than South Yorkshires and somewhat higher than Merseysides. 105.\nIgnoring Devon, which receives less per capita because it is in the south (see paras 84 and 96 above), it is noteworthy that Lincolnshire (which in terms of GDP per capita is somewhat worse off than either of the appellants), receives a payment which is very similar on a per capita basis to that of the appellants, whereas Tees Valley & Durham (which in terms of GDP per capita is only slightly lower than Lincolnshire) receives twice as much.\nOn the other hand, Cumbria (which is richer than any other English transition region) receives a payment per capita significantly more than Lincolnshire. 106.\nThus, the figures demonstrate that there is no reliable correlation between payment per capita and GDP per capita for 2014 2020, even for English regions which were ordinary (ie not phasing in or phasing out) competitiveness regions in 2013 and transition regions in 2014.\nThat does not mean, of course, that any level of payment for the appellants would be justified.\nHowever, the important point for present purposes is that, on a GDP per capita basis, (i) the appellants plainly fare better than one region, Devon, and, more significantly, fare consistently with another region, Lincolnshire, and (ii) there is nothing like a precise correlation with the 2014 payments per capita. 107.\nThis analysis of the distributions to the other English transition regions thus leads to the conclusion that criticism of the outcome of the Secretary of States method of distributing the UK allocated funds is not soundly based, if it rests on the presumption that each English transition region (or even each transition region in the north and midlands) should get the same payment per capita, or the same payment per capita adjusted to take account of the regions 2014 GDP per capita.\nIndeed, as mentioned in para 96 above, that conclusion is consistent with the Secretary of States evidence, which states that the 2014 payment for transition regions was arrived at by a fixed percentage uplift on the 2013 payment, which itself had been arrived at by reference to a number of different indicators in 2007. 108.\nFurthermore, it appears to be very difficult, at least on the evidence in these proceedings, to assess what difference it would have made if the appellants 2014 2020 payments had been determined by reference to what they would have received in 2013, or in the period 2007 2013, had they been ordinary competitiveness regions, rather than phasing in regions.\nConclusion 109.\nIn these circumstances, I have come to the conclusion that this appeal fails.\nI must, however, confess that I have reached this conclusion with some hesitation.\nAlthough I do not agree by any means entirely with the approach adopted by Lord Mance (who places more emphasis than I do on the criteria and limits imposed by the 2013 Regulation on the Commission, when considering a member states freedom of movement when distributing allocated funds) or by Lord Carnwath (who considers that the Secretary of State has a greater duty to justify his distributions between individual regions than I believe is mandated by the 2013 Regulation), I see force in much of their reasoning, and indeed I was at one time persuaded that they had reached the right conclusion. 110.\nWhile I would dismiss this appeal, it is right to re affirm the courts duty to declare that decisions of the executive, whether relating to the distribution of funds or otherwise, are unlawful if they are insufficiently justified or do not accord with the lawful aims or requirements pursuant to which the distributions in question are made.\nI appreciate that the decision under consideration in this case was difficult and potentially complex, and that it involved many competing factors, political and social as well as economic.\nHowever, with the expertise and information available to the Secretary of State, one would have hoped for a more sophisticated and considered, and a more consultative, approach to the question of how to apportion such a large sum of money between different regions of the United Kingdom.\nI note from the evidence put in by the Secretary of State that it does appear that a much more careful approach was adopted in relation to the distribution for the 2007 2013 period. 111.\nIn summary, then, while the decision as to how to distribute the UK allocated funds between the 37 regions of the United Kingdom may have been unimpressive in some respects, it was not unlawful.\nLORD CLARKE: 112.\nI have read the other judgments in this appeal with great interest (and no little admiration).\nI have throughout been inclined to agree with Lord Sumption.\nIt does seem to me that the court should be very reluctant to interfere with decisions of the kind under scrutiny here because they raise questions of policy which are essentially matters for the executive.\nI recognise that in an appropriate case it is the duty of the court to interfere.\nHowever, I agree with Lord Neuberger at para 66 that the decisions under review involved a range of different policy considerations and that it cannot fairly be said that the choices made by the Government were unlawful.\nLike Lord Neuberger I have had some doubts in the course of the argument, especially in the light of the judgment of Lord Mance.\nHowever, again like Lord Neuberger, I prefer the reasoning of Lord Sumption to that of Lord Mance.\nI do not detect any significant difference between the reasoning of Lord Sumption and that of Lord Neuberger.\nI agree with them and Lord Hodge that the appeal should be dismissed.\nLORD MANCE: (with whom Lady Hale agrees) Introduction 113.\nThe European Union (EU) has a set of structural and investment funds (the ESI funds), of which the three main elements relate to the Common Agricultural Policy, the Cohesion Fund and the Structural Funds.\nThe Structural Funds, defined by article 1 of Council Regulation (EC) No 1303\/2013, consist of the Regional Development Fund (ERDF) and the somewhat smaller Social Fund (ESF).\nThe ERDF is established under article 176 TFEU, and the ESF under articles 162 to 164 TFEU.\nThe EU makes available the Structural Funds on the basis of its overall assessment of each Member States regional development needs, but their allocation within each Member State is, subject to limits, the responsibility of that State.\nThe EU operates on the basis of seven year budgets, each of which determines the Structural Funds available for the next seven year period.\nThe budget for the years 2014 2020 was thus agreed in 2013. 114.\nOn this appeal various local authorities in the Merseyside and South Yorkshire regions challenge the defendant Secretary of States allocation of the Structural Funds within the United Kingdom during the EU budgetary period of 2014 2020.\nThe challenge focuses on two successive decisions taken by the Secretary of State.\nThe first was to allocate the funds received in respect of the period 2014 2020 between the individual territories or nations of the United Kingdom (that is England, Scotland, Wales and Northern Ireland) in the same proportions as in the previous seven year period 2007 2013.\nThe second was to base the allocations for English transitional regions in the period 2014 2020 on the amounts each such region received in 2013 under the scheme in place during that previous seven year period.\nThese decisions, taken individually or in combination, are alleged to have affected Merseyside and South Yorkshire in a manner which, it is submitted, is not supported by the relevant EU Regulations and involves anomalies and inequalities of treatment which cannot be and have not been justified. 115.\nStructural funding is made available by reference to the NUTS level 2 (NUTS 2) regions.\nNUTS 2 regions are second tier regions corresponding broadly to large counties in the United Kingdom.\nThey are defined by the Nomenclature of Territorial Units for Statistics (NUTS 2006\/EU27) (NUTS) established pursuant to article 1 and Annex I of regulation (EC) 1059\/2003.\nThere are 30 NUTS 2 regions in England (including Merseyside and South Yorkshire), 4 in Scotland and 2 in Wales while Northern Ireland is a single NUTS 2 region.\nFor the purposes of structural funding, the EU also identifies categories of NUTS 2 regions.\nIt determines the total funding which each Member State receives from the ERDF and ESF by reference to its own assessment of regional development needs within each such category.\nThe categorisation adopted has changed from seven year period to seven year period, as has the extent to which the relevant regulations define at an EU level the amount which each region is to receive, or leave this to the relevant Member State to determine.\nAll Structural Funds funding has to be co financed or matched by domestic investment in a defined percentage. 116.\nThe broad purposes for which the Structural Funds are made available are defined in article 174 TFEU in the case of the ERDF and article 162 in the case of the ESF.\nArticle 174 is part of a title consisting of articles 174 178, headed Economic, Social and Territorial Cohesion.\nIt provides: In order to promote its overall harmonious development, the Union shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion.\nIn particular, the Union shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions.\nAmong the regions concerned, particular attention shall be paid to rural areas, areas affected by industrial transition, and regions which suffer from severe and permanent natural or demographic handicaps such as the northernmost regions with very low population density and island, cross border and mountain regions.\nArticle 176 further provides that the ERDF is intended to help to redress the main regional imbalances in the Union through participation in the development and structural adjustment of regions whose development is lagging behind and in the conversion of declining industrial regions. 117.\nArticle 162 provides that the ESF is established: In order to improve employment opportunities for workers in the internal market and to contribute thereby to raising the standard of living and that it shall aim to render the employment of workers easier and to increase their geographical and occupational mobility within the Union, and to facilitate their adaptation to industrial changes and to changes in production systems, in particular through vocational training and retraining. 118.\nArticles 164 and 178 provide for the European Parliament and Council to adopt implementing regulations relating to, respectively, the ESF and the ERDF, while article 177 confers further more generally worded power to make regulations defining the tasks, priority objectives and organisation of such funds. 2000 2006 119.\nDuring the period 2000 2006 regions were classified in three categories, which have been described as Objectives 1, 2 and 3.\nObjective 1 (the most needy) contained five UK regions, namely Cornwall and the Scillys, West Wales and the Valleys, Highlands & Islands, Merseyside and South Yorkshire, plus the whole of Northern Ireland. 2007 2013 120.\nDuring the period 2007 2013, Regulation (EC) No 1083\/2006 provided for a different categorisation.\nThe most needy and the least needy regions were the two main categories, and have been described as respectively convergence and competitiveness regions.\nBut in between them, under articles 8.1 and 8.2 of the regulation, were two sub categories to which support was allocated on a transitional and specific basis, and these have been described as phasing out and phasing in regions. 121.\nRegulation No 1083\/2006 determined the precise amounts allocated to particular regions falling within the convergence and the two transitional categories.\nAll that was left to the United Kingdom was to determine the allocation between competitiveness regions of the funds allocated by the EU to United Kingdom competitiveness regions.\nThere was no scope for any transfer of funds between categories.\nThe allocation between competitiveness regions was done on a basis which, because of the use of NUTS 1 as distinct from NUTS 2 criteria and a safety net limiting any reduction by reference to the prior period of 2000 2006 to 6.7%, did not necessarily correspond precisely with but nonetheless reflected (in the words of counsel for the Secretary of State, Mr Jonathan Swift QC) an approximation of each such competitiveness regions economic needs.\nThe indicators and safety net used by the Government to determine regional allocations within the competitiveness category also had the intended effect of channelling relatively high levels of funding to northern regions, compared with southern regions with similar economic profiles. 122.\nUnder article 8, read with para 6 of Annex II, of Regulation 1083\/2006, the transitional support for phasing out regions was 80% of their individual 2006 per capita aid intensity level in 2007 and a linear reduction thereafter to reach the national average per capita aid intensity level for the Regional competitiveness and employment objective in 2013.\nFor phasing in regions, it was 75% of their individual 2006 per capita aid intensity level in 2007 and a linear reduction thereafter to reach the national average per capita aid intensity level for the Regional competitiveness and employment objective by 2011. 123.\nThe purpose of transitional support was thus to smooth the relevant regions movement from the most needy category to full competitiveness by the linear reduction of funding.\nHowever, the final figure, based on the national average per capita aid intensity level for competitiveness regions was necessarily aspirational.\nIn other words, whether or not any phasing in or phasing out region actually achieved the same level of development as the average for all competitiveness regions was something that could only be determined with time.\nThere was no guarantee that any of such regions would do so. 124.\nIn the case of the United Kingdom the convergence regions (those with less than 75% of the GDP of the 25 EU member states) were Cornwall and the Scillys and West Wales and the Valleys.\nThe only phasing out region (ie with more than 75% of the GDP of the 25 EU member states, but less than 75% of the GDP of the 15 member states) was Highlands & Islands.\nThe only phasing in regions (those which had been old Objective 1 regions, but with GDP now exceeding 75% of the average of that of the 25 EU Member States) were Merseyside and South Yorkshire. 125.\nThe linear reduction prescribed by the regulation led both phasing out and phasing in regions to receive a flow of funds tapering sharply downward during the seven year period.\nThe tapering extended in the case of phasing out regions over the full seven year period, but took in the case of phasing in regions only four years, leading to the receipt of monies based on the national average per capita aid intensity level for competitiveness regions during each of the last three years, 2011 2013.\nTaking rounded figures, Merseyside thus received some 161m in 2007, 129m in 2008, 95m in 2009, 60m in 2010 and 23m in each of the three years 2011 to 2012, while South Yorkshire received some 142m in 2007, reducing each year to 52m in 2010 and then remaining stable at 21m in each of the last three years.\nThe phasing out regions only received monies based on the national average per capita aid intensity level for competitiveness regions in the last year, 2013. 2014 2020 126.\nFor the period 2014 2020, Regulation (EU) No 1303\/2013 applies.\nThis is expressed to have been made with particular regard to article 177.\nRecital 1 records that article 174 TFEU provides that, in order to strengthen its economic, social and territorial cohesion, the Union is to aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions or islands Recital 77 recites that in order to promote the TFEU objectives of economic, social and territorial cohesion, the investment for growth and jobs goal should support all regions and that to provide balanced and gradual support and reflect the level of economic and social development, resources under that goal should be allocated from the ERDF and the ESF among the less developed regions, the transition regions and the more developed regions according to their GDP per capita in relation to the EU 27 average. 127.\nThe regulation states both common or general principles (article 1) and thematic objectives (article 9) which are to apply to all ESI funds and fund specific, general rules governing the two Structural Funds and the Cohesion Fund (articles 1, 2(4) and 4 and Part 3).\nIn relation to the Structural Funds, article 89 (the first in Part 3) identifies one mission and two goals to be pursued for the purpose of that mission.\nThe mission is stated in article 89(1): 89(1).\nThe Funds shall contribute to developing and pursuing the actions of the Union leading to strengthening of its economic, social and territorial cohesion in accordance with article 174 TFEU.\nThe actions supported by the Funds shall also contribute to the delivery of the Union strategy for smart, sustainable and inclusive growth.\nThe goals are defined as follows: 89(2).\nFor the purpose of the mission referred to in paragraph 1, the following goals shall be pursued: (a) Investment for growth and jobs in Member States and regions, to be supported by the Funds; and (b) European territorial cooperation, to be supported by the ERDF. 128.\nThe thematic objectives which under article 9 all ESI Funds should support do not alter or detract from the fund specific mission and goals identified in the case of the Structural Funds in Part 3.\nOn the contrary, article 9 makes clear that they are introduced in order to contribute to the Union strategy for smart, sustainable and inclusive growth as well as the Fund specific missions pursuant to their Treaty based objectives, including economic, social and territorial cohesion They represent, in short, ways in which the fund specific mission and goals may be promoted.\nThey are identified as strengthening research, technological development and innovation; enhancing access to, and use and quality of ICT; enhancing the competitiveness of SMEs and of the agricultural, fishery and aquaculture sectors; supporting the shift towards a low carbon economy; promoting climate change adaptation, risk prevention and management; preserving and protecting the environment and promoting resource efficiency; promoting sustainable transport and removing bottlenecks in key network infrastructures; promoting sustainable and quality employment and supporting labour mobility; promoting social inclusion, combating poverty and any discrimination; investing in education, training and vocational training for skills and lifelong learning; enhancing institutional capacity of public authorities and stakeholders and efficient public administration.\nArticle 9 concludes by stating that these thematic objectives are to be translated into priorities that are specific to each of the ESI Funds and are set out in the Fund specific rules. 129.\nArticle 91 provides that, for the purposes of the mission identified in article 89(1), the resources available for the Structural Funds and the Cohesion Fund are some 322,000m in 2011 prices, 96.33% (some 313,000m) of which is under article 92(1) for the growth and jobs goal, while only 2.75% is under article 92(9) for the territorial cooperation goal. 130.\nCritically, for present purposes, article 90 introduces a new three fold categorisation for the period 2014 2020.\nThis is quite different from the categorisation used in the prior period 2007 2013.\nIt identifies less developed regions (those with less than 75% of the GDP of the now 27 Member States), transition regions (those with GDP between 75% and 90% of the average of the 27 Member States) and more developed regions (those with more than 90% of the average GDP of the 27 Member States).\nArticle 90(4) provides for the Commission to decide which regions fall within each category, by a list valid for the whole period 2014 2020. 131.\nFurther, a fixed percentage of the total resources of 313,000m available for the growth and jobs goal is under article 92(1) allocated to each of the defined categories of region viz 52.45% for less developed regions, 10.24% for transition regions and 15.67% for more developed regions (with 21.19% also going to the Cohesion Fund and 0.44% for additional funding for outermost regions).\nThe fixed nature of these allocations is identified in article 93.1: The total appropriations allocated to each Member State in respect of less developed regions, transition regions and more developed regions shall not be transferable between those categories of regions.\nArticle 93.2 gives Member States a very limited possibility of altering these fixed allocations.\nIt allows the Commission in duly justified circumstances which are linked to the implementation of one or more thematic objectives to accept a Member States proposal to transfer up to 3% of the total appropriation for a category of regions to other categories of regions. 132.\nAnnex VII prescribes the allocation method for each Member States entitlement in respect of less developed, transition and more developed regions (basically, in each case, the sum of allocations or shares calculated for each of its individual NUTS level 2 regions, on bases taking into account specified factors including GDP).\nThe total allocated to the United Kingdom for less developed regions was some 2.118 billion, for transition regions some 2.3266 billion and for more developed regions some 5.126 billion.\nThe Commissions calculations of individual regional needs are not published (though the parties have been able to work out what they approximately were), and they have no domestic application. 133.\nThe overall funds allocated to the United Kingdom for the period 2014 2020 were (after allowing for inflation) reduced by 5% compared with 2007 2013.\nThe Secretary of State was under article 93.2 permitted to transfer to the two less developed regions in the United Kingdom, that is Cornwall and the Scillys and West Wales and the Valleys, 3% of the budget which the EU had assigned to transition and more developed regions, and to split the amount so transferred between these two regions, achieving thereby an equal 16% cut in funding compared with the prior seven year period.\nThe Partnership Agreement 134.\nWithin the above parameters, it is for the United Kingdom to adopt national rules on the eligibility of expenditure (see Recital 61), by preparing a Partnership Agreement, to be approved by the Commission.\nPartnership Agreement is defined in article 2 as: Partnership Agreement means a document prepared by a Member State with the involvement of partners in line with the multi level governance approach, which sets out that Member State's strategy, priorities and arrangements for using the ESI Funds in an effective and efficient way so as to pursue the Union strategy for smart, sustainable and inclusive growth, and which is approved by the Commission following assessment and dialogue with the Member State concerned. 135.\nArticle 4(4) and 5 provide: 4(4).\nMember States, at the appropriate territorial level, in accordance with their institutional, legal and financial framework, and the bodies designated by them for that purpose shall be responsible for preparing and implementing programmes and carrying out their tasks, in partnership with the relevant partners referred to in article 5, in compliance with this Regulation and the Fund specific rules. 5(1).\nFor the Partnership Agreement and each programme, each Member State shall in accordance with its institutional and legal framework organise a partnership with the competent competent urban and other public authorities; regional and local authorities.\nThe partnership shall also include the following partners: (a) (b) economic and social partners; and (c) relevant bodies representing civil society, including environmental partners, non governmental organisations, and bodies responsible for promoting social inclusion, gender equality and non discrimination. 136.\nAny Partnership Programme prepared for the purposes of articles 4(4) and 5(1) must self evidently comply with, and be prepared on the basis of considerations relevant to, the fund specific mission and goals of the regulation.\nIt must also comply with more general principles of European and domestic law, including those of equality and rationality.\nThe present challenges were brought at a stage when the programme submitted by the United Kingdom to the Commission had not yet been approved.\nThe Commission was kept informed about the challenge, but regarded it as an internal issue for the United Kingdom to resolve.\nIt stated that, if this Courts ruling required the United Kingdom Government to review the Partnership Agreement after it had been adopted, this could be done through the mechanism of article 16 of the regulation.\nArticle 16(4) enables a Member State to propose an amendment, whereupon the Commission will carry out a (re )assessment and, where appropriate, adopt a decision within three months.\nIn the event, the Commission has, since the oral hearing, issued a decision dated 29 October 2014 approving the Partnership Programme proposed by the United Kingdom.\nGiven the Commissions stance, the United Kingdom Government also, successfully, resisted a claim for disclosure of the communications between it and the Commission about the Partnership Agreement, as not relevant to any issue in this appeal. 137.\nNo submission has been made to the Supreme Court at any stage that the Commission should be regarded as the judge of the present challenge made to the Secretary of States decisions, or that any decision that the Commission might make, or has now made, approving the Partnership Programme in its present form has or could have any effect on the challenge, if otherwise valid, to such decisions.\nLord Sumptions statements in paras 10 and 24 of his judgment that the Commission is the mechanism of compliance envisaged in the Regulation is not based on any argument which was or could in the circumstances fairly be put before the Court.\nI am also unable to accept the further assertion that the Commission is able to review the merits of the Secretary of States value judgments in a way that is beyond the institutional competence of any court.\nThere is no information at all whether or how the Commission has looked into the subject matter of the present challenges.\nThe suggestion that it is beyond the institutional competence of any court, let alone a national court to review the merits of the Secretary of States value judgments furthermore begs the question whether the appellants present challenges are to value judgments.\nCourts, national and international, have a significant role in reviewing the conformity of administrative decisions with the legislative framework within which they are made.\nIt is their role to consider the relevance of the considerations on the basis of which such decisions are taken, and their compliance with fundamental principles of equality and rationality.\nThe Secretary of State and the Commission were both fulfilling administrative functions, the former at the national, the latter at a supranational level.\nThe issue in detail 138.\nThe critical issue on this appeal is whether the Secretary of States decisions were in conformity with the legislative framework.\nThe appellants case on this falls under three heads: (i) the Secretary of State was obliged when making such decisions to take as their basis the relative economic needs and disparities of the regions, but in fact reached the decisions on a different basis; (ii) the decisions were in breach of the general EU principle of equality; (iii) the decisions were in breach of the general EU principle of proportionality. 139.\nIn relation to (i), the Secretary of State accepts that the underlying purpose of Structural Funds is to reduce development disparities between regions and the Court of Appeal was, in my view correctly, content to assume that the objective of reducing economic disparities was a mandatory relevant consideration and that the Secretary of State was therefore required to have regard to the relative economic needs of the transition regions (para 88).\nThe fund specific mission of the Structural Funds is under article 89(1) of the regulation the strengthening of economic, social and territorial cohesion in accordance with article 174 TFEU.\nThis is to be pursued overwhelmingly through the goal of investment for growth and jobs (articles 89(2)(a) and 92(1) of the regulation) with reference to the specified thematic objectives set out in article 9 of the regulation. 140.\nIn relation to (ii), the Secretary of State accepts that the principle of equality applies.\nThe Court of Appeal stated the position before it as follows (para 65): 65.\nThe equal treatment principle requires that comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified: see, for example, the Arcelor Atlantique case [2008] ECR I 9895, para 23.\nJustification is not in issue in this case.\nAccordingly, the only question is whether there was a failure to treat like cases alike and unlike cases differently.\nLater, in para 82, the Court of Appeal again noted that the Secretary of State does not rely on justification, but added: We acknowledge that, as a matter of legal analysis, there is a clear distinction between the fact of differential treatment and its justification.\nBut in the circumstances of this case, as is clear from the evidence of Dr Baxter the dividing line is not easy to maintain.\nI will revert to Dr Baxters evidence later in this judgment. 141.\nIn relation to (iii), the Secretary of State submits and the Court of Appeal agreed that proportionality can add nothing to a challenge based on the principle of equality or rationality, in the absence of some specific legal standard in the light of which it can gain greater content.\nThis seems to me correct, and I shall proceed on that basis. 142.\nWith regard to the two principal grounds which are therefore open to the appellants, the Secretary of State submits that both the challenged decisions involved complex evaluative judgments, which can only attract what may be described as a light standard of review.\nReferring to its previous decision in R (Sinclair Collis Ltd) v Secretary of State for Health [2011] EWCA Civ 437, [2012] QB 394, the Court of Appeal said (para 70) that: In principle, the more complex and the more judgment based the decision, the greater the margin of discretion [that] should be afforded to the decision maker.\nThat too is a proposition which I accept as relevant, in any context where different institutions of the State, the administration and the courts, have different institutional competence and the courts are asked to review the administrations decision making in an area which is with the administrations particular competence.\nBut that does not apply to, or exclude closer review of, a decision which is based on irrelevant considerations or fails to treat like cases alike.\nFurther, the lack of prior consultation with the appellants, or with Merseyside and South Yorkshire, and the informality of the process by which the Secretary of State made his decisions, take this case outside the most extreme category of cases in which courts have expressed reluctance judicially to review public funding decisions.\nThe first decision 143.\nAgainst this background, it is necessary to examine more closely the Secretary of States two impugned decisions.\nThe first arose as follows.\nDuring the period 2014 2020, the only less developed regions are the two former convergence regions.\nTransition regions include not only the three former phasing out and phasing in regions, but also eight former competitiveness regions, including Northern Ireland.\nThe total EU funding for the ERDF and ESF was divided between the three categories of region as follows.\nThe total allocated to the United Kingdom for less developed regions was some 2.118 billion, for transition regions some 2.3266 billion and for more developed regions some 5.126 billion. 144.\nThe overall funds allocated to the United Kingdom for the period 2014 2020 were (after allowing for inflation) reduced by 5% compared with 2007 2013.\nThe Secretary of State was under article 93.2 permitted to transfer to the two less developed regions in the United Kingdom, that is Cornwall and the Scillys and West Wales and the Valleys, 3% of the budget which the EU had assigned to transition and more developed regions, and to split the amount so transferred between these two regions, achieving thereby an equal 16% cut in funding compared with the prior seven year period.\nThe Secretary of State then took the amounts allocated to each of the four territorial units making up the United Kingdom that is England, Wales, Scotland and Northern Ireland in the period 2007 2013 and determined that each such territorial unit should receive the same amount as in that period, less a 5% reduction. 145.\nAt this stage, Dr Baxter confirms in her first witness statement, that Ministers did not consider the split of funding within Scotland or England and that Ministers were aware that increasing the funding for the Devolved Administrations [ie in comparison with that which would have resulted from a region by region assessment] would mean less for certain regions in England, as allocations had to be made from a set budget category for each category of region.\nHowever, it was decided that this would be dealt with at the next stage of the allocation process and that only the big picture within the UK would be looked at when trying to distribute the cut fairly between the UK nations. 146.\nThe first decision was taken after the Department of Business Innovation and Skills had calculated that an allocation to all United Kingdom regions on a basis similar to that used by the Commission to arrive at the figures set out in para 132 above would lead to England receiving 439m more than in the period 2007 2013, while Wales, Scotland and Northern Ireland would receive, respectively, 494m, 272m and 216m less. 147.\nAs a result of the first decision: (a) Northern Ireland, a unit consisting of one transition region which had previously been a competitiveness region, received the same as it had received both in 2013 and (because it had been receiving monies on a flat line basis) in each year during the period 2007 2013 less 5%. (b) Highlands & Islands received the yearly average of its total receipts during the period 2007 2013, less 5%.\nThis was effectively inevitable.\nThe only other regions in Scotland were competitiveness regions, and the Secretary of State was not likely to (and after discussion with the Scottish Ministers did not) increase their allocation in order to reduce that of Highlands & Islands. (c) The allocation for West Wales and the Valleys was set as described in para 144, with the effect of allocating to the one remaining Welsh region, East Wales, a more developed region, the whole of the remaining amount allocated to Wales.\nThe second decision 148.\nThe second decision arose as follows.\nWithin England there are in all nine transition regions.\nSeven of these are former competitiveness regions, and two are former phasing in regions, Merseyside and South Yorkshire.\nThe Secretary of State determined that, taking the amount that each region has received in the year 2013 (not the annual average it had received over the whole period 2007 2013), each should receive a 20% uplift, reduced by 4.3% for technical assistance and for funding of the national offenders programme, making a final uplift of 15.7%.\nRegions in the more developed category received a 5% uplift, reduced again by 4.3% making a 0.7% uplift, while Cornwall and the Scillys received a 16% reduction.\nThe effects of the two decisions 149.\nThe combined effect of the two decisions was that, while Northern Ireland was guaranteed an allocation based, albeit not exactly, on an assessment of its actual needs during the prior period and while Highlands & Islands would receive an allocation based on the average of its receipts as a transitional region over the whole of the prior period, Merseyside and South Yorkshire received an allocation which was, in contrast, not referable to any assessment of its actual needs or its average receipts during the prior period, but based on the average of the aid which had been estimated as required by competitiveness regions in the prior period (since that was the basis of Merseysides and South Yorkshires receipt of aid in the year 2013). 150.\nBy any measure of development and need, however, Merseyside and South Yorkshire still fall well below the average for competitiveness regions.\nThe indicators of economic development selected by the Government itself for allocating funding in 2007 2013 were per capita business expenditure on research and development, start ups, qualifications, GVA per workforce job, percentages of working age population unemployed or inactive, percentages of working age population without qualifications and with NVQ level 1 qualifications.\nApplying such indicators, Merseyside and South Yorkshire are ranked third and sixth most deprived out of the total of 34 regions not falling into the convergence and phasing out categories in 2007 2013.\nUsing the Commissions methodology, Merseyside and South Yorkshire would have received about 315m and 236m respectively, while on the Governments current approach, they would receive only 202m and 178m respectively, in each case for the whole period 2014 2020.\nIt is common ground that, even on the basis of the calculation most favourable to the United Kingdom Government that the Secretary of State has been able to support, Merseyside and South Yorkshire would, if their entitlement during the period 2014 2020 were computed as if they had then been competitiveness regions, receive at least 10.3m and 24.1m more than they would be under the Governments present intended allocation.\nThey submit that the figures would be much greater.\nGDP is not of course the only possible measure of any regions entitlement, and Lord Neuberger has identified variations in funding even between regions whose funding was arrived at on a comparable basis.\nBut the use of inconsistent bases to arrive at the level of funding is on its face likely to lead to distortions, unless it can be justified by considerations relevant under Regulation 1303\/2013.\nThe combined effect of the two decisions was in my view to preclude this. 151.\nThe further combined effect of the two decisions is that Merseyside and South Yorkshire will as transition regions receive funding calculated, as a matter of substance, on a different basis from that received by other English transition regions which were formerly competitiveness regions.\nFirst, by taking the year 2013 as the base for the seven former English competitiveness regions, the Secretary of State was taking as his base for those seven regions funding which applied in each of the years 2007 2013 and was calculated on a basis with a relationship to each such regions needs and characteristics.\nSecond, the 2013 base reflected in the case of the seven former competitiveness regions the Governments deliberate policy of favouring northern regions over southern regions, which it was free to adopt in the period 2007 2013 in relation to regions which fell in that period into the competitiveness category. 152.\nIn contrast, the 2013 base taken for Merseyside and South Yorkshire was derived from an average for United Kingdom competitiveness regions, which these two regions do not match.\nSecondly, their 2013 base was pre determined by the EU by Regulation (EC) No 1083\/2006.\nIt was not a figure which was (or could have been) uplifted to cater for the United Kingdom Government policy of favouring northern over southern regions.\nYet on the evidence Merseyside and South Yorkshire are among the neediest of northern regions. 153.\nIn the light of the above, the appellants are therefore right, I consider, when they observe that (a) the first decision committed a significant part of the transition funding to two particular transition regions (Northern Ireland and Highlands & Islands) on a basis which continued to give, subject only to a 5% reduction, the average level of funding received throughout the whole of the prior seven year period, (b) it did this without regard to the extent to which this would impact on the funding available for the new range of English transition regions (including seven former competitiveness regions) formed by the Commissions re categorisation of regions for the period 2014 2020 and (c) in reality there would be an adverse impact, since effectively preserving the pot for Northern Ireland and Highlands & Islands (less 5%) was bound to diminish the pot available for the nine English transition regions, including not only Merseyside and South Yorkshire, but also seven former competitiveness regions now entitled to enhanced funding as transition regions in the period 2014 2020.\nLord Sumptions contrary view in paras 35 and 50 ignores the reduced size of the pot for the new category of transition regions embracing seven former competitiveness regions, once the previous allocation to Northern Ireland and Highlands & Islands was effectively ring fenced (less 5%), compared with the average funding they received throughout the whole prior seven year period, by the Secretary of States first decision.\nAs to the second decision, the appellants are also right, in my opinion, in submitting that this allocated monies to Merseyside and South Yorkshire on a basis which, although superficially similar, was in fact fundamentally different from that applied to other English transition regions, as well as Northern Ireland and Highlands & Islands. 154.\nIn her first witness statement, Dr Baxter identified the reasons for dividing the United Kingdoms Structural Fund allocation between the four territories constituting the United Kingdom.\nShe stated that they were transparency, simplicity, consistency and a balance taking account of the status of the devolved administrations under the United Kingdoms constitutional settlement.\nHowever, none of these reasons relates directly to the fund specific mission of strengthening economic and social cohesion and the reduction in that connection of development disparities between regions or indeed with delivery of the Union strategy for smart, sustainable and inclusive growth or the thematic objectives introduced to contribute thereto (see paras 126 128 above).\nOn the contrary, they involve an initial four way division, essentially for political reasons, which operates irrespective of the position in individual regions, and potentially and actually to the detriment of one or more English regions.\nDr Baxters witness statement effectively accepts this (para 145 above).\nRegional disparities, and consideration of the mission and goal identified in article 89 of Regulation 1303\/2013 were displaced by territorial and political considerations deriving from the United Kingdoms devolution settlements.\nIn so far as she goes on to suggest that any adverse effect would or might be addressed at the second stage of decision making, I have already noted in para 153(c) that this would not have been practicable and in any event it was not done. 155.\nThe Secretary of State seeks to make good this approach by reference to his view that there had been no significant change from the years 2006 2007 to the years 2013 2014 in the economic or other relevant differentials between different United Kingdom regions.\nLord Sumption endorses this response in para 35, as does Lord Neuberger in para 67.\nBut the response could only have been relevant, had the categorisation of and treatment of regions introduced by Regulation No 1303\/2013 remained the same as it was in the previous period 2007 2013 under Regulation No 1083\/2006.\nThis was not the case.\nA division of total available funding between the four territories of the United Kingdom in the period 2014 2020 in the same totals (less 5%) as had applied throughout the whole period 2007 2013 was bound to lead to anomalies in the light of (a) the re categorisation of regions under Regulation No 1303\/2013, (b) the recognition of seven former competitiveness regions as meriting enhanced treatment as transition regions, along with Merseyside and South Yorkshire, and (c) the different bases and levels of funding which different transition regions would necessarily enjoy in the period 2014 2020 compared with the period 2007 2013.\nThe consistency and balance involved in giving each devolved administration the same amount (less 5%) were in fact bound to lead to inconsistency and imbalance.\nTwo unlike situations (those existing in the periods 2007 2013 and 2014 2020) were treated alike, in a manner and with results that none of Dr Baxters four reasons justifies. 156.\nReference was made in argument to the Court of Justices decision in (Case C 428\/07) R (Horvath) v Secretary of State for Environment, Food and Rural Affairs [2009] ECR I 6355.\nBut that decision turned on the constitutional settlement involved in devolution.\nIt was of its essence that the devolved administrations had under the relevant devolution arrangements the primary responsibility for implementing the common agricultural policy, and on that basis the Court of Justice held that divergences between the measures provided for by the various administrations cannot, alone, constitute discrimination (para 57).\nIn para 56 the Court distinguished discrimination resulting from a measure adopted by that Member State implementing a Community obligation, referring in this regard to its decision in Joined Cases 201\/85 and 202\/85.\nFurther, the relevant measure expressly required and permitted Member States to define, at national or regional level, minimum requirements for funding support, a provision which the court interpreted as expressly recognising the possibility for the Member States, to the extent authorised by their constitutional system or public law, to permit regional or local authorities to implement Community law measures, by defining such minimum requirements. 157.\nThe present case is critically different.\nThe Structural Funds are allocated to the United Kingdom, primarily to strengthen its social and economic cohesion.\nThe Secretary of State retains responsibility for the internal allocation of the Structural Funds within the United Kingdom.\nThat he consulted with the devolved administrations in relation to the decisions which he took does not affect this, or alter his duty to avoid discrimination between those affected by his decisions.\nIf he chose to divide up the total funding available between territories of the United Kingdom, he was obliged to do so in a way which was consistent with the fund specific mission of cohesion and the goal of growth and jobs set by Regulation No 1303\/2013, and would lead to like cases being treated alike, and unlike cases differently, across the whole United Kingdom.\nThe mathematical division between the four territories of the funding allocated to the United Kingdom for the period 2014 2020 was, as noted in para 155 above, bound to lead to discrepancies detrimental to cohesion, in particular when arrived at in disregard of the re categorisation of regions effected by Regulation No 1303\/2013. 158.\nThe appellants challenge to the Secretary of States decisions, on the basis of the discrepancies to which they lead between the bases of allocation to Merseyside and South Yorkshire and to other regions within the United Kingdom is, I consider, also made good.\nAll transition regions must in my view be regarded as comparable, and on this basis differences in treatment between them require to be considered and justified.\nThe Secretary of State appears to have foregone any case of justification in the courts below, but, even if justification is treated as a live issue or an issue which is in the present context inextricably linked with comparability, I do not consider that the difference in treatment has been shown to be legitimate. 159.\nMerseyside and South Yorkshire were given an allocation which took as relevant funding they received in 2013 by reference to an average for competitiveness regions, which clearly did not reflect their position or needs.\nHighlands & Islands on the other hand received funding based on the average of the tapered funding they received over the whole 2007 2013 period.\nThey were both transitional regions.\nTheir funding reduced in each case to the same level in 2013.\nHighlands & Islands was admittedly a phasing out region, of whom it could be said that in 2006 their GDP had been less than 75% of that of the original 15 EU Member States.\nThis could not be said of Merseyside and South Yorkshire and they were only transitional regions because they had been Objective 1 regions in the period 2000 2006.\nBut, nevertheless, funding in the period 2007 2013 was in each case arranged on the basis that it reduced to the average for competitiveness regions by 2013.\nThere was no reason to assume, without analysis, that the needs of Highlands & Islands merited a complete preservation (subject only to a 5% reduction) of their average funding in the period 2007 2013, whereas Merseyside and South Yorkshire required no more than the preservation with a 15.7% uplift of their very low level funding in the year 2013, based on an average which did not on any view reflect their actual position.\nThere is (with respect to Lord Sumptions comment in para 42 about additional funding) no basis for concluding that Merseyside and South Yorkshire received (but Highlands & Islands did not) some sort of uncovenanted bonus through the higher early funding allocated to them during the prior period 2007 2013 which should now be carried forward as a form of debit to their account in respect of the period 2014 2020.\nDifferences in the co financing received in the period 2007 2013 between phasing out regions (which had only to find 33.33p for every pound of EU funding) and phasing in regions (which had to match EU funding pound for pound) play against rather than for continuing to award Highlands & Islands funding on a more favourable basis than Merseyside and South Yorkshire during the period 2014 2020 when both are now transition regions. 160.\nLord Sumptions reference to additional funding and much of paras 20, 28, 37 and 42 44 of his judgment are focused on a case which was originally advanced by the appellants that Merseyside and South Yorkshire should, like Highlands & Islands, have received funding by reference to an average of what they had received in the period 2007 2013.\nHowever, save to highlight the obvious disparity with the funding of Highlands & Islands, the appellants in their case before the Supreme Court focused on the disparity arising from the use of the base year 2013.\nIn that respect, in my opinion, the appellants have made good their challenge to the Secretary of States decisions.\nThere was no good reason for awarding funding on the basis of the same 15.7% uplift over the 2013 level both in relation to English transition regions which had been competitiveness regions and to Merseyside and South Yorkshire which had not been, but whose funding in 2013 had been based on an average which did not reflect their actual position.\nContrary to Dr Baxters statement in para 54 of her first witness statement, the result was not to treat all English Transition regions in the same way, since the nature of the 2013 base differed significantly between them. 161.\nDr Baxter states, in her first witness statement, para 49, that attention was given to the possibility of using, indeed that Ministers did see a strong case for using, a basket of indicators based on the latest economic data to determine the allocations within England during the period 2014 2020, together with applying a suitable safety net.\nShe says that this option was rejected because it would have led to too great a shift of resources from north to south, and would have had to be countered by a safety net which, she suggests, would have taken one back to the present position.\nBut an assessment of actual development needs would have avoided the use of 2013 allocations as a base for transition regions, and would have meant that Merseyside and South Yorkshire would have been treated on the same basis as other English transition regions.\nFurther, in circumstances where, as a matter of general policy, a shift in funding from south to north was desired, that could and would then have been given effect in relation to all English regions, including Merseyside and South Yorkshire.\nThe actual basis of allocation fails to give Merseyside and South Yorkshire the benefit of any such policy.\nAny additional safety net could also have been applied on a basis which affected all English transition regions in like fashion. 162.\nIn proceeding as he did, therefore, the Secretary of State in my view gave priority to irrelevant considerations (the maintenance in the period 2014 2020 of similar funding, less 5%, for each United Kingdom territory to that which obtained in the period 2007 2013, when the re categorisation of regions during the current period makes the comparison inappropriate), failed to treat like situations alike (although all were transition regions, Merseyside and South Yorkshire were treated quite differently from Northern Ireland and Highlands & Islands) and treated unlike situations alike (by taking 2013 as an appropriate base for funding for all English transition regions, although it had been arrived at in the case of Merseyside and South Yorkshire on a quite different basis bearing no relationship to their actual needs, in contrast to the basis on which it had been arrived at in the case of other transition regions).\nWhether the matter is viewed under EU law or at common law, these are manifest flaws which are neither problems of value judgment nor fall within the margin of discretion undoubtedly due when value judgments are in issue. 163.\nI would only add that, even if I had arrived at a different view with regard to the legitimacy of the first decision, the discrepancy in the bases on which funding was allocated to different English transition regions would still have led me to conclude that the second decision was illegitimate. 164.\nI have also had the benefit of reading the judgment prepared by Lord Carnwath, who reaches the same conclusions as I do and with whose reasoning in paras 176 187 I find myself in substantial agreement. 165.\nIt follows that, in my opinion, the appeal should be allowed, and the Secretary of State required to reconsider and re determine the allocations between all the transition regions within the United Kingdom in the light of the guidance given in this judgment.\nLORD CARNWATH: 166.\nI agree with Lord Mance that this appeal should be allowed, substantially for the reasons given by him.\nWhile I agree also with much of Lord Sumptions analysis, I am not persuaded that he provides an adequate answer to the essential complaints made by Mr Coppel QC.\nIn the circumstances I will confine myself to some comments on the correct general approach, and a short explanation of my reasons for disagreeing with the majority.\nGeneral approach 167.\nEqual treatment and proportionality are of course well established principles of EU law, but they are not the starting point.\nWhether under European or domestic law, such general principles have to be seen in the context of the legislative scheme in question.\nI agree with the Court of Appeal (para 57) that these decisions were concerned with matters of broad economic, social and political judgment, for which the objectives were widely defined.\nAs they said, it is classic territory for affording the decision maker a wide margin of discretion (or appreciation), where the court should only interfere if satisfied that the decisions were manifestly inappropriate or manifestly wrong.\nOn the other hand, the lack of formality in the decision making process distinguishes the case, for example, from domestic authorities where public funding decisions have been subject to review in Parliament, and the courts have accordingly a very restrictive view of the scope for judicial review (see R v Secretary of State for Environment, Ex p Hammersmith and Fulham London Borough Council [1991] 1 AC 521). 168.\nThe Court of Appeal referred to the exhaustive review of the relevant European and domestic authorities by all three members of the Court of Appeal in R (Sinclair Collis Ltd) v Secretary of State for Health [2012] QB 169.\nI do not find it necessary to analyse the differences of emphasis between the three judgments in that case, nor to enter into discussion about different formulations of the test.\nI agree with Lord Neuberger of Abbotsbury MR (para 200): The breadth of the margin of appreciation in relation to any decision thus depends on the circumstances of the case and, in particular, on the identity of the decision maker, the nature of the decision, the reasons for the decision, and the effect of the decision.\nFurther, because the extent of the breadth cannot be expressed in arithmetical terms, it is not easy to describe in words which have the same meaning to everybody, the precise test to be applied to determine whether, in a particular case, a decision is outside the margin.\nIt is therefore unsurprising that in different judgments, the same expression is sometimes used to describe different things, and that sometimes different expressions are used to mean the same thing.\nAs the Court of Appeal said of the present case, the context is one where the treaty and the regulation together confer a wide area of policy choice on both the Commission and the member states, within the objectives set by them.\nFurther, since responsibility is shared between the European and national agencies, there is no reason for any material differences in the approach of the courts to their respective decisions. 170.\nFor similar reasons, it is unhelpful in the present context to look for a clear cut distinction between issues of comparability on the one hand and justification on the other.\nAs the regulation makes clear (and as Mr Coppel QC ultimately accepted), the Secretary of State had a wide discretion as to the factors he could properly take into account in comparing the various regions for the purpose of allocating funds.\nThis exercise cannot be equated to a simple comparison (as in R (Chester) v Secretary of State for Justice [2014] AC 271) between prisoners and non prisoners, or the issue of equality between men and women (specifically addressed in article 7 of the regulation). 171.\nNone of the cases relied on by Mr Coppel QC seems to me sufficiently close to the present context to advance his argument for a more stringent test.\nFor example he cites Franz Egenberger GmbH Molkerei und Trockenwerk v Bundesanstalt fr Landwirtschaft und Ernhrung (Case C 313\/04) [2006] ECR I 6331 para 33, for the proposition that the general principle of equality requires that comparable situations must not be treated differently and different situations must not be treated alike unless such treatment is objectively justified.\nThe case itself related to the narrow issue of where applications for butter import licences should be lodged, and provides no assistance in the present case. 172.\nThe highpoint of his argument perhaps is in Socit Arcelor Atlantique et Lorraine v Premier Ministre (Case C 127\/07) [2008] ECR I 9895, where the equal treatment principle was treated by the European court as applicable to a scheme for trading in greenhouse gas emission allowances.\nThe issue was whether that principle had been breached by a scheme which applied to the steel sector but not to the plastics or aluminium sectors (para 24).\nThe court accepted that the emissions from all these activities were in principle in a comparable situation, since they all contributed to greenhouse emissions and were capable of contributing to the functioning of a trading allowance scheme (para 34).\nIt went on, first, to accept that the different treatment had caused disadvantage to the steel sector (paras 42 44), but, secondly, to hold that it was justifiable (not manifestly less appropriate than other measures), taking account of the broad discretion allowed to the Commission (paras 57 59), and the difficulties of managing a novel and complex scheme with too great a number of participants (paras 60ff). 173.\nThe case offers some help to Mr Coppel QCs argument, to the extent that even in an area of broad policy discretion the court adopted a three stage analysis comparability, disadvantage, justification.\nThe margin of discretion was applied only at the last stage.\nHowever, there the issue of comparability turned on a narrow view of the purpose of the scheme, which applied equally to all industrial emissions whatever the form of the industry.\nThere is no parallel with the much more varied objectives of the present scheme, which allow a broad discretion at all stages, and make it impossible to draw a meaningful distinction between comparability and justification. 174.\nThe Secretary of State no doubt needed to adopt rational and consistent criteria for his allocations, within the objectives set by the regulation, and he needed to be able to justify those criteria and their application as between the regions.\nBut nothing is gained for this purpose by treating justification as a separate stage in the legal analysis.\nThe court must look at the reasoning as a whole to decide whether it was affected by legal error, or otherwise manifestly inappropriate.\nIssues of equal or unequal treatment and proportionality may play a part in that assessment, in both European and domestic law (see Kennedy v Charity Commission [2014] UKSC 20, [2014] 2 WLR 808, para 54, per Lord Mance). 175.\nThe danger of the formulaic approach advocated by Mr Coppel QC is that it may make it more difficult to separate the wood from the trees, and distract attention from the ultimate question, under EU law or domestic law: whether something has gone seriously wrong with the decision making process such as to justify the intervention of the court.\nThe two decisions 176.\nIt is unnecessary to repeat Lord Sumptions description of the two decisions.\nThe essential complaint against the first decision is simply stated.\nThe decision to start by dividing the UK allocation between the four jurisdictions had the effect of limiting the Secretary of States options to achieve fairness at the second stage, in a way which was not justified by anything in the scheme or objectives set out by the regulation. 177.\nThe complaint against the second decision turns on the adoption of 2013 as a base for all transition regions.\nThe appellant authorities from the two regions say that, by taking the 2013 figure as a base for all, the Secretary of State was not comparing like with like.\nIn the previous round all the other transition regions had been competitiveness regions, but their allocations had been determined by reference to their relative economic and social circumstances, rather than the application of a single formula, and the allocations were constant throughout the period.\nBy contrast the allocations of the two regions, as phasing in regions, had been determined, not by reference to their relative circumstances, but by a special formula set by the regulations; the last year was based on the national average for all competitiveness regions throughout the UK (regardless of relative strength).\nThat meant that their last year did not reflect either their own circumstances relative to the other transition regions, nor in particular the extra funding allowed to the north in the previous period, to reflect its greater development needs a balance which had not changed in the interim. 178.\nThis is explained most clearly in the evidence of Mr Eyres (para 33).\nAlthough the precise methodology for calculating allocations to the competitiveness regions in the previous period had not been disclosed, the government had confirmed that it took account of the greater development needs of the North and Midlands, and, as he understood, it had used a basket of indicators reflecting the relative deprivation of those areas.\nHad the allocations for 2013 been calculated on the same basis as the neighbouring regions they would have been allocated far in excess of the amounts resulting from the phasing in formula.\nHe adds (para 50(3)): The Secretary of State seems to assume that the additional, transitional funding was awarded between 2007 2010, leaving the funding for 2011, 2012 and 2013 as the correct funding allocation for Merseyside and South Yorkshire.\nYet this ignores the fact that the funds allocated in 2011, 2012 and 2013 were significantly below the level for Competitiveness regions in the North and Midlands, which had no protected status.\nThis is because the allocation for 2013 was based on the 'national average for Competitiveness regions and takes no account of the GDP and high levels of deprivation within individual Competitiveness regions in North and Midlands, including within Merseyside and South Yorkshire themselves (which the Government did take into account when making 2007 2013 allocations to Competiveness regions). 179.\nIn short, the appellants case can be reduced to two apparent anomalies which required explanation: (a) Alone of all the transition regions in the UK (including Highland & Islands, which had been also subject to a tapered funding regime in the previous period), the two regions were given no protection from a substantial reduction in funding (65%) as compared with the previous period taken as a whole; (b) Alone of all the English transition regions, their funding was fixed by reference to a base which had taken no account of their relative economic and other circumstances in the previous period.\nI will take them in turn. 180.\nThe first, as respects the comparison with Highlands & Islands, was in large part attributable to the prior decision to adopt a two stage process.\nIn itself there could be no objection to the Secretary of State taking account of the territorial divisions and governance arrangements within the UK.\nThe provisions of the regulation confer a wide discretion on member states to take account of local structure at all levels.\nAlthough the decisions on funding were not themselves devolved, the devolved administrations had a clear interest in the process, both as partners, and (presumably) as possible sources of co financing. 181.\nI note also that no objection was taken on behalf of the two regions to the two stage process at the time of the first decision.\nOn the contrary Mr Eyres records (para 40) that the Mayor of Liverpool, as Chair also of the Liverpool partnership, wrote to the minister welcoming the decision to amend the EU formula to provide a 95% safety net for devolved areas provided the same principles were applied in England. 182.\nHowever, the judge was wrong with respect to treat this as a socio economic decision by the Secretary of State which thereby absolved him of the need for further comparisons between different parts of the UK (para 72).\nThat would in my view be contrary to the scheme of the EU regulation (and indeed to the devolution settlement), which gives him responsibility for the fairness and consistency of the distribution as between all the regions in the UK, so far as not predetermined by the Commission.\nRightly, that was not how the case was argued by Mr Swift QC in the Court of Appeal or before us.\nAs has been seen, his submission, in substance accepted by the Court of Appeal, turned on lack of comparability between phasing in and phasing out regions. 183.\nI agree that there were significant differences of detail between the two categories, as explained by Dr Baxter, although it is not clear why some of them were reasons for less favourable treatment for the two regions.\nFor example, the fact that the co financing regime was more onerous for them seems on its face a point going the other way.\nHowever, none of these points addresses the main complaint.\nThe reasons which led the Secretary of State to include Highlands & Islands in the 95% safety net by reference to the 2007 2013 funding as a whole, were apparently no less applicable to the two regions.\nThat indeed was the point made by the Mayor of Liverpool at the time.\nConversely, the main reason which led the Secretary of State to treat the two regions differently in this respect from the other English transition regions (that is, the higher funding for 2007 2013 overall, tapered down to the average competitiveness level) was in principle no less applicable to Highlands & Islands. 184.\nAs Dr Baxter indicates, the Secretary of State was aware of this apparent discrepancy, but as far as Scotland was concerned he felt constrained (in practice if not in law) by the overall budget envelope that had already been set (para 62 of her witness statement).\nThe idea of a safety net for the two regions was rejected because of the negative impact on the other transition regions.\nThat with respect is little more than a statement of the obvious.\nIf I take from Peter to give to Paul, it will no doubt have an adverse impact on Peter, but that says nothing about the balance of fairness as between the two. 185.\nSimilar issues arise in respect of the second decision.\nViewed by reference simply to a comparison with the other English transition regions (and ignoring Highlands & Islands), he was entitled to take account of the different funding regime in the previous period.\nSince the overall funding for the two regions in that period had been on a more generous basis than for the others, and since that was by definition special and transitional, there was no reason to carry it forward into the exercise for 2014 2020.\nFurthermore, if their figure for 2013 had been related in some way to their own circumstances (as was the case with the other transition regions), it might have formed a suitable base for the subsequent period.\nHowever, that was not the case.\nThe 2013 figure for the two regions (as for Highlands & Islands) reflected the average of all the former competitive regions, a category which had included even the most prosperous regions (that is, those now categorised as more developed). 186.\nThe Secretary of State was faced with a difficulty in that the transition regions were a new intermediate category, encompassing a relatively wide range of relative development (between 75% and 90% of the EU average).\nHad his distribution been based, as in the previous period, on a comparison of economic or other factors, within the scope of the regulation, it would have been very difficult to challenge.\nIt is perhaps understandable that he preferred a more simple blanket approach to the new category, particularly as his view of the general economic balance had not changed.\nHowever, that could only be justified if he took steps to ensure that the two regions were dealt with on a comparable basis.\nHis principal reason for his not doing so was, not a view as to the relative needs of the two regions as compared to the others, but again the negative impact for them of a 22% cut where they (and probably the Commission) had expected enhanced levels of funding.\nThis, by implication, assumed a finite budget for England, in effect predetermined by the first decision. 187.\nI conclude that the criticisms made by the two regions of the decision making process, including both decisions, have not been satisfactorily answered.\nI do so with some hesitation in view of the risk of over simplification of some very complex issues and material.\nIt matters not, in my view, whether this is expressed as an issue of unequal treatment or lack of proportionality under European law, or inconsistency and irrationality under domestic law, the anomalies are in my view sufficiently serious to have required explanation which has not been given, and which renders the resulting decisions manifestly inappropriate under EU and domestic principles. 394.\nThe term manifestly inappropriate in European jurisprudence was traced back by Arden LJ (para 115ff) to R v Minister for Agriculture, Fisheries and Food, Ex p Fedesa (Case C 331\/88) [1990] ECR I 4023, a case relating to decisions implementing the Common Agricultural Policy.\nShe showed that it has been treated as applicable also in appropriate cases to decisions of national legislatures or other decision makers (para 129).\n","output":"The European Union distributes money from European Structural Funds to Member States in order to promote the overall harmonious development of the EU and in particular to reduce disparities between the levels of development of the various regions and the backwardness of the least favoured regions (Article 174 TFEU).\nFunds are allocated in seven year cycles.\nThe previous two rounds were for 2000 2006 and 2007 2013.\nThe most recent round was for 2014 2020 and took place pursuant to Regulation (EU) 1303\/2013 (the 2013 Regulation).\nRegions within Member States are classified based on the relationship between their GDP per head and the EU average, with different categories used in each round.\nThe European Commission notionally allocates funds to Member States according to a formula based on how many regions in each category they have, but there is no formula setting out how allocations are to be made within Member States.\nThat decision is jointly determined under a Partnership Agreement which must be proposed by the Member State and approved by the Commission.\nIn the UK this is the responsibility of the Respondent, the Secretary of State for Business, Innovation and Skills.\nIn 2000 2006, Merseyside and South Yorkshire were both Objective 1 regions, corresponding to the current less developed category, with a GDP per head less than 75% of the EU average.\nThey received the most generous level of funding under the UKs Partnership Agreement.\nIn 2007 2013, there were two principal categories, convergence regions (with a GDP per head less than 75% of the EU average), and competitiveness regions (with a GDP per head greater than 75% of the EU average).\nHowever, the EU average GDP per head decreased due to the accession of 10 new Member States.\nThere were carved out of the category of competitiveness regions two special categories commonly referred to as phasing out and phasing in regions.\nPhasing out regions were regions which would have been convergence regions but moved above the 75% threshold as a result of the reduction of the EU average.\nPhasing in regions were regions which moved above the 75% threshold and would have done so in any event.\nMerseyside and South Yorkshire were both phasing in regions in 2007 2013.\nHighlands & Islands was a phasing out region.\nIn order to ease the transition to the higher category and the consequent reduction of support, both phasing in and phasing out regions were eligible for additional support from the Commission on a transitional and specific basis.\nThat support tapered down over the course of the seven year period to the national average level of support for competitiveness regions in 2013.\nIn 2014 2020, Merseyside and South Yorkshire became transition regions, with a GDP per head between 75% and 90% of the EU average.\nThe UK received 5% less money overall for 2014 2020 than it had for 2007 2013.\nThe Secretary of State had to decide how to allocate it.\nFirst, he decided that each of the four countries comprising the UK would have its overall funding reduced by 5% compared with the previous period.\nNorthern Ireland, a single region, therefore had its funding cut by 5% altogether.\nSecond, he decided that each\nEnglish transition region would receive an allocation per year for 2014 2020 representing an increase of 15.7% on its allocation for 2013, the last year of the previous period.\nFor Merseyside and South Yorkshire, these decisions resulted in a 61% cut in funding altogether compared with the whole of the 2007 2013 period.\nThis was because the new allocations were based on allocations for 2013, and therefore took no account of the transitional funding received in the earlier period.\nIn Scotland, Highland & Islands had its funding cut by 5% altogether.\nThis was the result of a decision made by the Secretary of State in consultation with the Scottish Ministers.\nThe Commission has now approved the Secretary of States proposals.\nThe Appellants say that Merseyside and South Yorkshire have unfairly been treated differently from: (i) the non English transition regions of Northern Ireland and Highland & Islands; and (ii) other English transition regions.\nTheir arguments failed before Stewart J and in the Court of Appeal.\nThey now appeal to the Supreme Court.\nThe Court dismisses the appeal by a 4 3 majority (Lord Mance, Lord Carnwath and Lady Hale dissenting).\nLord Sumption and Lord Neuberger both give reasoned judgments for the majority.\nLord Hodge agrees with Lord Sumption and Lord Clarke agrees with both Lord Sumption and Lord Neuberger.\nLord Mance and Lord Carnwath give dissenting judgments.\nLady Hale agrees with Lord Mance and Lord Carnwath.\nThe majority judgments Lord Sumption notes that the allocation made by the Secretary of State is amenable to judicial review, but a court should be cautious about intervening because it: (i) was a discretionary decision of a kind courts have traditionally been reluctant to disturb; (ii) involved particularly delicate questions about the distribution of finite domestic and EU resources, in which the legitimacy of the decision making process depends to a high degree on ministers political accountability; and (iii) has been approved by the Commission [21 24].\nLord Neuberger agrees that this is classic territory where executive decisions should be afforded a wide margin of discretion, but emphasises that the fact that a matter is one for democratic decision does not remove the need for judicial oversight [61 65].\nLord Sumption holds that the ultimate question for the court is whether there is enough of a relevant difference between Merseyside and South Yorkshire on the one hand and the remaining transition regions on the other to justify any difference in treatment [25 29].\nLord Neuberger analyses the Appellants objections as comprising two procedural attacks and two outcome attacks [52 60].\nAs to the first decision, to allocate to each of the UKs four countries 95% of what they had received for the previous period, Lord Sumption says that the Secretary of State did not unjustifiably discriminate.\nHe was entitled to have regard to the constitutional settlement as between the component countries of the United Kingdom; nothing suggested that any countrys position had significantly changed since the last allocation; and a decision based on broad qualitative considerations rather than purely GDP per head is consistent with the 2013 Regulation [30 36].\nLord Neuberger agrees that it was procedurally legitimate for the Secretary of State to take into account the increasingly decentralised nature of UK administration and the political realities of devolution [75 78].\nThe disparities in outcome between Merseyside and South Yorkshire on the one hand and Highland & Islands and Northern Ireland on the other give pause for thought, but, bearing in mind the Secretary of States margin of discretion and the relevance of factors other than GDP per head, those disparities do not make the decision unlawful [87 99].\nAs to the second decision, to use 2013 as a baseline for the 2014 2020 allocations for English transition regions, Lord Sumption and Lord Neuberger both point out that the additional funding given to Merseyside and South Yorkshire in the previous period was transitional and specific and provided to smooth the passage to their being treated as competitiveness regions, so that basing the 2014 2020 allocations on their average allocations for the whole of 2007 2013 would have continued\nthe impact of that funding beyond the period envisaged [37 44, 80 83].\nFor Lord Neuberger, there is force to the point that the use of the 2013 baseline deprives Merseyside and South Yorkshire of the uplift given to other northern regions, but this is outweighed by the discretionary and complex context and the legitimacy of the Secretary of States goals [84 85].\nAs a matter of outcome, he notes that other English transition regions received varying amounts unrelated to their GDP per head and that some allocations were less than or comparable to those of Merseyside and South Yorkshire [100 108].\nOverall the Secretary of States approach is less considered and consultative than one would have hoped, but not unlawful [109 111].\nThe minority judgments Lord Mance and Lord Carnwath observe that the principle that a greater margin of discretion should be afforded where a decision is complex and judgment based does not exclude closer review of a decision which is based on irrelevant considerations or fails to treat like cases alike, particularly in light of the informality of the decision making process and (per Lord Mance) the lack of consultation in this case [142, 167].\nLord Mance explains that the combined effect of the two decisions was that Northern Ireland was guaranteed an allocation based on an assessment of its actual needs over the prior period, Highland & Islands received an allocation based on the average of its receipts as a transition region throughout the prior period, and the other English transition regions received allocations based on previous allocations calculated on the basis of each regions needs, including uplifts for northern regions.\nMerseyside and South Yorkshire, by contrast, received allocations without any uplift and not referable to any assessment of their actual needs or receipts over the prior period, even though by any measure they still fall well below the competitiveness region average [149 152].\nThe Secretary of States decision was unlawful because he took irrelevant considerations into account and treated like cases unalike and unlike cases alike [162].\nLord Carnwath agrees with Lord Mance [166].\nHe considers it illogical to deny to Merseyside and South Yorkshire the safety net protection given to Highland & Islands on the basis that it would lead to a 22% cut for the other English transition regions [180 186].\n","id":5}
{"input":"The wedding of the Duke and Duchess of Cambridge on 29 April 2011 attracted vast public interest nationally and internationally.\nManaging the crowds presented the Metropolitan Police with a big challenge.\nIn giving the judgment of the Administrative Court, [2012] EWHC 1947 (Admin), Richards LJ explained the nature of the policing operation, its command structure and planning, in considerable detail.\nThis was necessary because at the heart of the claims made against the police in these proceedings was a broad challenge that the planning and execution of the policing operation did not make proper allowance for the democratic rights of anti monarchist protestors to express their views in a peaceable way.\nFor present purposes, the background and circumstances giving rise to the claims may be outlined more shortly.\nThe police were aware that on the day of the wedding a large number of members of the Royal Family, foreign royalty and other heads of state would be moving around London and that thousands of citizens including children were expected to converge on central London to take part in the days celebrations.\nOne month earlier, on 26 March 2011, a day of action organised by the TUC had been marred by the actions of outsiders who used the occasion to commit various offences of violence.\nThere had been similar violent disruption of student protests in November and December 2010, including an attack on the Prince of Waless car.\nIn the build up to the royal wedding, the police had intelligence that activities aimed at disrupting the celebrations were being planned through social websites.\nThe threat level from international terrorism at the time was assessed as severe, meaning that an attempted attack was thought to be highly likely.\nThousands of police officers were deployed across the metropolis.\nThe strategic aims, as set out in briefing materials prepared by the Gold commander with overall responsibility for the safe policing of the event, included to provide a lawful and proportionate policing response to protest, balancing the needs and rights of protesters with those impacted by the protest and to maintain public order.\nThe same aims were reflected in tactical operational plans prepared by subordinate commanders.\nThe four appellants were part of a larger group of claimants, but it was agreed before the Court of Appeal that their cases should be treated as test cases.\nThey were arrested in separate incidents at various places in central London on the grounds that their arrest was reasonably believed by the arresting officers to be necessary to prevent an imminent breach of the peace.\nThey were taken to four different police stations and later released without charge, once the wedding was over and the police considered that the risk of a breach of the peace had passed.\nTheir periods of custody ranged from about 2 hours to 5 hours.\nThe power of the police, or any other citizen, to carry out an arrest to prevent an imminent breach of the peace is ancient, but it remains as relevant today as in times past.\nThe leading domestic authorities on the subject are the decisions of the House of Lords in Albert v Lavin [1982] AC 546 and R (Laporte) v Chief Constable of Gloucestershire Constabulary [2007] 2 AC 105.\nThere are important safeguards for the citizen, in order to prevent breach of the peace powers from becoming a recipe for officious and unjustified intervention in other peoples affairs (in Lord Rodgers words in Laporte, at para 62).\nThe essence of a breach of the peace is violence.\nThe power to arrest to prevent a breach of the peace which has not yet occurred is confined to a situation in which the person making the arrest reasonably believes that a breach of the peace is likely to occur in the near future (quoting again from Lord Rodger in Laporte, at para 62).\nAnd even where that is so, there may be other ways of preventing its occurrence than by making an arrest; there is only a power of arrest if it is a necessary and proportionate response to the risk.\nThe Administrative Court rejected the broad complaint that the police adopted an unlawful policy for the policing of the royal wedding.\nAfter close examination of the facts of the individual arrests, it also held that the arresting officers had good grounds to believe that the arrests were necessary in order to prevent the likelihood of an imminent breach of the peace.\nIt dismissed as unrealistic the argument that lesser measures would have been adequate to meet the degree of risk.\nContinuous police supervision was not a feasible option, given the many demands on police resources.\nThe claims that the police acted unlawfully as a matter of domestic law therefore failed.\nArticle 5\nThe appellants also alleged that their detention violated their rights under article 5 of the European Convention on Human Rights, and on this issue alone they were given permission to appeal to the Court of Appeal and subsequently to this court.\nThe material parts of article 5 for present purposes are the following: 1.\nEveryone has the right to liberty and security of person.\nNo one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: the lawful arrest or detention of a person for non (b) compliance with the lawful order of a court or in order to secure the fulfilment of any obligation prescribed by law; (c) the lawful arrest or detention of a person effected for the purpose of bringing him before the competent legal authority on reasonable suspicion of having committed an offence or when it is reasonably considered necessary to prevent his committing an offence or fleeing after having done so; 3.\nEveryone arrested or detained in accordance with the provisions of paragraph 1(c) of this Article shall be brought promptly before a judge or other officer authorised by law to exercise judicial power and shall be entitled to trial within a reasonable time or to release pending trial. 4.\nEveryone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful. 5.\nEveryone who has been the victim of arrest or detention in contravention of the provisions of this Article shall have an enforceable right to compensation.\nDecision of the Administrative Court\nThe Administrative Court interpreted the phrase effected for the purpose of bringing him before the competent legal authority in article 5.1(c) as limited in its application to the words immediately following it, that is, for the purpose of bringing the person concerned before the court on reasonable suspicion of having committed an offence, and not applying where the purpose of the arrest was to prevent the commission of an offence.\nThe court considered that this was the more natural reading of the wording, and that the Strasbourg case law on the point was inconclusive.\nFor the purposes of the Convention a breach of the peace counts as an offence, despite it not being classified as an offence under English law: Steel v United Kingdom (1998) 28 EHRR 603, paras 46 to 49.\nThe Administrative Court therefore concluded that the arrests conformed with article 5.1(c).\nThe police also relied on the wording of article 5.1(b).\nRichards LJ commented that that the wording seemed ill suited on its face to cover arrest and detention for the purpose of preventing a future, albeit imminent, breach of the peace, but that it was unnecessary for the court to decide the point and better not to do so: para 187.\nDecision of the Court of Appeal\nThe Court of Appeal agreed with the decision of the Administrative Court in a judgment given by Maurice Kay LJ, [2014] 1 WLR 2152, but not with its reasoning.\nThe Court of Appeal was strongly influenced by the judgment of the Strasbourg court in Ostendorf v Germany (2013) 34 BHRC 738, which post dated the decision of the Administrative Court.\nThe Court of Appeal held that it was well established in the Strasbourg jurisprudence that the words for the purpose of bringing him before the competent legal authority govern all the limbs of article 5.1(c) and that English courts should accept that interpretation.\nHowever, it declined to follow the majority view in Ostendorf that article 5.1(c) was incapable of authorising purely preventive detention, notwithstanding the existence of good grounds to believe an offence to be imminent, and that the person concerned must be suspected of having already committed a criminal offence.\nOn the facts, the Court of Appeal concluded that it was an irresistible inference that the officers who arrested and detained the [appellants] appreciated that, if only by reference to domestic law, the [appellants] could not be lawfully detained beyond the point at which it was reasonably practicable to take them before the magistrates court: para 85.\nThe court also inferred that as things were in central London on the day of the royal wedding it would not have been practicable to take the appellants before a magistrates court before they were released, but that they would have been taken to court if the situation had deteriorated to the extent that it was necessary to continue their detention to a point in time when it would have been practicable to do so.\nThe court therefore concluded that that the appellants were arrested and detained for the purpose of bringing [them] before the competent legal authority, if that were to become necessary, so as to prolong their detention on a lawful basis: para 86.\nAs to article 5.1(b), the Court of Appeal observed that the decision of the majority in Ostendorf had strengthened the argument advanced by the police (para 90), but considered it unnecessary to reach a conclusion on that issue.\nThe appellants argue that the Court of Appeal was wrong not to follow the interpretation of article 5.1(c) by the Strasbourg court in Ostendorf, and that the process of reasoning by which the Court of Appeal arrived at its finding that the appellants were detained for the purpose of bringing them before the court was artificial and contrived.\nThey submit that it was plain from the evidence as a whole that the purpose of the appellants arrest and detention was purely preventive.\nThey also submit that article 5.1(b) was not applicable even on the approach taken by the court in Ostendorf.\nThe police argue that the Court of Appeal was right to hold that there was a contingent purpose to bring the appellants before the court sufficient to satisfy the requirements of article 5.1(c) and that the appellants detention was also justified under article 5.1(b).\nStrasbourg case law\nLawless v Ireland (No 3) (1961) 1 EHRR 15 concerned the internment without trial of IRA members by the Irish government.\nThe applicant was detained for five months, without being brought before a judge, under legislation which gave to ministers special powers of detention without trial, whenever the government published a proclamation that the powers were necessary to secure the preservation of peace and order.\nThe government argued that such detention was permitted by the second limb of article 5.1(c), which was not qualified by the words for the purpose of bringing him before the competent legal authority and therefore was also not within article 5.3.\nThe court rejected this argument, noting that in the French text there is a comma after the passage up to for the purpose of bringing him before the competent legal authority (en vue dtre conduit devant lautorit judiciaire comptente), meaning that this passage qualifies all the categories after the comma.\nThe court also said (at para 14) that the governments interpretation would permit the arrest and detention of a person suspected of an intent to commit an offence for an unlimited period on the strength merely of an executive decision, and that this, with its implications of arbitrary power, would lead to conclusions repugnant to the fundamental principles of the Convention.\nI interpose that two linked points are important to note: the reference to the potential for unlimited detention without judicial oversight and the fundamental objectionableness of arbitrary detention.\nThe court held that the expression effected for the purpose of bringing him before the competent legal authority qualified every category of arrest or detention referred to in article 5.1(c), and the clause therefore permitted deprivation of liberty only when such deprivation is effected for the purpose of bringing the person arrested or detained before the competent judicial authority, irrespective of whether such person is a person who is reasonably suspected of having committed an offence, or a person whom it is reasonably considered necessary to restrain from committing an offence, or a person whom it is reasonably considered necessary to restrain from absconding after having committed an offence.\nThe court further held that the purpose of bringing the person before the court might, depending on the circumstances, be either for the purpose of examining the question of deprivation of liberty or for the purpose of deciding on the merits (para 14).\nIn Brogan v United Kingdom (1988) 11 EHRR 117, the four applicants were arrested and detained under prevention of terrorism legislation on suspicion of being concerned in the commission, preparation or instigation of acts of terrorism.\nThey were released without charge after periods between four and six days and without having been brought before a magistrate.\nThe court held that in each case there had been a violation of article 5.3 but not article 5.1.\nThe court accepted that there was an intention to bring them before a court if sufficient and usable evidence had been obtained during the police investigation following their arrest, and that this was sufficient to satisfy the requirement in article 5.1(c) that the detention was for the purpose of bringing them before the court.\nThere was no reason to believe that the police investigation was not in good faith or that their detention was for any other reason than to further the investigation by confirming or dispelling the suspicions which grounded their arrest.\nIn other words, the police were not required to intend to take the applicants to court in the event of there being insufficient evidence after investigation to proceed against them.\nIn Jecius v Lithuania (2000) 35 EHRR 16, the applicant complained of violation of his article 5 rights in successive periods of detention.\nThe first period of five weeks was under a broad provision of the criminal code which permitted preventive detention in connection with banditry, criminal association or terrorising a person.\nDuring that period no investigation was carried out and no charge was made.\nIn holding that preventive detention of the kind found in that case was not permitted by article 5.1(c), the court stated that a person may be detained under that clause only in the context of criminal proceedings for the purpose of bringing him before the competent legal authority on suspicion of his having committed an offence (para 50).\nHowever, as the Court of Appeal observed in this case (para 61), that was plainly not a complete statement of article 5.1(c).\nNicol and Selvanayagam v United Kingdom, (Application No 32213\/96) 11 January 2001, provides an example of a case where the court recognised that article 5.1(c) embraces different sets of circumstances.\nThe applicants took part in an anti fishing protest at an angling match on 28 May 1994.\nTheir aim was to sabotage the match by throwing twigs in the water close to the anglers hooks so as to disturb the surface, while other protestors sounded horns to frighten the fish.\nWhen they refused to stop, they were arrested.\nThe custody record gave the reason for their initial detention as to allow a period of calming, and to determine method of processing.\nThey were later kept in custody in order to take them before the magistrates for the purpose of being bound over to keep the peace.\nThe court found that their complaint under article 5.1 was manifestly unfounded.\nIt said that their initial detention was to prevent them from committing an offence and their continued detention was for the purpose of bringing them before the court on suspicion of having committed an offence.\nBoth the initial arrest and their subsequent detention were therefore compatible with article 5.1(c).\nMost recently, Ostendorf raised parallel issues to those in the present case.\nThe applicant was known to the police as a suspected football hooligan and gang leader.\nHe travelled by train from Bremen to Frankfurt to attend a match with 30 to 40 other fans, most of whom were known to the police and considered to be hooligans prepared to use violence.\nThe group went under police surveillance to a pub.\nThey were told that they would be escorted to the football ground and that any member leaving the group would be arrested.\nAt the pub the applicant was seen talking to a member of a rival hooligan group.\nHe remained in the pub when the rest of his group left and was discovered by the police hidden in a locked cubicle in the ladies bathroom.\nHe gave no plausible explanation why he was there.\nThe police reasonably concluded that he was trying to evade police surveillance and that he was planning violence.\nHe was arrested under public security legislation which permitted the police to take a person into custody if necessary to prevent the imminent commission of a criminal or regulatory offence of considerable importance to the general public.\nHe was taken to a police station and released one hour after the game finished, when it was considered that the risk of violence had passed.\nHe complained that his arrest and detention violated his rights under article 5.\nThe Strasbourg court (Fifth Section) unanimously rejected his complaint.\nThe following paragraph in the leading judgment merits citation in full, not only because it states a central principle but also because it has a direct resonance in the present case: 88.\nThe court is aware of the importance, in the German legal system, of preventive police custody in order to avert dangers to the life and limb of potential victims or significant material damage, in particular, in situations involving the policing of large groups of people during mass events It reiterates that article 5 cannot be interpreted in such a way as to make it impracticable for the police to fulfil their duties of maintaining order and protecting the public provided that they comply with the underlying principle of article 5, which is to protect the individual from arbitrariness (see Austin v UK (2012) 32 BHRC 618 at para 56).\nThe court was divided on how to implement that principle.\nThe majority held that the applicants detention was permitted under article 5.1(b) but not under article 5.1(c).\nConversely, the minority were for holding that it was permitted under article 5.1(c) but not under article 5.1(b).\nAs to article 5.1(c), the majority held (at paras 82 to 86) that the second part (when it is reasonably considered necessary to prevent his committing an offence) only covers pre trial detention, and not custody for preventive purposes without the person concerned being suspected of having already committed an offence.\nMoreover, it held that the purpose of bringing the person before a court must be for the purpose of trial, and not just for the purpose of determining the legality of his preventive detention.\nThe majority sought to answer the governments argument that on this analysis the second part would add nothing to the first, saying that it was not superfluous since it could cover the detention of a person who had already committed preparatory acts which were themselves punishable in order to prevent him from going on to commit the full offence.\nHowever, that does not fully meet the point, for in the hypothetical case postulated by the majority the applicant would already be suspected of having committed an offence, for which he could be detained under the first part of article 5.1(c).\nThe minority (Judges Lemmens and Jaderblom) considered that the case law to the effect that preventive detention under article 5.1(c) was permissible only in the context of criminal proceedings, for the purpose of bringing [a person] before the competent legal authority on suspicion of his having committed an offence (Jecius v Lithuania at para 50), derogated without any specific explanation from what the court stated in Lawless, and that it went too far.\nIn Lawless the court recognised that article 5.1(c) covered three different types of situation.\nThe judgment in Lawless stated (para 14) that the clause had to be construed in conjunction with article 5.3, with which it formed a whole; and that the obligation to bring a person arrested or detained in any of the circumstances contemplated by article 5.1(c) was for the purpose of examining the question of deprivation of liberty or for the purpose of deciding on the merits.\nThe minority in Ostendorf said that later case law had unduly restricted the purpose of bringing the detainee before the court to deciding on the merits and had done away with the possible purpose of examining the question of deprivation of liberty.\nThey favoured returning to Lawless, which did more justice to prevention as a possible justification for a deprivation of liberty than the interpretation followed by the majority.\nThey said at para 5 of their judgment: An early, prompt release, without any appearance before a judge or judicial officer, may occur frequently in cases of administrative detention for preventive purposes.\nEven so, in such a situation it will be enough for the purpose of guaranteeing the rights inherent in article 5 of the convention if the lawfulness of the detention can subsequently be challenged and decided by a court.\nApplying that approach to the facts, the minority said that the applicant was detained in order to prevent a brawl in connection with a football match.\nThey were of the opinion that the police, faced with the situation of a large football event with the assembly of many aggressive supporters in which the applicant appeared and, as assessed by the authorities, planned to instigate fights, could reasonably consider it necessary to arrest and detain him.\nHe was detained for approximately four hours.\nIt did not appear that this period exceeded what was required in order to prevent the applicant from fulfilling his intentions.\nFor those reasons they concluded that his arrest and detention were justifiable under article 5.1(c).\nAs to article 5.1(b), it is well established in the Strasbourg case law that an obligation prescribed by law within the meaning of the paragraph must be concrete and specific and that a general obligation to comply with the criminal law will not suffice: see, for example, Schwabe v Germany (2011) 59 EHRR 28, paras 70 and 73.\nThe majority found that the requirement of specificity was satisfied on the facts because the obligation whose fulfilment was secured by the applicants detention was not to arrange a brawl between Bremen and Frankfurt hooligans in the hours before, during and after the football match in the vicinity of Frankfurt.\nIn the case of a negative obligation, it was necessary and sufficient to show that the applicant had taken clear and positive steps which indicated that he would not fulfil the obligation.\nFor this purpose it was necessary that the person concerned was made aware of the specific act which he or she was to refrain from committing, and that the person showed himself or herself not willing to refrain from doing so (as the applicant had done by ignoring a police warning).\nThey added that in the case of a duty not to commit a specific offence at a certain time and place, the obligation must be considered as having been fulfilled for the purposes of article 5.1(b) at the latest at the time when it ceased to exist by lapse of the time at which the offence at issue was to take place.\nJudges Lemmens and Jaderblom disagreed, because the legislation under which the applicant was arrested did not specify any obligation which he failed to fulfil.\nAlthough the police specifically ordered him to stay with his group of fans, the statutory obligation not to commit criminal or regulatory offences was in the view of the minority too general for the purpose of article 5.1(b).\nThe cases on the subject all concerned obligations to perform specific acts.\nThings might have been different if the applicant had been the subject of a specific banning order, but that was not the case.\nHis only legal obligation was the general obligation not to commit certain crimes or regulatory offences.\nThat general obligation did not become specific and concrete merely because he was reminded of it in the context of a specific football match.\nAnalysis\nThe fundamental principle underlying article 5 is the need to protect the individual from arbitrary detention, and an essential part of that protection is timely judicial control, but at the same time article 5 must not be interpreted in such a way as would make it impracticable for the police to perform their duty to maintain public order and protect the lives and property of others.\nThese twin requirements are not contradictory but complementary, and this is reflected in the statement in Ostendorf cited at para 22 above.\nIn balancing these twin considerations it is necessary to keep a grasp of reality and the practical implications.\nIndeed, this is central to the principle of proportionality, which is not only embedded in article 5 but is part of the common law relating to arrest for breach of the peace.\nIn Austin v Commissioner of Police of the Metropolis [2009] 1 AC 564 Lord Hope made the point at para 34: I would hold that there is room, even in the case of fundamental rights as to whose application no restriction or limitation is permitted by the Convention, for a pragmatic approach to be taken which takes full account of all the circumstances.\nNo reference is made in article 5 to the interests of public safety or the protection of public order as one of the cases in which a person may be deprived of his liberty But the importance that must be attached in the context of article 5 to measures taken in the interests of public safety is indicated by article 2 of the Convention, as the lives of persons affected by mob violence may be at risk if measures of crowd control cannot be adopted by the police.\nThis is a situation where a search for a fair balance is necessary if these competing fundamental rights are to be reconciled with each other.\nThe ambit that is given to article 5 as to measures of crowd control must, of course, take account of the rights of the individual as well as the interests of the community.\nSo any steps that are taken must be resorted to in good faith and must be proportionate to the situation which has made the measures necessary.\nIn this case there was nothing arbitrary about the decisions to arrest, detain and release the appellants.\nThey were taken in good faith and were proportionate to the situation.\nIf the police cannot lawfully arrest and detain a person for a relatively short time (too short for it to be practical to take the person before a court) in circumstances where this is reasonably considered to be necessary for the purpose of preventing imminent violence, the practical consequence would be to hamper severely their ability to carry out the difficult task of maintaining public order and safety at mass public events.\nThis would run counter to the fundamental principles previously identified.\nThere is, however, a difficult question of law as to how such preventive power can be accommodated within article 5.\nThe Strasbourg case law on the point is not clear and settled, as is evident from the division of opinions within the Fifth Section in Ostendorf.\nMoreover, while this court must take into account the Strasbourg case law, in the final analysis it has a judicial choice to make.\nThe view of the minority in Ostendorf, that article 5.1(c) is capable of applying in a case of detention for preventive purposes followed by early release (that is, before the person could practicably be brought before a court), is in my opinion correct for a number of reasons.\nIn the first place I agree with the Administrative Court that the situation fits more naturally within the language of article 5.1(c) than 5.1(b).\nOn its plain wording article 5.1(c) covers three types of case, the second being when the arrest or detention of a person is reasonably considered necessary to prevent his committing an offence.\nThere is force in the argument that the interpretation adopted by the majority in Ostendorf collapses the second into the first (reasonable suspicion of having committed an offence) and is inconsistent with Lawless.\nIt is accepted by the police that English courts should treat Lawless as authoritative, but in that case the court was not concerned with a situation in which the police had every reason to anticipate that the risk necessitating the persons arrest would pass in a relatively short time and there was every likelihood of it ending before the person could as a matter of practicality be brought before a court.\nIt would be perverse if it were the law that in such circumstances, in order to be lawfully able to detain the person so as to prevent their imminently committing an offence, the police must harbour a purpose of continuing the detention, after the risk had passed, until such time as the person could be brought before a court with a view to being bound over to keep the peace in future.\nThis would lengthen the period of detention and place an unnecessary burden on court time and police resources.\nSome analogy may be drawn with Brogan, in which the court rejected the argument that at the time of the arrest the police must intend to take the arrested person before the court willy nilly, regardless of whether on investigation there was cause to do so.\nIn order to make coherent sense and achieve the fundamental purpose of article 5, I would read the qualification on the power of arrest or detention under article 5.1(c), contained in the words for the purpose of bringing him before the competent legal authority, as implicitly dependent on the cause for detention continuing long enough for the person to be brought before the court.\nI agree therefore with Judges Lemmens and Jederblom in para 5 of their judgment in Ostendorf (cited at para 25 above) that in the case of an early release from detention for preventive purposes, it is enough for guaranteeing the rights inherent in article 5 if the lawfulness of the detention can subsequently be challenged and decided by a court.\nI prefer to put the matter that way, rather than as the Court of Appeal did by inferring the existence of a conditional purpose ab initio to take the appellants before the court, although it makes no difference to the result.\nI have no disagreement with the Court of Appeal that the appellants would have been brought before a court to determine the legality of their continued detention, if it had been considered necessary to detain them long enough for this to happen.\nThe case would then have been materially similar to Nicol and Selvanayagam, where the applicants initial detention was preventive and they were later kept in custody and brought before the court to be bound over.\nIt would be contrary to the spirit and underlying objective of article 5 if the appellants early release placed them in a stronger position to complain of a breach of article 5 than if it had been decided to detain them for longer in order to take them before magistrates to be bound over.\nAs to article 5.1(b), I am inclined to the same view as the minority in Ostendorf that the obligation has to be much more specific than a general obligation not to commit a criminal offence (or, in this case, a breach of the peace), and that such a general obligation does not acquire the necessary degree of specificity by focusing narrowly on the particular facts or by the person concerned being given a reminder of it in specific circumstances.\nThere are also practical considerations.\nThe police may find it necessary to take action to prevent an imminent breach of the peace in circumstances where there is not sufficient time to give a warning.\nAn example might be a football match where two unruly groups collide and the police see no alternative but to detain them, or the ringleaders on both sides, immediately for what may be quite a short time.\nIn summary, I would be concerned that in stretching article 5.1(b) beyond its previously recognised ambit the majority found it necessary to impose limitations which in another case might leave the police effectively powerless to step in for the protection of the public.\nConclusion\nI would uphold the decision of the lower courts that the appellants arrests and detention were lawful under article 5.1(c) and dismiss the appeals.\n","output":"This appeal concerns the arrest and detention of four individuals on 29 April 2011, the day of the wedding of the Duke and Duchess of Cambridge.\nThe appellants were part of a larger group of claimants but it was agreed before the Court of Appeal that their cases should be treated as test cases [1, 3].\nThe appellants were arrested in separate incidents at various places in central London on the grounds that their arrest was reasonably believed to be necessary to prevent an imminent breach of the peace.\nThey were all released without charge once the wedding was over and the police considered the risk of a breach of the peace had been passed.\nTheir period of custody ranged from 2.5 to 5.5 hours [3].\nComplaints regarding the lawfulness of the policy for the policing of the royal wedding and the grounds for, and necessity of, the appellants arrest were dismissed by the Administrative Court and these issues were not in dispute on appeal [5].\nThe appellants also alleged that their detention violated their rights under article 5 of the European Convention on Human Rights which provides that no one shall be deprived of their liberty save in the certain specific circumstances provided for in subsection (1).\nThe police argued that the appellants detention was lawful under article 5(1)(b), which allows for the lawful detention of a person in order to secure the fulfilment of any obligation prescribed by law, or under article 5(1)(c), which allows for the detention of a person for the purpose of bringing him before the competent legal authority on reasonable suspicion of having committed an offence or when it is reasonably considered necessary to prevent his committing an offence or fleeing after having done so.\nFor the purposes of article 5 a breach of the peace counts as an offence, despite not being classified as an offence under English law [8].\nThe Administrative Court found that the appellants arrest and detention were lawful under article 5(1)(c).\nIt interpreted the phrase effected for the purpose of bringing him before the competent legal authority as applicable only where the purpose of the arrest was to bring the person before the court on reasonable suspicion of having committed an offence and not where the purpose of the arrest was to prevent a commission of an offence [8].\nIt felt it was therefore unnecessary to determine whether the arrest was lawful under article 5(1)(b) [9].\nThe Court of Appeal agreed but for different reasons.\nIn light of the decision of the Strasbourg court in Ostendorf v Germany (2015) 34 BHRC 738, which post dated the decision of the Administrative Court, it read the phrase effected for the purpose of bringing him before the competent legal authority as applying to the whole of article 5(1)(c).\nHowever, it inferred that the officers who arrested and detained the appellants appreciated the appellants would not be lawfully detained beyond the point at which it was reasonably practicable to take them before the magistrates court.\nThe appellants had therefore been arrested and detained with the intention of bringing them before the competent legal authority within the meaning of article 5.1(c) [11].\nThe Supreme Court unanimously dismisses the appeal.\nLord Toulson, with whom the other Justices agree, gives the lead judgment.\nThe fundamental principle underlying article 5 is the need to protect the individual from arbitrary detention, and an essential part of that protection is timely judicial control.\nHowever, article 5 must not be interpreted in such a way as would make it impracticable for the police to perform their duty to maintain public order and protect the lives and property of others [29].\nAn appreciation of the reality and practical implications is central to the principle of proportionality embedded in both article 5 and in the common law relating to arrest for breach of the peace [30].\nThe ability of the police to perform their duty would be severely hampered if they could not lawfully arrest and detain a person for a relatively short time (too short for it to be practical to take the person before a court) [31].\nThe Strasbourg case law on how such a preventative power can be accommodated within article 5 is not clear and settled and the Strasbourg court in Ostendorf was divided.\nWhilst the Supreme Court must take into account the Strasbourg case law, the final decision is the Courts [32].\nThe Court prefers the view of the minority of the Strasbourg court in Ostendorf that article 5(1)(c) is capable of applying to a case of detention for preventive purposes followed by early release [33].\nIt would be perverse if the law was such that in order to be lawfully able to detain a person so as to prevent their imminent commission of an offence, the police must harbour a purpose of continuing the detention, after the risk has passed, until such time as the person could be brought before a court with a view to being bound over to keep the peace in the future.\nThis would lengthen the period of detention and place an unnecessary burden on police resources [36].\nRather, Lord Toulson reads the phrase for the purpose of bringing him before the competent legal authority as implicitly dependent on the cause for detention continuing long enough for the person to be brought before the court.\nEarly release from detention for preventive purpose will not breach article 5 if the lawfulness of the detention can subsequently be challenged and decided by a court [38].\nIn respect of article 5(1)(b), the Court also prefers the view of the minority in Ostendorf.\nA general obligation not to commit a criminal offence or, in this case, a breach of the peace, is not an obligation prescribed by law for the purposes of article 5(1)(b) as it is not concrete or specific enough.\nSuch a general obligation does not acquire the necessary degree of specificity by focusing narrowly on the particular facts or by the person concerned being given a reminder of it in specific circumstances.\nThe police may be required to take action to prevent an imminent breach of the peace where there is insufficient time to give a warning [27, 40].\n","id":6}
{"input":"Counsel for the respondent, Jonathan Crow QC, boldly asserted at the outset of his submissions that this case is in fact bristling with simplicity.\nThe issue is certainly a simple one.\nThe 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.\nIn 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.\nThe 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.\nCan 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?\nThe background\nThe 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.\nAt all times material to this claim, Mr Al Sanea was its sole shareholder, a director and also its chairman, president and treasurer.\nThere were six other directors, who were reputable people, but did not exercise any influence over the management of the company.\nVery extensive powers were delegated to Mr Al Sanea to take decisions on behalf of the company, including signing powers over the companys bank accounts.\nThe 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.\nThe appellant, Daiwa, is the London subsidiary of a Japanese investment bank and brokerage firm.\nIn 2007, it entered into a stock financing arrangement with Singularis.\nDaiwa provided Singularis with loan financing to enable it to purchase shares which were the security for the repayment of the loan.\nIn June 2009, all the shares were sold, the loan was repaid, and Daiwa was left holding a cash surplus for the account of Singularis.\nTogether with a sum of US$80m deposited by Singularis in June 2009, the total held to Singularis account was approximately US$204m.\nBetween 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.\nFive of those payments were to the Saad Specialist Hospital Company.\nThree of them were to or for the benefit of Saad Air (A320 No 2) Ltd and Saad Air (A340 600) Ltd (together, Saad Air).\nThose 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.\nDaiwa made those payments.\nThe judge held that each of the payments was indeed a misappropriation of Singularis funds because there was no proper basis for any of them.\nThere has been no appeal against that finding.\nOn 20 August 2009, Mr Al Sanea placed Singularis in voluntary liquidation.\nOn 18 September 2009 the Grand Court of the Cayman Islands made a compulsory winding up order and joint liquidators were appointed.\nOn 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).\nThere 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.\nIn the Chancery Division of the High Court, Rose J dismissed the dishonest assistance claim because Daiwas employees had acted honestly.\nHowever, 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.\nSingularis did not appeal against the dismissal of the dishonest assistance claim.\nDaiwa did appeal against the finding of liability on the negligence claim.\nThe Court of Appeal unanimously dismissed the appeal: [2018] EWCA Civ 84; [2018] 1 WLR 2777.\nIn 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.\nDaiwa now appeals to this Court on the question of attribution and its consequences.\nTwo 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?\nThe starting point\nThe starting point must be the judges findings, none of which is under appeal.\nShe 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).\nShe 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).\nAs 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.\nThis precluded making gratuitous payments to other companies in the Saad group to the detriment of Singularis creditors (paras 128 137).\nShe went on to hold that Daiwa was in breach of the Quincecare duty on the facts of the case.\nAny reasonable banker would have realised that there were many obvious, even glaring, signs that Mr Al Sanea was perpetrating a fraud on the company.\nHe was clearly using the funds for his own purposes and not for the purpose of benefiting Singularis (para 192).\nFirst, 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).\nSecond, it was aware that Singularis might have other substantial creditors with an interest in the money (para 197).\nThird, 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).\nFourth, 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).\nFifth, there was a striking contrast between the way in which some payment requests were processed and how the disputed payments were handled (para 201).\nIn 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).\nOn the basis of those findings, the judge held that there was a clear breach of Daiwas Quincecare duty of care to Singularis.\nThat is incontrovertible.\nThe issue for this Court, as in the courts below, is whether Daiwa has any defence to that claim.\nThe issue of attribution has to be seen in the context of the possible defences to which it might give rise.\nWere attribution to be established, Daiwa raises three possible defences.\nIt is worth giving a brief account of each of these before turning to the question of attribution.\nIt will be seen that, even if attribution were established, none of them is a very promising basis for denying liability.\nIllegality\nBoth 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).\nPatel v Mirza was a restitution claim.\nMr 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.\nThis was a conspiracy to commit the offence of insider dealing contrary to section 52 of the Criminal Justice Act 1993.\nHowever, the inside information was not forthcoming and the bets were never placed.\nMr Patel asked for his money back and Mr Mirza refused.\nHe 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.\nA 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.\nBy 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.\nInstead 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.\nIn 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.\nIn wanting it back he was seeking to unwind the arrangement, not to profit from it.\nIn 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.\nThe 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.\nThat purpose would certainly not be enhanced by preventing the company from getting back the money which had been wrongfully removed from its account.\nThe 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.\nAlthough 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.\nIt 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)\nTurning 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.\nIf 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).\nFinally, denial of the claim would be an unfair and disproportionate response to any wrongdoing on the part of Singularis.\nThe 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).\nThe Court of Appeal took the view that there was no error in the judges approach.\nBarring 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).\nMr John McCaughran QC, who appears for Daiwa, argues that the judge went wrong at each stage of the analysis.\nThe purpose of the prohibition of deceit is to encourage honest dealing.\nThe integrity of the legal system is not enhanced by allowing fraudulent companies to recover damages in respect of their fraud.\nIf this is adequately addressed by the carefully calibrated Quincecare duty, it leaves no room for the application of the illegality defence.\nAs 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.\nThere was no need for a further incentive in the form of a damages claim by the company.\nDenying the claim would be a proportionate response to the companys wrongdoing.\nDaiwas arguments necessarily depend upon a finding that Mr Al Saneas fraud was the companys fraud, an issue which is discussed later.\nBut even if it was, in my view the judges conclusion was correct for the reasons she gave.\nI 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).\nDaiwa 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.\nIt 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.\nCausation\nDaiwa 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.\nIn 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.\nThis was a case, argues Daiwa, in which the company inflicted the harm upon itself.\nAgainst 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.\nBut, 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.\nThis 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.\nHence Mr Crow argues that the loss was caused, not by the dishonesty, but by Daiwas breach of its duty of care.\nHad it not been for that breach, the money would still have been in the companys account and available to the liquidators and creditors.\nThis 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).\nThe fraudulent instruction to Daiwa gave rise to the duty of care which the bank breached, thus causing the loss.\nCountervailing claim in deceit\nDaiwa 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.\nThey 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.\nThis cancels out the companys claim against them for negligence in failing to detect the fraud.\nThis 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.\nThese 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.\nThe 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.\nThat 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.\nThe second decision concerned the activities of Mr Leeson.\nFraudulent though they were, they did not defeat the banks claim because it was the very duty of the auditors to detect the fraud.\nThus, 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.\nTheir breach, and not Mr Al Saneas misrepresentations, is the cause of their exposure to the claim for Singularis loss (Rose J, para 228).\nDaiwa 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.\nThe 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).\nAttribution\nDaiwa 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.\nTo examine such an assertion, it is necessary to go back to basic principles.\nThe 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.\nMr Salomon had established the company, with his family, to buy his boot and shoe manufacturing business at a time when it was solvent.\nWhen 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.\nIt 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.\nThat is a taking nickname, but it does not help one much in the way of argument.\nCompanies being fictional persons, they have of course to act through the medium of real human beings.\nSo the issue is when the acts and intentions of real human beings are to be treated as the acts and intentions of the company.\nThe 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.\nHe identified three levels of attribution (at pp 506 507).\nThe 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.\nBut this will not cover the whole field of the companys decision making.\nFor 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.\nHowever there will be some particular rules of law to which neither of these principles supplies the answer.\nThe question is not then one of metaphysics but of construction of the particular rule in question.\nIn 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.\nThe claimant company was owned, controlled and managed by a Mr Stojevic, who had procured the company to engage in frauds upon banks.\nThe company was sued for deceit by one of the banks and went into liquidation.\nThe company then brought proceedings against its auditors, alleging that they had been negligent in failing to detect and prevent Mr Stojevics activities.\nThe auditors applied to strike out the claim on the basis that Mr Stojevics fraud was to be attributed to the company.\nThe trial judge refused to strike it out, on the basis that such fraud was the very thing that the auditors were employed to detect.\nThe 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).\nThe 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.\nLord 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.\nIt 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.\nStone & Rolls has prompted much debate and criticism.\nIt 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.\nThe 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.\nThe 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.\nThis 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.\nThe 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.\nWhere 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.\nStone & Rolls was a case between a company and a third party.\nLords 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.\nIt 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.\nLord 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).\nThe first was that an illegality defence cannot be run by a third party against a company where there are innocent shareholders or directors.\nThe second was that the defence was available, albeit only on some occasions, where there are no innocent directors or shareholders.\nLord 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).\nSubject 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.\nWithout 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)\nUnfortunately, 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.\nThus 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.\nThe 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).\nThe company had a board of reputable people and a substantial business.\nThere was no evidence to show that the other directors were involved in or aware of Mr Al Saneas actions.\nThere was no reason why they should have been complicit in his misappropriation of the money (para 189).\nThe Court of Appeal held that, on those findings of fact, she had made no error of law (CA, para 54).\nI agree.\nBut 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.\nIn 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).\nI agree and, if that is the guiding principle, then Stone & Rolls can finally be laid to rest.\nThe context of this case is the breach by the companys investment bank and broker of its Quincecare duty of care towards the company.\nThe purpose of that duty is to protect the company against just the sort of misappropriation of its funds as took place here.\nBy definition, this is done by a trusted agent of the company who is authorised to withdraw its money from the account.\nTo 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).\nIf 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.\nThis would be a retrograde step.\nDaiwa makes two further arguments essentially policy arguments against this conclusion.\nFirst, 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.\nBut (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.\nThe 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.\nIf the company already knows the true position (as in Berg) then the auditors negligence does not cause the loss.\nSecond, Daiwa argues that the law should not treat a company more favourably than an individual.\nIn 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.\nBut companies are different from individuals.\nThey have their own legal existence and personality separate from that of any of the individuals who own or run them.\nThe shareholders own the company.\nThey do not own its assets and a sole shareholder can steal from his own company.\nI 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.\nHowever, even if it were, for the reasons given earlier, none of the defences advanced by Daiwa would succeed.\nConclusion\nIn 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.\nBut Mr Crow was correct to say that this case is bristling with simplicity.\nA company with a substantial business traded for some years and ran up debts in doing so.\nIt also had a substantial sum of money standing to its credit, as a result of its legitimate business activities, with its broker bankers.\nWhen 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.\nDaiwa 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.\nThe company (and through the company its creditors) has been the victim of Daiwas negligence.\nThis appeal should be dismissed and the judges order should stand.\n","output":"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.\nThis 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.\nThe respondent company (Singularis) is registered in the Cayman Islands.\nIt was set up to manage the personal assets of Mr Maan Al Sanea.\nHe was the sole shareholder, a director and the chairman, president and treasurer.\nThere were six other directors but they did not exercise any influence over the management of Singularis.\nSole signing powers over the companys bank accounts rested with Mr Al Sanea.\nIn 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.\nIn June 2009 the shares were sold, the loan was repaid, and Daiwa held a cash surplus of US$204m for the account of Singularis.\nDaiwa complied with instructions from Mr Al Sanea to pay out those funds to third parties.\nThe payments were a misappropriation of Singularis funds and left Singularis unable to meet the demands of its creditors.\nOn 18 September 2009 the Grand Court of the Cayman Islands made a compulsory winding up order and joint liquidators were appointed.\nOn 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.\nThe 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.\nDaiwas appeal against the finding of liability on the negligence claim was dismissed.\nDaiwa appealed to the Supreme Court.\nThe Supreme Court unanimously dismisses Daiwas appeal and holds that the High Court order should stand.\nLady Hale gives the only substantive judgment.\nDaiwa 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].\nLady 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.\nAs 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.\nThat purpose would not be enhanced by preventing the companys recovery of the money wrongfully removed from its account.\nThe 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].\nDenial of the claim would undermine the public interest in requiring banks to play an important part in uncovering financial crime and money laundering [17].\nIt 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].\nThe 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.\nHowever, the purpose of the Quincecare duty is to protect the banks customers from harm caused by people for whom the customer is responsible.\nThe 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.\nThe 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].\nAttribution Mr Al Saneas fraud should not however be attributed to the company for the purposes of the Quincecare claim.\nThe basic principle was that a properly incorporated company has an identity and legal personality separate from that of its shareholders and directors.\nThe 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].\nAs 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].\nThe context in this case is the breach of Daiwas Quincecare duty of care.\nTo 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].\n","id":7}
{"input":"This appeal arises from steps taken by the appellant, Dallah Real Estate and Tourism Holding Company (Dallah), to enforce in England a final award dated 23 June 2006 made in its favour in the sum of US$20,588,040 against the Government of Pakistan (the Government) by an International Chamber of Commerce (ICC) arbitral tribunal sitting in Paris.\nThe Government has hitherto succeeded in resisting enforcement on the ground that the arbitration agreement was not valid . under the law of the country where the award was made (Arbitration Act 1996, s.103(2)(b), reflecting Article V(I)(a) of the New York Convention), that is under French law.\nDallah now appeals.\nThe award was made against the Government on the basis that it was a true party to an Agreement dated 10 September 1996 expressed to be made between and signed on behalf of Dallah and Awami Hajj Trust (the Trust).\nThe Agreement contains an arbitration clause referring disputes or differences between Dallah and the Trust to ICC arbitration.\nThe tribunal in a first partial award dated 26 June 2001 concluded that the Government was a true party to the Agreement and as such bound by the arbitration clause, and so that the tribunal had jurisdiction to determine Dallahs claim against the Government.\nThe central issue before the English courts is whether the Government can establish that, applying French law principles, there was no such common intention on the part of the Government and Dallah as would make the Government a party.\nDallah is a member of a group providing services for the Holy Places in Saudi Arabia.\nIt had had long standing commercial relations with the Government.\nBy letter dated 15 February 1995, Mr Shezi Nackvi, a senior director in the Dallah group, made a proposal to the Government to provide housing for pilgrims on a 55 year lease with associated financing.\nThe Government approved the proposal in principle, and a Memorandum of Understanding (MOU) was concluded on 24 July 1995.\nLand was to be purchased and housing facilities were to be constructed at a total cost not exceeding US$242 million and the Government was to take a 99 year lease subject to Dallah arranging the necessary financing to be secured by the Borrower designated by THE GOVERNMENT under the Sovereign Guarantee of THE GOVERNMENT.\nThe lease and financing terms were to be communicated to the Government within 30 days for approval, and Dallah was to supply detailed specifications within 60 days of the date of such approval.\nIn the event, Dallah in November 1995 acquired a larger and more expensive plot of land than the MOU contemplated, and the timetable was also not maintained.\nFurther, on 21 January 1996 the President of Pakistan promulgated Ordinance No VII establishing the Trust with effect from 14 February 1996.\nUnder article 89(2) of the Constitution of Pakistan, an Ordinance so promulgated shall stand repealed at the expiration of four months from its promulgation, although, under the same article, it should before then have been laid before Parliament, upon which it would have taken effect as a bill.\nIn the event, Parliament appears never to have been involved, but further Ordinances were promulgated to recreate and continue the Trust, viz Ordinance No XLIX of 1996 on a date unknown (presumably prior to 21 May 1996) and No LXXXI of 1996 on 12 August 1996.\nUnder each Ordinance the Trust was to maintain a fund with a trustee bank, to be financed from contributions and savings by pilgrims (Hujjaj) and philanthropists, as well as by any income from investments or property.\nThe Ordinances also assigned functions within the Trust to various public officers.\nThey prescribed, in particular, that the secretary of the Ministry of Religious Affairs (MORA) should act as secretary of the Board of Trustees and (unless some other person of integrity was appointed) as Managing Trustee of the Trust.\nOn 29 February 1996 Dallah wrote to the secretary of MORA with a revised proposal, increasing the cost to US$345 million to take account of the larger plot purchased, setting out options for a new legal and financial structure and stating: Legal issues In order to comply with the legal requirements of the various entities involved, the structure will be as follows: a) Government of Pakistan to set up AWAMI HAJJ TRUST b) Trust will borrow the US$100 Million from Dallah Albaraka c) Trust will make a down payment of US$100 million to Albaraka d) Trust will enter into a lease to use these buildings during the Hajj period Annex A detailed the financial structure: Loan terms for down payment of US $ 100 Million Approx 30% of project cost Amount: US $ 100 Million Borrower: Awami Hajj Trust\nGuarantor: Government of Pakistan\nOn 3 April 1996 Dallah instructed its lawyers, Orr, Dignam & Co. that the current shape of the transaction involved an agreement to be entered into between Dallah and the Trust on terms which it described.\nFurther negotiations with the Government led to the signing of the Agreement between Dallah and the Trust on 10 September 1996.\nThe Agreement reflected the increased cost of $345 million, out of which it provided that: the Trust shall pay a lump sum of U.S. $ 100 [million] . to Dallah by way of advance . subject to (i) Dallah arranging through one of its affiliates a U.S. Dollar 100 [million] Financing Facility for the Trust against a guarantee of the Government of Pakistan, . (iii) A counter guarantee issued by the Trust and Al Baraka Islamic Investment Bank, E.C., Bahrain, . appointed by the Board of Trustees pursuant to Section 8 of the Awami Hajj Trust Ordinance, 1996 in favour of the Government of Pakistan.\nClause 27 provided that: The Trust may assign or transfer its rights and obligations under this Agreement to the Government of Pakistan without the prior consent in writing of Dallah.\nThe Agreement made no other references to the Government and was in terms introducing and setting out mutual obligations on the part of Dallah and the Trust.\nThese included the arbitration clause: 23.\nAny dispute or difference of any kind whatsoever between the Trust and Dallah arising out of or in connection with this Agreement shall be settled by arbitration held under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris, by three arbitrators appointed under such Rules.\nOn 6 November 1996 Ms Benazir Bhuttos government fell from power, and was replaced by that of Mr Nawaz Sharif.\nNo further Ordinance was promulgated, and the Trust accordingly ceased to exist as a legal entity at midnight on 11 December 1996.\nIt will be necessary to look in detail at correspondence as well as three sets of proceedings in Pakistan which took place during the following years.\nDallah invoked ICC arbitration against the Government on 19 May 1998, nominating Lord Mustill as its arbitrator.\nIt is common ground that the Government has throughout the arbitration denied being party to any arbitration agreement, maintained a jurisdictional reservation and not done anything to submit to the jurisdiction of the tribunal or waive its sovereign immunity.\nThe ICC under its Rules appointed Justice Dr Nassim Hasan Shah to act as the Governments arbitrator and Dr Ghaleb Mahmassani to chair the tribunal.\nTerms of Reference, in which the Government refused to join, were signed by the arbitrators and Dallah in March 1999 and approved by the ICC in April 1999.\nThe tribunal issued its first partial award on its own jurisdiction on 26 June 2001.\nA second partial award on liability was issued on 19 January 2004 and the final award on 23 June 2006.\nLeave to enforce the final award in England was given by Order of Christopher Clarke J dated 9 October 2006 on a without notice application by Dallah.\nThe Governments application to set aside the leave led to a three day hearing with oral evidence before Aikens J in July 2008.\nHis judgment setting aside the Order is dated 1 August 2008: [2008] EWHC 1901 (Comm); [2009] 1 All ER (Comm) 505.\nA further three day hearing led to the Court of Appeals dismissal of Dallahs appeal on 20 July 2009 ([2009] EWCA Civ 755; [2010] 1 AER 592), against which the present appeal lies.\nOn 19 August 2009, Dallah filed an application in the French courts for enforcement of the final award, and, on 12 January 2010, it sought a stay of the present appeal pending the outcome of its French application.\nOn 25 January 2010, the Supreme Court refused such a stay.\nOn 21 December 2009, the Government applied in France to set aside all three awards.\nIt was in time to do this, since, under French law, the limitation period for doing so only starts to run one month after official notification of the award bearing an enforcement order.\nThe issue and the principles governing its resolution\nThe validity of the arbitration agreement depends in the present case upon whether there existed between Dallah and the Government any relevant arbitration agreement at all.\nDallahs case is that the Government has at all times been an unnamed party to the Agreement containing the arbitration clause.\nBefore the English courts, this case has been founded on a submission that it was the common intention of the parties that the Government should be such a party to the Agreement.\nBefore the arbitral tribunal Dallah put the matter differently.\nIt argued that either the Trust was the alter ego of the Government or the Government was the successor to the Trust or to the rights and obligations which the Trust had under the Agreement prior to its demise.\nNeither of these ways of putting the case is now pursued.\nDallah did not argue before Aikens J that the Trust was the Governments alter ego (judgment, para 58, footnote 21), and it merely submitted that, if and so far as the Government behaved as if it were a successor to the Trust, this was relevant to the issue of common intention (judgment, paras 94 96).\nThe issue regarding the existence of any relevant arbitration agreement falls to be determined by the Supreme Court as a United Kingdom court under provisions of national law which are contained in the Arbitration Act 1996 and reflect Article V(1)(a) of the New York Convention.\nThe parties submissions before the Supreme Court proceeded on the basis that, under s.103(2)(b) of the 1996 Act and Article V(1)(a) of the Convention, the onus was and is on the Government to prove that it was not party to any such arbitration agreement.\nThis was so, although the arbitration agreement upon which Dallah relies consists in an arbitration clause in the Agreement which on its face only applies as between Dallah and the Trust.\nThere was no challenge to, and no attempt to distinguish, the reasoning on this point in Dardana Limited v Yukos Oil Company [2002] EWCA Civ 543; [2002] 1 All ER (Comm) 819, paras 10 12, and I therefore proceed on the same basis as the parties submissions.\nS.103(2)(b) and article V(1)(a) raise a number of questions: (a) what is meant by the law of the country where the award was made? (b) what are the provisions of that law as regards the existence and validity of an arbitration agreement? (c) what is the nature of the exercise which an enforcing court must undertake when deciding whether an arbitration agreement existed under such law? and, in particular, (d) what is the relevance of the fact that the arbitral tribunal has itself ruled on the issue of its own jurisdiction? (a) The law of the country where the award was made.\nIt is common ground that the award was made in France and French law is relevant.\nBut it is also common ground that this does not mean the French law that would be applied in relation to a purely domestic arbitration.\nIn relation to an international arbitration, the experts on French law called before Aikens J by Dallah and the Government agreed in their Joint Memorandum (para 2.8) that: Under French law, the existence, validity and effectiveness of an arbitration agreement in an international arbitration . need not be assessed on the basis of a national law, be it the law applicable to the main contract or any other law, and can be determined according to rules of transnational law.\nThe approach taken in French law appears in decisions of the Court of Appeal of Paris, in particular Menicucci v Mahieux [1976] Rev Crit 507 (13 December 1975) and Coumet et Ducler v Polar Rakennusos a Keythio [1990] Rev Arb 675 (8 March 1990), and later in the decision of the Cour de Cassation (1re Ch.\nCiv) (20 December 1993) in Municipalit de Khoms El Mergeb v Dalico [1994] 1 Rev Arb 116, where the court said that: en vertu dune rgle matrielle du droit international de larbitrage, la clause compromissoire est indpendante juridiquement du contrat principal qui la contient directement ou par rfrence et que son existence et son efficacit sapprcient, sous rserve des rgles impratives du droit franais et de lordre public international, daprs la commune volont des parties, sans quil soit ncessaire de se rfrer une loi tatique .\nThis language suggests that arbitration agreements derive their existence, validity and effect from supra national law, without it being necessary to refer to any national law.\nIf so, that would not avoid the need to have regard to French law as the law of the country where the award was made under Article V(1)(a) of the Convention and s.103(2)(b) of the 1996 Act.\nThe Cour de Cassation is, however, a national court, giving a French legal view of international arbitration; and Dallah and the Government agree that the true analysis is that French law recognises transnational principles as potentially applicable to determine the existence, validity and effectiveness of an international arbitration agreement, such principles being part of French law.\nAs Miss Heilbron QC representing Dallah put it, transnational law is part of French law.\nMr Landau QC representing the Government now accepts this analysis (although in his written case, para 157, he appeared to take issue with it and Aikens J, para 93, in fact disregarded transnational law on the basis that it was not part of French law, but relevant only under French conflict of laws principles and so not within Article V(1)(a) and s.103(2)(b)).\nSince the point is common ground, I merely record that Mr Landau referred the Court to Pierre Mayers note on Ducler in KluwerArbitration, explaining the rationale of the Paris Court of Appeal decisions as being to confine the restrictive provisions of article 2061 of the French Civil Code to internal contracts.\nHe also referred to Fouchard, Gaillard, Goldmans International Commercial Arbitration (1999) (Kluwer), para 440, describing as somewhat unfortunate the terminology used in (French) decisions referring to an arbitration agreement as autonomous from any national law and as having its own effectiveness, and observing that a contract can only be valid by reference to a law that recognises such validity.\nFinally, in response to a 1977 commentary, suggesting that the validity of an arbitration clause in an international contract resulted solely from the will of the parties, independently of any reference to the law of the main contract, and to any national law and describing this as the ultimate pinnacle of autonomy, Poudret and Bessons Comparative Law of International Arbitration 2nd ed (2007), para 180 also said that: it is only the first two aspects, i.e. indifference to the fate of the main contract and the possibility of being submitted to a separate law, that flow logically from the principle of separability.\nThe latter by no means implies that the arbitration agreement is independent of any national law.\nThe real justification of this regime lies elsewhere: as Philippe Fouchard emphasises in his note on the Menicucci judgment, the aim is to remove the obstacles which certain laws, including French law, bring to the development of international arbitration.\nAlthough the judgment does not say so, this new conception of separability implies abandoning the conflict of laws approach in favour of material rules, which are in reality part of French law and not of any international or transnational system.\nWe shall see this point with the Dalico judgment.\nIn the light of the common ground between the parties, it is also unnecessary to engage with the competing representations of international arbitration lucidly discussed in Gaillards Legal Theory of International Arbitration (2010) pp. 13 66.\nWhatever the juridical underpinning or autonomy of their role from the viewpoint of international arbitrators, the present case involves an application to enforce in the forum of a national court, subject to principles defined by s.103 of the 1996 Act and Article V of the New York Convention, upon the effect of which there is substantial, though not complete, agreement between the parties now before the Supreme Court. (b) The provisions of that law as regards the existence and validity of an arbitration agreement.\nThe parties experts on French law were agreed that a French court would apply a test of common intention to an issue of jurisdiction.\nDallahs expert, M. Derains, said this in his written report (p.14): Thus, my Experts opinion is that it is open to an arbitral tribunal seating in Paris in an international arbitration to find that the arbitration agreement is governed by transnational law.\nYet, the arbitrators must also look for the common will of the parties, express or implied, since it is a substantive rule of French law that the Courts will apply when controlling the jurisdiction of the arbitrators.\nIn para 2.9 of a joint memorandum to which Aikens J referred in paras 85 et seq of his judgment, the experts agreed upon the following statement: Under French law, in order to determine whether an arbitration clause upon which the jurisdiction of an arbitral tribunal is founded extends to a person who is neither a named party nor a signatory to the underlying agreement containing that clause, it is necessary to find out whether all the parties to the arbitration proceedings, including that person, had the common intention (whether express or implied) to be bound by the said agreement and, as a result, by the arbitration clause therein.\nThe existence of a common intention of the parties is determined in the light of the facts of the case.\nTo this effect, the courts will consider the involvement and behaviour of all the parties during the negotiation, performance and, if applicable, termination of the underlying agreement.\nThe experts agreement summarises a jurisprudence constante in the French courts.\nThe Cour de Cassation endorsed a test of common intention in the case of Dalico (para 14 above).\nM. Derains endorsed its application to issues such as that in the present case.\nAikens J had cited to him the leading decisions of the Paris Court of Appeal spelling out the principle in greater detail in a series of cases concerning international arbitrations: Socit Isover Saint Gobain v Socit Dow Chemical [1984] 1 Rev Arb 98 (21 October 1983), Co. tunisienne de Navigation v Socit Comptoir commercial Andr [1990] 3 Rev Arb 675 (28 November 1989) and Orri v Socit des Lubrifiants Elf Aquitaine [1992] Jur Fr 95 (11 January 1990).\nIn the last case, the Court put the position as follows: Selon les usages du commerce international, la clause compromissoire insre dans un contrat international a une validit et une efficacit propres qui commandent den tendre lapplication aux parties directement impliques dans lexcution du contrat et les litiges qui peuvent en rsulter, ds lors quil est tabli que leur situation contractuelle, leurs activits et les relations commerciales habituelles existent entre les parties font prsumer quelles ont accept la clause darbitrage dont elles connaissaient lexistence et la porte, bien quelles naient pas t signataires du contrat qui la stipulait.\nIn translation: According to the customary practices of international trade, the arbitration clause inserted into an international contract has its own validity and effectiveness which require that its application be extended to the parties directly involved in the performance of the contract and any disputes which may result therefrom, provided that it is established that their contractual situation, their activities and the normal commercial relations existing between the parties allow it to be presumed that they have accepted the arbitration clause of which they knew the existence and scope, even though they were not signatories of the contract containing it.\nThis then is the test which must be satisfied before the French court will conclude that a third person is an unnamed party to an international arbitration agreement.\nIt is difficult to conceive that any more relaxed test would be consistent with justice and reasonable commercial expectations, however international the arbitration or transnational the principles applied.\nAikens J recorded that the experts were also agreed that: (i) when the court is looking for the common intention of all the potential parties to the arbitration agreement, it is seeking to ascertain the subjective intention of each of the parties, through their objective conduct.\nThe court will consider all the facts of the case, starting at the beginning of the chronology and going on to the end and looking at the facts in the round (para 87); (ii) when a French court is considering the question of the common intention of the parties, it will take into account good faith (para 90); and (iii) under French law a state entering into an arbitration agreement thereby waives its immunity, both from jurisdiction (as under English law: State Immunity Act 1978, s.9(1) and Svenska Petroleum Exploration AB v Government of the Republic of Lithuania (No 2) [2006] EWCA Civ 1529; [2007] QB 886) and (unlike English law) also from execution (para 91).\nHowever the experts disagreed as to whether the last point had any relevance when considering whether a state had entered into such an agreement.\nIn the light of their conflicting evidence on this point, Aikens J found that: (iv) the correct analysis of French law is that when the court is ascertaining the subjective intention of the potential state party to the arbitration agreement, it will bear in mind the fact that the potential state party to the arbitration agreement would lose its state immunity if it were to become a party to the arbitration agreement (para 91). (c) The nature of the exercise which an enforcing court must undertake when deciding whether an arbitration agreement existed under such law, and (d) the relevance of the fact that the arbitral tribunal has itself ruled on the issue of its own jurisdiction.\nThese questions are here linked.\nMiss Heilbrons primary submission on question (c) is that the only court with any standing to undertake a full examination of the tribunals jurisdiction would be a French court on an application to set aside the award for lack of jurisdiction.\nAn example of the French courts willingness to do this is provided by Rpublique arabe dEgypte v Southern Pacific Properties Ltd [1986] Ju Fr 75; [1987] Ju Fr 469 (12 July 1984, Paris Court of Appeal and 6 January 1987, Cour de Cassation) (the Pyramids case).\nArticle 1502 of the French Code of Civil Procedure entitles a French court to refuse to recognise or enforce an arbitral award made in the absence of any arbitration agreement, while article 1504 entitles the court to set aside an award made in France in an international arbitration on the grounds provided in article 1502.\nAn ICC arbitral tribunal sitting in Paris had held the Arab Republic of Egypt liable as being party to a contract signed between companies in the Southern Pacific group and the Egyptian General Organisation for Tourism and Hotels (EGOTH).\nOn an application by Egypt to set aside the award, the Court of Cassation held that the Court of Appeal had been entitled under articles 1502 and 1504 de rechercher en droit et en fait tous les elements concernant les vices en question (to examine in law and in fact all the elements relevant to the alleged defects: p 470), and that it had on that basis been up to the Court of Appeal to make up its own mind whether the arbitrators had exceeded their jurisdiction.\nIn Miss Heilbrons submission, any enforcing court (other than the court of the seat of the arbitration) should adopt a different approach.\nIt should do no more than review the tribunals jurisdiction and the precedent question whether there was ever any arbitration agreement binding on the Government.\nThe nature of the suggested review should be flexible and nuanced according to the circumstances.\nHere, Miss Heilbron argues that the answer to question (d) militates in favour of a limited review.\nShe submits that the tribunal had power to consider and rule on its own jurisdiction (Kompetenz Kompetenz or comptence comptence), that it did so after full and close examination, and that its first partial award on jurisdiction should be given strong evidential effect.\nIn these circumstances, she submits, a court should refuse to become further involved, at least when the tribunals conclusions could be regarded on their face as plausible or reasonably supportable.\nAt times, Dallah has put its case regarding the first partial award even higher.\nIn her oral submissions, Miss Heilbron went so far as to suggest that the first partial award was itself an award entitled to recognition and enforcement under the New York Convention.\nNo application for its recognition or enforcement has in fact been made (the present proceedings concern only the final award), but, quite apart from that, the suggestion carries Dallah nowhere.\nFirst, (in the absence of any agreement to submit the question of arbitrability itself to arbitration) I do not regard the New York Convention as concerned with preliminary awards on jurisdiction.\nAs Fouchard, Gaillard, Goldmans International Commercial Arbitration, para 654, observes the Convention does not cover the competence competence principle.\nDallah could not satisfy even the conditions of Article IV(1) of the Convention and s.102(1)(b) of the 1996 Act requiring the production of an agreement under which the parties agreed to submit the question of arbitrability to the tribunal let alone resist an application under Article V(1)(a) and s.103(2)(b) on the ground that the parties had never agreed to submit that question to the binding jurisdiction of the tribunal.\nSecond, Dallahs case quotes extensively from Fouchard, Gaillard, Goldman, para 658, pointing out that arbitral tribunals are free to rule on their own jurisdiction, but ignores the ensuring para 659, which says, pertinently, that: Even today, the competence competence principle is all too often interpreted as empowering the arbitrators to be the sole judges of their jurisdiction.\nThat would be neither logical nor acceptable.\nIn fact, the real purpose of the rule is in no way to leave the question of the arbitrators jurisdiction in the hands of the arbitrators alone.\nTheir jurisdiction must instead be reviewed by the courts if an action is brought to set aside or to enforce the award.\nIn its written case Dallah also argued that the first partial award gave rise, under English law, to an issue estoppel on the issue of jurisdiction, having regard to the Governments deliberate decision not to institute proceedings in France to challenge the tribunals jurisdiction to make any of its awards.\nThis was abandoned as a separate point by Miss Heilbron in her oral submissions before the Supreme Court, under reference to the Governments recent application to set aside the tribunals awards in France.\nBut, in my judgment, the argument based on issue estoppel was always doomed to fail.\nA person who denies being party to any relevant arbitration agreement has no obligation to participate in the arbitration or to take any steps in the country of the seat of what he maintains to be an invalid arbitration leading to an invalid award against him.\nThe party initiating the arbitration must try to enforce the award where it can.\nOnly then and there is it incumbent on the defendant denying the existence of any valid award to resist enforcement.\nDallahs stance on question (d) cannot therefore be accepted.\nArbitration of the kind with which this appeal is concerned is consensual the manifestation of parties choice to submit present or future issues between them to arbitration.\nArbitrators (like many other decision making bodies) may from time to time find themselves faced with challenges to their role or powers, and have in that event to consider the existence and extent of their authority to decide particular issues involving particular persons.\nBut, absent specific authority to do this, they cannot by their own decision on such matters create or extend the authority conferred upon them.\nOf course, it is possible for parties to agree to submit to arbitrators (as it is possible for them to agree to submit to a court) the very question of arbitrability that is a question arising as to whether they had previously agreed to submit to arbitration (before a different or even the same arbitrators) a substantive issue arising between them.\nBut such an agreement is not simply rare, it involves specific agreement (indeed clear and unmistakable evidence in the view of the United States Supreme Court in First Options of Chicago, Inc. v Kaplan 514 US 938, 944 (1995) per Breyer J), and, absent any agreement to submit the question of arbitrability itself to arbitration, the court should decide that question just as it would decide any other question that the parties did not submit to arbitration, namely, independently: ibid, per Breyer J, p.943.\nLeaving aside the rare case of an agreement to submit the question of arbitrability itself to arbitration, the concept of competence competence is applied in slightly different ways around the world, but it says nothing about judicial review and it appears that every country adhering to the competence competence principle allows some form of judicial review of the arbitrators jurisdictional decision . : China Minmetals Materials Import and Export Co., Ltd. v Chi Mei Corporation 334 F 3d 274, 288 (2003), where some of the nuances (principally relating to the time at which courts review arbitrators jurisdiction) were examined.\nIn China Minmetals it was again held, following First Options, that under United States law the court must make an independent determination of the agreements validity and therefore of the arbitrability of the dispute, at least in the absence of a waiver precluding the defense: p 289.\nEnglish law is well established in the same sense, as Devlin J explained in Christopher Brown Ltd v Genossenschaft sterreichischer [1954] 1 QB 8, 12 13, in a passage quoted in the February 1994 Consultation Paper on Draft Clauses and Schedules of an Arbitration Bill of the DTIs Departmental Advisory Committee (then chaired by Lord Steyn): It is not the law that arbitrators, if their jurisdiction is challenged or questioned, are bound immediately to refuse to act until their jurisdiction has been determined by some court which has power to determine it finally.\nNor is it the law that they are bound to go on without investigating the merits of the challenge and to determine the matter in dispute, leaving the question of their jurisdiction to be held over until it is determined by some court which had power to determine it.\nThey might then be merely wasting their time and everybody elses.\nThey are not obliged to take either of those courses.\nThey are entitled to inquire into the merits of the issue whether they have jurisdiction or not, not for the purpose of reaching any conclusion which will be binding upon the parties because that they cannot do but for the purpose of satisfying themselves as a preliminary matter whether they ought to go on with the arbitration or not.\nIf it became abundantly clear to them, on looking into the matter, that they obviously had no jurisdiction as, for example, it would be if the submission which was produced was not signed, or not properly executed, or something of that sort, then they might well take the view that they were not going to go on with the hearing at all.\nThey are entitled, in short, to make their own inquiries in order to determine their own course of action, and the result of that inquiry has no effect whatsoever upon the rights of the parties.\nThis coincides with the position in French law: paras 20 and 22 above.\nAn arbitral tribunals decision as to the existence of its own jurisdiction cannot therefore bind a party who has not submitted the question of arbitrability to the tribunal.\nThis leaves for consideration the nature of the exercise which a court should undertake where there has been no such submission and the court is asked to enforce an award.\nDomestically, there is no doubt that, whether or not a partys challenge to the jurisdiction has been raised, argued and decided before the arbitrator, a party who has not submitted to the arbitrators jurisdiction is entitled to a full judicial determination on evidence of an issue of jurisdiction before the English court, on an application made in time for that purpose under s.67 of the Arbitration Act 1996, just as he would be entitled under s.72 if he had taken no part before the arbitrator: see e.g. Azov Shipping Co. v Baltic Shipping Co. [1999] 1 Lloyds Rep 68.\nThe English and French legal positions thus coincide: see the Pyramids case (para 20 above).\nThe question is whether the position differs when an English court is asked to enforce a foreign award.\nThere is an irony about Dallahs stance that any enforcing court, other than the court of the seat, has a restricted role in reviewing an arbitral tribunals jurisdiction.\nThe concept of transnational arbitration has been advocated in arbitral circles, and was no doubt recognised by French courts, in order so far as possible to underline the autonomy of international arbitration from the seat of arbitration or its national legal system.\nWhat matters in real terms is where an arbitration award can be enforced: see Gaillards Legal Theory of International Arbitration, (op. cit.) Chapter I.\nYet Miss Heilbrons submissions invoke in one and the same breath a transnational view and a view attaching a special and dominant significance to the law of the seat.\nThey also invite the spectre of dual sets of proceedings, conducted in two different countries (that of the seat and that of enforcement) involving different levels of review in relation to essentially the same issue whether the award should be enforced in the latter country.\nIt is true that Article V(1)(e) of the Convention and s.103(2)(f) of the 1996 Act recognise the courts of the country in which, or under the law of which an award was made as the courts where an application to set aside or suspend an award may appropriately be made; and also that Article VI and s.103(5) permit a court in any other country where recognition or enforcement of the award is sought to adjourn, if it considers it proper, pending resolution of any such application.\nBut Article V(1)(a) and s.103(2)(b) are framed as free standing and categoric alternative grounds to Article V(1)(e) of the Convention and s.103(2)(f) for resisting recognition or enforcement.\nNeither Article V(1)(a) nor s.103(2)(b) hints at any restriction on the nature of the exercise open, either to the person resisting enforcement or to the court asked to enforce an award, when the validity (sc. existence) of the supposed arbitration agreement is in issue.\nThe onus may be on the person resisting recognition or enforcement, but the language enables such person to do so by proving (or furnishing proof) of the non existence of any arbitration agreement.\nThis language points strongly to ordinary judicial determination of that issue.\nNor do Article VI and s.103(5) contain any suggestion that a person resisting recognition or enforcement in one country has any obligation to seek to set aside the award in the other country where it was made.\nNone of this is in any way surprising.\nThe very issue is whether the person resisting enforcement had agreed to submit to arbitration in that country.\nSuch a person has, as I have indicated, no obligation to recognise the tribunals activity or the country where the tribunal conceives itself to be entitled to carry on its activity.\nFurther, what matters, self evidently, to both parties is the enforceability of the award in the country where enforcement is sought.\nSince Dallah has chosen to seek to enforce in England, it does not lie well in its mouth to complain that the Government ought to have taken steps in France.\nIt is true that successful resistance by the Government to enforcement in England would not have the effect of setting aside the award in France.\nBut that says nothing about whether there was actually any agreement by the Government to arbitrate in France or about whether the French award would actually prove binding in France if and when that question were to be examined there.\nWhether it is binding in France could only be decided in French court proceedings to recognise or enforce, such as those which Dallah has now begun.\nI note, however, that an English judgment holding that the award is not valid could prove significant in relation to such proceedings, if French courts recognise any principle similar to the English principle of issue estoppel (as to which see The Sennar (no. 2) [1985] 1 WLR 490).\nBut that is a matter for the French courts to decide.\nThe nature of the present exercise is, in my opinion, also unaffected where an arbitral tribunal has either assumed or, after full deliberation, concluded that it had jurisdiction.\nThere is in law no distinction between these situations.\nThe tribunals own view of its jurisdiction has no legal or evidential value, when the issue is whether the tribunal had any legitimate authority in relation to the Government at all.\nThis is so however full was the evidence before it and however carefully deliberated was its conclusion.\nIt is also so whatever the composition of the tribunal a comment made in view of Dallahs repeated (but no more attractive for that) submission that weight should be given to the tribunals eminence, high standing and great experience.\nThe scheme of the New York Convention, reflected in ss.101 103 of the 1996 Act may give limited prima facie credit to apparently valid arbitration awards based on apparently valid and applicable arbitration agreements, by throwing on the person resisting enforcement the onus of proving one of the matters set out in Article V(1) and s.103.\nBut that is as far as it goes in law.\nDallah starts with advantage of service, it does not also start fifteen or thirty love up.\nThis is not to say that a court seised of an issue under Article V(1)(a) and s.103(2)(b) will not examine, both carefully and with interest, the reasoning and conclusion of an arbitral tribunal which has undertaken a similar examination.\nCourts welcome useful assistance.\nThe correct position is well summarised by the following paragraph which I quote from the Governments written case: 233.\nUnder s.103(2)(b) of the 1996 Act \/ Art V.1(a) NYC, when the issue is initial consent to arbitration, the Court must determine for itself whether or not the objecting party actually consented.\nThe objecting party has the burden of proof, which it may seek to discharge as it sees fit.\nIn making its determination, the Court may have regard to the reasoning and findings of the alleged arbitral tribunal, if they are helpful, but it is neither bound nor restricted by them.\nThe application of the above principles\nThe above principles have already been applied to the facts of this case at two previous instances.\nNot surprisingly, therefore, most of the emphasis of Dallahs written case and oral submissions before the Supreme Court was on the submissions of principle which have already been considered.\nIn the circumstances and in the light of the careful examination of the whole history in the courts below, it is unnecessary to go once again into every detail.\nEach of the courts below has paid close attention to the arbitral tribunals reasoning and conclusions, before concluding that the tribunal lacked jurisdiction to make the final award now sought to be enforced.\nTheir examination of the case took place by reference to the same principles that a French court would, on the expert evidence, apply if and when called upon to examine the existence of an arbitration agreement between Dallah and the Government: see paras 17 20 above.\nIt took account of the whole history, including the Governments close involvement with and interest in the project from the original proposal onwards, the negotiation and signature of the MOU with the Government, the creation by the Government of the Trust and the re structuring of the project to introduce the Trust, the negotiation and signature of the Agreement between Dallah and the Trust, the subsequent correspondence, the three sets of proceedings in Pakistan and the arbitration proceedings.\nThe tribunals approach\nThe arbitral tribunal set out its approach to the issue of jurisdiction in the opening paragraphs of its first partial award.\nDallah and the Government had argued for a single law governing both arbitral jurisdiction and the substance of the issues: the law of Saudi Arabia in Dallahs submission and the law of Pakistan in the Governments.\nThe tribunal distinguished between jurisdiction and substance, relying on the principle of autonomy of arbitral agreements, and rejected both the suggested national laws.\nIt held (section III(I)) that: 3.\nJudicial as well as Arbitral case law now clearly recognise that, as a result of the principle of autonomy, the rules of law, applicable to an arbitration agreement, may differ from those governing the main contract, and that, in the absence of specific indication by the parties, such rules need not be linked to a particular national law (French Cour de Cassation, 1er civ., Dec. 20, 1993, Dalico), but may consist of those transnational general principles which the Arbitrators would consider to meet the fundamental requirements of justice in international trade.\nDr Justice Shah and Lord Mustill would not endorse without reservation the concept of a transnational procedural law independent of all national laws.\nThey need not however pursue this, since it makes no difference to the result. 4. in view of the autonomy of the Arbitration Agreement, the Tribunal believes that such Agreement is not to be assessed, as to its existence, validity and scope, neither under the laws of Saudi Arabia nor under those of Pakistan, nor under the rules of any other specific local law connected or not, to the present dispute.\nBy reason of the international character of the Arbitration Agreement coupled with the choice, under the main Agreement, of institutional arbitration under the ICC Rules without any reference in such Agreement to any national law, the Tribunal will decide on the matter of its jurisdiction and on all issues relating to the validity and scope of the Arbitration Agreement and therefore on whether the Defendant is a party to such Agreement and to this Arbitration, by reference to those transnational general principles and usages reflecting the fundamental requirements of justice in international trade and the concept of good faith in business.\nAs to what this meant in practice, the tribunal noted (section III(III)(1)) that: a non signatory may be bound by an arbitration agreement, by virtue of any one of a number of legal theories such as representation, assignment, succession, alter ego or the theory of group of companies.\nIt recorded that Dallahs primary case was that the Trust was an alter ego of the Government, but went on immediately to say that: To arbitrate this disputed issue, the Arbitral Tribunal believes that it is very difficult to reason exclusively on the basis of juristic and abstract legal principles and provisions and to decide such issue by merely relying on general considerations of legal theory.\nThe tribunal then described the setting up and organisation of the Trust.\nIt concluded that the rules and regulations provided in the Ordinance did not contain sufficient evidence that would permit it to disregard the Trusts legal entity and to consider that the Trust and the Government are one such entity, and were fully consistent with the general features of the regulations of public entities, and that Such control of the Trust by the Government is not, in itself, sufficiently pertinent to impair the distinct legal personality enjoyed by the Trust or to lead to the disregard of such personality, and therefore to the extension of the Arbitration Agreement from the Trust to the Government.\nThe tribunal, or Dr Shah and Lord Mustill, added that particular caution must be observed where the party sought to be joined as defendant is a state or state body.\nThe tribunal continued (section III(III)): 5.\nIn fact, any reply to the present issue relating to whether or not the Present Defendant is a Party to the Arbitration Agreement depends on the factual circumstances of the case and requires a close scrutiny of the conduct and of the actions of the parties before, during and after the implementation of the main Agreement in order to determine whether the Defendant may be, through its role in the negotiation, performance and termination of such Agreement, considered as a party thereto, and hence to the Arbitration Agreement.\nThe control exercised by the State over the Trust becomes, within that framework, an element of evidence of the interest and the role that the party exercising such control has in the performance of the agreement concluded by the Trust, and provides the backdrop for understanding the true intentions of the parties. 6.\nArbitral as well as judicial case law has widely recognised that, in international arbitration, the effects of the arbitration clause may extend to parties that did not actually sign the main contract but that were directly involved in the negotiation and performance of such contract, such involvement raising the presumption that the common intention of all parties was that the non signatory party would be a true party to such contract and would be bound by the arbitration agreement.\nIn the context of the award as a whole, the last paragraph must be a statement by the tribunal of one of the transnational general principles and usages reflecting the fundamental requirements of justice in international trade and the concept of good faith in business, to which the tribunal had earlier referred in section III(I)(4).\nIn this light, the tribunal examined in turn the position prior to, at signature of, and during performance of the Agreement, and during the period after the Trust lapsed.\nAt each point, it focused on the Governments conduct.\nIt considered that it was clearly established that the Trust was organically and operationally under the Governments strict control, that its financial and administrative independence was largely theoretical, and that everything concerning the Agreement was at all times performed by the [Government] concurrently with the Trust and that the Trust functions . reverted back logically to the Government, after the Trust ceased to exist (section III(III)(12 1).\nThe tribunals examination led it to conclude (para 12 1) that: The Trust, in spite of its distinct legal personality in theory, appears thus in fact and in conduct to have been considered and to have acted as a part and a division of the Defendant to which it is fully assimilated, a temporary instrument that has been created by a political decision of the Defendant for specific activities which the Defendant wanted to perform, and which was cancelled also by a political decision of the Defendant.\nTherefore, the Trust appears as having been no more than the alter ego of the Defendant which appears, in substance, as the real party in interest, and therefore as the proper party to the Agreement and to the Arbitration with the Claimant.\nThe tribunal went on (para 12 2) to say that the Governments behaviour, as in actual fact the party that was involved in the negotiation, implementation and termination of the Agreement . before, during and after the existence of the Trust, shows and proves that the [Government] has always been and considered itself to be a true party to the Agreement .\nThe tribunal acknowledged (para 13) that Certainly, many of the above mentioned factual elements, if isolated and taken into a fragmented way, may not be construed as sufficiently conclusive for the purpose of this section, but it recorded that Dr Mahmassani believed that, when looked at globally as a whole, such elements constitute a comprehensive set of evidence that may be relied upon to conclude that the Defendant is a true party to the Agreement, and that While joining in this conclusion Dr Shah and Lord Mustill note that they do so with some hesitation, considering that the case lies very close to the line.\nIn paragraph 14, the tribunal recorded a further divergence of view, with Dr Mahmassani believing that the general principle of good faith comforts the conclusion that the Trust is the alter ego of the Defendant, but Dr Shah and Lord Mustill not convinced that in matters not concerning the conduct of proceedings but rather the identification of those who should be participants in them, a duty of good faith can operate to make someone a party to an arbitration who on other grounds could not be regarded as such.\nThe tribunals ultimate conclusion on jurisdiction was thus expressed as a finding (in which two of the arbitrators only narrowly concurred) that the Trust was the alter ego of the Government, making the Government a true party to the Agreement.\nThat, as I have said (para 11 above), is not now Dallahs case.\nBut Dallah points out that the tribunals reasoning for its ultimate finding, and the lengthy analysis of conduct and events which the tribunal undertook, can be traced back to para 6 of section (III)(III) of its award, where the tribunal identified a test of common intention to be derived from judicial and arbitral case law.\nHow these strands of thought relate is not to my mind clear.\nThere is a considerable difference between a finding (and between the evidence relevant to a finding) that one of two contracting parties is the alter ego of a third person and a finding that it was the common intention of the other party to the contract that the third person should be a party to the contract made with the first party.\nThe former depends on the characteristics and relationship of the first contracting party and the third person.\nThe latter depends on a common intention on the part of the second contracting party and the third person (and possibly also on the part of the first contracting party, although no one has suggested that the Trust in the present case did not concur in any common intention that Dallah and the Government may be found to have had).\nSince the tribunal focused throughout on the Trust and Government and their relationship and conduct, and ended with a conclusion that the former was the alter ego of the latter, it is not clear how far the tribunal was in fact examining or making any finding about any common intention of Dallah and the Government.\nIf it was, the weight attaching to the finding is diminished by the tribunals failure to focus on Dallahs intention.\nThe hesitation of two of the arbitrators about the conclusion they reached also suggests the possibility that even a slight difference in the correct analysis of the relevant conduct and events could have led the tribunal overall to a different conclusion.\nMore fundamentally, if and so far as the tribunal was applying a test of common intention, the test which it expressed in section III(III)(6) differs, potentially significantly, from the principle recognised by the relevant French case law on international arbitration.\nAlthough the tribunal must have viewed its test as a transnational general principle and usage, it appears likely that it also had the French case law in mind.\nThis is suggested by its use of the words directly involved in and presumption, by its earlier mention of the Dalico case (see para 18 above), and by its letter dated 29 November 2000 written (after the oral hearings before it on jurisdiction) raising the possibility that reasoning embodied in the French Pyramids case might be relevant on the issue of jurisdiction.\nIn any event, in Dallahs submission, the tribunal applied principles which accord broadly with French law.\nBut, the French legal test, set out in para 18 above, is that an international arbitration clause be may extended to non signatories directly involved in the performance of a contract: provided that it is established that their contractual situation, their activities and the normal commercial relations existing between the parties allow it to be presumed that they have accepted the arbitration clause of which they knew the existence and scope.\nIn contrast, under the test stated by the tribunal (para 36 above), direct involvement in the negotiation and performance of the contract is by itself said to raise the presumption of a common intention that the non signatory should be bound.\nThe tribunals test represents, on its face, a low threshold, which, if correct, would raise a presumption that many third persons were party to contracts deliberately structured so that they were not party.\nAsked about the tribunals test, M. Vatier did not consider it accurate enough, adding that the principles adopted were in general the principles that might be adopted in French law.\nBut they are too general.\nI consider that Aikens J was therefore correct to doubt (in para 148) whether the tribunal had applied a test which accords with that recognised under French law.\nAnalysis of the history\nI turn to the conduct of the Government and the events on which the tribunal relied.\nAs to the Ordinance, the tribunal said that it regarded the Governments organic control of the Trust as an element of evidence as to the true intention of the Defendant to run and control directly and indirectly the activities of the Trust, and to view such Trust as one of its instruments.\nMiss Heilbron accepts that Dallah cannot rely on the last ten words.\nDallah is not advancing a case of agency, and the Ordinance does not support a case of agency.\nThe tribunals comment at this point is on its face also inconsistent with the tribunals earlier references to the normality of the control established by the Ordinance (para 35 above).\nAs to the negotiations leading up the Agreement, the courts below were in my view correct to observe that the fact that the Government was itself involved in negotiations and in the MOU and remained interested throughout in the project does not itself mean that the Government (or Dallah) intended that the Government should be party to the Agreement deliberately structured so as to be made, after the Trusts creation, between Dallah and the Trust.\nIt does not appear that a French court would adopt any different attitude to governmental interest and involvement in the affairs of a state entity.\nAn illustration of the careful analysis required in this context is provided by the decision of the Court of Appeal of Paris in the Pyramids case (above).\nUnder Heads of Agreement signed by the Egyptian government through its Minister of Tourism, the Egyptian General Organisation for Tourism and Hotels (EGOTH) and the claimant, the government had committed itself to do the necessary work to acquire property near the Pyramids and EGOTH and the claimants undertook to form a company (to be owned 40\/60 by EGOTH and the claimants) to develop a tourist centre on such property.\nA usufruct over the property was to be given to the company by the government and EGOTH, and the claimants were to be responsible for engineering, construction and architectural services, as well as financing.\nSubsequently, EGOTH and the claimants entered into a Supplemental Agreement which defined the project and their obligations and contained an ICC arbitration clause.\nUnderneath their respective signatures on this agreement, the Minister of Tourism placed the words approved, agreed and ratified by the Minister of Tourism followed by his signature.\nA worldwide outcry led to the Egyptian authorities cancelling the project.\nThe Paris Court of Appeal set aside an arbitral award against the state of Egypt, holding that the words and signature added by the Minister did not mean that the state was a party.\nThey were added because the Ministry was responsible for supervising tourist sites and approving the creation of economic complexes and the creation, operation and management of hotels, and EGOTH and the claimants had specifically contemplated that their agreement would be subject to such approval.\nThe added words and signature did not therefore indicate any intention to be bound and so to waive the states immunity.\nHere, the structure of the Agreement made clear that the Government was distancing itself from any direct contractual involvement: see per Aikens J, para 129 and Moore Bick LJ, para 32.\nThe Governments only role under the Agreement (in the absence of any assignment or transfer under clause 27) was to guarantee the Trusts loan obligations and to receive a counter guarantee from the Trust and its trustee bank.\nDallah was throughout this period advised by lawyers, Orr, Dignam & Co. The tribunal confined itself in relation to the Agreement to statements that (a) it was the Government which decided to delegate to the Trust the finalisation, signature and implementation of the Agreement, (b) the Government was contractually involved in the Agreement, as the Government was bound, under Article 2, to give its guarantee and (c) clause 27 authorised the Trust to assign its rights and obligations to the Government without Dallahs prior approval, such a clause being normally used only when the assignee is very closely linked to the assignor or is under its total control . (no doubt true, but on its face irrelevant to the issue).\nThe delegate and bound tend to beg the issue, and nothing in these statements lends any support to Dallahs case that the Agreement evidences or is even consistent with an intention on the part of either Dallah or the Government that the Government should be party to the Agreement.\nNowhere did the tribunal address the deliberate change in structure and in parties from the MOU to the Agreement, the potential significance of which must have been obvious to Dallah and its lawyers, but which they accepted without demur.\nAs to performance of the Agreement, between April 1996 and September 1996, exchanges between Dallah and the Ministry of Religious Affairs (MORA) of the Government culminated in agreement that one of Dallahs associate companies, Al Baraka Islamic Investment Bank Ltd., should be appointed trustee bank to manage the Trusts fund as set out in each Ordinance (para 5 above), and in notification by letters dated 30 July and 9 September 1996 of such appointment by the Board of Trustees of the Trust.\nIn subsequent letters dated 26 September and 4 November 1996, the MORA urged Mr Nackvi of the Dallah\/Al Baraka group to give wide publicity to the appointment and to the savings schemes proposed to be floated for the benefit of intending Hujjaj.\nBy letter dated 22 October 1996 Dallah submitted to the MORA a specimen financing agreement for the Trust (never in fact approved or agreed), under one term of which the Trust would have confirmed that it was under the control of the Government.\nThe Governments position and involvement in all these respects is clear but understandable, and again adds little if any support to the case for saying that, despite the obvious inference to the contrary deriving from the Agreement itself, any party intended or believed that the Government should be or was party to the Agreement.\nThe fact that the Trust never itself acquired any assets is neutral, since its acquisition of any property always depended upon the arrangement of financing through Dallah, which never occurred, and its acquisition of other funds was to depend on the savings and philanthropic schemes to be arranged through its trustee bank under the Ordinances, the time for which never came.\nIt is scarcely surprising that in these circumstances the Trust never itself acquired its own letter paper, and letters recording its activity were, like those reporting decisions of its Board of Trustees, written on MORA letter paper.\nAt the forefront of Dallahs factual case before the Supreme Court, as below, were exchanges and events subsequent to the Trusts demise.\nOne letter in particular, dated 19 January 1997, was described in Dallahs written case as playing a pivotal role in, and in Miss Heilbrons oral submissions as key to the differing analyses of the tribunal and the courts below.\nThe letter was written by Mr Lutfullah Mufti, signing himself simply as Secretary, on MORA letter paper, and faxed to Dallah on 20 January 1997.\nIt read: Pursuant to the above mentioned Agreement for the leasing of housing facilities in the holy city of Makkah, Kingdom of Saudi Arabia, you were required within ninety (90) days of the execution of the said Agreement to get the detailed specifications and drawings approved by the Trust.\nHowever, since you have failed to submit the specifications and drawings for the approval of the Trust to date you are in breach of a fundamental term of the Agreement which tantamounts to a repudiation of the whole Agreement which repudiation is hereby accepted.\nMoreover, the effectiveness of the Agreement was conditional upon your arranging the requisite financing facility amounting to U.S. $100,000,000.00 within thirty (30) days of the execution of the Agreement and your failure to do so has prevented the Agreement from becoming effective and as such there is no Agreement in law.\nThis is without prejudice to the rights and remedies which may be available to us under the law.\nMr Lutfullah Mufti was secretary of MORA from 26 August 1993 to 19 December 1995 and from 23 December 1996 to 3 June 1998, and it will be recalled that, under each Ordinance, the secretary of MORA was at the same time secretary of the Trust.\nAlso on 20 January 1997 Mr Mufti verified on oath the contents of a plaint issued in the name of the Trust as plaintiff to bring the first set of Pakistani proceedings against Dallah.\nThe plaint set out the establishment of the Trust by Ordinance LXXXI of 1996 dated 12 August 1996 as a body having perpetual succession and asserted that Dallah had repudiated the Agreement by failing to submit detailed specifications and drawings within 90 days of the execution of the Agreement which repudiation was accordingly accepted by the plaintiff vide its letter dated 19.01.1997.\nThe Trust sought a declaration that, in consequence of the accepted repudiation, the Agreement was not binding and is of no consequence upon the rights of the plaintiff and a permanent injunction restraining Dallah from claiming any right against the plaintiff.\nBy an undated application, also verified by Mr Mufti, the Trust further sought an interlocutory injunction restraining Dallah from representing or holding out itself to have any contractual relation with the applicant on the basis of the aforesaid repudiated Agreement.\nDallah made an application against the Trust for a stay of the Trusts proceedings in favour of arbitration under clause 23 of the Agreement.\nThe application is missing from the bundle, but a written reply to it was put in on behalf of the Trust.\nThis averred, in terms consistent with the stance taken in the plaint (though less obviously consistent with the principle of the separability of arbitration clauses), that since the plaintiff has challenged the very validity and existence of the agreement dated 10.09.1996, the instant application is, therefore, not maintainable.\nMr Mufti deposed on oath that allegations evidently made by Dallah against the Trust in its application for a stay were false and that the facts stated in the plaint are true and correct to the best of my knowledge and belief and are reiterated.\nIn early 1998, the first set of Pakistan proceedings were brought to an end by a judgment which commenced by recording that: Counsel for the defendant had objected at the last date of hearing that Awami Haj Trust was established [under section] 3 of the Awami Haj Trust Ordinance, 1996 but at the time of institution of this suit Ordinance had elapsed, there was no more ordinance in the field and suit has been filed on behalf of same which was formed under the Ordinance after the lapse of Ordinance.\nAwami Haj Trust is plaintiff in this suit.\nAfter the lapse of Ordinance, the present plaintiff was no more a legal person in the eye of law.\nThe judge went on to record and reject the submission of counsel appearing for the Trust that the Trust continued to be able to file suit in respect of things done during the life of the Trust, adding: Moreover the things done during the Ordinance can be sued and can sue by the parent department for which this Ordinance was issued by the government and that was ministry for religious affairs.\nSuit should have been filed by the Ministry of religious affairs. [B]efore parting with this Order, I observe that the liabilities and duties against the present defendant can be agitated by the Ministry of Religious affairs government of Pakistan if any.\nSince the suit has not been filed by the legal person.\nThe present plaintiff is no more a plaintiff in the eye of the law.\nSuit is dismissed.\nDallah invoked ICC arbitration against the Government on 19 May 1998, on the basis that the Government was party to the Agreement.\nNotice of Dallahs request for arbitration was received by the Government on 29 May 1998, and on 2 June 1998 a second Pakistani suit was filed in the Governments name against Dallah, verified once again by Mr Mufti.\nIts terms were clearly drawn from those of the first suit, but it started by reciting that the Trust established under Ordinance no. LXXXI of 1996 no longer remained in field after the lapse of the Ordinance after four months, and that The present suit is, therefore, being filed by Pakistan who issued the said Ordinance.\nThe plaint went on to recite the Agreement, variously referring to the parties to it, to the Trust as a party, to the plaintiff Trust, to the plaintiff and to Dallahs alleged repudiation which repudiation was accordingly accepted by the plaintiff vide its letter dated 19.01.1997.\nIt further asserted that, on account of such repudiation, the Agreement is no longer binding on the plaintiff and then: 14.\nThat in January 1997, Awami Hajj Trust instituted a civil suit for declaration and permanent injunction against the defendant which suit was, however, dismissed vide order dated 21.02.1998 on the ground that after the lapse of the Ordinance, Awami Hajj Trust was no more a legal person and it could neither sue or be sued.\nThe learned civil court, however observed that liabilities and duties against the defendant can be agitated by the Government of Pakistan [sic].\nThe plaint concluded by praying for a declaratory decree in favour of the plaintiff that the Agreement stands repudiated on account of default of the defendant . and the same, as such, is not binding and is of no consequence upon the rights of the plaintiff and by seeking a permanent injunction restraining Dallah from claiming any right against the plaintiff under the said Agreement or representing or holding out that it has any contractual relationship with the plaintiff.\nAn interim injunction in the same terms was obtained on 2 June 1998.\nOn 5 June 1998 the Government, through its advocates, wrote to the ICC informing it of the proceedings and the interim injunction as well as relying on s.35 of the Pakistan Arbitration Act 1940 in support of a contention that any further proceedings in the ICC arbitration would be invalid in the light of the Pakistan proceedings.\nDallah responded to the second set of Pakistan proceedings on 12 June 1998 with an application for a stay for arbitration, asserting that the contract, admitted by the Plaintiff, which is complete, valid and fully effective between the parties, contains the following clause 23 ., which was then set out.\nIt pointed out, no doubt correctly, that the Governments plaint must be seen as a riposte to the recently notified request for ICC arbitration.\nThe Government replied on 27 June 1998 to the effect that there is no valid and effective Agreement between the parties.\nThe application, as such, is incompetent and is liable to be dismissed.\nOn 15 August 1998 the Governments advocates informed the ICC that the Government has already declined to submit to the jurisdiction of the International Court of Arbitration and spelled out that: There is no contract or any arbitration agreement between our client and Dallah .\nThe contract and the arbitration agreement referred to by the Claimant were entered into between the Claimant and Awami Hajj Trust.\nThe Trust has already ceased to exist after expiry of the period of the Ordinance under which it was established.\nBy a judgment dated 18 September 1998, the judge in the second set of Pakistan proceedings dismissed Dallahs application for a stay for arbitration on the ground that Dallah had neither alleged nor placed on record any instrument of transfer of rights and obligations of the Trust in the name of the [Government], which was not therefore prima facie bound by the Agreement dated 10 September 1996.\nDallah appealed on the ground that the Government was successor to the Trust, but on 14 January 1999 the Government withdrew its suit, as it was apparently entitled to, in view of its commencement of the third set of Pakistani proceedings.\nDallah has disclaimed, both before the tribunal and before the English courts, any suggestion that these short lived and abortive proceedings could give rise to any estoppel on the issue of the tribunals jurisdiction.\nBut Dallah relies on them in support of its current case of common intention.\nIn the third set of proceedings the Government claimed against Dallah declarations to the effect, inter alia, that it was not successor to the Trust, had not taken over the Trusts responsibilities and was not a party to the Agreement or any arbitration agreement with Dallah.\nThe claim was made under s.33 of the Arbitration Act 1940, which entitles a party to an arbitration agreement or any person claiming under such party to claim relief.\nDallahs response was that, since the Government was denying that it was party to an arbitration agreement, it had no locus standi to make the claim.\nThis response was upheld by judgment dated 19 June 1999, against the Governments argument that the purpose of s.33 was to enable a party alleged to be party to an arbitration agreement to seek the relief it claimed.\nAn appeal by the Government to the Lahore High Court was dismissed, again on the basis that the Government was not a party to the Agreement or arbitration agreement.\nAn appeal to the Pakistan Supreme Court has apparently remained unresolved.\nNo evidence was adduced from Mr Mufti before Aikens J. Aikens J said, in relation to the letter dated 19 January 1997 that, logically Mr Mufti must, in fact, have been writing the letter in his capacity of Secretary to MORA, whatever he may have thought at the time, but Aikens J found it possible to get a clearer indication of the state of mind of the [Government] at this stage by reference to the proceedings begun by Mr Mufti on 20 January 1997 (paras 117, 119).\nThese indicated, in Aikens Js view, that Mr Mufti thought that the Trust had rights it could enforce, and that there was no intention on the part of the Government to be bound by the Agreement or to step into the shoes of the Trust (para 119).\nThe Court of Appeal took a slightly different view.\nIt observed that the fact that, after the Trust ceased to exist, Mr Mufti could not have been writing (as opposed, I add, to purporting to write) as secretary to the Board of Trustees did not necessarily mean that he was writing on behalf of the Government or that the Government viewed itself as a party to the Agreement (Moore Bick LJ, para 36).\nMoore Bick LJ continued: If, as I think likely, the letter was written in ignorance that the Trust had ceased to exist, it is almost certain that Dallah was equally unaware of the fact and that it was read and understood as written on behalf of the Trust.\nMiss Heilbron challenges this reasoning as regards the Government, and invites attention to the letter on its face and to the Governments stance in the second set of Pakistan proceedings.\nBut one obvious explanation of the letter, read with the first set of proceedings of which it was clearly the precursor, is that neither Mr Mufti nor indeed Dallah was at that stage conscious of the drastic effect under Pakistan law of the failure to repromulgate the Ordinance.\nEven if Mr Mufti was aware of the Trusts demise, he may well have believed (and one may understand why) that this could not affect the Trusts right to litigate matters arising during and out of the Trusts existence which was the stance taken by counsel for the Trust when Dallah eventually realised and pointed out that the Trust had lapsed.\nHowever that may be, it seems clear that Mr Mufti was in January 1997 acting on the basis that and as if the Trust existed.\nFurther, Dallah clearly cannot have appreciated that the Trust had ceased to exist until a late stage in the course of the first set of Pakistan proceedings.\nThe arbitral tribunal regarded the letter dated 19 January 1997 as very significant because it confirmed in the clearest way possible that the Defendant [the Government], after the elapse of the Trust, regarded the Agreement with the Claimant as its own and considered itself as a party to such Agreement (para 11 1).\nIt went on to say that the Governments position in the arbitration: did not deal with the substance and contents of such letter, but was rather limited to a formal and very general challenge of the validity of said letter, on the ground that such letter was absolutely unauthorised, illegal and of no legal effect because all office bearers of the Trust, including the Secretary, had ceased to have any authority to act for the defunct Trust.\nSuch challenge is however completely unfounded as the signatory of the letter of 19.1.97, Mr Lutfallah Mufti, did not sign such letter in his capacity as official of the Trust, to which anyhow the letter makes no reference at all, but in his capacity as Secretary of the Defendant i.e. the Ministry of Religious Affairs which is an integral part of the Government of Pakistan.\nAs such, the signatory of the letter engages and binds the Government, as he has continued to bind it during the whole previous period where the Trust was in existence.\nSeveral features of the arbitral tribunals reliance on the letter are notable.\nFirst, the tribunal did not put the letter in its context.\nIt did not mention the first set of proceedings at all in addressing the letters significance.\nIn fact, it referred to those proceedings only once in its whole award.\nThat was much earlier in para 5(c) where it recited three short submissions by the Government With respect to the effect of the legal proceedings in Pakistan.\nThe first such submission read: The 1st [sic] January 1997 suit : Pakistan was not a party to such suit and as such it is not bound by any observation made by the Court in the said suit instituted by the defunct Trust. (In making this submission, the Government was evidently seeking to rebut a possible argument that it might be bound by the (obiter) observations of the judge in his judgment at the end of the first set of proceedings to the effect that the liabilities and duties against the present defendant can be agitated by the Ministry of Religious affairs government of Pakistan if any.\nIt has not been, and could not have been suggested in the present proceedings that these observations in any way bind the Government.)\nSecondly, the tribunal rejected any idea that Mr Mufti was, when writing the letter, acting in a manner which was absolutely unauthorised, illegal and of no legal effect.\nBut that, on any view, was precisely what Mr Mufti can be seen, with hindsight, to have been doing, on the same day as the letter was faxed, by commencing the first set of proceedings in the Trusts name.\nThirdly, the tribunals comments on the letter assume that the Government or Mr Mufti on its behalf was aware of the elapse of the Trust and believed that this ended any possibility of the Trust taking any legal stance or proceedings.\nThat, for reasons I have indicated, cannot have been the case.\nHe must at least have believed that it was still possible for action to be taken in the Trusts name in respect of matters arising from the Agreement.\nFourth, the tribunal, in this context as in others, did not address Dallahs state of mind, or its objective manifestation an important point when considering a test based on common intention.\nThe letter dated 19 January 1997 and faxed on 20 January 1997 cannot be read in a vacuum, particularly when the issue is whether the parties shared a common intention, manifested objectively, to treat the Government as a or the real party to the Agreement and arbitration clause.\nRead in the objectively established context which I have indicated, it is clear that it was written and intended as a letter setting out the Trusts position by someone who believed that the Trust continued either to exist or at least to have a sufficient existence in law to enable it to take a position on matters arising when the Ordinance was in force.\nThis is precisely how the plaint of 20 January 1997 put the matter when it said that the repudiation was accordingly accepted by the plaintiff [i.e. the Trust] vide its letter dated 19.01.1997.\nIt makes no sense to suppose that Mr Mufti on one and the same day sent a letter intended to set out the Governments position and caused proceedings to be issued by the Trust on the basis that the letter was intended to set out the Trusts position.\nThat Dallah also believed that the Trust continued to exist, certainly in a manner sufficient to enable it to pursue the proceedings, is confirmed by Dallahs application to stay the Trusts proceedings pending arbitration and is also (as I understood her) admitted by Miss Heilbron.\nThe arbitral tribunal also relied on the second set of Pakistan proceedings and on the Governments letter dated 5 June 1998 to the tribunal.\nIt saw Mr Muftis verification on oath of the plaint dated 2 June 1998 as an admission providing another piece of evidence to be added to the other pieces, as to the fact that the [Government] has always been and has considered itself a party to the agreement, and the letter as an admission that it was a party to such Agreement and that it could accept repudiation of the Agreement by [Dallah] (para 11 2).\nAikens J and the Court of Appeal did not accept this analysis.\nThey considered that the second set of proceedings viewed overall was premised on the basis that the Government had succeeded to the Trusts rights and obligations upon the Trusts demise, not that the Government had been a party to it always or at any previous date.\nThe Government was taking up the suggestion of the judge who, when determining the first set of proceedings, had remarked that the liabilities and duties against the present defendant can be agitated by the Ministry of Religious affairs government of Pakistan if any.\nIn my opinion this analysis is clearly correct.\nIf the search is for confirmation of an intention to be or belief that the Government was party to the Agreement throughout, the second set of proceedings does not therefore advance the matter.\nNor does the letter dated 5 June 1998.\nThis was written to draw express attention to the second set of proceedings, and it recorded and attached a copy of the Pakistan judges injunction in them restraining Dallah from representing or holding out itself to have contractual relations with the applicant on the basis of the disputed contract.\nFurther, nothing affirmed by the Government during the second set of proceedings or in the letter throws any light on Dallahs intention at any prior date, or therefore assists the case that there was any common intention that the Government should always be party to the Agreement.\nIf the search is for an admission in or after June1998 that the Agreement or arbitration clause was binding on the Government, this is equally lacking.\nThe Governments case in the second set of proceedings, and the gist of the injunction and the letter dated 5 June 1998 was that, although the Government could agitate the former Trusts rights and liabilities, the Governments acceptance of Dallahs alleged repudiation meant that the Agreement as such, is not binding and is of no consequence upon the rights of the [Government] (plaint of 20 January 1997).\nHowever questionable the proposition that an accepted repudiation renders the whole agreement (let alone an arbitration clause) not binding, that was the Governments case, and such a case is inconsistent with an intention to be party to the Agreement or agreement clause in or after June 1998.\nFurther and in any event, a very short time afterwards on 15 August 1998 the Government wrote to the tribunal making clear also its current position that it had never been party to any contract or arbitration agreement with Dallah.\nEven if the Government could be treated in June as having made any relevant, short lived admission, it would in context and in the overall course of events be incapable of giving rise to any real inference that the Government had always intended or been intended to be a party to the Agreement.\nFinally, the search for a subjective common intention under the principle recognised by the French courts must be undertaken by examining, and so through the prism of, the parties conduct.\nAccount will in that sense necessarily be taken of good faith.\nThe tribunal also described the transnational general principles and usages, which it decided to apply, as reflecting the fundamental requirements of justice in international trade and the concept of good faith in business (award, section III (I)(4)), and this must also be true of the principle recognised by the French courts.\nAs both Aikens J (para 130) and Moore Bick LJ (para 45) said, and in agreement on this point with Justice Dr Shah and Lord Mustill, if conduct interpreted as it would be understood in good faith does not indicate any such common intention, then it is impossible to see how a duty of good faith can operate to make someone a party to an arbitration who on other grounds could not be regarded as such (award, section (III)(III)(14)).\nThis remains so, whatever comments might or might not be made about the Governments conduct in allowing the Trust to lapse without providing for the position following its lapse.\nIn my view, the third re examination by this court, in the light of the whole history, of the issue whether the Government was party to the Agreement, and so to its arbitration clause, leads to no different answer to that reached in the courts below.\nThe arbitral tribunals contrary reasoning is neither conclusive nor on examination persuasive in a contrary sense.\nAs to the law, it is far from clear that the tribunal was directing its mind to common intention and, if it was, it approached the issue of common intention in terms differing significantly from those which a French court would adopt.\nIn any event, as to the facts, there are a number of important respects in which the tribunals analysis of the Governments conduct and the course of events cannot be accepted, and this is most notably so in relation to the significance of the letter dated 19 January 1997 and the second set of proceedings in Pakistan.\nThe upshot is that the course of events does not justify a conclusion that it was Dallahs and the Governments common intention or belief that the Government should be or was a party to the Agreement, when the Agreement was deliberately structured to be, and was agreed, between Dallah and the Trust.\nDiscretion\nDallah has a fall back argument, which has also failed in both courts below.\nIt is that s.103(2) of the 1996 Act and Article V(1) of the New York Convention state that Recognition and enforcement of the award may be refused if the person against whom such is sought proves (or furnishes proof of) one of the specified matters.\nSo, Miss Heilbron submits, it is open to a court which finds that there was no agreement to arbitrate to hold that an award made in purported pursuance of the non existent agreement should nonetheless be enforced.\nIn Dardana Ltd v Yukos Oil Company [2002] 1 All ER (Comm) 819 I suggested that the word may could not have a purely discretionary force and must in this context have been designed to enable the court to consider other circumstances, which might on some recognisable legal principle affect the prima facie right to have enforcement or recognition refused (paras 8 and 18).\nI also suggested as possible examples of such circumstances another agreement or estoppel.\nS.103(2) and Article V in fact cover a wide spectrum of potential objections to enforcement or recognition, in relation to some of which it might be easier to invoke such discretion as the word may contains than it could be in any case where the objection is that there was never any applicable arbitration agreement between the parties to the award.\nArticle II of the Convention and ss.100(2) and 102(1) of the 1996 Act serve to underline the (in any event obviously fundamental) requirement that there should be a valid and existing arbitration agreement behind an award sought to be enforced or recognised.\nAbsent some fresh circumstance such as another agreement or an estoppel, it would be a remarkable state of affairs if the word may enabled a court to enforce or recognise an award which it found to have been made without jurisdiction, under whatever law it held ought to be recognised and applied to determine that issue.\nThe factors relied upon by Dallah in support of its suggestion that a discretion should be exercised to enforce the present award amount for the most part to repetition of Dallahs arguments for saying that there was an arbitration agreement binding on the Government, or that an English court should do no more than consider whether there was a plausible or reasonably supportable basis for its case or for the tribunals conclusion that it had jurisdiction.\nBut Dallah has lost on such points, and it is impossible to re deploy them here.\nThe application of s.103(2) and Article V(1) must be approached on the basis that there was no arbitration agreement binding on the Government and that the tribunal acted without jurisdiction.\nGeneral complaints that the Government did not behave well, unrelated to any known legal principle, are equally unavailing in a context where the Government has proved that it was not party to any arbitration agreement.\nThere is here no scope for reliance upon any discretion to refuse enforcement which the word may may perhaps in some other contexts provide.\nConclusion\nIt follows that Aikens J and the Court of Appeal were right in the conclusions they reached and that Dallahs appeal to this Court must be dismissed.\nLORD COLLINS Introduction\nI agree that this appeal from the excellent judgments of Aikens J [2009] 1 All ER (Comm) 505 and the Court of Appeal [2010] 2 WLR 805 (with Moore Bick and Rix LJJ giving the reasons) should be dismissed.\nBecause of the international importance of the issues on the appeal, I set out the steps which have led me to that conclusion.\nThe final award is a Convention award which prima facie is entitled to enforcement in England under the Arbitration Act 1996, section 101(2).\nThe principal issue is whether the courts below were right to find that the Government has proved that on the proper application of French law (as the law of the country where the award was made, since there is no indication in the Agreement as to the law governing the arbitration agreement), it is not bound by the arbitration agreement.\nTo avoid any misunderstanding, it is important to dispel at once the mistaken notion (which has, it would appear, gained currency in the international arbitration world) that this is a case in which the courts below have recognised that the arbitral tribunal had correctly applied the correct legal test under French law.\nOn the contrary, one of the principal questions before all courts in this jurisdiction has been whether the tribunal had applied French law principles correctly or at all.\nThe main issue involves consideration of these questions: (a) the role of the doctrine that the arbitral tribunal has power to determine its own jurisdiction, or Kompetenz Kompetenz, or comptence comptence; (b) the application of arbitration agreements to non signatories (including States) in French law, and the role of transnational law or rules of law in French law; (c) whether renvoi is permitted under the New York Convention (and therefore the 1996 Act) and whether the application by an English court of a reference by French law to transnational law or rules of law is a case of renvoi.\nThere is also a subsidiary issue as to whether, even if the Government has proved that it is not bound by the arbitration agreement, the court should exercise its discretion ( enforcement may be refused ) to enforce the award.\nBy Article V(1)(a) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958: Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: (a) the [arbitration] agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made;\nThe New York Convention is given effect in the United Kingdom by Part III of the Arbitration Act 1996 (England and Wales and Northern Ireland) and by sections 18 to 22 of the Arbitration (Scotland) Act 2010.\nArticle V(1)(a) of the New York Convention is transposed in England and Wales and Northern Ireland by section 103 of the 1996 Act, which provides: (1) Recognition or enforcement of a New York Convention award shall not be refused except in the following cases. (2) Recognition or enforcement of the award may be refused if the person against whom it is invoked proves (b) that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made;\nAlthough Article V(1)(a) (and section 103(2)(b)) deals expressly only with the case where the arbitration agreement is not valid, the consistent international practice shows that there is no doubt that it also covers the case where a party claims that the agreement is not binding on it because that party was never a party to the arbitration agreement.\nThus in Dardana Ltd v Yukos Oil Co [2002] 2 Lloyds Rep 326 it was accepted by the Court of Appeal that section 103(2)(b) applied in a case where the question was whether a Swedish award was enforceable in England against Yukos on the basis that, although it was not a signatory, it had by its conduct rendered itself an additional party to the contract containing the arbitration agreement.\nIn Sarhank Group v Oracle Corp, 404 F 3d 657 (2d Cir 2005) the issue, on the enforcement of an Egyptian award, was whether a non signatory parent company was bound by an arbitration agreement on the basis that its subsidiary, which had signed the agreement, was a mere shell; and in China Minmetals Materials Import and Export Co Ltd v Chei Mei Corpn, 334 F 3d 274 (3d Cir 2003) enforcement of a Chinese award was resisted on the ground that the agreement was a forgery.\nSee also Born, International Commercial Arbitration (2009), pp 2778 2779.\nIn this case, because there was no indication by the parties of the law to which the arbitration agreement was subject, French law as the law of the country where the award was made, is the applicable law, subject to the relevance of transnational law or transnational rules under French law.\nII The applicable principles\nKompetenz Kompetenz or comptence comptence as a general principle\nA central part of this appeal concerns the authority to be given to the decision of the arbitral tribunal as to its own jurisdiction, and the relevance in this connection of the doctrine of Kompetenz Kompetenz or comptence comptence.\nThese terms may be comparatively new but the essence of what they express is old.\nThe principle was well established in international arbitration under public international law by the 18th century.\nIn the famous case of The Betsy (1797) the question was raised as to the power of the commissioners under the Mixed Commissions organised under the Jay Treaty between United States and Great Britain of 19 November 1794 to determine their own jurisdiction.\nOn 26 December 1796 Lord Loughborough LC had a meeting at his house with the American Commissioners and the American Ambassador.\nThe Lord Chancellor expressed the view that the doubt respecting the authority of the commissioners to settle their own jurisdiction, was absurd; and that they must necessarily decide upon cases being within, or without, their competency: Moore, History and Digest of International Arbitrations to which the United States has been a Party, Vol 1 (1898), p 327.\nWhile the point was under discussion, the American Commissioners filed opinions.\nMr. Christopher Gore, the eminent American Commissioner, said: A power to decide whether a Claim preferred to this Board is within its Jurisdiction, appears to me inherent in its very Constitution, and indispensably necessary to the discharge of any of its duties: Moore, op cit, Vol.3 (1898), p 2278.\nThe principle has been recognised by the Permanent Court of International Justice and the International Court of Justice: Rosenne, The Law and Practice of the International Court 1920 1996 (3rd ed 1997), Vol II, pp 846 et seq.\nIn the Advisory Opinion on the Interpretation of the Greco Turkish Agreement (1928) Series B No 16, 20, the Permanent Court of International Justice said: as a general rule, any body possessing jurisdictional powers has the right in the first place itself to determine the extent of its jurisdiction .\nIn the Nottebohm case (Liechtenstein v Guatemala), 1953 ICJ Rep 111, 119, the International Court of Justice, after referring to the Alabama case in 1872, and the views of the rapporteur of the Hague Convention of 1899 for the Pacific Settlement of International Disputes, said: it has been generally recognised.thatan international tribunal has the right to decide as to its own jurisdiction.\nThe principle has been recognised also by the European Court of Justice.\nIn West Tankers Inc v Allianz SpA (formerly Ras Riunione Adriatica di Sicurta SpA) (Case C 185\/07) [2009] ECR I 663, [2009] AC 1138, para 57, it referred to the general principle that every court is entitled to examine its own jurisdiction (doctrine of Kompetenz Kompetenz).\nThe principle that a tribunal has jurisdiction to determine its own jurisdiction does not deal with, or still less answer, the question whether the tribunals determination of its own jurisdiction is subject to review, or, if it is subject to review, what that level of review is or should be.\nThus the International Courts decision on jurisdiction is not subject to recourse, although the State which denies its jurisdiction may decline to take any part at all in the proceedings (as in the Fisheries Jurisdiction cases (Federal Republic of Germany v Iceland; United Kingdom v Iceland), 1972 1974), or to take any further part after it has failed in its objections to the jurisdiction (as in Military and Paramilitary Activities in and against Nicaragua case (Nicaragua v United States, 1986).\nBy contrast, a decision of an ICSID tribunal (which shall be the judge of its own competence: Article 41(1) of the ICSID Convention) is subject to annulment on the grounds (inter alia) that the tribunal manifestly exceeded its powers (article 52(1)(b)), which includes lack of jurisdiction: Klckner v Cameroon, Decision on Annulment, 2 ICSID Rep 95; Schreuer, The ICSID Convention: A Commentary (2nd ed 2009), pp 943 947.\nThe principle in international commercial arbitration\nSo also the principle that a tribunal in an international commercial arbitration has the power to consider its own jurisdiction is no doubt a general principle of law.\nIt is a principle which is connected with, but not dependant upon, the principle that the arbitration agreement is separate from the contract of which it normally forms a part.\nBut it does not follow that the tribunal has the exclusive power to determine its own jurisdiction, nor does it follow that the court of the seat may not determine whether the tribunal has jurisdiction before the tribunal has ruled on it.\nNor does it follow that the question of jurisdiction may not be re examined by the supervisory court of the seat in a challenge to the tribunals ruling on jurisdiction.\nStill less does it mean that when the award comes to be enforced in another country, the foreign court may not re examine the jurisdiction of the tribunal.\nThus Article 16(1) of the UNCITRAL Model Law on International Commercial Arbitration provides that the arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement.\nBut by article 34(2) an arbitral award may be set aside by the court of the seat if an applicant furnishes proof that the agreement is not valid under the law to which the parties have subjected it, or, failing any indication thereon, under the law of the seat (and see also article 36(1)(a)(i)).\nArticles V and VI of the European Convention on International Commercial Arbitration of 1961 also preserve the respective rights of the tribunal and of the court to consider the question of the jurisdiction of the arbitrator.\nComparative procedure\nConsequently in most national systems, arbitral tribunals are entitled to consider their own jurisdiction, and to do so in the form of an award.\nBut the last word as to whether or not an alleged arbitral tribunal actually has jurisdiction will lie with a court, either in a challenge brought before the courts of the arbitral seat, where the determination may be set aside or annulled, or in a challenge to recognition or enforcement abroad.\nThe degree of scrutiny, particularly as regards the factual enquiry, will depend on national law, subject to applicable international conventions.\nThere was sometimes said to be a rule in German law that an arbitral tribunal had the power to make a final ruling on its jurisdiction without any court control, but if it ever existed, there is no longer any such rule: Poudret and Besson, Comparative Law of International Arbitration (2nd ed 2007), para 457; Born, International Commercial Arbitration, vol I (2009), pp 907 910.\nIn France the combined effect of articles 1458, 1466 and 1495 of the New Code of Civil Procedure (NCPC) is that, in an international arbitration conducted in France, the tribunal has power to rule on its jurisdiction if it is challenged.\nIf judicial proceedings are brought in alleged breach of an arbitration agreement the court must declare that it has no jurisdiction unless the jurisdiction agreement is manifestly a nullity: Fouchard, Gaillard, Goldman, International Commercial Arbitration (ed Gaillard and Savage 1999), paras 655, 672; Delvolv, Pointon and Rouche, French Arbitration Law and Practice (2nd ed. 2009), paras 139 et seq, 172 et seq; and eg Soc Laviosa Chimica Mineraria v Soc Afitex, Cour de cassation, 11 February 2009, 2009 Rev Arb 155 (Vu le principe comptence comptence selon lequel il appartient larbitre de statuer par priorit sur sa propre competence).\nBut the position is different once the arbitral tribunal has ruled on its jurisdiction.\nIts decision is not final and can be reviewed by the court hearing an action to set it aside.\nThe French Cour dappel seised of an action for annulment of an award made in France for lack of jurisdiction, or seised with an issue relating to the jurisdiction of a foreign tribunal or an appeal against an exequatur granted in respect of a foreign award, has the widest power to investigate the facts: Fouchard, Gaillard, Goldman, paras 1605 to 1614; Delvolv, Pointon and Rouche, para 426.\nIn the Pyramids case (Rpublique Arabe dEgypte v Southern Pacific Properties Ltd, Paris Cour dappel, 12 July 1984 (1985) 10 Yb Comm Arb 113; Cour de cassation, 6 January 1987 (1987) 26 ILM 1004) the question was whether a distinguished tribunal had been entitled to find that Egypt (as opposed to a State owned entity responsible for tourism) was a party to an arbitration agreement.\nThe Cour dappel said that the arbitral tribunal had no power finally to decide the issue of its jurisdiction; if it decided the issue of the existence or of the validity of the arbitration agreement, nevertheless it only decided this question subject to the decision of the court on an application for the annulment of the award pursuant to article 1504, NCPC.\nThe Cour de cassation confirmed that the Cour dappel had been entitled de rechercher en droit et en fait tous les elements concernant les vices en question en particulier, il lui appartient dinterprter le contrat pour apprcier elle mme si larbitre a statu sans convention darbitrage. (to examine as a matter of law and as a matter of fact all circumstances relevant to the alleged defects in particular, it is for the court to construe the contract in order to determine itself whether the arbitrator ruled in the absence of an arbitration agreement.)\nFirst Options of Chicago Inc v Kaplan, 514 US 938 (1995) was not an international case.\nIt concerned the application of the Federal Arbitration Act to an award of an arbitral panel of the Philadelphia Stock Exchange.\nThe question was whether the federal District Court should independently decide whether the arbitral panel had jurisdiction.\nThe United States Supreme Court drew a distinction between the case where the parties had agreed to submit the arbitrability question itself to arbitration, and the case where they had not.\nIn the former case the court should give considerable leeway to the arbitrator, setting aside the award only in certain narrow circumstances, but (at 943, per Breyer J): If, on the other hand, the parties did not agree to submit the arbitrability question itself to arbitration, then the court should decide that question just as it would decide any other question that the parties did not submit to arbitration, namely, independently.\nThat flowed inexorably from the fact that arbitration was simply a matter of contract between the parties and was a way to resolve those disputes, but only those disputes, that the parties had agreed to submit to arbitration.\nThis decision was applied in the international context, in connection with the enforcement of a CIETAC award, in China Minmetals Materials Import and Export Co Ltd v Chei Mei Corpn, 334 F 3d 274 (3d Cir 2003) in which Minmetals, a Chinese corporation, sought to enforce a CIETAC award against Chei Mei, a New Jersey corporation.\nChei Mei resisted enforcement on the ground that the contract containing the arbitration clause had been forged.\nThe tribunal had held that Chei Mei failed to show that the contracts were forged, but that even if its signature and stamp had been forged, it had taken various steps which confirmed its adherence to the arbitration agreement.\nThe Court of Appeals for the Third Circuit decided that the court asked to enforce an award may determine independently the arbitrability of the dispute.\nAfter an illuminating discussion of the doctrine of comptence comptence and kompetenz kompetenz, it concluded (at 288, citing Park, Determining Arbitral Jurisdiction: Allocation of Tasks Between Courts and Arbitrators (1997) 8 Am Rev Int Arb 133, 140 142) that it appears that every country adhering to the competence competence principle allows some form of judicial review of the arbitrators jurisdictional decision where the party seeking to avoid enforcement of an award argues that no valid arbitration agreement ever existed.\nThe court said (ibid): After all, a contract cannot give an arbitral body any power, much less the power to determine its own jurisdiction, if the parties never entered into it.\nThe position in England\nPrior to the 1996 Act the leading authority in England was Christopher Brown Ltd v Genossenschaft Osterreichischer [1954] 1 QB 8, in which Devlin J said (at pp 12 13): It is not the law that arbitrators, if their jurisdiction is challenged or questioned, are bound immediately to refuse to act until their jurisdiction has been determined by some court which has power to determine it finally.\nNor is it the law that they are bound to go on without investigating the merits of the challenge and to determine the matter in dispute, leaving the question of their jurisdiction to be held over until it is determined by some court which had power to determine it.\nThey might then be merely wasting their time and everybody elses.\nThey are not obliged to take either of those courses.\nThey are entitled to inquire into the merits of the issue whether they have jurisdiction or not, not for the purpose of reaching any conclusion which will be binding upon the parties because that they cannot do but for the purpose of satisfying themselves as a preliminary matter whether they ought to go on with the arbitration or not.\nIf it became abundantly clear to them, on looking into the matter, that they obviously had no jurisdiction as, for example, it would be if the submission which was produced was not signed, or not properly executed, or something of that sort, then they might well take the view that they were not going to go on with the hearing at all.\nThey are entitled, in short, to make their own inquiries in order to determine their own course of action, and the result of that inquiry has no effect whatsoever upon the rights of the parties.\nThe DTI Departmental Advisory Committee in its February 1994 Report on a draft Arbitration Bill said: [The German] doctrine of Kompetenz Kompetenz resolves logical difficulties in legal systems where the jurisdiction of state courts and the jurisdiction of arbitrators under a valid arbitration agreement are mutually exclusive in legal theory.\nIn these legal systems, the state courts must dismiss legal proceedings brought in violation of a valid arbitration agreement, thereby retaining no competence over the parties but in the case of an invalid or non existent arbitration agreement, the arbitrators can have no jurisdiction at all.\nWho then decides what and in what order in the absence of a suitable doctrine of Kompetenz Kompetenz? In contrast, the courts of most common law countries (including England) merely stay legal proceedings because in legal theory an arbitration agreement can never oust the Courts jurisdiction over the parties; and this logical problem over jurisdiction has not arisen in the same form For these reasons, the law and practice of English arbitration does not require an express doctrine of Kompetenz Kompetenz.\nEnglish law achieves the same result as the German doctrine by a different route. [T]he practice of arbitration tribunals determining their own jurisdiction, subject to the final decision of the English Court, has long been settled in England . (Ch III, pp 4 5)\nThe position in England under the Arbitration Act 1996 as regards arbitrations the seat of which is in England is as follows.\nBy section 30(1) of the 1996 Act, which is headed Competence of tribunal to rule on its own jurisdiction the arbitral tribunal may rule on its own substantive jurisdiction, including the question whether there is a valid arbitration agreement.\nBy section 30(2) any such ruling may be challenged (among other circumstances) in accordance with the provisions of the Act.\nSection 32 gives the court jurisdiction to determine any preliminary point on jurisdiction but only if made with the agreement of all parties or with the permission of the tribunal, and the court is satisfied (among other conditions) that there is good reason why the matter should be decided by the court.\nBy section 67 a party to arbitral proceedings may challenge any award of the tribunal as to its substantive jurisdiction but the arbitral tribunal may continue the arbitral proceedings and make a further award while an application to the court is pending in relation to an award as to jurisdiction.\nThe equivalent provisions in Scotland are in the Arbitration (Scotland) Act 2010, Sched 1, Rules 19, 42 (not limited to jurisdiction), and 67.\nThe consistent practice of the courts in England has been that they will examine or re examine for themselves the jurisdiction of arbitrators.\nThis can arise in a variety of contexts, including a challenge to the tribunals jurisdiction under section 67 of the 1996 Act, or in an application to stay judicial proceedings on the ground that the parties have agreed to arbitrate.\nThus in Azov Shipping Co v Baltic Shipping Co [1999] 1 Lloyds Rep 68 Rix J decided that where there was a substantial issue of fact as to whether a party had entered into an arbitration agreement, then even if there had already been a full hearing before the arbitrator the court, on a challenge under section 67, should not be in a worse position than the arbitrator for the purpose of determining the challenge.\nThis decision has been consistently applied at first instance (see, eg, Peterson Farms Inc v C&M Farming Ltd [2004] EWHC 121 (Comm), [2004] 1 Lloyds Rep 603) and is plainly right.\nWhere there is an application to stay proceedings under section 9 of the 1996 Act, both in international and domestic cases, the court will determine the issue of whether there ever was an agreement to arbitrate: Al Naimi (t\/a Buildmaster Construction Services) v Islamic Press Agency [2000] 1 Lloyds Rep 522 (CA) (English arbitration); Albon (t\/a NA Carriage Co) v Naza Motor Trading Sdn Bhd (No 4) [2007] EWCA Civ 1124, [2008] 1 Lloyds Rep 1 (Malaysian arbitration).\nSo also where an injunction was refused restraining an arbitrator from ruling on his own jurisdiction in a Geneva arbitration, the Court of Appeal recognised that the arbitrator could consider the question of his own jurisdiction, but that would only be a first step in determining that question, whether the subsequent steps took place in Switzerland or in England: Weissfisch v Julius [2006] EWCA Civ 218, [2006] 1 Lloyds Rep 716, para 32.\nConsequently, in an international commercial arbitration a party which objects to the jurisdiction of the tribunal has two options.\nIt can challenge the tribunals jurisdiction in the courts of the arbitral seat; and it can resist enforcement in the court before which the award is brought for recognition and enforcement.\nThese two options are not mutually exclusive, although in some cases a determination by the court of the seat may give rise to an issue estoppel or other preclusive effect in the court in which enforcement is sought.\nThe fact that jurisdiction can no longer be challenged in the courts of the seat does not preclude consideration of the tribunals jurisdiction by the enforcing court: see, e.g. Svenska Petroleum Exploration AB v Government of the Republic of Lithuania (No 2) [2006] EWCA Civ 1529, [2007] QB 886, para 104; Paklito Investment Ltd v Klockner East Asia Ltd [1993] 2 HKLR 39, 48, per Kaplan J.\nThe application of the principles in the present case\nDallahs argument is that the enforcing court, faced with a decision by the tribunal that it has jurisdiction, should only conduct a limited review.\nThe argument is essentially this: (1) The arbitral tribunal remained a competent tribunal to determine its own jurisdiction, whether or not it determined it wrongly. (2) The first partial award was made with jurisdiction i.e. the Kompetenz Kompetenz jurisdiction, even if (on the English courts view) the later awards relating to the merits were subsequently found to be made without substantive jurisdiction. (3) It is universally accepted that an enforcing court cannot review the merits of an award, and a de novo rehearing at the enforcement stage (by contrast with an application to set aside at the seat of the arbitration) adds a fact finding layer to the process which was not envisaged by those drafting the New York Convention and which undermines the finality and efficiency of the system. (4) The review envisaged by the New York Convention is premised on the need to ensure that there is not a grave departure from the basic precepts of international arbitration and fairness and basic concepts of justice. (5) The award is itself an evidential element of the reviewing process, and deference must be given to such an award by the reviewing\/enforcing court. (6) The degree of deference may vary according to many factors, for example, the experience of the tribunal or the nature of the underlying decision, such as whether it was one of fact or law or mixed fact and law, and enforcing courts must be particularly wary where, as here, the underlying decision is fact based or a case of mixed fact and law. (7) Where, as here, there is no dispute as to the underlying facts or law such that the decision is one upon which different tribunals can legitimately come to different conclusions, enforcing national courts should be slow to substitute their own interpretation unless it can be shown that the tribunals decision was unsustainable, and this is particularly so where, as in this case, the resisting party has offered no new evidence. (8) In essence the issue in this case is whether the English court should refuse to enforce the award on the basis that its views and interpretation of the same facts, applying the same principles of law, should be preferred to the decision of a former Law Lord and a doyen of international arbitration, a former Chief Justice of Pakistan and an eminent Lebanese lawyer.\nDallah relies in particular on international authorities relating to applications to annul awards on the basis that the matters decided by the arbitral tribunal exceeded the scope of the submission to arbitration: article V(1)(c) of the New York Convention; article 34 of the UNCITRAL Model Law.\nIn Parsons & Whittemore Overseas Co Inc v Soc Gn de lIndustrie du Papier, 508 F 2d 969 (2d Cir 1974) the Court of Appeals for the Second Circuit, in dealing with an attack on a Convention award based on Article V(1)(c), said (at p 976) that the objecting party must overcome a powerful presumption that the arbitral body acted within its powers.\nThat statement was applied by the British Columbia Court of Appeal, in a case under article 34 of the Model Law as enacted by the International Commercial Arbitration Act, SBC 1986: Quintette Coal Ltd v Nippon Steel Corpn [1991] 1 WWR 219 (BCCA).\nThese cases are of no assistance in the context of a challenge based on the initial jurisdiction of the tribunal and in particular when it is said that a party did not agree to arbitration.\nNor is any assistance to be derived from Dallahs concept of deference to the tribunals decision.\nThere is simply no basis for departing from the plain language of article V(1)(a) as incorporated by section 103(2)(b).\nIt is true that the trend, both national and international, is to limit reconsideration of the findings of arbitral tribunals, both in fact and in law.\nIt is also true that the Convention introduced a pro enforcement policy for the recognition and enforcement of arbitral awards.\nThe New York Convention took a number of significant steps to promote the enforceability of awards.\nThe Geneva Convention placed upon the party seeking enforcement the burden of proving the conditions necessary for enforcement, one of which was that the award had to have become final in the country in which it was made.\nIn practice in some countries it was thought that that could be done only by producing an order for leave to enforce (such as an exequatur) and then seeking a similar order in the country in which enforcement was sought, hence the notion of double exequatur (but in England it was decided, as late as 1959, that a foreign order was not required for the enforcement of a Geneva Convention award under the Arbitration Act 1950, section 37: Union Nationale des Co opratives Agricoles des Crales v Robert Catterall & Co Ltd [1959] 2 QB 44).\nThe New York Convention does not require double exequatur and the burden of proving the grounds for non enforcement is firmly on the party resisting enforcement.\nThose grounds are exhaustive.\nBut article V safeguards fundamental rights including the right of a party which has not agreed to arbitration to object to the jurisdiction of the tribunal.\nAs van den Berg, The New York Arbitration Convention of 1958 (1981) puts it, at p 265: In fact, the grounds for refusal of enforcement are restricted to causes which may be considered as serious defects in the arbitration and award: the invalidity of the arbitration agreement, the violation of due process, the award extra or ultra petita, the irregularity in the composition of the arbitral tribunal or the arbitral procedure, the non binding force of the award, the setting aside of the award in the country of origin, and the violation of public policy.\nIn Kanoria v Guinness [2006] 1 Lloyds Rep 701, 706, May LJ said that section 103(2) concerns matters that go to the fundamental structural integrity of the arbitration proceedings.\nNor is there anything to support Dallahs theory that the New York Convention accords primacy to the courts of the arbitral seat, in the sense that the supervisory court should be the only court entitled to carry out a re hearing of the issue of the existence of a valid arbitration agreement; and that the exclusivity of the supervisory court in this regard ensures uniformity of application of the Convention.\nThere is nothing in the Convention which imposes an obligation on a party seeking to resist an award on the ground of the non existence of an arbitration agreement to challenge the award before the courts of the seat.\nIt follows that the English court is entitled (and indeed bound) to revisit the question of the tribunals decision on jurisdiction if the party resisting enforcement seeks to prove that there was no arbitration agreement binding upon it under the law of the country where the award was made.\nArbitration agreements and non signatories: groups of companies\/State owned\nentities and States\nOne of the most controversial issues in international commercial arbitration is the effect of arbitration agreements on non signatories: among many others see, eg, Hanotiau, Non Signatories in International Arbitration: Lessons from Thirty Years of Case Law, in International Arbitration 2006: Back to Basics? (2007, ed van den Berg), p 341; Park, Non signatories and International Contracts: An Arbitrators Dilemma, in Multiple Party Actions in International Arbitration (ed Macmahon, Permanent Court of Arbitration, 2009), p 1.\nThe issue has arisen frequently in two contexts: the first is the context of groups of companies where non signatories in the group may seek to take advantage of the arbitration agreement, or where the other party may seek to bind them to it.\nThe second context is where a State owned entity with separate legal personality is the signatory and it is sought to bind the State to the arbitration agreement.\nArbitration is a consensual process, and in each type of case the result will depend on a combination of (a) the applicable law; (b) the legal principle which that law uses to supply the answer (which may include agency, alter ego, estoppel, third party beneficiary); and (c) the facts of the individual case.\nOne of the decisions in the field of groups of companies best known internationally is the Dow Chemical case in France, which arose in the context of the setting aside of a French award.\nThe arbitrators (Professors Sanders, Goldman and Vasseur: (1984) 9 Yb Comm Arb 131) decided that non signatory companies in a group could rely on an arbitration clause in contracts between Isover St Gobain and two Dow Chemical group companies.\nThe tribunal said that a group of companies constituted one and the same economic reality (une realit conomique unique) of which the tribunal should take account when it ruled on its jurisdiction.\nIt decided that it was the mutual intention of all parties that the group companies should have been real parties to the agreement.\nThey relied in particular on the fact that group companies participated in the conclusion, performance and termination of the contract, and on the economic reality and needs of international commerce.\nThe Paris Cour dappel rejected an application to set aside the award: the effect of the ICC Rules was that the tribunal was bound to take account of the will of the parties and of trade usages; in the light of the agreements and of the documents exchanged in the course of their conclusion and termination, the tribunal had given relevant and consistent reasons for deciding that it was the joint intention of the parties that Dow Chemicals France and Dow Chemical Company had been parties to the agreements (and therefore to the arbitration agreements) although they had not physically signed them.\nThe court also mentioned that as a subsidiary reason the tribunal had invoked the notion of the group of companies, which had not been seriously disputed by Isover St Gobain: Soc.\nIsover Saint Gobain v Soc.\nDow Chemical France, 21 October 1983, 1984 Rev Arb 98.\nFor other cases see, eg, Redfern and Hunter, International Arbitration (5th ed 2009, ed Blackaby and Partasides), paras 2.44 2.45; Wilske, Shore and Ahrens, The Group of Companies Doctrine Where is it heading? (2006) 17 Am Rev Int Arb 73.\nAs regards States, the Pyramids case (Rpublique Arabe dEgypte v Southern Pacific Properties Ltd, above, para 89) was also a case of setting aside rather than enforcement of a foreign award.\nA company incorporated in Hong Kong (SPP) signed an agreement with an Egyptian state owned entity responsible for tourism (EGOTH).\nThe contract referred to a pre existing framework contract between the same parties and the Egyptian Government concerning the construction of two tourist centres, one of which was located near the Pyramids.\nThe contract contained an ICC arbitration clause with Paris as the seat.\nThe last page of the agreement contained the words approved, agreed and ratified followed by the signature of the Egyptian Minister for Tourism.\nAfter political opposition to the project, the Egyptian authorities cancelled it, and SPP initiated arbitration proceedings against both EGOTH and Egypt.\nThe arbitral tribunal, with Professor Giorgio Bernini as Chairman, ruled that it had jurisdiction, because, although acceptance of an arbitration clause had to be clear and unequivocal, there was no ambiguity since the Government, in becoming a party to the agreement, could not reasonably have doubted that it would be bound by the arbitration clause contained in it.\nThe Egyptian Government brought proceedings in France to set aside the award.\nThe combined effect of articles 1502 and 1504, NCPC, is that the French court may set aside an award made in France in an international arbitration on the ground that there is no arbitration agreement.\nThe Paris Cour dappel held that the Government was not a party to the arbitration agreement because the words under the Ministers signature were to be read in the light of Egyptian legislation which simply gave the Minister the power to approve construction and in the light of a declaration by the signatories that the obligations assumed by EGOTH would be subject to approval by the relevant government authorities.\nSubsequently an ICSID Tribunal found that it had jurisdiction and awarded the claimants $27m: 3 ICSID Rep 131 and 189.\nSee also the Westland case in the Swiss courts, involving the application of an arbitration agreement in a contract between Westland Helicopters and the Arab Organisation for Industrialisation to the organisations member States: (1991) 16 Yb Comm Arb 174; and Lew, Mistelis and Krll, Comparative International Commercial Arbitration (2003), paras 27 26 et seq; Westland Helicopters Ltd v Arab Organisation for Industrialisation [1995] QB 282.\nAn example in England of a foreign award prior to the present case is Svenska Petroleum Exploration AB v Government of the Republic of Lithuania (No 2) [2006] EWCA Civ 1529, [2007] QB 886, where the Court of Appeal, after a review of the principal arbitral decisions, confirmed (at para 81 et seq) that a government is not to be taken to be a party to an agreement or to have submitted to arbitration simply because it has put forward a state organisation to contract with a foreign investor.\nBut on the facts the Government had agreed to ICC arbitration in Denmark.\nFrench law and transnational law\nThe Joint Memorandum of the experts stated (para 2.8): Under French law, the existence, validity and effectiveness of an arbitration agreement in an international arbitration need not be assessed on the basis of national law, be it the law applicable to the main contract or any other law and can be determined according to rules of transnational law.\nTo this extent, it is open to an international arbitral tribunal the seat of which is in Paris to find that the arbitration agreement is governed by transnational law.\nThe notion in French law that an arbitration clause may be valid independently of a reference to national law goes back to the decisions of the Cour de cassation in Hecht v Buismans, 4 July 1972, 1974 Rev Crit 82 and of the Paris Cour dappel in Menicucci v Mahieux, 13 December 1975, 1976 Rev Crit 507: see Fouchard, Gaillard, Goldman, para 418; Poudret and Besson, para 180.\nIn the Dow Chemical case the Paris Cour dappel (21 October 1983, 1984 Rev Arb 98) said that the arbitral tribunal could decide on its competence without reference to French law, and could rely on the notion of the group of companies as a customary practice in international trade.\nIn the Dalico case (Municipalit de Khoms El Mergeb v Soc Dalico, 20 December 1993, 1994 Rev Arb 116) the Cour de cassation was concerned with an application to set aside an award in which an arbitral tribunal had upheld the existence and validity of an arbitration clause in a document annexed to a works contract between a Libyan municipal authority and a Danish company (Dalico).\nThe main contract was subject to Libyan law and stipulated standard terms and conditions, amplified or amended by an annex, which formed part of the contract.\nThe standard terms and conditions conferred jurisdiction on the Libyan courts, but the annex amended them by providing for international arbitration.\nDalico referred the dispute to arbitration and obtained an award against the Libyan municipal authority.\nAn action to set aside the award was brought before the Paris Cour dappel.\nThe court dismissed the application to set aside, relying in particular on the fact that the principle of the autonomy of the arbitration agreement confirms the independence of the arbitration clause, not only from the substantive provisions of the contract to which it relates, but also from a domestic law applicable to that contract.\nThe court held that the wording of the documents revealed the parties intention to submit their dispute to arbitration.\nThe Cour de cassation dismissed an appeal, emphasising that the Cour dappel justified its decision in law by establishing the existence of the arbitration agreement without reference to Libyan law, which governed the contract.\nThe Cour de cassation said, at p 117: en vertu dune rgle matrielle du droit international de larbitrage, la clause compromissoire est indpendante juridiquement du contrat principal qui la contient directement ou par rfrence et que son existence et son efficacit sapprcient, sous rserve des rgles imperatives de droit franais et de lordre public international, daprs la commune volont des parties, sans quil soit ncessaire de se rfrer une loi tatique . (by virtue of a substantive rule of international arbitration, the arbitration agreement is legally independent of the main contract containing or referring to it, and the existence and effectiveness of the arbitration agreement are to be assessed, subject to the mandatory rules of French law and international public policy, on the basis of the parties common intention, there being no need to refer to any national law.).\nOn this case see Fouchard, Gaillard, Goldman, paras 388, 452.\nThe fact that the experts were agreed that an arbitral tribunal with a French seat may apply transnational law or transnational rules to the validity of an arbitration agreement does not mean that a French court would not be applying French law or that it is no longer a French arbitration.\nIt simply means that the arbitration agreement is no longer affected by the idiosyncrasies of local law, and its validity is examined solely by reference to the French conception of international public policy: Fouchard, Gaillard, Goldman, paras 420, 441.\nAs Poudret and Besson put it (at para 181): The result of this case law is that the arbitration agreement is subjected to a material rule which recognises its validity provided it does not violate international public policy.\nAlthough this has been the subject of controversy, the rule is an international rule of French law and not a transnational rule.\nNor could there be any suggestion that the application of transnational law or transnational rules could displace the applicability in England, under article V(1)(a) of the New York Convention as enacted by section 103(2)(b) of the 1996 Act, of the law of the place where the award is made.\nThis case does not therefore raise the controversial question of delocalisation of the arbitral process which has been current since the 1950s.\nIt started with the pioneering work of Professor Berthold Goldman, Professor Pierre Lalive and Professor Clive Schmitthoff, which was mainly devoted to the question of disconnecting the substantive governing law in international commercial arbitration from national substantive law.\nIt expanded to promotion of the notion that international arbitration is, or should be, free from the controls of national law, or as Lord Mustill put it in SA Coppe Lavalin NV v Ken Ren Chemicals and Fertilizers Ltd [1995] 1 AC 38, 52, a self contained juridical system, by its very nature separate from national systems of law: see, among many others, Lew, Achieving the Dream: Autonomous Arbitration (2006) 22 Arb Int 179; Gaillard, Legal Theory of International Arbitration (2010); Paulsson, Arbitration in Three Dimensions (LSE Law, Society and Economy Working Papers 2\/2010); the older material cited in Dicey, Morris and Collins, The Conflict of Laws (14th ed 2006), para 16 032; and the cases on the enforcement in France of awards which have been annulled in the country where they were rendered on the basis that they were international awards which were not integrated in the legal system of that country, e.g. Soc PT Putrabali Adyamulia v Soc Rena Holding, Cour de cassation, 29 June 2007 (2007) 32 Yb Comm Arb 299, and below at para 129.\nNon signatories: the principle in French law\nOne of the odd features of this case is that there is nothing in the experts reports which suggests that there is any relevant difference between French arbitration law in non international cases and the principle in such cases as Dalico.\nWhen counsel was asked at the hearing of this appeal what difference it made, there was no satisfactory answer.\nNo doubt that is because common intention would serve equally to answer the question in a non international case: cf Loquin, Arbitrage, para 18, in Juris Classeur Procdure Civile, Fasc 1032.\nAs M Yves Derains (Dallahs expert) put it in his report, the arbitrators may find that the arbitration agreement is governed by transnational law, but the arbitrators must also look for the common will of the parties, express or implied, since it is a substantive rule of French law that the courts will apply when examining the jurisdiction of the arbitrators.\nThere was, in the event, a large measure of agreement between the experts on French law who appeared before Aikens J, M le Btonnier Vatier for the Government and M Yves Derains for Dallah.\nIn their Joint Memorandum they agreed that in order to determine whether an arbitration clause upon which the jurisdiction of an arbitral tribunal is founded extends to a person who is neither a named party nor a signatory to the underlying agreement containing that clause, it is necessary to find out whether all the parties to the arbitration proceedings, including that person, had the common intention (whether express or implied) to be bound by the agreement and, as a result, by the arbitration clause; the existence of a common intention of the parties is determined in the light of the facts of the case; the courts will consider the involvement and behaviour of all the parties during the negotiation, performance and, if applicable, termination of the underlying agreement.\nWhen a French court has to determine the existence and effectiveness of an arbitration agreement, and when for these purposes it must decide whether the agreement extends to a party who was neither a signatory nor a named party, it examines all the factual elements necessary to decide whether that agreement is binding upon that person.\nThe fact that an arbitration agreement is entered into by a State owned entity does not mean that it binds the State, and whether the State is bound depends on the facts in the light of the principles.\nThe principle as expressed in the jurisprudence of the Paris Cour dappel is as follows: Selon les usages du commerce international, la clause compromissoire insre dans un contrat international a une validit et une efficacit propres qui commandent den tendre lapplication aux parties directement impliques dans lexcution du contrat et les litiges qui peuvent en rsulter, ds lors quil est tabli que leur situation contractuelle, leurs activits et les relations commerciales habituelles existant entre les parties font prsumer quelles ont accept la clause darbitrage dont elles connaissaient lexistence et la porte, bien quelles naient pas t signatoires du contrat qui la stipulait. (According to international usage, an arbitration clause inserted in an international contract has a validity and an effectiveness of its own, such that the clause must be extended to parties directly implicated in the performance of the contract and in any disputes arising out of the contract, provided that it has been established that their respective contractual situations and existing usual commercial relations raise the presumption that they accepted the arbitration clause of whose existence and scope they were aware, irrespective of the fact that they did not sign the contract containing the arbitration agreement.\nSee Orri v Soc. des Lubrifiants Elf Acquitaine, 11 January 1990, 1991 Rev Arb 95 (affd Cour de cassation, 11 June 1991, 1992 Rev Arb 73, on different grounds); also Socit Korsnas Marma v Soc DurandAuzias, 30 November 1988, 1989 Rev Arb 691; Compagnie tunisienne de navigation (Cotunav) v Soc Comptoir commercial Andr, 28 November 1989, 1990 Rev Arb 675.\nThe principle applies equally where a non signatory seeks the benefit of an arbitration agreement, as in Dalico itself and in Dow Chemicals.\nThe common intention of the parties means their subjective intention derived from the objective evidence.\nM le Btonnier Vatier, the Governments expert, confirmed in his oral evidence that under French law the court must ascertain the genuine, subjective, intention of each party, but through its objective conduct, and M Yves Derains, Dallahs expert, agreed.\nM Derains confirmed that in order for an act (such as the letter of termination) of the Government to have the effect of establishing the subjective intention on the Governments part to be bound by the arbitration agreement, it would have to be a conscious, deliberate act by the government; that anything less than a conscious and deliberate act of the government might make the letter less relevant; and that the letter would not be relevant if it was written by mistake.\nRenvoi\nThe parties were agreed before Aikens J that article V(1)(a) of the New York Convention established two conflict of laws rules.\nThe first was the primary rule of party autonomy: the parties could choose the law which governed the validity of the arbitration agreement.\nIn default of that agreement, the law by which to test validity was that of the country where the award to be enforced was made.\nBecause they were to be treated as uniform conflict of laws rules, the reference to the law of the country where the award was made in article V(1)(a) of the New York Convention and the same words in section 103(2)(b) of the 1996 Act must be directed at that countrys substantive law rules, rather than its conflicts of law rules.\nAikens J also drew support from section 46(2) in Part I of the 1996 Act, which defines the law chosen by the parties as the substantive laws of that country and not its conflict of laws rules, and which was specifically inserted to avoid the problems of renvoi: Mustill & Boyd, Commercial Arbitration, 2001 Companion (2001), p 328.\nAikens J considered that the same approach was intended for section 103(2)(b) in Part III of the 1996 Act, and that he should have regard to French substantive law and not its conflict of laws rules (at para 78) and that the principle of French law that the existence of an arbitration agreement in an international context may be determined by transnational law was a French conflict of laws rule (at para 93).\nIt is likely that renvoi is excluded from the New York Convention: see van den Berg, The New York Convention of 1958 (1981), p 291.\nBut it does not follow that for an English court to test the jurisdiction of a Paris tribunal in an international commercial arbitration by reference to the transnational rule which a French court would apply is a case of renvoi.\nRenvoi is concerned with what happens when the English court refers an issue to a foreign system of law (here French law) and where under that countrys conflict of laws rules the issue is referred to another countrys law.\nThat is not the case here.\nWhat French law does is to draw a distinction between domestic arbitrations in France, and international arbitrations in France.\nIt applies certain rules to the former, and what it describes as transnational law or rules to the latter.\nAs mentioned above, the applicability of transnational rules or law (and there was no evidence on their content) would not make a difference in this case.\nBut even if there were a difference, there is not, according to English notions, any reference on to another system of law.\nAll that French law is doing is distinguishing between purely domestic cases and international cases and applying different rules to the latter.\nIf a French court would apply different principles in an international case, for an English court to do what a French court would do in these circumstances is not the application of renvoi.\nDiscretion\nThe court before which recognition or enforcement is sought has a discretion to recognise or enforce even if the party resisting recognition or enforcement has proved that there was no valid arbitration agreement.\nThis is apparent from the difference in wording between the Geneva Convention on the Execution of Foreign Arbitral Awards 1927 and the New York Convention.\nThe Geneva Convention provided (article 1) that, to obtain recognition or enforcement, it was necessary that the award had been made in pursuance of a submission to arbitration which was valid under the law applicable thereto, and contained (article 2) mandatory grounds (shall be refused) for refusal of recognition and enforcement, including the ground that it contained decisions on matters beyond the scope of the submission to arbitration.\nArticle V(1)(a) of the New York Convention (and section 103(2)(b) of the 1996 Act) provides: Recognition and enforcement of the award may be refused See also van den Berg, p 265; Paulsson, May or Must Under the New York Convention: An Exercise in Syntax and Linguistics (1998) 14 Arb Int 227.\nSince section 103(2)(b) gives effect to an international convention, the discretion should be applied in a way which gives effect to the principles behind the Convention.\nOne example suggested by van den Berg, op cit, p 265, is where the party resisting enforcement is estopped from challenge, which was adopted by Mance LJ in Dardana Ltd v Yukos Oil Co [2002] 2 Lloyds Rep 326, para 8.\nBut, as Mance LJ emphasised at para 18, there is no arbitrary discretion: the use of the word may was designed to enable the court to consider other circumstances, which might on some recognisable legal principle affect the prima facie right to have an award set aside arising in the cases listed in section 103(2).\nSee also Kanoria v Guinness [2006] 1 Lloyds Rep 701, para 25 per Lord Phillips CJ.\nAnother possible example would be where there has been no prejudice to the party resisting enforcement: China Agribusiness Development Corpn v Balli Trading [1998] 2 Lloyds Rep 76.\nBut it is not easy to see how that could apply to a case where a party had not acceded to an arbitration agreement.\nThere may, of course, in theory be cases where the English court would refuse to apply a foreign law which makes the arbitration agreement invalid where the foreign law outrages its sense of justice or decency (Scarman Js phrase in In the Estate of Fuld, decd (No 3) [1968] P 675, 698), for example where it is discriminatory or arbitrary.\nThe application of public policy in the New York Convention (article V(2)(b)) and the 1996 Act (section 103(3)) is limited to the non recognition or enforcement of foreign awards.\nBut the combination of (a) the use of public policy to refuse to recognise the application of the foreign law and (b) the discretion to recognise or enforce an award even if the arbitration agreement is invalid under the applicable law could be used to avoid the application of a foreign law which is contrary to the courts sense of justice.\nOnly limited assistance can be obtained from those cases in which awards have been enforced abroad (in particular in France and the United States) notwithstanding that they have been set aside (or supended) in the courts of the seat of arbitration.\nIn France the leading decisions are Pabalk Ticaret Sirketi v Norsolor, Cour de cassation, 9 October 1984, 1985 Rev Crit 431; Hilmarton Ltd v OTV, Cour de cassation, 23 March 1994 (1995) 20 Yb Comm Arb 663, in which a Swiss award was enforced in France even though it had been set aside in Switzerland: the award rendered in Switzerland is an international award which is not integrated in the legal system of that State, so that it remains in existence even if set aside (at p 665); Rpublique arabe dEgypte v Chromalloy Aero Services, Paris Cour dappel, 14 January 1997 (1997) 22 Yb Comm Arb 691.\nThus in Soc PT Putrabali Adyamulia v Soc Rena Holding, Cour de cassation, 29 June 2007 (2007) 32 Yb Comm Arb 299, an award in an arbitration in England which had been set aside by the English court (see PT Putrabali Adyamulia v Soc Est Epices [2003] 2 Lloyds Rep 700) was enforced in France, on the basis that the award was an international award which did not form part of any national legal order.\nThose decisions do not rest on the discretion to allow recognition or enforcement notwithstanding that the award has been set aside by a competent authority of the country in which that award was made (New York Convention, article V(1)(e)).\nThey rest rather on the power of the enforcing court under the New York Convention, article VII(1), to apply laws which are more generous to enforcement than the rules in the New York Convention: see Born, International Commercial Arbitration (2009), pp 2677 2680; Gaillard, Enforcement of Awards Set Aside in the Country of Origin (1999) 14 ICSID Rev 16; and Yukos Capital SARL v OAO Rosneft, 28 April 2009, Case No 200.005.269\/01 Amsterdam Gerechtshof.\nIn the United States the courts have refused to enforce awards which have been set aside in the State in which the award was made, on the basis that the award does not exist to be enforced if it has been lawfully set aside by a competent authority in that State: Baker Marine (Nigeria) Ltd v Chevron (Nigeria) Ltd, 191 F 3d 194 (2d Cir 1999); TermoRio SA ESP v Electranta SP, 487 F 3d 928 (DC Cir 2007).\nBut an Egyptian award which had been set aside by the Egyptian court was enforced because the parties had agreed that the award would not be the subject of recourse to the local courts: Chromalloy Aeroservices v Arab Republic of Egypt, 939 F Supp 907 (DDC 1996).\nThat decision was based both on the discretion in the New York Convention, article V(1) and on the power under article VII(1) (see Karaha Bodas Co v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F 3d 357, 367 (5th Cir 2003)) and whether it was correctly decided was left open in TermoRio SA ESP v Electranta SP, ante, at p 937.\nThe power to enforce notwithstanding that the award has been set aside in the country of origin does not, of course, arise in this case.\nThe only basis which Dallah puts forward for the exercise of discretion in its favour is the Governments failure to resort to the French court to set aside the award.\nBut Moore Bick LJ was plainly right in the present case (at para 61) to say that the failure by the resisting party to take steps to challenge the jurisdiction of the tribunal in the courts of the seat would rarely, if ever, be a ground for exercising the discretion in enforcing an award made without jurisdiction.\nThere is certainly no basis for exercising the discretion in this case.\nIII The application of the principles to the appeal\nThe crucial facts have been set out fully by Lord Mance.\nThe essential question is whether the Government has proved that there was no common intention (applying the French law principles) that it should be bound by the arbitration agreement.\nThe essential points which lead to the inevitable conclusion that there was no such common intention are these.\nFirst, throughout the transaction Dallah was advised by a leading firm of lawyers in Pakistan, Orr, Dignam & Co, which was responsible for the drafts of both the Memorandum of Understanding (MoU) which was concluded on 24 July 1995 between Dallah and the Government, and the Agreement of 10 September 1996 (the Agreement) between Dallah and the Trust.\nIt must go without saying that the firm well understood the difference between an agreement with a State entity, on the one hand, and the State itself, on the other.\nSecond, there was a clear change in the proposed transaction from an agreement with the State to an agreement with the Trust.\nThe MoU was expressed to be made between Dallah and the President of the Islamic Republic of Pakistan through the Ministry of Religious Affairs, and it was signed For and on behalf of The President of the Islamic Republic of Pakistan.\nIt was governed by Saudi Arabian law (clause 23).\nIt provided for ad hoc arbitration with a Jeddah seat (clause 24), and contained an express waiver of sovereign immunity, including immunity from execution (clause 25).\nThird, the Trust was established as a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of property, and may by its name, sue and be sued.\nFourth, the Agreement (including the arbitration agreement) was plainly an agreement between Dallah and the Trust, and the Government was referred to in the Agreement only in its capacity of guarantor of loans to the Trust.\nIt described the parties as Dallah Real Estate and Tourism Holding Company and Awami Hajj Trust. (which is referred to as having been: established under Section 3 of the Awami Hajj Trust Ordinance, 1996 (Ordinance No VII of 1996) On the signature page, there are two signatories: Dallah and the Awami Hajj Trust.\nShezi Nackvi signed on behalf of Dallah, and Managing Trustee (Zubair Kidwai) signed on behalf of the Trust.\nClause 2 provided for the Trust to pay $100m to Dallah by way of advance, subject to (inter alia) Dallah providing a Financing Facility against a guarantee of the Government of Pakistan and the Trust and the Trustee Bank providing a counter guarantee in favour of the Government of Pakistan.\nBy clause 27 it was provided: The Trust may assign or transfer its rights and obligations under this Agreement to the Government of Pakistan without the prior consent in writing of Dallah.\nThe arbitration clause (article 23) related to Any dispute or difference of any kind whatsoever between the Trust and Dallah .\nThe parties amended the ICC model clause (which reads: All disputes arising out of or in connection with the present contract shall be finally settled), in order to specify the Trust and Dallah.\nFifth, it was the Trust which immediately following the termination letter of 19 January 1997, commenced proceedings against Dallah in Islamabad (the 1997 Pakistan Proceedings).\nThe proceedings were for a declaration that the Trust had validly accepted Dallahs repudiation of the Agreement between the Trust and Dallah on 19 January 1997.\nThe contents of the pleading were verified on oath by Mr Muhammad Lutfullah Mufti.\nOn the same day Mr Lutfullah Mufti made an application in the name of the Trust for an interim injunction restraining Dallah from holding itself out to have any contractual relationship with the Trust.\nOn 6 March 1997 Dallah filed an application to stay the action, given the existence of an arbitration agreement with the Trust.\nThe Trust took preliminary objections against this application, among which was that the Trust had challenged the validity and existence of the Agreement.\nMr Lutfullah Mufti, describing himself as Secretary Board of Trustees Awami Hajj Trust\/Secretary, Religious Affairs Division, Government of Pakistan swore an affidavit verifying the objections by the Trust to the application.\nThere are only two serious contra indications.\nThe first is the fact that the termination latter was written, after the Trust had ceased to exist, by Mr. Lutfullah Mufti (who had been Secretary of the Board of Trustees of the Trust and its Managing Trustee, and who was also from time to time Secretary of the Ministry of Religious Affairs) under the letterhead of the Ministry of Religious Affairs, and signed as Secretary.\nThere is nothing in the text of the letter to suggest that it was written on behalf of the Government.\nOn the contrary, as Moore Bick LJ said [2010] 2 WLR 805, para 36 (differing on this point from Aikens J, at para 117) all the internal indications are that it was written on behalf of the Trust.\nThus the opening paragraph reads as follows: Pursuant to the above mentioned Agreement for the leasing of housing facilities in the holy city of Makkah, Kingdom of Saudi Arabia, you were required within ninety (90) days of the execution of the said Agreement to get the detailed specifications and drawings approved by the Trust.\nHowever, since you have failed to submit the specifications and drawings for the approval of the Trust to date you are in breach of a fundamental term of the Agreement which tantamounts to a repudiation of the whole Agreement which repudiation is hereby accepted.\nThe second contra indication is contained in the fact that the 1998 Pakistan Proceedings were commenced in the name of the Government.\nThat was because, when the 1997 Pakistan Proceedings were dismissed by the Pakistan court on the ground that the Trust had ceased to exist as of 11 December 1996, the judge said that, on dissolution of the Trust suit should have been filed by the Ministry for Religious Affairs, apparently on the basis that the Government had succeeded to the rights and obligations of the Trust.\nOn 18 September 1998, the Islamabad judge ruled that the Government was not the legal successor of the Trust, and so not bound by the Agreement or the arbitration agreement.\nOn 14 January 1999, the Government applied voluntarily to withdraw the suit, which was granted on the same day.\nNeither of these two matters, nor the other matters relied on, was sufficient to justify a finding of a common intention that the Government should be bound by the arbitration agreement.\nIt is true that the principle of common intention in French law was similar to that articulated by the tribunal, but M Le Btonnier Vatiers evidence made clear that there were significant differences.\nHe accepted that the principles adopted by the tribunal were in general the principles that might be adopted in French law, but they were too general.\nThat is undoubtedly a valid criticism of the way in which the Tribunal sought to use material from the period prior to termination to justify its conclusion.\nThe Tribunal first considered the conduct of the Government prior to the execution of the Agreement.\nIt drew the conclusion that the organic control of the Government over the Trust, although insufficient to lead to the disregard of the separate legal entity of the Trust, constituted nevertheless an element of evidence as to the true intention of the Government to run and control directly and indirectly the activities of the Trust, and to view the Trust as one of its instruments.\nThe Tribunal next considered the conduct of the Government at the time of execution of the Agreement.\nFrom that it drew the conclusion that the Government was contractually involved in the Agreement, as the Government was bound, under article 2 thereof, to give its guarantee for the financial facility to be raised by [Dallah] and that the Trusts right to assign its rights and obligations to the Government was a provision which was normally used only where the assignee is closely linked to the assignor or is under its total control through ownership, management or otherwise.\nThe Tribunal considered that during the lifetime of the Agreement the Government continued itself to handle matters relating to the Agreement and to act and conduct itself in a way which confirmed that it regarded the Agreement as its own.\nGovernment officials were actively involved in the implementation of the Agreement.\nThe Government decided not to re promulgate the Ordinance and therefore put an end to the Trust, and so the very existence of the Trust appeared to have been completely dependent on the Government.\nNone of these matters could possibly justify a finding that there was a common intention that the Government should be bound by the arbitration agreement.\nThe crucial finding was that after the dissolution of the Trust, the termination letter of 19 January 1997 was written on Ministry of Religious Affairs letterhead and signed by the Secretary of the Ministry, and confirmed in the clearest way possible that the Government regarded the Agreement with Dallah as its own and considered itself as a party to the Agreement and was entitled to exercise all rights and assume all responsibilities provided for under the Agreement.\nThe signature of the letter could only be explained as evidence that the Government considered itself a party to the Agreement.\nBut the Trust had no separate letterhead and it is plain from the surrounding circumstances, and particularly the way in which the 1997 Pakistan proceedings were commenced on behalf of the Trust, and verified by Mr Lutfullah Mufti, that the letter was written on behalf of the Trust and in ignorance of its dissolution.\nThe tribunal ignored the 1997 Pakistan proceedings, and relied on the 1998 Pakistan proceedings to find that they showed that the Government considered itself as a party to the Agreement.\nBut it is clear that those proceedings were commenced at the erroneous suggestion of the Pakistan judge and shed no light on whether the parties intended that the Government should be bound by the Agreement or the arbitration agreement.\nConsequently on a proper application of French law as mandated by the New York Convention and the 1996 Act there was no material sufficient to justify the tribunals conclusion that the Governments behaviour showed and proved that the Government had always been, and considered itself to be, a true party to the Agreement and therefore to the arbitration agreement.\nOn the contrary, all of the material up to and including the termination letter shows that the common intention was that the parties were to be Dallah and the Trust.\nOn the face of the Agreement the parties and the signatories were Dallah and the Trust.\nThe Governments role was as guarantor, and beneficiary of a counter guarantee.\nThe assignment clause showed that the Government was not a party.\nIt permitted the Trust to assign or transfer its rights and obligations under the Agreement to the Government without the prior consent in writing of Dallah.\nThe arbitration clause related to any dispute between the Trust and Dallah.\nThe weakness of the conclusion of the tribunal is underlined by this passage in the Award: Certainly, many of the above mentioned factual elements, if isolated and taken into a fragmented way, may not be construed as sufficiently conclusive for the purpose of this section.\nHowever, Dr Mahmassani believes that when all the relevant factual elements are looked into globally as a whole, such elements constitute a comprehensive set of evidence that may be relied upon to conclude that the Defendant is a true party to the Agreement with the Claimant and therefore a proper party to the dispute that has arisen with the Claimant under the present arbitration proceedings.\nWhilst joining in this conclusion Dr Shah and Lord Mustill note that they do so with some hesitation, considering that the case lies very close to the line.\nAikens J rejected the argument that the discretion should be exercised in favour of enforcement because of the Governments failure to challenge the award in the French courts: Dallah had not submitted that the Government was estopped from challenging the jurisdiction of the tribunal; and the discretion would not be exercised where, as in this case, there was something unsound in the fundamental structural integrity of the ICC arbitration proceedings, namely that the Government did not agree to be bound by the arbitration agreement in clause 23 of the Agreement.\nThere was no error of principle and the Court of Appeal was right not to interfere with the judges exercise of discretion.\nLORD HOPE\nThe essential question in this case, as Lord Mance and Lord Collins explain in paras 2 and 132 of their judgments, is whether the Government of Pakistan has proved that there was no common intention (applying French law principles) between it and Dallah that it should be bound by the arbitration agreement.\nThis is a matter which goes to the root of the question whether there was jurisdiction to make the award.\nAs such, it must be for the court to determine.\nIt cannot be left to the determination of the arbitrators.\nFor the reasons set out in the opinions of Lord Mance and Lord Collins, I agree that the facts point inevitably to the conclusion that there was no such common intention.\nAs Lord Mance says in para 66, the agreement was deliberately structured to be, and was agreed, between Dallah and the Trust.\nI also agree that the Court of Appeal was right not to interfere with the judges exercise of his discretion to refuse enforcement of the award.\nI too would dismiss the appeal.\nLORD SAVILLE\nIn his judgment Lord Mance has set out in detail the facts of this case and no purpose would be served by repeating them in this judgment.\nThe case concerns an application by Dallah Real Estate and Tourism Holding Company to enforce in this country an ICC arbitration award dated 23rd June 2006 against the Ministry of Religious Affairs of the Government of Pakistan.\nThe amount of the award was US$20,588,040.\nThe application was opposed by the Ministry of Religious Affairs on the grounds that there was no arbitration agreement between the parties, so that the award was unenforceable.\nThe award was a New York Convention Award within the meaning of Section 100 of the Arbitration Act 1996 and was made in Paris.\nSection 103(1) of the Arbitration Act 1996 provides that recognition and enforcement of a New York Convention Award shall not be refused except in the following cases.\nThe following sub sections set out the cases in question.\nSection 103(2) contains a number of these cases and provides that recognition or enforcement of the award may be refused if the person against whom it is invoked proves (so far as the case relevant to these proceedings is concerned) that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made.(Section 103(2) (b)) (emphases added).\nThe arbitrators considered the question of their jurisdiction before dealing with the merits of the claim and concluded that the Ministry of Religious Affairs of the Government of Pakistan was party to an arbitration agreement with Dallah Real Estate and Tourism Holding Company, for the reasons contained in what they described as a Partial Award dated 26th June 2001.\nIt was common ground that the question whether or not the Ministry of Religious Affairs was a party to the arbitration agreement relied upon by Dallah Real Estate and Tourism Holding Company, under which the ICC award was made, was to be determined under Section 103(2)(b) of the Arbitration Act 1996, and that the law to be applied was French law, being the law of the place where the award was made.\nAfter a trial, during which both parties tendered expert evidence on French law, Aikens J (as he then was) held that the Ministry of Religious Affairs was not party to the arbitration agreement and refused to enforce the award.\nThe Court of Appeal upheld his decision.\nDallah Real Estate and Tourism Holding Company now appeal to the Supreme Court.\nIn their written case Dallah Real Estate and Tourism Holding Company submitted that the first issue for resolution by the Supreme Court concerned the nature and standard of review to be undertaken by an enforcing court when considering recognition and enforcement of a New York Convention award; and further submitted that the court should accord a high degree of deference and weight to the award of the arbitrators that there was an arbitration agreement between the parties.\nIn the present case the arbitrators have made a ruling, as they were doubtless entitled to do under the doctrine of kompetenz kompetenz, that there was an arbitration agreement between the parties, so that they were able to hear and decide the merits of the case, which they then proceeded to do.\nHowever, under Section 103 of the Arbitration Act 1996 (as under the New York Convention itself) the person against whom the award was invoked has the right to seek to prove that there was no arbitration agreement between the parties, so that in fact the arbitrators had no power to make an award.\nThe question at issue before the court, therefore, was whether the person challenging the enforcement of the award could prove there was no such agreement.\nIn these circumstances, I am of the view that to take as the starting point the ruling made by the arbitrators and to give that ruling some special status is to beg the question at issue, for this approach necessarily assumes that the parties have, to some extent at least, agreed that the arbitrators have power to make a binding ruling that affects their rights and obligations; for without some such agreement such a ruling cannot have any status at all.\nAs the Departmental Advisory Committee on Arbitration Law put it in paragraph 1.38 of its 1996 Report on the Arbitration Bill, an arbitral tribunal may rule on its own jurisdiction but cannot be the final arbiter of jurisdiction, for this would provide a classic case of pulling oneself up by ones own bootstraps.\nIn my judgment therefore, the starting point cannot be a review of the decision of the arbitrators that there was an arbitration agreement between the parties.\nIndeed no question of a review arises at any stage.\nThe starting point in this case must be an independent investigation by the court of the question whether the person challenging the enforcement of the award can prove that he was not a party to the arbitration agreement under which the award was made.\nThe findings of fact made by the arbitrators and their view of the law can in no sense bind the court, though of course the court may find it useful to see how the arbitrators dealt with the question.\nWhether the arbitrators had jurisdiction is a matter that in enforcement proceedings the court must consider for itself.\nI accept, as an accurate summary of the legal position, the way it was put in the written case of the Ministry of Religious Affairs: Under s103(2)(b) of the 1996 Act \/ Art V.1(a) NYC, when the issue is initial consent to arbitration, the Court must determine for itself whether or not the objecting party actually consented.\nThe objecting party has the burden of proof, which it may seek to discharge as it sees fit.\nIn making its determination, the Court may have regard to the reasoning and findings of the alleged arbitral tribunal, if they are helpful, but it is neither bound nor restricted by them.\nIn short, as was held in China Minmetals Materials Import and Export Co Ltd v Chi Mei Corporation (2003) 334 F3d 274, a decision of the United States Court of Appeals (3rd Circuit), the court must make an independent determination of the question whether there was an arbitration agreement between the parties.\nIn the present case, for the reasons given by Lord Mance and Lord Collins (and the courts below), the Ministry of Religious Affairs has succeeded in showing that no arbitration agreement existed to which it was party and that there were no other grounds for enforcing the award.\nI would accordingly dismiss this appeal.\nLORD CLARKE\nI agree that this appeal should be dismissed for the reasons given by the other members of the court.\nBoth Lord Mance and Lord Collins have analysed the relevant principles so fully and so expertly that it would be inappropriate self indulgence for me to attempt a detailed analysis of my own.\n","output":"The central issue on this appeal is whether the Government of Pakistan was a party to and bound by an arbitration agreement, so that an award made by an arbitral tribunal under that agreement can be enforced against the Government of Pakistan in the United Kingdom.\nThe appellant company (Dallah) is a member of a group providing services for the Holy Places in Saudi Arabia.\nIn July 1995, it concluded a Memorandum of Understanding with the respondent Government (the Government) for the provision by Dallah of housing for pilgrims.\nIn January 1996 the Awami Hajj Trust (the Trust) was established and subsequently continued by various ordinances of the President of Pakistan.\nIn September 1996, after Dallah put forward a revised proposal which differed from the Memorandum of Understanding and after further negotiations with the Government, an agreement between Dallah and the Trust was signed (the Agreement).\nThe Agreement contained an arbitration clause, whereby any dispute between Dallah and the Trust arising out of the Agreement was to be settled by arbitration.\nIn December 1996, the ordinances lapsed and were not renewed, and Trust ceased to exist as a legal entity.\nDallah invoked arbitration against the Government in May 1998.\nOn 23 June 2006 an International Chamber of Commerce arbitral tribunal sitting in Paris made an award in favour of Dallah in the sum of US$20,588,040 against the Government.\nDallah applied to the High Court in England for leave to enforce the award in this country.\nThe award was an award within the meaning of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958.\nArticle V(1)(a) of the Convention and s.103 of the Arbitration Act 1996, which transposes Article V(1)(a) in the UK, provide that enforcement of an award may be refused if the arbitration agreement was not valid under the applicable law, which is the case, in particular, if the person against whom enforcement is sought was not a party to the agreement.\nThe applicable law was in this case French law, where the arbitral tribunal sat and made its award.\nThe High Court held that the Government was not a party to the Agreement or therefore to the arbitration agreement and refused leave to enforce the award.\nThe Court of Appeal upheld the decision and Dallah appealed to the Supreme Court.\nThe Supreme Court unanimously dismisses the appeal.\nIt holds that the Government was not a party to the arbitration agreement.\nAn initial issue was the status and weight of the arbitral tribunals own decision that it had jurisdiction, based on its conclusion that the Government was a party to the Agreement and so to the arbitration agreement.\nThe Supreme Court, while recognising that a tribunal has jurisdiction to determine its own jurisdiction for its own purposes, held that a court, whether within the country where the tribunal is located or within a foreign country where an attempt is made to enforce the award, can and must revisit the question of jurisdiction.\nThe arbitral tribunal could only have jurisdiction by consent, and could not give itself jurisdiction, if there was no relevant consent under the applicable law.\nWhether consent exists is an issue subject to ordinary judicial determination.\nArticle V of the Convention safeguards the right of a party which has not agreed to arbitration to object to the jurisdiction of the tribunal.\nThe language of Article V(1)(a) of the Convention and s.103(2)(b) of the 1996 Act requires the English court to revisit the tribunals decision on jurisdiction where the person resisting enforcement maintains that it was not party to any relevant arbitration agreement under the applicable law. [26] [31]; [79] [104] The central issue in the case was whether the Government could establish that, applying French law principles, there was no common intention on the part of the Government and Dallah, such as would make the Government a party to the Agreement.\nThe Court held that the Government had established that there was no such common intention, having regard amongst other matters to: The clear change in the proposed transaction from an agreement with the Government (the Government was a party to the initial Memorandum of Understanding) to an agreement with the Trust. [134] The deliberate structuring of the Agreement to be between Dallah and the Trust: the Governments only role under the Agreement was to guarantee the Trusts loan obligations and to receive a counter guarantee from the Trust.\nFurther, Dallah was throughout the transaction advised by lawyers who must have understood the difference between an agreement with a State entity and an agreement with the State itself. [42] [43]; [133] [136] The fact that the Trust was established as a body corporate capable of holding property and of suing and being sued. [135] The fact that it was the Trust which commenced proceedings against Dallah in Pakistan in 1997. [137] A final issue in the case concerned the nature and existence of any discretion to be found in Article V(1) and s.103(2), which provide that recognition or enforcement of the award may be refused if the arbitration agreement is proved to be invalid.\nDallah submitted that even if the Government could prove that it is not bound by the Agreement, the Court should exercise its discretion under Article V(1) and s.103(2) to enforce the award.\nThe Court refused to do this, saying that, in the absence of some fresh circumstance such as another agreement, it would be remarkable if the word may enabled a court to recognise or enforce an award which it found to have been made without jurisdiction. [68]\n","id":8}
{"input":"This appeal is about the proper approach of the courts where the defendant to a claim for possession of his home raises a defence of unlawful discrimination, contrary to the Equality Act 2010, by the claimant landlord.\nIn particular, the issue is whether the courts are entitled to take the same summary approach to such a defence, where the claimant is a social landlord, as they can normally take to a defence asserting that eviction by a public authority would breach the right to respect for the defendants home, which is protected by article 8 of the European Convention on Human Rights.\nDo the principles applicable to article 8 defences, laid down by the Supreme Court in Manchester City Council v Pinnock [2010] UKSC 45, [2011] 2 AC 104 (Pinnock) and Hounslow London Borough Council v Powell [2011] UKSC 8, [2011] 2 AC 186 (Powell) also apply to discrimination defences?\nThe issue could arise, whichever of the characteristics protected by the Equality Act 2010 is relied upon by the defendant to support a discrimination defence, and whatever the type of discrimination complained of.\nHowever, this case is concerned with the protected characteristic of disability, which can raise different equality issues from those raised by a claim of, say, sex or race discrimination.\nWhereas treating a man equally with a woman usually means treating him in the same way as a woman is treated, treating a disabled person equally with a non disabled person may mean treating him differently from a non disabled person.\nThis is in order to ensure that he can play a full part in society despite his disabilities.\nThis case\nThe appellant is a 47 year old man who has been diagnosed with Prolonged Duress Stress Disorder or Complex Post Traumatic Stress Disorder.\nThis is the result of sustained physical and emotional abuse by his parents when he was a child, exacerbated by his having been failed by the system.\nDisability is one of the protected characteristics listed in section 4 of the Equality Act 2010.\nThe basic definition of disability is contained in section 6, which provides that a person has a disability if (a) he has a physical or mental impairment, and (b) the impairment has a substantial and long term adverse effect upon his ability to carry out normal day to day activities.\nThis is fleshed out by Schedule 1 to the Act and by the Equality Act 2010 (Disability) Regulations 2010.\nIt is not in dispute that the appellants mental ill health is so chronic and severe that he falls within this definition.\nThe appellant became homeless in 2010.\nIn June, the local housing authority in the district where he lives (the council) accepted that it owed him a duty, under section 193(2) of the Housing Act 1996, to secure that accommodation was available to him.\nThe council had an agreement with a housing association, Flourish, that it would grant tenancies to people to whom the council owed duties under the 1996 Act.\nPursuant to that agreement, in August 2010, a one bed roomed ground floor flat in Glastonbury was let to the appellant on a weekly periodic tenancy.\nThe duty to secure accommodation for a homeless person under section 193(2) of the 1996 Act is not intended to last indefinitely.\nBroadly speaking, it comes to an end if he obtains accommodation elsewhere or if he refuses an offer of suitable accommodation elsewhere, in particular if he refuses a final offer of social housing under Part 6 of the 1996 Act (section 193(7)).\nThe appellant joined the councils choice based scheme for the allocation of social housing, known as Homefinder Somerset, and over the next nine months various attempts were made to find an acceptable home for him.\nHe put in bids for two properties in Wells, but later withdrew these because he associated Wells with his childhood abuse.\nAnother bid for a property in Wells was unsuccessful.\nHe successfully bid for a property in Meare, Glastonbury but then declined this as it was too far from his GP.\nHe declined to bid for two more properties, one in Wells and one in Glastonbury, which he was told were open for bids.\nAnd he objected to three more bids, one in Wells and two in Street, which the council placed on his behalf.\nHis community psychiatric nurse supported the objection to Wells and so the bid was withdrawn.\nIn March 2011, the council wrote to him formally making a final offer of one of the properties in Street.\nHe declined to accept this.\nHence in April the council wrote notifying him that it considered that its duty under section 193 had been discharged.\nHe requested a review under section 202 of the 1996 Act.\nThe review upheld the original decision that the property was suitable for him and in the same letter the council told him that it would be terminating the provision of temporary accommodation for him in the Glastonbury flat.\nAccordingly, Flourish served a notice to quit, expiring on 21 August 2011; and on 15 September, it issued a claim for possession in the Yeovil County Court.\nAt the first hearing on 20 October 2011, this was adjourned for the appellant to obtain legal representation.\nWhen the case returned to the county court on 15 December, District Judge Smith had before him the first report of a Chartered Psychologist, Mr Callow, whom the appellant had consulted for the purpose of these proceedings.\nHe had examined the appellant twice and administered a variety of psychometric tests.\nHe described the appellant as very vulnerable and desperately in need of intensive therapy to help him overcome the traumas from which he had suffered.\nHe also supported the appellants claim that he could not live in Street, because of its associations with his childhood.\nThe district judge gave a short judgment in which he took the view (i) that on the issue of whether the proposed possession order was proportionate for the purpose of article 8, it falls just beyond the line of its being sufficiently clear that I can say that it cannot apply (para 24); and (ii) that he did not rule out the Equality Act defence, but I think there will be formidable problems in maintaining it (para 26).\nHe concluded that we are going to have a contested hearing about it not later than the end of January when all these issues can be established (para 27).\nHence he ordered the appellant to file and serve a defence, made provision for the service of any witness statements, and listed the claim for a hearing on 26 January 2012.\nThe defence filed that same day raised three defences: disability discrimination, article 8 and a public law defence based primarily on breach of the public sector equality duty.\nMr Callow made a second report, dated 23 January 2012, confirming his opinion that the appellant suffers from a disability within the meaning of the Equality Act and that the accommodation in Street was unsuitable for him because of that disability.\nHowever, when the case came back before District Judge Smith on 26 January 2012, he ordered that it be transferred to Bristol County Court for hearing as soon as possible, with a longer time estimate because of the issues raised under the Equality Act.\nIn the meantime, on 15 December the appellant had also made a fresh homelessness application to the council.\nThis was rejected in April 2012, on the ground that he was intentionally homeless.\nBut in July that decision was overturned on review and the council therefore accepted again that it owed him the duty under section 193(2) of the 1996 Act.\nBy this time Flourish had merged with two other housing associations to form Aster Communities, which became the appellants landlord.\nBristol County Court had listed the case for a two day trial on 18 July 2012 and Mr Callow had prepared a third report on 2 July 2012.\nIn this he stated that we are not dealing here with a man who thinks and behaves in a reasonable and socially acceptable way but with someone who is profoundly mentally ill and who needs help.\nGiven the councils change of view, the trial was vacated on Asters application and the case adjourned by consent with liberty to restore.\nIn September 2012, Aster wrote to the appellant offering him a starter tenancy of a property in the same road in Glastonbury as his current accommodation.\nAnother property in Glastonbury was also available for him, but the appellant did not wish to apply for that.\nOn 27 September 2012 he declined the offer of the property in the same road.\nIn October 2012, the council wrote to notify the appellant of their decision that their duty to him was discharged because 10.\n12. 11.\nLater that month, Aster applied to reinstate the claim for possession.\nAlthough the case had previously been set down for a full trial, this time it was listed for a preliminary hearing to decide whether or not a proportionality and\/or Equality Act 2010 defence can be raised.\nThat hearing was originally listed for February 2013 and Mr Callow made a further report dated 11 February 2013.\nIn this he stated that, it is impossible to say definitively that [the appellants] inaction and\/or failure was wholly attributable to his condition, but I would say that his condition seems likely to have played a major part in this inaction and\/or failure.\nThere was insufficient time available in February and so the case was adjourned until June 2013 when it came before His Honour Judge Denyer QC.\nHe heard legal argument over a day on 6 June 2013 and gave judgment on 7 June.\nJudge Denyer prefaced his account of the facts with a reference to the role of the court in an appeal against a local authoritys decisions under Part 7 of the 1996 Act, pointing out that in such cases the court was exercising a function not dissimilar to that of the Administrative Court in judicial review (para 2).\nHe returned to this point in his conclusions, where he referred to what is a quasi judicial review claim or defence, as here (para 16, emphasis supplied).\nAfter setting out the facts, he observed that the defendant raises no conventional landlord and tenant type defence, but raises effectively public law defences (para 8).\nHe went on to say that Whether the defence is viewed pursuant to the Equality Act 2010 or pursuant to article 8 or both, the approach outlined by the Court of Appeal to such defences in the case of Thurrock Borough Council v West [2012] EWCA Civ 1435; [2013] HLR 69 is the appropriate starting point (para 9).\nHe cited extensively from that case, which summarises the principles to be gleaned from Pinnock and Powell and some later Court of Appeal cases.\nThe threshold for establishing an arguable case that a local authority is acting disproportionately and so in breach of article 8 where repossession would otherwise be lawful is a high one and would be met only in a small proportion of cases (para 10).\nBoth article 8 and section 15 of the Equality Act involved a consideration of proportionality.\nIt was necessary therefore to go back to Thurrock, the crucial point being effectively the presumption in favour of proportionality when a public authority is exercising its housing functions (para 15).\nThe actions of the local authority were entirely reasonable and the action of the claimants could in no wise be characterised as unreasonable or disproportionate and certainly not actuated by any malevolent response to the defendants disability (para 16).\nHence there was no arguable defence and the claimants were entitled to possession. 13.\nJudge Denyer granted permission to appeal on whether the discrimination defence should be treated in the same way as an article 8 defence.\nThat appeal was dismissed by Cranston J, on the ground that the usual structured approach to proportionality issues in discrimination claims should not apply because of the context, which was the homelessness duties of local authorities.\nThe same reasons, given in Pinnock and Powell, for rejecting the structured approach to an article 8 defence applied to a discrimination defence (para 33). 14.\nA further appeal to the Court of Appeal was also dismissed: [2014] EWCA Civ 1081, [2014] 1 WLR 3980.\nIt held that the approach to proportionality was the same under the Equality Act as it was under article 8 (para 27) and the weight to be given to the interests of a social landlord was no different (para 29).\nFor a tenant to succeed in a disability discrimination case he will have to show some considerable hardship which he cannot fairly be asked to bear (para 37).\nThere was no difference between a social landlord acting on the instructions of a local housing authority and the local housing authority itself (para 46).\nThe Equality Act 2010 15.\nThe scheme of the Equality Act 2010 is to define what is meant by discrimination and then to define the circumstances in which such discrimination is unlawful.\nThe Act prohibits both direct and indirect discrimination against disabled persons in the same way that it prohibits discrimination against persons with the other characteristics protected by the Act.\nBut it also contains two types of discrimination which are specific to persons with a disability.\nIt is discrimination to fail to comply with the specific duties to make the reasonable adjustments which are required by the Act in particular contexts (section 21(2)).\nThere is also a more general concept of disability discrimination defined by section 15: (1) 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. (2) Subsection (1) does not apply if A shows that A did not know, and could not reasonably have been expected to know, that B had the disability. 17. 16.\nUnder section 35(1)(b), A person (A) who manages premises must not discriminate against a person (B) who occupies the premises by evicting B (or taking steps for the purpose of securing Bs eviction).\nThe eviction is unfavourable treatment for the purpose of section 15.\nIt was held by the House of Lords in Lewisham London Borough Council v Malcolm [2008] AC 1399 that it might therefore be unlawful to evict a disabled person even though the disabled person had no other claim to remain in the property.\nAs Lord Bingham explained: Parliament has enacted that discriminatory acts proscribed by the [Disability Discrimination Act 1995] are unlawful.\nThe courts cannot be required to give legal effect to acts proscribed as unlawful (para 19).\nThe same would, of course, apply to an eviction which was unlawfully discriminatory on other grounds, such as race or sex.\nHence, as the Court of Appeal in this case correctly said (para 2), if the appellant succeeds in his defence that bringing the proceedings amounted to discrimination against him by reason of his disability, in breach of section 15, the court could not make a possession order. 18.\nWhere section 15 is raised, therefore, and assuming that the defendant is in fact disabled within the meaning of the Act, there are two key questions: (a) whether the eviction is because of something arising in consequence of Bs disability; this was a reformulation from that in the Disability Discrimination Act 1995, intended to make it clear that where something arising in consequence of the disability was the reason for the unfavourable treatment, the landlord (or other provider) would have to justify that treatment; there was no need for a comparison with how it would treat any other person; it might have to behave differently towards a disabled tenant from the way in which it would behave towards a non disabled tenant; and if so (b) whether the landlord can show that the unfavourable treatment is a proportionate means of achieving a legitimate aim. 19.\nAlso relevant is section 136, headed Burden of Proof: (1) This section applies to any proceedings relating to a contravention of this Act. (2) If there are facts from which the court could decide, in the absence of any other explanation, that a person (A) contravened the provision concerned, the court must hold that the contravention occurred. (3) But subsection (2) does not apply if A shows that A did not contravene the provision.\nThus, for example, if there are facts from which the court could conclude that an eviction was because of something arising in consequence of a persons disability then it would be for the alleged discriminator to prove that it was not.\nIf he could not do so, the burden would then be upon him to show that it was nevertheless a proportionate means of achieving a legitimate aim.\nArticle 8 20.\nThe Supreme Court cases of Pinnock and Powell were the culmination of a long process of dialogue between the highest courts in the United Kingdom and the European Court of Human Rights in Strasbourg as to the extent to which the protection given to a persons home under article 8 of the European Convention applied to social housing which the occupier had no right to occupy in domestic law.\nIn Manchester City Council v Pinnock [2011] 2 AC 104, the Supreme Court held that article 8 does apply to a possession action brought by a local authority against a tenant who has no other right to remain in the property.\nIf an article 8 defence is raised, therefore, the court has to determine whether it would be proportionate to make the order (para 49).\nHowever, the aims of making such an order are, first, to vindicate the local authoritys property rights, and secondly, to enable the authority to comply with its statutory duties in the allocation and management of the housing stock available to it (para 52), including, for example, the fair allocation of its housing, the redevelopment of the site, the refurbishing of sub standard accommodation, the need to move people who are in accommodation that now exceeds their needs, and the need to move vulnerable people into sheltered or warden assisted housing.\nIn many cases there might also be other cogent reasons, such as the need to remove a source of nuisance to neighbours, to support the proportionality of dispossessing the occupiers. 21.\nThese twin aims should be a given which did not have to be explained or justified by the authority, unless it wanted to establish some further reason in the particular case (para 53).\nIn virtually every case there will be a strong case for saying that the possession order would be a proportionate means of achieving those aims (para 54).\nAs a general rule, therefore, article 8 should only be considered if it is expressly raised by or on behalf of a residential occupier and initially should be considered summarily and only allowed to proceed if, were the facts alleged to be made out, it might make a difference (para 61).\nHowever, the court agreed with the Equality and Human Rights Commission that proportionality was more likely to be relevant in respect of occupants who are vulnerable as a result of mental illness, physical or learning disability, poor health or frailty (para 64).\nThe effect might justify granting an extended period for possession, suspending the order or even refusing it altogether (para 62). 22.\nPinnock concerned a demoted tenancy that is a formerly secure local authority tenancy which had been demoted because of anti social behaviour.\nIn Hounslow London Borough Council v Powell [2011] 2 AC 186, the same principles were applied to introductory tenancies and to accommodation provided under a local authoritys duties towards the homeless.\nThere was nothing in Part 7 of the 1996 Act which prevented a court from refusing to make a possession order if it would not be proportionate to do so (para 39).\nNevertheless, the court would only have to consider the proportionality issue if it had been raised by the occupier and it has crossed the high threshold of being seriously arguable (para 33).\nOtherwise the court could dispose of it summarily.\nAre there any differences between article 8 and section 15? 23.\nThe courts below took the view that whatever differences there may be between the rights contained in article 8 and section 15, they were not such as to require a different approach to evictions from social housing.\nBoth depended on proportionality.\nThe twin aims were in most cases overwhelming (Court of Appeal, para 27).\nThere was no rational basis for saying that the weight to be given to the social landlords interest is somehow diminished where the tenant is relying on disability discrimination (para 29).\nThese propositions, attractive though they may appear, require some examination. 24.\nThe first and most obvious difference between article 8 and the Equality Act is that section 35 of the Equality Act applies to both private and public sector landlords, whereas only public authorities are obliged by section 6(1) of the Human Rights Act 1998 to act compatibly with the Convention rights. (It has been assumed for the purpose of this case that social landlords providing accommodation to enable local authorities to fulfil their duties towards the homeless are public authorities.) Thus no landlord, public or private can adopt a discriminatory policy towards eviction, for example, by evicting a black person where they would not evict a white.\nThus also no landlord, public or private, can evict a disabled tenant because of something arising in consequence of [his] disability unless the landlord can show that this is a proportionate means of achieving a legitimate aim. 25.\nThis tells us that the substantive right to equal treatment protected by the Equality Act is different from the substantive right which is protected by article 8.\nAll occupiers have a right to respect for their home.\nParliament has expressly provided for an extra right to equal treatment for people to be protected against direct or indirect discrimination in relation to eviction.\nParliament has further expressly provided, in sections 15 and 35, for disabled people to have rights in respect of the accommodation which they occupy which are different from and extra to the rights of non disabled people.\nLandlords may be required to accommodate, or to continue to accommodate, a disabled person when they would not be required to accommodate, or continue to accommodate, a non disabled person. 26.\nThis extra right is consistent with the obligations which the United Kingdom has now undertaken under the United Nations Convention on the Rights of Persons with Disabilities.\nThis defines discrimination on the basis of disability to include the denial of reasonable accommodation (article 2).\nStates Parties are required, not only to prohibit all discrimination on the basis of disability, but also In order to promote equality and eliminate discrimination, [to] take all appropriate steps to ensure that reasonable accommodation is provided (article 5(2) and (3)).\nBy reasonable accommodation is meant adjustment to meet the particular needs of a disabled person. 27.\nThis is not an absolute obligation.\nThe landlord is entitled to evict a disabled tenant if he can show that this is a proportionate means of achieving a legitimate aim.\nThe wording in section 15, and elsewhere in the Equality Act, is not the same as that in article 8, where the public authority has to show that its interference is necessary in a democratic society for one of the specific purposes listed there, but they have come to be interpreted in the same way. 28.\nThe concept of proportionality contained in section 15 is undoubtedly derived from European Union law, which is the source of much of our anti discrimination legislation.\nThree elements were explained by Mummery LJ in R (Elias) v Secretary of State for Defence [2006] 1 WLR 3213, at para 165: First, is the objective sufficiently important to justify limiting a fundamental right? Secondly, is the measure rationally connected to the objective? Thirdly, are the means chosen no more than is necessary to accomplish the objective? This three fold formulation was drawn from the Privy Council case of de Freitas v Permanent Secretary of the Ministry of Agriculture, Fisheries, Lands and Housing [1999] 1 AC 69, 80, which was itself derived from the Canadian case of R v Oakes [1986] 1 SCR 103.\nHowever, as Lord Reed explained in Bank Mellat v Her Majestys Treasury (No 2) [2013] UKSC 39, [2014] AC 700, para 68 et seq, this concept of proportionality, which has found its way into both the law of the European Union and the European Convention on Human Rights, has always contained a fourth element.\nThis is the importance, at the end of the exercise, of the overall balance between the ends and the means: there are some situations in which the ends, however meritorious, cannot justify the only means which is capable of achieving them.\nAs the European Court of Justice put it in R v Minister for Agriculture, Fisheries and Food, Ex p Fedesa (Case C 331\/88) [1990] ECR I 4023, the disadvantages caused must not be disproportionate to the aims pursued; or as Lord Reed himself put it in Bank Mellat, para 74, In essence, the question at step four is whether the impact of the rights infringement is disproportionate to the likely benefit of the impugned measure.\nIn Pinnock and Powell, the Supreme Court rejected this structured approach to proportionality where article 8 was the only defence that could be raised in answer to a possession claim by a social landlord.\nAs Lord Hope explained in Powell, para 41, . in the context of a statutory regime which has been deliberately designed by Parliament, for sound reasons of social policy, so as not to provide the occupier with a secure tenancy [the structured approach] would be wholly inappropriate .\nIt would give rise to the risk of prolonged and expensive litigation, which would divert funds from the uses to which they should be put to promote social housing in the area.\nIn the ordinary case the relevant facts will be encapsulated entirely in the two legitimate aims that were identified in Pinnock , para 52.\nIt is against those aims, which should 29. always be taken for granted, that the court must weigh up any factual objections that may be raised by the defendant and what she has to say about her personal circumstances. 30.\nIn the great majority of cases, the court is simply not equipped to judge the weight of an individuals right to respect for her home against the weight of the interests of the whole community for whom the authority has to manage its limited housing resources (para 35).\nIt simply does not follow that, because those twin aims will almost always trump any right to respect which is due to the occupiers home, they will also trump the occupiers equality rights.\nEquality rights prohibit both direct and indirect discrimination, as well as the special concept of disability discrimination.\nBut they all have the same aim, which is to secure equality of treatment, by prohibiting inequality of treatment on grounds of a protected characteristic.\nThus, save as expressly provided, there is no defence to direct discrimination.\nNo landlord is allowed to evict a black tenant in circumstances where he would not evict a white tenant.\nThe fact that the landlord is thereby vindicating his property rights is neither here nor there.\nNo landlord is allowed to adopt a lettings or eviction policy which indirectly discriminates against black people, unless he can show that it is a proportionate means of achieving some independent aim.\nThe aim of vindicating his property rights would indeed be a given, but is scarcely likely to be sufficient to justify a discriminatory provision, criterion or practice. 31.\nNo landlord is allowed to evict a disabled tenant because of something arising in consequence of the disability, unless he can show eviction to be a proportionate means of achieving a legitimate aim.\nHe is thus obliged to be more considerate towards a disabled tenant than he is towards a non disabled one.\nThe structured approach to proportionality asks whether there is any lesser measure which might achieve the landlords aims.\nIt also requires a balance to be struck between the seriousness of the impact upon the tenant and the importance of the landlords aims.\nPeople with disabilities are entitled to have due allowance made for the consequences of their disability (Malcolm, para 61).\nIt certainly cannot be taken for granted that the first of the twin aims will almost invariably trump that right.\nEven where social housing is involved, the general considerations involved in the second of the twin aims may on occasions have to give way to the equality rights of the occupier and in particular to the equality rights of a particular disabled person.\nThe impact of being required to move from this particular place upon this particular disabled person may be such that it is not outweighed by the benefits to the local authority or social landlord of being able to regain possession. 32.\nAs the Equality and Human Rights Commission have pointed out, the public policy considerations applicable to the general run of social housing cases are also different from the public policy considerations applicable to Equality Act claims.\nAs Etherton LJ explained in Thurrock, para 25, the reasons why the threshold is so high lie in the public policy and public benefit inherent in the functions of the housing authority in dealing with its housing stock, a precious and limited public resource.\nThat public policy and public benefit has to be weighed against the public policy and public benefit inherent in the Equality Act, aiming as it does to secure equal treatment and thus equal respect for the human dignity of all people, irrespective of their race, their gender, their sexual orientation, their religion or belief, or, in particular their disability.\nWhen a disability discrimination defence is raised, the question is not simply whether the social landlord is entitled to recover the property in order to fulfil its or the local authoritys public housing functions, but also whether the landlord or the local authority has done all that can reasonably be expected of it to accommodate the consequences of the disabled persons disability and whether, at the end of the day, the twin aims are sufficient to outweigh the effect upon the disabled person.\nThese are questions which a court is well equipped to address. 33.\nA further difference between article 8 and Equality Act cases is that the Equality Act contains express provisions relating to the burden of proof.\nThe general position under the Human Rights Act is that, once an interference with the protected right is established, the burden shifts to the public authority to prove that the interference is justified.\nHowever, in Pinnock and Powell the Supreme Court held that, in possession actions brought by social landlords against tenants who otherwise had no right to remain in the property, it could be taken for granted that the landlord was acting in pursuance of the twin aims and that to do so was proportionate in the great majority of cases.\nRequiring it to plead and prove this would be burdensome and futile (Pinnock, para 53, citing Lord Binghams observation to this effect in Kay v Lambeth London Borough Council [2006] 2 AC 465, para 29).\nI am prepared to accept that, in possession actions brought by social landlords against tenants who otherwise have no right to remain in the property, it can generally be taken for granted that the landlord is acting in pursuance of the twin aims; and further that those twin aims are entitled to weigh heavily in a proportionality exercise.\nHowever, as already explained, that is not by itself enough to counter a discrimination defence.\nOnce facts are established that could give rise to a discrimination claim, the burden shifts to the landlord to prove otherwise.\nThis will depend upon the particular type of discrimination alleged.\nIf it is a claim (or defence) of direct discrimination, for example that a disabled person has been evicted when a non disabled person in the same or similar circumstances has not, then the landlord would have to show that 34. the disability was not the reason for the difference in treatment.\nIf it is a claim of indirect discrimination, for example that the landlord has imposed a requirement upon its tenants which puts disabled tenants at a particular disadvantage, then the landlord would have to show that there was a good independent reason for the requirement.\nIf it is a claim of disability discrimination under section 15, then the landlord would have to show that there was no less drastic means of solving the problem and that the effect upon the occupier was outweighed by the advantages.\nThe express burden of proof provisions in the Equality Act cannot simply be ignored because there are some elements in the proportionality exercise which can be taken for granted.\nSummary disposal 35.\nPossession actions are governed by Part 55 of the Civil Procedure Rules.\nA claim will be allocated a fixed return date for hearing between four and eight weeks after it is issued.\nGiven the huge volume of such claims, they are normally listed in batches on the basis that they will take only a few minutes each.\nAt that hearing the court will either decide the claim or, in the event that it is genuinely disputed on grounds that appear to be substantial (CPR 55.8(2)), will allocate it to a track and give case management directions.\nThus the case can be summarily disposed of at the first hearing.\nNor is there anything to prevent the court deciding to dispose of it summarily at a later hearing.\nAs the Court of Appeal pointed out (para 42), the court can deal with possession claims summarily without the summary judgment provisions of CPR Part 24 being invoked.\nHence claims where the only defence is article 8 will be dealt with summarily unless the case raised by the occupier has crossed the high threshold of being seriously arguable (Powell, paras 33, 34). 36.\nThere may also be cases where a discrimination defence is so lacking in substance that summary disposal is merited.\nThe test is whether the claim is genuinely disputed on grounds that appear to be substantial.\nI agree with Lord Neuberger (para 59) that the case could be summarily disposed of if the landlord could show (i) that the defendant had no real prospect of proving that he was disabled within the meaning of the Act; or (ii) that it was plain that possession was not being sought because of something arising in consequence of his disability; or (iii) that bringing and enforcing the claim were plainly a proportionate means of achieving a legitimate aim.\nLike him, I suspect that such cases will be rare.\nThe course taken at the outset of this case by District Judge Smith was, in my view, the entirely proper course to take on the information which was then available to him.\nThe question now is whether the course taken by Judge Denyer QC, in summarily disposing of the case (albeit after a day of legal argument), was the proper one to take in the circumstances as they then were.\nSummary disposal in this case? 37.\nIt is very easy to understand why Judge Denyer reached the conclusion that he did.\nThe local authority had accepted that the appellant was a vulnerable person in priority need and he had been allocated this accommodation accordingly.\nNumerous attempts had been made to find permanent accommodation which was acceptable to him.\nEventually the authority concluded that he had refused a final offer of suitable accommodation.\nHence these proceedings were begun.\nHowever, he then made a fresh application and the authority acknowledged, on review, that he had not become homeless intentionally.\nThis was because it accepted that the alternative accommodation was not suitable because of his disability.\nHence the proceedings were stayed.\nThen a fresh offer was made of accommodation in the very street where he was living.\nHow could it possibly be disproportionate to require him to move into that? 38.\nThere are, however, two problems with Judge Denyers approach.\nThe first is that he appears to have regarded his role as akin to the role of the county court judge in homelessness appeals under section 204 of the 1996 Act, in other words, as akin to a judicial review role.\nIt is, however, clear that in possession actions generally, and in discrimination cases in particular, the role of the court is not akin to judicial review.\nIt has to undertake the proportionality exercise itself.\nThe second problem is that he regarded the proportionality exercise under section 15 as the same as the proportionality exercise under article 8.\nFor the reasons given earlier, it cannot be exactly the same.\nWhile some things can be taken for granted, and some cases may be so clear that summary disposal is warranted, the issues are not all the same.\nIn this particular case, the first issue was whether the appellants inability even to take up an offer of accommodation in the same street was something which arose out of his mental illness.\nMr Callows evidence raised a substantial case that it was.\nIf he was right about that (and of course his evidence could have been challenged), then the next question was whether there was any lesser action that could have been taken and, if there was not, whether the harm to the appellant of forcing him to move was outweighed by the benefit to the landlord, the local authority, to the other homeless people in the area, and to the public generally, of being able to obtain possession of this particular property.\nThe landlord might very well have been able to show that it was.\nThere may have been good reasons why it was not practicable to leave the appellant where he was and put the alternative accommodation in 39. 40. 41. the same road to the use to which it was wished to put his flat.\nBut in my view the time which Judge Denyer devoted to this case ought to have been spent on considering the merits of the appellants defence rather than listening to a days legal argument devoted to whether to do that.\nI am afraid, therefore, that I cannot be satisfied that the outcome would have been the same had he considered the defence on its merits and so, had matters remained as they then were, I would have allowed this appeal and sent it back so that those merits could be properly explored.\nI recognise, however, that things have moved on since then.\nThere would not only be little point, but also some injustice, in sending the case back for a hearing, the result of which would be inevitable.\nThose later events are recounted in Lord Wilsons judgment and I agree with him that they would inevitably result in a possession order now being made.\nIn those circumstances, it would not only be unjust to the respondent and the building owners, but also no kindness to the appellant, to prolong matters further.\nI would therefore dismiss this appeal.\nLORD NEUBERGER: 42.\nI have had the benefit of reading in draft the judgments of Lady Hale and Lord Wilson. 43.\nAs to the law, Lady Hale has fully set out the relevant statutory material at paras 15 to 22.\nI agree with her that the Court of Appeal, Cranston J and Judge Denyer QC were wrong to hold that, in relation to a claim for possession of residential premises, a court should take the same approach to a defence raising an argument of unlawful discrimination under section 35(1)(b) of the Equality Act 2010 Act (the 2010 Act) as to a defence based on article 8 of the European Convention on Human Rights (the Convention). 44.\nHowever, this does not mean that the court cannot summarily make an order for possession against a residential occupier who raises an unlawful discrimination defence.\nIndeed, on the facts of this case as they now are, I agree with Lord Wilson that the summary order for possession made by Judge Denyer should not be disturbed.\nI turn first to the law.\nIn three successive cases, Harrow London Borough Council v Qazi [2003] UKHL 43; [2004] 1 AC 983, Kay v Lambeth London Borough Council [2006] UKHL 10; [2006] 2 AC 465, and Doherty v 45. 46. 47.\nBirmingham City Council [2008] UKHL 57; [2009] AC 367, the House of Lords held that a residential occupier, who had no right to occupy his home in domestic law, could never succeed in relying on article 8 of the Convention (article 8) to resist an order for possession in favour of a public authority land owner, on the ground that it would be disproportionate in his particular circumstances.\nThis conclusion was expressed thus by Lord Hope in Kay at para 110: a defence which does not challenge the law under which the possession order is sought as being incompatible with article 8 but is based only on the occupier's personal circumstances should be struck out.\nTo much the same effect, he observed that, where the defence did not challenge the compatibility of the legislation with the Convention, then if the requirements of the law have been established and the right to recover possession is unqualified, the defendant would not be entitled to raise an article 8 proportionality defence.\nIn Pinnock, however, the Supreme Court accepted that this conclusion had been decisively rejected by the Strasbourg court.\nIn Pinnock and the subsequent case of Powell, the Supreme Court accordingly restated the law in relation to the issue.\nIn those two decisions, this court laid down the approach which should be adopted by first instance judges to claims for possession of residential property where the defendant raised a defence that, in the light of article 8 of the Convention, it would be disproportionate to require him to vacate his home even though he had no domestic right to remain there.\nAs Lord Hope explained in Powell at paras 33 and 35, [t]he court will only have to consider whether the making of a possession order is proportionate if the issue has been raised by the occupier and it has crossed the high threshold of being seriously arguable, and that the threshold for raising an arguable case on proportionality was a high one which would succeed in only a small proportion of cases. 48.\nAs Lord Hope explained in Powell, para 36, The proportionality of making the order for possession at the suit of the local authority will be supported by the fact that making the order would (a) serve to vindicate the authority's ownership rights; and (b) enable the authority to comply with its public duties in relation to the allocation and management of its housing stock.\nAccordingly, as he went on to say in the next paragraph, there will be no need, in the overwhelming majority of cases, for the local authority to explain and justify its reasons for seeking a possession order.\nIt will be enough that the authority is entitled to possession because the statutory pre requisites have been satisfied and that it is to be assumed to be acting in accordance with its duties in the distribution and management of its housing stock. 49.\nSo far as procedure is concerned, this court observed in Pinnock at para 61, that if an article 8 point is raised, the court should initially consider it summarily, and if, as will no doubt often be the case, the court is satisfied that, even if the facts relied on are made out, the point would not succeed, it should be dismissed.\nLord Phillips expressed the same view in Powell at para 92, when he said that the judge should summarily dismiss any attempt to raise a proportionality argument unless the defendant can show that he has substantial grounds for advancing this and that it was extremely unlikely that the defendant will be in a position to do this. 50.\nThe question of principle raised by this appeal is whether the same approach is appropriate where the defence raised is based on unlawful discrimination under the 2010 Act. 51.\nThe facts that (i) the landlord is vindicating its property rights by seeking possession and (ii) the landlord has to take into account competing demands from other potential or actual occupiers of residential accommodation are plainly very telling points when weighed against the article 8 rights of a public sector occupier with no domestic law right to be in occupation.\nAfter all, every residential occupier of property, at least if it is owned by a public authority, is entitled to the benefit of article 8, and there are domestic statutes which bestow a measure of protection on residential tenants of public sector landlords.\nIt is therefore to be presumed, at least in the general run of cases, that Parliament has decided how the right to respect for an occupiers home is to be balanced against a public sector owners right to possession.\nAccordingly, it must be very much for the occupier to raise and make out a proportionality defence to a claim for possession of his home, and it will be a very unusual case where such a defence could succeed.\nIt follows that, in the great majority of cases, the court will be able, at a preliminary stage, to hold that a defendants proportionality argument should be rejected simply on the ground that, even if all the facts which he relies on are made out, he would fail. 52. 53.\nThe position is different in a case where a defendant relies on section 35(1)(b) of the 2010 Act (section 35(1)(b)).\nThat is neatly illustrated by the point that, unlike in the cases cited in para 45 above in relation to article 8, it would be inconceivable that a court could have held that an occupier of residential property could not rely on his particular circumstances to justify a defence under section 35(1)(b) to a claim for possession once his landlord had established a right to possession. (That may appear at first sight to be a questionable proposition in the light of the majority view in Lewisham London Borough Council v Malcolm [2008] UKHL 43; [2008] AC 1399 subsequently reversed by the 2010 Act but that was, on analysis, concerned with a rather different point). 54.\nThe defence afforded by article 8, as considered in Pinnock and Powell, applies to an occupier of residential property against whom possession is sought by a public sector landlord.\nThe defence afforded by section 35(1)(b), by contrast, extends to occupiers of any type of property against whom possession is sought by any landlord provided, of course, that the occupier is a disabled person.\nWhile the marked distinction in the ambit of the two provisions does not automatically undermine the notion that the same substantive and procedural principles apply to possession claims where the two types of defence are raised, it certainly negatives the notion that they should be expected to be the same. 55.\nMore specifically, although both types of defence involve the court considering the proportionality of making an order for possession, the protection afforded by section 35(1)(b) is plainly stronger than the protection afforded by article 8.\nSection 35(1)(b) provides a particular degree of protection to a limited class of occupiers of property, who are considered by Parliament to deserve special protection.\nThe protection concerned is founded on a desire to avoid a specific wrong in a number of fields, not just in relation to occupation of property, namely discrimination against disabled persons.\nFurther, once the possibility of discrimination is made out, the burden of proof is firmly on the landlord to show that there was no discrimination contrary to section 15(1)(a), or that an order for possession is proportionate under section 15(1)(b), of the 2010 Act see section 136 of that Act.\nAdditionally, the proportionality exercise under section 15(1)(b) involves focussing on a very specific issue, namely the justification for discrimination. 56.\nAll this is very different from the home related, but otherwise far less specific and targeted, article 8 defence.\nThus, the protection afforded by section 35(1)(b) is an extra, and a more specific, stronger, right afforded to disabled occupiers over and above the article 8 right.\nIt is also worth mentioning that this conclusion ties in with what was said in Pinnock at para 64, namely that as suggested by the Equality and Human Rights Commission, proportionality is more likely to be a relevant issue in respect of occupants who are vulnerable as a result of mental illness, physical or learning disability, poor health or frailty, and that the issue may also require the local authority to explain why they are not securing alternative accommodation in such cases.\nIn other words, where the occupier is disabled, it is significantly less unlikely than in the normal run of cases that an article 8 defence might succeed. 57.\nAs Lady Hale says, the difference between the article 8 defence to possession and a defence under section 35(1)(b) is further underlined by the fact that, in relation to an article 8 proportionality defence, the Supreme Court has expressly rejected the applicability of the sort of structured approach which has been held to be generally appropriate to a disability discrimination proportionality defence (and which there is no reason not to apply where proportionality under section 15(1)(b) is in issue in a possession action) compare Powell at para 34 per Lord Hope and R (Elias) v Secretary of State for Defence [2006] 1 WLR 3213, para 165 per Mummery LJ. 58.\nAccordingly, it appears to me clear that it is wrong to equiparate, either procedurally or substantively, a defence under section 35(1)(b) to a possession action with a defence under article 8 to a possession action.\nProvided that a defendant establishes that the landlord is (or at a summary stage, may well be) seeking to evict him because of something arising in consequence of [his] disability, the landlord faces a significantly more difficult task in having to establish proportionality than does a landlord who faces an article 8 defence. 59.\nThat does not, however, mean that a landlord whose possession claim is met with a defence to the effect that possession is being sought because of something arising in consequence of [the defendants] disability, cannot seek or obtain summary judgment for possession.\nPossession could be ordered summarily if the landlord could establish that (i) the defendant had no real prospect of establishing that he was under a disability, (ii) in any event, it was plain that possession was not being sought because of something arising in consequence of [the] disability, or (iii) in any event, the claim and its enforcement plainly represented a proportionate means of achieving a legitimate aim. 60.\nThe problem for a landlord seeking summary judgment for possession in such a case would not be one of principle, but one of practice.\nEach of the three types of issue referred to in the immediately preceding paragraph would often give rise to disputed facts or assessments, eg whether the defendant suffers from a physical or mental disability, whether it has led to the possession claim, and where the proportionality balance comes down.\nSummary judgment is not normally a sensible or adequate procedure to deal with such disputes, which normally require disclosure of documents, and oral and\/or expert evidence tested by cross examination.\nThere will no doubt be cases where a landlord facing a section 35(1)(b) defence may be well advised to seek summary judgment, but they would, I suspect, be relatively rare. 61.\nTurning to the facts of this case, it is fair to say that the claimant landlord had a fairly strong case before Judge Denyer QC even though it seems clear that (i) the defendant tenant is a person suffering from a disability and (ii) the claimant is seeking possession because of something arising in consequence of [the defendants] disability.\nThe history as summarised by Lady Hale suggests that the claimant and the local housing authority had gone out of their way to accommodate the defendant, and that, if there had been a full hearing, a judge may very well have reached the same conclusion as was reached by Judge Denyer QC at a summary stage. 62.\nHowever, for the reasons given by Lady Hale and myself, Judge Denyer QC misdirected himself in holding that he should approach the defendants section 35(1)(b) defence in the same way as if it had been an article 8 defence.\nIn those circumstances, the appeal against his decision ought to be allowed, unless we could be satisfied that either (i) had the judge applied the right test, namely the threefold approach identified by Mummery LJ in Elias at para 165, he could only properly have reached the same conclusion as he did, namely that an order for possession should be made, or (ii) if the claim was now remitted to the county court, it is effectively inevitable that an order for possession would be made after a full hearing before a judge. 63.\nFor the reasons given so cogently by Lord Wilson, I am of the view that this is a case where the second of those two alternatives applies.\nI would therefore dismiss this appeal.\nLORD WILSON: 64.\nIn substantial agreement with the legal analysis offered by Lady Hale and Lord Neuberger I conclude as follows: (a) The normal procedure of the court in addressing a defence under section 35(1)(b) of the 2010 Act to an action for possession should not be equated with its normal procedure in addressing a defence to such an action under Article 8 of the Convention. (b) Where a defence is raised under section 35(1)(b) to an action for possession, there should be no presumption that the action is fit for summary disposal.\nOn the contrary rule 55.8(2) of the CPR calls for a careful evaluation at that initial stage whether the claim is genuinely disputed on grounds which appear to be substantial. (c) Where such a defence is raised, the court should adopt a four stage structured approach to the claimants attempt to show, pursuant to section 15(1)(b) of the 2010 Act, that the steps which it is taking for the purpose of securing the defendants eviction are a proportionate means of achieving a legitimate aim. 65.\nI consider however that the appeal should be dismissed on the basis that, although it would be conducted in accordance with the guidance which Lady Hale and Lord Neuberger have given, the full trial would inevitably result in a further order for possession against the defendant.\nIn my opinion the claimant is correct to submit that there is no real dispute of fact, with the result that there is no inhibition on the ability of an appellate court even at this stage to form a clear view of the proper result. 66.\nThe situation of the defendant is deeply tragic.\nThe evidence is that he is highly intelligent and gifted but that his disorder has disabled him from engaging in the therapy which he needs and from cooperating with many of those, particularly of those in authority, who seek to help him.\nAttempts to improve his situation are therefore locked.\nSadly the law can do little to unlock them.\nBut he has the support of a close friend and advocate; of Mr Callow, a distinguished chartered psychologist; and of the inestimable Shelter, which represents him.\nGranted also what appears to be the continued goodwill of the local housing authority (Mendip) and its acceptance that, even if the defendants appeal were dismissed, it would nevertheless owe him the limited duties set out in section 190(2) of the 1996 Act, there is some hope that, between them, they can spark a positive response within the defendant.\nIn that he has a mental impairment which has a substantial and long term adverse effect on his ability to carry out normal day to day activities, the defendant has a disability within the meaning of section 6 of the 2010 Act.\nIn that the claimant is taking steps for the purpose of securing his eviction from the flat in Glastonbury, it is treating him unfavourably within the meaning of section 15(1)(a) of that Act.\nIn that its claim is founded on his refusal of Mendips final offer of accommodation within the meaning of section 193(7) of the 1996 Act and that, as Mr Callow has explained, his refusal is attributable to his psychological inability to make a decision, the cause of the unfavourable treatment is something arising in consequence of [his] disability within the meaning of section 15(1)(a) of the 2010 Act.\nOne may therefore confidently conclude that, at any full trial, the only issue would be 67. whether the claimant can show that the steps which it is taking for the purpose of securing the defendants eviction are a proportionate means of achieving a legitimate aim within the meaning of section 15(1)(b) of that Act. 68.\nThe structured approach requires attention to be given, first, to the claimants aims or objectives in taking the steps for the purpose of securing the defendants eviction.\nIn the Pinnock case, cited at para 20 above, Lord Neuberger MR, indicated on behalf of this court, at para 52, that one aim of a possession action would be the vindication of the claimants ownership rights and that a second aim of a possession action brought by a housing authority would usually be to enable it to comply with its duties in relation to the distribution and management of its housing stock.\nAdapted to the facts of this case, in which the action is not brought by Mendip, the housing authority, but by a registered social landlord which has agreed with Mendip to let accommodation at its request to those whom Mendip is obliged (or elects) to accommodate under Part VII of the 1996 Act, the usual second aim, if it were to exist in the present case, would be to enable Mendip to comply with its duties (and to exercise its powers) through its agreement with the claimant to provide accommodation to homeless persons under the 1996 Act.\nIn the Pinnock case Lord Neuberger MR added, at para 53, that, in relation to an Article 8 defence, the twin aims can be a given and, at para 34 above, Lady Hale accepts that, in relation to a defence under section 35(1)(b) of the 2010 Act, they can also be a given.\nIn its Reply to the Defence the claimant expressly invoked the usual second aim.\nIt did so in the following terms: 70. 69.\nIn remaining in occupation, the Defendant is preventing other applicants for housing assistance whom the Council has determined it does owe a duty to from enjoying the better standard of accommodation which the Council could secure for them by requesting the Claimant to accommodate them temporarily in the Property.\nBut the Reply was filed more than two years ago.\nEvents have supervened.\nThe usual second aim no longer exists in the present case and, were there to be a full trial, should therefore on no account be accepted as a given.\nIt has been replaced by an aim which is even more compelling: for the claimant now urgently needs vacant possession of the flat occupied by the defendant (Flat One) in order to comply with its own legal obligations. 71.\nMaterial to the above effect has, without controversy, been put before this court, as it was before the Court of Appeal, and, were there to be a full trial, the claimant would no doubt be permitted to amend its Reply in order to plead it.\nThere is nothing to indicate that the claimants proposed averments are disputed so in all likelihood it would not even have to prove them.\nThey are to the following effect: (a) Flat One is one of eight flats in a building in Glastonbury. (b) At all material times the freehold of the building has been held by a small property company, subject to a mortgage. (c) The claimants interest in the flats has been as a leaseholder, namely under eight separate fixed term leases.\nThe claimant entered into the leases in order to perform its agreement with Mendip to provide temporary accommodation to those whom Mendip was required (or elected) to accommodate under Part VII.\nIn August 2010, at Mendips request, the claimant let Flat One to the defendant under a weekly tenancy.\nOn 18 July 2011, following Mendips conclusion, upon review, that it had ceased to be subject to a duty to secure accommodation for him, the claimant served him with notice to quit effective from 21 August 2011.\nThe appeal proceeds on the basis that the notice to quit validly terminated his tenancy. (d) (e) The fixed terms of the claimants leases of the eight flats expired on dates no later than February 2014 and thereafter it held them on monthly tenancies. (f) Early in 2014 Mendip informed the claimant that, for reasons of policy, it had decided no longer to request it to provide accommodation in the building for those whom it was required (or elected) to accommodate under Part VII. (g) Coincidentally and at about the same time, the freeholder, under pressure from its mortgagee, determined to sell the building with vacant possession. (h) In April 2014 the claimant served on the freeholder notice to quit seven of the eight flats but, because of the pending appeal, not Flat One. (i) On 1 May 2014, however, the freeholder served on the claimant notice to quit Flat One, effective from 30 June 2014.\nSince then the claimant has had no interest in Flat One, save that the freeholder has granted to it a licence to enforce the possession order made by Judge Denyer QC if and when it can. 72. (j) The claimants breach, to date, of its obligation to give vacant possession to the freeholder of Flat One appears to have disabled the latter from selling the building to a buyer who has been ready to purchase it with vacant possession.\nIn this regard the claimant is at risk of a claim by the freeholder for damages.\nIt was in his short oral reply on the defendants behalf that Mr Luba reminded this court that, no doubt after consultation with Mendip, the claimant had made an offer to the defendant of a flat along the very street on which the building is situated; and, he then raised the question why the claimant could not accommodate the intended occupant of Flat One in the flat along the street because, if such could be achieved, it would enable the defendant to continue to occupy Flat One.\nIt seems clear, however, that the claimant does not intend to place another occupant in Flat One: Mendip no longer wishes to place a homeless person there and the claimant no longer has the right to allow anyone to occupy it. 73.\nThe structured approach requires attention to be given, second, to the existence or otherwise of a rational connection between the claimants objectives and the defendants eviction (upon which the conclusion must be that it exists) and, third, to whether the eviction is no more than is necessary to accomplish them (upon which the conclusion must be that it is indeed no more than is necessary).\nBut there is a fourth element to which the structured approach requires that attention be given.\nFor the eviction may be proportionate to the claimants objectives without being proportionate in the necessary wider sense.\nSection 15(1)(b) of the 2010 Act requires the claimant to show that the eviction strikes a fair balance between its need to accomplish its objectives and the disadvantages thereby caused to the defendant as a disabled person. 74.\nSo the focus turns at last upon the defendant, in relation to whom the relevant facts are as follows: (a) The defendant began to occupy Flat One in August 2010.\nIt was intended to be temporary accommodation because it was provided pursuant to Mendips duty to him under section 193 of the 1996 Act. (b) By the date of any full trial he will have remained in occupation of Flat One for almost five years. (c) Efforts to place the defendant in permanent accommodation owned or procured by Mendip began as soon as he began to occupy Flat One.\nMendip operates a system whereby those eligible for social housing can bid for available properties, as can Mendip on their behalf. (e) (d) Between the summer 2010 and March 2011 eleven properties in Mendips area were canvassed for possible occupation by the defendant.\nIn relation to ten of them, either he declined to bid; or he told Mendip not to bid on his behalf; or he withdrew his bid; or, after his bid had been accepted, he rejected the property.\nBut it seems that, in the light of his disability, all 11 of them were unsuitable for him for one reason or another.\nIn his Defence dated 22 December 2011 to the claim for possession the defendant asserted that he required to continue to occupy Flat One only for so long as it would take to find more permanent suitable accommodation in a suitable area having regard to his disability.\nIn September 2012 the claimant offered to the defendant a starter tenancy of the flat situated along the same street as the building.\nThe fact is that this flat was suitable for him.\nAccording to Mr Callow, it was the defendants state of mind which prevented him from accepting it.\nHaving previously reversed its original decision to this effect, Mendip thereupon again decided that its duty to the defendant under section 193 of the 1996 Act was discharged.\nRepresented at this stage by Shelter, the defendant did not request a review of the decision pursuant to section 202 because he could not dispute that the flat situated along the same street had been suitable for him. (f) 75. 76. (g) As recently as 11 June 2014, Shelter, by letter, reiterated to the claimant that the surest way in which it would secure vacant possession of Flat One prior to the expiry, which was then imminent, of the freeholders notice to quit would be for it immediately to make or procure an offer of suitable alternative accommodation to him. (i) (h) But, at the hearing before this court, the stance taken on behalf of the defendant inevitably changed.\nChange was inevitable because, in that the defendant had been unable to accept the suitable accommodation along the street, there were no grounds for considering that there was any change in his condition which might enable him at this stage to accept other suitable accommodation.\nThe stance became as follows: This is a case where therapy was and is required.\nPending receipt of this, moves to evict [the defendant] ought not to be made.\nIt is unclear whether, and if so when and for how long, the defendant has undergone therapy.\nIn December 2011 Mr Callow commented that he had seldom seen someone more in need of therapy than the defendant and in July 2012 he added that the defendant had needed therapy for many years.\nThere is no evidence that the defendant has embarked or, as would be a fairer description, has been able to embark on therapy since Mr Callow made his comments.\nSo the question arises: no eviction prior to receipt of therapy means eviction when? In the light of the above my view is that, no doubt with the utmost reluctance, the judge at any full trial of the action would feel bound to conclude that the eviction would strike a fair balance between the claimants need to accomplish its objectives and the disadvantages thereby caused to the defendant; that therefore the eviction would be a proportionate means of achieving a legitimate aim; and that, by securing his eviction, the claimant would therefore not be discriminating against him.\nIn January 2013 the defendants close friend and advocate wrote that the legal issues surrounding his housing, economy and care were causing him severe stress.\nNo doubt they have continued to do so.\nSo my postscript is that it would not even be a kindness to the defendant to prolong the current action by a remission of it for a full trial of which the result is a foregone conclusion.\nLORD CLARKE AND LORD HUGHES: 77.\nWe agree that the relevant principles are those stated by Lady Hale, Lord Neuberger and Lord Wilson.\nWe also agree that the appeal should be dismissed, essentially for the reasons given by Lord Wilson. of his refusal of suitable accommodation.\nHe did not seek a review of that decision.\n","output":"The issue in this appeal is the proper approach of the courts when a defendant to a claim for possession of his home raises a defence of unlawful discrimination by the landlord, contrary to the Equality Act 2010 (the EA); in particular, whether such defences may be dealt with in the same way as defences alleging a breach of the rights to respect for the home protected by Article 8 of the European Convention on Human Rights.\nThe appellant is a 47 year old man.\nHe has chronic and severe mental ill health amounting to a disability for the purposes of the EA.\nHe became homeless in 2010 and under the Housing Act 1996 the local housing authority was under a duty to secure accommodation for him.\nThat duty would cease if he refused an offer of suitable accommodation elsewhere.\nThe appellant was placed in a flat in a building in Glastonbury leased by the respondent housing association and numerous attempts were made to find an acceptable home for his permanent occupation over the next nine months.\nHe refused them all so in April 2011 the local authority notified him that the duty to house him had been discharged.\nThe respondent served notice on him to quit the flat and issued a claim for possession.\nThe appellants defence was that a possession order would (i) amount to disability discrimination and (ii) breach his Article 8 rights, and it was supported by medical evidence of his vulnerability and need for intensive therapy.\nDuring the course of the proceedings the local authority came under a duty to house him again after the appellant made a fresh homelessness application in December 2011.\nThe duty ended after he was offered, but refused, an offer of a property in the same road as the flat, in which he was still living.\nThe respondent applied to reinstate the proceedings and a preliminary hearing took place in June 2013 in the Bristol County Court to decide whether or not the appellant could raise his defence.\nThe judge took the same approach to both grounds and held summarily that neither defence was arguable.\nThe appellants appeals from this decision were dismissed in the courts below.\nIn May 2014 the freeholder of the building in which the appellant has his flat served notice to quit on the respondent.\nThe respondent is therefore now in breach of its legal obligation to give vacant possession of the flat so that the building can be sold.\nThe Supreme Court unanimously dismisses the appeal.\nLady Hale, Lord Neuberger and Lord Wilson give substantive judgments stating the applicable principles and holding that the judge misdirected himself in adopting the same approach to the defence of disability discrimination as to the alleged\nbreach of Article 8.\nHowever, for the reasons given by Lord Wilson, supervening events mean that the matter should not be remitted to the court below, as an order for possession is now inevitable.\nA complaint of disability discrimination under s 15 EA in response to an eviction raises two key questions: (i) whether the eviction is because of something arising in consequence of the complainants disability; and (ii) whether the landlord can show that the eviction is a proportionate means of achieving a legitimate aim [18].\nA court considering whether an eviction is proportionate when a defence under Article 8 is raised can assume that an order would meet the legitimate aims of vindicating a local authoritys property rights and of enabling the authority to comply with its statutory duties in the allocation and management of the housing stock available to it.\nIn virtually every case there will be a strong case for finding that the possession order would be a proportionate means of achieving those aims.\nThus as a general rule the defence should be considered summarily and only be allowed to proceed if it crosses the high threshold of being seriously arguable [20 22, 52].\nThe substantive right to equal treatment protected by the EA is different from and extra to the Article 8 right: it applies to private as well as public landlords; it prohibits discriminatory treatment, for example, by evicting a black person where a white person would not be evicted; and it grants additional rights to disabled people to reasonable adjustments to meet their particular needs.\nIt cannot be taken for granted that the aim of vindicating the landlords property rights will almost invariably make an eviction proportionate: the protection afforded by s 35(1)(b) EA is plainly stronger than that given by Article 8 [31, 55 58].\nThe burden will be on the landlord to show that there were no less drastic means available and that the effect on the occupier was outweighed by the advantages [34].\nSummary disposal may still be appropriate, but not in cases where a claim is genuinely disputed on grounds that appear to be substantial, where disclosure or expert evidence might be required [36, 60].\nIn the appellants case, the judge misdirected himself and adopted the wrong approach.\nHe should have undertaken the proportionality assessment himself in relation to each defence, and he wrongly regarded this exercise as the same for the discrimination defence as for the Article 8 defence [38].\nThere was no point however in allowing the appeal and remitting it to the county court.\nThe notice to quit that has since been served by the freeholder of the building means that the respondent is in breach of its legal obligations and leaves the freeholder unable to proceed with the proposed sale [71].\nThe appellants disability has also caused him to refuse undeniably suitable accommodation in the same street and there is no evidence that he has embarked on the therapy that is said to be necessary to allow him to accept the need for change [74].\nThese supervening events mean that a possession order would be inevitable.\nIt would be unjust to the respondent and the freeholders and no kindness to the appellant to prolong matters further [41, 75 76].\n","id":9}
{"input":"These appeals raise a number of points, some technical, others fundamental, relating to the requirements of and consequences of non compliance with the short and inflexible time limits introduced by the Extradition Act 2003.\nParts 1 and 2 of that Act deal with extradition to respectively category 1 territories in practice other member states of the European Union party to the Council Framework Decision of 13 June 2002 (2002\/584\/JHA) introducing the European Arrest Warrant, to which Part 1 gives effect and category 2 territories in relation to which a different and more traditional scheme applies.\nEach of the schemes contained in Part 1 and 2 leads to the person whose extradition is requested being brought before a judge.\nThe judge then decides, by considering a series of questions laid down in the Act, whether or not, in the case of Part 1, to order extradition or, in the case of Part 2, to send the case to the Secretary of State for his decision whether to extradite.\nDepending upon the judges decision, there are rights of appeal to the High Court on law and fact.\nThese are given under Part 1 to the individual (section 26) or to the authority issuing the warrant (section 28) and under Part 2 to the individual (section 103) or the authority acting on behalf of the category 2 territory seeking extradition (section 105).\nRights of appeal also exist under Part 2, if the Secretary of State orders extradition (sections 108(1) and 110(1)).\nThese rights of appeal must all be exercised within short time limits, described as the permitted periods.\nThus, section 26(4) provides in the case of an order for extradition to a Part 1 territory that: Notice of an appeal under this section must be given in accordance with rules of court before the end of the permitted period, which is seven days starting with the day on which the order is made.\nSection 28(4) gives the authority a parallel right in the case of an order for discharge, providing for a like seven day permitted period starting with the day on which the order for the persons discharge is made.\nSections 103, 105, 108 and 110 provide for appeals from a judges order sending a case to the Secretary of State for his decision whether a person is to be extradited and from any order subsequently made by the Secretary of State for extradition.\nIn each case the permitted period within which notice of an appeal must be given in accordance with rules of court is 14 days starting with the day on which the Secretary of State informs the person affected or the person acting on behalf of the category 2 territory (as the case may be) of the order.\nIn Mucelli v Government of Albania; Moulai v Deputy Public Prosecutor in Creteil, France [2009] UKHL 2; [2009] 1 WLR 276, the House of Lords held by a majority (Lord Rodger dissenting) that the requirement in sections 26(4) and 103(9) that notice of an appeal be given within the relevant permitted period meant that it had both to be filed in the High Court and served on all respondents to the appeal within such period.\nA similar requirement must necessarily exist under sections 28, 105, 108 and 110.\nThe Supreme Court was asked on the present appeal to revisit and reverse that decision.\nThe House in Mucelli distinguished between the requirement to give notice of an appeal within the permitted period and the requirement that such notice should be given in accordance with the rules.\nFailure to comply with the mandatory requirement (interpreted in Mucelli as involving both filing and service) is on this basis fatal to any appeal, since the statutory language only permits appeals within the permitted periods with no possibility of extension.\nFailure to comply with the rules can, on the other hand, be cured by the court in the exercise of its discretion under (in England) CPR 3.9 and 3.10.\nThe result is similar to that achieved in Pollard v The Queen [1995] 1 WLR 1591, where the Privy Council held that a notice of appeal which was required by statute to be given \"in such manner as may be directed by rules of court\", but which did not comply with such rules because it was not signed by the appellant personally, was nonetheless a notice within the meaning of the relevant statutory provision, at least once the irregularity was waived by the court, and that such waiver validated the notice from the date of its lodging and did not merely bring into existence for the first time a valid notice.\nThe House in Mucelli further held that the rules of court were incapable of cutting down the statutory permitted period; thus, CPR 3.6 providing (at the relevant time) that any document served after 16.00 should be deemed to be served on the next day was incapable of rendering out of time a notice of appeal served by Mr Moulai after 16.00 on the seventh and last day of the permitted period.\nSubsequent case law in the High Court shows the distinction between requirements of the statute and of the rules to have proved contentious.\nOne line of authority has taken a relaxed view of the statutory requirements.\nIn Office of Public Prosecutor of Hamburg, Germany v Hughes [2009] EWHC 279 (Admin), the court, rightly in my view, treated as a mere procedural error, which could be corrected, the endorsement in a notice of appeal of a wrong date of arrest (the effect of such endorsement being that, on the face of the notice, the 40 day period allowed for the court to begin to hear the substance of the appeal would have expired a month early).\nIn a series of further cases, the court accepted that service of an unsealed notice of appeal was, at most, a procedural error: Pawel Sciezka v Court in Sad Okregowy, Poland [2009] EWHC 2259 (Admin), Dunne v High Court Dublin [2009] EWHC 2003 (Admin), Arunthavaraga v Administrative Court Office [2009] EWHC 18921 (Admin) and R (Kane) v Trial Court No 5 Marbella, Spain [2011] EWHC 824 (Admin); [2012] 1 WLR 375.\nIn Kaminski v Judicial Authority of Poland [2010] EWHC 2772 (Admin) the court refused to strike out appeals where no or only plainly inadequate grounds were stated in the notice of appeal.\nIt did so on the basis that the inclusion of grounds was a matter for rules (in which connection the court also thought that the rules made no provision for grounds).\nOther courts have taken a more stringent line.\nIn Regional Court in Konin, Poland v Walerianczyk [2010] EWHC 2149 (Admin); [2012] 1 WLR 363, service of an unsealed copy notice of appeal was held insufficient to satisfy the statutory requirement under section 28 a decision which meant that it was the Polish authority that was out of time to appeal.\nIn R (Bergman) v District Court in Kladno, Czech Republich [2011] EWHC 267 (Admin), a notice of appeal was prepared by an unrepresented defendant who had been remanded in custody, and was then faxed in draft to the judicial authority and filed, all within the 7 day period, but no stamped copy was served, or indeed received back by the defendant, until much later.\nFollowing Walerianczyk, it was held that there could be no appeal, although Irwin J, at para 10, recorded his \"concern that unrepresented litigants who are in custody will often find it very hard to comply with the necessary requirements, despite every effort on the part of the court staff\".\nIn Szelagowski v Regional Court of Piotrkow Trybunalski Poland [2011] EWHC 1033 (Admin), a clerk was instructed, after filing a notice of appeal, to serve it on the Crown Prosecution Service with a letter on which he wrote the relevant Crown Office reference.\nThe letter was expressed to cover the delivery of the appellants notice and grounds and to request a signature by way of receipt, and the Crown Prosecution Service gave such a receipt.\nBut the clerk handed over the wrong accompanying package.\nNothing in the package handed over or in the covering letter could be described as a notice of appeal.\nThere was held to be no valid appeal.\nSullivan LJ observed (para 18) that: this case demonstrates how a rigid statutory time limit which cannot be extended under any circumstances can work injustice in practice, but the statutory scheme is very clear.\nIn the cases of Lukaszewski, Pomiechowski and Rozanski [2011] EWHC 2060 (Admin); [2012] 1 WLR 391, now before the Supreme Court, each of the appellants is a Polish citizen who is the subject of a European Arrest Warrant issued by the Polish court on the basis that he is wanted in order to serve an existing sentence, and, in the case of Mr Lukaszewski, that he is also wanted to stand trial on ten charges of fraud.\nThe appellants were arrested and brought before the City of Westminster Magistrates Court, where their extradition was ordered on (respectively) 28th January 2011, 2nd March 2011 and 4th March 2011.\nMr Lukaszewski and Mr Rozanski had each only been arrested on the day before such order.\nMr Pomiechowski was also brought before the court on the day after his arrest, but his case was twice adjourned and he was remanded in custody until 2nd March 2011.\nHe was then refused a further adjournment, and his extradition was ordered.\nWestminster Magistrates Court is the dedicated court for extradition proceedings, with three of its ten court rooms apparently being devoted to that purpose.\nIt is a busy court.\nArticle 11(2) of the Framework Decision stipulates that a person arrested for the purpose of the execution of a European Arrest Warrant shall have a right to be assisted by a legal counsel and by an interpreter in accordance with the national law of the executing Member State.\nAt the City of Westminster Magistrates Court, such legal assistance is provided by duty solicitors before though not, it appears, after an extradition order is made by a magistrate.\nOn Mr Lukaszewskis (untested) account, he was able to speak to the duty solicitor only briefly for two or three minutes through the glass of the dock immediately before the hearing with the security guard by him, and was not aware that the matter would proceed straight to a decision.\nMr Pomiechowski was, in contrast, provided after his first appearance with a solicitor, and wished to oppose extradition on the grounds of delay, but on his account the solicitor had not produced a skeleton on this point by the 2nd March 2011, when a further adjournment was refused.\nIn the event, none of these three appellants argued any substantive points before the magistrate in opposition to extradition.\nIt is not difficult to see how, under such circumstances, the statutory right of appeal might prove relevant.\nHaving regard to the dates on which their extradition was ordered, the permitted periods for Mr Lukaszewski, Mr Pomiechowski and Mr Rozanski to give notices of an appeal expired at midnight on respectively 3rd February, 8th March and 10th March 2011.\nEach appellant was remanded in custody (Mr Rozanski because he was unable to meet a condition of bail that he lodge security of 1,500), and taken to HMP Wandsworth.\nAll three had been made aware, by the magistrate and\/or the relevant duty solicitor or legal representative, at least in general terms of the permitted period of 7 days for appealing.\nEach had at this point no legal assistance, but each was assisted by a prison officer working in the prisons Legal Services Department to complete a Form N161 notice of appeal.\nOfficers working in the prison legal services department have no legal background, but have completed a three day training course, which does not include extradition training.\nThey seek to help unrepresented prisoners and to facilitate their appeals against extradition.\nFor completeness, I record that Mr Lukaszewski sought to raise issues relating to his mental health, put later as involving a risk of suicide and as entitling him to protection from extradition under sections 25 and 21 of the 2003 Act.\nMr Pomiechowskis grounds are not before the court, but appear to have invoked the delay elapsed since he left Poland in 2000.\nMr Rozanski invoked compassionate grounds and inhuman conditions that he said that he would face in a Polish prison.\nHowever, no point arises or has been raised at this stage on the contents or merits of these appellants notices of appeal.\nThe points before the Supreme Court are points of principle, which affect the admissibility of appeals, however good or bad.\nThe legal services department faxed the notices of appeals to the Administrative Court for filing and stamping.\nThe Administrative Court faxed a copy of the sealed front page back to the legal services department.\nThe legal services department then faxed to the Crown Prosecution Service (as the legal representatives of the judicial authority of the state requesting surrender) a copy of the sealed front page together with a cover sheet.\nIn the case of each of these three appellants all this occurred within the seven day permitted period.\nIn the case of Mr Lukaszewski, the cover sheet faxed on 2nd February 2011 bore the words Sealed copy and his name with the explanation extradition appeal, and in the case of Mr Pomiechowski the cover sheet faxed on 8th March 2011 identified the copy as sealed and said see attached front page of Extradition paperwork for Mr Pomiechowski.\nObjection was not at once taken to the service only of a sealed front page.\nBut, once taken, it was accepted by the High Court.\nIt was also only after the course of events recounted in the previous paragraphs that the solicitors now acting for Mr Lukaszewski, Mr Pomiechowski and Mr Rozanski first became involved.\nIn the cases of Lukaszewski and Pomiechowski, [2012] 1 WLR 391, para 20, Laws LJ and Kenneth Parker J held on 15th June 2011 that, in order [to] be or purport to be a notice of appeal, the document must (a) identify the appellant, (b) identify the decision against which he seeks to appeal and (c) pace Ouseley J in Kaminksi v Judicial Authority of Poland [2010] EWHC 2772, set out at least the gist of the basis on which the appeal is sought to be presented.\nLaws LJ reasoned that: So much is, I think, inherent in any sensible understanding of a notice of appeal.\nA document without statement of any grounds at all could not support an appeal.\nThe absence of grounds from the notice at the beginning of the process will, I think, be apt to lengthen that process by later procedural contests.\nThe case of Rozanski came on later, on 17th November 2011, before Moore Bick LJ who followed the decision in Lukaszewski and Pomiechowski.\nThe fourth appellant before the court is Mr Halligen, a British citizen whose extradition is sought to the United States of America under Part 2 of the 2003 Act to face allegations of wire fraud and money laundering.\nHe was arrested and brought before the City of Westminster Magistrates Court which on 4th November 2010 ordered that the case be sent to the Secretary of State for her to decide whether Mr Halligen should be extradited, and remanded Mr Halligen in custody.\nMr Halligens extradition was ordered by the Secretary of State under section 93 on 22nd December 2010.\nThe order and a letter setting out the Secretary of States reasons were sent not only by post, but also by fax (timed at either 15.48 or 16.48) to Mr Halligens solicitors on the same day.\nThe Secretary of States letter addressed an objection which Mr Halligen had raised with reference to alleged national security grounds (see section 208 of the 2003 Act).\nIt also informed Mr Halligen of his right under section 108 to give notice of appeal within 14 days to the High Court, pointing out explicitly that the giving of such notice requires both filing and service of the appellants notice within such 14 days and that under the rules any papers filed at the High Court must also be served upon the Home Office and the Crown Prosecution Service.\nMr Halligen had solicitors.\nEvidently, they were quick to prepare grounds of appeal, since those attached to the notice of appeal are dated 23rd December 2010.\nThe notice of appeal (by which he sought to pursue his alleged national security points by reference to the Secretary of States failure to exercise her powers under section 208 of the 2003 Act) was filed and stamped on prescribed form N161 on 29th December 2010.\nThis was well within the fourteen day permitted period.\nIf one takes 22nd December 2010 as the date on which the Secretary of State informed Mr Halligen of his decision, that period expired at midnight on 4th January 2011.\nAlso on 29th December 2010, Mr Halligen himself wrote from prison by fax to the Home Office, asking them to accept this letter as notice & service of my intent to appeal that decision, and adding that My solicitors have been duly instructed and this letter is only necessitated by the imposed due date of 4th January 2011 and my inability to make contact with them given the restrictions imposed by HMP Wandsworth.\nHis apparent concern was justified, since his solicitors let him down.\nIt was only on 5th January 2011 that they sent the notice of appeal to the Crown Prosecution Service by fax and to the Home Office by post, reaching the latter on 6th January 2011.\nOn 25th February 2011 the Treasury Solicitor wrote stating that there would be an application to have the appeal dismissed accordingly.\nIn the ensuing High Court proceedings and before the Supreme Court, Mr Halligen has been represented by different solicitors to those to whom reference has been made in this paragraph.\nThe High Court on 19th April 2011 accepted it had no jurisdiction to hear Mr Halligens appeal.\nApplying Mucelli Stadlen J, giving a judgment with which Laws LJ agreed, rejected a submission that the court had power to dispense with service.\nThe High Court rejected a submission that Mr Halligens letter dated 29th December 2010 constituted or purported to constitute a notice of appeal to the Secretary of State.\nIt rejected a submission that, assuming that the fax of 22nd December 2010 was sent at 16.48 (rather than 15.48), the Secretary of State should be treated as having informed Mr Halligen of her decision only on 23rd December 2010, with the result that the fax sent to the Crown Prosecution Service on 5th January 2011 would have been in time.\nThis submission was advanced on the basis that it was only open to the Secretary of State to inform someone of an extradition decision within normal working hours, which could in turn be regarded as ending at 16.30, by analogy with CPR 6.26, governing documents to be served in accordance with the CPR or any Practice Direction.\nFinally, it rejected more general submissions that the court should under section 3 of the Human Rights Act 1998 read the mandatory requirements of section 108(4) of the 2003 Act as subject to an implied qualification and\/or to the power of relief contained in CPR 3.10, in order to cater for the large number of public holidays that occurred during the relevant 14 day period and\/or to avoid the loss of the right of appeal which would otherwise follow from Mr Halligens solicitors failings.\nNevertheless Stadlen J commented (para 31): It would seem to offend basic principles of fairness that a person served with a notice of extradition should be deprived of a statutory right of appeal through no fault of his own.\nThe first question is whether the Supreme Court should apply or decline to follow the Houses decision in Mucelli.\nLord Rodgers dissenting approach in that case was that all that the statute required was filing, and not service, within the statutory period.\nI understand the attraction of preferring this dissenting approach, in so far as to do so would enable all the current hard cases to be resolved quite easily in the appellants favour.\nThat would not itself be a good reason for adopting such an approach.\nIt would also not resolve other hard cases, for example those which could well arise if a negligent solicitor failed to file notice of appeal with the court within the permitted period, or if a prison riot or a defendants collapse and illness following receipt of information about an extradition decision prevented him giving any instructions to lodge notice of appeal (see in this connection para 70 of Lord Neubergers speech in Mucelli).\nFurther, it would not address the very real considerations which led the majority in Mucelli to their decision.\nThe structure of the relevant sections, with the distinctions drawn between appealing, or bringing an appeal, to the High Court and giving notice of an appeal within the relevant permitted periods, is itself difficult to reconcile with any conclusion that some form of notice to the respondents is not required (a point to which Lord Neuberger referred at para 65).\nI would not therefore depart from Mucelli in so far as it requires not merely filing of an appeal, but also some form of notice of an appeal being given to the respondents, both within the permitted period.\nThe question remains what form of notice of an appeal is required.\nIn Mucelli the argument and majority judgments proceeded on the basis that what was required was service of the notice of appeal.\nIt was however recognised, and was one plank of Lord Rodgers dissent, that in Scotland the requirement is that a note of appeal should be served (necessarily in draft) before lodging with the court (Mucelli, para 19).\nMucelli concerned the question whether the statute (as opposed to the rules) required notice of an appeal to be given to all respondents within the permitted period.\nThe House spoke of a statutory requirement of service.\nBut the question what sort of notice was required by the statute (as opposed to the rules) was not the focus of decision.\nThe statute requires notice of an appeal to be given in accordance with rules of court, so any failure to comply with the rules of court requires the appellant to seek relief from the court to cure the irregularity.\nBut this does not answer the question what constitutes giving notice of an appeal to the respondents which, if not in accordance with the rules, nonetheless satisfies the statutory requirement and is capable of being cured.\nIn my view, a generous view can and should be taken of this, bearing in mind the shortness of the permitted period and the fact that what really matters is that an appeal should have been filed and all respondents should be on notice of this, sufficient to warn them that they should not proceed with extradition pending an appeal.\nThis should not however be taken as a licence to appellants to give informal notices of appeal.\nAny potential appellant serving anything other than a complete copy of the sealed Form N161 will need to seek and will depend upon obtaining the courts permission to cure the position under the rules.\nHowever, it follows from the foregoing that I cannot agree with Laws LJs reasoning in the cases of Lukaszewski and Pomiechowski.\nTo have any prospect of success an appeal must at some point be supported by grounds.\nRules may provide that such grounds must be stated or summarised in the appeal notice, and do in fact do so: CPR 52.4, read with note 52.4.4, prescribed form N161 section 6 and Practice Direction Appeal, para 3.2 at 52PD.5.\nNon constat however that a purported notice of appeal is a nullity unless accompanied from the outset by grounds.\nIf, contrary to rules of court, it is not, that is an irregularity, but one which can in an appropriate case be cured under CPR 3.9 and 3.10.\nThis is the position in principle.\nAs a matter of practice also, there is no attraction in a conclusion whereby a notice without any grounds would be a nullity incapable of grounding any appeal, whereas a notice with palpably inadequate grounds would be merely irregular and capable of cure by amendment.\nThe front page of the notices of appeal returned by the court and served by fax in the cases of Lukaszewski, Pomiechowski and Rozanski showed the relevant High Court references and stamps with the dates of filing as well as the names and addresses of the appellants and the respondent Polish court.\nThe subsequent pages which were not returned or served identified matters such as the decision appealed (though in current extradition practice this would be a decision of the Westminster Magistrates Court), its date, the grounds and a statement of belief.\nThe irregularity involved in their absence was capable of cure, and on the present facts certainly merited this.\nThe Crown Prosecution Service can have had no difficulty in identifying the decision being appealed, and it would be disproportionate if the practice followed by the court and the prison Legal Services Department should lead to these appellants losing any right of appeal.\nI would therefore allow the appeals in all three Polish cases, and remit the appeals against the relevant extradition decisions to the High Court to be heard there.\nThe position in Halligen is more problematic.\nAgain his notice of appeal was filed with the court in time, but notice was required to both the Secretary of State and the Crown Prosecution Service.\nTaking the Secretary of State first, Mr Halligen has to rely on his letter dated 29th December 2010, which he asked the Home Office Extraditions Section to accept as notice & service of my intent to appeal.\nIn terms of the rules, this was a highly irregular notice of any appeal, and, although it was dated the same date as his solicitors in fact filed notice of appeal with the court on his behalf, it was framed as notice of my intent to appeal, rather than as notice of an actual appeal.\nNonetheless, the statute is capable of embracing the Scottish practice, whereby a draft note of an appeal is served before being lodged with the court.\nIt follows that notice of an intent to appeal must be within the statutory language.\nI would regard Mr Halligens letter as notice to the Secretary of State of an appeal within the statute, albeit that the letter was highly irregular in terms of the rules.\nProvided it counts as a notice within the statute, the court is able to cure the irregularity if it thinks fit.\nThe circumstances again militate strongly in favour of doing this.\nHowever, Mr Halligen faces the further difficulty that he has to show that notice of an appeal was given to the Crown Prosecution Service.\nThe first submission made on his behalf in this connection is that the Secretary of State informed him on 23rd rather than 22nd December 2010.\nLike the High Court, and for the same reasons, I am unable to accept this submission.\nMaking the assumption in Mr Halligens favour, in the absence of any evidence either way, that the relevant fax was timed at 16.48 rather than 15.48 on 22nd December 2010, there is no basis for applying, directly or by analogy, CPR 6.26 which only governs documents to be served in accordance with the CPR or any Practice Direction.\nI add that, even if it were relevant (which it is not in my view) to consider whether the notice was transmitted at an hour when it would be expected to come to the attention of someone responsible in the receiving solicitors firm, there would be no basis for treating 16.48 as not being such an hour.\nIndeed, as far as anyone knows, the fax was immediately read and addressed, and some support for this may be found in the dating of the grounds in the notice of appeal on the next day (23rd December 2010).\nIt was also faintly submitted that the fourteen day period should be extended by reference to the large number of public holidays occurring during it.\nBut, contrary to the situation considered by Lord Neuberger in Mucelli at paras 83 84, the last day of the fourteen day period was not a public holiday.\nLord Neubergers approach allows for the human propensity to think about things at the last moment, but I do not think that it should be extended to situations where the last moment is a business day on which the intended appellant could have filed and served a notice of appeal.\nIt follows that no notice of an appeal was given to the Crown Prosecution Service within the permitted period, and Mr Halligens appeal is on its face impermissible as against both respondents.\nIt is therefore necessary to consider whether the apparently inflexible time limits for appeals in the 2003 Act are subject to any qualification or exception.\nThe appellants in the cases of Lukaszewski, Pomiechowski and Rozanski have in particular sought to rely on article 5(4) of the Human Rights Convention, read with section 3 of the Human Rights Act 1998.\nSection 3 requires the court, so far as it is possible to do so, to read the relevant sections in a way which is compatible with the Convention.\nArticle 5(4) reads 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.\nThe appellants submit that, in so far as the 2003 Act provides rights of appeal, such rights cannot consistently with article 5(4) be made subject to limitations which restrict or reduce the access left to the individual in such a way or to such an extent that the very essence of the right is impaired and that any such restriction must pursue a legitimate aim and there must be a reasonable relationship of proportionality between the means employed and the aim sought to be achieved: Tolstoy Miloslavsky v United Kingdom (1995) 20 EHRR 442, para 59.\nTolstoy was a case concerning appeals in a context to which Article 6(1) applied, but the appellants in invoking article 5(4) rely by analogy upon the case law under article 6(1).\nThe difficulty which these appellants face in relying upon article 5(4) is that their grievance relates to the extradition decision, rather than the fact, incidental to that decision, that they were remanded in custody pending extradition.\nIn MT (Algeria) v Secretary of State for Home Department [2009] UKHL 10; [2010] 2 AC 110, the House was concerned with challenges to deportation decisions upheld in partly closed proceedings before the Special Immigration Appeals Tribunal (SIAC).\nThe appellants were by reason of such decisions detained with a view to deportation, and submitted on that basis that the proceedings before SIAC were subject to article 5(4).\nThe House did not accept the submission.\nLord Phillips noted that the European Court of Human Rights had held in Chahal v United Kingdom (1996) 23 EHRR 413 that the lawfulness of the detention of a person with a view to deportation did not depend upon whether the underlying decision to deport could be justified, and that the appellants had not made an independent challenge of [sic] his detention as opposed to the decision to deport him (paras 89 90).\nLord Hoffmann noted, at para 173, that the European court in Chahal had decided that an alien who was detained pending deportation was entitled by virtue of article 5(4) to a substantial measure of procedural justice in proceedings to determine the lawfulness of his detention (paragraph 131) but not to a judicial tribunal to review whether the underlying decision to expel could be justified under national or Convention law (paragraph 128).\nLord Hope and Lord Brown and I all expressed our agreement with these parts of Lord Phillips and Lord Hoffmanns speeches (paras 226, 252 and 262).\nIn Chahal, para 128, the European Court in fact said this: 128.\nThe Court refers again to the requirements of Article 5 para. 1 (article 5 1) in cases of detention with a view to deportation (see paragraph 112 above).\nIt follows from these requirements that Article 5 para. 4 (article 5 4) does not demand that the domestic courts should have the power to review whether the underlying decision to expel could be justified under national or Convention law.\nThe present appellants suggest that the conclusion and reasoning in MT (Algeria) requires reconsideration in the light of other authority in which article 5(4) has been relied upon as indicating that a court must have jurisdiction to consider whether an extradition decision involves an abuse of process.\nIn R (Kashamu) v Governor of Brixton Prison [2002] QB 887, the Divisional Court (Rose LJ and Pitchford J) was faced with a series of pre Human Rights Act decisions at the highest level: Atkinson v United States of America [1971] AC 197, R v Governor of Pentonville Prison, Ex p Sinclair [1991] 2 AC 64 and In re Schmidt [1995] 1 AC 339.\nThese cases had held that, despite the development in other fields of a general power on the part of a court to intervene on the grounds of abuse of process, any challenge on such grounds to the lawfulness of a decision ordering a persons extradition and detention with a view to extradition was a matter for the Secretary of State rather than the courts: the courts could become involved at most only on a subsequent application for judicial review of the Secretary of States decision.\nIn Kashamu the Divisional Court relied upon section 6(1) of the Human Rights Act 1998 and upon article 5(4) to hold that such decisions could no longer be applied, and that it was, under schedule 1 to the Extradition Act 1989, incumbent on the district judge to consider whether there had been abuse of process rendering the detention unlawful under article 5(4), rather than to leave this issue for a minister to consider.\nThe abuse of process alleged is only briefly outlined in relation to one of the three persons concerned in Kashamu.\nIn relation to him it consisted of a prior arrest, conceded to have been irregular due to non disclosure (para 11).\nIt seems clear that the abuse asserted would have affected not only any detention pending extradition but also, more fundamentally, any possibility of extradition.\nUnder para 6(1) of Schedule 1 to the Extradition Act 1989, the district judge in Kashamu had had the same powers, as near as may be, . as if the proceedings were the summary trial of an information against him for an offence committed in England and Wales.\nOn a summary trial, those powers would have included considering and applying article 5(4) in relation to any issue whether detention was justified.\nIn these circumstances, I am not surprised that the Divisional Court held that the district judge had the power to investigate the possibility of abuse, which earlier authority had confined to the High Court by way of judicial review.\nThe decision in Kashamu was followed and approved by the Privy Council in Fuller v Attorney General of Belize [2011] UKPC 23.\nThere was in Fuller no equivalent provision to para 6(1) to Schedule 1 to the Extradition Act 1989, and the Board simply treated article 5(4) and its Belizean analogue, section 5(2)(d) of the Constitution, as applicable to detention for the purpose of extradition.\nAs the Board made clear the abuse alleged went, in that case also, to the extradition as much as to any prior detention: paras 5 and 53 54.\nIndeed, Mr Fuller had been released on bail, although it is established for the purposes of a challenge to extradition under domestic law that an applicant for habeas corpus is to be treated as effectively in custody, even if released on bail: R v Secretary of State for the Home Department, Ex p Launder (No 2) [1998] QB 994, 1000G 1001G and 1011G H.\nWhere detention and the extradition proceedings as a whole stand and fall together, according to whether or not they involve an abuse of process, then Fuller suggests that article 5(4) may be an effective means by which a root and branch challenge to extradition may be pursued.\nThe decision in MT (Algeria) was not however cited in Fuller, and both Kashamu and Fuller were concerned with a question whether the previous restriction on an extradition courts ordinary power to restrain proceedings conducted in abuse of process should continue to be recognised.\nIt is unsurprising that the courts should conclude that this limitation was no longer appropriate.\nThere is no suggestion of any abuse of process at the root of the present extradition proceedings.\nThe present appeals concern the single question whether proceedings to challenge an extradition decision are subject to the procedural guarantee contained in article 5(4).\nProceedings to challenge an extradition decision are capable of raising a whole range of issues which have nothing to do with abuse of process or, indeed, with the question whether the person concerned is actually detained in the sense clearly envisaged in article 5(4).\nFor example, they may raise questions whether the alleged offence is an extradition offence (section 10), whether extradition is barred by the rule against double jeopardy, extraneous considerations, the passage of time, age, hostage taking considerations, speciality, earlier extradition to the United Kingdom or earlier transfer to the International Criminal Court (sections 11 to 19A) and whether extradition would be compatible with the Convention rights within the meaning of the Human Rights Act 1998 (section 21).\nThe reasoning in Kashamu and Fuller does not suggest, or justify a conclusion, that all such questions engage the procedural guarantee contained in article 5(4).\nThis is so whether the person concerned is in custody or whether, even if he is not, he is to be treated as if he were for the domestic law purposes of a challenge to the proceedings by writ of habeas corpus.\nI do not therefore consider that either Kashamu or Fuller affects the careful distinction drawn by the European Court of Human Rights in Chahal between challenges to detention and to the underlying decision to remove an alien from the jurisdiction.\nThe same careful distinction was followed in MT (Algeria), which in my view governs the present situation of a challenge made essentially to an extradition decision.\nI would therefore hold that article 5(4) did not apply and that the present appellants were not entitled to a judicial decision under article 5(4).\nArticle 5(4) is not however the only potential string in the appellants bow.\nMr Halligen also invokes article 6(1).\nThe respondent, the Secretary of State, in reply submits that it is clear that article 6(1) has no application to decisions to expel or extradite.\nShe cites a number of decisions of the European Court.\nH. v Spain (Application no. 10227\/82) concerned an American citizen whose extradition from Spain was sought by the United States and who complained that he had had inadequate legal representation and interpretation before the Audiencia Nacional.\nThe Commission held the complaint inadmissible on the ground that extradition proceedings do not involve the determination of a criminal charge within article 6(1), because in this context the word determination involves the full process of the examination of an individuals guilt or innocence of an offence.\nE.G.M. v Luxembourg (Application No 24015\/94) concerned a Colombian national whose extradition from Luxembourg was sought by the United States.\nHe complained that the extradition proceedings in Luxembourg violated the principle ne bis in idem and his rights of defence.\nThe Commission held that the former principle was not guaranteed by the Convention, in the context of different criminal proceedings in different states, and that the rights and freedoms recognised in the Convention do not include any right not to be extradited.\nIt referred in the latter connection to a prior statement to this general effect in G.K. and B.J.F. v The Netherlands (Application No 12543\/86), based in turn on a similar general statement in X v Belgium (Application No 7256\/75).\nAnother case in which a similar statement appears is Salgado v Spain (Application No 65964\/01).\nThese were all again cases concerning aliens, in the first and third complaining that he would be ill treated in the requesting country and in the second that his extradition violated the terms of an extradition treaty.\nLastly, the Commission in E.G.M. v Luxembourg referred to its established case law whereby the words determination . of a criminal charge . relate to the full process of the examination of an individuals guilt or innocence, and not merely to the process of determining whether or not a person may be extradited to another country, citing H v Spain and Kirkwood v United Kingdom (Application No 10479\/83), (1984) 37 DR 158.\nIn Kirkwood the applicant, a United States national, claimed that the proceedings for his extradition from the United Kingdom to the United States infringed article 6(3)(d), because he was not permitted to cross examine the witnesses against him in the United Kingdom.\nThe Commission held that, although the tasks of the Magistrates' Court included the assessment of whether or not there was, on the basis of the evidence, the outline of a case to answer against the applicant and [t]his necessarily involved a certain, limited, examination of the issues which would be decisive in the applicant's ultim[at]e trial, nevertheless, these proceedings did not in themselves form part of the determination of the applicant's guilt or innocence, which will be the subject of separate proceedings in the United States which may be expected to conform to standards of fairness equivalent to the requirements of article 6, including the presumption of innocence, notwithstanding the committal proceedings.\nIn these circumstances the Commission concluded that the committal proceedings did not form part of or constitute the determination of a criminal charge within the meaning of Article 6 of the Convention (para 9).\nThe House of Lords cited and applied para 9 of the Commissions ruling in Kirkwood, when rejecting similar claims to rely on article 6(3)(d) by the appellants in R (Al Fawwaz) v Governor of Brixton Prison [2001] UKHL 69 [2002] 1 AC 556.\nIn Maaouia v France (2001) 33 EHRR 42, a Tunisian citizen sought to resist his exclusion from France on the ground that the length of the proceedings had been unreasonable and excessive.\nHe failed emphatically, for reasons which emphasised his position as an alien.\nThe Court said: 37.\nThe Court therefore considers that by adopting Article 1 of Protocol No.7 containing guarantees specifically concerning proceedings for the expulsion of aliens the States clearly intimated their intention not to include such proceedings within the scope of Article 6(1) of the Convention. 38.\nIn the light of the foregoing, the Court considers that the proceedings for the rescission of the exclusion order, which form the subject matter of the present case, do not concern the determination of a \"civil right\" for the purposes of Article 6(1).\nThe fact that the exclusion order incidentally had major repercussions on the applicant's private and family life or on his prospects of employment cannot suffice to bring those proceedings within the scope of civil rights protected by Article 6(1) of the Convention. 39.\nThe Court further considers that orders excluding aliens from French territory do not concern the determination of a criminal charge either.\nIn that connection, it notes that their characterisation within the domestic legal order is open to different interpretations.\nIn any event, the domestic legal order's characterisation of a penalty cannot, by itself, be decisive for determining whether or not the penalty is criminal in nature.\nOther factors, notably the nature of the penalty concerned, have to be taken into account.\nOn that subject, the Court notes that, in general, exclusion orders are not characterised as criminal within the Member States of the Council of Europe.\nSuch orders, which in most States may also be made by the administrative authorities, constitute a special preventive measure for the purposes of immigration control and do not concern the determination of a criminal charge against the applicant for the purposes of Article 6(1).\nThe fact that they are imposed in the context of criminal proceedings cannot alter their essentially preventive nature.\nIt follows that proceedings for rescission of such measures cannot be regarded as being in the criminal sphere either. 40.\nThe Court concludes that decisions regarding the entry, stay and deportation of aliens do not concern the determination of an applicant's civil rights or obligations or of a criminal charge against him, within the meaning of Article 6(1) of the Convention.\nIn Mammatkulov and Askarov v Turkey (2005) 41 EHRR 494, in the context of complaints about the fairness of Turkish extradition proceedings, the European Court reiterated, at para 82, that decisions regarding the entry, stay and deportation of aliens do not concern the determination of an applicant's civil rights or obligations or of a criminal charge against him, within the meaning of Article 6(1) of the Convention.\nThis examination of Strasbourg case law shows that the Commission and Court have stood firm against any suggestion that extradition as such involves the determination of a criminal charge or entitles the person affected to the procedural guarantees provided in the determination of such a charge under article 6(1) or 6(3).\nThe cases involved are all also cases involving the extradition of aliens.\nThe last two decisions emphasise that proceedings for the extradition of aliens do not involve the determination of any civil rights within the meaning of article 6(1).\nBy the same token they underline a potential difference in this respect between aliens and citizens.\nBoth in international law and at common law British citizens enjoy a common law right to come and remain within the jurisdiction, and Mr Halligen is such a citizen.\nBlackstone (Commentaries on the Laws of England 15th ed (1809) vol 1, p 137) stated: But no power on earth, except the authority of Parliament, can send any subject of England out of the land against his will; no, not even a criminal.\nThis passage was cited and approved by Lord Hoffmann in R (Bancault) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61; [2009] AC 453, para 44.\nIn R v Bhagwan [1972] AC 60, 77G Lord Diplock spoke of the common law rights of British subjects . to enter the United Kingdom when and where they please and on arrival to go wherever they like within the realm.\nIn Case 41\/74 Van Duyn v Home Office [1975] Ch 358, para 22, the European Court of Justice recognised that: it is a principle of international law, which the EEC Treaty cannot be assumed to disregard in the relations between member states, that a state is precluded from refusing its own nationals the right of entry or residence.\nThe principle is the necessary corollary of a states right (subject to obligations undertaken by e.g. the Geneva Refugee Convention and the European Convention on Human Rights) to refuse aliens permission to enter or stay in its territory.\nWere it otherwise, the Flying Dutchman would be no fleeting phantom.\nIn these circumstances, Mr Halligen enjoyed a common (or civil) law right to enter and remain in the United Kingdom as and when he pleased.\nThe next question is whether proceedings under the Extradition Act 2003, in that they may affect his freedom to remain in the United Kingdom at least for the duration of American criminal proceedings, involve the determination of that civil right.\nThe 2003 Act has the authority of Parliament, and to that extent Mr Halligens right to remain in the United Kingdom is potentially qualified.\nBut under the Act it is only through domestic extradition proceedings that this right can be affected and suspended for the purpose and period of any American proceedings and of any sentence which might thereafter be passed on him, if found guilty.\nIn so far as it may be suspended, the extradition proceedings determine whether Mr Halligen may continue to enjoy his common law right for whatever proves to be the relevant period.\nA claim to extradite him does not involve the determination of a criminal charge, and he is not entitled to any full process of examination of his guilt or innocence, or to the procedural guarantees which would attend that.\nBut he is entitled to a fair determination as to his common law right to remain within the jurisdiction.\nIn these circumstances, it follows in my view that the extradition proceedings against Mr Halligen fall within article 6(1).\nIn so far as the proceedings involve under the statute a right of appeal against any extradition decision, article 6(1) also requires that it be free of limitations impairing the very essence of the right, pursue a legitimate aim and involve a reasonable relationship of proportionality between the means employed and the aim sought to be achieved in accordance with the standard identified in Tolstoy Miloslavsky v United Kingdom, cited in para 22 above.\nI cannot regard the provisions regarding appeals contained in the 2003 Act as meeting the standard set in Tolstoy Miloslavsky.\nIndeed I note that the Review of the United Kingdoms Extradition Arrangements of 30 September 2011 identified the time limits as an unsatisfactory feature about the appeals process, and mentioned a number of trenchant judicial criticisms, some already set out, as well as the particular difficulties posed for those remanded in custody.\nIn the end, however, after identifying as possible mechanisms for alleviating potential injustice either extending the time limit for Part 1 from seven to fourteen days or giving the court a discretion to extend the time limit in the interests of justice, the Review said that On the whole we prefer the former, as this is an area in which certainty and finality is important.\nFinality and certainty are important legal values.\nBut, although the cases to date may not be large in absolute numerical terms, they indicate that neither finality nor certainty has been achieved to date.\nEven on the more relaxed view of the statutory conditions which I consider appropriate, the statute will be capable of generating considerable unfairness in individual cases, unless some further relief is available.\nMore importantly, it is not sufficient under article 6(1) if in most or nearly all cases the right of appeal can be or should be capable of being exercised in time.\nThe very essence of the right may be impaired in individual cases and there may still be no reasonable relationship of proportionality between the means employed and the aim sought to be achieved.\nIt has been held, in the public law context of removal from the jurisdiction of an alien, that a litigant must answer for the failings of his legal advisers, with the result that he was unable to obtain the reopening of an adjudicators decision on the ground of such advisers negligent failure to inform him of the hearing: R v Secretary of State for the Home Department, Ex p Al Mehdawi [1990] 1 AC 876.\nAny other decision would, it was said, come at the cost of opening such a wide door which would indeed seriously undermine the principle of finality in decision making: per Lord Bridge, at p 901E.\nIn Ex p Al Mehdawi there was however a residual discretion in the Secretary of State to refer the matter back to an adjudicator.\nIn contrast, in an asylum context where no such residual discretion existed, the Court of Appeal in FP (Iran) v Secretary of State for the Home Department [2007] EWCA Civ 13 held ultra vires immigration rules deeming a party to have received notice of a hearing served on the most recent addresses notified to the relevant tribunal and requiring the tribunal to proceed in the partys absence if satisfied that such notice had been given.\nThe solicitors acting for the asylum seekers in FP (Iran) had failed to give the tribunal new addresses to which the asylum seekers had been moved by the National Asylum Support Service.\nDistinguishing Ex p Al Mehdawi, the Court of Appeal held that there was no universal surrogacy principle which (reformulated) rules would have to depart from in order to operate justly (para 46).\nThe rules were framed so as to be productive of irremediable procedural unfairness.\nBoth the appellants were among those affected by this deficiency, because both have lost the opportunity to be heard through the default of their legal representatives and not through their own fault (para 48).\nThis decision (reached in the context of aliens) turned on common law principles regarding access to justice, though reference was made by analogy to the position under the European Convention on Human Rights.\nThe position is a fortiori in so far as article 6(1) is directly applicable in Mr Halligens case.\nIt is clear that the statutory provisions regarding the permitted periods for appeals may in individual cases impair the very essence of the right of appeal.\nThe previous judicial expressions of concern are eloquent about the potential and actual unfairness of the position in which prisoners find themselves in trying to meet the statutory requirements, with such aid as the prison legal services department or legal advisers can, under difficult conditions, provide.\nThe problems of communication from prison with legal advisers in the short permitted periods of seven and fourteen days are almost bound to lead to problems in individual cases.\nIt is no satisfactory answer that a person wrongly extradited for want of an appeal as a result of failings of those assisting him might, perhaps, be able to obtain some monetary compensation at some later stage.\nStrict application of the surrogacy principle would be potentially unjust.\nI am not persuaded that the interests of finality and certainty outweigh the interests of ensuring proper access to justice by appeal in the limited number of extradition cases where this would otherwise be denied.\nThere would not be a reasonable relationship of proportionality between the means employed and the aim sought to be achieved.\nWhat then does this mean for Mr Halligen? The opposed possibilities are, on the one hand, that the statute can be read in a manner consistently with the Convention rights, pursuant to the courts duty under section 3 of the Human Rights Act so to read it so far as it is possible to do so, and, on the other hand, that the statutory time limits are simply incompatible with article 6(1).\nThe former solution may involve reading in words, provided that they are compatible with the underlying thrust of the legislation and do not go against the grain of the legislation: Ghaidan v Godin Mendoza [2004] UKHL 30, [2004] 2 AC 557, paras 33, per Lord Nicholls, and 121, per Lord Rodger; and see R v A (No 2) [2001] UKHL 25, [2002] 1 AC 45, where statutory restrictions on cross examination were read as subject to a further implied exception to enable a fair trial under article 6(1), and Connolly v Director of Public Prosecutions [2007] EWHC 237 (Admin), [2008] 1 WLR 276, para 18, where the High Court was prepared to read a statutory prohibition on sending another person certain material as subject to an implied provision that this was not to apply where the prohibition would involve a breach of the senders Convention rights under article 10.\nIn the present case, there is no reason to believe that Parliament either foresaw or intended the potential injustice which can result from absolute and inflexible time limits for appeals.\nIt intended short and firm time limits, but can only have done so on the basis that this would in practice suffice to enable anyone wishing to appeal to do so without difficulty in time.\nIn these circumstances, I consider that, in the case of a citizen of the United Kingdom like Mr Halligen, the statutory provisions concerning appeals can and should all be read subject to the qualification that the court must have a discretion in exceptional circumstances to extend time for both filing and service, where such statutory provisions would otherwise operate to prevent an appeal in a manner conflicting with the right of access to an appeal process held to exist under article 6(1) in Tolstoy Miloslavsky.\nThe High Court must have power in any individual case to determine whether the operation of the time limits would have this effect.\nIf and to the extent that it would do so, it must have power to permit and hear an out of time appeal which a litigant personally has done all he can to bring and notify timeously.\nThe position of others who are not British citizens of the United Kingdom and do not enjoy the protection of article 6(1) is not, as it happens, relevant to the outcome of any of the appeals now before the Supreme Court.\nHowever, their position, as well as that of persons enjoying the protection of article 6(1), would, on the information before the court, appear to deserve attention.\nThis includes specifically whether they are currently provided with meaningful and effective legal assistance in relation to the whole extradition process, including any appeal they may wish to bring.\nFor the reasons I have explained, I would allow Mr Halligens appeal and remit his case, as well as those of Mr Lukaszewski, Pomiechowski and Rozanski (see paragraph 19 above), to the High Court for the hearing of all their four appeals against the relevant extradition decisions.\nLADY HALE\nI agree that these appeals should be allowed for the reasons given by Lord Mance.\nThey have highlighted a number of aspects of the present law which may be thought unsatisfactory.\nFirst, section 26(4), section 103(9) and section 108(4) of the Extradition Act 2003 lay down tight deadlines within which the requested person must give notice of appeal against, respectively, an extradition order under Part 1 of the 2003 Act, a decision to send the case to the Secretary of State under Part 2, and the Secretary of States extradition order under Part 2.\nSections 35 and 117 lay down tight deadlines within which the person must be extradited if no notice of appeal is given before the end of the permitted period.\nIn Mucelli v Government of Albania [2009] UKHL 2, [2009] 1 WLR 276, therefore, the House of Lords proceeded on the assumption that, unless the appellant gave notice to the respondent(s) within the permitted period, the extraditing authorities would not know whether the clock had stopped.\nWe now know that that assumption is incorrect, for two reasons.\nThe first is that the respondent(s) to the appeals are not the extraditing authorities for this purpose.\nThe respondents will be those acting on behalf of the issuing judicial authority (in Part 1) or the requesting authority and the Secretary of State (in Part 2).\nThe extraditing authority is the Serious Organised Crime Agency (SOCA) in Part 1 and the Secretary of State in Part 2.\nSo giving notice to the respondent(s) is not, in itself, sufficient for the extraditing authority to know that the clock has stopped.\nSecondly, the uncontradicted evidence of Mr Evans, solicitor for the first two appellants, is that Westminster Magistrates Court informs SOCA by email when an extradition order is made and that the High Court emails SOCA when an appeal is filed.\nThat is what alerts SOCA to the fact that it is no longer obliged, or indeed entitled, to extradite the requested person within the required period.\nThis undermines a substantial part of the reasoning of the majority in Mucelli at least in relation to Part 1 cases.\nThe best point remaining is the linguistic difference between an appeal . may be brought in section 26(3), section 103(4), (7) and (8)(b), and section 108(4), and notice of an appeal . must be given in section 26(4), section 103(9) and section 108(4).\nBut there is no magic in those words.\nDifferent terms are used for the process of bringing an appeal in the three different jurisdictions which make up the United Kingdom.\nIn Lord Rodgers view, the draftsman has just chosen a familiar form of words for referring to the bringing of an appeal [14].\nIt would have been so easy for the draftsman to have said filed and served if that is what he had meant but he did not.\nBe that as it may, this court is not constituted to depart from the decision in Mucelli and there is no need for it to do so in the Polish cases.\nHowever, the new information does underline the fact that there is no good practical reason for the court to construe what is meant by giving notice to the respondents in a demanding way.\nThe clock will have stopped, but if the rules about service have not been properly complied with, the court has power either to grant an extension or to impose sanctions, including the sanction of striking out the appeal, as appropriate.\nSecondly, however, the court does have to contend with Mucelli in the case of Mr Halligen.\nWe can treat his letter to the Secretary of State as notice for this purpose, but we cannot treat his notice to Crown Prosecution Service as arriving in time.\nThere are two possible ways of solving the problem, should we think this result to be unnecessary and unjust.\nOne is to depart from Mucelli.\nFor the reasons indicated earlier, we could conclude that it was not the intention of Parliament that there should be no jurisdiction to entertain an appeal in such circumstances.\nThe other is to employ the obligation of conforming interpretation in section 3(1) of the Human Rights Act 1998 in cases where the ordinary interpretation produces results which are incompatible with the Convention rights of the requested person.\nSection 3(1) requires that So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights.\nAs is now well established, this requires the court (and others) to read (and give effect to) legislation compatibly with the Convention rights even if this is not what, on ordinary principles of construction, Parliament intended, so long as it is possible to do so.\nThe appellants and the Secretary of State consider that it is possible in this case.\nThe respondents consider that it is not, and if (which they do not accept) the strict application of the time limit for service is incompatible, the only course would be a declaration of incompatibility under section 4 of the 1998 Act.\nThe right of a person to enter and remain in the country of which he is a national is the most fundamental right of citizenship.\nThe United Kingdom has signed but not ratified Protocol No 4 to the ECHR, article 3 of which makes this right crystal clear.\nBut, as Lord Mance has demonstrated, it has been part of United Kingdom law for centuries.\nIt is perhaps more questionable whether it counts as a civil right for the purpose of the right to a fair hearing in article 6(1) of the Convention.\nAs originally conceived, this did not apply to the rights enforceable only in public law.\nBut that limitation has been steadily eroded: see the jurisprudence discussed by Lord Hope in Ali v Birmingham City Council [2010] UKSC 8, [2010] 2 AC 39, [28] to [49].\nAnd in any event, this right is not like a claim to a social security benefit (which is a civil right) or to a social service (which currently is not), for these can only be enforced as provided for by the statute or by judicial review.\nShould the need arise, this right could be claimed in ordinary civil proceedings against a person who was denying it.\nI therefore agree with Lord Mance that the extradition proceedings against Mr Halligen involve the determination of his civil rights for the purpose of article 6(1).\nI also agree that to insist upon the time limit for service in the particular circumstances of his case is a disproportionate limitation upon his right of access to the appeal process.\nI further agree that it is possible to read and give effect to section 108(4) and, it would necessarily follow, section 26(4) and section 103(9) in the manner which Lord Mance suggests at paragraph 39.\nHowever, it does seem to me unsatisfactory that we are taking this course, rather than the more straightforward course of departing from Mucelli.\nThere is very good reason to think that the House decided Mucelli on a mistaken factual assumption.\nThere were very good reasons, trenchantly expressed in Lord Rodgers dissenting opinion, to think that the intention of Parliament was to insist only on filing, rather than on service, of the notice of appeal before the deadline.\nFor my part, I consider it more satisfactory to comply with the actual intention of Parliament than to resort to the obligation of conforming interpretation (whether under the European Communities Act 1972 or the Human Rights Act 1998).\nResorting to section 3 of the 1998 Act, although two of the parties consider this possible, produces two distortions in the extradition process.\nIt discriminates between nationals and aliens.\nIt also discriminates between the requested persons and the requesting authorities, for the latter can have no convention rights which mandate a compatible interpretation.\nThus section 28(4), section 105 (5) and section 110(5), which impose the same time limits upon appeals against discharge by the first instance court or by the Secretary of State, cannot be read down so as to forgive such trivial failures as these on the part of the requesting authorities.\nThirdly, however, whichever of the above courses is taken in this case, recognition that the right of a citizen to remain in this country is a civil right for the purposes of article 6(1) of the ECHR leaves open the possibility that section 26(4) and also section 103(9) and section 108(4) would also have to be read down if the rigid time limits for the filing of a notice of appeal were to be held a disproportionate limitation on a citizens right of access to the appeal process.\nThere was talk during the hearing of riots, strikes or fires at the prison to which the requested person was remanded making the service of notice impossible, but such extraordinary events might also make the filing of a notice of appeal impossible.\nAs things currently stand, a requested person who is remanded in custody does not always have access to a lawyer who can protect his interests.\nWhile we know that HMP Wandsworth has a Legal Services Department staffed by prison officers who provide assistance, we do not know whether similar facilities are available to requested persons who are remanded to other prisons.\nWe do know that, given the pace of proceedings, quite properly arguable grounds for resisting extradition or the execution of a European arrest warrant may not have been put before the district judge.\nI do not, of course, say that it would indeed be possible to read down the legislation in such circumstances, but merely that our decision in this case makes the argument possible.\nHad other members of the court been of the same mind, therefore, I would have allowed all these appeals, but for reasons other than those given by Lord Mance.\nBut those reasons are not incompatible with the reasons which he gives and with which I am also content to agree.\n","output":"Lukaszewski (L), Pomiechowski (P) and Rozanski (R) are Polish citizens who are each the subject of a European Arrest Warrant (EAW) issued by the Polish court.\nEach is wanted in order to serve an existing sentence.\nL is wanted, in addition, to stand trial on ten charges of fraud.\nThe fourth appellant, Halligen (H), is a British citizen whose extradition is sought to the USA under Part 2 of the Extradition Act 2003 (the Act) to face allegations of wire fraud and money laundering.\nAll four appellants were arrested and brought before Westminster Magistrates Court.\nL, P and Rs extradition were ordered on (respectively) 28th January 2011, 2nd March 2011 and 4th March 2011.\nHs case was sent to the Secretary of State for her to decide whether H should be extradited.\nOn 22nd December 2010, Hs extradition was ordered by the Secretary of State, and the order and a letter setting out the Secretary of States reasons were sent by post and fax (at either 15.48 or 16.48) to Hs solicitors on that same day.\nAll four appellants were remanded in custody at HMP Wandsworth pending extradition.\nThe permitted time period for giving notice of appeal against an extradition order was 7 days in the case of L, P and R, and 14 days in the case of H. L, P and R were each assisted by a prison officer working in the legal services department at HMP Wandsworth to complete a notice of appeal.\nThe legal services department faxed the notices of appeal to the Administrative Court for filing and stamping, which faxed back a copy of the sealed front page to the legal services department.\nThe legal services department then faxed to the Crown Prosecution Services (CPS), as legal representatives of the judicial authority of the state requesting surrender, a copy of the sealed front page together with a cover sheet.\nIn the case of each of L, P and R, all this occurred within the 7 day permitted period.\nHowever, in each case, the CPS was not served with a full copy of the notice of appeal, sealed or unsealed, until after the 7 day time limit had expired.\nThe High Court held it had no jurisdiction to hear the appeals.\nA notice of appeal had to be both filed and served within the non extendable permitted period, and must (a) identify the appellant, (b) identify the decision against which he seeks to appeal, and (c) set out at least the gist of the basis on which the appeal is sought to be presented.\nAccordingly, the purported notices of appeal were invalidly constituted and served out of time.\nHs solicitors prepared a notice of appeal, attaching grounds of appeal, on 23rd December 2010.\nThe notice of appeal was filed and stamped on 29th December 2011, well within the 14 day permitted period which expired at midnight on 4th January 2011.\nHowever, only on 5th January 2011 did Hs solicitors send the notice of appeal to the CPS by fax and to the Home Office by post (reaching the latter on 6th January 2011).\nH himself had written from prison by fax to the Home Office on 29th December 2010 asking them to accept the letter as notice & service of my intent to appeal that decision and stating that he had instructed solicitors for that purpose.\nThe High Court held it had no jurisdiction to hear Hs appeal, that Hs letter of 29th December 2011 did not constitute a valid notice of appeal, and the Secretary of State should be treated as having informed H of her decision on 22nd\nDecember, not 23rd December, 2011, so that the purported notice of appeal was in any event served out of time.\nAll four appellants appealed the decisions of the High Court to the Supreme Court.\nThe Supreme Court allows all four appeals unanimously.\nLord Mance gives the leading judgment of the Court.\nLady Hale gives a separate concurring judgment.\nThe requirement under the Act that a notice of an appeal be given within the relevant permitted period meant that it had to be filed in the High Court and served on all respondents to the appeal within such period (following the decision of the House of Lords in Mucelli v Government of Albania [2009] UKHL 2) [5], [17].\nHowever, a generous view should be taken of this requirement, bearing in mind the shortness of the permitted periods under the Act and that what really matters is that an appeal should have been filed and that all respondents be on notice of this, sufficient to warn them that they should not proceed with extradition pending an appeal [18].\nIn the cases of L, P and R, the irregularity involved in the absence of pages following the sealed front page of their notices of appeal was capable of cure.\nThe CPS, having received in time the sealed front page of each notice of appeal, can have had no difficulty in identifying the decisions being appealed.\nIt would be disproportionate if the practice followed by the court and the prison legal services department should lead to the appellants losing their right of appeal [19].\nThe Court regards Hs letter as notice to the Secretary of State of an appeal within the Act, albeit that the letter was highly irregular in its form [20].\nHowever, even if it is accepted that Hs solicitors only received the relevant fax from the Secretary of State at 16.48, there was no basis for deeming the fax to have been received the following day.\nIt follows that no notice of an appeal was given to the CPS within the permitted period, and Hs appeal is on its face impermissible as against both respondents [21].\nIn these circumstances, the question for the Court is whether the apparently inflexible time limits for appeals within the Act are subject to any qualification or exception [22].\nUnder Article 6(1) of the Human Rights Convention, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law in the determination of his civil rights and obligations or of any criminal charge against him.\nThe Court is satisfied that extradition does not involve the determination of a criminal charge [31].\nHowever, H, as a UK citizen, enjoyed a civil right to enter and remain in the UK as and when he pleased [32].\nProceedings under the Act, in that they may affect Hs freedom to remain in the UK, at least for the duration of foreign extradition proceedings, involve the determination of that civil right [32].\nIt follows that the extradition proceedings against H fall within Article 6(1) [33].\nIn the case of a UK citizen, the statutory provisions concerning appeals can and should be read (pursuant to the obligation of conforming interpretation under section 3(1) of the Human Rights Act 1998) as being subject to the qualification that the court must have a discretion in exceptional circumstances to extend time for both filing and service, where such statutory provisions would otherwise operate to prevent an appeal in a manner conflicting with the right of access to an appeal process under Article 6(1).\nAccordingly, the Court allows all four appeals and remits each appeal against extradition to the High Court to be heard there [19], [41].\n","id":10}
{"input":"This appeal is concerned with Stamp Duty Land Tax (SDLT), which was introduced by the Finance Act 2003 (the FA 2003) to replace Stamp Duty, a tax on written instruments which had been the subject of many successful tax avoidance schemes.\nThe principal question in the appeal is whether Project Blue Ltd (PBL) is due to pay SDLT of 50m arising out of its purchase from the Ministry of Defence (the MoD) of the former Chelsea Barracks in Chelsea Bridge Road, London.\nSince its enactment, the FA 2003 has been amended on several occasions.\nThis appeal is concerned with that Act as it existed on 31 January 2008.\nTwo issues lie at the heart of the appeal.\nThe first concerns the relationship between section 45 of the FA 2003, which provides what is often called sub-sale relief where there is a transfer of rights to a contract for a land transaction which is to be completed by a conveyance, and section 71A of that Act, which creates exemptions for alternative property finance which complies with the prohibition of usury in Sharia law.\nThe first issue does not arise in relation to transactions after 24 March 2011 because of an amendment to section 45(3) of the FA 2003 which was made by the Finance Act 2011, to which I refer in para 33 below.\nThe second issue concerns the correct interpretation of the anti-avoidance provisions in section 75A of the FA 2003, which was introduced by the Finance Act 2007.\nIf the anti- avoidance provisions do not apply to the transactions, PBL is not liable to pay the SDLT which HMRC claims; if they do apply, there is a dispute over the amount of SDLT which is due and who was or is liable to pay it.\nPBL purchased the Chelsea Barracks through a sealed bid deadline tender process for the price of 959m and exchanged contracts with the Secretary of State for Defence on 5 April 2007.\nA 20% deposit was paid on exchange of contracts and the balance of the price was to be paid in four equal instalments.\nCompletion of the purchase was postponed by the contract until 31 January 2008 to allow the MoD to re-house the troops from the barracks.\nThe principal shareholder in PBL was Qatari Diar Real Estate Investment Company (QD), which was owned by the Qatari Investment Authority, a sovereign wealth fund owned by the Qatari government.\nQD provided the funding for the initial deposit but PBL required to obtain finance for the purchase of the barracks from Qatari Bank Masraf al Rayan (MAR), a Qatari financial institution which provided a portfolio of Sharia-compliant products, and which syndicated the finance for the purchase.\nFinancial institutions, which seek to comply with the Islamic prohibition on usury, have adopted structures for financing deals which do not involve lending in return for interest and the taking of security for the repayment of the borrowed sums and interest by means of a mortgage.\nOne such form of Sharia -compliant financing, known as Ijara finance, was used to fund the purchase of the barracks.\nPBLs written case (paras 14 and 15) contains a convenient summary of the paradigm forms of Ijara arrangements, which I quote in full: 14.\nSuch transactions are likely to occur in one of two categories of case.\nIn the first, the counterparty wishes to acquire a property from a third party and requires funding to enable it to do so.\nThe financial institution buys the property from the third party, leases it to the counterparty and, at the same time, grants the counterparty an option to acquire the financial institutions interest at a later stage.\nIn the event that the counterparty has some, but insufficient, capital to acquire the property, each party can take an undivided share in the land; and the rent charged by the financial institution takes account of its reduced interest.\n15.\nIn the second case, the counterparty already owns the property but wishes to obtain funds to use for another purpose.\nIn this case the Ijara involves the counterparty selling his own interest in the property to the financial institution and taking a lease back, together with an option to repurchase.\nHMRC in para 44 of their written case described the two situations in which Ijara finance was used in essentially similar terms and stated (as is clearly the case) that section 71A was drafted with those situations in mind.\nThe funding of the purchase of the barracks was an adaptation of the first of the two categories.\nI set out the transactions in the following steps so as to assist understanding of the arguments which follow in relation to the tax consequences of the transaction: (1) 5 April 2007: PBL and the MoD entered into a contract to purchase the barracks.\n(2) 29 January 2008: PBL contracted to sub-sell the freehold to MAR.\n(3) 29 January 2008: MAR agreed to lease the barracks back to PBL.\n(4) 31 January 2008: On completion, (a) MAR and PBL entered into call and put options respectively entitling or requiring PBL to repurchase the freehold in the barracks; (b) the MoD conveyed the freehold in the barracks to PBL; (c) PBL conveyed the freehold in the barracks to MAR, and (d) immediately after that, MAR leased the barracks back to PBL.\nOn 1 February 2008 PBL granted a 999-year lease to its subsidiary, Project Blue Developments Ltd (PBDL) with call and put options for the purchase of the freehold, but that transaction is not relevant to this appeal.\nAs will be seen, it is not disputed that stages 4(b) and (c) brought into play the sub-sale relief provided by section 45 of the FA 2003, while it is contested whether stage 4(c) engaged the exemption for alternative property finance which section 71A(2) of the Act provides.\nThis is the first of the two principal issues mentioned in para 2 above.\nOn 1 February 2008, Clifford Chance LLP submitted a notification Disclosure of Tax Avoidance Scheme in accordance with the Stamp Duty Land Tax Avoidance (Prescribed Descriptions of Arrangements) Regulations (SI 2005\/1868).\nThe notification stated: No SDLT is payable by [PBL] on the sale from [the MoD] to [PBL] by virtue of sub-sale relief under section 45(3) Finance Act 2003.\nNo SDLT is payable by [MAR] on the sale of the property from [PBL] to [MAR] by virtue of alternative property finance relief under section 71A(2) Finance Act 2003.\nSuch a notification is not an acknowledgement that the arrangements were entered into for the purpose of tax avoidance.\nArrangements are notifiable under section 306(1) of the Finance Act 2004 if they enable, or might be expected to enable, any person to obtain a tax advantage and are such that one of the main benefits that might be expected to arise from the arrangements is the obtaining of that advantage.\nThe focus of the statutory provision is on the consequences of the arrangements and not on the intention of the parties who enter into them.\nOn 22 February 2008 several land transaction returns were filed in relation to these transactions.\nThree are relevant to this appeal.\nFirst, a return lodged on behalf of PBL, which related to the completion on 31 January 2008 of the contract of 5 April 2007 between the MoD and PBL, claimed that there was no liability to SDLT because of the sub-sale relief in section 45(3) of the FA 2003.\nSecondly, a return lodged on behalf of MAR related to the completion on 31 January 2008 of the sale agreement between PBL and MAR dated 29 January 2008.\nThe consideration was stated to be 1.25 billion, which was the Sterling equivalent of US$2,467,875,000 which was specified in the sale agreement.\nIn the return MAR claimed alternative property finance relief under section 71A of the FA 2003.\nThirdly, a return was filed relating to the grant by MAR of a lease to PBL on 31 January 2008.\nAgain, alternative property finance relief was claimed under section 71A. The consequence was that the taxpayers claimed that nobody incurred a liability to SDLT as a result of the completion of those transactions.\nHMRC opened an inquiry into the SDLT returns which had been submitted in relation to these transactions.\nIn relation to the first return, which was lodged on behalf of PBL, HMRC concluded the inquiry by a closure notice contained in a letter dated 13 July 2011, which amended that return by adjusting the amount of SDLT due from 0 to 38.36m.\nThis sum is the SDLT which would be due on the completion of the sale by the MoD to PBL for the consideration of 959m if that were a chargeable transaction.\nPBL now argues that HMRC were not empowered to amend that return as they did.\nI discuss this challenge under the heading The wrong return challenge in paras 81-84 below.\nHMRC did not require any amendment to the other land transaction returns as a result of their inquiry.\nBut when PBL appealed the amendment of the return, HMRC successfully applied to amend its case to increase the amount of SDLT due from 38.36m to 50m.\nThis was because the total consideration which MAR agreed to provide to PBL was 1.25 billion, and, at first sight at least, 50m would be the tax due on that transaction.\nI discuss those figures in greater detail below.\nThe sale contract which PBL and MAR entered into on 29 January 2008 involved payments by instalments which were subject to contingencies (clause 4.1 and 4.2).\nThe fourth tranche of consideration, which was US$378,670,740 payable on 31 January 2011, was never paid because the arrangement was terminated on 1 March 2010.\nThis is relevant to the dispute about the actual consideration and PBLs human rights challenge which I consider in paras 57-80 below.\nThe Finance Act 2003\nPart 4 of the FA 2003 introduced SDLT into British tax law.\nIt is a tax on land transactions (section 42(1)).\nA land transaction is any acquisition of a chargeable interest (section 43(1)); and a chargeable interest is defined (in section 48(1)) as including an estate, interest, right or power in or over land in the United Kingdom other than an exempt interest.\nA security interest, which is an interest or right (other than a rentcharge) held for the purpose of securing the payment of money or the performance of any other obligation (section 48(3)), is an exempt interest (section 48(2)).\nThus, in relation to land purchases and conventional property funding arrangements in the United Kingdom, the tax is levied on the acquisition of chargeable interests, such as freehold or leasehold interests in land, while security interests, including those which secure the financing of such acquisitions, are exempted.\nWhen persons enter into a contract for a land transaction under which the transaction is to be completed by a conveyance, section 44(2) provides that they are not regarded as entering into a land transaction by reason of entering into the contract.\nThus steps (1) and (2) in para 5 above would not of themselves give rise to any liability to SDLT.\nInstead, if the transaction is completed without previously having been substantially performed, the contract and the transaction effected on completion are treated as parts of a single land transaction, whose effective date is the date of completion (section 44(3)).\nIf the contract is not completed but is substantially performed (for example, if the purchaser takes possession of the subject matter of the contract or a substantial amount of the consideration is paid) the contract is treated as if it were the transaction provided for in the contract and its effective date is when the contract is substantially performed (section 44(4) and (5)).\nIt is common ground in this appeal that section 45, which creates sub-sale relief by modifying the operation of section 44, applies in relation to the completion of the two contracts for the sale of the barracks (steps (1) and (2) in para 5 above) to prevent a charge to tax on the completion of the contract between the MoD and PBL at step 4(b) in para 5 above.\nSection 45 (as amended by section 49 of and paragraph 2 of Schedule 10 to the Finance (No 2) Act 2005) provides: (a) (b) (2) The transferee is not regarded as entering into a land transaction by reason of the transfer of rights, but section 44 (contract and conveyance) has effect in accordance with the following provisions of this section.\n(3) That section applies as if there were a contract for a land transaction (a secondary contract) under which - the transferee is the purchaser, and the consideration for the transaction is - (i) so much of the consideration under the original contract as is referable to the subject- matter of the transfer of rights and is to be given (directly or indirectly) by the transferee or a person connected with him, and (ii) rights.\nthe consideration given for the transfer of The substantial performance or completion of the original contract at the same time as, and in connection with, the substantial performance or completion of the secondary contract shall be disregarded except in a case where the secondary contract gives rise to a transaction that is exempt from charge by virtue of subsection (3) of section 73 (alternative property finance: land sold to financial institution and re-sold to individual).\nThe consequence of the tailpiece of section 45(3) was that the completion of the contract between the MoD and PBL for the purchase of the barracks was disregarded.\nSection 71A\nThe FA 2003 as originally enacted contained an exemption for Ijara financing in section 72.\nSection 71A was added in April 2005 by section 94 of and paragraph 2 of Schedule 8 to the Finance Act 2005 and applies in place of section 72, except in relation to land in Scotland, to which sections 72 and 72A apply.\nSection 71A(1) sets out the scope of the section; it provides: (1) This section applies where arrangements are entered into between a person and a financial institution under which - (a) the institution purchases a major interest in land or an undivided share of a major interest in land (the first transaction), (b) where the interest purchased is an undivided share, the major interest is held on trust for the institution and the person as beneficial tenants in common, (c) the institution (or the person holding the land on trust as mentioned in paragraph (b)) grants to the person out of the major interest a lease (if the major interest is freehold) or a sub-lease (if the major interest is leasehold) (the second transaction), and (d) the institution and the person enter into an agreement under which the person has a right to require the institution or its successor in title to transfer to the person (in one transaction or a series of transactions) the whole interest purchased by the institution under the first transaction.\nThe section therefore has the scope to cover the contracts between PBL and MAR at steps (2), (3) and (4)(a) in para 5 above.\nThe section then spells out the exemptions which it confers on Ijara arrangements as follows.\nFirst, subsection (2) exempts the first transaction (the institutions purchase of a major interest in land) if the vendor is the counterparty to the arrangement with the financial institution (or is another financial institution which has provided Ijara finance to that person).\nIt provides: (2) The first transaction is exempt from charge if the vendor is - (a) the person, or (b) another financial institution by whom the interest was acquired under arrangements of the kind mentioned in subsection (1) entered into between it and the person.\nSecondly, subsection (3) exempts from charge the grant of the lease of the subjects to the counterparty by providing: The second transaction is exempt from charge if the provisions of this Part relating to the first transaction are complied with (including the payment of any tax chargeable).\nThirdly, subsections (4), (5) and (7) exempt from charge the re-conveyance by the financial institution of the major interest in land to the counterparty.\nThey provide: (4) Any transfer to the person that results from the exercise of the right mentioned in subsection (1)(d) (a further transaction) is exempt from charge if - the provisions of this Part relating to the first and (a) second transactions are complied with, and (b) the further transaction - at all times between the second transaction and (i) the interest purchased under the first transaction is held by a financial institution so far as not transferred by a previous further transaction, and (ii) second transaction is held by the person.\nthe lease or sub-lease granted under the (5) The agreement mentioned in subsection (1)(d) is not to be treated - (a) as substantially performed unless and until the whole interest purchased by the institution under the first transaction has been transferred (and accordingly section 44(5) does not apply), or (b) 46 (options and rights of pre-emption).\nas a distinct land transaction by virtue of section (7) A further transaction that is exempt from charge by virtue of subsection (4) is not a notifiable transaction unless the transaction involves the transfer to the person of the whole interest purchased by the institution under the first transaction, so far as not transferred by a previous further transaction.\nSection 71A therefore reflects the two paradigm forms of Ijara finance set out in para 4 above.\nFirst, if the financial institution purchases the property from a third party, that transaction is not exempted under subsection (2) and the financial institution pays SDLT on completion or the substantial performance of that contract; but the lease to the party who is being financed and the eventual transfer of the interest by the financial institution to that party on repayment of the financing are exempt under subsections (3) and (4) respectively.\nSecondly, if the financial institution purchases the property from the counterparty whom it is financing, subsection (2) applies to exempt the transfer of the major interest in land to the financial institution and subsections (3) and (4) exempt the second transaction (the lease) and the further transaction (the re-transfer of the major interest in land to the counterparty).\nBecause the arrangements for financing the purchase of the barracks involved PBL completing its purchase and its sale of the barracks to MAR on the same day in a connected transaction, PBL, as I have said, claimed sub-sale relief under section 45(3).\nBecause MAR had purchased the barracks from PBL in the context of an Ijara arrangement, it claimed exemption under section 71A(2) for that purchase and a claim was also submitted on behalf of PBL for exemption under section 71A(3) for the lease to PBL.\nWhen HMRC amended PBLs return to assert a liability to pay SDLT of 38.36m, PBL appealed to the First-tier Tribunal (the FTT).\nBefore the FTT the parties agreed that the combined effect of sections 45(3) and 71A was to exclude any liability to SDLT on the part of PBL or MAR in relation to the transactions unless the anti-avoidance provisions of section 75A applied to the transactions.\nThe arguments before the FTT therefore concentrated on the meaning and application of section 75A, to which I turn later in this judgment.\nBut when the appeal came before the Upper Tribunal (the UT), PBL changed its position.\nIt continued to argue that it was not liable for SDLT on its purchase of the barracks from the MoD because of its entitlement to sub-sale relief under section 45(3).\nBut it now argued that MAR was not entitled to exemption on its purchase of the barracks under section 71A(2) (para 14 above) because, on a proper understanding of the related provisions of the FA 2003, PBL was not the vendor of the barracks to MAR under that subsection.\nThe tailpiece of section 45(3) (para 12 above) required that the completion of the sale by the MoD to PBL be disregarded and that tax was due on the notional contract created by section 45(3).\nGiving effect to that disregard and the notional contract meant that the vendor of the barracks was the MoD, and not PBL.\nThe exemption in section 71A(2) therefore did not apply and MAR would have been liable to pay SDLT on the purchase price of 1.25 billion, if HMRC had not failed to so determine or to assess MAR within the six-year time limit since the transaction.\nThis argument did not succeed before the UT (Morgan J and Judge Nowlan).\nMorgan J, with whom Judge Nowlan agreed in relation to section 71A held, at para 43, that the purpose of the section was to equate the position of a provider of an alternative form of finance (such as MAR), who acquires a chargeable interest, with the position of a funder who acquires a security interest (which is an exempt interest).\nHe relied on section 45(5A) which I discuss in para 32 below, in interpreting the vendor in para 71A(2) as referring to PBL but also pointed out that his interpretation promoted the purpose of section 71A. If PBL were correct in its submission, SDLT would be paid on the level of funding provided by the financial institution and not on the price paid by the borrower for the land.\nHe acknowledged that his interpretation meant that neither PBL or MAR was liable to pay SDLT in respect of the transactions unless section 75A applied, but considered the legislation to be flawed at the relevant time because the tailpiece of section 45(3) did not contain an exception to the disregard where the sub-sale was exempt from a charge under section 71A.\nThe Court of Appeal (Patten, Lewison and Underhill LJJ) [2018] 1 WLR 368 disagreed with the Upper Tribunals interpretation of the relationship between section 45(3) and section 71A. Patten LJ began by observing, at para 28, that HMRCs approach by its reliance on section 75A produced a particularly inapt and harsh result because PBL would have to pay SDLT on the larger sum which MAR provided to it rather than on the purchase price which it paid to the MoD. Secondly, he held that PBL could not be the vendor in section 71A(2) because, as a result of the disregard of the transaction between the MoD and PBL in the tailpiece of section 45(3), the only contract by which MAR acquired the barracks for SDLT purposes was the secondary contract under that subsection.\nHe referred to the Court of Appeals earlier judgment in DV3 RS LP v Revenue and Customs Comrs [2014] 1 WLR 1136 (DV3) in support of his analysis: vendor in section 71A(2) must be a reference to the person from whom MAR purchased the barracks; that person could not be PBL as, by virtue of the disregard, it had no chargeable interest so as to be regarded as entering into the secondary contract, which under section 45(3) was a contract for a land transaction.\nHe rejected Mr Gammies submission on behalf of HMRC that section 71A was not addressing land transactions in the SDLT world but was framed to address transactions in the real world, and also his submission relying on section 45(5A).\nThirdly, he considered that the scheme of section 71A was to limit SDLT in all cases to a single charge on the acquisition of the property from the third party vendor, whether the acquirer was the financial institution or its customer.\nFourthly, he thought that it was unlikely that Parliament had intended to leave transactions, which fell within both of sections 45(3) and 71A, exempt from any SDLT charge and to have dealt with the problem by the anti-avoidance provisions of section 75A, which was introduced over a year later.\nThe vendor under section 71A(2) was therefore the MoD, and not PBL, with the result that that subsection did not exempt MAR from the charge.\nLewison LJ added two further points.\nFirst, he disagreed with the approach of the Upper Tribunal which equated the position of MAR with a traditional lender and saw the aim of section 71A as being that SDLT was to be paid by purchasers and not financiers.\nAs under an Ijara arrangement the financial institution owned the asset for the duration of the lease, it was not surprising that it should be liable to pay SDLT on the purchase.\nSecondly, because section 75A did not apply until 20 months after section 71A had taken effect, the result of HMRCs approach was that no SDLT would have been payable on transactions which combined sub-sale relief and the section 71A exemption in that period.\nThis provided a very strong context which made it inappropriate to apply an extended meaning of vendor in section 45(5A): para 49.\nI recognise the difficulty in interpreting the legislation which has been subjected to repeated incremental amendments and additions since 2003, as Parliament has struggled to optimise this new tax.\nBut I have come to the conclusion that the Upper Tribunal was correct in concluding that PBL was the vendor under section 71A(2) and therefore that MARs purchase of the barracks from PBL was exempt from SDLT for the following four reasons.\nFirst, it is in my view significant that Parliament has chosen, when describing the alternative property finance transactions to be exempted from charge in section 71A, and also in sections 72, 72A and 73, not to use the language of land transaction and chargeable interest but to use what Mr Gammie described as the language of real world transactions.\nParliament also adopted this practice in paragraphs 2-4 of Schedule 3, which exempt specified transactions from charge.\nThus in section 71A(1)(a) the first transaction is described as the purchase of a major interest in land and in subsection (1)(c) the second transaction is described as the granting of a lease out of the major interest.\nThis contrasts with the language of sections 42-45 which are concerned with the statutory constructs of land transactions, contracts for land transactions, and the acquisition and disposal of chargeable interests.\nAs descriptions of real world transactions the provisions of section 71A match the paradigm descriptions of Ijara arrangements in para 4 above so that in the first example, when the financial institution purchases the property from a third party and then finances its customers acquisition by means of a lease and a contract to purchase, the institution pays SDLT on its purchase but not on the financing arrangements which follow, whereas in the second example, where the financial institution purchases the property from its customer, that purchase and the subsequent transactions are exempt.\nThe distinctive treatment of the two examples is achieved by section 71A(2) which exempts the first transaction from charge if the vendor is the customer of the financial institution (or a financial institution which has previously provided Ijara finance to that customer).\nIt appears to me that in enacting the section using real world terms, Parliament has sought to describe the two paradigms of Ijara finance.\nIn the second example, in which subsection (2) exempts the first transaction, the customer may have purchased the major interest in land and paid SDLT on that purchase, or he may have received the major interest in land as a gift or through inheritance and therefore have incurred no charge to SDLT.\nIt is not relevant to the application of section 71A(2) to ask whether or not the customer has incurred a liability to pay SDLT before entering into the Ijara arrangement.\nSubsection (2) requires one only to ask the real world question: who sold the major interest in land to the financial institution? If the answer to that question is the customer, no charge to SDLT would arise.\nIn the present case, if one asks, who sold the barracks to MAR?, the answer is PBL.\nSecondly, this approach is consistent with the aim of section 71A, which the UT identified, of seeking to equate Ijara financing with conventional lending in the United Kingdom by taxing the purchaser of the property and exempting the financier.\nIn conventional lending, security interests are exempt in all circumstances (section 48(2)).\nSection 71A operates as a self-contained statutory regime to achieve this result.\nAs was stated in the Explanatory Notes to the original clauses 72 and 73 of the Finance Bill 2003 the aim was to place the amount of tax due on purchases by means of Islamic financing on a level footing with the amount due for purchases with conventional mortgage products.\nThus in the case where the financial institution purchases from its customer, the whole transaction may be seen as the equivalent of a security transaction.\nIn the case where the financial institution purchases from a third party, that purchase may be seen as a precursor of the equivalent of a security transaction effected by the lease and the conferring on the customer of the right to buy the property from the financial institution.\nThirdly, there is nothing within section 71A which suggests that the exemption in subsection (2) will not apply when the sale by the customer to the financial institution is a sub-sale which takes place contemporaneously and in connection with the customers purchase of the major interest in land.\nWhat Parliament appears to have overlooked at the outset is the possibility of the combination of sub-sale relief with the exemption of Ijara arrangements.\nFourthly, this interpretation has the benefit (subject to the operation in particular cases of section 75A which I discuss below) that, where the financial institution purchases the property from its customer, SDLT will not be charged on the amount which the financial institution provides its customer, which may in many circumstances be significantly less than the purchase price of the property, for example where the customer has provided a proportion of the purchase price of the land from its own resources.\nIn some cases, as here, the amount which the financial institution contracts to provide may be significantly more than the purchase price of the property which the customer has paid.\nIt is of note that the interpretation of section 71A(2) which the Court of Appeal has favoured in the context of a sub-sale has the effect of imposing a tax charge by reference to the amount which the financial institution provides the customer.\nThis would not achieve the level footing which the section was designed to achieve.\nIn DV3 the Court of Appeal was addressing relief under paragraph 10 of Schedule 15 to the FA 2003 which was available when a person transfers a chargeable interest to a partnership of which he is a partner.\nIn that case the partner (A) purchased a lease from an insurance company (C) and transferred the lease to a newly created partnership (B) of which A and four others were the partners.\nBoth contracts were completed on the same day.\nA claimed sub-sale relief under section 45(3) and also relief for B (the partnership) under paragraph 10 of Schedule 15.\nThe claim for the Schedule 15 relief failed because the section 45(3) disregard prevented A from acquiring a chargeable interest from C, and paragraph 10 of Schedule 15 applies only if a partner transfers a chargeable interest to a partnership.\nLewison LJ, when discussing the definition of land transaction in section 43(1), stated, at para 23: the fact that B acquires a chargeable interest as the result of an instrument giving effect to a transaction between him and A does not necessarily entail the proposition that the interest in As hands was itself a chargeable interest.\nIf there is no land transaction, there cannot have been the acquisition of a chargeable interest.\nHe continued at para 30: Paragraph 10 of Schedule 15 to the 2003 Act is not so much concerned with the acquisition of a chargeable interest by a partnership as the transfer by a partner of a chargeable interest.\nIt looks at a transaction from the perspective of the transferor.\nIt seems to me to be clear that a partner cannot transfer a chargeable interest to a partnership unless he has a chargeable interest to transfer.\nHMRC accept as correct the Court of Appeals analysis in DV3 but argue that the case casts no light on the correct interpretation of section 71A(2) because it is irrelevant to the operation of that subsection whether the completion of the sale from the MoD to PBL was a land transaction for the purpose of SDLT with the result that PBL acquired a chargeable interest.\nEqually, it is irrelevant to the interpretation of section 71A(2) whether or not the transaction between the customer and the financial institution is a land transaction.\nWhen the FA 2003 spoke of the vendor in section 71A and in the equivalent subsections in the other sections exempting alternative property finance, it was referring to the vendor in the real world transaction of the sale of the major interest in land.\nIt was not concerned with whether or not the real world transaction was a land transaction for the purposes of SDLT.\nAccordingly, HMRC submit that section 43(4), which defines vendor in relation to a land transaction in Part 4 of the FA 2003 as the person disposing of the subject-matter of the transaction is not in point.\nFor the reason set out in paras 24 and 25 above, I agree.\nIt follows that the disregard in the tailpiece of section 45(3) has no bearing on the operation of section 71A(2).\nA consideration which influenced the Court of Appeal in reaching its view on section 71A(2) was that Parliament could not have intended to leave transactions which involved a sub-sale financed by an Ijara arrangement (and thus fell within both section 45(3) and section 71A) free of charge for over one year before it introduced the anti-avoidance provision of section 75A. I see the force of this point; it is without question a legitimate method of purposive statutory construction that one should seek to avoid absurd or unlikely results.\nBut SDLT was a new tax created by the FA 2003 and, as I have said, required repeated amendments to make it effective.\nIt is not surprising that lacunas may have existed in the early years of a new tax.\nIn the early years of the tax, Parliament enacted amendments to close identified lacunas caused by the combination of sub-sale relief and exemptions.\nThus section 45(5A) was inserted into the FA 2003 by section 296 of and paragraph 5 of Schedule 39 to the Finance Act 2004.\nIt provided: In relation to a land transaction treated as taking place by virtue of subsection (3) - (a) references in Schedule 7 (group relief) to the vendor shall be read as references to the vendor under the original contract; (b) other references in this Part to the vendor shall be read, where the context permits, as referring to either the vendor under the original contract or the transferor.\nThis provision would not have needed to define the vendor for the purpose of group relief in para (a) as it did if, consistently with the Court of Appeals reasoning, the disregard in the tailpiece to section 45(3) operated already to make the vendor a reference to the vendor under the original contract.\nSimilarly, the insertion by the Finance (No 2) Act 2005 into the tailpiece of section 45(3) of the words of exception (ie except in a case where the secondary contract gives rise to a transaction that is exempt from charge by virtue of subsection (3) of section 73 (alternative property finance: land sold to financial institution and re-sold to individual)) would not have been required to impose a charge to SDLT.\nIf the Court of Appeal were correct in holding that the vendor in section 71A(2) had to have a chargeable interest and that the tailpiece of section 45(3) prevented it from having such an interest, sections 72(2), 72A(2) and 73(2), which are similarly worded, would operate in the same way in the context of a sub-sale so that the vendor in each case could not be the customer.\nThe parties have not explained to the court what prompted each of the various amendments, but Parliament may have been responding to particular schemes which had the effect of avoiding SDLT.\nHMRC explained in their written case that section 75A, which the Stamp Duty Land Tax (Variation of the Finance Act 2003) Regulations 2006 (SI 2006\/3237) and section 71 of the Finance Act 2007 inserted into the FA 2003, was a response to the formulation of tax avoidance schemes which combined reliefs (including sub-sale relief) and exemptions in ways which Parliament had not intended.\nAs will be clear when I turn to section 75A, it has a very broad ambit.\nThe problem of tax avoidance by combining sub-sale relief and the exemptions for the various forms alternative property finance was capable of a more focussed resolution.\nWhile subsequent amendments are not a legitimate tool in ascertaining prior parliamentary intention, it is relevant to note that the problem of the combination of the sub-sale relief and those exemptions was eventually resolved by a simple expedient.\nIn section 82 of and paragraph 2 of Schedule 21 to the Finance Act 2011 Parliament amended the exception in the tailpiece of section 45(3) to read: except in a case where the secondary contract gives rise to a transaction that is exempt from charge by virtue of any of sections 71A to 73 (which relate to alternative property finance) (new wording emphasised).\nThis amendment, like those referred to in para 32, would not have been needed to create a charge to SDLT if the interpretation which the Court of Appeal favoured were correct.\nThe courts adopt a purposive approach to the interpretation of taxing statutes following the guidance of the House of Lords in Barclays Mercantile Business Finance Ltd v Mawson (Inspector of Taxes) [2005] 1 AC 684.\nIn accordance with that guidance, summarised by Lord Nicholls of Birkenhead at para 32, the court asks itself two questions.\nFirst, it must determine the nature of the transaction to which a statutory provision is intended to apply; and secondly it must decide whether the actual transaction answers to the statutory description.\nIf I am correct about the self- contained nature of the provisions of section 71A, the answer to the first question is that the exemption in section 71A(2) applies to the first transaction of the Ijara arrangement in section 71A(1) where the customer sells a major interest in land to the financial institution.\nThe question whether PBLs sale of the barracks to MAR answers that description is answered in the affirmative.\nA purposive construction will not always operate in favour of HMRC and against the taxpayer as MacNiven v Westmoreland Investments Ltd [2003] 1 AC 311 shows.\nSimilarly, if there are lacunas in a statutory regime which enable tax avoidance, a purposive interpretation may not always remove them as the Court of Appeals judgment in Mayes v Revenue and Customs Comrs [2011] STC 1269 shows.\nI therefore conclude that, but for section 75A, the combination of the operation of sub-sale relief under section 45(2) and (3) and the exemption under section 71A(2) relieved the sale by the MoD to PBL and exempted the sale by PBL to MAR from a charge to SDLT.\nAn argument against this approach, which has attracted Lord Briggs, is that section 71A(2) must be construed as exempting a transaction which would otherwise be a chargeable transaction under Part 4.\nThe only transaction which is so chargeable, so the argument goes, is the completion of the notional secondary contract which section 45(3) creates, and section 45(5A)(b) gives instructions on the identification of the vendor in the notional land transaction.\nBecause the identification of the vendor in section 45(5A)(b) depends on the context in which the word is used and that context would give rise to the avoidance of tax if vendor referred to the transferee because the combination of sub-sale relief and section 71A(2) would exempt both transactions, it is argued that the vendor in section 71A(2) must refer to the original vendor, ie the MoD. I do not agree.\nIn relation to the first point, the statement that a transaction is exempt from charge, such as that in section 71A(2) referring to the first transaction, is an unqualified statement that a transaction of that description is free from a liability to pay the tax.\nThat exclusion of liability is not removed if, for some extraneous reason such as the operation of sub-sale relief under section 45, the transaction in question would not have imposed a liability to SDLT: viz the first of my four reasons (paras 24 and 25 above).\nIf that is correct, the second argument does not arise because operation of the exemption does not depend on section 45(5A)(b).\nIn any event, if section 45(5A)(b) were relevant, (a) the context of the use of the word vendor was in relation to real world transactions and (b) the history of the amendment of the FA 2003 in the years before the transactions were carried out on 31 January 2008 suggests that HMRC were struggling to respond to schemes which exploited lacunas in the legislation.\nIn that context the existence of a loophole in the tax legislation would not militate against the interpretation which I favour.\nThis is not to say that a contextual construction of a statutory provision may not have regard to the consequences of a particular interpretation and lead one to prefer another interpretation, especially when the former interpretation would have absurd or unreasonable results.\nIt is simply to say that in the early years of SDLT Parliament created a patchwork of provisions, which, for a while, allowed a transaction, which combined sub-sale relief and Ijara arrangements, what Lord Briggs correctly calls an unintended tax holiday.\nI recognise that the exclusion by the Finance (No 2) Act 2005 of the completion or substantial performance of the first contract from the section 45(3) disregard when the secondary contract would give rise to an exempt transaction under section 73(3) suggests that the draftsman in 2005 sought to impose a charge on the first transaction under section 73 while not addressing a similar problem in section 71A. But that indication of intention at that time is not sufficient in my view to outweigh the factors which have persuaded me to regard section 71A, which had been introduced earlier in 2005, as a self-contained statutory regime which confers exemption on real world transactions.\nFurther, the different treatment in section 45(3) of the similarly-worded exemptions in sections 71A and 73 at the time of the relevant transactions has the result, on Lord Briggs approach which is focussed on avoiding tax loss, that vendor is interpreted differently under sections 71A(2) and 73(2).\nWhile section 45(5A)(b) may allow such an interpretation, I find HMRCs explanation of a patchwork of provisions and a lacuna a more persuasive explanation of the relevant provisions as they were then.\nBecause, as a result of the combination of sections 45 and 71A(2), there is no SDLT charge on the sales between the MoD and PBL and between PBL and MAR, it is necessary to consider the correct interpretation and application of section 75A, to which I now turn.\nSection 75A\n(i) Whether and if so how it applies\nSection 75A is headed Anti-avoidance and provides: (1) This section applies where - (a) one person (V) disposes of a chargeable interest and another person (P) acquires either it or a chargeable interest deriving from it, (b) a number of transactions (including the disposal and acquisition) are involved in connection with the disposal and acquisition (the scheme transactions), and (c) the sum of the amounts of stamp duty land tax payable in respect of the scheme transactions is less than the amount that would be payable on a notional land transaction effecting the acquisition of Vs chargeable interest by P on its disposal by V. In subsection (1) transaction includes, in particular - (a) a non-land transaction, (2) any kind of arrangement whether or not it could an agreement, offer or undertaking not to take (b) specified action, (c) otherwise be described as a transaction, and (d) acquisition by P of the chargeable interest.\na transaction which takes place after the (3) The scheme transactions may include, for example - the acquisition by P of a lease deriving from a a sub-sale to a third person; the grant of a lease to a third person subject to a (a) freehold owned or formerly owned by V; (b) (c) right to terminate; (d) take some other action; the exercise of a right to terminate a lease or to (4) Where this section applies - (a) any of the scheme transactions which is a land transaction shall be disregarded for the purposes of this Part, but (b) there shall be a notional land transaction for the purposes of this Part effecting the acquisition of Vs chargeable interest by P on its disposal by V. (5) The chargeable consideration on the notional transaction mentioned in subsections (1)(c) and (4)(b) is the largest amount (or aggregate amount) - (a) given by or on behalf of any one person by way of consideration for the scheme transactions, or (b) received by or on behalf of V (or a person connected with V within the meaning of section 839 of the Taxes Act 1988) by way of consideration for the scheme transactions.\n(6) The effective date of the notional transaction is - the last date of completion for the scheme (a) transactions, or if earlier, the last date on which a contract in (b) respect of the scheme transactions is substantially performed.\n(7) This section does not apply where subsection (1)(c) is satisfied only by reason of - (a) (b) sections 71A to 73, or a provision of Schedule 9.\nThe breadth of section 75A was implicitly acknowledged by Parliament which in section 75C(11) and (12) empowered the Treasury to make an order, including an order with retrospective effect, which provides that section 75A is not to apply in specified circumstances.\nPBLs first argument, that section 75A could not apply because it had not been established that the parties entered into the transactions for the purpose of tax avoidance, failed before the FTT, the UT and the Court of Appeal.\nIn my view the tribunals and the Court of Appeal reached the correct conclusion.\nThe heading of the section, Anti-avoidance, is the only indication in the section which could support PBLs contention.\nThe heading is relevant to assist an understanding as to the mischief which the provision addresses, but it says nothing as to the motives of the parties to the scheme transactions.\nThere is nothing in the body of the section which expressly or inferentially refers to motivation.\nThe provision was enacted to counter tax avoidance which resulted from the use of a number of transactions to effect the disposal and acquisition of a chargeable interest.\nIt is sufficient for the operation of the section that tax avoidance, in the sense of a reduced liability or no liability to SDLT, resulted from the series of transactions which the parties put in place, whatever their motive for transacting in that manner.\nThis is clear from subsection (1)(c) which compares the amount of SDLT payable in respect of the actual transactions against what would be payable under the notional land transaction in section 75A(4), by which P acquired Vs chargeable interest on its disposal by V.\nSection 75A does not identify who is V and who is P in relation to the transactions to which the section applies.\nAs there is a number of transactions, it is possible that more than one person may be V and more than one person may be P. But Parliament has not conferred a discretion on HMRC to select whom they wish to treat as V or P. HMRC do not contend otherwise.\nIn Vestey v Inland Revenue Comrs (Nos 1 and 2) [1980] AC 1170, in which the Revenue contended that they had a discretion to select whom among a class of beneficiaries it should assess as liable to tax, Lord Wilberforce identified the following principles as fundamental objections to that contention, at p 1172: Taxes are imposed upon subjects by Parliament.\nA citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer and the amount of his liability is clearly defined.\nA proposition that whether a subject is to be taxed or not, or, if he is, the amount of his liability, is to be decided (even though within a limit) by an administrative body represents a radical departure from constitutional principle.\nIt is necessary therefore for the courts to analyse the words of a broadly-worded anti- avoidance provision to identify the persons on whom Parliament has imposed this charge to tax.\nThe words of section 75A by themselves do not disclose who is V and who is P in a particular case.\nBut the mischief which the provision addresses and the context of the provision within Part 4 of the FA 2003 provide the answer.\nThe court adopts the purposive approach which the House of Lords sanctioned in Barclays Mercantile Business Finance Ltd, to which I have referred in para 34 above.\nThe explanatory notes on clause 70 of the Finance Bill 2007 explained that the provision was introduced to counter avoidance schemes which have been developed to avoid payment of SDLT.\nIt appears to be drafted in deliberately broad terms to catch a wide range of arrangements which result in tax loss.\nThe examples of scheme transactions which are set out in subsection (3), although merely examples, give an indication of some at least of the targets of the provision.\nThe task is to identify where the tax loss has occurred as a result of the adoption of the scheme transactions in relation to the disposal and acquisition of the relevant interest or interests in land.\nThis in turn involves identifying the person on whom the tax charge would have fallen if there had not been the scheme transactions to which subsection (1)(b) refers and which exploited a loophole in the statutory provisions.\nIt is clear from (i) subsection (1)(a), which refers to P acquiring either Vs chargeable interest or a chargeable interest deriving from it, and (ii) subsection (3)(a), which refers to the acquisition by P of a lease deriving from a freehold owned or formerly owned by V (emphasis added), that the section may operate not only when P acquires the chargeable interest directly from V but also when P acquires a chargeable interest, such as a lease, which is derived from a chargeable interest which V formerly owned.\nThus the section can cover a series of transactions by which V disposes of its chargeable interest which comes to be acquired by another person and P ultimately acquires a chargeable interest derived from it from that other person.\nTurning to the application of the section to the transactions in this case, it is agreed by the parties that V in subsection (1)(a) is the MoD; its chargeable interest was the freehold in the Chelsea Barracks.\nI agree.\nIn the course of the scheme transactions, PBL did not acquire a chargeable interest, the freehold, when the contract between the MoD and it was completed on 31 January 2008 because the transaction fell to be disregarded under section 45(3); on the same day MAR acquired a chargeable interest, again the freehold, when its contract with PBL was implemented as a result of the completion of the notional transaction in section 45(3); and, on the same day, PBL acquired a chargeable interest, the lease, from MAR.\nThe put and call options were designed to enable PBL to re-acquire the freehold in the barracks, a result which was the ultimate aim of the series of transactions summarised in para 5 above.\nBut those options did not result in the acquisition of a chargeable interest on 31 January 2008.\nThey were nevertheless a scheme transaction within subsection (1)(b) because they were involved in connection with the disposal and acquisition of a chargeable interest and subsection (2)(d) includes within the definition of transaction under subsection (1) a transaction which takes place after P acquires the chargeable interest.\nThey are part of the context in which the scheme transactions, which led to Ps acquisition of a chargeable interest on 31 January 2008, fall to be analysed as they were the final stage of the transactions by which MAR was to finance PBLs acquisition of the freehold in the barracks.\nIf the court were to confine its attention to subsection (1)(a) alone, either MAR or PBL could be P, the former because it acquired a chargeable interest on its acquisition of the freehold in the barracks and the latter because it acquired the lease of the barracks from MAR.\nBut the court cannot so confine its attention.\nIt must go on to analyse how the scheme transactions gave rise to the loss of tax.\nIn the real world the nature of the transaction is clear: PBL acquired the barracks with the benefit of finance from MAR.\nThe sub-sale to MAR and the lease back to PBL were transactions involved in connection with the disposal by MoD of its chargeable interest, the freehold in the barracks, and the acquisition by PBL of its chargeable interest, the leasehold interest.\nThe loophole which has enabled the avoidance of tax is the combination of sub-sale relief under section 45(3) with the exemption conferred on Ijara financing when the customer of the financial institution sells its freehold interest in land to the institution and then leases back the land.\nThe simple means of removing the loophole, which Parliament eventually identified in 2011, was to exclude from the disregard in the tailpiece of section 45(3) a case where the secondary contract was exempt because of sections 71A to 73.\nThus it was PBL which obtained the benefit of the avoidance of tax in relation to the completion of its contract with MoD.\nI recognise that the method which Parliament subsequently chose to remove the tax loss cannot be decisive.\nThere might have been other ways of removing the tax loss.\nFor example, it might have been possible to amend section 71A(2) to remove the exemption of the sale transaction between the customer and the financial institution if the vendor had benefited from the section 45(3) disregard and thereby impose the burden on the financial institution.\nBut, as Judge Nowlan stated in his impressive judgment (para 137), it is appropriate to have regard to the overall structure of SDLT which seeks to impose the tax on purchasers and not financiers.\nThe amendment of section 45(3) rather than section 71A(2) had the advantage of preserving this structure by keeping intact the exemption of the two paradigms of Ijara financing to which I referred in para 4 above.\nIf the opportunity for tax avoidance were removed by amending section 71A(2), the consequence would be that SDLT would be paid on the price which the financial institution paid its customer in the context of the Ijara financing which, as I have said, might differ significantly from the purchase price of the major interest in land.\nThus I conclude, like Judge Nowlan, that the error obviously lay in the failure to disapply the section 45(3) disregard, an error which benefited PBL.\nTaking a purposive approach to the interpretation of section 75A, therefore, I conclude that PBL is P; and, because the completion of the contract between the MoD and PBL is disregarded under section 45(3), the chargeable interest which PBL acquires in section 75A(1) is the lease which it received from MAR.\nThe parties advanced two alternative approaches to the identification of P, which I comment on briefly to explain why I cannot accept either approach.\nFirst, PBL submits that the court should adopt a sequential approach and identify as P the first person who acquires a chargeable interest.\nAs the completion of the MoD-PBL contract is disregarded under section 45(3), MAR is that person.\nBut there is no justification in the wording of section 75A for the adoption of a sequential approach, when applying the section to the transactions which in fact took place, which stops the search at the first person to acquire a chargeable interest.\nOne would thereby remove from consideration the leaseback and the grant of the options which were part of the contractual scheme which the section is designed to address.\nThat approach appears to me to be inconsistent with the purpose of section 75A, which is to prevent a tax loss which otherwise would occur because of the totality of the connected transactions which have taken place in the real world.\nSecondly, HMRC submit that MAR could not be P because section 75A(7) disapplies section 75A if subsection (1)(c) is satisfied only by reason of sections 71A to 73.\nHMRC argues that, from MARs perspective, the only reason why MAR did not incur liability to SDLT on its acquisition of the freehold interest in the barracks from PBL was because of the exemption in section 71A. That may be so; but it is irrelevant.\nSubsection (1)(c) does not look at the question from the perspective of a party to one of the transactions.\nIt sets up a comparison between the sum of SDLT payable on all of the connected transactions and that payable on the notional transaction.\nSubsection (7) would disapply section 75A in relation to the transactions in para 5 above only if the section 71A exemption were the sole reason why the amounts of SDLT payable on those transactions is less than the amount payable on the notional transaction.\nThe first of those transactions was the completion of the MoD-PBL contract and the reason why the sum payable on that transaction was nil was because of the section 45(3) disregard.\nThus subsection (7) would not disapply section 75A.\nPBL advanced a refinement of this approach in its written case, namely that if one adds up all of the SDLT which would have been charged if there had been no sub-sale relief and no exemption for the Ijara finance, it is only the section 71A exemption which takes the tax due on the scheme transactions below that due on the notional transaction in the subsection (1)(c) balance.\nSubject to its challenge on the quantum of the charge on the notional transaction, which I discuss below, PBL presents the sums payable on the four transactions in para 5 above, if there were no sub-sale relief and no section 71A exemption, as follows: (i) 38.36m in respect of the MoD-PBL transfer; (ii) 50m in respect of the PBL-MAR transfer; (iii) 16.41m in respect of the lease granted by MAR to PBL; and (iv) 0 for the option to purchase, A total of 104.77m If 50m is payable for the notional transaction, PBL argues that it is only the section 71A exemption (50m plus 16.41m) which takes the sums payable in respect of those transactions below the sum payable on the notional transaction (ie 104.77m - 66.41m = 38.36m).\nI do not accept this approach.\nI consider that the purpose of subsection (7)(a) is to exclude the application of section 75A where the only cause of the tax loss which the section counters is the exemptions available under sections 71A to 73.\nThose alternative property finance provisions involve a series of transactions which otherwise might themselves be scheme transactions under section 75A(1)(b) and it is clearly not the purpose of the section to strike at transactions which go no further than to achieve the intended exemption of alternative property finance.\nWhere, as here, the combined effect of section 45(3) and section 71A is to diminish the SDLT payable below that payable on the notional transaction, section 75A must take effect.\nI conclude (i) that PBL is P under section 75A(1)(a), (ii) that the requirements of subsection (1)(b) also are met because the scheme transactions are those listed in para 5(4) above, and (iii) addressing the first side of the balance which subsection (1)(c) mandates, that the sum of SDLT payable in respect of the scheme transactions is nil.\nIt is then necessary to consider the other side of the subsection (1)(c) balance.\nIt will be recalled that subsection (4) requires that the scheme transactions which are land transactions be disregarded and establishes in their place a notional transaction by which P acquires Vs chargeable interest on its disposal by V. That notional transaction involves PBL acquiring MoDs freehold interest in the barracks.\nUnder subsection (6) the effective date of that notional transaction is 31 January 2008.\nI turn then to the chargeable consideration on this notional transaction.\nii) The actual consideration\nSubsection (5) provides, so far as relevant, that the chargeable consideration on the notional transaction is the largest amount (or aggregate amount) given by any one person for the scheme transactions.\nHMRC assert that that sum is the 1.25 billion which was the purchase price which MAR contracted to pay to PBL for the purchase of the freehold in the barracks.\nSDLT, which is chargeable at 4% on that figure, results in a liability of 50m.\nPBL contests this.\nIt points out that the Ijara arrangement was brought to an end on 1 March 2010, at a time when the fourth tranche of the consideration under the PBL-MAR sale agreement (US$378,670,740) had not been paid.\nBefore the FTT, PBL argued that MAR had therefore given consideration of only 970m and not the higher figure of 1.25 billion.\nPBL now asserts that the sterling equivalent of the amount which it had drawn down was approximately 847m, because paragraph 9 of Schedule 4 to the FA 2003 requires the sterling equivalent to be calculated at the effective date of the transaction (ie 31 January 2008).\nThe higher figure of 970m was, PBL asserts, based on an erroneous calculation of the sterling equivalent of each of the US$ draw downs on its own draw down date.\nIf the consideration which MAR actually paid to PBL for the conveyance to it of the freehold in the barracks was only 847m, the largest amount given by one person for the scheme transactions was the 959m paid by PBL to the MoD.\nIn my view it is not necessary for this court to determine what is the correct sterling equivalent of the sums which MAR actually paid to PBL as I am persuaded, for the reasons set out below, that HMRC are correct that the consideration for MARs purchase of the barracks from PBL was 1.25 billion, but that PBL may claim a refund for the part of that consideration which was never paid.\nMr Gammie does not dispute that it was open to PBL to make that claim.\nPBL asserts that it made that claim after the FTT handed down its decision.\nThe starting point is paragraph 1(1) of Schedule 4 to the FA 2003 which defines the chargeable consideration in these terms: The chargeable consideration for a transaction is, except as otherwise expressly provided, any consideration in money or moneys worth given for the subject-matter of the transaction, directly or indirectly, by the purchaser or a person connected with him.\nThis provision might appear, by itself, to support PBLs case.\nBut section 51 addresses contingent consideration.\nIt provides so far as relevant: (1) Where the whole or part of the chargeable consideration for a transaction is contingent, the amount or value of the consideration shall be determined for the purposes of this Part on the assumption that the outcome of the contingency will be such that the consideration is payable or, as the case may be, does not cease to be payable.\n(4) This section has effect subject to - section 80 (adjustment where contingency ceases or consideration is ascertained)\nSection 80, which provides for the adjustment of a return where a contingency ceases or the consideration is ascertained, provides so far as relevant (as amended by sections 299 and 326 of and Schedule 42 to the Finance Act 2004): (1) Where section 51 (contingent, uncertain or unascertained consideration) applies in relation to a transaction and - in the case of contingent consideration, the (a) contingency occurs or it becomes clear that it will not occur, or (b) in the case of uncertain or unascertained consideration, an amount relevant to the calculation of the consideration, or any instalment of consideration, becomes ascertained, the following provisions have effect to require or permit reconsideration of how this Part applies to the transaction (and to any transaction in relation to which it is a linked transaction).\n(2) If the effect of the new information is that a transaction becomes notifiable, or that additional tax is payable in respect of a transaction or that tax is payable where none was payable before - (a) within 30 days.\n(4) If the effect of the new information is that less tax is payable in respect of a transaction than has already been paid - the purchaser must make a return to [HMRC] the purchaser may, within the period allowed for (a) amendment of the land transaction return, amend the return accordingly; after the end of that period he may (if the land (b) transaction return is not so amended) make a claim to [HMRC] for repayment of the amount overpaid.\n(Emphasis added in sections (2)(a) and 4(a) & (b))\nPBL submits that because section 51 is subject to section 80 and section 80 requires reconsideration of the manner in which the SDLT code applies, it was incumbent upon HMRC or the courts to amend the land transaction return to reflect the actual chargeable consideration and thus the SDLT payable.\nOn that basis PBL asserts that the FTT erred in allowing HMRC to amend their statement of case to claim that the amount of SDLT which was payable was 50m.\nBut this is to mis- read section 80.\nSubsection (1) speaks of the following provisions having effect to require or permit reconsideration.\nThe use of the disjunctive conjunction is significant.\nSubsection (2) requires the purchaser to make a return where tax has been underpaid; but subsection (4), which applies where tax is overpaid, permits the taxpayer to amend the return or to claim the repayment.\nThis statutory asymmetry has the effect that section 51 operates to tax the contingent consideration and, under section 80, the taxpayer has to take the initiative to obtain repayment if new information shows that less tax is payable than has been paid.\nThere is no scope for the application of the Bwllfla principle, that where facts are available they are to be preferred to prophecies (Bwllfa & Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426), where Parliament has laid down the process by which the correct amount of SDLT which is payable is ascertained.\nI conclude therefore that, subject to the human rights challenge, HMRC are correct in their assertion that the chargeable consideration for the notional transaction (section 75A(4) and (5)) is 1.25 billion and the SDLT due thereon is 50m.\nHMRCs calculation of that sum as the SDLT due is however subject to the right to claim under section 80.\nPBL recorded in its written case (footnote 134) that it made such a claim shortly after the decision of the FTT and that HMRC opened an inquiry into that claim, which has been left in abeyance pending the outcome of this appeal.\nAs HMRC has not addressed this matter, I need say no more.\n(iii) Section 75B and the human rights challenge\nIn the UT Morgan J interpreted section 75B, to which I will turn, as enabling the tribunal to determine that the chargeable consideration on the notional transaction under section 75A was the 959m which PBL had paid the MoD for the freehold of the barracks and not the 1.25 billion which MAR had contracted to pay to PBL.\nPBL accepts that on a black-letter reading of section 75B, where the financial institution provides more finance than the price which the customer pays for the land, the section 75A charge on the notional transaction will take account of the whole of the amount payable for the chargeable interest which the financial institution acquires.\nBut it asserts that the manner in which section 75B is drafted indirectly discriminates against those of Islamic faith who may be expected to adopt Sharia financing techniques.\nUnder conventional mortgage financing, SDLT would have been payable on the consideration for PBLs acquisition of the freehold in the barracks from the MoD (959m) and the security transaction would have been exempt, notwithstanding that the financial institution had provided additional finance.\nBy contrast, if Sharia compliant finance is obtained, the additional sums provided by the financial institution would be subjected to the SDLT charge.\nPBL argues that the transactions fall within the ambit of article 9 of the European Convention on Human Rights (ECHR) (in particular the freedom to manifest ones religion) and of Article 1 of Protocol 1 (A1P1) (the entitlement to the peaceful enjoyment of ones property and the right not to be deprived of ones possessions except in the public interest).\nArticle 14 of the ECHR requires public authorities to secure the enjoyment of such rights and freedoms without discrimination on a ground such as religion.\nPBL submits that section 3(1) of the Human Rights Act 1998 requires the court to interpret section 75B in a manner which is compatible with article 14 read with article 9 and A1P1, and so to eliminate discrimination against those of the Islamic faith.\nSection 75B provides (so far as relevant): (1) In calculating the chargeable consideration on the notional transaction for the purposes of section 75A(5), consideration for a transaction shall be ignored if or in so far as the transaction is merely incidental to the transfer of the chargeable interest from V to P. (2) A transaction is not incidental to the transfer of the chargeable interest from V to P - (a) if or in so far as it forms part of a process, or series of transactions, by which the transfer is effected, or (c) if it is of a kind specified in section 75A(3).\n(3) A transaction may, in particular, be incidental if or in so far as it is undertaken only for a purpose relating to - the construction of a building on property to (a) which the chargeable interest relates, the sale or supply of anything other than land, or (b) (c) a loan to P secured by a mortgage, or any other provision of finance to enable P, or another person, to pay for part of a process, or series of transactions, by which the chargeable interest transfers from V to P. In subsection (3) - (a) paragraph (a) is subject to subsection (2)(a) to (c), (b) paragraph (b) is subject to subsection (2)(a) and (c), and (c) paragraph (c) is subject to subsection (2)(a) to (c).\n(4) (5) The exclusion required by subsection (1) shall be effected by way of just and reasonable apportionment if necessary.\nIn this section a reference to the transfer of a chargeable (6) interest from V to P includes a reference to a disposal by V of an interest acquired by P.\nAbsent the question of ECHR compatibility, I am satisfied that section 75B does not assist PBL.\nMorgan J in the UT sought to use section 75B to avoid what he saw as an unreasonable result by two means.\nFirst, he accepted PBLs submission that subsections (1) and (6) refer to the acquisition by P of the chargeable interest disposed of by V and that interest in this case could only be the freehold as V (the MoD) did not dispose of the leasehold.\nThus the only transfer which was relevant in section 75B was the transfer of the freehold from the MoD to PBL, to which the sub-sale by PBL to MAR was incidental.\nSecondly, he interpreted the words in so far as in subsection (1) as authorising the apportionment of the consideration which MAR provided to PBL for the freehold between (a) the sum which reimbursed PBL for the price which it paid the MoD for the freehold and (b) the sum which MAR agreed to provide to enable PBL to pay any SDLT which was due and to fund other expenditure.\nHe referred to PBLs submission that one could achieve this by reading into subsection (1) after the words in so far as the additional words the payment of the consideration or but said that it was not necessary to do so.\nI disagree on both points, for reasons which are essentially the same as those which Judge Nowlan advanced.\nIn my view both section 75A and section 75B are difficult provisions to interpret and to apply to particular transactions.\nIn summary, section 75A has been drafted in broad terms to catch a range of tax avoidance schemes and prevent unintended tax losses by the use within a series of transactions of a combination of reliefs and exemptions; and section 75B reduces the chargeable consideration of the notional transaction in section 75A(4) by excluding incidental transactions in that series of transactions from the section 75A(5) calculation.\nLooking at the matter in more detail, one starts with the chargeable consideration on the notional transaction in section 75A(5), which is calculated by reference to the scheme transactions which are the actual transfer or transfers by which a chargeable interest moves from V to P or P acquires a chargeable interest deriving from it (section 75A(1)(a)).\nThat chargeable consideration, as I have said, is the largest amount (or aggregate amount) given by any one person by way of consideration for the scheme transactions.\nSection 75B is framed to remove from those actual transactions (ie the scheme transactions of section 75A(1)(b)) any transactions which in accordance with its provisions are to be treated as incidental.\nTo achieve this, the reference in section 75B(1) to the transfer of the chargeable interest from V to P is a reference to the actual transfer or transfers which are the subject of section 75A(1)(a) and (b).\nSupport for this view comes from (a) subsection (6) and (b) subsection (2).\nSubsection (6) (a reference to the transfer of a chargeable interest from V to P includes a reference to a disposal by V of an interest acquired by P) makes clear that subsection (1) covers a case where P acquires from another party the interest which V has disposed of.\nThus section 75B could be applied to the circumstance where, within the scheme transactions, V sold the freehold in land to B who sold on that freehold to P. Subsection (2) is framed to place limits on the scope of subsection (1).\nSubsection (2)(a), which provides that a transaction is not incidental if or in so far as it forms part of a process or series of transactions, by which the transfer is effected, is a reference to the scheme transactions in section 75A(1)(b) in so far as they form part of the process by which the relevant disposal and acquisition or acquisitions are made.\nSubsection (2)(c) provides that a transaction is not incidental if it is of a kind specified in section 75A(3).\nThat includes (in section 75A(3)(a)) the acquisition by P of a lease deriving from a freehold owned or formerly owned by V and (in section 75A(3)(b)) a sub-sale to a third person.\nTo give effect to subsection (2) and achieve coherence both within section 75B and between that section and section 75A, the transfer of the chargeable interest from V to P in section 75B(1) and (6) must extend to the transactions to which section 75A(1)(a) and (b) and (3) refer, including the sub-sale to the third person under section 75A(3)(b) (ie PBLs sale to MAR) and the acquisition by P of an interest derived from the chargeable interest which V has disposed of under section 75A(3)(a) (ie the leasehold interest which MAR gave to PBL).\nThis interpretation is wholly consistent with the purpose of section 75B which is to reduce the consideration given for the transactions in section 75A(1)(b) which are to be taken into account in the section 75A(5) calculation of the consideration on the notional transaction.\nI therefore conclude that the transactions which transfer the chargeable interest from V to P in section 75B(1) include both the sub-sale to MAR and the grant by MAR of the lease to PBL.\nI am also not persuaded by the second argument which Morgan J favoured, namely that the words in so far as in section 75B(1) required the tribunal to apportion the 1.25 billion consideration which MAR paid between the purchase price of the barracks and other finance.\nThose words in subsection (1) appear to be addressing a composite transaction which in part is necessary for the disposal and acquisition, to which section 75A(1)(a) refers, and in part serves some other, incidental, purpose, such as any of those identified in subsection (3).\nThat cannot assist PBL in this case because of the overriding effect of subsection (2).\nIt is arguable that subsection (2)(a) may not provide an answer, for as PBL points out, it uses the same if and in so far as formulation as subsection (1).\nBut subsection (2)(c) is unqualified and prevents the sub-sale to MAR from being incidental because that transaction was of a kind specified in section 75A(3), ie a sub-sale to a third person.\nAny appeal to the terms of section 75B(3)(c) is excluded by subsection (4)(c) which overrides it by the operation of the exclusion in subsection (2)(a) and (c).\nI therefore conclude that the 1.25 billion consideration which MAR contracted to pay to PBL is the relevant consideration under section 75A(5)(a) unless section 3 of the Human Rights Act 1998 requires the court to adopt a more expansive interpretation of incidental transactions in section75B(1).\nPBLs argument in support of its challenge under article 14 of the ECHR (para 66 above) is that if a conventional lender were to advance sums to its customer in excess of the purchase price of the land, the purchaser would pay SDLT on the purchase price and the financiers security interest would be disregarded under section 48.\nIn a section 75A exercise, section 75B(3)(c) would treat the security transaction (a transaction undertaken only for a purpose relating to - a loan to P secured by a mortgage) as incidental to the transfer of the land from the seller to the customer and therefore outside the calculation of the chargeable consideration for the notional transaction under section 75A(5).\nBut if, as in this case, the financial institution using an Ijara arrangement were to provide funds in excess of the purchase price, section 75A(5) would operate to penalise it by using the larger funding as the measure of the chargeable consideration on the notional transaction.\nThis, says PBL, amounts to unjustified discrimination on the ground of religion contrary to article 14 read with article 9 of the ECHR and A1P1.\nAs I have said, PBL invites the court to read into section 75B(1) the words the payment of the consideration or after in so far as so as to enable the consideration given by the financial institution for the purchase of land from its customer at the first step of an Ijara arrangement to be allocated proportionately between the funding of the land purchase on the one hand and the funding of other expenditure by the customer on the other so that only the former would count towards the chargeable consideration on the notional transaction under section 75A(5).\nThe FTT did not have to consider the merits of this challenge because it concluded that PBL had not established that it had entered into the Sharia compliant financing for religious reasons and that it had therefore not proved that it suffered discrimination on the ground of religion.\nNeither the UT nor the Court of Appeal had to address the argument because the UT by the presiding members casting vote held that the chargeable consideration was 959m and the Court of Appeal held that section 75A did not apply.\nI note in passing however that, but for the expiry of a time limit for HMRC, the Court of Appeals decision would have imposed a liability on MAR of 50m on the chargeable consideration of 1.25 billion, and in accordance with standard practice in Ijara arrangements the charge would have fallen on PBL by means of a tax indemnity.\nI have come to the view that this court does not need to consider the ECHR challenge in detail because the matter can be determined on the simple bases (a) that any discriminatory effect is objectively justified and (b) that, in any event, PBL is not a victim.\nThere is in this case no need to delve into the question whether the FTT was correct in holding that it had not been established that there was any discriminatory treatment.\nIf one were, for the sake of argument, to accept that section 75A had had the potential to give rise to indirect discrimination on the prohibited ground of religion, in cases where the financial institution using Sharia compliant financing had provided funds to its customer beyond what was needed to fund the purchase of land, one would still need to consider whether the provision giving rise to the discriminatory treatment was objectively justified.\nHMRC advances as justification (a) the need to frame section 75A in broad terms to deal with the lacunas which were giving rise to tax loss and (b) the safety valve created by section 75C(11) and (12) which empowers the Treasury to disapply section 75A in specified circumstances, including making provision with retrospective effect.\nThus HMRC argue that if the provision were shown to give rise to a systemic or frequent infringement of ECHR rights, Parliament had provided the mechanism by which such infringements could be avoided.\nIn addition, section 75A(7) disapplies section 75A where the requirements of subsection (1)(c) are satisfied only because of the use of alternative property finance.\nParadigm forms of Ijara arrangements are therefore protected.\nIt is the tax loss occasioned by the combination of sub-sale relief and the alternative property finance which has given rise to the section 75A(5) charge in this case.\nThat circumstance cannot recur after section 45(3) was amended in 2011.\nThere is no evidence of any widespread use before 2011 of Ijara arrangements by means of a sub-sale to the financial institution and involving the provision of funds in excess of the purchase price of the land, as occurred in this case.\nAnd it is that combination which is the basis of the allegation of discrimination.\nThe fact that a broadly worded provision may on occasion have a harsh effect on an alternative property finance transaction which is structured in a particular way is not sufficient to establish unjustified discrimination under article 14 of the ECHR.\nIn any event, it is not disputed that PBL has a claim under section 80 for the repayment of any amount which is overpaid.\nIf, as appears to be the case, the sterling equivalent of the consideration, which MAR actually paid to PBL for the barracks before the Ijara arrangement was brought to an end, was less than the 959m which PBL paid to the MoD, it is the latter figure which is the chargeable consideration under section 75A(5)(a).\nIn that event, PBL is paying no more than it would have paid if it had used a conventional form of loan financing.\nIt is therefore not a victim of discriminatory treatment.\ninterpretation of section 75B for which PBL argues.\nI therefore do not accept that article 14 of the ECHR can support the Procedural challenges\n(a) The wrong return challenge\nPBL submits that HMRC are in any event not entitled to pursue their claim for the SDLT because they had no power to amend the SDLT return, lodged on its behalf, relating to the completion of the contract of 5 April 2007 between the MoD and PBL (para 7 above), because it was not a return relating to the notional transaction under section 75A.\nPBL argues that the return, which referred to the section 45(3) disregard, was not strictly necessary but was submitted on its behalf in order to have the purchase of the barracks entered onto the Land Register.\nIt submits that HMRC, while entitled to inquire into that return under section 76 of and paragraph 12 of Schedule 10 to the FA 2003 in relation to the sale by the MoD to PBL, had no power to amend the return in order to impose a liability to SDLT on the separate, notional transaction.\nThe only avenues which had been open to HMRC to impose a liability to SDLT on the notional transaction, it submits, were to make a determination under paragraph 25 of Schedule 10, because no return had been lodged in respect of the notional transaction, or to make a discovery assessment under paragraph 28 of that Schedule.\nAs the six-year time limit for either the determination or the assessment had now expired, HMRC could no longer seek payment of any SDLT due on a notional transaction.\nI do not accept that submission.\nThe answer lies in the terms of paragraph 13 of Schedule 10, which sets out the scope of the inquiry which HMRC can make under paragraph 12 of that Schedule, and HMRCs powers on completion of the inquiry under paragraph 23.\nParagraph 13 provides so far as relevant: (1) An inquiry extends to anything contained in the return, or required to be contained in the return, that relates - to the question whether tax is chargeable in (a) respect of the transaction, or (b) to the amount of tax so chargeable.\nThe relevant information contained in the return included information about the sale of the barracks by the MoD to PBL.\nTo my mind, the fact that the information in the return was provided to HMRC in relation to a transaction (the MoD-PBL sale), which was to be disregarded under both section 45(3) and section 75A(4), does not limit the scope of the inquiry.\nHMRC were entitled to inquire into the tax consequences of that sale.\nThe powers of HMRC on completion of the inquiry are set out in paragraph 23 of Schedule 10 which provides: (1) An inquiry under paragraph 12 is completed when [HMRC] by notice (a closure notice) inform the purchaser that they have completed their inquiries and state their conclusions.\n(2) A closure notice must either - state that in the opinion of [HMRC] no (a) amendment of the return is required, or (b) make the amendments of the return required to give effect to their conclusions.\nHMRC were entitled to inquire into that sale and, on ascertaining that it was a part of a series of transactions which gave rise to a section 75A charge, to amend the return to reflect the tax due on the notional freehold acquisition under section 75A(5).\nAny obligation on PBL to submit a return in relation to the notional transaction does not limit the scope of HMRCs power to inquire into the MoD-PBL sale or their power to amend the return under paragraph 23.\nI therefore reject this procedural challenge.\n(b) Case management challenges\nIt is not the normal practice of this court to review case management decisions of the FTT which have been upheld by the Upper Tribunal as involving no error of law.\nHaving rejected the argument that HMRC were not entitled to amend PBLs SDLT return in relation to the purchase of the freehold from the MoD, it is not necessary to decide whether the FTT should have granted PBL permission to amend its notice of appeal to put forward that argument.\nThe other procedural challenge is PBLs challenge to the FTTs decision to allow HMRC to amend its case to argue that the chargeable consideration was 1.25 billion and not 959m.\nIt is hard to see how the FTT could have decided otherwise.\nUnder paragraph 22(3) of the Stamp Duty Land Tax (Appeals) Regulations 2004 (SI 2004\/1363) the FTT is bound to increase the amounts of tax due if the taxpayer has been undercharged: see (by way of analogy in relation to section 50(7) of the Taxes Management Act 1970) Glaxo Group Ltd v Inland Revenue Comrs [1996] STC 191.\nBut, again, having reached the view that PBL has a claim for repayment of overpaid SDLT under section 80, there is no need to address this case management decision.\nA different approach?\nBefore the hearing, the court drew the attention of counsel to the Observations in Bulletin No 78 to Emmet and Farrand on Title (September 2016).\nThe authors there suggested that the courts might have found a simpler solution to the issues raised in this case if they had had regard to the equitable maxim that The test of a mortgage is in substance, not form.\nIf a transaction is in substance a mortgage, equity will treat it as such, even if it is dressed up in some other guise, as by the documents being cast in the form of an absolute conveyance (Megarry and Wade, The Law of Real Property, 8th ed (2012), para 25.085).\nThe authors suggested that the transfer of the Chelsea barracks to MAR in the Ijara transaction should be viewed in English law as a mortgage, with the result that PBL should have been registered as proprietor of the freehold and have paid SDLT on its purchase and MAR should have been registered as the proprietor of a charge, a security interest exempt from SDLT under section 48.\nBoth HMRC and PBL submitted written observations in response to this request.\nNeither party disputed that Ijara was a method of financing PBLs purchase and development of the Chelsea barracks.\nIndeed, the Ministry of Defence had accepted that the Ijara was in the nature of a mortgage and this was reflected in the Deed of Clarification entered into between the Secretary of State for Defence, PBL and Qatari Diar Real Estate Investment Co. But the purpose of this clarification was to ensure that the provisions in the contract of sale between the MoD and PBL providing for overage in the event of a sale on by PBL would not apply to the sale to MAR.\nNeither party accepts that, for this or any other reason, the transactions between PBL and MAR were in substance a mortgage and should be treated as such.\nThey were real transactions, albeit inextricably linked, and intended to take effect in accordance with their terms, and there is no reason for this court to treat them any differently.\nIn particular, there is no need to protect the interests of PBL, as there used to be to protect the interests of mortgagors who might otherwise be prevented from recovering their property.\nFurthermore, if the effect of treating these linked transactions as a mortgage were that the rental payments made by PBL were to be regarded as interest on money advanced to finance the purchase and development, this would run counter to their whole purpose, which was to comply with the Islamic prohibition of lending money at interest.\nAs PBL argues, the issue of the substance of a transaction is a fact sensitive matter and the burden of proving that the substance is other than the form falls upon the party suggesting it.\nIn the Upper Tribunal, Morgan J was alive to the possibility that in some circumstances, a transaction which takes the form of an absolute transfer coupled with an option for the transferor to re-acquire the property from the transferee can be analysed as being in substance a funding transaction under which the transferee has advanced funds to the transferor and so that the transfer is by way of security only (para 26).\nBut no-one had suggested that before the tribunal and further evidence would have been necessary had they done so.\nIn those circumstances, and where neither party supports the alternative approach, it would be quite unfair of this court to pursue it.\nIn any event, whatever might be the case in other contexts, it is clear from the terms of FA 2003 that Parliament did not intend to confer exemption from SDLT on an Ijara transaction by treating it as the creation of a security interest under section 48, but instead conferred exemptions under section 71A by recognising the substance of each of the three transactions within an Ijara.\nThus, it would be contrary to the legislative scheme in FA 2003 to treat MAR as exempt under section 48 on the basis that it had acquired a security interest.\nThat is a sufficient answer to the point.\nConclusion\nStamp Duty Land Tax (SDLT) is a relatively new tax, designed to generate broadly the same revenue stream as its venerable predecessor, Stamp Duty, which had become so easily avoided that it had acquired the unhappy reputation, among those who could afford skilled advice, of being a voluntary tax.\nIntroduced in Part 4 of the Finance Act 2003, SDLT was designed around a wholly new conceptual approach to the identification of the chargeable event in a sale of land.\nGenerally speaking it was no longer the stamping of a conveyance, but rather the completion or substantial performance of a contract for the sale of an interest in land in the UK, which Part 4 calls a land transaction.\nIt was hoped that this new start would close off many of the loopholes through which advisers had previously been able to guide their clients.\nIt is no surprise that, in its infancy, SDLT proved to have its own I would allow the appeal.\nunintended loopholes.\nDuring its first decade it has therefore been the subject of frequent tweaking and revision.\nLand may be sold and purchased by a chain of contracts, all made before the completion of any of them.\nThis may occur for example in a rising market, where the first buyer B turns the property to a subsequent buyer C, for an immediate profit derived from the higher price payable under the second contract.\nThe second contract is usually called a sub-sale.\nThe first and second contracts may be completed by a transfer by the original seller A to C, or by simultaneous transfers from A to B and from B to C. The second contract may be a separate contract of sale, or an assignment to C of Bs rights under the first contract.\nThe SDLT scheme is designed to avoid double taxation of sub-sales, that is charging the completion of both the AB purchase and the BC purchase or assignment to a full charge to tax.\nIt does so by taxing neither the AB nor the BC purchase separately, but rather by taxing an artificial deemed land transaction, constituted by the notional completion of what is called a secondary contract, which contains elements of both.\nThis treatment of sub-sales appears in section 45.\nUsing the ABC example, section 45(3) tells you that the purchaser under the secondary contract is C, and that the consideration is a combination of the consideration payable under the AB and BC purchases.\nSubsection (5A) rather enigmatically explains that the identity of the vendor under the deemed land transaction to which the secondary contract gives rise is either A or B, depending on the statutory context in which it matters.\nIt was never the objective of Stamp Duty, and is not the objective of SDLT, that it should tax the financing of the purchase of land.\nIn the UK this is usually done by lending at interest on the security of a mortgage.\nMortgages are exempt from SDLT.\nBut an increasing number of the purchasers of land in the UK finance their acquisition by forms of finance which do not offend against the Sharia prohibition of usury (a prohibition once applied in Christendom, but abolished in the UK in the early 19th century).\nThis may be because the purchaser is an individual of the Muslim faith, or (as here) because the purchaser wished to use a finance institution which itself carries on its business in accordance with Sharia principles.\nSharia law does not prohibit the taking of security, but it does forbid the payment of interest in connection with the lending of money.\nOver time a variety of alternative financing structures were developed, in which the commercial return to the finance house was provided by something other than the payment of interest on a loan.\nIn the present case the structure chosen, called Ijara, involved the acquisition of the freehold interest in property by the finance house (the bank), its lease to the finance customer (the customer), and the grant of put and call options which would enable the customer to acquire the freehold reversion from the bank.\nThe commercial return for the bank lay initially in the rentals payable under the lease, and then (once exercised) in the amount payable under the options, which in effect capitalised the outstanding rental stream under the lease.\nOriginally the lease and the transfer of the freehold under the options were exempted from SDLT by section 72 of the Finance Act 2003, later replaced, for land in England, by section 71A.\nThe acquisition of the freehold by the bank was also exempted by section 71A(2), if but only if the vendor under that transaction was the customer.\nThus if the customer had already purchased the property (and paid SDLT on that purchase), or inherited it, but wished to refinance by an Ijara structure, the first relevant finance transaction would be a sale of the property by the customer to the bank.\nIt needed to be exempted from tax if the objective of making Ijara finance free from SDLT was to be achieved.\nConversely, if the finance was being provided to fund the purchase, then the first relevant transaction would be the purchase of the property, usually by the bank direct from the third party seller.\nIn that case there was no reason to exempt that purchase from SDLT.\nAlthough the bank had to pay the tax, the customer would indemnify the bank under a tax indemnity included in the terms of the Ijara financing.\nViewed separately, the provisions for relief from the double taxation of sub- sale chains and for the exemption of alternative Sharia-compliant financing structures broadly achieved their objectives.\nAll the intractable problems in the present case, which have divided the courts below, and divide the members of this court, derive from a structure for the simultaneous purchase of land and its Sharia- compliant financing which also involves a sub-sale.\nFor particular reasons concerned with the nature of the marketing of Chelsea Barracks, and the desire of its seller, the Ministry of Defence (MOD), for a delayed completion, the Sharia compliant finance house (MAR) selected by the buying customer PBL could not make the original purchase from MOD.\nInstead PBL contracted to purchase from MOD, with MAR as a sub-purchaser.\nThe result of using a sub-sale in connection with Ijara financing was that, for SDLT purposes, the MOD \/ PBL and the PBL \/ MAR transactions were both replaced by a secondary contract by reason of section 45(3), the completion of which gave rise to a land transaction which would have been chargeable to SDLT, unless excluded from charge under section 71A(2) because it was part of Sharia compliant alternative financing.\nThat much is common ground.\nThe critical question on this appeal is whether that land transaction was exempted from a charge to SDLT by section 71A(2) of the Finance Act 2003.\nLord Hodge thinks that it was exempt, with the result that the series of transactions which began with the transfer by MOD to PBL and ended with the lease by MAR to PBL, coupled with the put and call options, was entirely tax-free, subject only to the effect of section 75A. If that were the effect of section 71A(2) then I would agree with all his conclusions as to the consequences, and with all his reasons for those conclusions.\nI also agree with his conclusion that the transactions are not to be treated as giving rise to a loan on mortgage security.\nIn my view however the transfer to MAR was not exempt, because PBL was not the vendor under the relevant land transaction within the combined meaning of sections 45(5A)(b) and 71A(2).\nThe vendor was MOD.\nThus the condition in section 71A(2)(a) was not satisfied.\nMAR was therefore chargeable to SDLT on its purchase of Chelsea Barracks.\nIn that respect I agree with the conclusion of the Court of Appeal, although my reasoning is not the same as theirs.\nIn setting out my own reasons I gratefully adopt Lord Hodges summary of the facts, and do not need to set out again the relevant statutory provisions.\nThe operative parts of section 71A are subsections (2), (3) and (4).\nEach of them exempts from charge to tax specific land transactions.\nEach has specific conditions which must be satisfied, even if the conditions of the gateway into section 71A, in subsection (1), are all satisfied, as they were in this case.\nBut the common feature of subsections (2), (3) and (4) is that they apply, if at all, only to land transactions which would otherwise be chargeable under Part 4.\nIn an ordinary Ijara financing which satisfied the gateway conditions in subsection (1), the purchase of the major interest by the institution (called the first transaction in subsection (1)(a)) would itself be a chargeable land transaction, regardless whether the vendor was the person to whom the lease was to be granted, or a third party.\nIt would then be exempted under section 71A(2) only if the vendor was that person.\nThe identity of the vendor would be readily apparent.\nIt would be the person disposing of the subject-matter of the transaction: see section 43(4).\nIn the context of a purchase effected (as here) by a Land Registry Transfer, it would be the transferor under that transfer.\nIn the present case, but for the matter I am about to describe, that would have been PBL.\nBut where, as here, the purchase by the institution takes place under a contract by way of a sub-sale to which section 45(1) applies, then the institution is not treated as having entered a land transaction at all by virtue of that purchase, let alone a chargeable land transaction: see section 45(2).\nThis is because the agreement to purchase is a transfer of rights within the meaning of the last sentence of section 45(1) and the institution is the transferee.\nThe ordinary consequence of the completion of that purchase laid down by section 44(3) (namely that the contract and its completion is treated as a single land transaction) is displaced by section 45(2) and (3).\nThe contract is replaced by the statutory construct called a secondary contract under which the transferee institution is the purchaser, but the vendor is not identified.\nThe secondary contract is not, on its own, a land transaction but, when it is completed by a conveyance, the secondary contract and its completion are together treated as a land transaction: see again section 44(3).\nI will call it, for short, the completed secondary contract.\nThe identity of the vendor under that land transaction, wherever it matters elsewhere in Part 4, is regulated by section 45(5A)(b).\nThe reference to the vendor in section 71A(2) is plainly within the contemplation of the phrase other references in this Part to the vendor in section 45(5A)(b).\nThus, where there is a sub-sale, the vendor under section 71A(2) is either the vendor under the original contract (here MOD) or the transferor under the transfer of rights (here PBL), depending on the context.\nThe relevant context, for present purposes, is a sub-sale under section 43, coupled with an Ijara finance structure compliant with section 71A(1), and the determination whether exemption is to be available under section 71A(2) for the completed secondary contract.\nIn this context it is plain that this is the relevant land transaction, by analogy with the reference in the tail-piece to section 45(3) to exemption in section 73(3).\nIt speaks of a case where the secondary contract gives rise to a land transaction that is exempt from charge by virtue of subsection (3) of section 73.\nThat section exempts another kind of alternative finance structure.\nIn a section 45 context, the scheme of Part 4 treats the alternative contract, rather than the real world contract which it replaces, as giving rise to the land transaction qualifying (or not qualifying as the case may be) for exemption under section 73.\nThe same must be true of section 71A, which confers exemption in a very similar way.\nSo, what choice, as between MOD and PBL is permitted by this context? There are considerations which may be said to pull both ways.\nIn favour of PBL is the fact that it was the vendor under the real world contract by which MAR agreed to buy the Barracks, and the transferor under the Land Registry transfer by which the freehold interest was actually transferred to MAR.\nIn favour of MOD is the fact that, if the completion of the original contract between MOD and PBL is to be disregarded under section 45(3), then PBL never received from MOD the chargeable interest which is deemed to be transferred to MAR by the completion of the secondary contract.\nThus the person disposing of that chargeable interest (the subject matter of the transaction under section 43(4)) can only have been MOD, so that MOD is the only candidate as vendor in this context, under section 45(5A).\nThe first of these considerations persuaded the Upper Tribunal, where the issue first arose for decision.\nThe second persuaded the Court of Appeal.\nIn this court the main battle between counsel has centred on the question whether the relevant context is one which calls to be resolved by a real world or an SDLT-world analysis.\nIn my view neither of those ways of looking at the matter is decisively better than the other.\nThe issue arises precisely at the point where the two worlds collide.\nTreating either MOD or PBL as vendor may loosely be said to be permitted by the context, if the contest is simply between those parallel worlds.\nSection 71A(1) sets out what appear to be real world conditions for the exemption of Ijara finance structures from SDLT.\nBut the land transaction which either is or is not to be exempted by section 71A(2) is a pure SDLT construct, namely that notional land transaction to which the secondary contract imposed by section 43 gives rise.\nBut there cannot be two vendors, nor is the taxpayer or HMRC free to choose between two available permitted candidates.\nThe application of section 45(5A) to the context of section 71A(2) must produce a single answer in each case, although the context will not always lead to the same result.\nIn my opinion there is a much more powerful third factor which provides a decisive answer to that question, namely an appreciation of the consequences.\nIf the vendor is to be PBL then, subject only to section 75A, the combined sub-sale and Ijara financing means that the whole transactional structure by which Chelsea Barracks was purchased from MOD is exempted from SDLT.\nBy contrast, if MOD is to be the vendor, there is a single charge to SDLT.\nThe first outcome cannot have been one which Parliament intended.\nThe second outcome accords with the overall purpose of Part 4 to charge SDLT on purchases of land in the UK, with the avoidance of double taxation on a sub-sale, and with the general objective of section 71A, namely to exempt those who use Sharia compliant alternative finance from incurring SDLT where finance by a loan on mortgage security would not do so.\nA choice, under section 45(5A) which, in this context, produces an unintended tax holiday for all the participants in the purchase, viewed as a whole, is simply not one permitted by the context, where the alternative choice produces a result broadly in accordance with the purpose of the legislation.\nI must now address some of the contrary arguments.\nThe first is that a statutory requirement to have regard to the context does not permit regard to be had to the consequences.\nI respectfully disagree.\nA hallmark of the modern contextual approach to the construction of a contract is that a choice which produces a result which the parties cannot have intended is to be rejected if there is a less unsatisfactory alternative.\nI can see no reason why the same approach is inapplicable to the construction of a statute.\nOn the contrary it is frequently used: see Bennion on Statutory Interpretation, section 9.6, In re British Concrete Pipe Associations Agreement [1983] 1 All ER 203, per Sir John Donaldson MR at p 205 and, in the context of a taxing statute, Fry v Inland Revenue Comrs [1959] Ch 86, per Romer LJ at p 105.\nThe only distinction in the present case is that the need to make a contextual choice is expressly required by the plain meaning of the statute itself, namely section 45(5A)(b).\nBut that is a distinction without a difference.\nThe second, and main, argument is that section 71A itself commands a real- world approach to the identification of the vendor, because the transaction looking for a vendor in subsection (2) is the first transaction described in real world terms by subsection (1)(a).\nSince it is the same first transaction which is exempted by subsection (2) then any issue as to the satisfaction of the vendor condition must be addressed by a real world test as to who is the vendor, treating the first transaction as the real world sale by PBL to MAR, not the notional land transaction to which the secondary contract gives rise.\nThis argument treats section 45(5A) as not being engaged at all, because it is not the completed secondary contract that is looking for a vendor.\nThis is the argument which has persuaded Lord Hodge.\nI agree that both subsections (1)(a) and (2) describe the same transaction.\nThat is the clear purpose of linking them by a common definition.\nBut in my view the use of that link works the other way.\nSubsection (2) is plainly designed, and is only of any use, to exempt from tax land transactions which would otherwise be chargeable to SDLT.\nUsually they will be real world transactions but, in the present case because of the sub-sale, the relevant land transaction is a statutory construct, namely the completed secondary contract.\nIf subsection (2) is not dealing with that land transaction, but some different transaction, then it simply misses its target altogether.\nIf that is right, then the effect of the linking definition is that section 71A(1)(a) must also be dealing in this context with the completed secondary contract, if its language will bear that construction.\nThere is nothing in the language of section 71A(1) which makes subsection (1)(a) inapposite as a reference to the completed secondary contract, where that is what section 45 requires.\nSubsection (1) speaks of arrangements under which certain transactions take place.\nWhere (as here) the relevant arrangements include provision for a simultaneous sub-sale, then the first transaction to which SDLT might otherwise be chargeable is necessarily a completed secondary contract.\nFocus on the very similar language of section 73 is compelling.\nSection 73(1) also speaks of arrangements under which transactions take place.\nIn fact the second transaction there described always takes place by way of sub-sale (because the same interest is the subject matter of both), so that the second transaction being exempted from charge by section 73(3) will always be a completed secondary contract.\nAnd this is what section 45(3) says in unambiguous express terms when it refers to section 73(3).\nFor this real world argument to have real force it would be necessary to re- write section 71A(2) as follows: The first transaction and any land transaction to which a secondary contract gives rise where the first transaction is by way of sub-sale is exempt from charge if the vendor under the first transaction is But it makes no sense to re-write the subsection in that way just to produce a result which gives rise to an unintended tax holiday, if the ordinary meaning of the words enacted does no such thing.\nThe next argument is that there cannot be a choice of the vendor under the original contract (here MOD) because, where there is a simultaneous sub-sale, the effect of section 45(3) is to disregard the original contract altogether, including its vendor.\nThere are in my view two objections to that argument.\nThe first is that section 45(3) does not require the original contract itself to be disregarded, but only its substantial performance or completion.\nThe contract itself remains visible, together with its vendor.\nThe second more serious objection is that section 45(5A) assumes that the vendor under the original contract remains an available choice, precisely where section 43(3) brings a completed secondary contract into deemed existence, and disregards the performance or completion of the original contract.\nIndeed it is only where there is a completed (or performed) secondary contract that it was thought necessary to provide a special means for the identification of its vendor.\nIt may be suggested that, under section 45(3), there can be both a completed secondary contract and a performed or completed original contract which is not disregarded, for example where the two are not simultaneous and connected, or where section 73(3) applies, but this is not why section 45(5A) was introduced.\nIts main target was precisely the unintended potential tax holiday which would arise where there was a sub-sale, because of a disregard of the original completed contract and an exemption for the sub-sale, eg because of the simultaneous potential application of group relief.\nIt is next said that what I have described as the compelling consequences in terms of an unintended tax holiday do not arise, because section 75A comes to the rescue of the public purse.\nI accept that, if need be, it does so on the facts of this case, which occurred after it came into force.\nBut 20 months passed between the introduction of section 45(5A) and section 75A, during which, if facts such as these did give rise to a tax holiday, the Revenue was entirely unprotected.\nThere are in my view powerful reasons why the construction and application of section 45(5A) should be undertaken without reference to the fact that, much later, section 75A floated into view, as a plank in a shipwreck.\nFirst, the exercise of construction and application of section 45(5A) ought to be based upon a perception of the intention of Parliament when enacting it.\nThat is, by the same token, why the re-casting of section 45(3) in 2011, in a way that solved the present difficulties by removing the disregard of the completed original contract where the sub-sale was exempted by section 71A, cannot be prayed in aid in interpreting section 45 in its earlier form.\nSecondly, the impetus for enacting section 75A was not a perception that sections 45(3) and 71A, working together, produced a tax holiday.\nSection 75A was, by its title, primarily designed to deal with tax avoidance schemes, although I accept that it was cast in wide enough terms to provide the Revenue with a rescue from the tax holiday to which linking Ijara finance to a sub-sale might give rise.\nThirdly it is counter-intuitive, to say the least, to adopt a construction and application of section 45(5A) which then gives rise to a further set of difficulties in the application of section 75A, when there is an alternative approach that does nothing of the kind.\nThis is, in my view, an a fortiori case where section 45(5A) expressly requires that choice to be made.\nFourthly, if a construction of sections 45(5A) and 71A(2) before the introduction of section 75A does not produce an unintended tax holiday, then there is no reason why the earlier sections need be re-interpreted in the light of section 75A.\nA rather different and more detailed objection to the identification of MOD as the vendor under section 71A(2) is that its effect is to charge the wrong taxpayer with the wrong amount of tax.\nBy this the proponents mean that the policy objectives of a single charge to tax, based upon the real purchase price for the Barracks, with Ijara structures being altogether exempt, would only truly be satisfied if PBL rather than MAR was liable, and SDLT was payable as a percentage of the price paid to MOD, rather than the inflated price stated in the PBL \/ MAR agreement, which was driven by financing considerations.\nThis is precisely what the amendments to section 45 made in 2011 now do achieve.\nEven the section 75A solution charges the right taxpayer, albeit still with the wrong amount of tax.\nThis objection has significant force at first sight but there are compensating matters which in my view largely deflate its effect.\nDealing first with the identity of the taxpayer, an ordinary Ijara structure to finance a purchase imposes SDLT on the bank rather than on the customer.\nThis is because the first relevant land transaction is a purchase by the bank from the third party seller.\nSection 71A(2) does not apply because the vendor is not the customer.\nThere is no sub-sale, because (as is common ground) a purchase followed by a lease does not trigger section 45.\nIn commercial reality, (as in the present case) the customer ends up footing the tax bill, because the bank takes a tax indemnity from the customer.\nThe Ijara structure to which the exemption in section 71A(2) typically applies is a re-finance by a customer who has already purchased the property and paid SDLT on completion.\nThere is, again, no sub-sale.\nAn interpretation and application of section 45(5A) in a sub-sale context so as to charge SDLT on the bank therefore imposes the same consequence of taxing the bank as does an ordinary Ijara structure to finance a purchase where there is no sub-sale.\nIn both cases, the usual tax indemnity imposes the ultimate tax burden on the customer.\nIn the present case the evidence suggests that the sub-sale route was chosen because MOD decided to use a sealed bid process in which MAR would have found it difficult to participate, and because MOD wanted a delayed completion, while it re-billeted the troops in the Barracks.\nThese are relatively unusual fact-specific matters which ought not to affect the issues of construction.\nThe reason why, in the present case, the tax payable was (at least initially) greater than the specified percentage of the price payable to MOD is because MAR and PBL chose to include within the financing a large amount over and above that purchase price, structured as part of the purchase price payable by MAR to PBL on the sub-sale.\nThe main element in the excess appears to have been the deferred payment of amounts needed by PBL to make early rental payments under the lease from MAR.\nTheir commercial effect, in cash flow terms, was to give PBL an initial rent holiday, in broadly the same way as is often achieved under conventional mortgaged-backed finance by the bank lending an additional amount above the purchase price to fund early payments of interest.\nIt is possible, although the evidence does not so state in terms, that this at least could have been a reason for constructing the Ijara finance by way of sub-sale, because the excess finance amounts could hardly have been payable to MOD, if MAR had purchased directly.\nAfter 2011 it would attract no additional SDLT if achieved by way of sub-sale, because the original purchase (here between MOD and PBL) would not be disregarded, and section 71A(2) would exempt the completed secondary contract.\nBefore 2011, taxation of this additional finance amount appears to have been inevitable, whether by treating MOD as the vendor under section 71A(2), or under section 75A.\nThis is, again, not an ordinary consequence of Sharia compliant financing.\nWhere the finance amount is less than the full purchase price, a shared ownership structure was usually adopted, with different tax treatment which the court did not need to investigate.\nThe Ijara structure used here was applied where the whole purchase price was being financed.\nIn such cases the amount of tax paid by the bank will not differ substantially from the tax which would have been payable on the price paid to the third party seller.\nIronically, substantially the same result may yet ensue here, because the Ijara structure was terminated early, before most of the excess finance amount had been paid.\nIn such circumstances it is common ground that Part 4 permits a claim for repayment of the excess tax from the Revenue.\nThis is because SDLT is paid up-front on contingent consideration on an assumption that the contingency will occur, and then reclaimed if it does not.\nIn conclusion therefore, I have not been persuaded by any of the objections to construing and applying sections 45 and 71A of the Act in a way which, in the unusual context of a sub-sale coupled with an Ijara financing structure, leads to SDLT being payable by MAR on the consideration payable under the completed secondary contract by which it acquired a chargeable interest in the Chelsea barracks under a chargeable land transaction, and all the other transactional parts of the structure being either disregarded or exempt.\nOf the only two interpretations of the relevant statutory provisions (from which I would exclude section 75A for the reasons given), that is the one which broadly achieves, rather than wholly frustrates, what must have been the underlying purpose of Part 4 in the relevant context.\nIf MAR cannot now be made to pay, which the Revenue do not accept, and this leads to the shocking consequence that the public purse gets nothing from this large transaction by way of SDLT, that will only be because, in the words of Mr Thomas QC for PBL, the Revenue have been relentlessly pursuing the wrong taxpayer.\nIt is a sad irony that, at all stages until the appeal to the Upper Tribunal, both parties appear to have thought that the only candidate as the taxpayer was PBL, but it is of no consequence to the outcome.\nIn my view the Court of Appeal reached the right answer, and I would therefore dismiss the appeal.\n","output":"In 2007 the Respondent (PBL) purchased the former Chelsea Barracks in London from the Ministry of Defence (MoD) for 959m.\nIn order make the purchase, PBL obtained finance from a Qatari Bank, Masraf al Rayan (MAR), which specialises in Islamic finance.\nIslamic finance seeks to comply with Sharia law, which forbids the payment of interest in connection with the lending of money.\nIn this case, the Sharia compliant funding model used is known as Ijara finance.\nOn 5 April 2007, PBL and the MoD entered into a contract to purchase the barracks.\nOn 29 January 2008, PBL contracted to sub sell the freehold to MAR.\nAlso on 29 January 2008, MAR agreed to lease the barracks back to PBL.\nUpon completion, on 31 January 2008, the following occurred: (a) MAR and PBL entered into put and call options respectively requiring or entitling PBL to repurchase the freehold in the barracks; (b) the MoD conveyed the freehold in the barracks to PBL; (c) PBL conveyed the freehold in the barracks to MAR, and (d) immediately after that, MAR leased the barracks back to PBL.\nOn 22 February 2008, PBL lodged a tax return in relation to the contract between it and MoD and claimed that there was no liability to Stamp Duty Land Tax (SDLT) because of the sub sale relief provision in s45(3) of the Finance Act 2003 (FA 2003).\nA return lodged by MAR relating to the sale agreement between PBL and MAR claimed alternative property finance relief under s71A of FA 2003.\nSection 71A relief was also claimed in relation to the lease by MAR to PBL on 31 January 2008.\nConsequently, the parties to the scheme transactions claimed that nobody incurred a liability to SDLT.\nThe Appellants (HMRC) challenged the return made by PBL and issued a closure notice which amended the amount of SDLT due from 0 to 38.36m (the sum which would have been due on the sale by the MoD to PBL if that were a chargeable transaction).\nPBL appealed to the First tier Tribunal (FTT).\nIn the FTT, HMRC successfully applied to amend its case to increase the amount of SDLT due from 38.36m to 50m (based on the total consideration which MAR agreed to provide PBL).\nUpon appeal to the Upper Tribunal (UT), PBL changed its position and argued that MAR was not entitled to s71A relief because, on a proper understanding of the related provisions of the FA 2003, MoD was the vendor of the barracks in terms of s71A(2).\nHowever, the UT concluded that PBL was the vendor.\nThe Court of Appeal (CoA) found, amongst other things, that the vendor was MoD, and not PBL, with the result that s71A(2) did not exempt MAR from charge.\nThe CoA found that PBL could not be the vendor due to s45(3) which disregarded the contract between MoD and PBL for the purchase of the barracks.\nAs a result of this disregard, PBL had no chargeable interest so as to be regarded as entering into the sub sale contract with MAR.\nThe principal question in the appeal to the Supreme Court is whether PBL is due to pay SDLT of 50m arising out of its purchase from the MoD.\nThe appeal is allowed.\nLord Hodge gives the majority judgment with which Lady Hale, Lord Hughes and Lord Lloyd Jones agree.\nLord Briggs gives a dissenting judgment [93 129].\nThe UT correctly concluded that PBL was the vendor under s71A(2) and therefore that MARs purchase of the barracks from PBL was exempt from SDLT [23].\nVarious reasons support this finding.\nFor instance, there is nothing within s71A which suggests that the exemption in s71A(2) will not apply when the sale by the customer to the financial institution is a sub sale which takes place contemporaneously and in connection with the customers purchase of the major interest in land [24 28].\nThe disregard in the tailpiece of s45(3) has no bearing on the operation of s71A(2)[30].\nIn this case, but for s75A (a general and broadly drafted anti avoidance provision [44 45]), the combination of the sub sale relief under s45(2) and s45(3) and the exemption under s71A(2) relieved the sale by the MoD to PBL and exempted the sale by PBL to MAR from a charge to SDLT [34 35].\nIt is unsurprising that s75A was only introduced over one year after the combination of s45 and s71A could operate in this way.\nS75A was enacted by Parliament to close such lacunas [31 33].\nIn this case, the party referred to as V in s75A is the MoD [46].\nLooking at s75 as a whole, and taking a purposive approach to interpretation, P as referred to in s75A is PBL.\nPBL did not obtain a chargeable interest on 31 January 2008 because the contract between it and the MoD fell to be disregarded under s45(3).\nPBL acquired its chargeable interest, a leasehold interest, following the sub sale to MAR and the lease back to PBL.\nThese transactions were transactions involved in connection with the disposal by MoD of its chargeable interest (s75A(1)(b)) [46 49].\nS75A(1)(c) requires that the sum of the amounts of SDLT payable in respect of the scheme transactions (which in this case is nil) is less than the amount that would be payable on a notional land transaction effecting the acquisition of Vs chargeable interest by P on its disposal by V.\nIn this case, the relevant notional land transaction involves PBL acquiring MoDs interest in the barracks [56].\nS75A(5) provides that the chargeable consideration on the notional transaction is the largest amount (or aggregate amount) given by any one person for the scheme transactions.\nHMRC correctly asserted that the relevant sum is 1.25bn (the purchase price which MAR contracted to pay to PBL).\nSDLT due thereon is 50m (although this is subject to PBLs right to make a claim under s80 of FA 2003) [57 64].\nS75B does not assist PBL.\nThis section operates by excluding incidental transactions from the calculation of the chargeable consideration on the notional transaction for the purposes of s75A(5).\nHowever, s75B(2) and s75B(6) support the conclusion that both the sub sale to MAR and the grant by MAR of the lease to PBL are included in the transactions which transfer the chargeable interest from V to P for the purposes of s75A(5)[68 72].\nTherefore, the 1.25 billion consideration which MAR contracted to pay to PBL is the relevant consideration under s75A(5)(a)[73].\nPBL also argued that s75A(5) and s75B read together indirectly discriminates against those of Islamic faith (who may be expected to adopt Sharia financing techniques) contrary to the European Convention on Human Rights [66; 74].\nThis matter can be determined on the simple bases (a) that any discriminatory effect is objectively justified and (b) that, in any event, PBL is not a victim [75 80].\nVarious procedural challenges by PBL are also rejected [81 86].\nFinally, a different approach suggested in Emmet and Farrand on Title whereby the transfer of the Chelsea barracks to MAR in the Ijara transaction should be viewed in English law as a mortgage such that MAR should have been registered as the proprietor of a charge (which is exempt from SDLT) would be contrary to the legislative scheme in FA 2003 [87 91].\nIn Lord Briggs view, the transfer from PBL to MAR was not exempt under s71A(2) because PBL was not the vendor under the relevant land transaction within the combined meaning of sections 45(5A)(b) and 71A(2).\nThe vendor was the MoD [101].\nLord Briggs considers that this analysis achieves rather than wholly frustrates the underlying purpose of the relevant provisions, namely to charge land transactions involving sub sales or Islamic finance to a single charge to SDLT, rather than there being no charge at all.\nThe contrary result cannot be what Parliament intended [109], at a time when there was no recourse to s75A [129].\nIn response, Lord Hodge notes that Lord Briggs approach results in different interpretations of vendor under s71A(2) and s73(2).\nHe finds HMRCs explanation of a patchwork of provisions and a lacuna (remedied by s75A) more persuasive [36 38].\n","id":11}
{"input":"This appeal from the Court of Session arises from an accident of an everyday kind, but raises a number of issues of practical importance relating to the Personal Protective Equipment at Work Regulations 1992 (the PPE Regulations) (SI 1992\/2966) and the Management of Health and Safety at Work Regulations 1999 (the Management Regulations) (SI 1999\/3242), to employers liability at common law, and to expert evidence in this field.\nThe accident\nThe appellant, Miss Kennedy, was employed by the respondents, Cordia (Services) LLP (Cordia), as a home carer in Glasgow.\nCordia are wholly owned by Glasgow City Council, and provide home care services on its behalf.\nThose services were previously provided by the Council itself.\nMiss Kennedys principal duty was to visit individuals in their homes and to provide them with personal care.\nAt about 8 pm on 18 December 2010 Miss Kennedy was required to visit an elderly lady, Mrs Craig, who was terminally ill and incontinent, at her home in order to provide her with palliative and personal care.\nThe visit was one of a series of visits carried out by Miss Kennedy during her shift.\nShe travelled to Mrs Craigs house after visiting another client.\nThere had been severe wintry conditions in central Scotland for a number of weeks prior to that date, with snow and ice lying on the ground.\nMiss Kennedy was driven to the house by a colleague, who parked her car close to a public footpath leading to the house.\nThe footpath was on a slope, and was covered in fresh snow overlying ice.\nIt had not been gritted or salted.\nMiss Kennedy was wearing flat boots with ridged soles.\nAfter taking a few steps along the footpath, she slipped and fell to the ground, injuring her wrist.\nRisk assessments and precautions\nCordia were aware of the risk that their home carers might slip and fall on snow and ice when travelling to and from clients houses in winter.\nOn average, four such accidents had been reported to them, or to their predecessors the Council, during each year since 2005.\nDuring 2010 there were 16 such accidents.\nCordia were also aware of the snowy and icy conditions on the night in question, as those conditions had persisted for weeks.\nIn 2005 the Council carried out a risk assessment in relation to home care services and client care.\nIt covered risks involved in travelling to and from work locations.\nThe assessment noted the risk of sprains, cuts, broken limbs, fractures and head injuries from slips and falls in inclement weather.\nThe current preventive and protective measures were noted as being the provision of a hazard awareness booklet and instruction on appropriate footwear.\nThe risk was assessed, using the risk rating scale appended to the guidance document Guide to Occupational Health and Safety Management Systems published by the British Standards Institution (BS 8800:2004).\nThe resultant assessment was that the risk was tolerable, on the basis that the severity of harm, and its likelihood, were respectively categorised under the scale as harmful and highly unlikely.\nThe assessment of the risk as tolerable, in terms of the British Standard, implied that it had been reduced to the lowest level that was reasonably practicable, and that no additional controls were required.\nA further risk assessment was carried out by Cordia in July 2010.\nIt did not expressly consider the risk of injury from slips and falls in inclement weather, but was otherwise in similar terms to the 2005 assessment.\nNeither assessment considered the possible provision of personal protective equipment (PPE), such as non slip attachments for footwear.\nMiss Kennedy underwent an induction programme of a kind which usually included a discussion of slips and falls on ice in winter, and the importance of wearing appropriate footwear.\nA hazard awareness booklet provided to employees stated that extra care should be taken when walking to and from work locations in inclement weather, and that staff should ensure that safe adequate footwear was worn.\nWhat constituted safe adequate footwear was left to the judgment of the individual employee.\nThe evidence of the expert witnesses\nEvidence was led on behalf of Miss Kennedy, under objection, from a consulting engineer, Mr Lenford Greasly.\nHis qualifications included a degree in engineering and a diploma in safety and hygiene.\nHe was a chartered member of the Institute of Safety and Health, and an associate member of the UK Slip Resistance Group.\nHe was a former member of the Health and Safety Executive, in which he had worked as an Inspector of Factories.\nHe had held senior management positions in industry, in areas including health and safety.\nHe had worked for many years as an engineering consultant advising companies on health and safety, including carrying out slip testing and advising on the adequacy of risk assessments.\nHe had carried out or revised between 50 and 100 risk assessments.\nIn a report which he had prepared, Mr Greasly referred to the relevant legislation and to advice published by the HSE, including advice concerning reducing the risk of slips on ice and snow by providing anti slip footwear.\nIn that regard, there was advice to consider finding out what footwear other similar businesses were using and whether it worked.\nMr Greaslys report described various types of anti slip attachment which had been available for some years at a modest cost, and which were said to increase grip in icy conditions.\nHe cited several published papers reporting on research into the slipperiness of footwear on icy and other surfaces, and the effect on slip resistance of using different types of sole and different types of attachment.\nThese included an American study which showed a reduction in falls of 90% among elderly people who wore attachments sold under the trade name Yaktrax.\nHe described his own experience of using Yaktrax, and said that he had found them helpful in increasing traction in icy conditions.\nHis report also included evidence that a number of employers whose staff had to work outdoors in snow and ice had provided them with anti slip attachments.\nThey included Royal Mail and a number of local authorities.\nHe concluded that such attachments reduced the risk of slipping on snow or ice, and that Cordia could have investigated the adequacy of such devices and provided Miss Kennedy with them.\nAt para 4.9, he stated: [Cordia] made a risk assessment but the identified preventative measures relied exclusively on the employee, via information and instruction, when dealing with inclement conditions.\nIn a supplementary report, Mr Greasly noted the information which had been provided by Cordia about the number of home carers who slipped and fell on snow and ice each year.\nIn the light of that information, he referred to the PPE Regulations, stating at paras 3.11 3.12: 3.11.\nThe Personal Protective Equipment at Work Regulations 1992 address the supply and use of PPE.\nAt regulation 4(1) it states Every employer shall ensure that suitable personal protective equipment is provided to his employees who may be exposed to a risk to their health or safety while at work except where and to the extent that such risk has been adequately controlled by other means which are equally or more effective. 3.12.\nThe risk of slipping on ice and snow was not controlled by other means, the controls that [Cordia] indicate were undertaken were informative; the risk of slipping on slippery surfaces (as identified by [Cordia]) remained.\nMr Greasly also referred to further published research.\nHe concluded that the research showed that the use of appropriate anti slip devices would help to avoid slips and falls.\nHe expressed the opinion that, had Miss Kennedy worn such devices then, on the balance of probabilities, the risk of her falling on ice and snow would have been reduced and might have been eliminated.\nHe also included information that at least six Scottish local authorities (including one to which he had referred in his earlier report) provided their home carers with anti slip attachments, although in two cases the practice had been introduced after 2010.\nMr Greasly expanded upon his reports in his oral evidence.\nHe explained how, in engineering terms, anti slip attachments reduced the risk of slipping.\nAsked whether the wearing of such attachments would have any effect in the conditions experienced by Miss Kennedy, he replied that it ought to, as it would increase grip.\nIn cross examination, he is recorded as having assented to the suggestion that he could not say whether Yaktrax would have made any difference to Miss Kennedy on the occasion in question.\nIn re examination, however, he expressed puzzlement at that answer, and said that it was likely to have reduced and maybe eliminated the risk.\nMore generally, he accepted that different types of device were more or less effective in different conditions.\nThe provision of such equipment would however reduce the risk.\nIt was for the employer to determine the particular device which was most suitable.\nMr Greasly was critical of the omission from the 2010 risk assessment of a consideration of slips and falls in inclement weather.\nHe was also critical of the categorisation of the risk of slipping and falling as tolerable.\nEvidence was led on behalf of Cordia from their health and safety manager, Miss Rodger, who had prepared the 2005 risk assessment on the basis of the British Standard and had been responsible for the preparation of its 2010 successor.\nShe was questioned, in particular, about the categorisation of the risk of slipping and falling as tolerable rather than substantial.\nIn terms of the British Standard, the latter categorisation would have led to the conclusion that work should not be started until the risk had been reduced, and that considerable resources might have to be allocated to reduce the risk.\nMiss Rodger accepted that a slip could produce injuries which were properly categorised as harmful, such as fractures and head injuries, and also accepted, in the light of the annual statistics referred to in para 5 above, that it was a dead cert that someone was going to fall on snow and ice.\nShe accepted that the risk involved in the activity being carried out by Miss Kennedy on the occasion in question was therefore substantial, in the absence of measures to control the risk.\nShe also accepted that it would be apparent to any employer, applying his mind to this activity on the day in question, that there was a substantial risk of injury, in the absence of controls.\nShe nevertheless maintained that the advice to wear safe and adequate footwear reduced the risk as far as was reasonably practicable.\nShe confirmed that Cordia had not given any consideration to the provision of footwear or attachments.\nThe proceedings in the Outer House\nMiss Kennedy commenced proceedings in the Court of Session, and the case proceeded to a proof restricted to the issue of liability.\nThe Lord Ordinary, Lord McEwan, found Cordia liable under the PPE Regulations, the Management Regulations, and the common law: [2013] CSOH 130.\nThe Lord Ordinary accepted Miss Kennedys evidence, including her evidence that, if provided with attachments for her boots, she would have worn them on the night in question.\nHe commented that it was of some importance that she and her colleague were under an urgent and important duty to an elderly sick lady.\nHe also accepted the evidence of Mr Greasly, which he regarded as consistent: in particular, he did not consider that what he said in cross examination had departed from his evidence in chief or in re examination.\nHis summary of Mr Greaslys evidence included the following passages: 16.\nHe then looked at the risk assessments.\nAgreeing in general with the later evidence of Miss Rodger, he said account had to be taken of controls to overcome hazards before any rating could be arrived at.\nHowever, he said that in his opinion the measures specified did not reduce the risk.\nPersonal Protective Equipment (PPE) should have been provided.\nHe was critical of the omission of inclement weather in [the 2010 risk assessment].\nSuch weather did not cease to be a hazard and simply to rate the risk as tolerable did not take account of changes in the risk when seriously adverse weather could and did occur that winter.\nThis risk could be eliminated altogether by not going to the house, but accepting the need to go, the employer (his emphasis) should choose and supply the correct footwear which was available at that time.\nThat was not done.\nBeing asked again about research papers he said some were surveys and some were lists.\nHe agreed that icy and snowy surfaces varied and shoe attachments varied in their reaction to these.\nHe described in detail how Yaktrax performed and how he had used his own set for 18 months in snow and ice.\nHe said that they reduced the risk although there was no one answer to the problem.\nEveryone still had to take care.\nHad he done a risk assessment for Miss Kennedys job he would have assessed the risk as likely and the severity as harmful.\nIt was for the employer to find out what PPE was best and in his opinion they should have provided Yaktrax or some other type of fitting.\n. under reference to the [British Standard], he said that\nthe assessment of the risk should have been substantial.\nSlipping and falling could give a variety of serious injuries.\nWhat the employer had to do was reduce or eliminate the risk.\nThat would have been done if Yaktrax had been provided. 20.\nThe Lord Ordinary repelled an objection which had been made to Mr Greaslys evidence on the ground that he did not have any relevant special skill, experience or learning.\nIn that regard, the Lord Ordinary had earlier commented that Mr Greasly had detailed knowledge of the correct approach to compiling risk assessments, and was justified in the conclusion he drew from the published papers.\nIn dealing with the objection, he stated at para 43: His [Mr Greaslys] many general qualifications are listed in his two reports .\nHe has given evidence on many occasions.\nHe is a member of a group with particular interests in slipping at work.\nHe demonstrated a detailed knowledge of a number of international papers on the subject of slipping and personal protective equipment relating to footwear.\nThe real issue is whether he was in a position to provide expertise in areas of health and safety at work which would not be within the knowledge of the court.\nIn my view he clearly has the qualifications and gives such evidence here.\nHe will be treated therefore as an expert witness. 21.\nHaving dealt with objections to the evidence, the Lord Ordinary then stated his findings on the evidence.\nIn the light of the evidence of Mr Greasly, he made the following findings: 47.\nThe following emerges.\nHe had been to the locus.\nThe conditions required some form of shoe add on.\nYaktrax was but one model available on the market at the time (it should be noted that Miss Kennedys case does not depend solely on Yaktrax.\nShe said she would have worn an add on if she had been given one). 48.\nImportantly I accept his criticism of the risk assessments given in his evidence (see para 4.9 of [the first report, quoted in para 10 above]) and he was clear in his evidence and reports that regulation 4 [of the PPE Regulations] was also breached (see eg paras 3.11 and 3.12 in [the supplementary report, quoted in para 11 above]).\nHe spoke to the availability of a number of devices to fit to footwear at the relevant time.\nIt is not necessary to dwell at any length on the various studies or indeed to express my own view of them.\nIn my opinion they present a consistent picture with the American one being particularly helpful.\nThe Lord Ordinary was critical of the reliability of Miss Rodgers evidence.\nHe stated that her evidence lacked a clear explanation of her conclusion that the risk of home carers slipping was tolerable rather than substantial.\nHe commented that her failure to consider the provision of PPE had resulted in the breach of duty in all areas.\nConsidering first the Management Regulations, on the basis that a risk assessment was logically anterior to the taking of safety precautions, the Lord Ordinary concluded that both assessments had been unsatisfactory.\nGiven Miss Rodgers acceptance that a fall on ice was likely and that any resultant injury could be harmful, the risk should have been assessed as substantial rather than tolerable.\nThe precautions in place, in the form of advice to wear safe and adequate footwear, were inadequate.\nThere was no specific advice as to what might constitute such footwear, and no checking or assessment of what was worn.\nIn those circumstances, the risk assessment had not been suitable and sufficient, as required by regulation 3(1).\nConsidering next the PPE Regulations, the Lord Ordinary concluded that in the light of Mr Greaslys evidence about the availability of relatively simple precautions to reduce the risk, and the absence of any consideration of PPE by Cordia, it could not be said that the risk had been adequately controlled by other means which were equally or more effective.\nThere was therefore a breach of regulation 4(1).\nConsidering next the common law, the Lord Ordinary stated: 72.\nFor the same reasons I find [Cordia] also liable at common law.\nIn the face of an obvious and continuing risk they provided no safe footwear.\nThere is no evidence they checked what was being worn.\nThere was no evidence of any system of working or reporting in when staff had to go out in the extreme weather and walk on snow and ice.\nThe proceedings in the Inner House\nThe Lord Ordinarys decision was reversed by an Extra Division of the Inner House (Lady Smith, Lord Brodie and Lord Clarke): [2014] CSIH 76; 2015 SC 154.\nThe Extra Division considered that the Lord Ordinary had erred in five respects.\nFirst, in relation to Mr Greaslys evidence, Lord Brodie, giving the leading judgment, stated that he should not have been allowed to give the evidence summarised by the Lord Ordinary at paras 16, 20, 21, 47 and 48 of his opinion, quoted at paras 19 and 21 above.\nThe Lord Ordinary abdicated his role as decision maker.\nThe dispute that had to be resolved was something the Lord Ordinary was fully equipped to do without any instruction or advice; it was squarely within his province as judicial decision maker.\nNo additional expertise was required.\nHealth and safety was not an area of expertise, since it was not a recognised body of science or experience.\nThe other members of the court agreed.\nLord Clarke commented that the Lord Ordinarys approach was simply to accept that the evidence of Mr Greasly determined the question for him.\nParagraph 43 of the Lord Ordinarys opinion (quoted at para 20 above) demonstrated a shifting of his responsibility for deciding the issues before him to Mr Greasly.\nSecondly, a failure to comply with the Management Regulations could not be a direct cause of injury.\nThe regulations did not impose any duty to take precautions.\nLady Smith considered that Cordias risk assessment had in any event complied with the regulations, but did not explain her reasons for reaching that conclusion.\nThe other members of the Extra Division did not express any opinion on the question.\nThirdly, regulation 4(1) of the PPE Regulations did not apply to the circumstances of the accident.\nThe regulations were concerned with risks to which workers were exposed which were created or increased by the nature of their work.\nBut the risk to which Miss Kennedy was exposed was not of that kind.\nThis point was explained most clearly by Lord Clarke.\nLike Lord Brodie and Lady Smith, he construed the regulations as being concerned with risks caused by the nature of the task performed by the employee.\nHe regarded that task, in the case of Miss Kennedy, as being confined to the administration of care to her clients, and not as encompassing her journeys to their homes.\nOn that basis, he considered that the carrying out of Miss Kennedys duties as a home carer did not create the risk of her slipping somewhere en route to carrying out those duties because of ice or snow on that route.\nThe regulations were in his view designed to deal with risks in circumstances where the employer had a degree of control over the employee, the place of work and the performance of the task which had to be carried out.\nThe risk of Miss Kennedys slipping on ice and snow, on the other hand, was not materially different from that to which any member of the public was exposed when making their way around Glasgow for whatever reason at the relevant time.\nIn any event, as it appeared to the Extra Division, on the Lord Ordinarys findings the risk of slipping was adequately controlled.\nThere was little evidence as to the likely efficacy of unspecified attachments over the range of underfoot conditions that Miss Kennedy could have been expected to encounter.\nIt could not even be said on the evidence that wearing attachments would have made any material difference on the pathway on which Miss Kennedy fell.\nThe Extra Division were also critical of the Lord Ordinarys statement that the direction of the law was to level safety upwards.\nLord Brodie remarked that the Lord Ordinary had cited no authority for his observation, while Lord Clarke asked whether the Lord Ordinarys words were meant to reflect an aspect of public policy or some supposed legal principle, and commented that they betrayed a failure to recognise that the law did not impose on an employer a generalised duty to ensure the safety of his employees.\nFourthly, in relation to the common law case, it was said that the Lord Ordinary had failed to address the necessary basic questions identified by Lord President Dunedin in Morton v William Dixon Ltd 1909 SC 807, 809: Where the negligence of the employer consists of what I may call a fault of omission, I think it is absolutely necessary that the proof of that fault of omission should be one of two kinds, either to shew that the thing which he did not do was a thing which was commonly done by other persons in like circumstances, or to shew that it was a thing which was so obviously wanted that it would be folly in anyone to neglect to provide it.\nIt could not be said that either requirement of Lord Dunedins formula was satisfied.\nThe Lord Ordinary had also failed to consider whether it would be fair, just and reasonable to find there to be a duty of care of the scope contended for, in accordance with Caparo Industries plc v Dickman [1990] 2 AC 605, 617 618.\nHad he done so, he could not have failed to reject the contention that Cordia were under a common law duty to determine what their competent adult employees should wear on their feet when negotiating the streets of Glasgow.\nFifthly, it was said that the Lord Ordinary was not entitled to find Cordia liable, in any event, because he had made no finding that the wearing of attachments would necessarily have prevented Miss Kennedys fall.\nHe had, it was said, not taken a view on the passages in the cross examination of Mr Greasly in which he conceded that he could not say that Yaktrax would have made any difference.\nMr Greaslys evidence\nWe shall begin by considering the issues arising in relation to Mr Greaslys evidence.\nThe use of expert witnesses, who in Scottish practice have traditionally been described as skilled witnesses, can provide significant benefits to the court in determining legal disputes.\nThere is a degree of commonality of approach between jurisdictions which adopt similar methods of fact finding.\nThus Scots law has drawn on the experience of other jurisdictions both as to the admissibility of skilled evidence and in relation to the duties of expert witnesses.\nThere are also concerns about the use of skilled witnesses, some of which may have lain behind the Extra Divisions approach in this case.\nWalker and Walker, in The Law of Evidence in Scotland, 4th ed (2015) (at para 16.3.11), record concerns about the excessive use of experts in litigation in other jurisdictions, and refer to Lord Cullens proposal to restrict the number of skilled witnesses in his Review of Outer House Business in 1995.\nMore recently, the Law Commission of England and Wales in its report, Expert evidence in criminal proceedings in England and Wales, Law Com No 325 (2011), has recorded concerns (i) that an expert witness might have an excessive influence on lay fact finders, (ii) whether in criminal cases the defence will have the resources to test the underlying basis of an experts evidence and (iii) that experts may not achieve the impartiality for which their role calls.\nIn our view, judges who frequently decide civil cases should through their experience be less likely than juries to be unduly influenced by skilled witnesses, but an advocate in a civil case may face difficulties in testing the evidence of an expert unless assisted by expert advice.\nThe need to regulate such evidence remains.\nIn this case, the Extra Divisions principal concerns about Mr Greaslys\nevidence were that he had expressed opinions on what Cordia should have done that involved questions of law, which it was the task of the court to decide and that, in any event, most of his evidence was unnecessary: see para 27 above.\nLord Clarke in his concurring opinion expressed concerns, more generally, about the unnecessary proliferation of allegedly expert reports in personal injury cases.\nThe Extra Division articulated their more general concern in their finding (in para 4 of Lady Smiths opinion, paras 15 and 16 of Lord Brodies opinion and para 40 of Lord Clarkes opinion) that the health and safety practice of employers could not be the subject matter of expert evidence, either because it was a legal question within the knowledge of the court or because it was not a recognised body of science or experience, which was suitably acknowledged as being useful and reliable, and which could properly form the basis of opinions capable of being subjected to forensic evaluation.\nCounsel for Cordia conceded at the outset of this appeal that so general an assertion was not correct and accepted that health and safety practice could properly be the subject of expert evidence.\nWe think that that concession was correctly made.\nBefore expressing our views on Mr Greaslys evidence in this appeal, we look at expert evidence more generally to provide the context for our conclusions.\nThe case law on the Scots law of evidence to which counsel referred included both civil and criminal cases.\nWe refer to both in this judgment but are mindful that the Scots law of criminal evidence, including expert evidence in criminal trials, lies within the competence of the High Court of Justiciary and not this court.\nIn this judgment therefore the criminal cases only provide context for our consideration of the law of evidence in civil cases.\nThe evidence of skilled witnesses\nIn our view four matters fall to be addressed in the use of expert evidence.\nThey are (i) the admissibility of such evidence, (ii) the responsibility of a partys legal team to make sure that the expert keeps to his or her role of giving the court useful information, (iii) the courts policing of the performance of the experts duties, and (iv) economy in litigation.\nThe first is the most directly relevant in this appeal.\nBut the others also arise out of either the parties submissions or the Extra Divisions concerns and we address them briefly.\n(i) Admissibility\nSkilled witnesses, unlike other witnesses, can give evidence of their opinions to assist the court.\nThis gives rise to threshold questions of the admissibility of expert evidence.\nAn example of opinion evidence is whether Miss Kennedy would have been less likely to fall if she had been wearing anti slip attachments on her footwear.\nExperts can and often do give evidence of fact as well as opinion evidence.\nA skilled witness, like any non expert witness, can give evidence of what he or she has observed if it is relevant to a fact in issue.\nAn example of such evidence in this case is Mr Greaslys evidence of the slope of the pavement on which Miss Kennedy lost her footing.\nThere are no special rules governing the admissibility of such factual evidence from a skilled witness.\nUnlike other witnesses, a skilled witness may also give evidence based on his or her knowledge and experience of a subject matter, drawing on the work of others, such as the findings of published research or the pooled knowledge of a team of people with whom he or she works.\nSuch evidence also gives rise to threshold questions of admissibility, and the special rules that govern the admissibility of expert opinion evidence also cover such expert evidence of fact.\nThere are many examples of skilled witnesses giving evidence of fact of that nature.\nThus Dickson on Evidence, Griersons ed (1887) at section 397 referred to Gibson v Pollock (1848) 11 D 343, a case in which the court admitted evidence of practice in dog coursing to determine whether the owner or nominator of a dog was entitled to a prize on its success.\nSimilarly, when an engineer describes how a machine is configured and works or how a motorway is built, he is giving skilled evidence of factual matters, in which he or she draws on knowledge that is not derived solely from personal observation or its equivalent.\nAn expert in the social and political conditions in a foreign country who gives evidence to an immigration judge also gives skilled evidence of fact.\nIt is common in Scottish criminal trials for the misuse of drugs for the Crown to adduce the evidence of a policeman who has the experience and knowledge to describe the quantities of drugs that people tend to keep for personal use rather than for supply to others.\nRecently, in Myers, Brangman and Cox v The Queen [2015] UKPC 40; [2015] 3 WLR 1145, the Judicial Committee of the Privy Council approved of the use of police officers, who had special training and considerable experience of the practices of criminal gangs, to give evidence on the culture of gangs, their places of association and the signs that gang members used to associate themselves with particular gangs.\nIn giving such factual evidence a skilled witness can draw on the general body of knowledge and understanding in which he or she is skilled, including the work and literature of others.\nBut Lord Hughes, in delivering the advice of the Board at para 58, warned that care must be taken that simple, and not necessarily balanced, anecdotal evidence is not permitted to assume the robe of expertise.\nTo avoid this, the skilled witness must set out his or her qualifications, by training and experience, to give expert evidence and also say from where he or she has obtained information, if it is not based on his or her own observations and experience.\nCounsel agreed that the South Australian case of R v Bonython (1984) 38 SASR 45 gave relevant guidance on admissibility of expert opinion evidence.\nWe agree.\nIn that case King CJ at pp 46 47 stated: Before admitting the opinion of a witness into evidence as expert testimony, the judge must consider and decide two questions.\nThe first is whether the subject matter of the opinion falls within the class of subjects upon which expert testimony is permissible.\nThis first question may be divided into two parts: (a) whether the subject matter of the opinion is such that a person without instruction or experience in the area of knowledge or human experience would be able to form a sound judgment on the matter without the assistance of witnesses possessing special knowledge or experience in the area, and (b) whether the subject matter of the opinion forms part of a body of knowledge or experience which is sufficiently organized or recognized to be accepted as a reliable body of knowledge or experience, a special acquaintance with which by the witness would render his opinion of assistance to the court.\nThe second question is whether the witness has acquired by study or experience sufficient knowledge of the subject to render his opinion of value in resolving the issues before the court.\nIn Bonython the court was addressing opinion evidence.\nAs we have said, a skilled person can give expert factual evidence either by itself or in combination with opinion evidence.\nThere are in our view four considerations which govern the admissibility of skilled evidence: (i) whether the proposed skilled evidence will assist the court in its task; (ii) whether the witness has the necessary knowledge and experience; (iii) whether the witness is impartial in his or her presentation and assessment of the evidence; and (iv) whether there is a reliable body of knowledge or experience to underpin the experts evidence.\nAll four considerations apply to opinion evidence, although, as we state below, when the first consideration is applied to opinion evidence the threshold is the necessity of such evidence.\nThe four considerations also apply to skilled evidence of fact, where the skilled witness draws on the knowledge and experience of others rather than or in addition to personal observation or its equivalent.\nWe examine each consideration in turn.\nAssisting the court: It is for the court to decide whether expert evidence is needed, when the admissibility of that evidence is challenged.\nIn R v Turner [1975] QB 834, a case which concerned the admissibility of opinion evidence, which Professor Davidson cites in his textbook on Evidence (2007) at para 11.04, Lawton LJ stated at p 841: If on the proven facts a judge or jury can form their own conclusions without help, then the opinion of an expert is unnecessary.\nIn Wilson v Her Majestys Advocate 2009 JC 336, which also concerned opinion evidence, the High Court of Justiciary, in an opinion delivered by Lord Wheatley, stated the test thus (at para 58): [T]he subject matter under discussion must be necessary for the proper resolution of the dispute, and be such that a judge or jury without instruction or advice in the particular area of knowledge or experience would be unable to reach a sound conclusion without the help of a witness who had such specialised knowledge or experience.\nMost of the Scottish case law on, and academic discussion of, expert evidence has focused on opinion evidence to the exclusion of skilled evidence of fact.\nIn our view, the test for the admissibility of the latter form of evidence cannot be strict necessity as, otherwise, the court could be deprived of the benefit of a skilled witness who collates and presents to the court in an efficient manner the knowledge of others in his or her field of expertise.\nThere may be circumstances in which a court could determine a fact in issue without an expert collation of relevant facts if the parties called many factual witnesses at great expense and thus a strict necessity test would not be met.\nIn Daubert v Merrell Dow Pharmaceuticals Inc (1993) 509 US 579, the United States Supreme Court referred to rule 702 of the Federal Rules of Evidence, which in our view is consistent with the approach of Scots law in relation to skilled evidence of fact.\nThe rule, which Justice Blackmun quoted at p 588, states: If scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.\nThe advantage of the formula in this rule is that it avoids an over rigid interpretation of necessity, where a skilled witness is put forward to present relevant factual evidence in an efficient manner rather than to give an opinion explaining the factual evidence of others.\nIf skilled evidence of fact would be likely to assist the efficient determination of the case, the judge should admit it.\nAn expert must explain the basis of his or her evidence when it is not personal observation or sensation; mere assertion or bare ipse dixit carries little weight, as the Lord President (Cooper) famously stated in Davie v Magistrates of Edinburgh 1953 SC 34, 40.\nIf anything, the suggestion that an unsubstantiated ipse dixit carries little weight is understated; in our view such evidence is worthless.\nWessels JA stated the matter well in the Supreme Court of South Africa (Appellate Division) in Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft fr Schdlingsbekmpfung mbH 1976 (3) SA 352, 371: [A]n experts opinion represents his reasoned conclusion based on certain facts or data, which are either common cause, or established by his own evidence or that of some other competent witness.\nExcept possibly where it is not controverted, an experts bald statement of his opinion is not of any real assistance.\nProper evaluation of the opinion can only be undertaken if the process of reasoning which led to the conclusion, including the premises from which the reasoning proceeds, are disclosed by the expert.\nAs Lord Prosser pithily stated in Dingley v Chief Constable, Strathclyde Police 1998 SC 548, 604: As with judicial or other opinions, what carries weight is the reasoning, not the conclusion.\nIn Davie the Lord President at p 40 observed that expert witnesses cannot\nusurp the functions of the jury or judge sitting as a jury.\nRecently, in Pora v The Queen [2015] UKPC 9; [2016] 1 Cr App R 3, para 24, the Judicial Committee of the Privy Council in an appeal from New Zealand, stated: It is the duty of an expert witness to provide material on which a court can form its own conclusions on relevant issues.\nOn occasions that may involve the witness expressing an opinion about whether, for instance, an individual suffered from a particular condition or vulnerability.\nThe expert witness should be careful to recognise, however, the need to avoid supplanting the courts role as the ultimate decision maker on matters that are central to the outcome of the case.\nThus, while on occasion in order to avoid elusive language the skilled witness may have to express his or her views in a way that addresses the ultimate issue before the court, expert assistance does not extend to supplanting the court as the decision maker.\nThe fact finding judge cannot delegate the decision making role to the expert.\nThe witnesss knowledge and expertise: The skilled witness must demonstrate to the court that he or she has relevant knowledge and experience to give either factual evidence, which is not based exclusively on personal observation or sensation, or opinion evidence.\nWhere the skilled witness establishes such knowledge and experience, he or she can draw on the general body of knowledge and understanding of the relevant expertise: Myers, Brangman and Cox (above) at para 63.\nImpartiality and other duties: If a party proffers an expert report which on its face does not comply with the recognised duties of a skilled witness to be independent and impartial, the court may exclude the evidence as inadmissible: Toth v Jarman [2006] EWCA Civ 1028; [2006] 4 All ER 1276, paras 100 102.\nIn Field v Leeds City Council [2000] 1 EGLR 54, the Court of Appeal upheld the decision of a district judge, who, having ordered the Council to provide an independent surveyors report, excluded at an interim hearing the evidence of a surveyor whom the Council proposed to lead in evidence on the ground that his impartiality had not been demonstrated.\nIt is unlikely that the court could make such a prior ruling on admissibility in those Scottish procedures in which there is as yet no judicial case management.\nBut the requirement of independence and impartiality is in our view one of admissibility rather than merely the weight of the evidence.\nThe Scottish courts have adopted the guidance of Cresswell J on an experts duties in The Ikarian Reefer [1993] 2 Lloyds Rep 68 in both civil and criminal matters: see Lord Caplan in Elf Caledonia Ltd v London Bridge Engineering Ltd September 2, 1997 (unreported) at pp 225 227 and Wilson v Her Majestys Advocate (above) at paras 59 and 60.\nWe quote Cresswell Js summary (at pp 81 82) omitting only case citations: The duties and responsibilities of expert witnesses in civil cases include the following: 1.\nExpert evidence presented to the court should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the exigencies of litigation. 2.\nAn expert witness should provide independent assistance to the court by way of objective unbiased opinion in relation to matters within his expertise.\nAn expert witness in the High Court should never assume the role of an advocate. 3.\nAn expert witness should state the facts or assumption on which his opinion is based.\nHe should not omit to consider material facts which could detract from his concluded opinion. 4.\nAn expert witness should make it clear when a particular question or issue falls outside his expertise. 5.\nIf an experts opinion is not properly researched because he considers that insufficient data is available, then this must be stated with an indication that the opinion is no more than a provisional one.\nIn cases where an expert witness who has prepared a report could not assert that the report contained the truth, the whole truth and nothing but the truth without some qualification, that qualification should be stated in the report. 6.\nIf, after exchange of reports, an expert witness changes his view on a material matter having read the other sides experts report or for any other reason, such change of view should be communicated (through legal representatives) to the other side without delay and when appropriate to the court. 7.\nWhere expert evidence refers to photographs, plans, calculations, analyses, measurements, survey reports or other similar documents, these must be provided to the opposite party at the same time as the exchange of reports.\nIn Wilson v Her Majestys Advocate (at paras 59 and 60) the High Court of\nJusticiary quoted the first four duties and added the requirement that an expert witness should in particular explain why any material relevant to his conclusions is ignored or regarded as unimportant.\nIn Elf Caledonia Ltd, Lord Caplan quoted Cresswell Js guidance more fully.\nIn our view, Cresswell Js guidance should be applied in the Scottish courts in civil cases, making such allowance as is necessary to accommodate different procedures.\nIt is implicit that the seventh duty applies only in relation to items to which the opposite party does not already have access.\nReliable body of knowledge or experience: What amounts to a reliable body of knowledge or experience depends on the subject matter of the proposed skilled evidence.\nIn Davie v Magistrates of Edinburgh the question for the court was whether blasting operations in the construction of a sewer had damaged the pursuers building and the relevant expertise included civil engineering and mining engineering.\nIn Myers, Brangman and Cox, as we have said, the subject matter was the activities of criminal gangs; a policemans evidence, which was the product of training courses and long term personal experience as an officer serving with a body of officers who had built up a body of learning, was admitted as factual evidence of the practices of such gangs.\nIn many cases where the subject matter of the proposed expert evidence is within a recognised scientific discipline, it will be easy for the court to be satisfied about the reliability of the relevant body of knowledge.\nThere is more difficulty where the science or body of knowledge is not widely recognised.\nWalker and Walker at para 16.3.5 refer to an obiter dictum in Lord Eassies opinion in Mearns v Smedvig Ltd 1999 SC 243 in support of their proposition that: A party seeking to lead a witness with purported knowledge or experience outwith generally recognised fields would need to set up by investigation and evidence not only the qualifications and expertise of the individual skilled witness, but the methodology and validity of that field of knowledge or science.\nWe agree with that proposition, which is supported in Scotland and in other jurisdictions by the courts refusal to accept the evidence of an expert whose methodology is not based on any established body of knowledge.\nThus in Young v Her Majestys Advocate 2014 SLT 21, the High Court refused to admit evidence of case linkage analysis because it was the subject of only relatively recent academic research and a methodology which was not yet sufficiently developed that it could be treated as reliable.\nSee also, for example, R v Gilfoyle [2001] 2 Cr App R 5, in which the English Court of Appeal (Criminal Division) refused to admit expert evidence on psychological autopsy for several reasons, including that the expert had not embarked on the exercise in question before and also that there were no criteria by reference to which the court could test the quality of his opinions and no substantial body of academic writing approving his methodology.\nThe court also observed that the psychologists views were based on one sided information and doubted that the assessment of levels of happiness or unhappiness was a task for an expert rather than jurors.\n(ii) Making sure that the expert performs his or her role\nIt falls in the first instance to counsel and solicitors who propose to adduce the evidence of a skilled witness to assess whether the proposed witness has the necessary expertise and whether his or her evidence is otherwise admissible.\nIt is also their role to make sure that the proposed witness is aware of the duties imposed on an expert witness.\nThe legal team also should disclose to the expert all of the relevant factual material which they intend should contribute to the experts evidence in addition to his or her own pre existing knowledge.\nThat should include not only material which supports their clients case but also material, of which they are aware, that points in the other direction, viz the courts concerns about one sided information in R v Gilfoyle.\nThe skilled witness should take into account and disclose in the written report the relevant factual evidence so provided.\n(iii) Policing the performance of an experts duties\nIt is not the normal practice of the Scottish courts to hold preliminary hearings or proofs on the admissibility of the evidence of skilled witnesses.\nConsiderations of cost and practicability may often make such a course unattractive.\nWhere the court has significant powers of case management, as in certain actions based on clinical negligence or relating to catastrophic injuries (Rules of the Court of Session 1994 as amended (RCS) Chapter 42A), commercial actions (RCS Chapter 47), and intellectual property actions (RCS Chapter 55), a judge can address concerns about the evidence in the report by a skilled witness at a case management hearing and discuss with counsel how they are to be resolved.\nWider opportunities for such case management in personal injury actions are likely to result from the implementation of Lord Gills Civil Courts Review.\nIn many cases it may not be possible to iron out all difficulties before the proof.\nA party may object to part or all of a skilled witnesss evidence at the start and during the course of a proof, as occurred in this case.\nIn the absence of objection, the judge should, when assessing whether and to what extent to give weight to the evidence, test the evidence to ascertain that it complies with the four considerations which we have set out in para 38 above and is otherwise sound.\nIn McTear v Imperial Tobacco Ltd 2005 2 SC 1, para 5.17 Lord Nimmo Smith usefully described the judges role in these terms: [I]t is necessary to consider with care, in respect of each of the expert witnesses, to what extent he was aware of and observed his function.\nI must decide what did or did not lie within his field of expertise, and not have regard to any expression of opinion on a matter which lay outwith that field.\nWhere published literature was put to a witness, I can only have regard to such of it as lay within his field of expertise, and then only to such passages as were expressly referred to.\nAbove all, the purpose of leading the evidence of any of the expert witnesses should have been to impart to me special knowledge of subject matter, including published material, lying within the witnesss field of expertise, so as to enable me to form my own judgment about that subject matter and the conclusions to be drawn from it.\nLord Brodie referred to this passage in his opinion at para 11.\nIt is not necessary in this appeal to determine how far a court should have regard to published material put to or cited by a skilled witness which is not within his or her core expertise.\nMuch may depend on the nature of the experts area of practice, which may or may not involve some working knowledge of related disciplines, and on the centrality of the published material to the matter which the court has to decide: see, for example, Main v McAndrew Wormald Ltd 1988 SLT 141 and, on the analogous question of a medical practitioner consulting another specialist, M v Kennedy 1993 SC 115.\n(iv) Economy in litigation\nIn recent years there have been many statements of concern in many jurisdictions about the disproportionate cost of civil litigation.\nScotland is no exception.\nThose concerns include the use of expert witnesses.\nIn the responses to consultation in the Scottish Civil Courts Review some respondents, including the Scottish Legal Aid Board, expressed their concern about the increased reliance on experts in litigation and the consequent cost (Report of the Scottish Civil Courts Review (2009) vol 1, chapter 9, para 64).\nThe latter concern was also discussed in the Taylor Review of Expenses and Funding of Civil Litigation in Scotland (2013), chapter 3, paras 59 95.\nCordia in this case challenge what they describe in their written case as the largely uncontrolled proliferation of experts.\nCase management offers a means by which the court can encourage parties to avoid leading evidence on matters which are not contentious, for example by agreeing a statement of fact which explains background matters, which are not the subject of written pleadings, to the court.\nThere may be matters which can readily be agreed, thereby allowing parties experts to concentrate on contentious matters.\nSolicitors with expertise in personal injury actions may use such statements as the basis for agreed evidence in other actions and thereby save expense.\nWhere that is not possible, a court which has case management powers may require experts to exchange opinions, confer and prepare a report which identifies matters of agreement and reasons for any continued disagreement.\nIt can also ascertain the scope for joint instruction of a single expert, and (where it possesses the necessary powers) can exclude expert reports and evidence.\nCourts also possess powers in relation to expenses which can be used to discourage the excessive use of expert evidence.\nNothing that we say in this judgment questions the legitimacy of the underlying concern about reducing the expense of litigation.\nExpert evidence in this case\nWith those general comments we turn to Mr Greaslys evidence in this case.\nWe have summarised his qualifications and his evidence in paras 9 to 14 above.\nThere were matters in Mr Greaslys reports to which Cordia did not take exception.\nLord Brodie acknowledged that there were matters of fact which were admissible, such as his description of the locus, including his measurements of the gradients, and his evidence of availability on the market of anti slip attachments to footwear.\nBut there were other factual matters which were admissible because they were relevant and might assist a judge, and against which Cordia did not persist in their challenge in this court.\nThey included: (i) information on the prevention or reduction of risks of tripping and slipping from publications by the Construction Industry Research and Information Association, by the HSE and from the HSE website; (ii) research literature on the effectiveness of different types of footwear and devices to resist slipping and on the circumstances in which people suffer falls; (iii) HSE guidance on the PPE Regulations which provided evidence of good health and safety practice in relation to dangers posed by the weather when people have to work out of doors; and (iv) working out of doors with anti slip devices. the practices of named public bodies in providing their employees Cordia maintained their challenge to his evidence of the effect of Yaktrax, based on his own use of them, and his oral explanation of how anti slip attachments reduced the risk of slipping, which was based on his knowledge of engineering.\nBut these were also factual matters, which he had the experience and qualifications to describe.\nIn our view, the Lord Ordinary did not err in admitting all of this factual evidence.\nSimilarly, it was relevant to the courts task to hear evidence on health and safety practice in complying with the Management Regulations and the PPE Regulations.\nThe expansion of the statutory duties imposed on employers in the field of health and safety has given rise to a body of knowledge and experience in this field, which, as we explain later in this judgment, creates the context in which the court has to assess an employers performance of its common law duty of care.\nThe Lord Ordinary was entitled to accept Mr Greaslys experience in carrying out and advising his clients on risk assessments as a proper basis for his giving of such evidence.\nThe Extra Division had two other major criticisms of Mr Greaslys evidence.\nOne was that he was inadmissibly giving his opinion on matters of law.\nThe other, which was based on the well known dictum of Oliver J in Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384, 402, a case of solicitors negligence, was that an experts opinion of what he would have done in the circumstances did not assist the court, and was therefore inadmissible.\nThe former objection may properly be made to Mr Greaslys statements that it was for Cordia to consider the range of footwear and attachments that were available (main report para 3.74) and that it was for Cordia to take steps to reduce the risk as far as was reasonably practicable (main report para 4.11).\nThey appear at first sight to be statements of opinion on Cordias legal duty, which would not be admissible before lay fact finders and should be avoided.\nAn experienced judge however could readily treat the statements as the opinions of a skilled witness as to health and safety practice, based on the Management Regulations and the PPE Regulations and on HSE guidance, and make up his own mind on the legal question.\nThe Lord Ordinary (at para 48 of his opinion) interpreted passages in Mr Greaslys supplementary report as expressing an opinion that Cordia had breached their statutory duty.\nIf that were a correct interpretation of what Mr Greasly had said, those passages of his evidence were not admissible.\nBut, as we shall explain, that does not undermine the Lord Ordinarys decision, because he applied his own mind to the central legal issues.\nWe are not persuaded by the latter objection.\nThere may be cases where the opinion of a professional as to what he or she would have done in a given circumstance is of only limited weight in the courts assessment of a claim for professional negligence, as in Hett, Stubbs.\nBut we see no reason why the Lord Ordinary should not have found helpful the reasoned view of a person experienced in carrying out risk assessments on the rating of risks within a risk assessment.\nCordia assessed the risk of injury such as sprains or fractures when travelling to and from work locations to be tolerable, applying a British Standard with which a judge might not be familiar but which was relevant to a consideration of proper practice.\nMr Greasly opined that in wintry conditions the risk should have been assessed as substantial.\nHis evidence provided a basis for the Lord Ordinary to weigh up the opposing views when deciding whether Cordia had suitably and sufficiently evaluated the risks and identified the measures needed to protect health and safety.\nWe have difficulty in seeing how Miss Kennedys counsel could have presented her case on these matters by legal submissions alone.\nMr Greasly not only collated the factual material to which we have referred but also gave opinion evidence on how the relevant risk assessment should have been carried out.\nThe Lord Ordinary held (in para 43 of his opinion) that Mr Greasly had the necessary experience to give such evidence about health and safety at work.\nIn our view the circumstances of this case are therefore materially different from Hawkes v Southwark London Borough Council (unreported) 20 February 1998 in which Aldous LJ was critical of the plaintiff for calling an expert engineering witness unnecessarily.\nWhen Cordia responded to an invitation from this court to submit a note identifying the specific passages in Mr Greaslys reports to which they objected, they identified passages which raised the issues which we have discussed above.\nThey also objected to several statements of the obvious, such as that anti slip attachments with spiked steel projections must help increase traction in snow and ice and so reduce the risk of slipping.\nBut these statements were a small part of Mr Greaslys narrative and are not objectionable.\nIt would be different if the sum and substance of an experts report were blindingly obvious.\nSuch a report would be inadmissible because it would not assist the court.\nIn summary, the Extra Division erred in treating much of the factual material in Mr Greaslys report as inadmissible on the basis that it was not skilled evidence that assisted the court.\nThe Extra Division also erred in excluding his evidence on how he would have carried out the risk assessment.\nAs we have said, his expressions of opinion as to what Cordia should have done were capable of being interpreted as legal opinions that Cordia had breached statutory regulations and thus objectionable.\nBut the Lord Ordinary applied his own mind to the legal questions which he had to decide: see our discussion of this part of his opinion in paras 21 25 above.\nAs in this case, it may on occasion be expedient to instruct a witness with general health and safety experience to give skilled evidence on a specific question of health and safety practice which he or she may not have encountered in the past.\nSuch a witness may have to conduct research into how the particular risk might have been reduced or avoided.\nWhether or not the witness has sufficient experience and knowledge to give skilled evidence is a matter which can be explored either through case management or in cross examination.\nIn this case Mr Greasly included in his evidence material, which his instructing solicitors had provided to him, relating to the practices of other employers obtained from freedom of information requests.\nThe solicitors themselves did not give evidence.\nIn such circumstances, it is, as a matter of fairness, incumbent on the solicitors to disclose to the skilled witness and to the other parties in the litigation the relevant material which they have assembled, whether or not it supports their case.\nIt is not clear in this case whether there was any undisclosed material.\nWe observe that in this case there was no suggestion that Miss Kennedys advisers had adopted an uneconomic approach to the litigation.\nHer proof consisted of two witnesses: herself and Mr Greasly.\nThe Framework Directive\nWe turn next to the issues of substantive law which are raised in the appeal.\nBefore considering the regulations which were relied upon, it is helpful to consider their background in EU law, partly because the regulations have to be construed as far as possible so as to give effect to EU law, and also in view of the Extra Divisions criticism of the Lord Ordinarys remarks about the direction of the law being to level safety upwards.\nArticle 153 of the Treaty on the Functioning of the European Union requires the EU to support and complement the activities of the member states in a number of fields, including improvement in particular of the working environment to protect workers health and safety, and permits the European Parliament and Council to adopt Directives for that purpose.\nIt is clear from the case law of the Court of Justice that article 153, and in particular the concepts of working environment, safety and health, are not to be interpreted restrictively: see, for example, United Kingdom v Council of the European Union (Case C 84\/94) [1996] ECR I 5755, para 15.\nIt was under the predecessor of article 153, namely article 118a of the EEC Treaty, that the Council adopted Directive 89\/391\/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work (the Framework Directive).\nIn the preamble, the recitals refer repeatedly to improving safety and health in the working environment, and to harmonising the relevant national laws, so that competition is not at the expense of safety and health.\nAs the Lord Ordinary correctly stated, safety is to be levelled upwards.\nAs we shall explain, the Framework Directive provides a basis for daughter Directives addressing particular aspects of health and safety at work.\nIt is necessary to refer to only a few of the articles of the Framework Directive itself.\nArticle 1(1) states that the object of the Directive is to introduce measures to encourage improvements in the safety and health of workers at work.\nTo that end, according to article 1(2), it contains general principles and general guidelines for the implementation of those principles.\nArticle 1(3) provides that the Directive is without prejudice to existing or future national and Community provisions which are more favourable to protection of the safety and health of workers at work.\nUnder article 4(1), member states are required to take the necessary steps to ensure that employers and others are subject to the legal provisions necessary for the implementation of the Directive.\nArticle 5(1) provides that the employer shall have a duty to ensure the safety and health of workers in every aspect related to the work.\nArticle 5(4) permits member states to provide for the exclusion or limitation of employers responsibility where occurrences are due to unusual and unforeseeable circumstances, beyond the employers control, or to exceptional events, the consequences of which could not have been avoided despite the exercise of all due care.\nArticle 6(1) provides that, within the context of his responsibilities, the employer shall take the measures necessary for the safety and health protection of workers, and shall aim to improve existing situations.\nArticle 6(2) sets out the general principles of prevention which are to form the basis of the measures taken under paragraph 1.\nThey include: evaluating the risks which cannot be avoided; (a) avoiding risks; (b) . (h) giving collective protective measures priority over individual protective measures; and (i) giving appropriate instructions to the workers.\nThese principles are fundamental to the panoply of daughter Directives, and to the legislation transposing them into domestic law.\nWhere possible, risk is to be avoided rather than reduced; means of collective protection are to be preferred to means of individual protection (such as PPE); and merely giving instructions to the workers is to be the last resort.\nAnother fundamental principle is the assessment of risk.\nThat principle is set out in article 6(3)(a), and is especially relevant to the present case.\nIt requires the employer to evaluate the risks to the safety and health of workers, and provides that Subsequent to this evaluation and as necessary, the preventive measures and the working and production methods implemented by the employer must: assure an improvement in the level of protection afforded to workers with regard to safety and health.\nFinally, in relation to the Framework Directive, article 16(1) requires the Council to adopt individual Directives in the areas listed in the annex, including personal protective equipment.\nIn terms of article 16(3), the provisions of the Framework Directive are to apply in full to all the areas covered by the individual Directives, without prejudice to more stringent or specific provisions contained in those Directives.\nThe PPE Directive\nOne of the individual Directives, within the meaning of article 16 of the Framework Directive, is Directive 89\/656\/EEC of 30 November 1989 on the minimum health and safety requirements for the use by workers of personal protective equipment at the workplace (the PPE Directive).\nIt again has its legal basis in article 118a of the EEC Treaty.\nArticle 1 explains that the Directive lays down minimum requirements for PPE used by workers at work.\nPPE is defined by article 2(1) as meaning all equipment designed to be worn or held by the worker to protect him against one or more hazards likely to endanger his safety and health at work, and any addition or accessory designed to meet this objective.\nArticle 3 lays down a general rule that Personal protective equipment shall be used when the risks cannot be avoided or sufficiently limited by technical means of collective protection or by measures, methods or procedures of work organization.\nArticle 6(1) requires member states to ensure that rules are established for the use of PPE, and refers to the annexes to the Directive as a guide.\nAnnex I includes the risk of slipping, falling over in a specimen risk survey table for the use of PPE.\nAnnex II sets out a non exhaustive guide list of items of PPE, including Removable spikes for ice, snow or slippery flooring.\nAnnex III sets out a non exhaustive guide list of activities and sectors of activity which may require the provision of PPE, including, under the category of weatherproof clothing, Work in the open air in rain and cold weather.\nThe Management Regulations\nThe Management Regulations are intended primarily to implement the Framework Directive.\nRegulation 3(1) provides: Every employer shall make a suitable and sufficient assessment of (a) the risks to the health and safety of his employees to which they are exposed whilst they are at work; for the purpose of identifying the measures he needs to take to comply with the requirements and prohibitions imposed upon\nhim by or under the relevant statutory provisions\nThe statutory provisions referred to in regulation 3(1) are those contained in Part I of the Health and Safety at Work etc Act 1974 (the 1974 Act) and regulations made under section 15 of that Act: see section 53(1).\nBoth the Management Regulations and the PPE Regulations were made under section 15 of the 1974 Act.\nRegulation 4 of the Management Regulations provides that where an employer implements any preventive and protective measures, he shall do so on the basis of the principles specified in Schedule 1 to the Regulations.\nThose principles are derived from article 6(2) of the Framework Directive and are in almost identical terms.\nIn relation to civil liability, section 47(2) of the 1974 Act provided at the relevant time, prior to its amendment by section 69 of the Enterprise and Regulatory Reform Act 2013, that breach of a duty imposed by health and safety regulations (ie regulations made under section 15) shall, so far as it causes damage, be actionable except in so far as the regulations provide otherwise.\nRegulation 22 of the Management Regulations, as it stood at the relevant time, provided that breach of a duty imposed on an employer by the Regulations did not confer a right of action in any civil proceedings in so far as the duty applied for the protection of a third party (ie someone other than an employee).\nThe Regulations therefore contained no bar to liability towards an employee, subject to the requirement imposed by section 47(2) that the breach of duty causes damage.\nThe importance of a suitable and sufficient risk assessment was explained by the Court of Appeal in the case of Allison v London Underground Ltd [2008] EWCA Civ 71; [2008] ICR 719.\nSmith LJ observed at para 58 that insufficient judicial attention had been given to risk assessments in the years since the duty to conduct them was first introduced.\nShe suggested that that was because judges recognised that a failure to carry out a sufficient and suitable risk assessment was never the direct cause of an injury: the inadequacy of a risk assessment could only ever be an indirect cause.\nJudicial decisions had tended to focus on the breach of duty which led directly to the injury.\nBut to focus on the adequacy of the precautions actually taken without first considering the adequacy of the risk assessment was, she suggested, putting the cart before the horse.\nRisk assessments were meant to be an exercise by which the employer examined and evaluated all the risks entailed in his operations and took steps to remove or minimise those risks.\nThey should, she said, be a blueprint for action.\nShe added at para 59, cited by the Lord Ordinary in the present case, that the most logical way to approach a question as to the adequacy of the precautions taken by an employer was through a consideration of the suitability and sufficiency of the risk assessment.\nWe respectfully agree.\nThe application of the Management Regulations in the present case\nAs we have explained, the Extra Division did not consider closely whether Cordia had complied with their duties under the Management Regulations, or reach any conclusion on that question.\nThis court should however do so.\nIt is clear from the evidence that Miss Kennedy was exposed to a risk to her health and safety whilst she was at work, namely the risk of slipping and falling on snow and ice while travelling between clients houses.\nThat risk was obvious as a matter of common sense, and was in any event within Cordias knowledge, given their previous experience of the incidence of home carers suffering such accidents each year.\nThe risk was identified, in general terms, in the 2005 risk assessment.\nAlthough it was not explicitly addressed in the 2010 risk assessment, risks of that general nature were again identified.\nConsidering the risk of slipping in accordance with the general principles set out in Schedule 1 to the Regulations, and adopted from article 6(2) of the Framework Directive, it could not be avoided: for wholly understandable reasons, it was Cordias position that the individuals who were dependent on the services of the home carers had to be visited if at all possible.\nThe risk therefore had to be evaluated and addressed in accordance with those principles, which set out a hierarchical order in which the measures necessary to protect health and safety should be considered.\nWas there, then, a sufficient evaluation of the risk, and of the necessary measures? In relation to these matters, the Lord Ordinarys conclusion was based on findings which he was entitled to make on the evidence, and on a proper understanding of the law.\nAs he noted, the risk of a home carer slipping on snow or ice while at work, on the way to a clients home, was accepted to be likely a dead cert, as Miss Rodger put it.\nIt was also accepted that the injuries which might be sustained included fractures and head injuries, and were therefore potentially serious.\nNo consideration, however, was given to the possibility of individual protective measures, before relying on the measure of last resort, namely giving appropriate instructions to employees.\nEven then, the instructions given, in the form of advice to wear appropriate footwear, provided no specification of what might be appropriate.\nIn these circumstances, the Lord Ordinary was entitled to conclude that there had been a breach of regulation 3(1).\nThe PPE Regulations\nThe PPE Regulations are intended to implement the PPE Directive.\nRegulation 2(1) defines personal protective equipment (PPE) as meaning all equipment (including clothing affording protection against the weather) which is intended to be worn or held by a person at work and which protects him against one or more risks to his health or safety, and any addition or accessory designed to meet that objective.\nWe should record that no reliance has been placed in these proceedings on regulation 3(2), which excludes the application of the regulations in respect of PPE which is (d) personal protective equipment used for protection while travelling on a road within the meaning (in England and Wales) of section 192(1) of the Road Traffic Act 1988, and (in Scotland) of section 151 of the Roads (Scotland) Act 1984.\nRegulation 4(1) is particularly relevant to the present case.\nIt provides: Every employer shall ensure that suitable personal protective equipment is provided to his employees who may be exposed to a risk to their health or safety while at work except where and to the extent that such risk has been adequately controlled by other means which are equally or more effective.\nIn terms of regulation 4(3), as amended, PPE is not suitable unless, amongst other things, (a) it is appropriate for the risk or risks involved, the conditions at the place where exposure to the risk may occur, and the period for which it is worn, and (d) so far as is practicable, it is effective to prevent or adequately control the risk or risks involved without increasing overall risk.\nRegulation 6 imposes a further duty to carry out a risk assessment.\nIn terms of regulation 6(1), before choosing any PPE which by virtue of regulation 4 he is required to ensure is provided, an employer must ensure that an assessment is made to determine whether the PPE he intends will be provided is suitable.\nIn terms of article 6(2), the assessment must include, among other things: (a) an assessment of any risk or risks to health or safety which have not been avoided by other means; (b) the definition of the characteristics which personal protective equipment must have in order to be effective against the risks referred to in sub paragraph (a) of this paragraph, taking into account any risks which the equipment itself may create; (c) comparison of the characteristics of the personal protective equipment available with the characteristics referred to in sub paragraph (b) of this paragraph.\nFinally, in relation to the provisions of the PPE Regulations, the Extra Division considered the Lord Ordinarys approach to be inconsistent with regulations 8 and 10.\nRegulation 8 provides: Where an employer or self employed person is required, by virtue of regulation 4, to ensure personal protective equipment is provided, he shall also ensure that appropriate accommodation is provided for that personal protective equipment when it is not being used.\nRegulation 10 provides, so far as material: (1) Every employer shall take all reasonable steps to ensure that any personal protective equipment provided to his employees by virtue of regulation 4(1) is properly used. (4) Every employee and self employed person who has been provided with personal protective equipment by virtue of regulation 4 shall take all reasonable steps to ensure that it is returned to the accommodation provided for it after use.\nThe application of the PPE Regulations in the present case\nAs we have explained, the Lord Ordinary was entitled to find that there had been a failure to carry out a suitable and sufficient risk assessment.\nSuch an assessment would have involved specific consideration of the possibility of individual protective measures to reduce the risk of home carers slipping and falling on snow and ice.\nHad that possibility been considered, the Lord Ordinary found that a number of devices were available which would have been suitable to reduce the risk.\nSince none was provided, it followed that there was a breach of regulation 4(1) of the PPE Regulations.\nThe Extra Division put forward a number of arguments in support of their conclusion that the Regulations had no application in the circumstances of the present case.\nFirst, they pointed out that regulation 4(1) is concerned with risks to which employees are exposed while at work.\nThey inferred that the risks in question must be created or increased by the nature of the work.\nLord Brodie considered that this construction was consistent with article 1(1) of the Framework Directive, which described the object of the Directive as being to introduce measures to encourage improvements in the safety and health of workers at work.\nSimilarly, article 1(1) of the PPE Directive stated that the Directive laid down minimum requirements for PPE used by workers at work.\nReliance was also placed on the reference in article 2(1) to hazards likely to endanger his safety and health at work, and to the general rule set out in article 3, quoted in para 84 above.\nLord Brodie said that he took from this language that the concern of the PPE Regulations was the risks to which the worker was exposed at work which arose specifically from that work, as opposed to risks to which a worker might be exposed in the same way as members of the public.\nIt was in the former circumstances that the employer might be supposed to have the requisite knowledge and means to control the risk through the hierarchy of measures set out in article 6(2) of the Framework Directive and Schedule 1 to the Management Regulations.\nWe do not find these arguments persuasive.\nAn employee is at work, for the purposes of both the Management Regulations and the PPE Regulations, throughout the time when she is in the course of her employment: section 52(1)(b) of the 1974 Act.\nThe point is illustrated by the facts of Robb v Salamis (M & I) Ltd [2006] UKHL 56; 2007 SC (HL) 71; [2007] ICR 175.\nMiss Kennedy in particular, as a home carer, was at work when she was travelling between the home of one client and that of another in order to provide them with care.\nIndeed, travelling from one clients home to anothers was an integral part of her work.\nThe meaning of the words while at work in regulation 4(1) of the PPE Regulations (and of the equivalent words, whilst they are at work, in regulation 3(1) of the Management Regulations) is plain.\nThey mean that the employee must be exposed to the risk during the time when she is at work, that is to say, during the time when she is in the course of her employment.\nThey refer to the time when she is exposed to the risk, not to the cause of the risk.\nThat conclusion as to the construction of the Regulations would not be affected even if, as the Extra Division considered, the Directives were to be construed as having a narrower application.\nAs article 1(3) of the Framework Directive makes clear, the Directives do not exclude the adoption of national measures which provide greater protection.\nThe PPE Directive in particular lays down minimum requirements: article 1(1).\nIt has been noted in earlier cases that the domestic Regulations are in some respects of wider scope than the Directives (see, for example, Hide v The Steeplechase Co (Cheltenham) Ltd [2013] EWCA Civ 545; [2014] ICR 326).\nBut the Directives are not in any case confined to risks arising specifically from the nature of the activities which the worker carries out, as opposed to risks arising from the natural environment to which the worker is exposed while at work.\nArticle 5(1) of the Framework Directive requires the employer to ensure the safety and health of workers in every aspect related to the work.\nArticle 5(4) makes it clear that the employers obligations are not confined to risks arising from matters within his control: member states are permitted to exclude or limit employers responsibility only where occurrences are due to unusual and unforeseeable circumstances, beyond the employers control, or to exceptional events, the consequences of which could not have been avoided despite the exercise of all due care.\nThe obligation imposed by article 6(3)(a) applies to all risks to the safety and health of workers: Commission of the European Communities v Italian Republic (Case C 49\/00) [2001] ECR I 8575, para 12.\nAs we have explained, Annex II to the PPE Directive includes Removable spikes for ice, snow in its non exhaustive guide list of items of PPE, while Annex III includes Work in the open air in rain and cold weather in its non exhaustive guide list of activities and sectors of activity which may require the provision of PPE.\nAs we have explained, the Extra Division also considered the Lord Ordinarys approach to be inconsistent with regulations 8 and 10 of the PPE Regulations.\nWe do not agree.\nRegulation 8 requires the employer to ensure that appropriate accommodation is provided for the PPE when it is not being used.\nLord Brodie reasoned that, since the employer could only make accommodation available in places or situations where he could exercise control, regulation 8 suggested that the risks with which the Regulations were concerned were similarly confined.\nWith respect, that does not follow.\nProtective clothing, for example, often has to be provided precisely because the employer cannot control the places or situations in which the clothing is to be worn (as, for example, in Henser Leather v Securicor Cash Services Ltd [2002] EWCA Civ 816 and Taylor v Chief Constable of Hampshire Police [2013] EWCA Civ 496; [2013] ICR 1150).\nIt also has to be borne in mind that there may be situations in which the most appropriate place for PPE to be accommodated when it is not in use will be in the employees home or vehicle.\nIn such a situation, the employer might fulfil its duty under regulation 8 by arranging with the employee for the PPE to be accommodated there.\nSo far as regulation 10 is concerned, it requires the employer to take all reasonable steps to ensure that any PPE provided to his employees is properly used, and is returned to the accommodation provided for it after use.\nThe Extra Division appear to have considered that it would be difficult to apply or enforce those obligations in situations where the risk was not created by the nature of the task carried out by the employee.\nWe do not share that concern.\nEvidently, the implications of a duty to take all reasonable steps depend on the circumstances.\nWhere, for example, the PPE is intended to be used in situations where the employee cannot reasonably be subject to immediate supervision, the duty to take all reasonable steps will not require such supervision, but may be satisfied by less onerous measures, such as adequate training and instruction.\nThere remains the Extra Divisions conclusion that there was in any event no obligation to provide PPE in the present case, since on the Lord Ordinarys findings the risk of slipping was adequately controlled by other means which were equally or more effective, as required by regulation 4(1) of the PPE Regulations.\nIn that regard, the Extra Division considered that there was little evidence as to the likely efficacy of attachments over the range of underfoot conditions that Miss Kennedy could have been expected to encounter.\nWe are unable to reconcile the Extra Divisions conclusion with the Lord Ordinarys findings.\nIn relation to the exception to regulation 4(1), he noted that the onus was on the employer to establish that the exception was made out.\nHe found, in the first place, that the evidence about the precautions in place, in the form of training, was vague and unsatisfactory.\nAs he commented, that in itself showed that the precautions taken could not be regarded as adequate control by other means.\nFurthermore, he accepted Mr Greaslys evidence about the availability of PPE which would reduce the risk.\nHis reasoning reflects the evidence and a proper understanding of the law.\nThe evidence established that anti slipping attachments were available at a modest cost; that they were used by other employers to address the risk of their employees slipping and falling on footpaths covered in snow and ice; that there was a body of research demonstrating that their use reduced the risk of slipping in wintry conditions; and that Mr Greaslys own experience was that the attachments which he had used had made a difference.\nHis evidence, which the Lord Ordinary accepted, was that, had Miss Kennedy worn such devices, on a balance of probabilities the risk of her falling on ice and snow would have been reduced and might have been eliminated.\nAs against that, Cordia had given no consideration to the matter.\nIn those circumstances, we can see no basis in the Lord Ordinarys findings, or in the evidence, for finding that the exception in regulation 4(1) had been made out.\nCommon law liability\nIt may be helpful at the outset to address a general point arising from the opinions of the Extra Division.\nThey contain numerous comments to the effect that it is unreasonable to suggest that Miss Kennedys employer should have provided her with special footwear designed to reduce the risk of her slipping and falling, since she was in the same position as any other member of the public travelling on foot in wintry conditions.\nIt was in that context that the Extra Division stressed the necessary basic questions identified by Lord President Dunedin in Morton v William Dixon Ltd, and referred to the Caparo test: see para 32 above.\nOne can understand the Extra Divisions concern that the law should not be excessively paternalistic.\nMiss Kennedy was not, however, in the same position as an ordinary member of the public going about her own affairs.\nIt was her duty, as someone employed by Cordia as a home carer, to visit clients in their homes in different parts of the city on a freezing winters evening despite the hazardous conditions underfoot.\nUnlike an ordinary member of the public, she could not choose to stay indoors and avoid the risk of slipping and falling on the snow and ice.\nUnlike an ordinary member of the public, she could not choose where or when she went.\nShe could not keep to roads and pavements which had been cleared or treated.\nShe could not decide to avoid the untreated footpath leading to Mrs Craigs door.\nUnlike an ordinary member of the public, she was obliged to act in accordance with the instructions given to her by her employers: employers who were able, and indeed obliged under statute, to consider the risks to her safety while she was at work and the means by which those risks might be reduced.\nIn those circumstances, to base ones view of the common law on the premise that Miss Kennedy was in all relevant respects in the same position as an ordinary member of the public is a mistake.\nFurthermore, the common law relating to employers liability was not definitively stated by Lord Dunedin in Morton v William Dixon Ltd. As long ago as 1959, Lord Keith of Avonholm devoted his speech in Cavanagh v Ulster Weaving Co Ltd [1960] AC 145 to the clarification of Lord Dunedins dictum.\nHe observed that the ruling principle was that an employer was bound to take reasonable care for the safety of his workmen, and all other rules or formulas must be taken subject to that principle (a point which had earlier been made, in relation to Lord Dunedins dictum, by Lord Normand in Paris v Stepney Borough Council [1951] AC 367, 382 and by Lord Reid in Morris v West Hartlepool Steam Navigation Co Ltd [1956] AC 552, 571, amongst others).\nHe added that Lord Dunedin could not have intended to depart from or modify that fundamental principle.\nBoth in that case and in Brown v Rolls Royce Ltd 1960 SC (HL) 22; [1960] 1 WLR 210 Lord Keith emphasised that Lord Dunedin was laying down no proposition of law.\nThe context in which the common law of employers liability has to be applied has changed since 1909, when Morton v William Dixon Ltd was decided.\nAs Smith LJ observed in Threlfall v Kingston upon Hull City Council [2010] EWCA Civ 1147; [2011] ICR 209, para 35 (quoted by the Lord Ordinary in the present case), in more recent times it has become generally recognised that a reasonably prudent employer will conduct a risk assessment in connection with its operations so that it can take suitable precautions to avoid injury to its employees.\nIn many circumstances, as in those of the present case, a statutory duty to conduct such an assessment has been imposed.\nThe requirement to carry out such an assessment, whether statutory or not, forms the context in which the employer has to take precautions in the exercise of reasonable care for the safety of its employees.\nThat is because the whole point of a risk assessment is to identify whether the particular operation gives rise to any risk to safety and, if so, what is the extent of that risk, and what can and should be done to minimise or eradicate the risk.\nThe duty to carry out such an assessment is therefore, as Lord Walker of Gestingthorpe said in Fytche v Wincanton Logistics plc [2004] UKHL 31; [2004] ICR 975, para 49, logically anterior to determining what precautions a reasonable employer would have taken in order to fulfil his common law duty of care.\nIt follows that the employers duty is no longer confined to taking such precautions as are commonly taken or, as Lord Dunedin put it, such other precautions as are so obviously wanted that it would be folly in anyone to neglect to provide them.\nA negligent omission can result from a failure to seek out knowledge of risks which are not in themselves obvious.\nA less outdated formulation of the employers common law duty of care can be found in Baker v Quantum Clothing Group Ltd [2011] UKSC 17; [2011] 1 WLR 1003, para 9.\nIn the present case, Cordia were aware of a history of accidents each year due to their home carers slipping on snow and ice, and they were aware that the consequences of such accidents were potentially serious.\nQuite apart from the duty to carry out a risk assessment, those circumstances were themselves sufficient to lead an employer taking reasonable care for the safety of its employees to inquire into possible means of reducing that risk.\nHad such inquiries been made, or a proper risk assessment carried out, the implication of the evidence accepted by the Lord Ordinary is that Cordia would have learned that attachments were available, at a modest cost, which had been found to be effective in reducing the risk, and had been provided by a number of other employers to employees in a similar position.\nIn those circumstances, the Lord Ordinary was entitled to conclude that Cordia were negligent in failing to provide Miss Kennedy with such attachments.\nIt is necessary only to add that the familiar threefold test set out by Lord Bridge of Harwich in Caparo is not relevant in this context, as counsel for Cordia acknowledged.\nThat test is concerned with the imposition of a duty of care in novel circumstances.\nThere is no doubt that an employer owes a duty of care towards its employees.\nThe question in the present case is not whether a duty of care existed, but whether it was fulfilled.\nCausation\nIt remains to consider the Extra Divisions conclusion that the Lord Ordinary was not entitled to find Cordia liable in the absence of any explicit finding that Miss Kennedys injury had been caused by any breach of duty on their part.\nThe question is not, of course, whether Miss Kennedys injury would necessarily have been prevented: as in other civil contexts, the matter has to be decided on a balance of probabilities.\nThe Lord Ordinary made no express findings in relation to causation, other than that he accepted Miss Kennedys evidence that she would have used anti slip attachments if they had been provided to her.\nThe question therefore is whether, in the light of the other findings which were made, the only reasonable inference which could be drawn was that Cordias breach of their duties caused or made a material contribution to Miss Kennedys accident.\nSo far as the Management Regulations are concerned, the breach of regulation 3(1) resulted in a failure to provide protective equipment, in breach of the PPE Regulations.\nThe issue of causation therefore turns on the consequences of the latter breach.\nSo far as the PPE Regulations are concerned, the finding that there was a breach of regulation 4(1) implies that there was a failure to ensure that suitable equipment was provided.\nAs we have explained, equipment is suitable only if so far as is practicable, it is effective to prevent or adequately control the risk or risks involved: regulation 4(3)(d).\nIt follows from that definition that the equipment need not necessarily prevent the risk, but it must, as a minimum, adequately control the risk so far as is practicable.\nThe concept of suitability thus contains a causal component.\nThe Regulations do not define adequately, but it can be inferred from the EU legislation (including the requirement under article 5(1) of the Framework Directive that the employer shall have a duty to ensure the safety and health of workers) that a risk will not be adequately controlled unless injury is highly unlikely.\nBearing in mind that the PPE Regulations should not be construed in such a way as to reduce pre existing levels of protection, that conclusion is also supported by case law on the previous domestic law.\nFor example, in the case of Rogers v George Blair & Co Ltd (1971) 11 KIR 391, which concerned the duty to provide suitable goggles under section 65 of the Factories Act 1965, Salmon LJ stated at p 395: The protection, to be suitable, need not make it impossible for the accident to happen, but it must make it highly unlikely.\nIt follows that where an employee has been injured as a result of being exposed to a risk against which she should have been protected by the provision of PPE, and it is established that she would have used PPE if it had been provided, it will normally be reasonable to infer that the failure to provide the PPE made a material contribution to the causation of the injury.\nSuch an inference is reasonable because the PPE which the employer failed to provide would, by definition, have prevented the risk or rendered injury highly unlikely, so far as practicable.\nSuch an inference would not, of course, be appropriate if the cause of the accident was unconnected with the risk against which the employee should have been protected.\nIn the present case, there was no suggestion that it would not have been practicable to provide equipment which was effective to prevent or adequately control the risk or risks involved, and the evidence of Mr Greasly was to the contrary effect.\nIn the circumstances, the only inference which could reasonably have been drawn was that the breach of regulation 4(1) had caused or materially contributed to the accident, and that Cordia were therefore liable to Miss Kennedy under the PPE Regulations.\nIf, on the other hand, the Lord Ordinarys finding of a breach of regulation 4(1) of the PPE Regulations is left out of account, and one focuses solely upon his finding of a breach of a common law duty of care, then the position in relation to causation is more problematical.\nGiven that the Lord Ordinary accepted Mr Greaslys evidence about the slip resistance of the attachments which he had experienced using, it might perhaps have been inferred as a matter of common sense that Cordias failure to provide such attachments was a material cause of Miss Kennedys accident (cf Drake v Harbour [2008] EWCA Civ 25, para 28).\nIt cannot, however, be said that the Lord Ordinary would necessarily have reached that conclusion.\nHis opinion does not contain any explicit consideration of the matter, or articulate any conclusion.\nIn those circumstances, it is difficult to maintain that there was a proper foundation for his decision that Cordia were liable in damages at common law.\nThat conclusion is however of no practical significance, given that Cordia are liable in any event under the 1992 Regulations.\nConclusion\nFor these reasons, we would allow the appeal.\n","output":"The appellant was employed as a home carer by the respondents.\nHer work involved visiting clients in their homes and providing personal care.\nOn 18 December 2010, at around 8pm, she was required to visit an elderly lady.\nThere had been severe wintry conditions in central Scotland for several weeks, with snow and ice lying on the ground.\nThe appellant was driven to the house by a colleague, who parked her car close to a public footpath leading to the house.\nThe footpath was on a slope, and was covered with fresh snow overlying ice.\nIt had not been gritted or salted.\nThe appellant was wearing flat boots with ridged soles.\nAfter taking a few steps, she slipped and fell, injuring her wrist.\nThe Lord Ordinary, relying on expert evidence, found the respondents liable for the appellants injury on the basis that they did not provide her with protective footwear.\nThe Lord Ordinarys decision was reversed by an Extra Division of the Inner House.\nThe appellants appeal to the Supreme Court concerned the admissibility of evidence given by the expert witness, and whether the respondents had been in breach of their statutory duties or negligent.\nThe Supreme Court unanimously allows Ms Kennedys appeal.\nLord Reed and Lord Hodge (with whom Lady Hale, Lord Wilson and Lord Toulson agree) give the judgment of the court.\nLord Reed and Lord Hodge provide guidance on the evidence of skilled witnesses under Scots law, addressing (i) admissibility [39 56]; (ii) the responsibilities of a partys legal team [57]; (iii) the courts policing of the performance of the experts duties [58 59]; and (iv) economy in litigation [60 61].\nIn the present case, the expert witness had experience and qualifications in health and safety [9].\nHis evidence on factual matters was relevant and admissible.\nHe had the necessary experience and qualifications to explain how anti slip attachments reduced the risk of slipping [62 63].\nHis evidence on health and safety practice was relevant [64].\nWhilst some of his statements might appear to be inadmissible expressions of opinion on the respondents legal duties, an experienced judge could treat the statements as opinions as to health and safety practice, and make up his own mind on the legal questions [66].\nThe witnesss evidence provided a basis for the Lord Ordinary to determine whether the defenders had suitably and sufficiently evaluated the risks and identified the measures needed to protect health and safety [67].\nThe statutory case was based first on the Management of Health and Safety at Work Regulations 1999 (the Management Regulations), which implement Directive 89\/391\/EEC (the Framework Directive), and under regulation 3(1) require a suitable and sufficient risk assessment to be carried out [85 89], and secondly on the Personal Protective Equipment at Work Regulations 1992 (the PPE\nRegulations), which implement Directive 89\/656\/EEC (the PPE Directive), and under regulation 4(1) require suitable personal protective equipment to be provided to employees who may be exposed to a risk to their health or safety while at work except to the extent that such risk has been adequately controlled by other means which are equally or more effective [93 97].\nThe most logical way to approach the issues was through a consideration of the suitability and sufficiency of the risk assessment [89].\nThe appellant was exposed to a risk of slipping and falling on snow and ice which was obvious and was within the knowledge of the respondents, who had previous experience of home carers suffering such accidents each year.\nThe risk had been identified in a 2005 assessment, and risks of that general nature were also identified in a 2010 assessment [90].\nNo consideration had been given to the possibility of personal protective equipment.\nThe precautions taken, in the form of advice to wear appropriate footwear, did not specify what might be appropriate.\nThe Lord Ordinary was entitled to conclude that there had been a breach of regulation 3(1) of the Management Regulations [92].\nThe appellant was at work whilst she was travelling between the home of one client and that of another in order to provide them with care.\nContrary to the view of the Extra Division, the words while at work in regulation 4(1) of the PPE Regulations, and whilst they are at work in regulation 3(1) of the Management Regulations, mean that the employee must be exposed to the risk during the time when she is at work.\nThey do not refer to the cause of the risk [100].\nThe Directives encompass not only risks arising specifically from the nature of the activities which the worker carries out, but also risks arising from the natural environment to which the worker is exposed whilst at work [102].\nThe Lord Ordinary found that anti slip attachments were available which would have been suitable to reduce the risk of home carers slipping and falling on ice, and that the risk was not adequately controlled by other means which were equally or more effective.\nHe was therefore entitled to conclude that there had been a breach of regulation 4(1) of the PPE Regulations [106].\nIn relation to the common law case, it was a mistake to view the appellant as being in the same position as an ordinary member of the public.\nShe was required to visit clients in their homes in hazardous weather conditions, whether or not the roads and footpaths in question had been treated.\nHer employers were able (and obliged by statute) to consider the risks to her safety and the means by which those risks could be reduced [108].\nA reasonably prudent employer would conduct a risk assessment so as to take suitable precautions to avoid injury to its employees.\nThe duty to carry out a risk assessment was logically anterior to determining what precautions a reasonable employer would take to fulfil its common law duty of care [110].\nThe respondents were aware of a history of accidents each year and were aware that the consequences were potentially serious.\nThose circumstances were sufficient to require an employer taking reasonable care for the safety of its employees to inquire into possible means of reducing the risk.\nUpon such inquiry, or the carrying out of a proper risk assessment, on the evidence accepted by the Lord Ordinary the respondents would have learnt that attachments were available at a modest cost to reduce the risk, and had been used by other employers in a similar position.\nThe Lord Ordinary was entitled to conclude that the respondents were negligent in failing to provide the appellant with such attachments [112 113].\nThe Lord Ordinary made no express findings as to causation, other than that the appellant would have used attachments if they had been provided.\nThe concept of suitability, under regulation 4(1) of the PPE Regulations, contained a causal component: the equipment must adequately control the risk so far as was practicable.\nA risk would not be adequately controlled unless injury was highly unlikely [118].\nIn the circumstances, it was reasonable to infer that the failure to provide the anti slip attachments caused or materially contributed to the accident [119].\n","id":12}
{"input":"This appeal is concerned with the obligations under the Equality Act 2010 of a charity which has been set up to provide housing in Stamford Hill in Hackney for a disadvantaged group, the observant Orthodox Jewish community comprising, in particular, the Haredi community.\nThe charity is the second respondent, Agudas Israel Housing Association Ltd (AIHA).\nIts charitable objective is to make social housing available primarily for members of the Orthodox Jewish community.\nSuch is the surplus of demand for social housing from the members of that community, as compared with the properties which AIHA has available, that in practice all of AIHAs properties are allocated to members of the Orthodox Jewish community.\nThe first respondent is a local housing authority, Hackney London Borough Council (the Council).\nAIHA makes properties available to the Council, as they become vacant, to house persons who have applied to the Council for social housing and who have been identified by the Council as having a priority need for such housing.\nThe properties provided by AIHA constitute about 1% of the stock of social housing available to the Council.\nIn relation to the Council, there is a large surplus of demand for social housing as compared with the supply available, so applicants for social housing can spend long periods waiting for suitable properties to become available.\nThe Council does not have any right to compel AIHA to take tenants who do not fall within the scope of AIHAs charitable objective and its selection criteria.\nThe Council therefore nominates applicants for social housing with AIHA who fall within those criteria.\nIn practice, this means that the Council only nominates members of the Orthodox Jewish community to be housed in property owned by AIHA.\nThe principal appellant (the appellant) is a single mother with four small children: twin daughters and two sons, both of whom have autism and one of whom is also a party to the proceedings.\nShe was on the Councils list for social housing and had been identified by the Council as having priority need to be housed in a larger property.\nShe is not from the Orthodox Jewish community and so has been unable to gain access to the properties let by AIHA.\nWhile the appellant was waiting to be allocated a suitable property by the Council, large properties owned by AIHA which would have been suitable for her became vacant and were allocated by AIHA to families from the Orthodox Jewish community who had also been identified by the Council as having priority needs.\nThe appellant had to wait longer than them to be allocated a suitable property by the Council from its other social housing resources, as they became available.\nThe appellant commenced proceedings against the Council and AIHA in 2018 complaining that this involved unlawful conduct on their part in various respects.\nIn particular, she complains that there has been unlawful direct discrimination against her on grounds of her religion and on grounds of her race.\nHer claim was dismissed by the Divisional Court (Lindblom LJ and Sir Kenneth Parker) in a judgment dated 4 February 2019: [2019] EWHC 139 (Admin); [2019] PTSR 985.\nHer appeal was dismissed by the Court of Appeal (Lewison and King LJJ and Sir Stephen Richards) in a judgment dated 27 June 2019: [2019] EWCA Civ 1099; [2019] PTSR 2272.\nIn the course of the proceedings, the appellants claims have been somewhat\nrefined.\nFor the purposes of the appeal to this court, the issues to be decided relate to the lawfulness of the conduct of AIHA.\nThe Council accepts that if AIHA engaged in unlawful discrimination against the appellant by its allocation policy, then the Council cannot lawfully maintain its nomination arrangements with AIHA.\nBut there is no distinct legal claim against the Council which does not turn upon the underlying substantive question of whether AIHA acted lawfully or not.\nAccordingly, in what follows, the focus is entirely on the claims against AIHA.\nThe relevant claims brought by the appellant against AIHA were based on the prohibition of direct discrimination on grounds of race or religion by any person in the provision of services, as contained in the Equality Act 2010 (the 2010 Act).\nAIHA relied on defences set out in section 158 and section 193 of the 2010 Act.\nSection 158 provides for an exemption from unlawfulness for positive action to address needs or disadvantages experienced by persons which are connected to a protected characteristic.\nSection 193 provides an exemption for the activities of charities under defined conditions.\nAIHA accepts that it distinguishes between applicants for its housing on the grounds of religion and that, subject to the statutory defences, this would constitute unlawful direct discrimination contrary to the relevant provisions of the 2010 Act.\nAIHA denies that it discriminates between applicants on grounds of their race.\nMr Ian Wise QC, for the appellant, in his skeleton argument for the hearing in the Divisional Court, indicated to the court that since discrimination on grounds of religion was admitted by AIHA, it might be unnecessary to decide if AIHA discriminated on grounds of race.\nThe Divisional Court took Mr Wise at his word and focused its analysis on the appellants claim of unlawful discrimination on grounds of religion.\nIt made no finding as to whether there was discrimination on grounds of race. (This is subject to one narrow point which the Divisional Court did deal with, which is no longer a live issue between the parties: the court dealt with a submission on the part of the appellant to the effect that AIHA was not entitled to rely on a defence under section 193 of the 2010 Act by reason of section 194(2) of that Act.\nSection 194(2) provides that a charity may not avail itself of a defence under section 193 if it discriminates on grounds of race, in the sense of colour.\nThe Divisional Court found that AIHA does not discriminate between applicants for housing on grounds of colour and by the time of the hearings in the Court of Appeal and in this court this was common ground.)\nAlthough the Divisional Court had been invited by Mr Wise not to deal with the allegation of discrimination on grounds of race if it was unnecessary to do so and hence did not make findings about that part of the case, on the appellants appeal to the Court of Appeal this was made into a point of criticism.\nFurther, for the first time in his reply skeleton argument in the Court of Appeal, Mr Wise referred to Council Directive 2000\/43\/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin (the Race Directive).\nAt that stage, the Race Directive was relied on as a potential aid to interpretation of section 193 of the 2010 Act.\nThis was not on the footing that the appellant had rights under it as against AIHA on the findings made by the Divisional Court (which involved only discrimination on grounds of religion, which does not fall within the scope of the Race Directive), but on the basis that others might have rights under the Directive where there was discrimination on grounds of race and that these rights ought to be reflected in the interpretation of section 193, by virtue of the principle of sympathetic construction of national legislation articulated by the European Court of Justice (now the Court of Justice of the European Union: I will refer to it as the CJEU in both phases of its existence) in Marleasing SA v La Comercial Internacional De Alimentacion SA (Case C 106\/89) [1990] ECR I 4135; [1992] 1 CMLR 305 (Marleasing).\nThe Court of Appeal rejected this argument (para 54).\nSince the appellant could not show that she had suffered discrimination on grounds of race within the scope of the Race Directive, she could not benefit from the special interpretive obligation arising from the Marleasing case.\nSimilarly, since the appellant had not shown that her case fell within the scope of EU law, she could not rely on the right against discrimination set out in article 21 of the Charter of Fundamental Rights of the European Union (the CFR).\nOn the appeal to this court, the appellants position shifted again.\nAt the hearing, Mr Wise applied to the court for permission to introduce a new argument for the appellant.\nAccording to this argument, Mr Wise invites the court to find that the appellant was in fact affected by direct discrimination by AIHA on grounds of race or ethnic origin, contrary to the Race Directive.\nHe submits that the appellant was subject to direct discrimination on grounds of ethnic origin which was the same as that found by this court, by a majority, to have occurred in R (E) v Governing Body of JFS (United Synagogue intervening) [2009] UKSC 15; [2010] 2 AC 728 (JFS) in the context of the application of domestic anti discrimination legislation, and that this means that she must be taken to have been subjected to direct discrimination on grounds of race or ethnic origin for the purposes of the Race Directive.\nOn that basis, Mr Wise submits that either section 193 must be read so as to be compatible with the appellants rights under the Race Directive in accordance with the Marleasing principle of sympathetic construction or, if that cannot be done, it should be disapplied altogether by virtue of the principle of direct effect of EU law.\nIt is very unusual for this court to grant permission for a wholly new argument to be introduced at this stage.\nMoreover, since it is a new argument based on a legal instrument (the Race Directive) which was not pleaded by the appellant in her grounds of claim, Mr Wise should have made an application to amend those grounds, which (if allowed) would also have led to AIHA and the Council having the right to amend their grounds of defence to meet the new claim.\nAs it is, the court was not presented by Mr Wise with any formal or clear statement of the new claim which he wished to introduce.\nThis was highly unsatisfactory.\nIt only emerged from the answer given by Mr Wise to a question by the court during his submissions in reply that this new case for the appellant did not involve any complaint of indirect discrimination by AIHA on grounds of race or ethnic origin.\nAlso, the court did not have the benefit of a formally pleaded defence to the appellants new claim based on the Race Directive, which meant that possible defences had to be explored in submissions without a clear and proper focus.\nAlso, to state the obvious, the court did not have the benefit of an examination of the new claim and those defences by the lower courts.\nFurthermore, the appellant should have made a formal application for permission to amend her grounds of claim and to raise the new argument in this court well in advance, rather than leaving it to be raised at the hearing, thereby taking up time which was set aside for the substantive arguments on the appeal.\nDespite these points, however, Mr Sam Grodzinski QC for AIHA made no strong objection to the introduction of this new case for the appellant at this late stage.\nHe was confident that he was in a position to meet it without difficulty.\nMr Matt Hutchings QC for the Council likewise made no strong objection.\nHaving regard to their position, the court gave provisional permission at the hearing for Mr Wise to develop the new case for the appellant.\nThe court reserved its position as to the possibility of refusing permission if, after hearing how the argument was developed, it considered that it had been advanced in a way which was unfair to AIHA or the Council.\nIn the event, given the narrow basis on which Mr Wise sought to develop the new claim based on the Race Directive, the court considers that it is appropriate to confirm the permission given provisionally at the hearing.\nI will, therefore, address the appellants new claim based on the Race Directive along with her claim based on the 2010 Act.\nTwo final matters should be mentioned in this introduction.\nAlthough at an early stage in the proceedings AIHA disputed that it carries out functions which have a sufficient public element to make it amenable to judicial review, it now accepts that it does.\nBut AIHA does not accept that it is a public authority by virtue of carrying out functions of a public nature within the meaning of section 6(3)(b) of the Human Rights Act 1998 (the HRA).\nAccordingly, AIHA does not accept that it has any obligation arising under section 6(1) of the HRA to act compatibly with Convention rights of the appellant or other applicants for housing.\nIn her pleaded case and in her submissions in the Divisional Court and in the Court of Appeal, the appellant did not assert any claim against AIHA under section 6(1) of the HRA on the basis that it was a public authority within the meaning of that Act, and no such issue was included in the agreed Statement of Facts and Issues for the appeal.\nIn his printed case for the appeal in this court, Mr Wise did include an argument to that effect.\nHowever, in the event he did not make any application for permission to introduce it, so it is not necessary to say anything about it.\nThe EU legislative context\nThe Race Directive enshrines the principle of equal treatment, described in article 2 as meaning that there shall be no direct or indirect discrimination based on racial or ethnic origin.\nArticle 3 provides that the Directive applies to to all persons, as regards both the public and private sectors in relation to a number of matters, including at article 3(1)(h): access to and supply of goods and services which are available to the public, including housing.\nRecital (17) to the Race Directive states: The prohibition of discrimination should be without prejudice to the maintenance or adoption of measures intended to prevent or compensate for disadvantages suffered by a group of persons of a particular racial or ethnic origin, and such measures may permit organisations of persons of a particular racial or ethnic origin where their main object is the promotion of the special needs of those persons.\nArticle 5 makes provision to allow for the objective set out in recital (17), as follows: With a view to ensuring full equality in practice, the principle of equal treatment shall not prevent any member state from maintaining or adopting specific measures to prevent or compensate for disadvantages linked to racial or ethnic origin.\nArticle 21 of the CFR prohibits any discrimination based on a number of grounds, including race, colour, ethnic or social origin and religion or belief.\nArticle 51 of the CFR states that it applies to member states only when they are implementing Union law.\nThe domestic legislative context\nThe 2010 Act makes various forms of discrimination unlawful.\nDirect discrimination is defined by section 13(1) of the Act: A person (A) discriminates against another (B) if, because of a protected characteristic, A treats B less favourably than A treats or would treat others.\nThe relevant protected characteristics are set out in section 4.\nThey include race and religion or belief.\nThe meaning of these concepts is explained in sections 9 and 10, respectively.\nRace includes colour, nationality and ethnic or national origins.\nBy contrast with the position in relation to indirect discrimination (defined in section 19 of the 2010 Act), there is no general defence of justification in relation to direct discrimination on the basis of these protected characteristics; but so far as is relevant for present purposes, particular defences are set out in sections 158 and 193.\nService providers and persons exercising public functions are prohibited from discriminating, whether directly or indirectly: section 29.\nSection 158 is headed Positive action: general.\nSo far as relevant, it provides: (1) This section applies if a person (P) reasonably thinks that (a) persons who share a protected characteristic suffer a disadvantage connected to the characteristic, (b) persons who share a protected characteristic have needs that are different from the needs of persons who do not share it, or (c) participation in an activity by persons who share a protected characteristic is disproportionately low. (2) This Act does not prohibit P from taking any action which is a proportionate means of achieving the aim of (a) enabling or encouraging persons who share the protected characteristic to overcome or minimise that disadvantage, (b) meeting those needs, or (c) enabling or encouraging persons who share the protected characteristic to participate in that activity. (4) This section does not apply to (a) action within section 159(3)\nSection 159 is headed Positive action: recruitment and promotion.\nIt provides a defence where action is taken on the grounds of a protected characteristic to overcome disadvantages a person with that characteristic may face in obtaining employment or promotion.\nSection 159(3) provides: That action is treating a person (A) more favourably in connection with recruitment or promotion than another person (B) because A has the protected characteristic but B does not.\nSection 193 provides: (1) A person does not contravene this Act only by restricting the provision of benefits to persons who share a protected characteristic if the person acts in pursuance of a charitable (a) instrument, and the provision of the benefits is within subsection (b) (2). (2) The provision of benefits is within this subsection if it is a proportionate means of achieving a legitimate (a) aim, or (b) for a disadvantage characteristic. for the purpose of preventing or compensating the protected linked\nThe Equality and Human Rights Commission (EHRC) has the power to issue codes of guidance.\nThe court must take any such code into account in any way in which it appears to the court to be relevant: section 15(4)(b) of the Equality Act 2006.\nSection 3(1) of the HRA states that [s]o 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.\nThe Convention rights are those set out in the European Convention on Human Rights (the ECHR), as contained in Schedule 1 to the HRA.\nThey include article 8 (right to respect for private and family life and the home), article 9 (freedom of thought, conscience and religion) and article 14 (prohibition of discrimination).\nArticle 14 provides: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.\nIn this case, AIHA relies on defences under section 158, section 193(2)(a) and section 193(2)(b) of the 2010 Act.\nSuccess on any of these will mean that the appellants claim fails.\nFactual background\nThe Council is a local housing authority with statutory functions in relation to the allocation of social housing.\nAs well as allocating its own stock of social housing, it also discharges its functions by nominating applicants for social housing to properties owned by independent housing associations such as AIHA.\nThe Council assesses applications for social housing using a points based system which is based on need.\nAIHA is a charitable housing association, established in 1986.\nIn order to qualify as a charity, its activities must be for the public benefit: see section 4 of the Charities Act 2011 (the Charities Act).\nIt is registered with the Regulator of Social Housing of England as a private registered provider of social housing under Part 2 of the Housing and Regeneration Act 2008.\nIt owns property in Hackney, principally in parts of the borough which are inhabited by members of the Orthodox Jewish community.\nAIHAs charitable objects are set out in its rules, which state: A2 The Association is formed for the benefit of the community.\nIts object shall be to carry on for the benefit of the community (and primarily for the benefit of the Orthodox Jewish Community): A2.1 the business of providing housing, accommodation, and assistance to help house people and associated facilities and amenities for poor people or for the relief of the aged, disabled, handicapped (whether physically or mentally) or chronically sick people.\nA2.2 any other charitable object that can be carried out by an Industrial and Provident Society registered as a social landlord with the Corporation.\nAIHA has its own Allocations and Lettings Manual separate from the Councils allocation scheme.\nThe manual states that AIHAs primary aim is to house members of the Orthodox Jewish Community.\nAIHA operates its own waiting list for its properties, but pursuant to an agreement with the Council the Council has nomination rights in respect of a significant proportion of properties owned by AIHA which become available for occupation.\nAIHAs criteria for selection are similar to those used by the Council, and are likewise based on need.\nAIHA owns 470 properties in Hackney.\nThey amount to 1% of the overall number of 47,000 units of general social needs housing in the Councils area.\nAIHAs lettings each year are on average less than 1% of social housing lettings arranged by the Council.\nThe Orthodox Jewish community tend to have large families and so have a greater need, as a community, for larger properties, including those with four bedrooms.\nAIHAs stock of social housing has been developed with that in mind, so it has a proportionately greater share of the stock of larger properties available for social housing in Hackney.\nApplicants nominated by the Council for a property owned by AIHA also have to satisfy AIHAs own selection criteria.\nProperties available for social housing are advertised on a portal on the Councils website.\nThe advertisements on the portal in respect of properties owned by AIHA reflect AIHAs selection criteria under current market conditions and state: Consideration only to the Orthodox Jewish community.\nThe appellants two sons with autism, now aged nine and five, display very challenging behaviour.\nIn July 2018, the appellant gave birth to twin girls.\nThe appellant is not a member of the Orthodox Jewish community.\nShe grew up and lives in Hackney and embraces the diversity of the local community.\nThe family were assessed by the Council as falling within the group having the highest need for re housing under its scheme for the allocation of social housing in the borough.\nIn 2017 the appellant brought judicial review proceedings against the Council, in which she claimed that she and her sons were housed in inadequate accommodation.\nIn consequence, the appellant and her sons were re housed in better temporary accommodation.\nThe proceedings were settled in October 2017 on terms which included the Council agreeing to offer the appellant its next available unit of suitable social housing.\nFollowing the birth of her daughters, the appellant was moved to the offer list for a four bedroom property.\nDespite the Councils recognition of the familys need for suitable social housing, no offer of a suitable property was made by the time the case came before the Divisional Court.\nDuring the same period, at least six four bedroom properties owned by AIHA became available and were advertised by the Council.\nHowever, because of AIHAs practice of only letting its properties to members of the Orthodox Jewish community, the Council did not put the appellant forward for consideration; nor did the appellant apply directly to AIHA.\nFortunately, between the hearing in the Divisional Court and the hearing in the Court of Appeal another four bedroom property became available to the Council and was allocated to the appellant.\nAccordingly, the appellant and her family are now housed in suitable accommodation.\nExtensive evidence about the problems faced by the Orthodox Jewish community in Hackney, and the need for it to gather together in Stamford Hill, was reviewed by the Divisional Court.\nIt made a number of important findings relevant for the discussion below which are not challenged on this appeal: (1) Social housing is under severe pressure in the Councils area, with demand far exceeding supply (para 19). (2) Although the Jewish population in the United Kingdom is contracting and the average age is increasing, the strictly Orthodox Jewish Haredi community is growing at 4% per year, with 34% of Jews in Hackney aged 14 or under.\nStrictly Orthodox Jews are more likely to experience poverty and deprivation than other mainstream Jewish families.\nJewish households in Hackney (which are comprised mainly of Haredi Jews) are much more likely to be in socially rented accommodation (35%) than the general Jewish population (9%). 25% of them live in overcrowded conditions, compared to 8% of the general Jewish population.\nMost of the Haredi community are unwilling to live outside Stamford Hill, where AIHAs properties are located, and so tend not to bid for social housing elsewhere in the Councils area.\nNearly all of the Haredi community in social housing within Hackney are tenants of AIHA.\nRoughly 2% of applicants for social housing in Hackney self identify as Orthodox Jews (para 31). (3) The Orthodox Jewish community has a particular need for larger properties because of their large family sizes.\nSelf identifying Orthodox Jews represent an increasing proportion of housing applicants as the number of bedrooms increases.\nAlthough they are only a small proportion of the families seeking one , two or three bedroom properties, in May 2018 they were 66 out of 459 families wanting four bedrooms, 32 out of 64 wanting five bedrooms, and 29 out of 35 wanting six bedrooms (para 32). (4) Witnesses emphasised the fact that Orthodox Judaism is not a lifestyle but a way of life, and that living as a community is a central part of this.\nMembers of the Orthodox Jewish community need to remain proximate to that community, even if it means foregoing improved living conditions, bigger houses, or proper housing at all (para 34).\nThe Divisional Court made these comments about the community (para 64): there are very high levels of poverty and deprivation, with associated low levels of home ownership.\nOn the evidence before us, we are satisfied that there is a strong correlation between the evidenced poverty and deprivation and the religion.\nThis is explained in part by the way of life, especially affecting educational and employment opportunities, which is characteristic of the Orthodox Jewish community. (5) The Orthodox Jewish community is subjected to anti Semitism, including racially aggravated harassment and assaults, criminal damage to property and verbal abuse (para 33).\nVolunteer security patrols in Stamford Hill, known as the Shomrim, provide physical reassurance and help to deter anti Semitic incidents, thereby fostering a sense of security within the community.\nThe Divisional Court referred to widespread and increasing overt anti Semitism in society and an increase in reported anti Semitic crime; and to the way in which the traditional Orthodox Jewish clothing worn by the Haredi community heightens the exposure to anti Semitism and to related criminality (para 66).\nThe court found that the community had a need to live together in relatively close proximity with a view to reducing apprehension and anxiety regarding personal security, anti Semitic abuse and crime (para 67). (6) The Orthodox Jewish community face prejudice when trying to rent properties in the private sector, on account of their appearance, language and religion (para 66). (7) The properties owned by AIHA are designed specifically for Orthodox Jewish religious needs whereby the tenants are able to follow the tenets of their faith and the rules relating to the Sabbath.\nAIHA provides facilities such as kosher kitchens, an absence of television aerials, Shabbos locks on the estate, and mezuzahs on communal doors.\nThe Divisional Court acknowledged that these features are normative, rather than essential.\nAt para 69 the court said, we would accept that, standing alone, they would be unlikely to be sufficient to justify the challenged discrimination.\nHowever, we do not believe that they should be entirely discounted. (8) The Orthodox Jewish community has a particular need to live close to community facilities, such as schools, synagogues and suitable shops (paras 34 and 68). (9) The Orthodox Jewish community in Hackney faces particular problems of overcrowding.\nThe Divisional Court said (para 70): there was evidence in data from 2015 which showed that the average number of occupants of Orthodox Jewish households in Stamford Hill was 6.3, in contrast to the average for the whole of Hackney of 2.43, and for the UK of 2.38.\nIn our view, this evidence demonstrates a particular need in the Orthodox Jewish community for property, which is likely to be in very short supply, that would accommodate substantially larger families, and that would significantly reduce the particular and intensified risk to such families of eviction from overcrowded accommodation.\nThe evidence shows that, if a situation arose in which AIHA had a surplus of properties as against the needs of the Orthodox Jewish community for social housing, it would allocate the surplus properties to families from outside that community.\nIt is in this sense that AIHA has as its charitable objective and the purpose of its allocation policy the aim of primarily meeting the needs of the Orthodox Jewish community.\nHowever, there is no surplus of supply of properties as against the needs of that community at present, nor is there likely to be one in the foreseeable future.\nAs regards the question whether AIHA discriminates on grounds of race, although the Divisional Court made no relevant finding for present purposes, in the context of its discussion of section 194(2) of the 2010 Act (at para 86) it accepted the evidence of the principal witness for AIHA, as follows: In her evidence Mrs Cymerman Symons MBE stated that AIHA did not discriminate according to ethnic background.\nAIHAs housing applicants come from a variety of ethnic backgrounds.\nShe continued at para 28 of her second witness statement: Our sole criterion is that the applicants are of the Orthodox Jewish faith.\nThis is certainly not an issue of race; it is purely about religious observance.\nWe respond to people from many ethnic backgrounds.\nThe common factor is a commitment to the Orthodox Jewish way of life.\nThis evidence has not been challenged.\nIt is corroborated by the relevant documents produced by AIHA.\nThe application form used by AIHA simply asks, in a box marked Personal circumstances, Would you describe yourself as Orthodox Jewish, strictly observant of Shabbath and Kashrut? and for details of which synagogue is attended and the school attended by children of the family.\nThe application pack also includes a section for provision of details of ethnic origin which is stated to be solely for monitoring purposes, as is common form, and to assist AIHA in the development of its equal opportunities policy.\nThe judgment of the Divisional Court\nThe Divisional Court considered section 158 and section 193 of the 2010 Act in turn, in the light of the findings it had made.\nAs to section 158, the court reasoned in a series of steps which are not now disputed, as follows: (i) The disadvantages faced by Orthodox Jews are real and substantial; (ii) Those disadvantages are connected with the religion of Orthodox Judaism; (iii) The needs of members of the Orthodox Jewish community are different from those who are not members of it.\nThey have a relevant need to live relatively close to each other, with a view to reducing apprehension and anxiety regarding personal security, anti Semitic abuse and crime.\nThey also have a need for community facilities, including schools, synagogues and shops, as well as special features of accommodation.\nThey also have a need for property that will accommodate substantially larger families; and (iv) AIHAs arrangements for allocating housing, which place Orthodox Jews in a primary position, enable them both to avoid the disadvantages and to meet the needs referred to.\nThe remaining question in relation to section 158 was whether AIHAs arrangements for allocating housing enabled members of the Orthodox Jewish community to avoid the identified disadvantages and meet the identified needs in a proportionate manner.\nOn this, the Divisional Court directed itself by reference to the guidance given by Baroness Hale of Richmond in Aster Communities Ltd (formerly Flourish Homes Ltd) v Akerman Livingstone [2015] UKSC 15; [2015] AC 1399, at para 28.\nThe case concerned a complaint of discrimination on grounds of disability, contrary to section 15 of the 2010 Act.\nUnder section 15(1)(b), a person does not act unlawfully if he can show that the treatment in question is a proportionate means of achieving a legitimate aim: this is similar to the defence in section 158(2) and identical to the defence in section 193(2)(a) of the 2010 Act, which are at issue in the present appeal.\nBaroness Hale explained that the concept of proportionality as used in domestic anti discrimination law is derived from EU law.\nIt requires application of a structured approach in relation to the measure in question, involving four stages: First, is the objective sufficiently important to justify limiting a fundamental right? Secondly, is the measure rationally connected to the objective? Thirdly, are the means chosen no more than is necessary to accomplish the objective? And, fourth: As the Court of Justice of the European Communities put it in R v Minister for Agriculture, Fisheries and Food, Ex p Fedesa (Case C 331\/88) [1990] ECR 1 4023, para 13, the disadvantages caused must not be disproportionate to the aims pursued: or as Lord Reed JSC put it in the Bank Mellat case [Bank Mellat v HM Treasury (No 2)] [2014] AC 700, 791, para 74, In essence, the question at step four is whether the impact of the rights infringement is disproportionate to the likely benefit of the impugned measure.\nThe Divisional Court observed that this approach to the question of proportionality in section 158 was reinforced by the explanatory notes for that provision and the relevant guidance given in the statutory code of practice promulgated by the EHRC (the EHRC code of practice).\nThe explanatory notes to section 158 state (paragraph 512): The extent to which it is proportionate to take positive action measures which may result in people not having the relevant characteristic being treated less favourably will depend, among other things, on the seriousness of the relevant disadvantage, the extremity of need or under representation and the availability of other means of countering them.\nThis provision will need to be interpreted in accordance with European law which limits the extent to which the kind of action it permits will be allowed.\nParagraph 10.22 of the EHRC code of practice states: The seriousness of the relevant disadvantage, the degree to which the need is different and the extent of the low participation in the particular activity will need to be balanced against the impact of the action on other protected groups, and the relative disadvantage, need or participation of these groups.\nAt paragraph 5.32, the EHRC code of practice also refers to the derivation in EU law of the concept of proportionality in section 158.\nApplying this approach, the Divisional Court held that the allocation policy of AIHA was a proportionate means to achieve aims falling within section 158(2)(a) and (b).\nAt para 73 the court rejected the submission of Mr Wise that AIHAs allocation policy was to be regarded as an illegitimate and disproportionate blanket prohibition against letting properties to persons from outside the Orthodox Jewish community.\nThe court referred to the fact that the policy allowed for allocation to persons from outside the community, should circumstances permit.\nIt said: AIHAs charitable objectives permit and oblige it to accord primary benefit to members of the Orthodox Jewish community.\nThere is no unqualified restriction of benefits to members of that community, nor absolute exclusion of non members.\nAIHA currently has over 700 applicants on its waiting list.\nIt has a total housing stock of 470 homes in Hackney, but the crucial consideration in this context is that, over the seven year period from 2011 to 2018, only 89 general needs properties became available for allocation, a marginal availability of only about 12 to 13 properties each year, with a huge imbalance between supply and demand.\nThere is no evidence that that imbalance is likely to decrease markedly in the foreseeable future.\nAt the same time there is an acute imbalance between supply and demand for social housing in Hackney generally.\nAbout 13,000 households are currently registered under [the Councils] scheme for the allocation of social housing.\nIn 2016, [the Council] allocated only 1,229 properties for social housing.\nAgain, there is no evidence that the imbalance is likely to decrease markedly in the foreseeable future.\nThe Divisional Court found (para 74) that the reason why, in practice, AIHA allocated its properties to members of the Orthodox Jewish community was clear.\nGiven the limited availability to, and pressing demand from, that community, if AIHA were to allocate any of its properties to non members, it would seriously dilute the number of properties available to Orthodox Jews, and would fundamentally undermine its charitable objective of giving primary position, in a meaningful, as distinct from formalistic, sense to Orthodox Jews.\nAt para 75 the Divisional Court said: We also conclude that AIHAs arrangements are justified as proportionate under section 158.\nFor the reasons we have already given, the disadvantages and needs of the Orthodox Jewish community are many and compelling.\nThey are also in many instances very closely related to the matter of housing accommodation.\nWe recognise the needs of other applicants for social housing, but, in the particular market conditions to which we have referred, AIHAs arrangements are proportionate in addressing the needs and disadvantages of the Orthodox Jewish community, notwithstanding the fact that in those market conditions, a non member cannot realistically expect AIHA to allocate to him or her any property that becomes available.\nAt para 76 the court referred back to its finding that members of the Orthodox Jewish community in Hackney have a particular need for larger accommodation and observed that given the acute scarcity of such accommodation, it is readily understandable, and proportionate, that such properties are allocated to members of the Orthodox Jewish community who have need of the accommodation.\nAt para 77 the court rejected a further submission by Mr Wise, that AIHAs allocation policy constituted unlawful positive discrimination rather than legitimate positive action falling within section 158.\nFor this distinction, Mr Wise referred to paragraph 10.7 of the EHRC code of practice.\nThe court pointed out that the EHRC code of practice stated that positive action in favour of a preferred group might well cause disadvantage to persons outside that group, but that the advantages to the preferred group might well outweigh the disadvantages, and thus be proportionate.\nThe court added: In this case it is self evident that the allocation of particular accommodation to a member of the Orthodox Jewish community may well disadvantage an individual non member who may have a priority need for such accommodation.\nHowever, the relevant question, which we have dealt with above, is whether the arrangements, viewed as a whole and in the light of relevant market circumstances, address the disadvantages and needs of the Orthodox Jewish community in a manner that outweighs the disadvantage to non members of that community.\nThe Divisional Court emphasised, at para 78, that its conclusion was reached in the context of AIHA being a small provider of social housing with only 1% of the general needs housing in the Councils area and its lettings running at less than 1% of social housing lettings in the Councils area each year (see para 29 above).\nThe court said that it could not be assumed that the same conclusion would be reached in the case of a service provider with a large share of the available properties.\nAt paras 79 to 83 the court addressed a further argument of Mr Wise, in which he sought to draw an analogy with the judgment of the CJEU in Briheche v Ministre de lIntrieur (Case C 319\/03) [2004] ECR I 8807; [2005] 1 CMLR 4 (Briheche).\nThat case was concerned with application of Council Directive 76\/207\/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions (the Equal Treatment Directive).\nArticle 2(4) of that Directive allows a member state to engage in forms of positive discrimination in the area of employment in relation to recruitment and promotion, but in Briheche and other authorities the CJEU laid down restrictive conditions for the application of that provision.\nI discuss Briheche and the Equal Treatment Directive below.\nHere it suffices to say that the Divisional Court held (para 83) that the text, context and object of article 2(4) of that Directive were different from section 158 of the 2010 Act and that Briheche does not provide relevant guidance in relation to the application of section 158 or section 193 of the 2010 Act.\nAs regards section 193 of the 2010 Act, the Divisional Court reasoned as follows: (1) AIHA did not discriminate on the ground of colour (hence section 194(2) of the 2010 Act had no application); (2) The specific protected characteristic, on the basis of which AIHA discriminated, was the religion of Orthodox Judaism; (3) AIHAs arrangements for allocating housing were authorised by or in line with its charitable instrument; and were therefore made in pursuance of it within the meaning of section 193(1)(a) (paras 93 to 101).\nThis is now common ground; (4) For the same reasons as underpinned its conclusion in relation to section 158, AIHAs arrangements were a proportionate means of achieving a legitimate aim (section 193(2)(a)) and were for the purpose of preventing or compensating for disadvantages linked to the protected characteristic (section 193(2)(b)) (paras 103 and 104).\nThe judgment of the Court of Appeal\nIn the Court of Appeal, Mr Wise for the appellant submitted that the Divisional Court had erred in its proportionality assessment under section 158 and section 193 of the 2010 Act.\nSince, as was then common ground, the express requirements of section 193(2)(b) were satisfied and that provision is capable of providing a complete defence for AIHA and does not in terms depend upon a proportionality assessment, a new question arose for debate which had not been considered by the Divisional Court, namely whether section 193(2)(b) contained any requirement of proportionality.\nMr Wise submitted that it did, for three reasons: (i) in the present context, article 14 of the ECHR, read with article 8 or article 9 of the ECHR, means that any positive action which involves discrimination has to be justified as being proportionate to some legitimate aim, and section 3(1) of the HRA means that section 193(2)(b) must be read and given effect in a way which is compatible with the appellants rights and those of her family under article 14; (ii) in some cases covered by section 193(2)(b) the Race Directive would apply; in those cases a proportionality requirement would be applicable as a matter of general EU law; and as a result of the interpretive obligation set out in Marleasing, section 193(2)(b) should be construed as containing such a requirement; and (iii) to interpret section 193(2)(b) as not containing a proportionality requirement would produce absurd consequences.\nLewison LJ gave the substantive judgment, with which King LJ and Sir Stephen Richards agreed.\nLewison LJ summarised the findings and analysis of the Divisional Court.\nAt paras 34 to 62 he rejected Mr Wises submissions for the implication of a proportionality test into section 193(2)(b).\nThis meant that the appellants appeal could not succeed.\nAs to Mr Wises submission (i), Lewison LJ held by reference to domestic authority including, in particular, R (H) v Ealing London Borough Council [2017] EWCA Civ 1127; [2018] PTSR 541, that AIHAs allocation policy did not fall within the ambit of article 8 of the ECHR, nor did it fall within the ambit of article 9, so article 14 had no application (paras 44 52).\nEven if article 14 did apply, it was not possible to read a proportionality requirement into section 193(2)(b) by virtue of section 3(1) of the HRA.\nSection 193(2)(b) had to be read in the context of the scheme of the 2010 Act and in light of its juxtaposition with section 193(2)(a).\nTo read a proportionality requirement into sub paragraph (b) of section 193(2) would make it redundant and hence, in effect, would disapply it, which would not be permissible under section 3(1) of the HRA.\nThis was explained at para 53, where Lewison LJ said: The reason is a simple one.\nSection 193(2)(a) permits discrimination where it is a proportionate means of achieving a legitimate aim.\nSection 193(2)(b) does not contain the proportionality assessment required under section 193(2)(a).\nIt is a necessary part of Mr Wises argument in support of the imposition of a proportionality requirement in section 193(2)(b) that preventing or compensating for a disadvantage linked to a protected characteristic might not be a legitimate aim.\nIf it were a legitimate aim, it would already be covered by section 193(2)(a).\nSo section 193(2)(b), read as Mr Wise proposes, would be entirely redundant.\nIn the course of the argument Mr Wise accepted this; and also agreed that preventing or compensating for a disadvantage linked to a protected characteristic would be a legitimate aim.\nSo he accepted that his interpretation made section 193(2)(b) redundant.\nThat, to my mind, is a powerful reason why that interpretation cannot be right.\nAs regards Mr Wises submission (ii), Lewison LJ held (para 54) that since the case had proceeded on the footing that AIHA had discriminated against the appellant on grounds of religion, which did not fall within the Race Directive, the appellant was not able to show that the Marleasing principle of sympathetic construction was applicable to allow or require any change to the ordinary meaning of section 193(2)(b).\nIt was not open to the appellant to say that in some case other than her own there might be a conflict between section 193(2)(b) and rights under the Race Directive, where EU law might trump the domestic provision (either in the sense of requiring a conforming interpretation to be adopted pursuant to the Marleasing principle or in the sense of requiring the disapplication of the domestic provision by giving direct effect to rights under the Directive), and then indirectly to seek to take the benefit of EU law in her case, although no relevant rights of hers under EU law were in issue.\nLewison LJ also rejected Mr Wises submission (iii) (paras 55 61).\nThere was no absurdity in construing section 193(2)(b) as bearing its ordinary meaning, with no proportionality requirement.\nIt could not be said to be absurd that section 193(1), read with section 193(2)(b), provided a defence for a charitable institution in fulfilling its charitable objects which, ex hypothesi (by virtue of the Charities Act), must be for the public benefit.\nThe contrast between section 193(2)(a) (which incorporates a proportionality test) and section 193(2)(b) (which does not) is striking and deliberate.\nWhere the 2010 Act requires a proportionality requirement, as it does in a number of provisions, it says so in terms.\nThe absence of such a requirement from section 193(2)(b) must be taken to be a deliberate policy choice by Parliament, and was well within the legislatures margin of appreciation.\nThe explanatory notes for the 2010 Act and the EHRC code of practice supported this conclusion.\nLewison LJ also held (para 52) that even if section 193(2)(b) were interpreted as importing a proportionality requirement, then for reasons given later in his judgment in relation to section 158 and section 193(2)(a) of the 2010 Act, that requirement was satisfied.\nIn relation to all these provisions, the Divisional Court was entitled to find that AIHAs allocation policy was a proportionate means of achieving a legitimate aim.\nAlthough by reason of his conclusion regarding the interpretation of section 193(2)(b) Lewison LJ held that the appeal should be dismissed, he also went on to consider Mr Wises submission that AIHAs allocation policy could not be regarded as proportionate for the purposes of sections 158 and 193 of the 2010 Act.\nAt paras 63 68 Lewison LJ referred to the leading authorities on the role of an appeal court in considering a proportionality assessment by a lower court.\nThis passage merits quotation in full: 63.\nIn In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911, the Supreme Court considered the role of an appeal court in an appeal which involves a challenge to a lower courts appraisal of proportionality.\nLord Neuberger of Abbotsbury said at para 88: If, after reviewing the judges judgment and any relevant evidence, the appellate court considers that the judge approached the question of proportionality correctly as a matter of law and reached a decision which he was entitled to reach, then the appellate court will not interfere.\nIf, on the other hand, after such a review, the appellate court considers that the judge made a significant error of principle in reaching his conclusion or reached a conclusion he should not have reached, then, and only then, will the appellate court reconsider the issue for itself if it can properly do so (as remitting the issue results in expense and delay, and is often pointless). 64.\nHe added that an appeal court should only interfere where the lower courts assessment of proportionality was wrong; and then went on to explain what he meant by that.\nLord Wilson and Lord Clarke of Stone cum Ebony agreed with Lord Neuberger. 65.\nIn R (R) v Chief Constable of Greater Manchester Police [2018] UKSC 47; [2018] 1 WLR 4079, the Supreme Court added a qualification to this approach.\nLord Carnwath (with whom the other Justices agreed) said at para 64: In conclusion, the references cited above show clearly in my view that to limit intervention to a significant error of principle is too narrow an approach, at least if it is taken as implying that the appellate court has to point to a specific principle whether of law, policy or practice which has been infringed by the judgment of the court below.\nThe decision may be wrong, not because of some specific error of principle in that narrow sense, but because of an identifiable flaw in the judges reasoning, such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermines the cogency of the conclusion.\nHowever, it is equally clear that, for the decision to be wrong under CPR rule 52.11(3), it is not enough that the appellate court might have arrived at a different evaluation.\nAs Elias LJ said in R (C) v Secretary of State for Work and Pensions [2016] PTSR 1344, para 34: the appeal court does not second guess the first instance judge.\nIt does not carry out the balancing task afresh as though it were rehearing the case but must adopt a traditional function of review, asking whether the decision of the judge below was wrong 66.\nIt is not enough simply to demonstrate an error or flaw in reasoning.\nIt must be such as to undermine the cogency of the conclusion.\nAccordingly, if there is no such error or flaw, the appeal court should not make its own assessment of proportionality. 67.\nThere are two further points that I should make, in view of some of Mr Wises criticisms of the Divisional Court.\nFirst, an appeal court is bound, unless there is compelling reason to the contrary, to assume that the lower court has taken the whole of the evidence into its consideration: Henderson v Foxworth Investments Ltd [2014] UKSC 41; [2014] 1 WLR 2600, para 48; ACLBDD Holdings Ltd v Staechelin [2019] EWCA Civ 817; [2019] 3 All ER 429, para 31.\nSecond, an appeal court should be reluctant to interfere with a lower courts findings of fact, even where those findings are based on written rather than oral evidence.\nHaving referred to earlier cases dealing with findings of fact made at trial after hearing oral evidence, Lord Kerr of Tonaghmore explained in In re DBs Application for Judicial Review [2017] UKSC 7; [2017] NI 301, para 80: The statements in all of these cases and, of course, in McGraddie itself [McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477, paras 1 3 per Lord Reed] were made in relation to trials where oral evidence had been given.\nOn one view, the situation is different where factual findings and the inferences drawn from them are made on the basis of affidavit evidence and consideration of contemporaneous documents.\nBut the vivid expression in Anderson [Anderson v City of Bessemer (1985) 470 US 564, 574 575] that the first instance trial should be seen as the main event rather than a try out on the road has resonance even for a case which does not involve oral testimony.\nA first instance judgment provides a template on which criticisms are focused and the assessment of factual issues by an appellate court can be a very different exercise in the appeal setting than during the trial.\nImpressions formed by a judge approaching the matter for the first time may be more reliable than a concentration on the inevitable attack on the validity of conclusions that he or she has reached which is a feature of an appeal founded on a challenge to factual findings.\nThe case for reticence on the part of the appellate court, while perhaps not as strong in a case where no oral evidence has been given, remains cogent.\nIn the present appeal, I consider that the Court of Appeal should have evinced a greater reluctance in reversing the judges findings than they appear to have done. 68.\nThose observations have particular force in the present case, where the Divisional Court were presented with a mass of demographic and sociological evidence from multiple reputable sources.\nIn the following section of his judgment (paras 69 88), Lewison LJ followed this approach.\nHe rejected Mr Wises submissions that the Divisional Court had failed to conduct a proper balancing exercise, comparing the detriments of AIHAs allocations policy for non members of the Orthodox Jewish community with the benefits sought to be achieved for that community.\nThe Divisional Court had correctly directed itself by reference to the judgment of Baroness Hale in the Akerman Livingstone case.\nIt analysed the position in accordance with propositions to be drawn from the judgment of Baroness Hale in R (Coll) v Secretary of State for Justice [2017] UKSC 40; [2017] 1 WLR 2093, at para 42, by assessing whether there was a disadvantage for non members of the Orthodox Jewish community, considering how significant that disadvantage was and considering what might be done to meet that disadvantage.\nAt para 87 Lewison LJ summarised the analysis of the Divisional Court: (i) The disadvantage to non members of the Orthodox Jewish community was the withdrawal of 1% of the potentially available units of accommodation. (ii) The scale of that disadvantage was minuscule. (iii) The needs of the Orthodox Jewish community linked to the relevant protected characteristic were many and compelling. (iv) The allocation of properties to non members of the Orthodox Jewish community would fundamentally undermine AIHAs charitable objectives.\nThus there was no more limited way of achieving the legitimate aim. (v) Weighing these factors together, AIHAs allocation policy was proportionate.\nIn Lewison LJs judgment, there was no flaw in this analysis which would entitle an appeal court to intervene.\nAccordingly, the appeal in relation to AIHA was dismissed for these reasons as well.\nThe issues on the appeal to this court\nThe parties identified the following issues for determination on the appeal: In order for AIHA to be able to rely on section 193(2)(b) of the 2010 (1) Act, does it have to show that its arrangements are proportionate, whether pursuant to EU law or the HRA? (2) In so far as is relevant to issue (1) above, is the allocation of social housing a matter that falls within the ambit of article 8 of the ECHR for the purposes of a discrimination claim under article 14 of the ECHR? (3) Do AIHAs arrangements amount to impermissible positive discrimination as opposed to permissible positive action for the purposes of section 158 and\/or section 193 of the 2010 Act? (4) Were the courts below entitled to conclude that AIHAs arrangements are a proportionate means of achieving the aims referred to in either section 158(2) or section 193(2) of the 2010 Act? To these must now be added a fifth issue: (5) Did AIHAs allocation policy involve direct discrimination on grounds of race or ethnic origin, contrary to the Race Directive? This may have implications for issue (1) above.\nMr Wise also submits that the appellant has rights under the Race Directive which would require that section 193(2)(b) of the 2010 Act should be disapplied if it conflicts with the requirements of that Directive.\nSince the outcome of the appeal depends on whether the Divisional Courts holding regarding the proportionality of AIHAs allocation policy for the purposes of sections 158 and 193(2)(a) of the 2010 Act should be overruled, I will consider issues (3) and (4) first.\nIssue (3) is a dimension of the general question of proportionality raised in issue (4), so I will address them together.\nThen it is convenient to address issue (5).\nFinally, I will turn to issues (1) and (2).\nIssues (3) and (4): the proportionality of AIHAs allocation policy\nMr Wise submits that, as explained in the Akerman Livingstone case, the relevant test of proportionality is that to be found in EU law and says that the Divisional Court erred in discounting the Briheche judgment as relevant guidance.\nOn this appeal, Mr Wise relies on Briheche and a number of other judgments of the CJEU which he submits show that positive discrimination is only permissible under EU law if its object is equality of opportunity for a disadvantaged group rather than equality of outcome; where a disadvantaged person is given priority only in circumstances where an objective assessment has been carried out to compare their position with that of a person who does not share the relevant characteristic and the positions are found to be equivalent, so that the relevant characteristic is taken into account only as a tie break at the end of that process; and where the policy in question has a safety valve to allow priority in exceptional cases for a person who does not share the relevant characteristic.\nIn this case, however, the Divisional Court did not assess proportionality in this way.\nMr Wise submits that AIHAs policy on allocation cannot be regarded as proportionate according to this standard.\nIt is concerned with equality of outcome rather than equality of opportunity; AIHA does not conduct assessments of the needs of non members of the Orthodox Jewish community who might apply for social housing to compare them with the needs of members of that community; AIHA does not treat membership of the Orthodox Jewish community as a final tie break, where an assessment of the needs of an applicant for social housing who is not a member of the community as compared with those of an applicant who is a member shows that they are broadly equivalent; and AIHAs policy does not include a safety valve to allow a property to be allocated to a non member of the Orthodox Jewish community in preference to members of the community in exceptional circumstances.\nThe judgments of the CJEU relied on by Mr Wise are those in Kalanke v Freie Hansestadt Bremen (Case C 450\/93) [1996] All ER (EC) 66 (Kalanke); Marschall v Land Nordrhein Westfalen (Case C 409\/95) [1997] All ER (EC) 865 (Marschall); In re Badeck (Case C 158\/97) [2000] All ER (EC) 289 (Badeck); Abrahamsson v Fogelqvist (Case C 407\/98) [2002] ICR 932 (Abrahamsson); Lommers v Minister van Landbouw, Natuurbeheer en Visserij (Case C 476\/99) [2004] 2 CMLR 49 (Lommers); Briheche; and Cresco Investigation GmbH v Achatzi (Case C 193\/17) [2019] 2 CMLR 20, Grand Chamber (Cresco).\nHe also relies on the judgment of the EFTA Court in EFTA Surveillance Authority v Norway (Case E 1\/02) [2003] 1 CMLR 23 (the EFTA Surveillance case).\nI do not accept Mr Wises submission based on these cases.\nThere is no\ngeneral doctrine of positive discrimination in EU law, which is subject to the limitations for which Mr Wise contends.\nThe judgments in these cases addressed the specific requirements arising under legislative instruments which are not applicable in the present case, in particular the Equal Treatment Directive.\nArticle 2(1) of the Equal Treatment Directive states that the principle of equal treatment means that there shall be no discrimination whatsoever on grounds of sex either directly or indirectly.\nArticle 2(4) provides that the Directive: shall be without prejudice to measures to promote equal opportunity for men and women, in particular by removing existing inequalities which affect women's opportunities.\nIn Kalanke the CJEU held that German legislation which provided for the automatic promotion of a woman who had the same qualifications as a man, where there was under representation of women, was incompatible with the Equal Treatment Directive.\nNational rules which guaranteed women absolute and unconditional priority for appointment or promotion go beyond promoting equal opportunities and fall outside what is permitted by article 2(4): para 22.\nThis was confirmed by the CJEU in Marschall (para 32), but the court held there that such a national rule which contained a saving clause which guaranteed that male candidates would be the subject of an objective assessment which would take account of all relevant criteria and would override the priority accorded to female candidates where the assessment indicated the male candidate was better would be acceptable under article 2(4): paras 33 and 35.\nThe under represented sex could thus only be given priority by a national rule where there was an objective assessment of the respective relevant qualities of male and female candidates and the rule operated as a tie breaker where that assessment showed that they were equally qualified to do the job: see also Badeck, paras 15 23; Abrahamsson, paras 60 62; Lommers, paras 38 39; Briheche, para 23; and the EFTA Surveillance case, para 45.\nAs the CJEU pointed out in Briheche at para 24 (reiterating a point made in Lommers, para 39): Those conditions are guided by the fact that, in determining the scope of any derogation from an individual right such as the equal treatment of men and women laid down by the Directive, due regard must be had to the principle of proportionality, which requires that derogations must remain within the limits of what is appropriate and necessary in order to achieve the aim in view and that the principle of equal treatment be reconciled as far as possible with the requirements of the aim thus pursued.\nThis is a conventional approach to the proportionality principle.\nAs the statement of the principle in Akerman Livingstone makes clear, proportionality analysis requires identification of a legitimate aim and then an assessment whether a measure taken to promote that aim is proportionate in its effects in pursuing it, having regard to other interests at stake.\nFor present purposes, what is significant about the Equal Treatment Directive is that article 2(4) identifies the aim which is to be regarded as a legitimate basis for departing from the general obligation of equal treatment imposed by article 2(1), namely promotion of equality of opportunity in employment rather than equality of outcome.\nIn the judgments referred to, rules of national law were held to be compatible with the Directive if limited to securing equality of opportunity but were held to be incompatible if they went beyond promotion of equality of opportunity and sought to achieve equality of outcome in terms of equal representation of men and women in the workforce.\nThis tells one nothing of any significance about the proper approach to proportionality in the context of section 158 and section 193(2)(a) of the 2010 Act.\nIn fact, separate provision is made in the 2010 Act, in section 159, governing positive action in relation to employment.\nIn each of section 158 and section 193(2)(a), the range of permissible legitimate aims is wider than the legitimate aim specified in article 2(4) of the Equal Treatment Directive and includes seeking to achieve particular outcomes, ie enabling persons who share the protected characteristic to overcome or minimise disadvantages they suffer which are connected to the characteristic or to meet needs particular to persons with the protected characteristic, in the case of section 158; or any legitimate aim in the case of section 193(2)(a) (which includes aims recognised as legitimate under section 158).\nAccordingly, the correct question, as the Divisional Court and the Court of Appeal rightly appreciated, is whether AIHAs allocation policy is a measure which is proportionate to promoting such aims in relation to ameliorating the position of members of the Orthodox Jewish community.\nThose aims relate to improving outcomes for that community, not merely equality of opportunity of the more limited kind discussed in the cases on the Equal Treatment Directive.\nThe judgment of the Grand Chamber of the CJEU in Cresco is more relevant.\nThat addressed the application of article 21 of the CFR and Directive 2000\/78 establishing a general framework for equal treatment in employment and occupation (the Framework Directive).\nArticle 2 of the Framework Directive states that the principle of equal treatment shall mean that there shall be no direct or indirect discrimination as regards employment and occupation on a range of grounds referred to in article 1, including religion or belief.\nArticle 7, headed Positive action, provides in para 1: With a view to ensuring full equality in practice, the principle of equal treatment shall not prevent any member state from maintaining or adopting specific measures to prevent or compensate for disadvantages linked to any of the grounds referred to in article 1.\nThe terms of article 7(1) are materially different from those of article 2(4) of the Equal Treatment Directive, and are closer to section 158 and section 193 of the 2010 Act.\nCresco concerned Austrian legislation which provided that for members of specified Christian churches Good Friday was a public holiday, with the result that if they worked on that day they should be paid a supplement.\nNon Christians were not entitled to treat Good Friday as a day of holiday and were not entitled to any supplement for working that day; nor were any religious days of other religions treated as public holidays for them.\nA non Christian who worked for a private company complained that this was incompatible with article 21 of the CFR and with the Framework Directive.\nAt paras 62 68 the Grand Chamber dealt with an argument by the Austrian Government that the law treating Good Friday as a public holiday for members of Christian churches was justified pursuant to article 7(1) of the Framework Directive, and rejected it.\nThe Grand Chamber observed (para 63) that, in light of article 7(1), the principle of equal treatment in the Directive does not prevent a member state from retaining or adopting, in order to ensure full equality in practice, specific measures to prevent or compensate for disadvantages linked to any of the grounds referred to in article 1.\nThe Grand Chamber also noted (para 64) that article 7(1) is designed to authorise measures which, although discriminatory in appearance, are in fact intended to eliminate or reduce actual instances of inequality which may exist in society.\nThe objectives of ensuring full equality in practice and the elimination or reduction of instances of inequality are very different from the more limited objective of securing equality of opportunity referred to in article 2(4) of the Equal Treatment Directive.\nThey are objectives which can include efforts to achieve equality of outcomes as well as equality of opportunity, to use the distinction urged on us by Mr Wise.\nAt para 65, the Grand Chamber affirmed that a conventional proportionality analysis applies in relation to such aims (referring in that regard to Lommers, para 39): in determining the scope of any derogation from an individual right such as equal treatment, due regard must be had to the principle of proportionality, which requires that derogations remain within the limits of what is appropriate and necessary in order to achieve the aim in view and that the principle of equal treatment be reconciled as far as possible\nwith the requirements of the aim thus pursued\nApplying the principle of proportionality, the Grand Chamber held (paras 66 68) that since there was no corresponding designation of important festivals of other religions as public holidays the law in issue went further than was necessary to compensate for the alleged disadvantage suffered by employees who are members of Christian churches and subject to a religious duty not to work on Good Friday.\nAccordingly, the Grand Chamber in Cresco confirmed at para 65 the point made above about the conventional operation of the proportionality principle in the context of anti discrimination legislation.\nThe guidance in Cresco is relevant in relation to the analogous provisions in section 158 and section 193 of the 2010 Act.\nIt confirms that the conventional approach adopted by the Divisional Court and the Court of Appeal on the question of proportionality was correct.\nThe Divisional Court directed itself correctly as to the proportionality test to be applied.\nIt made appropriate findings on the evidence before it regarding the needs of the Orthodox Jewish community connected to their religion and the disadvantages to which they were subject on grounds of their religion.\nIt found that the AIHA allocation policy was a legitimate and proportionate means of meeting those needs and of seeking to correct for those disadvantages.\nI would endorse the observations of Lewison LJ at paras 63 68 (quoted at para 56 above) about the proper approach for an appellate court when reviewing a finding of proportionality or disproportionality of a measure such as AIHAs allocation policy.\nMr Wise did not suggest this approach was wrong.\nSince the Divisional Court gave itself a correct self direction as to the test to be applied, its conclusion that AIHAs allocation policy is a proportionate means of pursuing the legitimate aims identified can only be set aside if the appeal court comes to the view that its conclusion was wrong in the relevant sense.\nIt is not sufficient that an appellate court might think it would have arrived at a different conclusion had it been considering the matter for the first time.\nAlthough the word wrong is taken from what is now CPR Part 52.21, which is concerned with the powers of the Court of Appeal and certain other appellate courts, but not the Supreme Court, the arguments for a limited role for an appellate court are of general application and the same approach applies at this level.\nIt would be a recipe for confusion if this court applied a different standard of review on appeal than that applied by the Court of Appeal.\nIt is for that reason that I have dealt with the Divisional Courts judgment on the question of proportionality at some length.\nI agree with Lewison LJs assessment at paras 69 88 (see para 57 above) that there is no proper basis on which an appellate court could interfere with the Divisional Courts conclusion that AIHAs allocation policy is a measure which is proportionate to legitimate aims.\nNot only was that a conclusion which the Divisional Court was entitled to reach, I agree with it.\nTwo particular points should be mentioned.\nFirst, AIHAs allocation policy operates as a direct counter to discrimination suffered by the Orthodox Jewish community in seeking to obtain housing in the private sector.\nThe Divisional Court properly weighed up the effect of the policy in addressing needs of the Orthodox Jewish community connected with their religion and in correcting for disadvantages suffered by that community.\nLewison LJ forcefully made this point at para 79 when rejecting criticisms made by Mr Wise: It is, with respect, obvious why discrimination against the Orthodox Jewish community in accessing private sector housing is ameliorated by a housing association that gives members of that community preference.\nThe extent of the amelioration may be impossible to assess with any precision, but that does not cast doubt on the fact that amelioration there is.\nNor do I accept the criticism that the Divisional Court failed to assess the disadvantage occasioned to other groups who did not share the relevant protected characteristic.\nOn the basis of the Divisional Courts findings, the effect of AIHAs allocation policy (taken at its most restrictive) is to withdraw from the pool of potentially available properties for letting 1% of units.\nThe remaining 99% are potentially available to persons who do not share the relevant protected characteristic.\nThus the disadvantage to those persons is minuscule.\nEven if one concentrates on larger units, where AIHA has a larger share of units, Orthodox Jews are disproportionately represented among applicants for such units.\nAs far as the smaller units are concerned, the evidence is that many of them are also used to house large families.\nI do not regard this criticism as well founded.\nSecondly, Lewison LJ rightly rejected (at paras 84 85) a further criticism made by Mr Wise, that the Divisional Court was wrong to dismiss his argument that AIHAs allocation policy was an illegitimate blanket policy.\nThere is some flexibility in the policy as it is formulated, in that it allows for AIHA to allocate properties to non members of the Orthodox Jewish community if AIHA has properties surplus to the demand from that community.\nHowever, in circumstances in which demand from that community far exceeds supply, allocation to non members is not a realistic prospect in the foreseeable future.\nAs Lewison LJ pointed out, the market circumstances are such that AIHAs allocation policy (in combination with the limited number of properties AIHA owns) does not achieve the aim of meeting the needs of the Orthodox Jewish community in Hackney, but only goes some way towards achieving that aim.\nThere are still many Orthodox Jews in Hackney whom AIHA cannot accommodate and who still suffer the disadvantages associated with the relevant protected characteristic.\nUnless and until the aim of elimination of such disadvantages is achieved, it would be proportionate for AIHA to operate a simple blanket policy to allocate its properties to members of the Orthodox Jewish community as a means of promoting that legitimate aim.\nSo even though market circumstances give AIHAs policy, in practice, a blanket effect, that does not show that it is a measure which is disproportionate to that aim.\nMr Wise criticised the Divisional Court and the Court of Appeal for their focus on the minuscule impact of AIHAs allocation policy.\nHe said that the impact on the appellant could not be so described, since she had had to wait almost 18 months for a suitable property while at least six four bedroom properties owned by AIHA became available and were advertised by the Council for members of the Orthodox Jewish community.\nIn my view, there is nothing in this criticism.\nThe Divisional Court and the Court of Appeal rightly took account of the small impact of AIHAs allocation policy on the group of persons outside the Orthodox Jewish community when assessing its proportionality with reference to its aim.\nIt was proportionate for AIHA to adopt an allocation policy which aimed to meet the particular needs and alleviate the particular disadvantages experienced by members of the Orthodox Jewish community, as a group, in connection with their religion.\nIn assessing the proportionality of the policy in the light of that aim, the courts below were entitled to weigh the benefits for that community as a group as compared with the disadvantages experienced by other groups as a result, rather than by comparing the benefits for that community with the disadvantage suffered by one person drawn from those other groups falling outside the policy.\nPositive action pursuant to section 158 has to address needs or disadvantages experienced in connection with a protected characteristic, and so contemplates that a group based approach may be adopted, defined by reference to one of the protected characteristics as shared with others (such as gender, disability or religion).\nSimilarly, in the context of section 193, charities typically focus the benefits they aim to provide on defined groups.\nCharitable status is a way of recruiting private benevolence for the public good (subject to the public benefit test in the Charities Act), and charities focus on providing for particular groups since that is what motivates private individuals to give money, where they feel a particular link to or concern for the groups in question.\nIt is for the public benefit that private benevolence should be encouraged for projects which supplement welfare and other benefits provided by the state, even though those projects do not confer benefits across the board.\nAccordingly, Parliament contemplated that the proportionality of measures falling within section 158 and section 193 should be assessed on a group basis, by comparing the advantages for groups covered by the measure in question with the disadvantages for groups falling outside it.\nThis point is reinforced by the guidance on the question of proportionality under section 158 of the 2010 Act contained in the EHRC code of practice at para 10.22: The seriousness of the relevant disadvantage, the degree to which the need is different and the extent of the low participation in the particular activity will need to be balanced against the impact of the action on other protected groups, and the relative disadvantage, need or participation of these groups.\nIn this context, the proportionality assessment would be distorted by simply\ntaking the worst affected individual who is not covered by the measure and comparing her with the most favourably affected individual who is covered by it.\nThat is in effect what Mr Wise seeks to do by comparing the appellant with a member of the Orthodox Jewish community, out of the many in need, who happened to be fortunate in having one of AIHAs properties assigned to them in the relevant period.\nThe House of Lords in R (Ahmad) v Newham London Borough Council [2009] UKHL 14; [2009] PTSR 632 considered a broadly analogous context when assessing whether a local housing authoritys scheme made under section 167(2) of the Housing Act 1996 (as amended) for determining priority for allocation of social housing based on placing individuals within broad need based categories rather than on individualised, fine grained comparative assessment of needs was irrational, and held that it was not.\nBaroness Hale and Lord Neuberger of Abbotsbury, who gave the principal speeches, emphasised the dangers of distorting the analysis by seeking to compare the situation and needs of the claimant with those of a general category, in circumstances where it was legitimate for the authority to adopt a group based approach to allocation of housing: see paras 15 (Baroness Hale) and 46 48 and 60 62 (Lord Neuberger).\nIn R (XC) v Southwark London Borough Council [2017] EWHC 736 (Admin); [2017] HLR 24 Garnham J relied on these observations in deciding that a particular category based feature of a local housing authoritys housing priority scheme (to award additional points to persons in working households or who provide community services) was a proportionate means of achieving legitimate objectives (the creation of sustainable and balanced communities and encouraging residents to make a contribution to the local community), so as to provide a defence to a claim of indirect discrimination under section 19 of the 2010 Act.\nThe claimant suffered from disabilities which meant that she could not work.\nHaving regard to the observations in Ahmad, Garnham J held that the priority scheme in issue was the least intrusive measure which could be used without unacceptably compromising the chosen objectives and that it struck a fair balance between securing the objectives and its effects on the claimants rights: paras 85 99.\nAs he pointed out (para 92): Determining those matters in the context of housing allocation schemes is especially difficult.\nEvery tweak to the scheme to benefit one individual or one class of applicant is likely to have an adverse effect on another; every exception to the operation At para 98 he said: of a preference may damage the achievement of the objective.\nThe court inevitably concentrates on the circumstances of the claimant in front of it and it is easy to recognise the disadvantage that a claimant may suffer.\nBut the local authority has to consider the position of all applicants and the court can have only the most attenuated understanding of their position.\nI can see no measure less intrusive, less likely to be detrimental to the claimant, which would not undermine the legitimate objective identified by the council and to which I have referred above.\nTo extend the class of volunteers to include all those who, like the claimant, provide some measure of care for others living in other accommodation would inevitably reduce the ability of the council to cater for those who benefit from the reasonable preferences provided for by the scheme.\nTo extend the class of working households to include those who cannot work because of the type of disabilities suffered by the claimant would inevitably conflict with the legitimate preference to be given to those in work.\nThe wider the class the less valuable the benefit of being within it.\nSo also in the present case, if AIHA changed its allocation policy to bring in people who are not members of the Orthodox Jewish community, that would inevitably dilute the impact it could have on addressing the needs and disadvantages experienced by that community in connection with their faith.\nIn light of the unmet need for social housing for that community and the small impact on other groups, the Divisional Court was entitled to conclude that it was proportionate for AIHA to focus its efforts on that community without diluting its beneficial impact for that community in the way for which Mr Wise contends.\nIn the context of state provision of social welfare benefits, it is well established that it is generally a legitimate approach and in accordance with the principle of proportionality for the state to use bright line criteria to govern their availability: see eg R (RJM) v Secretary of State for Work and Pensions (Equality and Human Rights Commission intervening) [2008] UKHL 63; [2009] 1 AC 311; Carson v United Kingdom (2010) 51 EHRR 13, para 62; and R (Tigere) v Secretary of State for Business, Innovation and Skills (Just for Kids Law intervening) [2015] UKSC 57; [2015] 1 WLR 3820.\nThat is to say, the state is entitled to focus provision of social welfare benefits on a particular group, and hence exclude other groups, even though there may be little or no difference at the margins in terms of need between some particular individual in the first group and another particular individual in the excluded groups.\nUse of bright line criteria in this way is justified because it minimises the costs of administration of a social welfare scheme; it may be the best way of ensuring that resources are efficiently directed to the group which, overall, needs them most; it can reduce delay in the provision of benefits; and it provides clear and transparent rules which can be applied accurately and consistently, thereby eliminating the need for invidious comparisons of individual cases in all their variety, with the risk of arbitrariness in outcomes which that may involve.\nLord Sumption and Lord Reed explained these points in Tigere, which concerned a challenge to the proportionality of rules which restricted the availability of student loans in the case of non nationals to those who had settled immigration status, in a general discussion of proportionality and bright line rules at paras 88 91 (albeit in their conclusion on the facts of that case they were in a minority): 88.\nThose who criticise rules of general application commonly refer to them as blanket rules as if that were self evidently bad.\nHowever, all rules of general application to some prescribed category are blanket rules as applied to that category.\nThe question is whether the categorisation is justifiable.\nIf, as we think clear, it is legitimate to discriminate between those who do and those who do not have a sufficient connection with the United Kingdom, it may be not only justifiable but necessary to make the distinction by reference to a rule of general application, notwithstanding that this will leave little or no room for the consideration of individual cases.\nIn a case involving the distribution of state benefits, there are generally two main reasons for this. 89.\nOne is a purely practical one.\nIn some contexts, including this one, the circumstances in which people may have a claim on the resources of the state are too varied to be accommodated by a set of rules.\nThere is therefore no realistic half way house between selecting on the basis of general rules and categories, and doing so on the basis of a case by case discretion.\nThe case law of the Strasbourg court [the European Court of Human Rights] is sensitive to considerations of practicality, especially in a case where the Convention [the ECHR] confers no right to financial support and the question turns simply on the justification for discrimination.\nIn Carson v United Kingdom (2010) 51 EHRR 369 [51 EHRR 13], which concerned discrimination in the provision of pensions according to the pensioners country of residence, the Grand Chamber observed, at para 62: as with all complaints of alleged discrimination in a welfare or pensions system, it is concerned with the compatibility with article 14 of the system, not with the individual facts or circumstances of the particular applicants or of others who are or might be affected by the legislation.\nMuch is made in the applicants submissions and in those of the third party intervener of the extreme financial hardship which may result from the policy.\nHowever, the court is not in a position to make an assessment of the effects, if any, on the many thousands in the same position as the applicants and nor should it try to do so.\nAny welfare system, to be workable, may have to use broad categorisations to distinguish between different groups in need the courts role is to determine the question of principle, namely whether the legislation as such unlawfully discriminates between persons who are in an analogous situation.\nThis important statement of principle has since been applied by the European Court of Human Rights to an allegation of discrimination in the distribution of other welfare benefits such as social housing: Bah v United Kingdom [(2011) 54 EHRR 21] at para 49.\nAnd by this court to an allegation of discrimination in the formulation of rules governing the benefit cap: R (SG) v Secretary of State for Work and Pensions (Child Poverty Action Group intervening) [2015] 1 WLR 1449, para 15 (Lord Reed JSC). 90.\nThe second reason for proceeding by way of general rules is the principle of legality.\nThere is no single principle for determining when the principle of legality justifies resort to rules of general application and when discretionary exceptions are required.\nBut the case law of the Strasbourg court has always recognised that the certainty associated with rules of general application is in many cases an advantage and may be a decisive one.\nIt serves to promote legal certainty and to avoid the problems of arbitrariness and inconsistency inherent in weighing, on a case by case basis: Evans v United Kingdom (2007) 46 EHRR 728, at para 89.\nThe Court of Justice of the European Union has for many years adopted the same approach to discrimination cases, and has more than once held that where a residence test is appropriate as a test of eligibility for state financial benefits, it must be clear and its application must be capable of being predicted by those affected: Collins v Secretary of State for Work and Pensions (Case C 138\/02) [2005] QB 145, para 72, Frster v Hoofddirectie van de Informatie Beheer Groep (Case C 158\/07) [2009] All ER (EC) 399, para 56.\nAs Advocate General Geelhoed acknowledged in considering these very Regulations in Bidar [R (Bidar) v Ealing London Borough Council (Case C 209\/03) [2005] QB 812], para 61: Obviously a member state must for reasons of legal certainty and transparency lay down formal criteria for determining eligibility for maintenance assistance and to ensure that such assistance is provided to persons proving to have a genuine connection with the national educational system and national society.\nIn that respect, and as the court recognised in Collins, a residence requirement must, in principle, be accepted as being an appropriate way to establish that connection. 91.\nThe advantages of a clear rule in a case like this are significant.\nIt can be applied accurately and consistently, and without the element of arbitrariness inherent in the discretionary decision of individual cases.\nBy simplifying administration it enables speedy decisions to be made and a larger proportion of the available resources to be applied to supporting students.\nThese points apply a fortiori in relation to a proportionality assessment in respect of a measure taken by a charity, such as AIHAs allocation policy.\nA charity is a private body which does not have the same responsibility as the state for ensuring equal treatment of citizens, so if the state is entitled to use bright line criteria for distribution of social welfare benefits still more will that be true for a charity.\nMoreover, charities do not have the same resources as the state, so if the state is entitled to use bright line criteria for distribution of benefits, still more will that be true for a charity.\nIt is in the public interest that charities should be able to minimise their costs of administration.\nThat is in order to ensure that maximum resources are made available to address the problems which charities seek to alleviate and since otherwise charitable giving may be deterred, if donors feel excessive amounts of what they give will be spent on administration rather than actually helping people in need.\nThe aims of minimising wastage of resources on administration and encouraging charitable giving are themselves legitimate objectives to be brought into account in the assessment of proportionality.\nMr Wise maintained that there are examples of other faith or ethnicity based housing associations (he cited three) having allocation policies which do not require them to provide housing exclusively to members of the relevant religious or ethnic community, and that there is no evidence that the aims or essential nature of these housing associations, which are presumably operating in similarly demanding market conditions to AIHA, have been unacceptably compromised thereby.\nHowever, there was no evidence about how these housing associations manage the tension between their faith or ethnicity based focus for provision of social housing and provision for other groups, no evidence that these three examples were in any way representative of the sector as a whole, and no evidence that the problems faced by the groups they seek to help or the market conditions in their areas are equivalent to those which AIHA has to address.\nTherefore, I did not find Mr Wises attempt to rely on these examples at all persuasive.\nEach case must depend on its own facts.\nThe Divisional Court was entitled to make the assessment that if AIHA relaxed its allocation criteria it would dilute its ability to address the problems faced by the Orthodox Jewish community to an unacceptable degree.\nMr Wise made vague references to the possibility that AIHA could allocate more properties to non members of that community whilst still maintaining assistance for the community, but he did not propose any concrete solution, let alone a viable one, to resolve that dilemma.\nIn my judgment, for the reasons given above, the appellants grounds of\nappeal in relation to issues (3) and (4) fail.\nThe consequence is that her appeal as a whole should be dismissed.\nIssue (5): The Race Directive\nThe Race Directive requires discrimination on grounds of race or ethnic origin to be made unlawful, including in particular in relation to housing.\nMr Wise submits that the JFS case shows that AIHAs allocation policy involved direct discrimination on grounds of ethnic origin.\nMr Grodzinski has a short response to this new claim by the appellant: AIHAs allocation policy involves differentiation on grounds of religious observance, which is not prohibited by the Race Directive; it does not involve discrimination on grounds of race or ethnic origin; the facts in the JFS case were materially different.\nIn my view, Mr Grodzinski is right about this.\nThe JFS case concerned a complaint that the admissions criteria adopted by the Jewish Free School involved unlawful direct discrimination on grounds of ethnic origin contrary to the Race Relations Act 1976, one of the pieces of anti discrimination legislation which was replaced by the 2010 Act.\nOnly children who were recognised as Jewish according to the Office of the Chief Rabbi could be admitted, such recognition being based on matrilineal descent from a Jewish mother or one who had been converted in accordance with the tenets of Orthodox Judaism.\nThere was no requirement of practice of the Jewish faith.\nThe school refused to accept a child whose mother had undergone conversion to non Orthodox Judaism, which was not recognised by the Office of the Chief Rabbi.\nBy a majority, this court held that the test of matrilineal descent applied by the school was a test of ethnic origin and that therefore the schools policy involved direct discrimination on racial grounds contrary to the 1976 Act, which defined such grounds to include ethnic or national origins.\nAs Lord Phillips of Worth Matravers explained at para 13, [i]n deciding what were the grounds for discrimination it is necessary to address simply the question of the factual criteria that determined the decision made by the discriminator.\nThe motive of the discriminator for the discrimination in issue is irrelevant.\nIn JFS the court considered and affirmed the guidance given by Lord Fraser of Tullybelton in Mandla (Sewa Singh) v Dowell Lee [1983] 2 AC 548, 562 regarding the meaning of an ethnic group in this context, as set out by Lord Phillips at para 28.\nThe criteria set out by Lord Fraser include two essential conditions (that the group should have a long shared history and a cultural tradition of its own) and a number of other relevant factors; and he stated, [p]rovided a person who joins the group feels himself or herself to be a member of it, and is accepted by other members, then he is, for the purposes of [the 1976 Act], a member.\nIn JFS this court recognised that one could define Jews as an ethnic group by reference to these general criteria without reference to matrilineal descent, but it was concerned with the particular question whether the matrilineal test applied by the school involved discrimination on grounds of ethnic origins, including as against persons who regarded themselves as Jews (as the mother and father of the child did): see, eg, paras 30 31, 33, and 43 46, where Lord Phillips, in the majority, distinguishes the criterion of matrilineal ethnic origin at issue in the case from whether someone is a member of what he describes as a Mandla Jewish ethnic group.\nLord Phillips and the majority held that the application of that criterion by the school (as distinct from a criterion by reference to a Mandla Jewish ethnic group) involved direct discrimination on grounds of ethnic origin.\nBaroness Hale, also in the majority, emphasised at para 66 that the child was not excluded from the school by reason of his religious beliefs, but by reason of his ethnic origins, because his mother was not recognised as Jewish by the Office of the Chief Rabbi.\nFor the new claim based on the Race Directive, Mr Wise submits that the JFS decision establishes that the criterion used by AIHA that an applicant for its properties should be a member of the Orthodox Jewish community involves discrimination on grounds of ethnic origin, and that this holds true for the concept of ethnic origin in the Race Directive itself.\nIn my view, however, this submission cannot be sustained on the facts of this case.\nUnlike in the JFS case, AIHA did not make its selection on the grounds of a persons Jewish matrilineal descent, but on the grounds of whether they engage in Orthodox Jewish religious observance: see paras 37 38 above.\nDiscrimination on grounds of religious belief or religious observance is not prohibited by the Race Directive.\nSince the new claim was introduced so late in the day, there has been no evidence put forward and no examination by the courts below regarding whether persons who engage in Orthodox Jewish religious observance might, by virtue of that, be regarded as part of some wider and differently constituted Mandla Jewish ethnic group according to Lord Frasers guidelines.\nIt is possible that they might, but the question is not a straightforward one.\nEvidence would be required in relation to it, for instance to explore the extent that such persons would be accepted by other Jews (Orthodox or non Orthodox) to be part of their ethnic group or might be perceived as such by non Jews.\nMr Wise was not given permission to introduce such a case.\nA range of legal issues would arise if an attempt were made to present such a case in future.\nThese would include whether the concept of ethnic origin in the Race Directive is the same as in the 1976 Act and, now, the 2010 Act; whether a defence existed under article 5 of the Race Directive which, by contrast with the more limited positive discrimination provision in the Equal Treatment Directive, is in similar wide terms to the positive discrimination provision in the Framework Directive considered in Cresco and discussed above (and, for the reasons given above, it is likely that AIHA would have a good defence under article 5); whether the Race Directive can have horizontal effect in relation to a private body like AIHA (see Cresco, paras 72 73); whether it is possible to interpret provisions of domestic legislation compatibly with the Directive pursuant to the Marleasing interpretive obligation (see Cresco, para 74); and whether article 21 of the CFR might create rights on which a claimant could rely (see Cresco, paras 75 78).\nIt is not appropriate to say anything further about these issues in this judgment.\nIssues (1) and (2): interpretation of section 193(2)(b) and the ambit of article 8\nAs mentioned above, it is common ground that in applying its allocation policy AIHA acts in pursuance of its charitable instrument, so that section 193(1)(a) of the 2010 Act is satisfied, and also that it provides benefits to persons who shared a protected characteristic (ie religion) for the purpose of preventing or compensating for a disadvantage linked to the protected characteristic, in the language of section 193(2)(b).\nThe Court of Appeal held that there is no implied additional requirement in section 193(2)(b) that a charity should have to persuade a court that the measures it takes within section 193(2)(b) are proportionate.\nAlthough it is my view that the appeal should be dismissed for the reasons given above in relation to issues (3) (5), we should also address the interpretation of section 193(2)(b), which was the main ground on which the Court of Appeal dismissed the appellants appeal.\nIn my opinion, this does not require us to reach a concluded view on the ambit of article 8 of the ECHR in the present context, for the purposes of application of article 14.\nThat is because, even if article 14 is applicable, I consider that the Court of Appeal was right to construe section 193(2)(b) in the way it did, as not being dependent on a proportionality assessment to be conducted by the court.\nThere are two reasons for this.\nFor the purposes of analysis, I will make the assumption that AIHAs allocation policy falls within the ambit of article 8 so that article 14 is applicable.\nFirst, I accept Mr Grodzinskis submission that by section 193(1) read with section 193(2)(b), Parliament has itself established a regime which is proportionate and compatible with article 14.\nSecondly, even if that is not the case, I agree with Lewison LJ that it is not possible under section 3(1) of the HRA to read an additional proportionality requirement into section 193(2)(b).\nIn relation to both arguments it is relevant to trace the legislative history.\nCharities have been subject to legal regulation for a very long time.\nIn particular, charitable status is limited to bodies which provide public benefits of specified kinds.\nBy virtue of section 2(1) of the Charities Act, to be charitable a purpose has to fall within section 3(1) of the Act and has to be for the public benefit, as set out in section 4 of the Act.\nCharitable purposes include the prevention or relief of poverty, the advancement of religion and the relief of those in need because of youth, age, ill health, disability, financial hardship or other disadvantage: sub paragraphs (a), (c) and (j) of section 3(1), respectively.\nThe Charity Commission exercises regulatory oversight in relation to the activities of charities, to ensure, among other things, that the public benefit requirement is satisfied: see the discussion in R (Independent Schools Council) v Charity Commission for England and Wales [2011] UKUT 421 (TCC); [2012] Ch 214.\nThe public benefit requirement will not be satisfied if a charitys activities have unduly detrimental wider effects in society: see the Independent Schools Council case, in particular at paras 64 and 105 106.\nThe Sex Discrimination Act 1975 made forms of discrimination on grounds of sex unlawful, but section 43(1) set out an exemption for charities in relation to an act which was done to give effect to a provision in a charitable instrument for conferring benefits on persons of one sex only.\nThe Race Relations Act 1976, which made forms of discrimination on grounds of race unlawful, contained a similar exemption.\nIn 2008, section 43 of the 1975 Act was amended by the Sex Discrimination (Amendment of Legislation) Regulations 2008 (SI 2008\/963) by the addition of subsection (2A), which provided that subsection (1) should not apply to specified types of discrimination unless the conferral of benefits is (a) a proportionate means of achieving a legitimate aim, or (b) for the purpose of preventing or compensating for a disadvantage linked to sex.\nThis was the forerunner of what became section 193(2) of the 2010 Act.\nThe Explanatory Memorandum for the Regulations stated that this provision was introduced to give effect in domestic law to Council Directive 2004\/113\/EC, implementing the principle of equal treatment between men and women in the access to and supply of goods and services (the Gender Directive).\nThe amendment was introduced while consultation on the terms of what became the 2010 Act was in progress.\nRecital (16) to the Gender Directive states: Differences in treatment may be accepted only if they are justified by a legitimate aim.\nA legitimate aim may, for example, be the protection of victims of sex related violence (in cases such as the establishment of single sex shelters), reasons of privacy and decency (in cases such as the provision of accommodation by a person in a part of that persons home), the promotion of gender equality or of the interests of men or women (for example single sex voluntary bodies), the freedom of association (in cases of membership of single sex private clubs), and the organisation of sporting activities (for example single sex sports events).\nAny limitation should nevertheless be appropriate and necessary in accordance with the criteria derived from case law of the Court of Justice of the European Communities.\nIn terms similar to those of article 7 of the Framework Directive and article 5 of the Race Directive, article 6 of the Gender Directive provides: With a view to ensuring full equality in practice between men and women, the principle of equal treatment shall not prevent any member state from maintaining or adopting specific measures to prevent or compensate for disadvantages linked to sex.\nWhile the 2010 Act was a Bill, Parliaments Joint Committee on Human Rights sent a letter to the Government dated 2 June 2009 raising a number of queries about the Bill, including about the clause which became section 193.\nThe Governments response by letter dated 19 June 2009 explained that the exemptions from anti discrimination law for charities were to be tightened up in the new provision in line with the model already adopted in relation to sex discrimination, so that it would no longer be sufficient for them to discriminate if their charitable instrument allowed for this; now a charity would also need to show that it was justified in discriminating.\nThis would be achieved if it could show that such discrimination is objectively justified (ie under section 193(2)(a)) or is intended to prevent or compensate for disadvantage linked to the protected characteristic in question (ie under section 193(2)(b)).\nIt is clear from this that in proposing the provision in section 193(2) the government intended sub paragraphs (a) and (b) to serve as distinct conditions for the operation of the charitable exemption and that it considered that satisfaction of either of them would constitute justification for discrimination which would meet the requirements of EU law under the Race Directive and the Gender Directive.\nUnder the Race Directive (see recital (17) and article 5) and the Gender Directive (see recital (16) and article 6) it is contemplated that positive action to help disadvantaged sections of the population may be taken by bodies created for that purpose.\nIn the English context, these obviously include charities.\nThe general regime for regulation of charities in English law limits charitable status by reference to defined public goods as set out in section 3 of the Charities Act and, by application of the public benefit test in section 4, ensures that the benefits to be provided by a charity are balanced against any detriment from its activities.\nThus, as a result of this regulatory regime, the requirement in section 193(1)(a) of the 2010 Act that the person seeking to benefit from the exemption in section 193 has to act in pursuance of a charitable instrument imposes substantive requirements that the acts in question promote the public interest.\nThis point is emphasised in the guidance on section 193 in the EHRC code of practice, at para 13.35: The public benefit test that all charities must satisfy to gain charitable status may assist, but it will not guarantee that any such restriction meets either of the tests specified in the Act.\nThe Charity Commission for England and Wales and the Scottish Charity Regulator will consider the likely impact of any restriction on beneficiaries in the charitable instrument, and whether such restriction can be justified, in assessing whether the aims of a charity meet the public benefit test.\nThe effect of subsection (2)(b) is to ensure in addition that, in order to be exempt, the provision of benefits is for the purpose of preventing or compensating for a disadvantage linked to the relevant protected characteristic.\nIn the context of general anti discrimination legislation as contained in the 2010 Act, it was abundantly obvious that issues would arise under both EU law and article 14 of the ECHR in relation to activities falling within section 193.\nParliament, acting with the benefit of the explanation from the government referred to above, must be taken to have made the assessment that by this combination of conditions the regime it enacted in the 2010 Act satisfied the requirement of proportionality for the purposes of EU law.\nIt must equally be taken to have considered that the regime satisfied the requirement of proportionality for the purposes of the ECHR, in particular as it arises under article 14.\nThis has the benefit for charities that, where they rely on the section 193(2)(b) limb of the exemption, they do not have to produce a separate proportionality justification of their own if challenged.\nThis means that their resources will not have to be used up in this way in meeting challenges which might be brought against them, and since section 193(2)(b) provides a defence with bright line characteristics it is likely to protect them from challenges being brought which can be seen will not succeed.\nIn this way, this limb of the exemption in section 193, as framed, helps to ensure that the scarce resources of charities are channelled through to those who need them, rather than being diverted to meet costs of administration, legal proceedings and threats of legal proceedings.\nIt is also relevant that this is achieved against the background that it is the states, not charities, responsibility to provide essential welfare benefits for all who need them.\nIt is easier to say that Parliament has struck a fair and proportionate balance between the needs of charities (and, more particularly, those who benefit from their activities) and the general interests of the sections of the public who do not so benefit, where those general interests are met out of state resources where there is pressing need.\nThe margin of appreciation to be afforded to Parliament when it has sought to strike a balance between competing interests varies depending on context.\nWhere, as here, Parliament has had its attention directed to the competing interests and to the need for the regime it enacts to strike a balance which is fair and proportionate and has plainly legislated with a view to satisfying that requirement, the margin of appreciation will tend to be wider.\nA court should accord weight to the judgment made by the democratic legislature on a subject where different views regarding what constitutes a fair balance can reasonably be entertained.\nThe context here is provision of social benefits of various kinds, to be provided by charities out of the scarce resources available to them.\nWhen the state provides social welfare benefits, the margin of appreciation afforded to Parliament is wide.\nIts judgment will be respected in relation to general measures of economic or social strategy unless manifestly without reasonable foundation: see eg Humphreys v Revenue and Customs Comrs [2012] UKSC 18; [2012] 1 WLR 1545, para 19 (Baroness Hale); R (SG) v Secretary of State for Work and Pensions (Child Poverty Action Group and Another intervening) [2015] UKSC 16; [2015] 1 WLR 1449, para 11 (Lord Reed); Gilham v Ministry of Justice [2019] UKSC 44; [2019] 1 WLR 5905, para 34 (Baroness Hale).\nI accept Mr Grodzinskis submission that this is also the relevant margin of appreciation to be applied in the context of the exemption for charities from the general anti discrimination rules in the 2010 Act.\nThe underlying issue, of allocation of scarce resources to meet a range of needs, is similar to that which is relevant in the context of welfare benefits provided by the state.\nAllowing the state a wide margin of appreciation in the latter context recognises the legitimacy of such decisions of social and economic policy being taken by a body which has democratic authority and the responsibility for raising taxes and deciding how they are spent.\nIt is also a matter of social and economic policy for Parliament to decide how best to stimulate private benevolence which will allow charities to supplement state provision of welfare benefits.\nThe degree to which charities are given freedom to pursue objectives which their donors regard as important affects the extent to which donors will provide private resources to supplement provision by the state.\nIf donors are not given reasonable assurance that what they give will reach the persons they intend to benefit, they will not give at all.\nIt was a legitimate policy choice by Parliament to fashion the exemption for charities under the section 193(2)(b) limb of section 193 in the way it did, as a relatively bright line rule which would give that assurance to donors.\nIn my judgment, having regard to the relevant margin of appreciation, the fact that charitable provision supplements basic social welfare provision by the state, the general regulation of charities to ensure they provide public benefits, the desirability of ensuring that the resources of charities are not diverted from being used to meet social needs and the way in which Parliament has carefully and deliberately framed the section 193(2)(b) limb of the exemption to meet the proportionality tests in EU law and under the ECHR, that limb of the exemption satisfies the proportionality requirement across the range of cases in which it applies.\nThere is, therefore, clearly no basis on which it would be appropriate for the court to seek to imply into that provision an additional requirement that proportionality should be demonstrated separately by a charity in every, or any, case falling within it.\nEven if I were wrong in that conclusion, I agree with Lewison LJ (para 53) that it is not possible, as that term is used in section 3(1) of the HRA, to read and give effect to section 193(2)(b) by implying into it an additional proportionality requirement.\nTo do so would make section 193(2)(b) redundant, since then a charity could always in a case covered by that provision rely on the section 193(2)(a) limb of the exemption.\nThe point made by Lewison LJ is strongly reinforced by consideration of the legislative history, set out above.\nIt is clear from the terms of section 193(2) and from that history that Parliament intended the two limbs to be separate and distinct, and that there should be no additional proportionality requirement in section 193(2)(b).\nTo import such a requirement would undermine a fundamental feature of that provision and would go against the grain of what Parliament intended; therefore, section 3(1) of the HRA does not allow section 193(2)(b) to be read and given effect in this way: see Ghaidan v Godin Mendoza [2004] UKHL 30; [2004] 2 AC 557, in particular at para 33 (Lord Nicholls of Birkenhead) and paras 113 114 and 121 124 (Lord Rodger of Earlsferry).\nThis point is reinforced by the fact that where Parliament intended a proportionality requirement to apply in any provision of the 2010 Act it clearly said so: see also the express provisions setting out a proportionality requirement in sections 13(2), 19(2), 158(2) and 159.\nThe omission of such a requirement from section 193(2)(b) was a deliberate choice by Parliament which constituted a fundamental feature of the legislation.\nThe same reasoning prevents the court from interpreting section 193(2)(b) as including a proportionality requirement by reason of the Marleasing interpretive obligation in EU law.\nAs with section 3(1) of the HRA, that obligation only requires and permits a sympathetic construction of national legislation to be adopted so as to produce compatibility with EU law when it is possible for the national legislation to be interpreted in that way.\nThe analogy with section 3(1) of the HRA is a close one and the boundaries of the interpretive obligation are essentially the same: see Ghaidan v Godin Mendoza, paras 45 (Lord Steyn), 122 (Lord Rodger) and 145 (Baroness Hale).\nIn any event, to the extent that Mr Wise sought to rely on the Race Directive and the Marleasing interpretive obligation, his submission fails for the reasons alluded to by Lewison LJ at para 54.\nNo right of the appellant was engaged under the Race Directive, as I have also concluded under issue (5) above.\nIt is true that, as Lewison LJ noted, other people in other circumstances might have rights under that Directive which are affected by a charitys actions taken in reliance on section 193(2)(b); but that does not assist the appellant in her case.\nThe proper approach to construction is that legislation should be read and given effect in a particular case according to its ordinary meaning, unless the person who is affected by it can show that this would be incompatible with their Convention rights under the HRA or some provision of EU law as applied to their case.\nOnly then do the special interpretive obligations under section 3(1) of the HRA or under the Marleasing principle come into play to authorise the court to search for a conforming interpretation at variance with the ordinary meaning of the legislation.\nThis means that the same legislative provision might be given a different interpretation in different cases, depending on whether Convention rights or EU law are applicable in the case or not.\nAlthough at first glance this might seem odd, in fact it is not.\nIt simply reflects the fact that in the one case circumstances are such that an additional interpretive obligation has to be taken into account, but in the other case no such obligation is in play: see R (Hurst) v London Northern District Coroner [2007] UKHL 13; [2007] 2 AC 189, para 1 (Lord Bingham of Cornhill), paras 9 and 12 15 (Lord Rodger) and para 52 (Lord Brown of Eaton under Heywood); and Gingi v Secretary of State for Work and Pensions [2001] EWCA Civ 1685; [2002] 1 CMLR 20, paras 41 47 per Arden LJ (as she then was).\nIf the position were otherwise, Convention rights and rights under EU law would be given disproportionate effect in domestic law, and statutory interpretation would become an exercise in the imaginative construction of theoretical cases in which such rights might be in issue in order to change the interpretation of legislation in cases where they are not.\nLike Lewison LJ, I have no hesitation in rejecting Mr Wises further argument that it is necessary to imply a proportionality requirement into section 193(2)(b) to avoid absurdity.\nAs explained above, there is nothing absurd about the way in which Parliament has framed the section 193(2)(b) limb of the exemption for charities.\nHaving reached the conclusion that the interpretation of section 193(2)(b) is clear whether or not article 14 of the ECHR is applicable, it is not necessary to reach a view on issue (2) (whether the current circumstances fall within the ambit of article 8).\nIt has often been observed that the question of what falls within the ambit of article 8 and other Convention rights so as to bring article 14 into operation is a difficult and rather opaque area: see the review of the authorities in R (Joint Council for the Welfare of Immigrants) v Secretary of State for the Home Department [2020] EWCA Civ 542, paras 97 111 (Hickinbottom LJ).\nI think this question should be left to be decided in another case where it may be determinative.\nWe were not taken to all the relevant authorities and there was little debate before us on this issue, so I do not think we should venture to try to make any definitive statement about it.\nHowever, this should not be taken as endorsement of the conclusion of the Court of Appeal that the present case falls outside the ambit of article 8.\nA number of factors might be relevant in relation to that issue.\nThe fact that the appellant and her children were already housed, on which the Court of Appeal placed weight, is one.\nBut I have reservations whether that factor is necessarily determinative in circumstances where the adequacy of the living accommodation available to them as a family, as compared with others, is in issue.\nOn the other hand, it is also potentially relevant that AIHA is not part of the state and that no case has been made out that it is a public authority within the meaning of section 6 of the HRA, so that what is in issue is the ambit of article 8 so far as concerns positive obligations of the state under that provision to intervene in relationships between private persons.\nIt might be argued that this makes the connection with article 8 more tenuous, and that such a tenuous connection is not sufficient.\nI think that we should leave the point open in this case.\nConclusion\nFor the reasons given above, I would dismiss the appeal.\nIn summary, the judgment of the Divisional Court on the issue of proportionality, in so far as it is relevant to the statutory defences in sections 158 and 193 of the 2010 Act, cannot be faulted.\nAccordingly, those defences have rightly been found to apply in relation to AIHA.\nFurther and in any event, the Court of Appeal was right to conclude that, on its proper interpretation, the statutory defence based on section 193(2)(b) of the 2010 Act does not include an implied requirement of proportionality.\nAccordingly, the Court of Appeal was right to conclude that AIHA benefited from that defence, whatever the position on the issue of proportionality.\nThe appellants new claim based on the Race Directive fails.\nLADY ARDEN:\nThe Court of Appeal in this case was careful to hold that in relation to the issue as to the proportionality of AIHAs allocation policy the Divisional Court was entitled to make its evaluation of the relevant factors and that there was no basis on which its evaluation could be set aside (per Lewison LJ at paras 63 to 68) for the reasons which Lewison LJ gave.\nLord Sales, giving the first judgment in this case, endorses that conclusion, as do I.\nLord Sales then sets out the reasons why he agrees with the Divisional Court at paras 76 to 88.\nWhat falls from my Lord is illuminating and valuable, but it does not in my judgment diminish the importance of the point made by Lewison LJ that the evaluation made by the Divisional Court was one which they were entitled to make and could not be set aside on appeal.\nThe point made by Lewison LJ is not changed by the fact that the appellate court might have reached some other conclusion, nor yet by the fact that the appellate court would have reached the same conclusion.\nThe function of the appellate court is simply one of review.\nIt follows that it is not necessary for this court to express its own view, nor can its view alter the conclusion arrived at by the Divisional Court.\nIndeed, I would at least in the generality of cases, agree with Lewison LJ at para 66 of his judgment that if the court at first instance makes no error and there is no flaw in its judgment, the appellate court should not make its own assessment of proportionality.\nThere may be exceptional circumstances when it is necessary to do so but for my part it has not been suggested that this case was one of them.\nOn that basis, I agree with the judgment of Lord Sales.\n","output":"This appeal is about the application of anti discrimination law to charities, where they are established to provide benefits (in this case, social housing) for particular groups which are the subject of their charitable objectives.\nThe relevant anti discrimination laws are contained in the Equality Act 2010 and Council Directive 2000\/43\/EC of 29 June 2000 (the Race Directive).\nThe charitable objective of Agudas Israel Housing Association Ltd (the Housing Charity) is to make social housing available primarily for members of the Orthodox Jewish community in Hackney, in particular the Haredi community.\nIt makes properties available via an online portal operated by Hackney London Borough Council (the Council), which is open to applicants for social housing whom the Council has identified as having a priority need.\nThe Council cannot compel the Housing Charity to take tenants who do not fall within scope of its charitable objective and its selection criteria.\nThis, combined with a significant surplus of need for social housing on the part of the Orthodox Jewish community, means that in practice the Council only nominates and the Housing Charity only accepts members of that community for the Housing Charitys properties.\nThe social housing provided by the Housing Charity makes up less than 1% of the social housing available in Hackney.\nThe principal appellant (the appellant) is a single mother with four small children, two of whom have autism.\nThe Council identified the appellant as having a priority need for social housing in a larger property, and she has now been housed by the Council in such a property.\nHowever, she had to wait longer to be allocated suitable housing as she is not a member of the Orthodox Jewish community and so larger properties owned by the Housing Charity which became vacant were not available to her.\nShe issued proceedings against the Council and the Housing Charity, alleging that she had thereby suffered unlawful direct discrimination on grounds of race or religion contrary to the Equality Act 2010.\nThe Divisional Court dismissed the claim and the Court of Appeal dismissed her appeal.\nThe appellant now appeals to this Court.\nShe was given permission to add to her claim based on the Equality Act 2010 a new claim that the allocation policy of the Housing Charity contravened the Race Directive by unlawfully discriminating against her on the grounds of race or ethnic origin.\nThe appeal turns on whether the Housing Charity acted unlawfully or not in restricting access to its stock of social housing.\nThe Supreme Court unanimously dismisses the appeal.\nLord Sales gives the main judgment (with which Lord Reed, Lord Kerr and Lord Kitchen agree).\nLady Arden gives a concurring judgment.\nEquality Act 2010 The Equality Act 2010 makes it unlawful to discriminate directly against any person on the basis of certain characteristics, known as protected characteristics.\nThese include race and religion or belief [17] [18].\nHowever, the Act sets out exemptions where certain actions will not be considered as unlawful direct discrimination.\nSection 158 provides one such exemption where positive action addresses in a proportionate manner needs or disadvantages connected to a protected characteristic [19].\nSection 193 sets out two further exemptions.\nSection 193(2)(a) permits charities to restrict benefits to those with a protected characteristic if that restriction is a proportionate means of achieving a legitimate aim and section 193(2)(b) permits charities to restrict benefits to those who share a protected characteristic if the restriction seeks to prevent or compensate for a disadvantage linked to the characteristic [21].\nLord Sales upholds the lower courts findings that the Housing Charitys allocation policy is proportionate and lawful under sections 158 and 193(2)(a) of the Equality Act 2010.\nA proportionality assessment first requires the identification of a legitimate aim and, secondly, consideration of whether the measures taken to promote that aim are proportionate, having regard to other interests at stake [65].\nThe dispute in this case centres on what constitutes a legitimate aim [60] [72].\nAs found by the Divisional Court and the Court of Appeal, the legitimate aims here include the minimisation of disadvantages which are connected to the Haredi communitys religious identity and counteracting discrimination which they suffer, including in the private housing market, and the fulfilment of relevant needs which are particular to that community [66].\nThe Housing Charity was entitled to adopt a clear and strict rule about who could and could not apply for its social housing, which meant that it was made available just for members of the Orthodox Jewish community, to ensure that its charitable activities were focused on that community, so that its activities did in fact fulfil its charitable objective to alleviate the problems of that community [76] [87].\nLord Sales holds that the Divisional Court correctly considered the Housing Charitys allocation policy in the light of the applicable legal framework and, accordingly, was entitled to find it to be proportionate and lawful under these statutory exemptions.\nLord Sales makes his own assessment of proportionality [76] [87], which is in agreement with that of the Divisional Court [73].\nLord Sales holds that, in any event, the Court of Appeal was right to say that the Divisional Courts finding of proportionality could only be set aside if it had misdirected itself or reached a decision which was wrong.\nApplying this approach, he holds that the Divisional Court had been entitled to make this finding, with the result that its decision should be upheld on appeal [74] [75].\nIn her concurring judgment, Lady Arden emphasises that an appellate court should generally not make its own assessment of proportionality in such circumstances [120], and with this caveat she agrees with the judgment of Lord Sales [121].\nAs regards the exemption in section 193(2)(b), the Court dismisses the argument for the appellants that the provision is subject to an implied proportionality requirement.\nThere is no sound basis on which such a requirement could be read into the provision [97].\nFirst, even on the assumption that the case is within the ambit of Article 8 of the European Convention on Human Rights (the ECHR), on the right to respect for private and family life, so that Article 14 of the ECHR (non discrimination) is applicable, any proportionality requirement inherent in that provision is satisfied by the structure of section 193 itself; Parliament was entitled to create a clear rule applicable to charities in the interests of conserving their resources for use in fulfilling their charitable objectives, having regard, among other things, to the regulation of charities under the Charities Act 2011 to ensure they operate in the public interest and the wide margin of appreciation accorded to Parliament, as the body with democratic authority, in setting social and economic policy, including encouragement for giving to charity [97] [110].\nSecondly, on the same assumption that the case falls within the ambit of Article 8 of the ECHR, even if the structure of section 193 itself did not satisfy any relevant proportionality standard, the drafting of the provision and the policy underlying it are so clear that it would not be possible to read into it an additional proportionality requirement [111] [115].\nIn the circumstances, therefore, it is not necessary to resolve the question whether the case falls within the ambit of Article 8 of the ECHR and the Court prefers to leave that issue open [96, 116].\nSection 193(2)(b) should be applied according to its express terms.\nIt is common ground that, on this basis, the requirements of section 193(2)(b) are satisfied in this case [50].\nEven if a proportionality\nrequirement could be read into the provision, it follows from the decision regarding proportionality in relation to section 158 and section 193(2)(a) that it would have been satisfied [55, 88].\nThe Race Directive The Race Directive provides that discrimination on grounds of race or ethnic origin must be unlawful, particularly in relation to housing [89].\nThe Court finds that the Housing Charity is not in contravention of this directive for the simple reason that its allocation policy differentiates on the basis of religious observance and not race or ethnic origin [89] [90].\n","id":13}
{"input":"This appeal concerns the supposed principle that reflective loss cannot be recovered.\nBefore 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.\nIntroduction\nIt is not uncommon for two persons, A and B, to suffer loss as a result of the conduct of a third person, C.\nIf 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.\nIf 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.\nIf 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.\nHowever, 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.\nThe 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.\nThe 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.\nThe 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.\nSubject to this, however, either of the two persons is entitled to enforce his right independently of the other.\nThe principle that double recovery should be avoided does not prevent a claimant from bringing proceedings for the recovery of his loss.\nBut the court will have to consider how to avoid double recovery in situations where the issue is properly before it.\nProcedurally, that may occur in a number of ways.\nFor 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).\nThe 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.\nThere 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.\nIn 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.\nThe 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.\nThat was the approach adopted, for example, in the decision cited by Brandon J, The Liverpool (No 2) [1963] P 64.\nIn 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.\nThe 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.\nThe 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.\nIt 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.\nIn 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.\nA 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.\nThere 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).\nThe most suitable approach to adopt in a particular case will depend upon its circumstances.\nThis 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.\nThe 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.\nThe 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.\nNor does it usually affect the rights of other persons, legal or natural, with concurrent claims.\nThere is, however, one highly specific exception to that general rule.\nIt 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.\nAs 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.\nThe 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.\nIn 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.\nThat 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.\nOn 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.\nPutting 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.\nIn 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.\nThe 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.\nThis 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.\nIn 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.\nIn 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.\nIt 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.\nThe present appeal\nThe 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.\nIn 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.\nOne 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.\nThe 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.\nOn 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.\nThe 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.\nThe facts\nIt 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.\nOn that basis, the material facts which, it should be made clear, are disputed by Mr Sevilleja can be summarised as follows.\nMr 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.\nMarex brought proceedings against the Companies in the Commercial Court for amounts due to it under contracts which it had entered into with them.\nFollowing a trial before Field J in April 2013, Marex obtained judgment against the Companies for more than US$5.5m.\nIt was also awarded costs which were later agreed at 1.65m.\nField 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.\nOver 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.\nBy the end of August 2013, the Companies disclosed assets of US$4,329.48.\nThe object of the transfers was to ensure that Marex did not receive payment of the amounts owed by the Companies.\nIn procuring the transfers, Mr Sevilleja acted in breach of duties owed to the Companies.\nThe 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.\nMarex was the only non insider creditor.\nAccording 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.\nThe liquidation process has effectively been on hold.\nThe 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.\nNor has he issued any proceedings against Mr Sevilleja.\nMarex 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.\nIt 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).\nIt 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).\nMr 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).\nIn 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.\nThe 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.\nMr Sevilleja concedes that those costs fall outside the scope of the reflective loss principle.\nThe issues in the appeal are agreed by the parties to be the following: 1.\nWhether 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.\nWhether 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.\nPrudential Assurance v Newman Industries (No 2)\nAlthough 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.\nDuring 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.\nIn 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.\nThe issue appears to have arisen for the first time in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2).\nThe 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.\nPrudential, 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.\nIn 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.\nThe court devoted most of its judgment to the derivative action, and dealt with the personal action relatively briefly.\nIt 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.\nIt 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.\nIt 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.\nNevertheless, 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).\nThe court disallowed Prudentials claim on the ground that it had not suffered any personal loss.\nIt 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.\nHe 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.\nAs 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.\nIt was not concerned with other losses suffered by a shareholder, or with situations where the company had not suffered any actionable loss.\nThe court explained its reasoning as follows, at p 223: The shareholder does not suffer any personal loss.\nHis only loss is through the company, in the diminution in the value of the net assets of the company .\nThe plaintiffs shares are merely a right of participation in the company on the terms of the articles of association.\nThe shares themselves, his right of participation, are not directly affected by the wrongdoing.\nThe plaintiff still holds all the shares as his own absolutely unencumbered property.\nThat reasoning requires elaboration.\nIt 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.\nIt is not immediately obvious what it means to say that his only loss is through the company.\nIt is, however, possible to explain the courts decision, particularly in the light of later passages in the judgment.\nAs 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.\nIt is for that reason that it does not give rise to an independent claim to damages on the part of the shareholders.\nThe 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.\nThe company has an issued share capital of 100 shares, of which 99 are held by the plaintiff.\nThe plaintiff holds the key of the cash box.\nThe defendant by a fraudulent misrepresentation persuades the plaintiff to part with the key.\nThe defendant then robs the company of all its money.\nThe 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.\nThere are two wrongs, the deceit practised on the plaintiff and the robbery of the company.\nBut 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.\nThe cash box example has been criticised for its artificiality.\nCertainly, 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.\nBut the point being made has a rationale in real life as well as in the simplified example.\nThe starting point is the nature of a share, and the attributes which render it valuable.\nA share is not a proportionate part of a companys assets: Short v Treasury Comrs.\nNor 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.\nThe 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.\nWhere 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).\nSince 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.\nThat 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.\nIn 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.\nIn 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.\nIf 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.\nIf 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.\nA 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.\nConsidering, then, the situation where a company suffers actionable loss as the result of wrongdoing, the company then acquires a right of action.\nIf 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.\nThe 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.\nIn 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.\nFor 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.\nMost 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.\nAs 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.\nThe avoidance of double recovery cannot, therefore, be sufficient in itself to justify the rule in Prudential.\nThat conclusion is also supported by another point.\nWhat 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.\nEven 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.\nBut 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?\nIn Prudential, the court answered that question in the negative, stating at p\n224 that the rule in Foss v Harbottle would be subverted if the shareholder could pursue a personal action.\nThe rule, as stated in Edwards v Halliwell [1950] 2 All ER 1064 and restated in Prudential at pp 210 211, has two aspects.\nThe 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.\nAs 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.\nThe 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.\nThis 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.\nWhen 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.\nAs 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.\nAccordingly, 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.\nThese normally provide for the ultimate control of the companys affairs by a majority of the shareholders voting at a general meeting.\nA 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.\nAs the court observed in Prudential, to allow the shareholder in addition to pursue a personal action would subvert the rule in Foss v Harbottle.\nThis is not merely a theoretical concern.\nExamples of the use of personal actions, post Johnson, to circumvent the rule in Foss v Harbottle are discussed in paras 52 53 below.\nThe 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.\nThat 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.\nOne 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.\nBut 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.\nIt 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.\nIn addition to arguments based on Foss v Harbottle, there are also pragmatic\nadvantages 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.\nAs 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.\nThose complexities should not be underestimated.\nEven 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.\nBut the existence of a concurrent claim by the company would add another dimension to the difficulties.\nIt 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.\nIt would also be necessary to consider the question of double recovery, and how it should be addressed both procedurally and substantively.\nThose 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.\nThey 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.\nIn 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.\nWhere there is no recoverable loss, it follows that the shareholder cannot bring a claim, whether or not the companys cause of action is pursued.\nThe 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.\nJohnson v Gore Wood & Co\nThe decision in Prudential was considered by the House of Lords in Johnson v Gore Wood & Co [2002] 2 AC 1.\nThe case concerned alleged negligence on the part of solicitors acting for a private company, which caused it to suffer losses.\nThe 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.\nMr 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.\nThe claim was struck out as an abuse of process.\nMr 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.\nIt is only the latter aspect of the case which needs to be considered.\nLord 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.\nNo 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.\nA 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.\nSo 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.\nThis 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.\nI 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.\nI 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.\nIn Lord Binghams proposition (1), the first sentence is a statement of the rule in Foss v Harbottle.\nThe 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.\nThe 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.\nAs 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.\nLord 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.\nIn 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.\nHe suffered injuries in a road accident for which the defendant was responsible.\nHe 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.\nHe recovered damages for his loss of earnings.\nThe company had no cause of action against the negligent driver.\nThis was not, therefore, a case concerned with concurrent claims.\nThe 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).\nHe, not the company, had been injured in the road accident.\nHe, not the company, was entitled to recover damages for his loss.\nIn 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).\nWhen 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.\nThat was another case where the wrong was committed against the shareholder, not the company.\nSince 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.\nSimilar 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.\nAs 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.\nBut 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.\nLord 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.\nThis proposition also makes it clear that the rule renders certain heads of loss irrecoverable, rather than barring a cause of action as such.\nLord 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.\nOn 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.\nThe second sentence reflects the fact that deciding whether a loss falls within the scope of the rule may call for the exercise of judgement.\nBefore 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.\nLord Millett began by discussing the relationship between the companys assets and the value of its shares.\nA 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.\nBut a share is not a proportionate part of the companys net assets: see Macaura.\nThe 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.\nThe rule in Prudential is not premised on any necessary relationship between a companys assets and the value of its shares (or its distributions).\nApproaching 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.\nNeither 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.\nAs 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.\nAs 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.\nIn addition, as was explained at para 38 above, there are pragmatic advantages in adopting a clear rule.\nHowever, 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.\nOne problem with reasoning based on the avoidance of double recovery is that the principle is one of the law of damages.\nIt 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.\nApplying 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.\nThis 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.\nFor 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.\nA 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.\nIt 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.\nA further example is Xie Zhikun v Xio GP Ltd, Cayman Islands Court of Appeal, unreported, 14 November 2018.\nSummarising 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.\nSir 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.\nThose 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.\nThe exception to that rule is the derivative action.\nWhether a shareholder can bring such an action depends on whether the relevant conditions are satisfied.\nThe 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.\nAnother 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.\nIn addressing this point, Lord Millett relied on a number of arguments, none of which, with respect, appears to me to be persuasive.\nThe first was based on causation.\nLord 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.\nThe same reasoning, he added, applies if the company settles for less than it might have done.\nThe 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.\nIt 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.\nThat 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.\nAs Lord Hutton observed in Johnson at p 54, causation does not provide a satisfactory explanation.\nOne 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.\nIn 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.\nFurthermore, 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.\nIn addition to the causation argument, Lord Millett put forward at p 66 two\nother reasons, which he described as policy considerations, for excluding the shareholders claim where the company had settled its claim.\nThe first was that the personal interests of the directors might otherwise conflict with their fiduciary duty to the company.\nPresumably 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.\nThis 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.\nNor 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.\nThe 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.\nThis point is addressed by the rule in Prudential, consistently with the underlying rule in Foss v Harbottle, as was explained in para 37 above.\nThe 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.\nAs 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.\nThat 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.\nThis is discussed at paras 62 63 and 84 85 below.\nLord 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.\nAll transactions or putative transactions between the company and its shareholders must be disregarded.\nPayment to the one diminishes the assets of the other.\nIn 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.\nHowever, 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.\nThat 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.\nThat issue was not discussed.\nMillett 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.\nHis loss is still an indirect and reflective loss which is included in the companys claim.\nThis is not altogether easy to follow.\nLord 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.\nAs Lord Millett had indicated, a company may be regarded in economic terms as the alter ego of its shareholders.\nIt 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.\nIf 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.\nFor 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.\nIf the creditor sues the wrongdoer for breach of contract, he is entitled to damages.\nThe 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.\nIn 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.\nWhere 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.\nTurning to the remaining speeches in Johnson, Lord Goff of Chieveley agreed with Lord Milletts analysis.\nLord 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.\nHe also concurred in the order proposed by Lord Bingham.\nOn 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.\nLord Hutton also emphasised those considerations (at p 54).\nHe 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.\nThe decision on the facts of Johnson is also important.\nThe House of Lords concluded that two of the heads of loss should be struck out.\nThe first of these was a claim for the fall in the value of Mr Johnsons shareholding in the company.\nIts being struck out followed from Lord Binghams proposition (1).\nThe second was a claim for loss in respect of the value of a pension policy set up by the company for Mr Johnsons benefit.\nSince 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.\nMr 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.\nIt 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.\nThat aspect of his claim was not, therefore, brought as a creditor of the company.\nIt 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.\nLord 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.\nHe 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.\nThe other members of the House agreed.\nThere 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.\nLord 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.\nHis conclusion that this head of loss should be struck out was consistent with the application of that proposition.\nIn summary, Johnson gives authoritative support to the decision in\nPrudential 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.\nLord Binghams speech is consistent with the reasoning in Prudential.\nOn 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.\nLater cases\nJohnson 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.\nOne 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.\nIn Giles v Rhind [2003] Ch 618 the Court of Appeal decided that such\ncircumstances existed.\nThe claimant was a former company director who was also a shareholder in the company.\nHe 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.\nThe 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.\nThe terms on which the action was discontinued precluded the company from bringing any further proceedings in relation to its claim.\nThe claimant sought to recover for a variety of losses, including the loss of the value of his shares.\nThe Court of Appeal allowed the claim to proceed to trial.\nIt 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.\nIt concluded that the reflective loss principle, in so far as it was relevant, did not apply in those circumstances.\nOne 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.\nThat conclusion does not depend on whether the company is financially able to bring proceedings or not.\nIf 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.\nThe 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.\nThe solution which company law provides, in a situation of that kind, is the derivative action.\nGardner v Parker\nA question left in doubt by Lord Milletts speech in Johnson was how widely the bar on the recovery of reflective loss applied.\nThat issue came before the Court of Appeal in Gardner v Parker [2004] EWCA Civ 781; [2004] 2 BCLC 554.\nThe 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.\nHe 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.\nIn 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.\nThe 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.\nProceedings 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.\nUnder 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).\nThe Court of Appeal considered three questions.\nThe 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.\nThe court held that it did, following its earlier decision in Shaker v Al Bedrawi [2003] Ch 350.\nThat aspect of the decision is not challenged in the present appeal.\nThe 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.\nThe court held that it should not.\nAs I have explained, I would hold that no such exception exists.\nThe 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.\nThe 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.\nNeuberger 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.\nOn 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.\nThe claim brought as a creditor was therefore dismissed.\nTaking 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.\nAs 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.\nIt therefore fell within the scope of the reasoning in Prudential, and Lord Binghams proposition (1).\nThe claim brought by the creditor shareholder in Gardner v Parker did not fall within the scope of that reasoning, or Lord Binghams proposition.\nIt should not have been barred as reflective loss.\nThe 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.\nThe cases since Gardner v Parker have followed the approach adopted in that case.\nThe 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.\nSo 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.\nSir Bernard added at para 96 that a number of distinguished judges have commented on the uncertainties and difficulties of the reflective loss doctrine.\nProfessor 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.\nThe 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.\nIt 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.\nThe extension of the principle to such cases has the potential to have a significant impact on the law and on commercial life.\nThe 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.\nAs the scope of the principle has expanded, so have the volume of litigation and the level of uncertainty.\nOther jurisdictions\nAlmost 40 years have passed since Prudential was decided.\nThe 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.\nWithout 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).\nSummary\nSummarising 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.\nIn 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.\nIt is only the company which has a cause of action in respect of its loss: Foss v Harbottle.\nHowever, 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.\nIts shareholders may therefore claim to have suffered a loss as a consequence of the companys loss.\nDepending on the circumstances, the companys recovery of its loss may have the effect of restoring the value of the shares.\nIn 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.\nThere may, however, be circumstances where the companys right of action is not sufficient to ensure that the value of the shares is fully replenished.\nOne 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.\nAnother 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.\nBut 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.\nIf 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.\nAs 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.\nThe 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).\nThe 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.\nAs 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.\nThe position is different in cases of the second kind.\nOne can take as an example cases where claims are brought in respect of loss suffered in the capacity of a creditor of the company.\nThe arguments which arise in the case of a shareholder have no application.\nThere is no analogous relationship between a creditor and the company.\nThere 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.\nThe 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.\nWhere 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.\nEven 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.\nIn an insolvency, the shareholders will recover only a pro rata share of the companys surplus assets, if any.\nThe value of their shares will reflect the value of that interest.\nThe 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).\nMost 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.\nThe potential concern that arises in relation to claims brought by creditors is not, therefore, the rule in Foss v Harbottle.\nOn 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.\nIn 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.\nWhere the risk of double recovery arises, how it should be avoided will depend on the circumstances.\nIt should be borne in mind that the avoidance of double recovery does not entail that the companys claim must be given priority.\nNor, 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.\nThat principle requires that, in a winding up, a companys assets must be distributed rateably among its ordinary creditors.\nThe 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).\nBut 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.\nIn 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.\nIn 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.\nIt is also necessary to consider whether double recovery may properly be\navoided by other means than the prioritising of one claim over the other, such as those mentioned in paras 5 7 above.\nThe 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.\nThat question has not, however, been discussed in the present proceedings, and I express no view upon it.\nI would therefore reaffirm the approach adopted in Prudential and by Lord\nBingham 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.\nIt follows that Giles v Rhind, Perry v Day and Gardner v Parker were wrongly decided.\nThe 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.\nOther claims, whether by shareholders or anyone else, should be dealt with in the ordinary way.\nThe present case\nIn the light of the foregoing discussion, the present case can be addressed relatively briefly.\nAs explained earlier, Marex obtained judgment against the Companies for US$5.5m.\nFollowing the circulation of the judgment in draft, Mr Sevilleja is alleged to have stripped the Companies of their assets, rendering them insolvent.\nThat 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.\nThree issues arose before the Court of Appeal.\nThe first was whether the reflective loss principle applied to creditors as well as shareholders.\nKnowles J had held that it did not.\nNo 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.\nThe Court of Appeal disagreed.\nIn 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.\nHowever, he correctly noted that the scope of the rule had been expanded in Gardner v Parker, following the approach of Lord Millett in Johnson.\nThe second issue was whether the Giles v Rhind exception applied.\nThe 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.\nThe third issue was whether the reflective loss doctrine applied to intentional torts.\nThe court held that it did.\nIt 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.\nThe appeal concerns only the first and second issues.\nFor the reasons I have explained, the rule in Prudential has no application to the present case, since it does not concern a shareholder.\nThat disposes of the first issue.\nIt also disposes of the second, since no question arises of a possible exception.\nIn any event, as I have explained, there is no Giles v Rhind exception.\nIt follows that Marex should be permitted to pursue the entirety of its claim.\nThe court has not been addressed on the issue of double recovery, in so far as it might arise in relation to Marexs claim.\nThat 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.\nIf 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.\nConclusion\nFor the foregoing reasons, I would allow the appeal.\nLORD HODGE: (agreeing with Lord Reed)\nI agree for the reasons given by Lord Reed that this appeal should be allowed.\nThere 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.\nBut 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.\nIn 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.\nIn 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.\nThe 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).\nIn 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.\nWhen 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.\nIt 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.\nThat 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.\nHe 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)\nThis 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.\nWhen 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.\nThe 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.\nBut 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).\nI 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.\nThat is the full extent of the principle of reflective loss which the Prudential case established.\nIt 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.\nAs 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.\nIn 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.\nInvestment 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.\nAs 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.\nThe 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.\nA 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).\nA 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.\nIt 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.\nA 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.\nA share confers rights in a company as well as rights against a company.\nThe 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.\nBut as the Short v Treasury Comrs case has shown, they are not part owners of the undertaking.\nInvestment in a limited liability company through a shareholding often involves the separation of management of the company from the ownership of its shares.\nThis 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.\nInvestment in a company by means of a shareholding can also bring disadvantages.\nA 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.\nThe 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.\nA 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.\nFurther, 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.\nIn 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).\nThe 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.\nAgainst 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.\nIt excludes the possibility of double recovery.\nIt 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.\nIt 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.\nIt maintains the rights of the majority of the shareholders, as the Court of Appeal stated in Prudential at p 224.\nAnd 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.\nIt 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.\nBut the creation of a bright line legal rule, as the Court of Appeal did in the Prudential case, is principled.\nThat 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.\nWe should not depart from it now.\nLORD SALES: (with whom Lady Hale and Lord Kitchin agree)\nIntroduction\nThe facts in this case are relatively simple.\nThe legal issues are more complex.\nBy 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.\nThe judge found that, subject to the issue of reflected loss, these claims are arguable and suitable for service out of the jurisdiction.\nThere has been no appeal to challenge this aspect of the judges conclusions.\nThis 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.\nThe 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).\nHe 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).\nThe judge did not accept this argument.\nMr Sevilleja appealed to the Court of Appeal to challenge this part of the judges reasoning.\nMarex 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.\nIn 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.\nThe Court of Appeal allowed Mr Sevillejas appeal and rejected Marexs submission based on Giles v Rhind.\nMarex 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.\nIn 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.\nThe 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.\nHowever, 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.\nIt is therefore necessary to examine whether the reasoning in Prudential, a shareholder case, can be sustained as a matter of principle.\nIt 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.\nThis 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.\nThe APP Group placed material before us which argued that the law had made a wrong turn in the Prudential case.\nI have come to the same conclusion as Lord Reed and the majority that Marexs appeal should be allowed.\nBut my reasoning differs from theirs.\nIt may be helpful if I give a brief outline of where the differences lie.\nLord 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.\nOn 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).\nLord 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.\nSince 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.\nIt 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.\nBy 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.\nIt did not purport to do so.\nRather, the court set out reasoning why it thought the shareholder in such a case in fact suffered no loss.\nBut as I explain below, that reasoning cannot be supported.\nThere clearly are some cases where the shareholder does suffer a loss which is different from the loss suffered by the company.\nIn 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.\nIf 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.\nThis 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.\nThat 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.\nI do not read Lord Binghams speech as discounting the relevance of this factor in a shareholder case.\nThe 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.\nSome aspects of the idea are valid, but some are not.\nIt 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.\nThe reflective loss principle and other principles\nIn 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.\nThe 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.\nIn 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.\nThat requires consideration of principles of law which long predate 1981, when the judgment in Prudential was handed down.\nIn 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.\nBefore turning to examine the authorities, it is relevant to have in mind some very basic points.\nA company is a legal person distinct from its shareholders, which has its own assets which are distinct from theirs.\nA share in a company is an item of property owned by the shareholder, which is distinct from the assets owned by the company.\nTypically, 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.\nThere is no simple correspondence between the value of a 1% shareholding and 1% of the net assets of the company.\nThis is true both in respect of a company whose shares are publicly traded and in respect of a small private company.\nIn 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.\nThe 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.\nI expand on this below.\nA company which is wronged acquires its own cause of action in respect of that wrong.\nThat cause of action is a chose in action which is the property of the company.\nWhat 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.\nThat 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.\nLitigation is an expensive enterprise, especially if lost, and can have negative consequences on trading relationships and business reputation.\nIt 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.\nA person may act in ways such that several people acquire causes of action against him.\nSometimes, 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.\nThe 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.\nEach may seek to sue and execute any judgment he obtains without regard to the impact that may have on the rights of others.\nThat is, of course, subject to any obligation a claimant may have assumed in relation to those others.\nBut 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.\nFor 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.\nSimilarly, 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.\nThe 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.\nIf 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.\nThe 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.\nThere 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.\nAs 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.\nArising 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).\nThese 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.\nSuch 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.\nA 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.\nA 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.\nThere 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).\nIn 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.\nA defendant may owe obligations to the shareholder owner of a company which are similar to those owed to the company itself.\nThis 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.\nI discuss this case below.\nThe Court of Appeal declined to rule out the parents claim on the basis of the reflective loss principle.\nIf 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.\nEach of them would have a cause of action.\nThe 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).\nThe 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).\nIt 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.\nIn 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.\nThat would be an asset of the subsidiary to be set against its losses.\nDepending 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.\nSuppose 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.\nThat would in no way remove the parents cause of action, assuming the parent had sued within the limitation period.\nThe 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.\nSubject 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.\nIn 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.\nJudges have talked about loss suffered by a shareholder in his personal capacity which reflects the loss suffered by a company.\nThis is a rather deceptive word.\nWhere 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.\nBut the loss suffered by the shareholder is not the same as the loss suffered by the company.\nThere is no necessary, direct correlation between the two.\nThe 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.\nThese different senses of the word reflects have been conflated.\nA 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.\nIn a loose sense of that phrase, it is not; but in a strict sense, it may be.\nThe reflective loss principle was first identified and relied upon in the judgment of the Court of Appeal in Prudential in 1981.\nIt 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.\nThe relevant facts in Prudential can be summarised as follows.\nThe claimant, Prudential, held 3.2% of the issued ordinary shares in Newman Industries (Newman), a company whose shares were quoted on the stock exchange.\nMr Bartlett was the chairman and chief executive of Newman and Mr Laughton was a non executive director and its vice chairman.\nThey were also associated with another company, TPG.\nPrudentials 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.\nIn 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).\nPrudential 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.\nPrudential 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.\nSince 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.\nMr 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.\nVinelott 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.\nAs 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.\nHe directed an inquiry as to the amount of the damages.\nMr Bartlett and Mr Laughton appealed.\nBy 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.\nThe 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).\nHowever, 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.\nThe 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.\nBoth aspects of the courts judgment are significant for the present discussion.\nAgain, Prudentials main objective was to succeed on the derivative claim, rather than on its own cause of action (referred to as its personal claim).\nThe 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.\nAs 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.\nThus, 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.\nThis 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.\nThe 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.\nBy 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.\nIn 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.\nIn our judgment the personal claim is misconceived.\nIt 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.\nIt 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.\nBut what he cannot do is to recover damages merely because the company in which he is interested has suffered damage.\nHe 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.\nThe shareholder does not suffer any personal loss.\nHis 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.\nThe plaintiffs shares are merely a right of participation in the company on the terms of the articles of association.\nThe shares themselves, his right of participation, are not directly affected by the wrongdoing.\nThe plaintiff still holds all the shares as his own absolutely unencumbered property.\nThe deceit practised upon the plaintiff does not affect the shares; it merely enables the defendant to rob the company.\nA simple illustration will prove the logic of this approach.\nSuppose that the sole asset of a company is a cash box containing 100,000.\nThe company has an issued share capital of 100 shares, of which 99 are held by the plaintiff.\nThe plaintiff holds the key of the cash box.\nThe defendant by a fraudulent misrepresentation persuades the plaintiff to part with the key.\nThe defendant then robs the company of all its money.\nThe 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.\nThere are two wrongs, the deceit practised on the plaintiff and the robbery of the company.\nBut the deceit on the plaintiff causes the plaintiff no loss which is separate and distinct from the loss to the company.\nThe deceit was merely a step in the robbery.\nThe plaintiff obviously cannot recover personally some 100,000 damages in addition to the 100,000 damages recoverable by the company.\nCounsel 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.\nBut 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.\nIf 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.\nIf 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.\nThe plaintiffs in this action were never concerned to recover in the personal action.\nThe plaintiffs were only interested in the personal action as a means of circumventing the rule in Foss v Harbottle.\nThe plaintiffs succeeded.\nA 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.\nThe rule is the consequence of the fact that a corporation is a separate legal entity.\nOther consequences are limited liability and limited rights.\nThe company is liable for its contracts and torts; the shareholder has no such liability.\nThe company acquires causes of action for breaches of contract and for torts which damage the company.\nNo cause of action vests in the shareholder.\nWhen 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.\nThe 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.\nIf 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.\nIn this case it is neither necessary nor desirable to draw any general conclusions.\nThis reasoning of the Court of Appeal was a new departure in the case.\nAt 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.\nFurther, 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.\nAs 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.\nIn 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.\nMarex 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.\nThere is no great difficulty in answering the questions posed by the Court of Appeal in Prudential when this distinction is borne in mind.\nSince 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.\nIt 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.\nI see no reason to question the good faith of the present liquidator, who is an insolvency practitioner from a reputable firm.\nThis 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.\nIn 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).\nHowever, 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.\nThe 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.\nThe 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.\nFurther, 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).\nThere was, therefore, no real focus on the independent nature of the causes of action which Prudential might have had in its personal capacity.\nIn 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.\nThus, 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).\nBe 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.\nI 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.\nThere is no report of any argument which led it to do this.\nSince 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.\nWith respect, I do not consider that the courts reasoning is sustainable.\nAgain, 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.\nThe shareholder does not suffer any personal loss).\nIn 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.\nThat 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).\nFurthermore, 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.\nThe reasoning in relation to the cash box example is in my view flawed.\nCompanies 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.\nThe 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.\nI will return to this example below, but for the purposes of analysis it should be emphasised that this is an unusual scenario.\nIn 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.\nWhat 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).\nA 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.\nOften, 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.\nWhen 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.\nIn 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.\nIt 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.\nThe 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.\nIn 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).\nThis 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.\nMitchell rightly criticises the explanation in Prudential as (p 459): an indefensibly narrow view of the value inherent in shares.\nNo 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.)\nIn 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.\nAs 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.\nIt 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.\nOn 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.\nThe 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.\nBy 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.\nIts attempt to say that it had suffered loss equivalent to a proportionate share of Newmans loss was rightly dismissed by the Court of Appeal.\nThat 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.\nThe only person with a cause of action in relation to that loss was the company, Newman.\nWhat, 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?\nIn principle, as mentioned above, if a person has a cause of action against another he is entitled to bring proceedings to vindicate his rights.\nHe may proceed as quickly as he chooses and with a view to maximising his prospects of securing recovery from the defendant.\nIf 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.\nIt 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.\nIt 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.\nIn my view, this reasoning cannot be sustained.\nAs 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.\nAs Charles Mitchell points out in his article, (2004) 120 LQR 457, 469 470, the causation argument begs the important question.\nIt 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.\nThe argument does not show why the shareholder should be disabled from claiming in the first place.\nThe 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.\nKnowledge 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.\nFurther, in other cases, the timing of recovery by the company may be important.\nIf 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.\nBut that is not the real world.\nThe 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).\nIn 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.\nIt 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.\nNor 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.\nThe companys prospects, as judged by the market, may be radically different at the later point in time.\nOr the shareholder may already have sold the shares at a price discounted for uncertainty regarding possible recovery by the company.\nIn many cases the companys recovery of its loss will not have the effect of restoring the value of the shares.\nSince 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.\nFurther 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.\nThe company does not control what the shareholder may do in relation to vindicating his own cause of action.\nHe is entitled to sue in relation to his own cause of action if he thinks he can prove he has suffered a loss.\nIf 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.\nIf 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.\nAs 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.\nIn 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.\nIn 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.\nAs 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.\nBut in the situation under review the wrongs and also the losses suffered by the claimant shareholder and the company respectively are different.\nThe claimant and the company each have distinct causes of action of their own.\nThe company can recover for its losses, eg depletion of its assets stolen by the defendant and consequential loss of profits.\nThe 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.\nThese losses may have some relationship to the losses suffered by the company, but are not the same as those losses.\nThe 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).\nOn 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.\nIf, 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.\nIn 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.\nAccordingly, 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.\nIt 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.\nIn 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.\nThe 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).\nIn 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.\nOne 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.\nIn 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.\nLord 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.\nIn 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.\nIn 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).\nThe 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.\nIt 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.)\nMoreover, 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.\nThe 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.\nIf 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.\nCompare 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.\nIn 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.\nIn some cases, the relationship between the loss suffered by the company and the loss suffered by the claimant shareholder may be more direct.\nPerhaps 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.\nTwo points may be made about this.\nFirst, 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.\nThe 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.\nThe 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.\nEven if the company decided to pursue its own claim as well, that would not necessarily undermine the claimants case either.\nIf 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.\nSo the claimant will again have suffered a real loss which would not be eliminated by the award of a remedy to the company.\nSecondly, the court can take steps to manage the coincidence of claims by the claimant and by the company by procedural means.\nFor 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.\nThe 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.\nFor 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.\nAlternatively, 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.\nThis 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.\nCourts 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.\nSimilarly, 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.\nIf 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.\nOn 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.\nA 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.\nThe 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.\nThe 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.\nSimilarly, 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.\nTo 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.\nIn 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.\nA 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.\nThis 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.\nThe 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.\nThus 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.\nThe courts judgment has to be read with this in mind.\nIn 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.\nThis 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.\nIn 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.\nAs 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.\nAt 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.\nSince 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.\nThe 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.\nAre 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.\nHowever, as I set out below, none of the other law lords in Johnson agreed with Lord Hutton.\nIn my view, there are no sound reasons why the shareholders personal cause of action should be eliminated in this way.\nThe 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.\nThe shareholders cause of action falls outside the rule in Foss v Harbottle.\nTo 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.\nThere 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.\nIt 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.\nThat may mean that the companys shareholders and creditors lose out.\nBut in my view, this is not a reason to prevent the claimant shareholder from recovering in respect of his cause of action.\nAs 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.\nThe 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.\nThe shareholder is exposed to the same risk in reverse, if the company obtains judgment and execution before the shareholder vindicates his rights.\nMoreover, 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.\nThere 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.\nIt 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.\nBright line rules have that effect.\nBut 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.\nIn 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.\nCommon law courts are used to working through complex situations in nuanced and pragmatic ways, to achieve practical justice.\nIn 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.\nIn Christensen v Scott the New Zealand Court of Appeal, sitting as a five judge court, declined to apply the reflective loss principle.\nThe 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.\nThe defendants came to act for the company as well.\nThe 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.\nConsequently the land was lost and the company failed.\nThe companys claim against the defendants was settled by the liquidator for a sum alleged by the plaintiffs to be totally inadequate.\nThe Court of Appeal held that the personal claims of the claimants should not be struck out before trial.\nThomas 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.\nIt has attracted not insignificant and, at times, critical comment.\nSee 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.\nIt 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.\nSuch 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.\nBut 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.\nWhere 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.\nNor would the claim necessarily have the calamitous consequences predicted by counsel in respect of the concept of corporate personality and limited liability.\nThe loss arises not from a breach of the duty owed to the company but from a breach of duty owed to the individuals.\nThe individual is simply suing to vindicate his own right or redress a wrong done to him or her giving rise to a personal loss.\nWe 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.\nThe 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.\nIndeed, 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.\nThe loss suffered by the company is the loss of the lease and the profit which would have been obtained from harvesting the potato crop.\nThat loss is reflected in the diminution in the value of Mr and Mrs Christensens shares.\nThey 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.\nDouble recovery, of course, cannot be permitted.\nThe problem does not arise in this case, however, as the company has chosen to settle its claim.\nPeat Marwick and McCaw Lewis accepted a compromise in the knowledge that Mr and Mrs Christensens claim was outstanding.\nIt 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.\nIt is to be acknowledged, however, that the problem of double recovery may well arise in other cases.\nNo 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.\nBut 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.\nIt 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.\nTo 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.\nA stay of one proceeding may be required.\nJudgment, with a stay of execution against one or other of the parties, may be in order.\nAn obligation to account in whole or in part may be appropriate.\nThe interest of creditors who may benefit if one party recovers and not the other may require consideration.\nAs 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.\nEssentially, 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.\nTheir assets in this case had been channelled into their company.\nThus, it is arguable that the diminution in the value of their shareholding is the measure of that loss.\nIt 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.\nWe 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.\nIt will be clear from what I have said about Prudential that I consider that there is considerable force in this reasoning.\nThe law as stated in Christensen v Scott was in substance affirmed by Leggatt LJ in Barings [1997] 1 BCLC 427, 435.\nThat 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.\nThe 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.\nI find the decision of the High Court of Australia in Gould v Vaggelas helpful in relation to the issues which arise on this appeal.\nThat 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.\nInduced 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.\nLater, as the business faltered, the claimant shareholders lent the company further sums to enable it to continue trading.\nIt 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.\nThe business eventually failed, the mortgaged properties were lost and the claimant shareholders incurred a substantial liability under their personal guarantees.\nThe company did not repay them the sums they had lent it.\nThe claimant shareholders came to realise that they had been deceived.\nIn 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.\nThe 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.\nThe trial judge awarded the claimant shareholders the damages claimed by them.\nHis 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.\nThe 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.\nThe 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.\nThe 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.\nAlthough 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.\nOn 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.\nThis is in line with my own view regarding the Prudential decision: para 148 above.\nAlthough 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.\nThat 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).\nThe 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.\nSee 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).\nJohnson v Gore Wood\nHowever, the leading English authority is now the decision of the House of Lords in Johnson.\nThe case is primarily concerned with other issues, of abuse of process and estoppel by convention.\nIt 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.\nA 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.\nAlthough 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.\nLord Bingham and Lord Millett, in their separate speeches, accepted the approach and reasoning in Prudential without question.\nHowever, 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.\nTherefore, 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.\nIt 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.\nThe 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.\nFor present purposes the facts can be summarised as follows.\nThe 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.\nOn behalf of W Ltd he instructed the defendant firm of solicitors, GW, in connection with the purchase of land for development.\nW Ltd had an option to purchase the land, and GW were instructed to serve a notice exercising the option.\nService 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.\nThe 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.\nW 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.\nMr 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.\nW Ltd commenced proceedings, but for particular reasons Mr Johnson held off bringing his own claim at the same time.\nGW settled W Ltds claim.\nAfter that, Mr Johnson commenced his personal claim against them.\nGW applied to strike out his claim on grounds of abuse of process and in reliance on the reflective loss principle.\nThe House of Lords held that Mr Johnson had committed no abuse of process.\nBy 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.\nLord Bingham addressed the reflective loss principle at [2002] 2 AC 1, 35 37.\nAfter 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.\nOn 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.\nOn the other, the court must be astute to ensure that the party who has in fact suffered loss is not arbitrarily denied fair compensation.\nThe 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.\nIn 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.\nIn other cases, inevitably, a finer judgment will be called for.\nAt the strike out stage any reasonable doubt must be resolved in favour of the claimant.\nI 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.\nThis claim is unobjectionable in principle, as Mr Steinfeld came close to accepting. (2) Cost of personal borrowings: loan capital and interest.\nThe 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.\nBoth 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.\nThe 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.\nIn 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.\nIn part the claim relates to enhancement of the value of Mr Johnsons pension if the payments had been duly made.\nI do not regard this part of the claim as objectionable in principle.\nAn 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.\nMr 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.\nThis claim is not in my view objectionable in principle. (5) Additional tax liability.\nIf proved, this is a personal loss and I would not strike it out.\nWith respect to Lord Bingham, he takes the reasoning of the Court of Appeal in Prudential to be correct without subjecting it to critical examination.\nThe authorities the effect of which he summarises essentially did the same, save for Christensen v Scott and Barings.\nIn 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.\nLord Goff agreed with the analysis of Lord Millett on this part of the case.\nIn 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.\nLord 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).\nHe 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.\nThe correspondence may not be exact, especially in the case of a company whose shares are publicly traded, since their value depends on market sentiment.\nBut in the case of a small private company like this company, the correspondence is exact.\nLord 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.\nHowever, he did not subject the reasoning in Prudential to critical examination in the light of this.\nHis 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.\nThis 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.\nThis is fundamental to Lord Milletts whole approach in his speech.\nAs stated above, however, I do not consider that this reasoning can be supported.\nWhen 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.\nLord 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).\nHe 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.\nIn 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.\nIf 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.\nNeither course can be permitted.\nThis is a matter of principle; there is no discretion involved.\nJustice 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.\nThis 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).\nIn my respectful opinion, that is a false premise.\nThe same false premise is evident again in Lord Milletts treatment of his own previous judgment in Stein v Blake.\nThe 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.\nThe Court of Appeal affirmed the decision that the claim should be struck out.\nLord 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.\nThe 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.\nIt was not alleged that the plaintiff had been induced or compelled to dispose of his shares in the companies; he still had them.\nIf 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.\nMoreover, 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.\nThe 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.\nThe court assumed that if the old companies recovered in respect of their loss, the claimants loss would be fully remedied.\nBut that would only be so if the loss was identical.\nSince the losses were not identical, double recovery would not necessarily follow from allowing the claimant to bring his personal claim.\nAlso, 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.\nThere was no principled reason why the claimant should not be entitled to seek to vindicate his own cause of action against the defendant.\nThat would not prevent the old companies from obtaining recovery in respect of their cause of action and their loss.\nIn my opinion, the same false premise underlies Lord Milletts criticism of the decisions in Barings and in Christensen v Scott.\nIn 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.\nThe point is that it merely reflected the diminution of the companys assets.\nThe 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.\nIf so, such reflected loss is recoverable by the company and not by the shareholders.\nHowever, with respect, I consider that the error is Lord Milletts.\nThe 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.\nThere 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.\nSimilarly, 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.\nLord Millett continued at [2002] 2 AC 1, 66F G: But there is more to it than causation.\nThe disallowance of the shareholders claim in respect of reflective loss is driven by policy considerations.\nIn my opinion, these preclude the shareholder from going behind the settlement of the companys claim.\nIf 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.\nI do not consider that these policy considerations can justify the reflective loss principle.\nAgain, 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.\nIf 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).\nIn bringing his claim he would not go behind nor undo the settlement of the companys claim.\nIf 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.\nIn 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.\nIf 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.\nIf 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.\nIn 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.\nAll transactions or putative transactions between the company and its shareholders must be disregarded.\nPayment to the one diminishes the assets of the other.\nIn 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.\nIn 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.\nOn 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.\nThe 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.\nHis loss is still an indirect and reflective loss which is included in the companys claim.\nThe 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.\nThe 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.\nThe analogy assumes, incorrectly, that the loss suffered by the company is identical with the loss suffered by the shareholder.\nStarting 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.\nHis speech therefore provides support for Mr Sevillejas case on this appeal.\nI will discuss the position of creditors after finishing this discussion of Johnson.\nLord 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.\nAlthough 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).\nIn 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.\nLord Cooke agreed that the English authorities cited by Lord Bingham supported the three propositions stated by him.\nNonetheless, 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.\nLord 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).\nDespite 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).\nLord Hutton also agreed with the order proposed by Lord Bingham, but his analysis was different from the others.\nLord 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).\nHowever, 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.\nOn 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.\nA 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.\nI disagree with this last step in the reasoning of Lord Hutton.\nNone of the other law lords endorsed this.\nThe 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.\nI 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.\nIt 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.\nWhilst, as noted above, it would allow for simple and speedy resolution of disputes, the price to be paid for that is too high.\nThe effect of Lord Huttons bright line rule would be disproportionate and arbitrary.\nSo 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.\nAnd 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.\nIt 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.\nInsolvency 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.\nFurther, there will be cases where there is in fact no difficulty in the defendant being able to meet all claims.\nIn 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.\nThe 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.\nThe reasoning of Lord Hutton relies on a policy based bright line exclusionary rule which is not justified.\nThe reasoning of Lord Cooke is suspended uneasily between the majority and Lord Hutton.\nLord 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.\nLord Reed points out (para 78) that the decisions in Prudential and Johnson have been followed in other common law jurisdictions.\nHowever, 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.\nTo 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.\nFlaux 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.\nIn my opinion, none of these considerations in fact provides a viable justification for the reflective loss principle.\nPoints (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.\nPoint (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.\nPoint (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.\nThe reflective loss principle and claims by creditors of the company\nThe 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.\nMarex was not a shareholder in the Companies, but their creditor.\nIn 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.\nA 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.\nSubject 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.\nMoreover, 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.\nTo 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.\nIf 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.\nAlso, in line with that part of the judges judgment, Marex would arguably have been able to bring a Lumley v Gye claim against him.\nBy 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.\nMarex 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).\nMr 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.\nTo the extent that the individual debtor or Mr Sevilleja paid the money due, Marex would have to give credit in pursuing the other.\nTo 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.\nIn my view, this outcome could readily be achieved in a case involving an individual debtor.\nThe question which arises, therefore, is whether the fact that Marexs debtor is a company rather than an individual should make any difference.\nIn my view, there is no good reason why it should.\nMr 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.\nAlternatively, 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.\nIf 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.\nAbsent 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.\nEven 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.\nIn my opinion, this would in fact be the simplest and most appropriate solution.\nSubrogation 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.\nAgain, the decision of the High Court in Gould v Vaggelas provides a helpful illustration.\nThe 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.\nAs 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.\nThe position was in my view analogous to that in the present case.\nThe 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.\nThe 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.\nThe 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).\nSave 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.\nTurning 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.\nPoint (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.\nPoint (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.\nMr 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.\nPoint (iii) (avoidance of conflicts of interest and discouraging settlements by the company) similarly has no force.\nThe 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.\nIf 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.\nPoint (iv) (preservation of company autonomy and avoidance of prejudice to minority shareholders and other creditors) also cannot justify dismissing Marexs claim.\nThe 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.\nIf 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.\nIt 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.\nIn 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.\nThere 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.\nIt 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.\nThere 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.\nLord 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.\nIt 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.\nLord Bingham did not suggest that it would make a difference if these payments constituted remuneration to which Mr Johnson was contractually entitled.\nThere 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.\nThe case concerned the claim of a company (BDC), as assigned to the claimant in the proceedings, against its sole director, Mr Parker.\nBDCs 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.\nIt 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.\nNeuberger 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.\nNeuberger LJ relied on the speeches of Lord Bingham and, in particular, Lord Millett in Johnson.\nProceeding 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).\nAccording 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).\nNeuberger 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.\nAccordingly, 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).\nThe 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.\nIn 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.\nIn 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.\nI would not follow Johnson in so far as it endorsed the reflective loss principle identified in Prudential in relation to claims by shareholder claimants.\nBut 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.\nWe 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.\nFor the reasons given above, I would hold that the reflective loss principle, if it exists, does not apply in the present case.\nThe exception in Giles v Rhind\nIn 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.\nHowever, 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.\nIf 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.\nThis will put pressure on the acceptability of the rule itself.\nConclusion\nFor 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.\n","output":"The respondent, Mr Sevilleja, owned and controlled two companies (the Companies) incorporated in the British Virgin Islands (BVI).\nThe appellant, Marex Financial Ltd (Marex), brought proceedings against the Companies for sums due under contract.\nAfter a trial in the Commercial Court before Field J, Marex obtained judgment for over US$5.5 million, plus costs of1.65 million.\nOn 19 July 2013, Field J gave the parties a confidential draft of his judgment, due to be handed down six days later.\nFrom 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.\nBy 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.\nIn December 2013, Mr Sevilleja placed the Companies into liquidation in the BVI, their alleged debts exceeding US$30 million.\nMarex is the only creditor not connected to Mr Sevilleja.\nAccording 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.\nIn 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.\nThe 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.\nMr Sevilleja contends that Marexs claim in respect of (1) is barred by the reflective loss principle.\nThat contention was upheld by the Court of Appeal.\nThe Supreme Court unanimously allows the appeal.\nThe leading judgment is given by Lord Reed, with whom Lady Black and Lord Lloyd Jones agree.\nLord Hodge gives a separate judgment agreeing with the reasoning of Lord Reed.\nLord Sales delivers a separate judgment, with which Lady Hale and Lord Kitchin agree, allowing the appeal on a wider basis.\nAfter 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].\nHe 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\nof 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.\nThe 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].\nThat understanding of the rule is consistent with the speech of Lord Bingham in Johnson.\nLord 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].\nLord 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].\nThis 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].\nThe first kind of case is barred by the rule in Prudential, regardless of whether the company recovers its loss in full [80 83].\nIn the second kind of case, recovery is permissible in principle, although it may be necessary to avoid double recovery [84 88].\nIn 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].\nThe rule in Prudential does not apply to Marex, which is a creditor of the Companies, not a shareholder [92].\nLord 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].\nLord 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].\nThe bright line rule has a principled basis in company law and ought not to be departed from now [109].\nLord Sales concludes that Marexs appeal should be allowed, but for reasons differing from those of the majority [116].\nThe 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.\nHowever, 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.\nThe 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].\nThe governing principle is indeed avoidance of double recovery, as was the view of the Law Lords in Johnson (contra Lord Reed) [119].\nLord Sales criticises the authorities use of the word reflective as being unhelpful.\nAlthough 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].\nThe 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.\nThat is not the case [142].\nA shareholder ought not to be prevented from pursuing a valid personal cause of action; double recovery can be prevented by other means [149 155].\nLord Sales therefore questions the justification for the reflective loss principle and whether it should still be recognised [194].\nEven if the principle is accepted, it should not be extended to cover a case involving loss suffered by a creditor of the company.\nThere 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].\n","id":14}
{"input":"The case of Seldon v Clarkson Wright and Jakes [2012] UKSC 16, which was heard alongside this case, concerned direct discrimination on the ground of age.\nIn that case there was no issue that the application of a mandatory retirement age constituted direct age discrimination.\nThe issue was how it might be justified.\nThis case concerns indirect discrimination on the ground of age.\nMr Homer appeals against the holding of the Court of Appeal that there was no such discrimination in his case.\nThe Chief Constable appeals against the holding that, if there was such discrimination, it could not be justified.\nThe proceedings\nMr Homer retired from the police force in October 1995 at the age of 51 with the rank of Detective Inspector.\nHe immediately began work with the Police National Legal Database (PNLD) as a legal adviser.\nThe PNLD provides legal advice and other resources to police forces and other organisations in the criminal justice system.\nWhen he was appointed, a law degree or equivalent was not essential if the post holder had exceptional experience\/skills in criminal law, combined with a lesser qualification in law.\nThis he was deemed to have by virtue of the experience gained and examinations passed in the police force.\nAfter his appointment, the criteria were changed so that a law degree became an essential qualification for first appointment, but this did not immediately affect him.\nThe requirement was never applied to him, nor was he told that the possession of a law degree was an issue of concern to his employers, until the matters giving rise to these proceedings.\nThe PNLD experienced problems in attracting enough suitably qualified candidates and concluded that this was because the staff were comparatively underpaid and there was no formal career structure.\nThey were advised to create a new career structure with opportunities for progression and more competitive salaries.\nAt the same time they were advised that it was important to retain current employees and that they continued to be instrumental in the development and expansion of the database.\nIn 2005, therefore, the PNLD introduced a new grading structure with three thresholds above the starting grade.\nIn order to reach the third threshold it was necessary to have a law degree or similar fully completed.\nIn 2006, Mr Homer was regraded to the first and second thresholds, but not to the third, as he did not have a law degree, although he met the criteria in all other respects.\nThe evidence of the business director of the PNLD was that she supported Mr Homers application for the third threshold but felt constrained by the rules to deny it to him.\nShe supported his internal appeal against the decision but it was rejected in May 2006.\nBy then, he was aged 62.\nThe normal retirement age in the PNLD was 65, although employment might be extended for a year at a time subject to satisfactory medical reports and fulfilling other criteria not expected of people below the age of 65.\nMr Homer would reach the age of 65 in February 2009.\nIt was the expectation of both sides that he would retire then.\nIf he were to undertake a law degree by part time study it would take him at least four years.\nThe earliest he could have graduated would have been the summer of 2010, after his normal retirement date.\nIn any event, it was unlikely that he would have obtained a place on a course starting in September 2006 if he only applied in May 2006.\nMr Homer appealed against the rejection of his internal appeal in August 2006.\nThe Employment Equality (Age) Regulations 2006 (SI 2006\/1031) came into force on 1 October 2006.\nHis further appeal was rejected in November 2006.\nIn December he issued a formal grievance, asking to be treated as a transitional exception, but the respondent did not hold the required meetings, and the grievance was eventually rejected in August 2007.\nIn April 2007 he issued these proceedings in the Employment Tribunal (ET) complaining of unlawful age discrimination.\nIn January 2008, the ET held that Mr Homer was indirectly discriminated against on grounds of age and that this was not objectively justified.\nHowever, the Employment Appeal Tribunal (EAT) held that he had not been indirectly discriminated against on grounds of age, although if he had been, it would not have been justified: [2009] ICR 223.\nThe Court of Appeal dismissed both his appeal and the respondents cross appeal: [2010] EWCA Civ 419, [2010] ICR 987.\nThe same issues arise on the appeal to this Court.\nThe law\nThe Employment Equality (Age) Regulations 2006 were the means by which the United Kingdom transposed into UK law the requirements of Council Directive 2000\/78\/EC establishing a general framework for equal treatment in employment and occupation.\nAccording to article 1, the purpose of the Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.\nArticle 2 explains what this means.\nThe portions dealing with indirect discrimination are as follows: 1.\nFor the purposes of this Directive, the 'principle of equal treatment' shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in article 1. 2.\nFor the purposes of paragraph 1: . (b) indirect discrimination shall be taken to occur where an apparently neutral provision, criterion or practice would put persons having . a particular age . at a particular disadvantage compared with other persons unless: (i) that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary, .\nThis is transposed by regulation 3 of the Age Regulations as follows: (1) For the purposes of these Regulations, a person (A) discriminates against another person (B) if . (b) A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same age group as B, but (i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons, and (ii) which puts B at that disadvantage, and A cannot show the . provision, criterion or practice to be a proportionate means of achieving a legitimate aim. (2) A comparison of Bs case with that of another person under paragraph (1) must be such that the relevant circumstances in the one case are the same, or not materially different, in the other. (3) In this regulation (a) age group means a group of persons defined by reference to age, whether by reference to a particular age or a range of ages; and .\nUnlike the case of direct discrimination, with which Seldon is concerned, it is not suggested that regulation 3 does not properly transpose the Directive into UK law.\nThe question is simply how it applies in this case.\nRegulation 7 defines the relevant unlawful acts of discrimination: (2) It is unlawful for an employer, in relation to a person whom he employs at an establishment in Great Britain, to discriminate against that person (a) in the terms of employment which he affords him; (b) in the opportunities which he affords him for promotion, a transfer, training or receiving any other benefit; (c) by refusing to afford him, or deliberately not affording him, any such opportunity; or (d) by dismissing him, or subjecting him to any other detriment.\nIt is common ground that the failure to allow Mr Homer across the third threshold falls within the regulation.\nThe discrimination issue\nThe ET found that the appropriate age group was people aged 60 to 65, who would not be able to obtain a law degree before they retired [15].\nThat group was put at a particular disadvantage compared with people younger than that, because they were prevented from reaching the third threshold and the status and benefits associated with it [18].\nThe claimant was put at a disadvantage because he could not achieve the qualification (and therefore the status) before he retired.\nThe ET noted that it was not argued that he was put at a disadvantage because fewer people in his age group had law degrees [18].\nThe EAT and Court of Appeal were however persuaded that what put Mr Homer at a disadvantage was not his age but his impending retirement.\nHad it not been for that, he would have been able to obtain a degree and reach the third threshold.\nAs Mr Lewis argues on behalf of the respondent, the key words in regulation 3(1)(b) are puts at.\nWhat is it that puts him at or causes the disadvantage complained of? It is the fact that he is due to leave work within a few years.\nRegulation 3(2) requires that the relevant circumstances in the complainants case must be the same, or not materially different, from the circumstances in the case of the persons with whom he is compared.\nSo, argues Mr Lewis, you have to build the relevant circumstance into the comparator group also, in this case the proximity of leaving work.\nSo Mr Homer must be compared with anyone else who is nearing the end of his employment for whatever reason.\nAnyone who was contemplating leaving within a similar period whether for family reasons or some other reason would face the same difficulty.\nThat is what puts him at a disadvantage and not the age group to which he belongs.\nIndeed, what Mr Homer is arguing for would put people of his age group at an advantage compared with younger people, because they would be able to get the benefits of the third threshold without having a law degree when others would not.\nThis argument involves taking the particular disadvantage which is suffered by a particular age group for a reason which is related to their age and equating it with a similar disadvantage which is suffered by others but for a completely different reason unrelated to their age.\nIf it were translated into other contexts it would have alarming consequences for the law of discrimination generally.\nTake, for example, a requirement that employees in a particular job must have a beard.\nThis puts women at a particular disadvantage because very few of them are able to grow a beard.\nBut the argument leaves sex out of account and says that it is the inability to grow a beard which puts women at a particular disadvantage and so they must be compared with other people who for whatever reason, whether it be illness or immaturity, are unable to grow a beard.\nIronically, it is perhaps easier to make the argument under the current formulation of the concept of indirect discrimination, which is now also to be found in the Equality Act 2010.\nPrevious formulations relied upon disparate impact so that if there was a significant disparity in the proportion of men affected by a requirement who could comply with it and the proportion of women who could do so, then that constituted indirect discrimination.\nBut, as Mr Allen points out on behalf of Mr Homer, the new formulation was not intended to make it more difficult to establish indirect discrimination: quite the reverse (see the helpful account of Sir Bob Hepple in Equality: the New Legal Framework, Hart 2011, pp 64 to 68).\nIt was intended to do away with the need for statistical comparisons where no statistics might exist.\nIt was intended to do away with the complexities involved in identifying those who could comply and those who could not and how great the disparity had to be.\nNow all that is needed is a particular disadvantage when compared with other people who do not share the characteristic in question.\nIt was not intended to lead us to ignore the fact that certain protected characteristics are more likely to be associated with particular disadvantages.\nIn any event, it cannot be right to equate leaving work because of impending retirement with other reasons for doing so.\nThey are materially different.\nA person who leaves work for family reasons or takes early retirement generally has some choice in the matter.\nIndeed, she may factor into her decision whether it would be advisable to obtain the law degree and with it the higher grading before doing so.\nA person who is coming up against the mandatory retirement age does not have the same choice.\nAny extension depends upon the decision of the employer which cannot be depended upon at the relevant time.\nAt the relevant time for this case, regulation 30 of the Age Regulations provided that the decision to retire an employee at the age of 65 did not need to be justified.\nHence, as Mr Allen puts it, this is a case of running up against the buffers of a mandatory retirement age rather than a matter of choice.\nNor is this a question of asking for more favourable treatment for people of their age.\nIt obviously has to be possible to cure the discrimination in a non discriminatory way.\nIn London Underground Ltd v Edwards (No 2) [1999] ICR 494, for example, the new rosters for underground train drivers were held to be indirectly discriminatory because all the men could comply with them but not all the women could do so: it was a striking fact that not a single man was disadvantaged despite the overwhelming preponderance of men in the pool of train drivers affected.\nThe reason, of course, was that the new rosters had a greater impact upon single parents and single parents are predominantly (though not exclusively) female.\nBut the problem could be solved, not by making an exception for the women, but by making arrangements for single parents of whatever sex.\nThis problem could have been solved by making arrangements for people appointed before the new criterion was introduced.\nIngenious though the argument put forward by Mr Lewis is, therefore, to my mind it is too ingenious.\nThe law of indirect discrimination is an attempt to level the playing field by subjecting to scrutiny requirements which look neutral on their face but in reality work to the comparative disadvantage of people with a I would therefore allow Mr Homers appeal on this point. particular protected characteristic.\nA requirement which works to the comparative disadvantage of a person approaching compulsory retirement age is indirectly discriminatory on grounds of age.\nThere is, as Lord Justice Maurice Kay acknowledged, unreality in differentiating between age and retirement [34].\nPut simply, the reason for the disadvantage was that people in this age group did not have time to acquire a law degree.\nAnd the reason why they did not have time to acquire a law degree was that they were soon to reach the age of retirement.\nThe resulting scrutiny may ultimately lead to the conclusion that the requirement can be justified.\nBut if it cannot, then it can be modified so as to remove the disadvantage.\nJustification\nThe approach to the justification of what would otherwise be indirect discrimination is well settled.\nA provision, criterion or practice is justified if the employer can show that it is a proportionate means of achieving a legitimate aim.\nThe range of aims which can justify indirect discrimination on any ground is wider than the aims which can, in the case of age discrimination, justify direct discrimination.\nIt is not limited to the social policy or other objectives derived from article 6(1), 4(1) and 2(5) of the Directive, but can encompass a real need on the part of the employers business: Bilka Kaufhaus GmbH v Weber von Hartz, Case 170\/84, [1987] ICR 110.\nAs Mummery LJ explained in R (Elias) v Secretary of State for Defence [2006] EWCA Civ 1293, [2006] 1 WLR 3213, at [151]: . the objective of the measure in question must correspond to a real need and the means used must be appropriate with a view to achieving the objective and be necessary to that end.\nSo it is necessary to weigh the need against the seriousness of the detriment to the disadvantaged group.\nHe went on, at [165], to commend the three stage test for determining proportionality derived from de Freitas v Permanent Secretary of Ministry of Agriculture, Fisheries, Lands and Housing [1999] 1 AC 69, 80: First, is the objective sufficiently important to justify limiting a fundamental right? Secondly, is the measure rationally connected to the objective? Thirdly, are the means chosen no more than is necessary to accomplish the objective? As the Court of Appeal held in Hardy & Hansons plc v Lax [2005] EWCA Civ 846, [2005] ICR 1565 [31, 32], it is not enough that a reasonable employer might think the criterion justified.\nThe tribunal itself has to weigh the real needs of the undertaking, against the discriminatory effects of the requirement.\nThe ET found that the aim of requiring a law degree was to facilitate the recruitment and retention of staff of appropriate calibre within the PNLD.\nIt is not disputed that this was a legitimate aim.\nWhen it comes to considering proportionality, however, it is necessary to distinguish the aim of recruitment from the aim of retention.\nIt is also necessary to distinguish the aim of retaining newly or recently recruited staff, who stand to benefit from the opportunity of career progression, and the aim of retaining existing staff, who were recruited under a different system, and who may or may not be motivated to stay by such an incentive.\nIt was clearly important to the developing organisation to retain the skills and expertise of its existing highly valued staff, including Mr Homer.\nThis means, as the EAT pointed out, that it was necessary to distinguish between the justification of the criteria for recruitment and the justification of the criteria for the thresholds above that, and in particular the third threshold.\nThe ET (perhaps in reliance on the IDS handbook on age discrimination) regarded the terms appropriate, necessary and proportionate as equally interchangeable [29, 31].\nIt is clear from the European and domestic jurisprudence cited above that this is not correct.\nAlthough the regulation refers only to a proportionate means of achieving a legitimate aim, this has to be read in the light of the Directive which it implements.\nTo be proportionate, a measure has to be both an appropriate means of achieving the legitimate aim and (reasonably) necessary in order to do so.\nSome measures may simply be inappropriate to the aim in question: thus, for example, the aim of rewarding experience is not achieved by age related pay scales which apply irrespective of experience (Hennigs v Eisenbahn Bundesamt; Land Berlin v Mai, Joined Cases C 297\/10 and C 298\/10 [2011] European Court Reports); the aim of making it easier to recruit young people is not achieved by a measure which applies long after the employees have ceased to be young (Kckdeveci v Swedex GmbH & Co KG, Case C 555\/07, [2011] 2 CMLR 703).\nSo it has to be asked whether requiring existing employees to have a law degree before they can achieve the highest grade is appropriate to the aims of recruiting and retaining new staff or retaining existing staff within the organisation.\nThe EAT expressed some scepticism about this [45, 46].\nA measure may be appropriate to achieving the aim but go further than is (reasonably) necessary in order to do so and thus be disproportionate.\nThe EAT suggested that what has to be justified is the discriminatory effect of the unacceptable criterion [44].\nMr Lewis points out that this is incorrect: both the Directive and the Regulations require that the criterion itself be justified rather than that its discriminatory effect be justified (there may well be a difference here between justification under the anti discrimination law derived from the European Union and the justification of discrimination in the enjoyment of convention rights under the European Convention of Human Rights).\nPart of the assessment of whether the criterion can be justified entails a comparison of the impact of that criterion upon the affected group as against the importance of the aim to the employer.\nThat comparison was lacking, both in the ET and in the EAT.\nMr Homer (and anyone else in his position, had there been someone) was not being sacked or downgraded for not having a law degree.\nHe was merely being denied the additional benefits associated with being at the highest grade.\nThe most important benefit in practice is likely to have been the impact upon his final salary and thus upon the retirement pension to which he became entitled.\nSo it has to be asked whether it was reasonably necessary in order to achieve the legitimate aims of the scheme to deny those benefits to people in his position? The ET did not ask itself that question.\nTo some extent the answer depends upon whether there were non discriminatory alternatives available.\nIt is not clear whether the ET were suggesting that an exception should have been made for Mr Homer (who was on any view an exceptional case) or whether they were suggesting that the criterion should have been modified to include qualifications other than law degrees.\nAs the EAT said, an ad hominem exception may be the right answer in personnel management terms but it is not the answer to a discrimination claim.\nAny exception has to be made for everyone who is adversely affected by the rule.\nGrandfather clauses preserving the existing status and seniority, with attendant benefits, of existing employees are not at all uncommon when salary structures are revised.\nSo it is relevant to ask whether such a clause could have represented a more proportionate means of achieving the legitimate aims of the organisation.\nOn the other hand, what is in issue here is not preserving existing benefits but affording entry to a newly created higher grade.\nAs the ET did not approach the question of justification in a suitably structured way, and ask itself all the right questions, the case should be remitted on the issue of justification.\nWe cannot be clear that if they had asked the right questions they would have reached the same conclusion, although it is possible that they would have done so.\nHowever, as the EAT pointed out, there is nothing to stop the Chief Constable deciding to make a personal exception for Mr Homer, quite independently of his age discrimination claim (provided of course that it can be done without discriminating against someone else on a prohibited ground).\nThis litigation has been pursued in a friendly spirit and it is to be hoped that it might be resolved in similar vein.\nIt was important to establish the principles in a new area which many still find counter intuitive.\nIt is not long ago that it was taken for granted that age was a relevant criterion in deciding how long people should be allowed to go on working.\nNow that has to be justified.\nThe same is true of apparently neutral criteria which have an adverse impact upon people of a particular age.\nBut both the Age Regulations and the Equality Act recognise that difficult balances have to be struck between the competing interests of different age groups.\nWe all have a lot of learning to do.\nLORD HOPE\nFor the reasons that Lady Hale gives, with which I entirely agree, I would allow this appeal.\nMr Lewis QC for the Chief Constable made much of the point that it was Mr Homers own decision to retire when he reached the normal retirement age of 65 and not stay on so that he could get the benefit of his law degree.\nBut I do not think that it follows that his age had no bearing on the issue.\nThe time available to complete the law degree and get the benefits that would flow from it was inevitably linked to the age of the person concerned.\nThe effect of the measure was bound to vary from person to person, but I do not see this as a reason for saying that it did not discriminate against Mr Homer on account of his age.\nThe number of years that he had left to him before he could reasonably expect to retire meant that his age had a direct bearing on whether he would be disadvantaged by the requirement.\nHe was, in effect, being forced to work on beyond the normal retirement age so that he could obtain the benefit.\nThis was, in itself, indirectly discriminatory.\nIt was submitted that to exclude Mr Homer from the requirement to obtain a law degree would be to give him a benefit that was not available to others.\nIt is true that this would have meant that he would not have to go to the trouble of studying and preparing for the examinations.\nNor would he have to wait until he had passed the examinations before he got the benefit.\nBut I cannot accept that discrimination on the grounds of age can be regarded as justified simply because eliminating it would put others at a disadvantage that is not related to their age.\nAny reversal of a discriminatory rule or practice that does not treat everyone equally is likely to have an impact on others which, from their point of view, may seem to be to their disadvantage.\nThis is especially so in the case of age discrimination, where a measure that affects some will inevitably affect others differently.\nWe all grow older as we progress through life.\nAge is a characteristic which changes with time.\nA disadvantage to others which is unrelated to their age will not be a ground in itself for holding that the age related discrimination of the person who complains of it must be regarded as justified.\nThat removing the discrimination would have this effect on others may, however, have a bearing on the issue of justification when it is looked at more broadly.\nThis is because it leads to the question whether there were other ways of dealing with the requirement of enhanced qualification.\nThe answers to that question may show that the discrimination could have been avoided without giving rise to any effects which were objectionable.\nBut the question whether there was a more proportionate way of doing this was not explored by the Employment Tribunal.\nI agree with Lady Hale that the case must be remitted to it for a further consideration of that issue.\nLORD MANCE\nMy initial reaction was that the case advanced by the appellant Mr Homer was counter intuitive (a word which Lady Hale uses in para 27).\nBut, having read her judgments in this case as well as in Seldon v Clarkson Wright and Jakes, I am fully persuaded that my initial reaction was wrong, and that the present case involved indirect discrimination on grounds of age, basically for the reasons she gives in paras 1 to 18.\nThe key to the resolution of Mr Homers claim therefore lies in the issue of justification, which must be remitted for further consideration by the Employment Tribunal as Lady Hale says in para 26.\nIn relation to that issue, I have difficulty about any suggestion that the Chief Constable should have made a personal exception for Mr Homer quite outside his age discrimination claim (Lady Hale, para 26) or make a modification of the provision, criterion or practice [requiring a law degree] for the appellants age group (Maurice Kay LJs phrase in the Court of Appeal, para 38).\nThe problem about such suggestions was identified by Elias J in the Employment Appeal Tribunal, para 49, when he held that the Tribunal was not correct to say if indeed it was intending to say that the discrimination should have been avoided by making a personal exception of the claimant.\nHe explained: If the imposition of the criterion of a law degree resulted in unjustified indirect discrimination, because the discriminatory effect was disproportionate to the aim, then all adversely affected by the rule must be treated equally.\nThat may well have had the consequence that only the claimant might qualify, but it is not the same as creating an ad hominem exception for him.\nIn other words, if (as the Tribunal appears to have concluded) there was no objective need for an employee as experienced, skilled and knowledgeable as Mr Homer to have had a law degree in order to qualify at the third threshold, then there may have been employees, with more than five years to go to retirement and so with sufficient years ahead in which to complete a law degree, whose experience, skill and knowledge would also have made such a requirement unnecessary.\nAn exception for Mr Homer personally, or a general exception for employees within four or five years of retirement age, could have discriminated unjustifiably against such younger employees on grounds of age.\nNo doubt, this is an aspect which the Tribunal will wish to consider, among others, in relation to the issue of justification.\n","output":"This case concerns the scope of indirect discrimination on the ground of age.\nIt was heard alongside the case of Seldon v Clarkson Wright and Jakes [2012] UKSC 16 which concerned the scope for justification of direct discrimination on the ground of age.\nMr Homer began working for the Police National Legal Database (PNLD) as a legal advisor in 1995 at the age of 51.\nWhen he was appointed the role did not require a law degree or equivalent if the post holder had exceptional experience or skills in criminal law combined with a lesser qualification in law.\nMr Homer fell within this latter category.\nPNLD began to experience problems in attracting suitable people for the role of legal advisor.\nIn 2005 the organisation introduced a new grading structure to improve career progression and offer more competitive salaries.\nThe new structure provided for three promotion thresholds above the starting grade, the third and final of which requiring a law degree.\nIn 2006 Mr Homer was graded under the new system as reaching the first and second thresholds but not the third.\nBecause of his previous skills and experience he was, under the old grading structure, effectively at the top grade.\nIn order to reach the third and highest threshold under the new structure Mr Homer would have been required to study for a law degree part time alongside his work.\nThis would take four years to complete.\nAt this time Mr Homer was 62 years old and, being due to retire at 65, would have been unable to reach or benefit from being at the third threshold before leaving the employment.\nHis various internal appeals and grievances were dismissed and, in April 2007, he issued proceedings under the Employment Equality (Age) Regulations 2006, SI 2006\/1031 (the Age Regulations) which came into force in October 2006.\nRegulation 7 of the Age Regulations (which have since been repealed but substantially re enacted under the Equality Act 2010) makes it unlawful for an employer to discriminate against employees such as Mr Homer in respect of, amongst other things, opportunities for promotion or receiving of other benefits.\nRegulation 3 provides that indirect discrimination occurs when a person (A) applies to another person (B) a provision, criterion or practice which he applies to persons not of the same age group as B, but which puts persons of the same age group as B at a particular disadvantage when compared with other persons, and which puts B at that disadvantage and A cannot show the . provision, criterion or practice to be a proportionate means of achieving a legitimate aim.\nIn contrast to the Seldon case, it was accepted that regulation 3 had properly transposed article 2(2)(b) of Council Directive 2000\/78\/EC on equal treatment in employment and occupation into UK law in cases of indirect age discrimination.\nIn January 2008 the Employment Tribunal found that the appropriate age group was employees aged between 60 and 65 as these persons would have been unable to obtain any real benefit from obtaining a law degree before retiring.\nIt went on to hold that Mr Homer had been indirectly discriminated against on the ground of age and that this was not objectively justifiable on the facts.\nThe Employment Appeal Tribunal held that there had been no indirect discrimination, but that if there had been then it would not be objectively justified.\nThe Court of Appeal dismissed Mr Homers appeal against the first finding, and dismissed the Respondents cross appeal against the second finding.\nBoth findings were then appealed to the Supreme Court.\nThe Supreme Court unanimously allows Mr Homers appeal on the first issue, finding that he was indirectly discriminated against by the Respondent.\nThe Court remits the case to the Employment Tribunal to reconsider the issue of justification.\nLady Hale gives the lead judgment with which all other members of the Court agree.\nLord Hope and Lord Mance add some comments of their own.\nThe Employment Appeal Tribunal and the Court of Appeal had been persuaded by the argument that Mr Homer was put at a disadvantage, not by his age but by his impending retirement [12].\nIt was accepted that his retirement was what prevented him from gaining any real benefit from acquiring a law degree.\nWhat put B at a particular disadvantage was not his age as such but the fact that he was due to leave employment within four years, his position being comparable with any other employees nearing the end of their employment for whatever reason.\nThe Supreme Court disagrees with that analysis.\nIts flaw is to ignore the fact that persons in the position of Mr Homer were disadvantaged because of a reason (retirement) that directly related to their age.\nPersons similarly disadvantaged for reasons not related to their age would not fall within the scope of the Age Regulations and were not the intended recipients of its protection [13].\nThe form of words used under the Age Regulations was intended to make it more straightforward to establish claims of indirect discrimination with claimants simply having to establish that they in particular, and persons of their age group in general, were, in fact, disadvantaged when compared with other persons [14].\nIn any event, there are material differences between leaving work because of impending retirement and other reasons for doing so [15].\nThe law on indirect discrimination is an attempt to level the playing field by subjecting to scrutiny requirements which look neutral on their face but in reality work to the comparative disadvantage of people with a particular protected characteristic. [17].\nAs to justification, the issue is to be remitted to the Employment Tribunal for consideration in the light of the Supreme Courts findings.\nThe range of aims capable of justifying indirect discrimination is greater that those available in the context of direct discrimination (see Seldon v Clarkson Wright and Jakes [2012] UKSC 16) [19].\nIn particular, a real business need on the part of the employer alone may be sufficient.\nIn addition to pursuing a legitimate aim, the treatment must be proportionate which means it is both an appropriate means of achieving the legitimate aim and (reasonably) necessary in order to do so. [22].\nIt is the criterion itself that must be justified as opposed to its discriminatory effects on the individual [23]; however part of that assessment includes comparing the likely impact of the criterion on the affected group as against the importance of the aim to the employer [24].\nIt is noted that Mr Homer was not dismissed or downgraded for not having a law degree, but was simply denied the additional benefits attaching to the newly introduced third threshold.\nThe question was whether it was reasonably necessary in order to achieve the legitimate aims of the scheme to deny those benefits to people in his position [24].\nIt was not clear whether the Employment Tribunal had been suggesting a specific exception for Mr Homer alone: that was not an appropriate response to a discrimination claim.\nThere has to be some way of modifying the criterion for everyone adversely affected but without introducing discrimination against another group [16, 25].\nLord Hope addresses the argument made that exempting Mr Homer from the third threshold requirements would unfairly advantage persons of Mr Homers age group.\nHe does not accept that discrimination on grounds of age can be regarded as justified simply because eliminating it would put others at a disadvantage which is not related to their age [30].\nLord Mance however expresses some concern about the possibility of making an exemption for Mr Homer personally or for all those persons in the same age group as him, on the basis that it might unjustifiably discriminate against younger employees on the ground of their age [36].\n","id":15}
{"input":"These two cases raise a number of important issues in relation to the detention pending deportation of foreign national prisoners (FNPs) following the completion of their sentences of imprisonment.\nSection 3(5)(a) of the Immigration Act 1971 (the 1971 Act) provides that a person who is not a British citizen is liable to deportation from the United Kingdom if the Secretary of State deems his deportation to be conducive to the public good.\nSchedule 3 to the 1971 Act provides in certain specified circumstances for the detention of such a person pending his deportation.\nWalumba Lumba is a citizen of the Democratic Republic of Congo (DRC) who entered the UK on 10 April 1994.\nHe was convicted of a number of offences culminating in an offence of wounding with intent for which he was sentenced to 4 years imprisonment on 12 January 2004.\nOn 3 April 2006, the Secretary of State informed Mr Lumba of his intention to deport him under section 3(5)(a) of the 1971 Act.\nHe was due to be released from prison on 23 June 2006, but by letter dated 22 June 2006 was notified that he was to be detained pending deportation.\nHe left the United Kingdom voluntarily on 13 February 2011.\nKadian Mighty is a citizen of Jamaica.\nHe arrived in the United Kingdom on 4 December 1992 and was given 6 months leave to enter as a visitor.\nThereafter, he made various unsuccessful applications for leave to remain.\nOn 10 February 2003, however, he was granted indefinite leave to remain.\nHe had been convicted of a number of offences, including possession of a Class A drug with intent to supply, for which on 27 June 2003, he was sentenced to 42 months imprisonment.\nFollowing his release on licence, he committed a driving offence and was recalled to prison.\nHe was finally released on 31 March 2006.\nOn 10 May 2006, the Secretary of State informed Mr Mighty of his intention to deport him under section 3(5)(a) of the 1971 Act.\nOn 19 May 2006, he was detained pending deportation because he was likely to abscond and his release was not conducive to the public good.\nHe was released on bail on 28 July 2008.\nSchedule 3 of the 1971 Act provides, so far as material: 2. (1) Where a recommendation for deportation made by a court is in force in respect of any person, and that person is not detained in pursuance of the sentence or order of any court, he shall, unless the court by which the recommendation is made otherwise directs, or a direction is given under sub paragraph (1A) below, be detained pending the making of a deportation order in pursuance of the recommendation, unless the Secretary of State directs him to be released pending further consideration of his case or he is released on bail. (1A) Where (a) a recommendation for deportation made by a court on conviction of a person is in force in respect of him; and (b) he appeals against his conviction or against that recommendation, the powers that the court determining the appeal may exercise include power to direct him to be released without setting aside the recommendation. (2) Where notice has been given to a person in accordance with regulations under section 105 of the Nationality, Immigration and Asylum Act 2002 (notice of decision) of a decision to make a deportation order against him, and he is not detained in pursuance of the sentence or order of a court, he may be detained under the authority of the Secretary of State pending the making of the deportation order. (3) Where a deportation order is in force against any person, he may be detained under the authority of the Secretary of State pending his removal or departure from the United Kingdom (and if already detained by virtue of sub paragraph (1) or (2) above when the order is made, shall continue to be detained unless he is released on bail or the Secretary of State directs otherwise).\nBetween April 2006 and 9 September 2008, the Secretary of States published policy on detention of FNPs under her immigration powers was that there was a presumption in favour of release, although detention could be justified in some circumstances.\nIn fact, during this period the Secretary of State applied a quite different unpublished policy which was described as a near blanket ban by the Secretary of State, Ms Jacqui Smith, to the Prime Minister, Gordon Brown, on 19 September 2007 in a document entitled Bail Proposal for Foreign National Prisoners in which she said: Since April 2006, the BIA [(the Border and Immigration Agency)] has been applying a near blanket ban on release, regardless of whether removal can be achieved and the level of risk to the public linked to the nature of the FNPs original offence.\nBy currently having no discretion to grant bail, the BIA has to regularly transfer FNPs around the Estate.\nOn 9 September 2008, the Secretary of State published a policy which included a presumption of detention and withdrew all references to a presumption of release.\nOn 22 January 2009, following the decision of Davis J in the current proceedings, this policy was amended again to omit the reference to a presumption of detention and substitute a policy in favour of release from detention.\nIt will be necessary to describe the policies and practices adopted from time to time in more detail later in this judgment.\nThe proceedings\nMr Lumba issued proceedings on 18 October 2007.\nHe challenged the lawfulness of his detention on the grounds that he was no longer being detained pending deportation and that his continued detention was in breach of the principles stated by Woolf J in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704 (the Hardial Singh principles).\nHe also claimed a declaration that his detention was unlawful, a mandatory order that he be released and damages.\nOn 4 July 2008, Collins J gave an interlocutory judgment on part of the claim: [2008] EWHC 2090 (Admin).\nHe did not make a decision in relation to Mr Lumbas past detention and reserved for a further hearing inter alia the questions of whether the operation of an unpublished policy had been unlawful and the past detention had been unlawful as a consequence.\nOn 28 July 2008, Mr Lumbas claim was joined to four other cases in which the same points arose.\nOne of these was the claim of Mr Mighty which had been issued on 29 May 2008.\nThe five cases were heard by Davis J on 11 14 November 2008.\nIn an impressive judgment given on 19 December 2008 [2008] EWHC 3166 (Admin), he granted the claimants declarations that (i) paragraph 2 of Schedule 3 to the 1971 Act prohibits the Secretary of State from operating any policy in relation to the detention of FNPs which contains a presumption in favour of detention and (ii) it was unlawful for the Secretary of State to operate the policy introduced in April 2006 in that it was not sufficiently published or accessible until its publication on 9 September 2008.\nHe dismissed the other claims, in particular the claims for damages for unlawful detention.\nThe appellants appealed and the Secretary of State cross appealed against the first declaration.\nIn a judgment of the court delivered by Stanley Burnton LJ, the Court of Appeal (Lord Neuberger MR, Carnwath and Stanley Burnton LJJ) ([2010] 1 WLR 2168) allowed the cross appeal and set aside the first declaration.\nThey also varied the second declaration.\nOtherwise the appeals were dismissed.\nThe issues\nThe principal issues are as follows. (i) Were the detention policies that were applied to the appellants after April 2006 unlawful because (a) they were blanket policies (para 21 below) and\/or (b) they were inconsistent with the published policies (para 26 below) and\/or (c) they were not published policies (paras 27 38 below) and\/or (d) they contained a presumption in favour of detention (paras 40 55 below)? (ii) If unlawful policies were applied to the appellants, was their detention unlawful in consequence (paras 56 89)? (iii) If their detention was unlawful, are the appellants entitled to more than nominal damages (paras 90 101 below)? (iv) Is Mr Lumba entitled to damages for unlawful detention on the grounds that, in his case, there has been a breach of the Hardial Singh principles? (paras 102 148 below) (v) Are the appellants entitled to an award of exemplary damages (paras 150 168 below)? The policies in more detail\nThe published policies\nThe presumption of release had been entrenched in the Secretary of States published policies since at least 1991.\nIt appeared in the White Paper Fairer, Faster and Firmer: a Modern Approach to Immigration and Asylum (1998) (Cm 4018), which was published in 1998 and again in 2002 in the White Paper Secure Borders, Safe Haven: Integration Diversity in Modern Britain (2002) (Cm 5387) which stated at para 4.76: Our 1998 White paper set out the criteria by which Immigration Act powers of detention were exercised and confirmed that the starting point in all cases was a presumption in favour of granting temporary admission or release.\nThe criteria were modified in March 2000 to include detention at Oakington Reception Centre if it appeared that a claimants asylum application could be decided quickly.\nThe modified criteria and the general presumption remain in place.\nChapter 38 of the Operational Enforcement Manual (OEM), which was a published document in force until April 2008, stated in its introductory section that the 1998 White Paper confirmed that there was a presumption in favour of temporary admission or release and that, whenever possible, we would use alternatives to detention.\nPara 38.3 stated: 1.\nThere is a presumption in favour of temporary admission or temporary release. 2.\nThere must be strong grounds for believing that a person will not comply with conditions of temporary admission or temporary release for detention to be justified. 3.\nAll reasonable alternatives to detention must be considered before detention is authorised.\nIdentical wording was contained in Chapter 55 of the Enforcement Instructions and Guidance (EIG) which replaced Chapter 38 of the OEM and came into force on 19 June 2008.\nOn 9 September 2008, Chapter 55 of the EIG was amended.\nWith regard to FNPs, para 55.1.2 stated: Due to the clear imperative to protect the public from harm and the particular risk of absconding in these cases, the presumption in favour of temporary admission or temporary release does not apply where the deportation criteria are met.\nInstead the person will normally be detained, provided detention is, and continues to be lawful.\nThe EIG then gave guidance to caseworkers as to the factors which might make further detention unlawful.\nIn particular, it stated that the presumption of detention will be displaced where legally the person cannot or can no longer be detained because detention would exceed the period reasonably necessary for the purpose of removal.\nFollowing the decision of Davis J in the current proceedings, on 22 January 2009 this policy was changed again so as to replace a presumption in favour of detention with a presumption in favour of release from detention.\nThe unpublished policies\nThe true picture during the period from April 2006 until September 2008 was very different.\nFollowing the public disclosure on 25 April 2006 that 1,013 FNPs had been released from prison before consideration had been given to the question of whether they should have been deported, the Secretary of State adopted a new policy which he did not publish.\nI have already referred at para 5 above to the description of it contained in the 19 September 2007 Bail Proposal as a near blanket ban.\nThe policy of blanket detention admitted of exceptions only on compassionate grounds.\nNo formal guidance was given to caseworkers to give effect to this policy until on 8 November 2007 they were issued with a document (known as Cullen 1) which set out criteria and guidance for the identification and release of FNPs who were considered to pose the lowest risks to the public and the lowest risks of absconding.\nCullen 1 was not published to the outside world.\nIt led at most to the release of a handful of FNPs.\nIn March 2008, an amended guidance document (known as Cullen 2) was issued to the caseworkers.\nIt too was not published to the outside world.\nAttached to Cullen 1 and Cullen 2 was an extensive list of offences entitled List of recorded crimes where release from immigration detention or at the end of custody will not be appropriate.\nIn practice, almost all FNPs who had been sentenced to imprisonment were likely to have committed one or more of such offences.\nBoth Mr Lumba and Mr Mighty had done so.\nThe evidence of David Wood, Strategic Director of the Criminality and Detention Group, was that between December 2006 and July 2008, 15 FNPs were released from detention.\nOn 22 May 2008, the existence of an unpublished policy or practice was belatedly disclosed by the Secretary of State to Mitting J after he had given judgment in the case of R (Ashori) v Secretary of State for the Home Department [2008] EWHC 1460 (Admin).\nMore detail as to the circumstances in which the policy came to be disclosed is given by Davis J at paras 21 to 26 of his judgment.\nThe unpublished policies were applied to Mr Lumba and Mr Mighty\nIt is now common ground that the unpublished policies were applied to the two appellants throughout their detention.\nIt is, therefore, unnecessary to consider para 203 of the judgment of Davis J (where the judge stated that there was nothing to show that Mr Lumba was detained by application of the unpublished policy) or para 100 of the judgment of the Court of Appeal which upheld Davis J on this point.\nWere these policies unlawful?\nHere too, there is little dispute between the parties.\nMr Beloff QC rightly accepts as correct three propositions in relation to a policy.\nFirst, it must not be a blanket policy admitting of no possibility of exceptions.\nSecondly, if unpublished, it must not be inconsistent with any published policy.\nThirdly, it should be published if it will inform discretionary decisions in respect of which the potential object of those decisions has a right to make representations.\nAs regards the first of these propositions, it is a well established principle of public law that a policy should not be so rigid as to amount to a fetter on the discretion of decision makers.\nDavis J held that the unpublished policy was not a blanket policy.\nThe Court of Appeal disagreed.\nBasing themselves on the review by David Wood of the failure to publish a revised FNP detention policy following the April 2006 crisis approved on 3 August 2009, the Court of Appeal concluded that the policy, as applied at least from the time of Cullen 1 in November 2007, effectively operated on a blanket basis rather than (as held by the judge) one of presumption.\nI agree with this assessment by the Court of Appeal but would go further.\nIt seems clear to me that a blanket policy was also applied from April 2006 until the introduction of Cullen 1 in November 2007.\nDuring this earlier period, the only exceptions made to the policy of universal detention were on compassionate grounds and these were few and far between.\nImportantly, there were no releases on the basis of Hardial Singh principles.\nIndeed, Cullen 1 represented a modest relaxation of the previous position.\nIt is convenient to introduce the Hardial Singh principles at this stage, since they infuse much of the debate on the issues that arise on this appeal.\nIt is common ground that my statement in R (I) v Secretary of State for the Home Department [2002] EWCA Civ 888, [2003] INLR 196 para 46 correctly encapsulates the principles as follows: (i) The Secretary of State must intend to deport the person and can only use the power to detain for that purpose; (ii) The deportee may only be detained for a period that is reasonable in all the circumstances; (iii) If, before the expiry of the reasonable period, it becomes apparent that the Secretary of State will not be able to effect deportation within a reasonable period, he should not seek to exercise the power of detention; (iv) The Secretary of State should act with reasonable diligence and expedition to effect removal.\nLord Phillips says that the first two of these principles cannot properly be derived from Hardial Singh.\nSince their correctness has not been put in issue by the parties to these appeals, I propose to deal with the points shortly.\nAs regards the first principle, I consider that Woolf J was saying unambiguously that the detention must be for the purpose of facilitating the deportation.\nThe passage quoted by Lord Phillips includes the following: as the power is given in order to enable the machinery of deportation to be carried out I regard the power of detention as being impliedly limited to a period which is reasonably necessary for that purpose(emphasis added).\nThe first principle is plainly derived from what Woolf J said.\nAs for the second principle, in my view this too is properly derived from Hardial Singh.\nWoolf J said that (i) the power of detention is limited to a period reasonably necessary for the purpose (as I would say) of facilitating deportation; (ii) what is reasonable depends on the circumstances of the particular case; and (iii) the power to detain ceases where it is apparent that deportation will not be possible within a reasonable period.\nIt is clear at least from (iii) that Woolf J was not saying that a person can be detained indefinitely provided that the Secretary of State is doing all she reasonably can to effect the deportation.\nIt seems to me that, in relation to both the first and second principles, Lord Phillips is suggesting a different interpretation of paragraph 2(3) of Schedule 3 to the 1971 Act from that enunciated by Woolf J.\nI do not agree with this interpretation.\nBut what is perhaps of more importance in the context of these appeals is that in my view it is not appropriate to depart from a decision which has been followed repeatedly for almost 30 years unless it is obviously wrong (which I do not believe to be the case), still less to do so without the benefit of adversarial argument.\nAs regards the second proposition accepted by Mr Beloff, a decision maker must follow his published policy (and not some different unpublished policy) unless there are good reasons for not doing so.\nThe principle that policy must be consistently applied is not in doubt: see Wade and Forsyth Administrative Law, 10th ed (2009) p 316.\nAs it is put in De Smiths Judicial Review, 6th ed (2007) at para 12 039: there is an independent duty of consistent application of policies, which is based on the principle of equal implementation of laws, non discrimination and the lack of arbitrariness.\nThe decision of the Court of Appeal in R (Nadarajah) v Secretary of State for the Home Department [2003] EWCA Civ 1768, [2004] INLR 139 is a good illustration of the principle.\nAt para 68, Lord Phillips MR, giving the judgment of the court, said that the Secretary of State could not rely on an aspect of his unpublished policy to render lawful that which was at odds with his published policy.\nAs for the third proposition, the Court of Appeal dealt with the issue of whether there is a general rule of law that policies must be published at paras 70 to 79 of their judgment.\nDisagreeing with Davis J, they concluded that there is no such general rule and said that the fact that the appellants were detained pursuant to unpublished policies was not in itself a reason for holding that the decisions to detain them were unlawful.\nMr Beloff did not feel able to support this conclusion.\nIt is unfortunate that the Court of Appeal embarked on this topic at all, since it was not before them and was not, therefore, the subject of argument or citation of authority.\nAs the point is of general importance, I need to say why in my view the judge was right and the Court of Appeal were wrong on this issue both as a matter of common law and ECHR law.\nThe Court of Appeal referred to a statement of Sedley LJ in R v Secretary of State for Education and Employment Ex P Begbie [2000] 1 WLR 1115, 1132C that there were cogent objections to the operation of undisclosed policies affecting individuals entitlements or expectations and said at para 72 that they had no difficulty in accepting this as (no more than) a statement of good administrative practice.\nThey also said that the judge was wrong to rely on Sunday Times v United Kingdom (1979) 2 EHRR 245 and criticised the reasoning in Nadarajah at paras 64 67 which relied on the Sunday Times case in support of the proposition that a relevant policy is part of the law that must be accessible, so as to enable those affected by it reasonably to foresee the consequences of their actions.\nAt para 73, they said that the relevant passage in the judgment of the ECtHR at para 49 of the judgment in the Sunday Times case is not, as we read it, about policy as such, but is rather directed to the need for accessibility and precision, as requirements of law in the strict sense.\nThey went on to say that, in the present context, the requirement for an accessible and precise statement of the relevant law is satisfied by paragraph 2 of Schedule 3 to the 1971 Act, taken with the Hardial Singh guidelines.\nIn short, policy is not the same as law (para 57).\nIn support for their conclusion, they referred to what Laws LJ said in R (SK Zimbabwe) v Secretary of State for the Home Department [2008] EWCA Civ 1204; [2009] 1 WLR 1527, para 33.\nIn that case, the Secretary of State had failed to carry out regular reviews following detention, as required by the Detention Centre Rules.\nAs regards the requirement that any deprivation of liberty be in accordance with a procedure prescribed by law in article 5(1) of the ECHR, Laws LJ said that this was to ensure that any interference is not random and arbitrary, but governed by clear pre existing rules.\nHe continued: Here the rules are the Hardial Singh principles.\nTheir fulfilment in any given case saves a detention from the vice of arbitrariness.\nA system of regular monitoring is, no doubt, a highly desirable means of seeing that the principles are indeed fulfilled.\nBut it is not itself one of those principles.\nBut all that the Hardial Singh principles do is that which article 5(1)(f) does: they require that the power to detain be exercised reasonably and for the prescribed purpose of facilitating deportation.\nThe requirements of the 1971 Act and the Hardial Singh principles are not the only applicable law.\nIndeed, as Mr Fordham QC points out, the Hardial Singh principles reflect the basic public law duties to act consistently with the statutory purpose (Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997, 1030B D) and reasonably in the Wednesbury sense (Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223).\nBut they are not exhaustive.\nIf they were exhaustive, there could be no room for the public law duty of adherence to published policy, which was rightly acknowledged by the Court of Appeal at paras 51, 52 and 58 of their judgment.\nI therefore accept the submission of Mr Husain QC and Mr Fordham that the Court of Appeals criticisms of Nadarajah were misplaced.\nI should interpolate that there is in any event an obvious difference between rules which require the review of a detention to be undertaken at prescribed intervals and rules which prescribe the criteria by which a person is to be released or to be subjected to continuing detention.\nThe fact that a policy states that only persons of a specified category will be considered for release is at least as substantively important as the Hardial Singh principles which determine, for example, that a person may not be detained for an unreasonable period.\nThere is further support in the ECtHR jurisprudence for the proposition that paragraph 2 of Schedule 3 to the 1971 Act and the Hardial Singh principles are not exhaustive of the law.\nIn Medvedyev v France (Appln no 3394\/03, 29 March 2010), the Grand Chamber said at para 80: where deprivation of liberty is concerned it is particularly important that the general principle of legal certainty be satisfied.\nIt is therefore essential that the conditions for deprivation of liberty under domestic and\/or international law be clearly defined.\nThe case of Gillan v United Kingdom (2010) 50 EHRR 45 concerned the stop and search powers conferred on the police by the Terrorism Act 2000.\nFor present purposes, the relevant issue was whether the powers were in accordance with the law within the meaning of article 8(2) of the ECHR.\nA Code of Practice was issued by the Secretary of State to guide police officers in the exercise of their powers of stop and search.\nThe ECtHR said: 77Consequently, the law must indicate with sufficient clarity the scope of any such discretion conferred on the competent authorities and the manner of its exercise.\nThe level of precision required of domestic legislation which cannot in any case provide for every eventuality depends to a considerable degree on the content of the instrument in question, the field it is designed to cover and the number and status of those to whom it is addressed.\nThe ECtHR noted at para 83 that the Code of Practice governs essentially the mode in which the stop and search is carried out, rather than providing any restriction on the officers decision to stop and search.\nThat decision is, as the House of Lords made clear, one based exclusively on the hunch or professional intuition of the officer concerned.\nIn the opinion of the court, there was a clear risk of arbitrariness in the grant of such a broad discretion to the police officer.\nAt para 87, they concluded that, despite the existence of the Code of Practice, the statutory powers were not in accordance with the law because they were neither sufficiently circumscribed nor subject to adequate legal safeguards against abuse.\nThe rule of law calls for a transparent statement by the executive of the circumstances in which the broad statutory criteria will be exercised.\nJust 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.\nThe individual has a basic public law right to have his or her case considered under whatever policy the executive sees fit to adopt provided that the adopted policy is a lawful exercise of the discretion conferred by the statute: see In re Findlay [1985] AC 318, 338E.\nThere is a correlative right to know what that currently existing policy is, so that the individual can make relevant representations in relation to it.\nIn R (Anufrijeva) v Secretary of State for the Home Department [2003] UKHL 36, [2004] 1 AC 604, para 26 Lord Steyn said: Notice of a decision is required before it can have the character of a determination with legal effect because the individual concerned must be in a position to challenge the decision in the courts if he or she wishes to do so.\nThis is not a technical rule.\nIt is simply an application of the right of access to justice.\nPrecisely the same is true of a detention policy.\nNotice is required so that the individual knows the criteria that are being applied and is able to challenge an adverse decision.\nI would endorse the statement made by Stanley Burnton J in R (Salih) v Secretary of State for the Home Department [2003] EWHC 2273 at para 52 that it is in general inconsistent with the constitutional imperative that statute law be made known for the government to withhold information about its policy relating to the exercise of a power conferred by statute.\nAt para 72 of the judgment of the Court of Appeal in the present case, this statement was distinguished on the basis that it was made in the quite different context of the Secretary of States decision to withhold from the individuals concerned an internal policy relating to a statutory scheme designed for their benefit.\nThis is not a satisfactory ground of distinction.\nThe terms of a scheme which imposes penalties or other detriments are at least as important as one which confers benefits.\nAs Mr Fordham puts it: why should it be impermissible to keep secret a policy of compensating those who have been unlawfully detained, but permissible to keep secret a policy which prescribes the criteria for their detention in the first place?\nThere was a real need to publish the detention policies in the present context.\nAs Mr Husain points out, the Cullen policies provided that certain non serious offenders could be considered for release.\nThe failure to publish these policies meant that individuals who may have been wrongly assessed as having committed a crime that rendered them ineligible for release would remain detained, when in fact, had the policy been published, representations could have been made that they had a case for release.\nThe precise extent of how much detail of a policy is required to be disclosed was the subject of some debate before us.\nIt is not practicable to attempt an exhaustive definition.\nIt is common ground that there is no obligation to publish drafts when a policy is evolving and that there might be compelling reasons not to publish some policies, for example, where national security issues are in play.\nNor is it necessary to publish details which are irrelevant to the substance of decisions made pursuant to the policy.\nWhat must, however, be published is that which a person who is affected by the operation of the policy needs to know in order to make informed and meaningful representations to the decision maker before a decision is made.\nFor all these reasons, the policies which were applied to Mr Lumba and Mr Mighty were unlawful.\nBut Mr Husain submits (with the support of Mr Rabinder Singh QC and Mr Fordham) that the policies were also unlawful because they included a presumption of detention.\nPresumption of detention\nDavis J held at paras 114 to 116 of his judgment that the provisions of paragraph 2 of Schedule 3 to the 1971 Act operate to prevent the Secretary of State from operating a policy of a presumption in favour of detention of FNPs pending deportation.\nHe applied R (Sedrati) v Secretary of State for the Home Department [2001] EWHC 210 (Admin) in which, by consent, Moses J had granted a declaration that the terms of paragraph 2 of Schedule 3 do not create a presumption in favour of detention upon completion of the sentence.\nOn the Secretary of States cross appeal against the declaration, the Court of Appeal said at para 65: . . there is no reason in principle why paragraph 2.1 of Schedule 3 to the 1971 Act, which clearly does require continued detention unless the Secretary of State otherwise orders (i.e. a presumption of detention), should not be construed as a presumption of detention pending deportation.\nEqually, the Secretary of State may lawfully adopt a policy for the purposes of paragraph 2(2) or (3) that involves a presumption.\nA presumption that those who have committed serious crimes (e.g. most of those listed in Cullen 1 and 2) should be detained is unobjectionable.\nThey went on at para 66 to say that for these reasons the declaration granted by Moses J was wrong and allowed the Secretary of States cross appeal.\nMr Husain, supported by Mr Singh and Mr Fordham, say that the judge was right and the Court of Appeal wrong on this issue.\nThe primary case advanced by Mr Husain is that the policy that was applied between April 2006 and September 2008 was not properly described as a presumptive policy at all, but rather was a blanket policy.\nBut whether that is right or not, Mr Lumba continued to be detained between September 2008 (when the Secretary of State published a policy in favour of detention) and 22 January 2009 (when the order of Davis J was implemented).\nIt follows that even if, as I have accepted, the Court of Appeal was justified in holding that the policy was a blanket policy until September 2008, the presumption of liberty issue is of more than academic interest in this appeal.\nIt is important at the outset to define clearly what a presumption means in this context.\nIt is the Secretary of States case that paragraph 2 of Schedule 3 to the 1971 Act permits the operation of a policy in which she states that a FNP will normally be detained in certain prescribed circumstances.\nSuch a policy serves as a guide to the caseworkers who make the decisions on the ground and as an indication to the FNPs of what they can normally expect in the circumstances specified in the policy.\nI shall refer to such a policy as normal practice.\nIt need not, and usually does not say anything about the burden of proof.\nNormal practice is to be distinguished from presumptions in the strict sense.\nPhipson on Evidence 17th ed (2009) at 6 16 to 6 31 categorises presumptions in this sense into rebuttable presumptions of law, irrebuttable presumptions of law and rebuttable presumptions of fact.\nSuch a presumption usually regulates the burden of proof in legal proceedings.\nThus, a presumption that a deprivation of liberty is unlawful regulates the burden of proof in relation to that issue: the burden is on the detainer to show that there was a power to detain.\nI shall refer to a presumption in the strict sense as a legal presumption.\nThe distinction between normal practice and a legal presumption is fundamental to the present issue.\nThe fact that in legal proceedings the burden of proving a certain issue is allocated to one party rather than the other does not assist in deciding whether the Secretary of State may, in principle, lawfully give guidance that when certain factors are present, the decision should normally be to detain.\nThis distinction was not articulated in the courts below.\nA further preliminary point needs to be made.\nThe legality of a decision may be considered at two stages: first at the administrative stage when the decision is taken and secondly, if the decision is challenged, at the stage of legal proceedings.\nAt the administrative stage, the individual against whom the decision is taken often plays no part.\nIt is not appropriate to talk of a burden of proof at this stage: see, for example, R v Lichniak [2003] 1 AC 903 at para 16 per Lord Bingham.\nAt the stage of legal proceedings, the Secretary of State rightly accepts that the burden of proof is on her to justify the detention.\nThis has long been established: Allen v Wright (1838) 8 C & P 522 and Lord Atkins dissenting speech in Liversidge v Anderson [1942] AC 206, 245 every detention is prima facie unlawful and that it is for a person directing imprisonment to justify his act.\nMr Husain submits that there is a presumption of liberty both under the jurisprudence of the ECtHR or at common law.\nI shall start with the jurisprudence on article 5 of the ECHR which Mr Husain submits establishes that there is such a presumption.\nHe refers to Ilijkov v Bulgaria (Application No 33977\/96) (unreported) 26 July 2001 where the ECtHR said: 84.\nThe court reiterates that continued detention can be justified in a given case only if there are specific indications of a genuine requirement of public interest which, notwithstanding the presumption of innocence, outweighs the rule of respect for individual liberty.\nAny system of mandatory detention on remand is per se incompatible with article 5(3) of the Convention.\nWhere the law provides for a presumption in respect of factors relevant to the grounds for continued detention. the existence of the concrete facts outweighing the rule of respect for individual liberty must be nevertheless convincingly demonstrated. 85.\nMoreover, the court considers that it was incumbent on the authorities to establish those relevant facts.\nShifting the burden of proof to the detained person in such matters is tantamount to overturning the rule of article 5 of the Convention, a provision which makes detention an exceptional departure from the right to liberty and one that is only permissible in exhaustively enumerated and strictly defined cases.\nThis was a decision in relation to an alleged violation of article 5(3) which provides: Everyone arrested or detained in accordance with the provisions of paragraph 1(c) of this article shall be brought promptly before a judge or other officer authorised by law to exercise judicial power and shall be entitled to trial within a reasonable time or to release pending trial.\nMr Husain submits that, although these principles were articulated in the context of detention pending trial, they are more widely applicable as expressions of the right to liberty protected by article 5: see also Bykov v Russia (Application No 4378\/02, 10 March 2009) at para 61 and Bordikov v Russia (Application no 921\/03, 9 October 2009) at para 88.\nHowever, these cases only concern legal presumptions that regulate burdens of proof in legal proceedings.\nThey are not concerned with normal practice contained in a policy of the kind with which these appeals are concerned.\nIn Ilijkov, the national courts rejected a series of applications for bail pending trial.\nThey did so relying on the Bulgarian Code of Criminal Procedure, which provided that, for certain crimes, detention on remand was mandatory in the absence of exceptional circumstances.\nThe ECtHR held that the initial decision to detain was lawful, but that the continuing application of the presumption of detention by the national judicial authorities was unlawful (paras 78 9 and 87).\nThe case was not concerned with the lawfulness of any decision to detain taken at an administrative stage.\nIt is clear from para 84 of the judgment that the court held that there was a breach of article 5(3).\nThere is, however, no provision in article 5(1)(f) corresponding with article 5(3) and there is nothing to indicate that the court intended its ruling in relation to article 5(1)(c) and 5(3) to apply to article 5(1)(f).\nThe decisions in Bykov and Bordikov do not advance the argument.\nPara 61 of the judgment in Bykov merely reiterates what the court has repeatedly said in relation to article 5(3).\nThe reference to the presumption of release under article 5 is a reference to the second limb of article 5(3).\nThe case is concerned with the decisions of judicial authorities and not administrative decision makers.\nSimilarly, para 88 of the judgment in Bordikov makes it clear that the court in that case too was only concerned with the decisions of the courts.\nThe principal ECtHR authority on article 5(1)(f) is Saadi v UK (2008) 47 EHRR 427.\nThe applicant sought judicial review of the decision to detain him for a short period while his asylum claim was being subject to fast track processing.\nThe decision was made pursuant to a policy under which all asylum claimants falling within defined criteria (usually by nationality) were normally detained at Oakington while their claims were determined in an accelerated process.\nThis was a normal practice case and not a case about legal presumptions.\nThe ECtHR held inter alia that deprivation of liberty must not be arbitrary.\nIt must comply with the substantive and procedural rules of national law and the detention must be in good faith.\nAt para 69, the court said: The condition that there be no arbitrariness further demands that both the order to detain and the execution of the detention must genuinely conform with the purpose of the restrictions permitted by the relevant sub paragraph of article 5(1).\nThere must in addition be some relationship between the ground of permitted deprivation of liberty relied on and the place and conditions of detention.\nAnd at para 72: Similarly, where a person has been detained under article 5(1)(f), the Grand Chamber, interpreting the second limb of this sub paragraph, held that, as long as a person was being detained with a view to deportation, that is, as long as action [was] being taken with a view to deportation, there was no requirement that the detention be reasonably considered necessary, for example, to prevent the person concerned from committing an offence or fleeing.\nThe Grand Chamber further held in Chahal (1997) 23 EHRR 413 that the principle of proportionality applied to detention under article 5(1)(f) only to the extent that the detention should not continue for\nan unreasonable length of time\nIt was this statement which led the Court of Appeal to conclude at para 62 that a national law that authorises detention with a view to deportation may be compatible with article 5 even if it imposes a presumption of detention pending deportation.\nIt is not clear in what sense the Court of Appeal was using the phrase presumption of detention in this passage.\nBut if it is construed as a reference to normal practice, I agree with it, provided that it requires the Government to justify the detention with reasons that are closely connected to the statutory purpose of effecting deportation.\nI turn to the position at common law.\nIt is not in dispute that the right to liberty is of fundamental importance and that the courts should strictly and narrowly construe general statutory powers whose exercise restricts fundamental common law rights and\/or constitutes the commission of a tort.\nThe Court of Appeal said at para 63 that there is no rule of our domestic law that precludes the application of a presumption in favour of detention pending deportation, subject, of course, to the limitations in Ex P Hardial Singh [1984] 1 WLR 704, none of which involves consideration of risk of reoffending or absconding.\nSuch risks, they said, are relevant to the reasonableness of the period during which it is lawful to detain a FNP, but the absence of such a risk does not of itself render detention unlawful.\nIf by presumption in favour of detention the Court of Appeal meant the normal practice as to the circumstances in which a FNP will be detained, then I would agree with them, provided that it is understood that (i) the Hardial Singh principles are observed and (ii) each case is considered individually.\nThe Court of Appeal set aside the declaration granted by Davis J. They were right to do so.\nFor the reasons I have given, it is lawful for the Secretary of State to operate a policy which sets out the practice that she will normally follow in deciding whether or not to detain FNPs pending their deportation provided that the criteria that I have set out at para 53 above are satisfied.\nSuch a policy is not prohibited by paragraph 2 of Schedule 3 to the 1971 Act.\nThe Court of Appeal also held at para 66 that the declaration granted by Moses J in Sedrati [2001] EWHC Admin 418 was wrong in law.\nI find this somewhat puzzling.\nThe declaration stated that the terms of paragraph 2 of Schedule 3 do not create a presumption in favour of detention.\nWhatever the position may be in relation to paragraph 2(1) and the parenthesis in paragraph 2(3), paragraph 2(2) and the remainder of paragraph 2(3) do not create any presumption at all.\nThey simply give the Secretary of State a discretion to detain.\nIn relation to paragraph 2(2) and (3), therefore, so far as it goes, the declaration granted by Moses J is correct.\nWere the detentions unlawful?\nIn summary, the appellants case is that their claims in false imprisonment should have succeeded: the Secretary of States unlawful unpublished policy which operated between April 2006 and September 2008 influenced the initial decisions to detain them and the subsequent decisions to continue to detain them.\nDavis J accepted the argument advanced on behalf of the Secretary of State that, where the unlawful policy was of no causative effect because the claimants could and would have been lawfully detained if the published policy had been applied, their detention was not unlawful.\nThe Court of Appeal agreed.\nThey distinguished Christie v Leachinsky [1947] AC 573 and Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662 on the footing that in those cases there was no lawful authority to detain the plaintiff.\nIn the present case, however, they said at para 87: there is no doubt that the statutory powers relied on by the Secretary of State were apt for the purpose, and the case is not based on the breach of any specific regulation on which the legality of detention was dependent.\nRather it is about the manner in which the power was exercised.\nAnd at para 89: The mere existence of an internal, unpublished policy or practice at variance with, and more disadvantageous to the FNP than, the published policy will not render a decision to detain unlawful.\nIt must be shown that the unpublished policy was applied to him.\nEven then, it must be shown that the application of the policy was material to the decision.\nIf the decision to detain him was inevitable, the application of the policy is immaterial, and the decision is not liable to be set aside as unlawful.\nIn short, since Mr Lumba and Mr Mighty would inevitably have been detained even if the published policy had been applied to them, their detentions were lawful.\nThe court therefore applied what it is convenient to call the causation test.\nDavis J and the Court of Appeal were right to hold that the detention of the appellants would have been inevitable in the light of the risk of absconding and re offending that they both posed.\nThis appeal therefore raises the important question of whether it was right to apply the causation test and for that reason to hold that the detentions were lawful.\nA somewhat similar problem arose in R (SK Zimbabwe) v Secretary of State for the Home Department.\nIn that case the unlawfulness lay in the failure of the Secretary of State to comply with her policy which prescribed the procedural requirements for reviews of FNPs who are already in detention.\nThe present case concerns the substantive requirements for the initial detention of FNPs as well as their continued detention.\nWhat follows is to a considerable extent based on the submissions of Mr Husain.\nThe introduction of a causation test in the tort of false imprisonment is contrary to principle both as a matter of the law of trespass to the person and as a matter of administrative law.\nNeither body of law recognises any defence of causation so as to render lawful what is in fact an unlawful authority to detain, by reference to how the executive could and would have acted if it had acted lawfully, as opposed to how it did in fact act.\nThe causation test entails the surprising proposition that the detention of a person pursuant to a decision which is vitiated by a public law error is nevertheless to be regarded as having been lawfully authorised because a decision to detain could have been made which was not so vitiated.\nIn my view, the law of false imprisonment does not permit history to be rewritten in this way.\nThe Court of Appeal were right to say at para 89 that the mere existence of an unlawful policy is not sufficient to establish that any particular exercise of a statutory discretion is unlawful.\nThe decision to detain and\/or continue detention will not be vitiated on the grounds of an unlawful policy unless the policy has been applied or at least taken into account by the decision maker.\nBut this does not shed any light on the correctness of the causation test.\nTrespassory torts (such as false imprisonment) are actionable per se regardless of whether the victim suffers any harm.\nAn action lies even if the victim does not know that he was imprisoned: see, for example, Murray v Ministry of Defence [1988] 1 WLR 692, 703A where Lord Griffiths refused to redefine the tort of false imprisonment so as to require knowledge of the confinement or harm because The law attaches supreme importance to the liberty of the individual and if he suffers a wrongful interference with that liberty it should remain actionable even without proof of special damage.\nBy contrast, an action on the case (of which a claim in negligence is the paradigm example) regards damage as the essence of the wrong.\nAll this is elementary, but it needs to be articulated since it demonstrates that there is no place for a causation test here.\nAll that a claimant has to prove in order to establish false imprisonment is that he was directly and intentionally imprisoned by the defendant, whereupon the burden shifts to the defendant to show that there was lawful justification for doing so.\nAs Lord Bridge said in R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58, 162C D: The tort of false imprisonment has two ingredients: the fact of imprisonment and the absence of lawful authority to justify it.\nThe causation test shifts the focus of the tort on to the question of how the defendant would have acted on the hypothesis of a lawful self direction, rather than on the claimants right not in fact to be unlawfully detained.\nThere is no warrant for this.\nA purported lawful authority to detain may be impugned either because the defendant acted in excess of jurisdiction (in the narrow sense of jurisdiction) or because such jurisdiction was wrongly exercised.\nAnisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 established that both species of error render an executive act ultra vires, unlawful and a nullity.\nIn the present context, there is in principle no difference between (i) a detention which is unlawful because there was no statutory power to detain and (ii) a detention which is unlawful because the decision to detain, although authorised by statute, was made in breach of a rule of public law.\nFor example, if the decision to detain is unreasonable in the Wednesbury sense, it is unlawful and a nullity.\nThe importance of Anisminic is that it established that there was a single category of errors of law, all of which rendered a decision ultra vires: see Boddington v British Transport Police [1999] 2 AC 143, 158D E.\nMr Beloff submits that there are inherent problems in what I consider to be the correct and principled approach.\nFirst, it fails to take account of the nature or extent of the public law error.\nFor example, he suggests that it treats for the purposes of liability as equally unlawful a decision to detain made by an official one grade lower than that specified in the detention policy (but which is otherwise unimpeachable) and a decision to detain for which there is no statutory authority at all.\nSecondly, it allows what is in essence a public law challenge to be made under the guise of a private law action without any of the procedural safeguards which apply in a judicial review application.\nIn particular, the normal time limits for judicial review proceedings are circumvented.\nThirdly, judicial review is a discretionary remedy.\nA minor public law error may result in no substantive relief being granted at all in judicial review proceedings, whereas a claimant can bring proceedings for false imprisonment as of right.\nI do not consider that these arguments undermine what I have referred to as the correct and principled approach.\nAs regards Mr Beloffs first point, the error must be one which is material in public law terms.\nIt is not every breach of public law that is sufficient to give rise to a cause of action in false imprisonment.\nIn the present context, the breach of public law must bear on and be relevant to the decision to detain.\nThus, for example, a decision to detain made by an official of a different grade from that specified in a detention policy would not found a claim in false imprisonment.\nNor too would a decision to detain a person under conditions different from those described in the policy.\nErrors of this kind do not bear on the decision to detain.\nThey are not capable of affecting the decision to detain or not to detain.\nLord Walker and Lord Hope would prefer the more demanding test of the wrongful use of a statutory power amounting to an abuse of power.\nIt is true that the phrase abuse of power is used in certain contexts in public law.\nFor example, it has been held that the court will in a proper case decide whether to frustrate the legitimate expectation of a substantial benefit is so unfair that to take a different course will amount to an abuse of power: see R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213 para 57.\nIn that context, the phrase abuse of power denotes a degree of unfairness.\nIt is not clear to me in what sense the phrase abuse of power is being suggested in the present context.\nSuppose that a detention policy states that no FNP who has been sentenced to less than 12 months imprisonment is to remain in detention pending deportation for more than 6 months.\nSuppose further that, by an administrative oversight, a FNP who has been sentenced to 9 months imprisonment is detained for 12 months.\nThere can be little doubt that the FNP would have a good claim for substantial damages for false imprisonment in respect of the period of 6 months when he should not have been detained.\nIt would be odd to say that his detention during that period was the result of an abuse of power.\nI would say that the FNP would be the victim of a material public law error.\nThe error was one which was relevant to the decision to detain him.\nIt was capable of affecting the decision to continue to detain him and did in fact do so.\nAs for Mr. Beloffs other points, such force as they have derives from the fact that the detention in these cases is unlawful because it is vitiated by a public law error.\nThe significance and effect of that error cannot be affected by the fortuity that it is also possible for a victim to challenge the decision by judicial review proceedings (which are subject to tighter time limits than private law causes of action) and that judicial review is a discretionary remedy.\nIt is well established that a defendant can rely on a public law error as a defence to civil proceedings and that he does not need to obtain judicial review as a condition for defending the proceedings: see, for example, Wandsworth London Borough Council v Winder [1985] AC 461.\nThe same applies in the context of criminal proceedings: see Boddington v British Transport Police [1999] 2 AC 143.\nMr Beloff submits that the position of a claimant who relies on a public law error to found his cause of action and a defendant can sensibly be differentiated.\nBut it is difficult to see how or why.\nI can see that at first sight it might seem counter intuitive to hold that the tort of false imprisonment is committed by the unlawful exercise of the power to detain in circumstances where it is certain that the claimant could and would have been detained if the power had been exercised lawfully.\nBut the ingredients of the tort are clear.\nThere must be a detention and the absence of lawful authority to justify it.\nWhere the detainer is a public authority, it must have the power to detain and the power must be lawfully exercised.\nWhere the power has not been lawfully exercised, it is nothing to the point that it could have been lawfully exercised.\nIf the power could and would have been lawfully exercised, that is a powerful reason for concluding that the detainee has suffered no loss and is entitled to no more than nominal damages.\nBut that is not a reason for holding that the tort has not been committed.\nBoth Mr Husain and Mr Beloff have referred to much authority.\nI shall refer to some of it.\nBut there is nothing in the cases which shows that the conclusion which I consider is dictated by principle is questionable, still less that it is wrong.\nMr Husain relies on dicta of Lord Diplock in Holgate Mohamed v Duke [1984] AC 437.\nLord Diplock recognised that a claim for false imprisonment may be made out where police powers of arrest are unlawfully exercised by reference to common law principles.\nThe statutory power for an arrest without warrant (section 2(4) of the Criminal Law Act 1967)) made it a condition precedent that the constable should have reasonable cause to suspect the person to be guilty of the arrestable offence in respect of which the arrest was being made.\nOn the facts, the condition precedent was made out.\nLord Diplock said at p 443B that this left the officer with an executive discretion whether to arrest or not.\nThe lawfulness of the way in which the discretion had been exercised could not be challenged except on Wednesbury grounds.\nHe then continued: The Wednesbury principlesare applicable to determining the lawfulness of the exercise of the statutory discretion of a constable under section 2(4) of the Criminal Law Act 1967, not only in proceedings for judicial review but also for the purpose of founding a cause of action at common law for damages for that species of trespass to the person known as false imprisonment, for which the action in the instant case is brought. (emphasis added)\nLord Diplock then applied the Wednesbury principles and concluded that the officers action was not unlawful.\nIt follows that his comments about false imprisonment were obiter dicta.\nNevertheless, it is clear that, if he had concluded that the officer had exercised his statutory discretion unlawfully, Lord Diplock would have held that he was liable in tort for false imprisonment.\nI accept, however, that these are no more than dicta, albeit from a source of high authority, and that the issue does not seem to have been the subject of much if any argument in the House of Lords.\nOther authorities relied on by Mr Husain as rejecting the causation test include Christie v Leachinsky [1947] AC 573, Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662 and Langley v Liverpool City Council [2006] 1 WLR 375.\nIn addition, Mr Singh relies on Cooper v The Board of Works for the Wandsworth District (1863) 14 C.B. (N.S) 180.\nIn Christie v Leachinsky, Viscount Simon explained that where an arrest was unlawful because it did not comply with the procedural requirements imposed by the common lawcommunication of the true and good ground of arrest to the detaineethere would be a false imprisonment notwithstanding that the arrest could have been effected in a proper manner.\nAt p 588H he said: I entertain no doubt that in the present case the appellants are not exonerated from liability for false imprisonment by satisfying the judge that they had a reasonable suspicion that the respondent had been guilty of theft or of receiving stolen goods knowing they had been stolen, when they never told the respondent that this was the ground of his arrest.\nInstead of doing so, they gave a different ground which, as Christie admitted, was not a good excuse for arresting him at all.\nMr Beloff submits that this case should be distinguished on the basis that it concerned the giving of reasons for detention which was a condition precedent to a lawful arrest.\nHe argues that it says nothing about the causation test in cases where the alleged error is not a failure to satisfy a condition precedent.\nI do not see why the failure to provide a detainee with the reasons for the arrest should be regarded as a failure to satisfy a condition precedent to lawful arrest rather than an unlawful exercise of the power to arrest.\nIn any event, it would be remarkable if the question whether a cause of action in false imprisonment exists should depend on such fine distinctions of classification.\nMore fundamentally, such distinctions have no justification in the light of Anisminic.\nIn Roberts v Chief Constable of the Cheshire Constabulary, the Court of Appeal held that a failure by the custody officer to conduct a review as required by section 40 of the Police and Criminal Evidence Act 1984 rendered the plaintiffs continued detention unlawful until the next review.\nThe defence was raised that the plaintiff could only prove false imprisonment if he could show that, if the review had been carried out at the appropriate time, he would have been released.\nThis causation defence was rejected by Clarke LJ (with whom Stuart Smith and Schiemann LJJ agreed) at p 667B as being nothing to the point.\nMr Beloff emphasises the fact that the plaintiff was not being detained in accordance with the relevant statutory provisions and that the statute stipulated an express condition precedent to the lawful continuation of the detention, namely a review of detention, and that condition was not satisfied.\nThis argument has no more force than Mr Beloffs corresponding argument in relation to Christie.\nLangley v Liverpool City Council [2006] 1 WLR 375 concerned child protection.\nThe Court of Appeal held that a constable who had wrongfully removed a child under section 46 of the Children Act 1989 was liable in false imprisonment.\nHe should instead have facilitated the exercise of a different power of removal through the execution of an emergency protection order (EPO) obtained by the local authority under section 44 of the 1989 Act.\nI gave the main judgment (with which Thorpe and Lloyd LJJ agreed).\nI held (para 32) that the power to remove a child under section 46 can be exercised even where an EPO is in force.\nI said (para 36) that where a police officer knows that an EPO is in force, he should not exercise the power of removing a child under section 46 unless there are compelling reasons to do so.\nOn the facts of the case, there were no compelling reasons for the constable to exercise the section 46 power.\nThe constable was in error in failing to ask himself whether there were compelling reasons why he should invoke section 46 rather than leave it to the council to execute the EPO.\nI held, therefore, that the removal of the child was unlawful.\nIt was not in issue that, if the removal of the child was unlawful, the Chief Constable was liable to the child in false imprisonment.\nMr Beloff submits that the effect of my reasoning was that the constable had no jurisdiction (in the narrow pre Anisminic sense) to do what he did.\nAs an EPO was in force, it was in effect mandatory to invoke section 44 rather than section 46.\nI do not accept this analysis.\nI drew a clear distinction between the existence of the statutory authority to use the section 46 powers (which the constable had) and the exercise of those powers (which was wrongful on the facts of that case).\nIn Cooper v The Board of Works for the Wandsworth District 14 CB (NS) 180, the defendant board had the statutory power to demolish a house that was in the course of construction.\nIt was held that this power was subject to the common law qualification that it should not be exercised without giving the builder notice and an opportunity to be heard.\nIt was held that the board had exercised its statutory power unlawfully and that the builder was entitled to damages for trespass to property.\nBut I agree with Mr Beloff that this decision does not shed any light on the question whether detention pursuant to an unlawful exercise of a power to detain is itself unlawful.\nAs Byles J put it at p 195, the board contravened the words of the statute.\nIn effect, therefore, the court held that the decision to demolish the house was one which the board had no jurisdiction to make in the narrow pre Anisminic sense.\nI should deal with the authorities relied on by Mr Beloff.\nIn R (Saadi) v Secretary of State for the Home Department [2002] 1 WLR 3131 as I have set out at para 50 above, the issue was whether the policy of detaining certain categories of asylum seekers whose claims could be processed quickly at the Oakington detention centre was lawful.\nThe House of Lords held that it was.\nAt first instance, Collins J had also considered the fact that when detaining the claimants the Home Office had used standard forms which did not reflect the new policy, and that therefore the true reasons for the detention had not been given.\nCollins J said that this did not affect the lawfulness of the detention.\nLord Slynn at para 48 agreed that the failure to give the right reason for detention and the giving of no or wrong reasons did not in the end affect the legality of the detention.\nBut para 48 is not part of the ratio of the decision of the House.\nIn any event, in so far as it was argued at all that the giving of untrue reasons for the detention rendered the detention unlawful, the Secretary of State did not advance a causation defence and contend that the giving of untrue reasons was immaterial because the true reasons were lawful.\nIn Nadarajah v Secretary of State for the Home Department [2004] INLR 139, the Secretary of States published policy was that, if legal proceedings were initiated, removal would not be treated as imminent even if it otherwise was.\nThe Secretary of State also had an unpublished policy, namely that information that proceedings were about to be initiated would be disregarded, however credible that information might be.\nAt paras 68 and 69 of the judgment of Lord Phillips MR, the Court of Appeal said that the Secretary of State could not rely on the unpublished policy as rendering lawful that which was, on the face of it, at odds with his policy, as made public and for that reason the detention of N was unlawful.\nThere is no hint of the causation test here.\nBut the court went on to say that, if Ns solicitors had been aware of the unpublished policy, they would have instituted proceedings sooner.\nN therefore suffered because his solicitor could not foresee the consequences of her conduct and his detention did not satisfy the requirement of lawfulness imposed by article 5(1)(f) of the ECHR.\nI accept that this was a causation point.\nBut it was unnecessary for the court to adopt this additional reason for holding that the detention was unlawful.\nFurther, it requires a huge leap to argue from this that the causation test must be satisfied as an element of the tort of false imprisonment.\nIn short, neither Saadi nor Nadarajah bears the weight that Mr Beloff seeks to place on them.\nRecognising that the court might reject the causation test, Mr Beloff suggested a number of alternative approaches.\nThe first is that false imprisonment should be confined to no authority cases ie cases in which there was in fact no authority to detain, without recourse to the legal fiction that, because of a public law error, an authority to detain which was in fact given should be treated as if it had no legal effect because it was ultra vires.\nThe second is that detention should be vitiated only by pre Anisminic error of law.\nThe third is that vitiating circumstances should be restricted to bad faith and improper purpose.\nThe fourth is that authority to detain should be vitiated only by failure to have regard to a material consideration which had an effect on the detention.\nThe fifth is that it should be a requirement that the claimant shall have successfully applied in judicial review proceedings for the decision to detain to be quashed.\nThe first two of these suggestions seek to put the clock back to the pre Anisminic era.\nFor reasons given earlier, this is unwarranted.\nAs regards the third and fourth suggestions, I have accepted at paras 68 and 69 above that the detention must be vitiated by an error which is material in public law terms and have attempted to explain there what I mean by that.\nThe fifth seeks unjustifiably to impose a procedural hurdle where none currently exists either at common law or in statute.\nTo accede to this suggestion would be to engage in an unacceptable exercise of judicial legislation.\nTo summarise, therefore, in cases such as these, all that the claimant has to do is to prove that he was detained.\nThe Secretary of State must prove that the detention was justified in law.\nShe cannot do this by showing that, although the decision to detain was tainted by public law error in the sense that I have described, a decision to detain free from error could and would have been made.\nOverall conclusion on liability on the basis that the policies applied were unlawful\nI conclude, therefore, that since it is common ground that the unlawful policies in force between April 2006 and September 2008 were applied to Mr Lumba and Mr Mighty, they were unlawfully detained and their claims in false imprisonment must succeed.\nI turn to consider the assessment of damages.\nCompensatory or nominal damages?\nHaving found that there was no liability in false imprisonment, the Court of Appeal did not need to decide whether the claimants were entitled to damages.\nThey did, however, say at para 96: If, on the evidence, it was clear that, even assuming a lawful consideration, there was no realistic possibility of a different decision having been reached, and no realistic possibility of earlier release, then we do not see why that should not be reflected in an award of nominal damages only.\nMr Husain and Mr Westgate submit that, even if it was inevitable that the appellants would have been detained if the statutory power to detain had been lawfully exercised, they are nevertheless entitled to substantial and not merely nominal damages.\nThey emphasise that false imprisonment is a tort of strict liability which is actionable without proof of special damage.\nThe focus is on the claimants right rather than the culpability of the defendants conduct.\nThey rely on two authorities in support of their argument.\nThe first is Roberts v Chief Constable of the Cheshire Constabulary to which I have already referred at para 75 above.\nThe plaintiff issued proceedings for false imprisonment arising from his detention by the police between 5.25 a.m. (when his detention should have been reviewed as required by statute) and 7.45 a.m. the same morning when it was reviewed and his continued detention authorised.\nIt was found by the judge that the detention between 5.25 a.m. and 7.45 a.m. was unlawful, but that, if a review had taken place at 5.25 a.m., his continued detention would have been authorised.\nThe judge awarded the plaintiff 500.\nThe defendants appeal on both liability and damages was dismissed by the Court of Appeal.\nClarke LJ gave the leading judgment.\nHe said at p 668 D that there was an infringement of the plaintiffs legitimate right to have his case reviewed and that, although the outcome may not have been affected by the failure to review in time, this infringement cannot be regarded as a purely nominal matter or a matter compensatable by entirely nominal damages.\nThere are rules, the police must stick to them.\nHe added at p 668G: As a matter of general principle such a plaintiff is entitled to be put into the position in which he would have been if the tort had not been committed.\nIt is therefore important to analyse what the tort is.\nThe plaintiffs claim was not for damages for breach of duty to carry out a review at 5.25 a.m. but for false imprisonment.\nAs I tried to explain earlier, the reason why the continued detention was unlawful was that no review was carried out.\nThe wrong was not, however, the failure to carry out the review but the continued detention.\nIf the wrong had not been committed the plaintiff would not have been detained between 5.25 a.m. and 7.45 a.m.\nI do not consider that this case was correctly decided on the issue of damages.\nI agree that the plaintiff was entitled to be put into the position in which he would have been if the tort of false imprisonment had not been committed.\nBut I do not agree that, if the tort had not been committed, the plaintiff would not have been detained between 5.25 a.m. and 7.45 a.m.\nOn the judges findings, if the tort had not been committed, he would have been detained during this period.\nIt seems to me that the fallacy in the analysis in Roberts is that it draws no distinction between a detainee who would have remained in detention if the review had been carried out (and therefore no tort committed) and a detainee who would not have remained in detention if the review had been carried out.\nBut the position of the two detainees is fundamentally different.\nThe first has suffered no loss because he would have remained in detention whether the tort was committed or not.\nThe second has suffered real loss because, if the tort had not been committed, he would not have remained in detention.\nThe second authority relied on in support of the appellants case is Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] UKHL 19, [2002] 2 AC 883.\nIt was held there that it is no answer to a claim in conversion of goods for a defendant to say that the goods were or would have been subsequently converted by a third party: see the discussion by Lord Nicholls at paras 81 to 84 of his speech.\nBut questions of causation in relation to cases of successive conversion by different tortfeasors have no application in the present context.\nThe question here is simply whether, on the hypothesis under consideration, the victims of the false imprisonment have suffered any loss which should be compensated in more than nominal damages.\nExemplary damages apart, the purpose of damages is to compensate the victims of civil wrongs for the loss and damage that the wrongs have caused.\nIf the power to detain had been exercised by the application of lawful policies, and on the assumption that the Hardial Singh principles had been properly applied (an issue which I discuss at paras 129 148 below), it is inevitable that the appellants would have been detained.\nIn short, they suffered no loss or damage as a result of the unlawful exercise of the power to detain.\nThey should receive no more than nominal damages.\nI should add that this approach is consistent with the observation by Lord Griffiths in Murray v Ministry of Defence [1988] 1WLR 692, 703A B: if a person is unaware that he has been falsely imprisoned and has suffered no harm, he can normally expect to recover no more than nominal damages.\nVindicatory damages\nMr Westgate submits that, if the appellants are entitled to no more than nominal damages, then they should also be awarded vindicatory damages.\nIt has been said that the award of compensatory damages can serve a vindicatory purpose: see, for example, Ashley v Chief Constable of Sussex Police [2008] UKHL 25, [2008] AC 962 per Lord Scott at para 22 and Lord Rodger at para 60.\nBut vindicatory damages serve a wider purpose than simply to compensate a successful claimant.\nThe phrase vindicatory damages seems to have been coined by Sharma CJ in the Court of Appeal of Trinidad and Tobago in Attorney General of Trinidad and Tobago v Ramanoop as a head of loss in claims for breach of constitutionally protected rights and freedoms: see address given by the President of the Caribbean Court of Justice to a Symposium entitled Current Developments in Caribbean Community Law in Port of Spain on 9 November 2009.\nLord Collins has traced the history of the use of the phrase in other contexts.\nThe concept of vindicatory damages was explained and endorsed by the Privy Council in the appeal in the Ramanoop case [2005] UKPC 15, [2006] 1 AC 328.\nLord Nicholls said: 18.\nWhen exercising this constitutional jurisdiction the court is concerned to uphold, or vindicate, the constitutional right which has been contravened.\nA declaration by the court will articulate the fact of the violation, but in most cases more will be required than words.\nIf the person wronged has suffered damage, the court may award him compensation.\nThe comparable common law measure of damages will often be a useful guide in assessing the amount of this compensation.\nBut this measure is no more than a guide because the award of compensation under section 14 is discretionary and, moreover, the violation of constitutional right will not always be coterminous with the cause of action at law. 19.\nAn award of compensation will go some distance towards vindicating the infringed constitutional right.\nHow far it goes will depend on the circumstances, but in principle it may well not suffice.\nThe fact that the right violated was a constitutional right adds an extra dimension to the wrong.\nAn additional award, not necessarily of substantial size, may be needed to reflect the sense of public outrage, emphasise the importance of the constitutional right and the gravity of the breach, and deter further breaches.\nAll these elements had a place in this additional award.\nRedress in section 14 is apt to encompass such an award if the court considers it is required having regard to all the circumstances.\nAlthough such an award, where called for, is likely in most cases to cover much the same ground in financial terms as would an award by way of punishment in the strict sense of retribution, punishment in the latter sense is not its object.\nAccordingly, the expressions punitive damages or exemplary damages are better avoided as descriptions of this type of additional award.\nIt will be seen, therefore, that the Privy Council endorsed the principle of vindicatory damages for violation of constitutional rights.\nShould this principle be extended further? In Ashley at para 22 Lord Scott obiter said that vindicatory damages might be awarded for the tort of battery or trespass to the person by the police resulting in the death of the victim.\nBut the issue in that case was whether a claimant should be allowed to continue with an action in order to establish whether an assault had been committed, where there could be no award of further compensatory damages because these had already been paid in full as a result of a concession by the police.\nLord Scotts view that vindicatory damages have a role in the compensation for civil wrongs and the breach of ECHR rights was endorsed, at least to some extent, in Mosley v News Group Newspapers Ltd [2008] EWHC 1777 (QB).\nIn awarding damages for breach of the claimants right to privacy, after recognising the compensatory nature of damages for infringements of privacy, Eady J said at paras 216 7 that there was another factor which probably had to be taken into account, namely vindication to mark the infringement of the right.\nIt is one thing to say that the award of compensatory damages, whether substantial or nominal, serves a vindicatory purpose: in addition to compensating a claimants loss, it vindicates the right that has been infringed.\nIt is another to award a claimant an additional award, not in order to punish the wrongdoer, but to reflect the special nature of the wrong.\nAs Lord Nicholls made clear in Ramanoop, discretionary vindicatory damages may be awarded for breach of the Constitution of Trinidad and Tobago in order to reflect the sense of public outrage, emphasise the importance of the constitutional right and the gravity of the breach and deter further breaches.\nIt is a big leap to apply this reasoning to any private claim against the executive.\nMcGregor on Damages 18th ed (2009) states at para 42 009 that It cannot be said to be established that the infringement of a right can in our law lead to an award of vindicatory damages.\nAfter referring in particular to the appeals to the Privy Council from Caribbean countries, the paragraph continues: the cases are therefore far removed from tortious claims at home under the common law.\nI agree with these observations.\nI should add that the reference by Lord Nicholls to reflecting public outrage shows how closely linked vindicatory damages are to punitive and exemplary damages.\nThe implications of awarding vindicatory damages in the present case would be far reaching.\nUndesirable uncertainty would result.\nIf they were awarded here, then they could in principle be awarded in any case involving a battery or false imprisonment by an arm of the state.\nIndeed, why limit it to such torts? And why limit it to torts committed by the state? I see no justification for letting such an unruly horse loose on our law.\nIn my view, the purpose of vindicating a claimants common law rights is sufficiently met by (i) an award of compensatory damages, including (in the case of strict liability torts) nominal damages where no substantial loss is proved, (ii) where appropriate, a declaration in suitable terms and (iii) again, where appropriate, an award of exemplary damages.\nThere is no justification for awarding vindicatory damages for false imprisonment to any of the FNPs.\nApplication of Hardial Singh principles to the appeal of Mr Lumba\nIn addition to the issues that are raised which are common to both appeals, it is submitted on behalf of Mr Lumba (but not Mr Mighty) that his detention is unlawful on the grounds that there has been a breach of the Hardial Singh principles.\nThis part of the appeal raises a number of points about the reach of those principles.\nI refer to the encapsulation of the principles set out in my judgment in R (I) [2003] INLR 196 at para 22 above.\nA convenient starting point is to determine whether, and if so when, there is a realistic prospect that deportation will take place.\nAs I said at para 47 of my judgment in R (I), there may be situations where, although a reasonable period has not yet expired, it becomes clear that the Secretary of State will not be able to deport the detained person within a period that is reasonable in all the circumstances, having regard in particular to time that the person has already spent in detention.\nI deal below with the factors which are relevant to a determination of a reasonable period.\nBut if there is no realistic prospect that deportation will take place within a reasonable time, then continued detention is unlawful.\nHow long is a reasonable period? At para 48 of my judgment in R (I), I said: It is not possible or desirable to produce an exhaustive list of all the circumstances that are, or may be, relevant to the question of how long it is reasonable for the Secretary of State to detain a person pending deportation pursuant to paragraph 2(3) of Schedule 3 to the Immigration Act 1971.\nBut in my view, they include at least: the length of the period of detention; the nature of the obstacles which stand in the path of the Secretary of State preventing a deportation; the diligence, speed and effectiveness of the steps taken by the Secretary of State to surmount such obstacles; the conditions in which the detained person is being kept; the effect of detention on him and his family; the risk that if he is released from detention he will abscond; and the danger that, if released, he will commit criminal offences.\nSo far as I am aware, subject to the following qualifications, the relevance of these factors has not been questioned.\nThe qualifications are first that the relevance of the risk of offending on release is challenged on behalf of the appellants in the present case.\nSecondly, the nature of the obstacles begs two questions that have been raised on this appeal, namely what is the relevance, if any, of delays attributable to the fact that a detained person (i) is challenging the decision to deport him by appeal or judicial review and will generally not be deported until his challenges have been determined; and (ii) has refused to return voluntarily to his country of origin?\nRisk of re offending\nMr Husain accepts that, where there is a risk that the detained person will abscond, the risk of re offending is relevant to the assessment of the duration of detention that is reasonably necessary to effect deportation.\nBut he submits that, where there is no real risk of absconding, the risk of re offending cannot of itself justify detention.\nWhere there is no such risk, detention is not necessary to facilitate deportation, because it will be possible to effect the deportation without the need for detention.\nThe underlying purpose of the power to detain is not to prevent the commission of criminal offences, but to facilitate the implementation of a deportation order.\nI have some difficulty in understanding why the risk of re offending is a relevant factor in a case where there is a risk of absconding, but not otherwise.\nIt seems to me that it is possible to construe the power to detain either (more narrowly) as a power which may only be exercised to further the object of facilitating a deportation, or (more broadly) as a power which may also be exercised to further the object which it is sought to achieve by a deportation, namely, in the present case, that of removing an offender whose presence is not conducive to the public good.\nThe distinction between these two objects was clearly drawn by the Court of Appeal in R (A) v Secretary of State for the Home Department [2007] EWCA Civ 804.\nToulson LJ said at para 55: A risk of offending if the person is not detained is an additional relevant factor, the strength of which would depend on the magnitude of the risk, by which I include both the likelihood of it occurring and the potential gravity of the consequences.\nMr Drabble submitted that the purpose of the power of detention was not for the protection of public safety.\nIn my view, that is over simplistic.\nThe purpose of the power of deportation is to remove a person who is not entitled to be in the United Kingdom and whose continued presence would not be conducive to the public good.\nIf the reason why his presence would not be conducive to the public good is because he has a propensity to commit serious offences, protection of the public from that risk is the purpose of the deportation order and must be a relevant consideration when determining the reasonableness of detaining him pending his removal or departure.\nPara 78 of Keene LJs judgment is to similar effect.\nI acknowledge that the principle that statutory powers should be interpreted in a way which is least restrictive of liberty if that is possible would tend to support the narrower interpretation.\nBut I think that the Court of Appeal was right in R (A) to adopt the interpretation which gives effect to the purpose underlying the power to deport and which the power to detain is intended to facilitate.\nPerhaps a simpler way of reaching the same conclusion is to say, as Simon Brown LJ said in R (I) at para 29, that the period which is reasonable will depend on the circumstances of the particular case and the likelihood or otherwise of the detainee re offending is an obviously relevant circumstance.\nBut the risk of re offending is a relevant factor even if the appellants are right in saying that it is relevant only when there is also a risk of absconding.\nAs Lord Rodger pointed out in argument, if a person re offends there is a risk that he will abscond so as to evade arrest or if he is arrested that he will be prosecuted and receive a custodial sentence.\nEither way, his re offending will impede his deportation.\nThe risk of re offending is, therefore, a relevant factor.\nDelay attributable to challenges to deportation\nMr Beloff submits that the time taken to resolve legal challenges brought by an individual against deportation should generally be left out of account in considering whether a reasonable period of detention has elapsed.\nHe concedes that this general rule should be subject to two qualifications: (i) if the Secretary of State has caused delay in the resolution of the legal challenge, then that time may be taken into account; and (ii) the time during which a legal challenge is being resolved should be taken into account if removal is not possible for reasons unrelated to the legal challenge.\nI shall call this general rule the exclusionary rule.\nIn support of this submission, Mr Beloff makes the following points.\nFirst, it is the individuals choice to challenge the removal and, if the time taken to resolve legal challenges were taken into account, the length of detention would be outside the control of the Secretary of State and would be entirely within the control of the detained person.\nSecondly, if the position were otherwise, those who (if at large) would be a danger to the public or who would be likely to thwart a deportation order by absconding, would be able to increase their prospects of release by pursuing every conceivable point by way of legal challenges and by doing everything possible to delay the legal process.\nThirdly, if the legality of detention is capable of depending on the merits of a challenge to the decision to deport, it will be necessary for the High Court to decide for itself the merits of the underlying challenge, in advance of consideration of the case by the specialist tribunal appointed by Parliament to undertake that task.\nThat is undesirable.\nAt para 102 of their judgment, the Court of Appeal said: In our judgment, the fact that a FNP is refusing to return voluntarily, or is refusing to cooperate in his return (for example, by refusing to apply for an emergency travel document, as initially did WL) is relevant to the assessment of the legality of his continued detention: see R (A) v Secretary of State for the Home Department [2007] EWCA Civ 804.\nSo is the fact that the period of his detention had been increased, and his deportation postponed by his pursuit of appeals and judicial review proceedings seeking to challenge his deportation order or his application for asylum or leave to remain, particularly if his applications and appeals are obviously unmeritorious.\nIn our judgment, as a matter of principle, a FNP cannot complain of the prolongation of his detention if it is caused by his own conduct.\nIt is not clear whether the Court of Appeal were accepting the exclusionary rule in its entirety.\nTo say that the fact that the length of the detention is attributable to the pursuit of legal proceedings is relevant to the assessment of the legality of the detention suggests a rejection of the exclusionary rule.\nBut to say that FNPs cannot complain of the prolongation of their detention caused by their own conduct suggests an acceptance of it.\nThe question of the relevance of the pursuit of legal proceedings has been considered in a number of authorities.\nI do not propose to analyse them.\nNone is binding on this court.\nThe discussion of the issue which I have found most helpful is that of Davis J in R (Abdi) v Secretary of State for the Home Department [2009] EWHC 1324 (Admin).\nIn that case, the exclusionary rule (with the same two exceptions) was urged on the court on behalf of the Secretary of State.\nIn rejecting it, Davis J pointed out at para 25 of his judgment, that it was undesirable, where the core question is an assessment of what is reasonable in all the circumstances, to be astute to look for mandatory restrictions or rules in what ought to be a fact specific exercise.\nI agree.\nThe Hardial Singh principles should not be applied rigidly or mechanically.\nThere are several problems with the exclusionary rule.\nFirst, it seems to require the exclusion of consideration of the individual circumstances of an applicant pending what may be a long appellate process.\nSuppose two FNPs who both embark on a meritorious appeal process which takes a number of years.\nThe only difference between them is that A poses a very high risk of absconding and re offending and B poses a very low risk.\nIf the exclusionary rule is applied, no difference can be drawn between them from the time proceedings are commenced.\nIn both cases, the several years during which they are detained while the appeal process is continuing are to be disregarded in assessing whether the period of detention is reasonable.\nOr suppose that the effect of detention on A is to cause serious damage to his health or that of members of his family, whereas there is no such effect in the case of B. I can see no warrant for such a mechanistic approach to the determination of what is reasonable in all the circumstances.\nSecondly, the exclusionary rule seems to involve the exclusion from consideration of any delays occurring within the appeal process which are not the fault of the applicant or (as is conceded by Mr Beloff) the Secretary of State.\nI see no reason why such delays, for example, delays on the part of the tribunal or court, should be disregarded in a determination of whether the period of detention is reasonable.\nThirdly, the consequence of the exclusionary rule is that a person can be detained for many years while pursuing a prima facie meritorious appeal but he cannot by judicial review or habeas corpus challenge his detention on Hardial Singh or related article 5(1)(f) of the ECHR principles.\nIt precludes such judicial scrutiny (i) however long the detention and appeals have lasted and (ii) regardless of the effects of prolonged detention on the detainee, provided that (iii) the appeals are being diligently pursued and there is no concurrent independent reason why deportation cannot be effected.\nI accept the submission of Mr Husain that bail is not a sufficient answer to the fundamental objection that the exclusionary rule constitutes an impermissible restriction on judicial oversight of the legality of administrative detention.\nParagraph 29 of Schedule 2 to the 1971 Act gives the First Tier Tribunal power to grant bail pending an appeal, but this is subject to the restrictions stated in paragraph 30.\nParagraph 30(1) provides that an appellant shall not be released under paragraph 29 without the consent of the Secretary of State if removal directions are currently in force.\nThere is nothing in the schedule which requires the tribunal to apply the Hardial Singh principles in deciding whether or not to grant bail and, in particular, to have regard to the past and likely future length of a detention.\nBail is not a determination of the legality of detention, whether at common law or for article 5(4) purposes.\nFourthly, the exclusionary rule is inconsistent with the decision of the ECtHR in Chahal v United Kingdom (1996) 23 EHRR 413.\nIn deciding whether the detention complied with the requirements of article 5(1)(f), the court had regard to the length of the detention, including the time taken for the various domestic proceedings to be completed: see paras 114, 115 and 123 of the judgment of the court.\nThere is a close analogy between the Hardial Singh principles and the article 5 requirement that detention for the purposes of deportation must not be of excessive duration.\nI would reject Mr Beloffs in terrorem argument that, unless the exclusionary rule applies, detained FNPs will be able to procure their release from detention by the simple expedient of pursuing hopeless legal challenges.\nTime taken in the pursuit of hopeless challenges should be given minimal weight in the computation of a reasonable period of detention.\nNor do I accept that it is undesirable (or indeed unduly difficult) to identify hopeless or abusive challenges.\nThere exist statutory mechanisms to curb unmeritorious appeals.\nIf a claim is clearly unfounded, certification under section 94(2) of the Nationality, Immigration and Asylum Act 2002 precludes an in country appeal.\nIf a claim relies on a matter which could have been raised earlier in response to an earlier immigration decision or in response to a one stop notice, certification under section 96 of the 2002 Act precludes any appeal at all.\nIn any event, a court considering the legality of a detention will often be able to assess the prima facie merits of an appeal.\nWhere, as in the case of Mr Lumba, there have been orders for reconsideration, or where there has been a grant of permission to appeal to the Court of Appeal, the court will easily recognise that the challenge has some merit.\nConversely, there may be one or more determinations from immigration judges dismissing claims as wholly lacking in credibility.\nTo summarise, I would reject the exclusionary rule.\nIf a detained person is pursuing a hopeless legal challenge and that is the only reason why he is not being deported, his detention during the challenge should be given minimal weight in assessing what is a reasonable period of detention in all the circumstances.\nOn the other hand, the fact that a meritorious appeal is being pursued does not mean that the period of detention during the appeal should necessarily be taken into account in its entirety for the benefit of the detained person.\nIndeed, Mr Husain does not go so far as to submit that there is any automatic rule, regardless of the risks of absconding and\/or re offending, which would compel an appellants release if the appeals process lasted a very long time through no fault of the appellant.\nHe submits that the weight to be given to time spent detained during appeals is fact sensitive.\nThis accords with the approach of Davis J in Abdi and I agree with it.\nThe risks of absconding and re offending are always of paramount importance, since if a person absconds, he will frustrate the deportation for which purpose he was detained in the first place.\nBut it is clearly right that, in determining whether a period of detention has become unreasonable in all the circumstances, much more weight should be given to detention during a period when the detained person is pursuing a meritorious appeal than to detention during a period when he is pursuing a hopeless one.\nNon cooperation with return\nThe most common examples of non cooperation are (i) a refusal by a person who does not have a valid passport to cooperate with the obtaining of travel documents to enable him to return and (ii) a persons refusal to avail himself of one of the Home Office schemes by which he may leave the United Kingdom voluntarily.\nMost of the discussion in the cases has centred on (ii).\nIt is common ground that a refusal to return voluntarily is relevant to an assessment of what is a reasonable period of detention if a risk of absconding can properly be inferred from the refusal.\nBut I would warn against the danger of drawing an inference of risk of absconding in every case.\nIt is always necessary to have regard to the history and particular circumstances of the detained person.\nWhat is, however, in issue is whether a failure to return voluntarily can of itself justify a period of detention which would otherwise be unreasonable and therefore unlawful.\nIn R (I), I said in the Court of Appeal: 50.\nAs regards the significance of the appellants refusal of voluntary repatriation, there appears to be agreement between Simon Brown LJ and Mummery LJ that this is a relevant circumstance, but Mummery LJ considers that it is decisively adverse to the appellant, whereas Simon Brown LJ considers that it is of relatively limited relevance on the facts of the present case.\nI too consider that it is a relevant circumstance, but in my judgment it is of little weight. [Counsel for the Secretary of State] submits that a refusal to leave voluntarily is relevant for two reasons.\nFirst, the detained person has control over the fact of his detention: if he decided to leave voluntarily, he would not be detained.\nSecondly, the refusal indicates that he would abscond if released from detention.\nIt is this second feature which has weighed heavily with Mummery LJ. 51.\nI cannot accept that the first of [the Secretary of States] reasons is relevant.\nOf course, if the appellant were to leave voluntarily, he would cease to be detained.\nBut in my judgment, the mere fact (without more) that a detained person refuses the offer of voluntary repatriation cannot make reasonable a period of detention which would otherwise be unreasonable.\nIf [the Secretary of State] were right, the refusal of an offer of voluntary repatriation would justify as reasonable any period of detention, no matter how long, provided that the Secretary of State was doing his best to effect the deportation. 52.\nI turn to [the Secretary of States] second reason.\nI accept that if it is right to infer from the refusal of an offer of voluntary repatriation that a detained person is likely to abscond when released from detention, then the refusal of voluntary repatriation is relevant to the reasonableness of the duration of a detention.\nIn that event, the refusal of voluntary repatriation is no more than evidence of a relevant circumstance namely the likelihood that the detained person will abscond if released. 53.\nBut there are two important points to be made.\nFirst, the relevance of the likelihood of absconding, if proved, should not be overstated.\nCarried to its logical conclusion, it could become a trump card that carried the day for the Secretary of State in every case where such a risk was made out regardless of all other considerations, not least the length of the period of detention.\nThat would be a wholly unacceptable outcome where human liberty is at stake. 54.\nSecondly, it is for the Secretary of State to satisfy the court that it is right to infer from the refusal by a detained person of an offer of voluntary repatriation that, if released, he will abscond.\nThere will no doubt be many cases where the court will be persuaded to draw such an inference.\nI am not, however, satisfied that this is such a case.\nIt is not at all surprising that this appellant has refused voluntary repatriation.\nHe has not yet exhausted the asylum process, which, if successful, would permit him to remain in the United Kingdom.\nIn these circumstances, why should one infer from the refusal of voluntary repatriation that, if released, he would abscond? In my judgment, the most that can be said is that there is a risk that if he is released the appellant will abscond.\nBut that can be said of most cases.\nI do not consider that the fact that he has refused the offer of voluntary repatriation adds materially to the evidence that such risk is present in the instance case.\nSimon Brown LJ adopted a somewhat different approach at para 31.\nHe said that, since in Hardial Singh Woolf J had regarded it as a factor in the applicants favour that he was quite prepared to go to India, he could not see why the converse should not be relevant.\nThe court should not ignore entirely the applicants ability to end his detention by returning home voluntarily.\nThe point was considered again by the Court of Appeal in R (A) Somalia v Secretary of State for the Home Department [2007] EWCA Civ 804 Toulson LJ (with whom Longmore LJ agreed) said: 54.\nI accept the submission on behalf of the Home Secretary that where there is a risk of absconding and a refusal to accept voluntary repatriation, those are bound to be very important factors, and likely often to be decisive factors, in determining the reasonableness of a persons detention, provided that deportation is the genuine purpose of the detention.\nThe risk of absconding is important because it threatens to defeat the purpose for which the deportation order was made.\nThe refusal of voluntary repatriation is important not only as evidence of the risk of absconding, but also because there is a big difference between administrative detention in circumstances where there is no immediate prospect of the detainee being able to return to his country of origin and detention in circumstances where he could return there at once.\nIn the latter case the loss of liberty involved in the individuals continued detention is a product of his own making.\nKeene LJ said at para 79: I am not persuaded by Mr Giffin that the refusal by this detainee to return to Somalia voluntarily when it was possible to do so is some sort of trump card.\nOn this I see the force of what was said by Dyson LJ in R (I) at paragraph 52, namely that the main significance of such a refusal may often lie in the evidence it provides of a likelihood of the individual absconding if released.\nAfter all, if there is in a particular case no real risk of his absconding, how could detention be justified in order to achieve deportation, just because he has refused voluntary return? The Home Office in such a case, ex hypothesi, would be able to lay hands on him whenever it wished to put the deportation order into effect.\nDetention would not be necessary in order to fulfil the deportation order.\nHaving said that, I do not regard such a refusal to return as wholly irrelevant in its own right or as having a relevance solely in terms of the risk of absconding.\nIt is relevant that the individual could avoid detention by his voluntary act.\nBut I do not accept that such a refusal is of the fundamental\nimportance contended for by the Secretary of State\nIt is necessary to distinguish between cases where return to the country of origin is possible and those where it is not.\nWhere return is not possible for reasons which are extraneous to the person detained, the fact that he is not willing to return voluntarily cannot be held against him since his refusal has no causal effect.\nBut what if return would be possible, but the detained person is not willing to go? Here it is necessary to consider whether the detained person has issued proceedings challenging his deportation.\nIf he has done so, then it is entirely reasonable that he should remain in the United Kingdom pending the determination of those proceedings (unless the proceedings are an abuse).\nIn those circumstances his refusal to accept an offer of voluntary return is irrelevant.\nThe purpose of voluntary return is not to encourage foreign nationals to return to their countries of origin where, if their legal challenges succeed, it is likely to have been demonstrated that they would face a risk of persecution within the meaning of the Convention and Protocol relating to the Status of Refugees (1951) (Cmd 9171) and (1967) (Cmnd 3906) or treatment contrary to article 3 of the ECHR.\nRather, it is to facilitate removal where that is justified because the FNPs have not proved that they would face the relevant risk on return.\nIn accepting voluntary return, the individual forfeits all legal rights to remain in the United Kingdom.\nHe should not be penalised for seeking to vindicate his ECHR or Refugee Convention rights and be faced with the choice of abandoning those rights or facing a longer detention than he would face if he had not been offered voluntary return.\nWhat about those who have no outstanding legal challenges? Here, the fact that the detained person has refused voluntary return should not be regarded as a trump card which enables the Secretary of State to continue to detain until deportation can be effected, whenever that may be.\nThat is because otherwise, as I said at para 51 of my judgment in R (I), the refusal of an offer of voluntary repatriation would justify as reasonable any period of detention, no matter how long, provided that the Secretary of State was doing his best to effect the deportation.\nIf the refusal of voluntary return has any relevance in such cases even if a risk of absconding cannot be inferred from the refusal, it must be limited.\nThat was the view of Simon Brown LJ in R (I) and Keene LJ in R (A) and I agree with them.\nThe appeal of Mr Lumba\nI can now turn to the particular case of Mr Lumba.\nHe entered the United Kingdom unlawfully on 10 April 1994 and claimed asylum on the same day.\nHis claim was refused on 20 February 2000.\nHe was, however, granted exceptional leave to remain until 20 February 2004.\nHe has a bad criminal record which includes convictions for assault occasioning actual bodily harm (six months imprisonment); two offences of using threatening and abusive behaviour (twelve months probation); two offences of shoplifting (non custodial sentences); assault occasioning actual bodily harm (six months imprisonment); assaulting a constable (four months imprisonment); and wounding with intent contrary to section 18 of the Offences Against the Person Act 1861 (4 years imprisonment).\nHe married MP, another national of the Democratic Republic of Congo (DRC).\nTheir son, PAS, was born on 5 July 2003.\nAs I have already said, on 3 April 2006, the Secretary of State decided to deport Mr Lumba.\nNotwithstanding that his son is a British citizen, the Secretary of State also decided to deport his wife and son, although the orders against them were subsequently revoked.\nHe was notified of the decision to detain him under the 1971 Act on 22 June 2006, the day before his release date.\nHis first detention review was in February 2007.\nHe appealed against the decision to deport him.\nOn 7 September 2006, while the appeal was still pending, he refused to attend a travel document interview with the immigration authorities to facilitate his return to the DRC.\nHis appeal against deportation was dismissed by the Asylum and Immigration Tribunal (AIT) on 15 December 2006.\nIn about January 2007, he was transferred from prison to Dover Immigration Removal Centre, since when he remained in detention.\nOn 1 March 2007, he attended an interview with an immigration officer at which he explained that his passport was missing.\nHe was asked to complete an application for an Emergency Travel Document (ETD) but refused to do so, stating that he did not wish to be returned to the DRC because the problem which formed the initial basis of his asylum claim is still true.\nBy 20 March 2007, the Secretary of States caseworkers had discovered that they had a copy of Mr Lumbas passport on file.\nHis indefinite leave to remain was terminated only after service on him of the signed deportation order on 21 March 2007.\nThe discovery of the copy of his passport on file obviated the need for his cooperation in completing a travel document application.\nOn 29 March, a completed application for an ETD, accompanied by copies of his passport and identity card, was sent to the Embassy of the DRC.\nThe Embassy claimed to have lost the initial application and the application for an ETD was resubmitted on 26 April 2007.\nThe application was granted by the DRC Embassy on 25 July 2007 and on the following day directions were set for Mr Lumbas removal from the United Kingdom on 20 August 2007.\nOn 15 August 2007, his new solicitors submitted fresh representations challenging his deportation.\nThese noted that a country guidance case (BK (DRC)) concerning the safety of returns to the DRC of failed asylum seekers\/ deportees was to be heard by the AIT on 17 September 2007.\nOn 16 August 2007, the Secretary of State refused to treat those representations as a fresh asylum claim and on the following day, Mr Lumba issued judicial review proceedings challenging that refusal.\nOn 14 September 2007, these proceedings were stayed by consent until the outcome of the pending country guidance case before the AIT was known.\nOn 23 October 2007, Mr Lumba issued the claim for judicial review challenging his detention which has given rise to the present appeal.\nOn 18 December 2007, the AIT promulgated its determination in BK (Democratic Republic of Congo) v Secretary of State for the Home Department and decided that failed asylum seekers were not, as such, at risk in the DRC: [2007] UKAIT 98.\nMr Lumba made applications for bail on 23 January 2008, 4 February 2008 and 4 March 2008.\nThey were all rejected by the immigration judge principally on the ground that there was a real risk that if he was released he would re offend.\nOn 23 April 2008, permission was granted to appeal the AITs decision in BK (DRC) to the Court of Appeal.\nMr Lumbas claim for judicial review in respect of his detention was heard by Collins J on 4 July 2008.\nHis judgment is reported at [2008] EWHC 2090 (Admin).\nHe concluded that the detention was lawful on Hardial Singh principles and that it would continue to be so until the Court of Appeal gave judgment in BK (DRC), on the assumption that judgment was given by the end of December 2008.\nIn fact judgment was given by the Court of Appeal on 3 December 2008 after the hearing before Davis J, but before he gave judgment: [2008] EWCA Civ 1322.\nDavis J agreed with the reasoning and conclusion of Collins J as to the lawfulness of the detention.\nThe findings made by Davis J are set out in full by the Court of Appeal at para 99 of their judgment.\nThere is no need to repeat them in this judgment.\nIn summary, Davis J said at para 203 that (i) Mr Lumba posed a high risk of absconding and a high risk of serious reoffending; (ii) at all stages there was a prospect of removing him within a reasonable period; and (iii) there had been no lack of due expedition on the part of the Secretary of State.\nOn 11 February 2009, Mr Lumbas solicitors made fresh representations on his behalf to the Secretary of State, and applied for the revocation of the deportation order.\nThey said that his marriage had broken down and that he was seeking contact with his son.\nHe relied on article 8 of the ECHR.\nThis application was rejected by the Secretary of State on 1 July 2009.\nMr Lumba appealed on 8 July 2009.\nThe appeal was dismissed by the AIT on 28 September 2009.\nA reconsideration was ordered by a senior immigration judge on 26 October 2009.\nAt the reconsideration, the Secretary of State conceded that the original tribunal had erred in law.\nBy a judgment given on 19 February 2010, the Court of Appeal dismissed Mr Lumbas appeals against the decisions of Collins J and Davis J. The Court of Appeal said at para 100 that they had seen nothing to justify interfering with Davis Js findings at para 203 of his judgment.\nThey said in relation to the application of the Hardial Singh principles that the real attack was on the judgment of Collins J.\nThere had been no material error in the approach or conclusions of Collins J who had taken into account the high risk of absconding and re offending, the fact that Mr Lumba could have returned to the DRC voluntarily, and that his deportation had been delayed by his pursuit of several unsuccessful applications for asylum or leave to remain and appeals against their refusal.\nThe Court of Appeal had been asked to consider the period which had elapsed since the judgment of Davis J and subsequent evidence, including a psychiatric report, and to determine the legality of Mr Lumbas current detention in the light of it.\nThey said at para 108 that it would be inappropriate for them to consider as a first instance decision whether Mr Lumbas mental condition rendered his continued detention unlawful.\nApart from that, they said that: having reviewed the history of [Mr Lumbas] detention and the reasons given for continuing it, and for the refusals of bail, and his several hitherto unmeritorious appeals and applications, we are satisfied that his detention for the purposes of his deportation continues to be lawful.\nOn behalf of Mr Lumba it is submitted that the Court of Appeal should have concluded that his detention was unreasonably long by the time of the hearing before Collins J on 4 July 2008; alternatively by the time of the hearing before Davis J on 11 14 November 2008; alternatively by the time of the hearing before them between 30 November and 2 December 2009.\nBy the time of the appeal, of particular importance were the facts that (i) Mr Lumba had been in detention for 41 months; (ii) he could not be deported while he was pursuing his appeal against the Secretary of States refusal to revoke the deportation order; and (iii) there was evidence from the Croydon Mental Health Team and consultant psychiatrist Dr Dinakaran which showed that the risk of re offending and psychotic relapse could be managed in the community.\nMr Lumba has now been in detention for 54 months.\nAt first sight, his detention seems to have been of unreasonable duration.\nThere must come a time when, however grave the risk of absconding and however the grave the risk of serious offending, it ceases to be lawful to detain a person pending deportation.\nMoreover, in certain respects the courts below have not applied the Hardial Singh principles correctly.\nIn particular, they have wrongly regarded the fact that Mr Lumba has been able to delay his deportation by pursuing applications and appeals which, thus far, have been unsuccessful as being relevant to the assessment of a reasonable period of detention.\nIt has not been suggested by the Secretary of State that any of these applications or appeals have been hopeless and abusive.\nFor the reasons given above, the fact that the applications and appeals delayed the deportation should have been regarded as irrelevant.\nThe courts below also appear to have taken into account Mr Lumbas refusal of voluntary return without making it clear how this is relevant to the assessment of a reasonable period.\nAs I have said, it is of limited relevance as a free standing reason (see paras 122 128 above).\nIt would be legitimate to infer from the refusal of voluntary return that there is a risk of absconding.\nBut it is not clear that Collins J or Davis J drew such an inference in this case.\nMr Husain submits that it was incumbent on the Court of Appeal to consider the legality of the continuing executive detention by reference to the situation current at the time of the appeal and that they erred in failing to do so.\nHe says that they should have considered what the prospects were of removal within a reasonable period.\nI accept that, where the facts are the same as they were before the first instance judge and the only difference is the passage of further time, there is no reason why the Court of Appeal should not decide for themselves whether a continuing detention is unlawful.\nI also accept that, where there is fresh evidence, the Court of Appeal are entitled to apply the Hardial Singh principles and consider for themselves on the basis of all the up to date material whether a continuing detention is lawful.\nIndeed, that was the course that the Court of Appeal took in R (I).\nBut there are some circumstances where that course is not appropriate.\nIn the present case, the Court of Appeal took the view that such a course was inappropriate.\nThey said at para 108 that they should not embark on a first instance decision on matters, such as whether the deportation order should be revoked on account of [Mr Lumbas] mental condition, that Parliament has entrusted to a specialist tribunal.\nThat was an entirely proper reason for the Court of Appeal not making a first instance decision in this case.\nMr Husain submits that the Supreme Court should allow Mr Lumbas appeal.\nI would allow the appeal of both appellants for the generic reasons that I have stated earlier.\nBut I would not decide whether the detention of Mr. Lumba for almost 56 months was in breach of the Hardial Singh principles.\nThe reasons which led the Court of Appeal to refuse to make a first instance decision apply with even greater force in an appeal to the Supreme Court.\nIt is only in the most exceptional case that this court should embark on a task that is normally to be performed by a court of first instance.\nIn view of the passage of further time since the decision of the Court of Appeal as well as the fact that the courts below failed to apply the Hardial Singh principles correctly, I would remit Mr Lumbas claim for damages for breach of those principles to the High Court for reconsideration in the light of all the evidence as to the current position.\nThe case of Mr Mighty\nAs I have already said, Mr Mighty was detained between 19 May 2006 and 28 July 2008.\nHe issued proceedings on 29 May 2008 alleging that his detention was for longer than a reasonable period and inter alia that, on a proper application of the Hardial Singh principles, he should have been released.\nHis Hardial Singh case was rejected by Davis J.\nThere was no appeal on this aspect of the case to the Court of Appeal and the point has not been raised on behalf of Mr Mighty before this court.\nExemplary damages\nThe relevant principles are not in doubt.\nExemplary damages may be awarded in three categories of case: see per Lord Devlin in Rookes v Barnard [1964] AC 1129.\nThe category which is relevant for present purposes is that there has been an arbitrary and outrageous use of executive power (p 1223) and oppressive, arbitrary or unconstitutional action by servants of the government (p 1226).\nIn this category of case, the purpose of exemplary damages is to restrain the gross misuse of power: see AB v South West Water Services Ltd [1993] QB 507, 529F per Sir Thomas Bingham MR.\nIt must be shown that the conscious wrongdoing by a defendant is so outrageous, his disregard of the plaintiffs rights so contumelious, that something more [than compensatory damages] is needed to show that the law will not tolerate such behaviour as a remedy of last resort: see per Lord Nicholls Kuddus v Chief Constable of Leicestershire Constabulary [2002] 2 AC 122 at para 63.\nBoth Davis J and the Court of Appeal addressed the question of exemplary damages, although in view of their findings on the issue of liability, it was not necessary for them to do so.\nDavis J said at para 205 of his judgment that: I add, briefly, that, even if I had concluded there was unlawful detention in any of these cases justifying an award of damages, I would not in any event have awarded exemplary damages on the footing of unconstitutional, oppressive or arbitrary conduct, in so far as sought.\nWhile the Home Office has, to put it mildly, not covered itself in glory in this whole matter of the new policy, I think the failings were in essence one of failing, promptly and directly, to confront and address a perceived legal difficulty: whether through concerns at being bearers of unwelcome news to the Ministers or through an instinct for ducking an apparently intractable problem or through institutional inertia or some other reason, I cannot really say.\nI am not prepared, however, to conclude on the material before me that there was a conscious decision within the Home Office to operate tacitly an unpublished policy, known to be highly suspect, in the hope it would not be uncovered or, if it was uncovered, against a plan, if the courts intervened, to present that reversal as being due solely to the courts or the Human Rights Act.\nIn my view what happened here, in any of these five cases, cannot fairly, I think, be described as sufficiently outrageous to justify an award of exemplary damages.\nIn any event, I emphasise that individual consideration was given to the cases of each of the claimants.\nBy the time of the appeal, the Secretary of State had disclosed more material than was before the judge.\nThe Court of Appeal said that, even taking account of the additional material, they agreed with the assessment of the judge.\nThey said: 122.\nWe give weight to that assessment by the judge at the end of his very careful and comprehensive judgment.\nIt also accords with our own view, even taking account of the additional material which has been disclosed.\nWe consider that there was a failure, which to put it very mildly indeed, was very regrettable, on the part of the department to face up to the basic problem that the published policy had not caught up with the much more restrictive approach implicit in ministerial statements on the subject.\nHowever, we find it difficult to describe such conduct as unconstitutional, oppressive or arbitrary, in circumstances where the Home Secretary had an undoubted power to detain for the purposes in question, and it has been held that on the facts of the case he could lawfully have exercised that power with the same effect; at any rate, if it can be so described, these circumstances mean that the conduct is at the less serious end of unconstitutional, oppressive or arbitrary.\nWe also bear in mind also that the claimants had the right to apply for bail to an independent tribunal, at which it was possible for the continuing reasonableness of their detention to be challenged.\nAn award of exemplary damages would be an unwarranted windfall for them, and it would have little punitive effect since it will not be borne by those most directly responsible.\nRather it would be a drain on public resources which in itself is unlikely to add significantly to the remedial effect of a declaration of unlawfulness. 123.\nMoreover, it is difficult to see on what basis exemplary damages could be assessed in lead cases such as these.\nThe conduct of the Home Secretary complained of in the present case was common to a large number of detainees who have brought proceedings against him.\nThe selection of lead claimants such as [Mr Lumba] and [Mr Mighty] does not depend on the merits of their individual cases, which have not been assessed other than for the purposes of the grant of permission to apply for judicial review or permission to appeal.\nOther claimants may have equally or even more meritorious claims to damages, and if appropriate exemplary damages, than the present claimants.\nThere would be no principled basis, therefore, to restrict an award of exemplary damages to the present lead claimants.\nIf an award of exemplary damages is made to the present lead claimants, a similar award would have to be made in every case.\nExemplary damages are assessed by reference to the conduct of the tortfeasor.\nThe court would, we think, have to assess an appropriate sum as exemplary damages and divide it between all successful claimants.\nBut we do not know how many successful claimants there will ultimately be.\nThese considerations demonstrate that exemplary damages, in a case such as the present, may be ill suited to be a remedy in judicial review proceedings, and would be in the present cases.\nYet further material has been disclosed by the Secretary of State since the hearing before the Court of Appeal.\nMr Westgate submits that it can now be seen that this is indeed one of those exceptional cases where awards of exemplary damages are merited.\nHis submissions are detailed and elaborate.\nI shall endeavour to concentrate on the essential points.\nHe submits that the conditions for an award of exemplary damages have been established because (i) from April 2006 until September 2008 the Secretary of State operated a hidden blanket policy which did not give effect to the Hardial Singh principles; (ii) the Secretary of State actively discouraged disclosure of her true detention policy with the consequence that the integrity of written reasons for detention was compromised; (iii) there was a deliberate decision not to publish the hidden policy; and (iv) the Secretary of State and\/or her officials knew that, or were reckless as to whether, their actions were unlawful, preferring for political reasons to leave it to the courts to remedy the illegality.\nIn addition, Mr Westgate submits that the Secretary of State in this litigation has fallen short of the duties of candour owed to the courts in that (v) the courts have been intentionally or recklessly misled by the Secretary of States officials; (vi) elementary safeguards necessary to promote compliance with a public authoritys duty of candour in judicial review proceedings have not been observed: in particular, the Deputy Chief of Staff of the Chief Executive of the UK Border Agency was selected as the person responsible for overseeing disclosure, when the responsibility for disclosure was that of the Treasury Solicitor; and (vii) there remain significant lacunae in the disclosure.\nI find it convenient to take (i) to (iv) together.\nI have already referred at paras 16 39 above to the hidden blanket policy which did not give effect to the Hardial Singh principles.\nThere is no doubt that such a policy was operated between April 2006 and November 2007 when a slight relaxation was effected by the introduction of Cullen 1.\nTo a large extent, the policy that was applied until September 2008 was a blanket policy.\nIt certainly remained a hidden policy during the whole period.\nBut that of itself comes nowhere near being sufficient to justify an award of exemplary damages.\nIt is the reasons why the policy was not published that are the matters of real concern.\nThere is undoubtedly evidence to support submissions (ii) to (iv).\nI shall refer to some of it.\nA more detailed description of the internal material relating to the period between April 2006 and September 2008 that was disclosed to Davis J appears at para 43 of his judgment.\nAt least from 17 May 2006, senior officers within the Home Office, including lawyers of the Home Office Legal Advisers Branch (HOLAB), expressed concern to, among others, Lin Homer (Chief Executive of the Border and Immigration Agency) (BIA) that the policy was unlawful on the grounds that it did not satisfy the Hardial Singh principles and that it differed from the published policy.\nThus, for example, on 20 July 2006, Ms Rogerson (Head of Policy for the BIA) said in an email we are increasingly vulnerable and we should probably publish revised criteria.\nShe suggested that they should review the criteria and consider being prepared to release FNPs in some cases, with public protection as a priority.\nShe added that Ministers preferred position may be to continue to detain all FNPs and let immigration judges take any hit which is to be had by releasing on bail.\nOn 19 January 2007, Joy Munro (Deputy Director, Border Control) wrote to Ms Rogerson asking for written evidence of the lawfulness of detaining FNPs whom they were unable to remove.\nShe referred to there being unrest in the CCD about the power in law to detain some of those held if they are not removable.\nMs Rogerson replied: We shouldnt be dealing with thisor any such policy discussionson email in this way.\nI believe a meeting would be the most profitable way forward.\nOn 13 March 2007, Stephen Braviner Roman of HOLAB wrote to Ken Sutton (Deputy Director of the Immigration and Nationality Directorate) saying: if the courts were to find we had not been following our policy in these cases we would face criticism, but also claims for compensation.\nHe also referred to the fact that Simon Harker (from the Treasury Solicitors Department) had pointed out that they have a duty of candour to the court and cannot mislead.\nFirst hand evidence of the attitude of the Secretary of State herself is to be found in an email dated 16 July 2007 sent to Lin Homer in response to a draft bail proposal: Is this an issue primarily about legal vulnerability rather than capacity? If so, what is the reason for worrying about this now? Have we been threatened with legal action?\nThis prompted a series of internal emails, some of which referred to the test case of R (A) (Somalia) v Secretary of State for the Home Department [2007] EWCA Civ 804.\nIn an email dated 17 July 2007, Mr Braviner Roman referred to the impending hearing and said that there was an on going legal vulnerability.\nIf it materialised, we would face a liability in damages as well as severe criticism if it was said that we have maintained a policy of detaining people which was unlawful (as opposed to having a lawful policy but just getting it wrong on the facts from time to time, which is inevitable).\nBut the unpublished policy was not disclosed in that litigation.\nThe response to the Secretary of States question was given in an email dated 19 July 2007 which stated that the issue was one of legal vulnerability.\nTo this the Private Secretary of the Secretary of State replied that there did not seem to be a strong enough or immediate enough reason to be releasing or not detaining people at this point.\nA further insight into the thinking of the senior officers can be derived from the draft policy submission that had been circulated in May 2007.\nIt referred to the legal advice that the Secretary of State was open to legal challenge for the reasons to which I have earlier referred.\nIt also said: if we were to lose a test case, we could present any change in FNP detention practice as having been forced on us by the courts.\nI agree with what Davis J said about this document at para 43.12 of his judgment: That may or may not be good politics: but it is deplorable practice, especially when it is seen that almost from day one the new unpublished policy was perceived in virtually all quarters within the department to be at least legally vulnerable and in some quarters positively to be untenable and legally invalid.\nThe tone of this draft is further confirmed by the subsequent comments that the longer the delay the more likely it would be that a court judgment would force us to pay out significant sums in compensation to FNPs whose detention was held to be unlawful as well as exposing the department to criticism in the media and to reputational damage.\nMr Westgate is able to point to clear evidence that caseworkers were directed to conceal the true reason for detention, namely the unpublished policy, and to give other reasons which appeared to conform with the published policy.\nThis material was disclosed seven days before the start of the hearing before the Court of Appeal.\nIt comprises an exchange of emails in relation to a Liverpool case.\nOn 21 March 2007, Philip Muirhead of the Criminal Casework Directorate (CCD) in Liverpool said of the FNP under consideration that there was no valid reason to detain him.\nNichola Samuel, a lawyer of HOLAB, said that if detention was appropriate in that case, this suggested that they were applying a different policy, ie that all FNPs should be detained pending deportation.\nGareth Lloyd (Assistant Director of the CCD) responded that he had an email from Mandie Campbell (Director of CCD) telling me that we must detain all FNPs until removal.\nIn an email dated 22 March 2007, Mr Lloyd said that this was not only a Liverpool issue and in an email sent on the following day, he said: We just detain as instructed and choose the most defendable option in our opinion.\nFrom the above, it seems to me to be clear that there was a deliberate decision not to publish the hidden policy.\nThe material that has now been disclosed suggests that the assessment made by Davis J at para 205 may have been somewhat generous to the Secretary of State and her senior officials.\nIt is true that they did not know and could not have known that the policy that was being applied was bound to be struck down as unlawful, but they certainly knew that it was vulnerable to legal challenge and that it did not accord with the published policy.\nNevertheless, the question remains whether, regrettable though the behaviour of the Secretary of State and her senior officials may have been, it was sufficiently outrageous and sufficiently unconstitutional, oppressive or arbitrary to merit awards of exemplary damages.\nI approach this question without regard to the allegations of lack of candour in the litigation.\nThis is because the role of exemplary damages is to punish the commission of the underlying tort and not the subsequent conduct of the litigation.\nAny disapproval of the conduct of the litigation can be marked by an appropriate order for costs or by an increased award of (compensatory) aggravated damages: Thompson v Commissioner of Police of the Metropolis [1998] QB 498, 517D per Lord Woolf MR.\nWhether the high threshold for the award of exemplary damages has been crossed in any particular case is ultimately a matter of judgment.\nOpinions can reasonably differ on whether a defendants conduct has been so outrageous and so unconstitutional, oppressive or arbitrary as to justify the imposition of the penalty of exemplary damages.\nAn appellate court should not interfere with the judgment of the court below unless that judgment is plainly wrong.\nOn the material that was before him, Davis J was entitled to reach the conclusion that he reached.\nIn my view, the Court of Appeal were also entitled to reach the conclusion that they reached on the more extensive material that was before them.\nBoth the judge and the Court of Appeal applied the correct test.\nIn particular, the Court of Appeal were right to place some weight on the fact that the Secretary of State had the statutory power to detain the appellants pending deportation and that, although she in fact exercised that power unlawfully, she could have done so lawfully.\nThey were also right to say that, if her conduct is properly to be described as unconstitutional, oppressive or arbitrary, it was at the less serious end of the scale.\nIt is material that there is no suggestion that officials acted for ulterior motives or out of malice towards the appellants.\nNevertheless, there was a deliberate decision taken at the highest level to conceal the policy that was being applied and to apply a policy which, to put it at its lowest, the Secretary of State and her senior officials knew was vulnerable to legal challenge.\nFor political reasons, it was convenient to take a risk as to the lawfulness of the policy that was being applied and blame the courts if the policy was declared to be unlawful.\nThe Court of Appeal identified at para 123 of their judgment a further point which militated against awards of exemplary damages to the appellants.\nWhere there is more than one victim of a tortfeasors conduct, one award of damages should be made which should be shared between the victims, rather than separate awards of exemplary damages for each individual: see Riches v News Group Newspapers Ltd [1986] QB 256.\nThis is because the purpose of the award is to punish conduct rather than compensate the claimants.\nIn Riches, the victims of the tort were a small class who were all before the court.\nBut where (as in the present case) there is potentially a large number of claimants and they are not all before the court, it is not appropriate to make an award of exemplary damages: see AB v South West Water Services Ltd [1993] QB 507, 527B D per Stuart Smith LJ and p 531D E per Sir Thomas Bingham MR.\nUnless all the claims are quantified by the court at the same time, how is the court to fix and apportion that punitive element of the damages? If the assessments are made separately at different times for different claimants, how is the court to know that the overall punishment is appropriate? The Court of Appeal were right to regard this a further reason why it was not appropriate to award exemplary damages in the present case.\nThere is yet one further point.\nIt is unsatisfactory and unfair to award exemplary damages where the basis for the claim is a number of serious allegations against named officials and Government Ministers of arbitrary and outrageous use of executive power and those persons have not been heard and their answers to the allegations have not been tested in evidence.\nIn a private law action, they would almost certainly have been called to give evidence.\nBut oral evidence is rarely adduced in judicial review proceedings and, understandably, it was not adduced in the present case.\nOverall conclusion\nI would, therefore, allow these appeals.\nFor the reasons that I have given, the Secretary of State is liable to both appellants in the tort of false imprisonment on the narrow ground that she unlawfully exercised the statutory power to detain them pending deportation because she applied an unpublished policy which was inconsistent with her published policy.\nThe appellants are, however, only entitled to nominal damages because, if the Secretary of State had acted lawfully and applied her published policy, it is inevitable that both appellants would have been detained.\nAs regards the discrete question whether the detention of Mr Lumba was in any event unlawful on the grounds of a breach of the Hardial Singh principles, I would remit this to a High Court judge.\nFinally, neither appellant is entitled to exemplary damages.\nLORD HOPE\nIn agreement with Lord Walker, Lady Hale, Lord Collins, Lord Kerr and Lord Dyson I would hold that the Secretary of State is liable to the appellants in the tort of false imprisonment because she applied to them an unpublished policy which was inconsistent with her published policy, and I too would remit to a High Court judge the question whether Mr Lumbas detention was unlawful as being in breach of the Hardial Singh principles.\nAs I am anxious to avoid adding to the length of the courts judgment, I shall simply say that I am in full agreement with all the reasons that Lord Dyson has given on these issues except that I do not have the same difficulty as he has with the use of the phrase abuse of power by Lord Walker (see para 69, above).\nThere are only three points on which I wish to comment.\nFirst, as Lord Phillips has noted (see para 258, below), it was common ground in these appeals that Lord Dyson correctly summarised the effect of Woolf Js judgment in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704.\nNevertheless he has indicated that he does not consider that the first and second principles that Lord Dyson has extracted from it can properly be derived from what Woolf J said in that judgment.\nFor my part, I think that Lord Dysons summary, which he has taken from his judgment in R (I) v Secretary of State for the Home Department [2003] INLR 196, para 46, is accurate and I would endorse it.\nWe can, of course, read what Woolf J said for ourselves, and there are no doubt various ways of expressing what Lord Dyson has taken from it.\nThe essential point, as Lady Hale has explained (see para 199, below), is that the detention must be for the statutory purposes of making or implementing a deportation order and for no other purpose.\nLord Phillips says that he can see no justification for reading the terms of the statute in this way, that it places an unjustified restriction on the Secretary of States power of detention and that he does not believe that Woolf J intended to say what Lord Dyson has attributed to him.\nHe would read Hardial Singh as concerned only with the length of time that was reasonably necessary to effect deportation and not the purpose of the detention.\nI am unable, with respect, to agree with this interpretation of Woolf Js judgment.\nThere are two points that need to be considered.\nThe first is, what do the words that Woolf J used actually mean? The second is whether, if they have the meaning that Lord Dyson has attributed to them, this limitation on the statutory power can properly be read into the statute.\nAs to the first point, in the second sentence of the relevant paragraph (see para 262 of Lord Phillipss judgment) Woolf J makes it plain that in his view the statutory power can only authorise detention if the individual is being detained pending the making of a deportation order or pending his removal and for no other purpose.\nI think that his judgment could not be clearer on this issue, and that Lord Dyson has captured the essential points that Woolf J made accurately in his summary.\nAs for the second, it must be recognised that until now Woolf Js statement of the limitations to the statutory power has never been questioned.\nI think that there are good reasons for this.\nTo confine the limitation to the period of the detention only and release the Secretary of State from the limitation as to purpose which Woolf J identified would greatly reduce the protection which, as I read it, his judgment was designed to give to the detainee.\nFor obvious reasons that, if it were to happen, would be regrettable.\nIt would, as Lord Phillips indicates in para 269, enable the Secretary of State to exercise the power to detain simply because he believed that the detainee would, if released, pose a threat to national security.\nI do not think that article 5(1)(f) of the European Convention on Human Rights permits this interpretation of the statutory power.\nIf Parliament had intended that the power to detain could be used for a purpose other than the making or effecting of a deportation order, it would have had to have said this expressly and it has not done so.\nIt is hard also to see how the limitation as to time which Lord Phillips accepts can be read into the statute can be tested without having regard to the purpose for which the detainee is being held.\nThe limitation as to time and the limitation as to purpose are really two sides of the same coin.\nThey cannot be separated from each other.\nI think that Woolf J was right to recognise this and that there are sound reasons for all that he said about the limitations that must be understood to qualify the statutory power.\nSecond, I cannot accept Lord Phillipss conclusion that the application of the secret policy did not render the detention of the appellants unlawful.\nThe basis for that view is that, if the published policy had been applied they would have been detained anyway and that, had they challenged their continued detention, they would have had no legitimate expectation of obtaining an order for their release.\nThis is the causation argument which, for the reasons Lord Dyson gives in paras 62 68 with which I agree, he rejects.\nThe key point, as I see it, are that we are dealing in this case with the tort of false imprisonment.\nTorts of this kind are actionable per se regardless of whether the individual suffers any harm.\nWhile not every breach of public law will give rise to a cause of action on this ground, the history of this case shows that there was here a serious abuse of power which was relevant to the circumstances of the appellants detention.\nIf the rule of law is to be sustained, the detention must be held to have been unlawful.\nThe appellants were being detained without regard to the purpose for which the Secretary of State was authorised to exercise the power by the statute.\nThe court must insist that powers of detention are exercised according to law.\nIf they are not, those who have abused their powers must accept the consequences.\nIt is no answer for them to say that they could, had they put their mind to it, have achieved the same result lawfully by other means.\nThird, I agree that this is not a case for exemplary damages.\nBut, for the reasons given by Lord Walker and Lady Hale, I would hold that the breach of the appellants fundamental rights that has occurred in these cases should not be marked by an award only of nominal damages.\nAn award on ordinary compensatory principles is, of course, out of the question.\nIt is plain that the appellants would not have had any prospect of being released from detention if the Secretary of State had acted lawfully.\nSo they cannot point to any quantifiable loss or damage which requires to be compensated.\nBut the conduct of the officials in this case amounted, as Lord Walker says (see para 194, below), to a serious abuse of power and it was deplorable.\nIt is not enough merely to declare that this was so.\nSomething more is required, and I think that this is best done by making an award of damages that is not merely nominal.\nThe principles on which damages for breaches of fundamental rights are to be assessed in situations such as this are not greatly developed, as Elias CJ pointed out in the Supreme Court of New Zealand in Taunoa and others v Attorney General and another [2007] 5 LRC 680, para 108.\nBut some guidance is available from judgments which the Judicial Committee of the Privy Council has given where a constitutional right has been infringed.\nIn Attorney General of Trinidad and Tobago v Ramanoop [2006] 1 AC 328 Lord Nicholls of Birkenhead added his own words to those of the Board in Harrikissoon v Attorney General of Trinidad and Tobago [1980] AC 265 as to how an award of damages should be assessed in such a case.\nIn para 18 he observed that when exercising its constitutional jurisdiction the court is concerned to uphold, or to vindicate, the constitutional right.\nIn para 19 he said that an award, not necessarily of substantial size, might be needed to reflect the sense of public outrage, emphasise the gravity of the breach and deter further breaches.\nThe law on this matter is still in the process of being worked out, so I should like to say just a little more about it.\nAlthough such an award is likely in financial terms to cover much the same ground as an award by way of punishment in the sense of retribution, punishment in that sense is not its object.\nThe expressions punitive damages or exemplary damages are therefore best avoided.\nAllowance must be made for the importance of the right and the gravity of the breach in the assessment of any award.\nIts purpose is to recognise the importance of the right to the individual, not to punish the executive.\nIt involves an assertion that the right is a valuable one as to whose enforcement the complainant has an interest.\nAny award of damages is bound, to some extent at least, to act as a deterrent against further breaches.\nThe fact that it may be expected to do so is something to which it is proper to have regard.\nAs for the amount to be awarded, an award is referred to as a conventional award when it is incapable of being calculated arithmetically as there is no pecuniary guideline which can point the way to a correct assessment: Lim Poh Choo v Camden and Islington Area Health Authority [1980] AC 174, 189G H, per Lord Scarman.\nIn most cases the sum to be awarded can be derived from experience and from awards in similar cases: Ward v James [1966] 1 QB 273, 303, per Lord Denning MR.\nBut that cannot be said of this case.\nSo I would turn for guidance to what Lord Bingham of Cornhill said in Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309, para 8.\nThe conventional award that he had in mind in that case to mark the injury and loss due to the unwanted child was not, and was not intended, to be compensatory.\nIt was not the product of calculation, nor was it derived from awards in other similar cases.\nBut it was not a nominal, let alone a derisory, award.\nIts purpose was to afford some measure of recognition of the wrong done.\nIn agreement with Lord Steyn, I regarded the idea of a conventional award under the tort system in that case as contrary to principle: Rees v Darlington Memorial Hospital NHS Trust paras 46, 70 77.\nBut I do not think that it is open to the same objection in the present context.\nIn this case the factors referred to by Lord Nicholls in Ramanoop must be the primary consideration.\nThere must be some recognition of the gravity of the breach of the fundamental right which resulted in false imprisonment, and account should be taken of the deterrent effect of an award lest there be the possibility of further breaches.\nBut account should also be taken of the underlying facts and circumstances which indicate that it should not be more than a modest one.\nIt should do no more than afford some recognition of the wrong done, without being nominal or derisory.\nLord Walker has suggested that an award of 1,000 to each appellant would be appropriate.\nWe have no yardstick by which that sum can be measured to test its accuracy.\nGiven the purpose of the award, I see no reason to disagree with his assessment although I, for my part, would have arrived at a substantially lower figure.\nLORD WALKER\nThe issue on which Lord Brown differs from Lord Dyson is one of high importance and great difficulty.\nIts high importance is obvious.\nLord Dyson cites Lord Bridge in R v Deputy Governor of Parkhurst Prison Ex p Hague [1992] 1AC 58, 162, The tort of false imprisonment has two ingredients: the fact of imprisonment and the absence of lawful authority to justify it.\nIt is a species of trespass to the person and as such a tort actionable without the need for proof of special damage.\nThe notion that no more than nominal damages should ever be awarded for false imprisonment by the executive arm of government sits uncomfortably with the pride that English law has taken for centuries in protecting the liberty of the subject against arbitrary executive action.\nIt would in Lord Browns view seriously devalue the whole concept of false imprisonment.\nThe difference of opinion between two Justices with so much expert knowledge in the field of public law, on a point of such high importance, demonstrates its difficulty.\nI hardly need say that it is with diffidence that I make any contribution to the debate.\nLord Browns approach to the solution to the problem is to distinguish between cases where there is no lawful authority to detain a person (including cases where a precondition to lawful detention has not been satisfied) and cases where there is a power to detain, but in the exercise of that power the decision maker has been in breach of some public law duty.\nIn cases (or at any rate some cases) of the flawed exercise of a power to detain there is (so the argument goes) no false imprisonment at all, and so the question of awarding damages, whether nominal or otherwise, simply does not arise.\nThis solution has considerable attractions.\nThe proposed distinction is based on the difference between the existence (or rather non existence) of a lawful authority to detain, and a defective exercise of an authority which does exist: see the observations of Lord Brown in R (Khadir) v Secretary of State for the Home Department [2006] 1AC 207, para 33.\nThe difficulty that I feel is whether the distinction, though clear enough in theory, can cope with the variety and complexity of the problems that arise in practice, as illustrated by the numerous decided cases cited to the court.\nI also have difficulty (or perhaps this is another way of putting the same point) in reconciling the basic existence\/exercise distinction with the four categories which Lord Brown extracts from his analysis of successful claims for false imprisonment by executive action.\nHis four categories are (1) no power to detain; (2) failure to satisfy a precondition to exercising the power to detain; (3) detention beyond the scope of the power to detain; and (4) power to detain limited by published official policy.\nThe distinction is clear enough in extreme cases.\nR v Governor of Brockhill Prison Ex p Evans (No 2) [2001] 2AC 19 was a case (in Lord Browns category (1)) in which there was simply no lawful authority for the claimants detention after the date of expiration of her term of imprisonment, when properly adjusted for time spent on remand (the complicated statutory provisions as to allowances for multiple periods spent on remand had been misinterpreted).\nAt or near the other extreme was the breach of a public law duty to see that an asylum seeker detained at a detention centre received a medical examination within 24 hours.\nThe omission to provide a medical examination was an administrative failing but it did not render the detention unlawful: R (HK (Turkey)) v Secretary of State for the Home Department [2007] EWCA Civ 1357.\nLord Brown supplements his category (1) by category (2) so as to let in a range of cases in which there is for the time being no lawful authority to detain because some precondition has not been satisfied.\nA well known example of this is Christie v Leachinsky [1947] AC 573, where a man arrested without a warrant was not correctly informed of the offence which gave rise to the power of arrest without a warrant.\nMoreover categories (1) and (2) must be expanded to cover cases in which detention, although initially lawful, has become unlawful because of a failure to carry out some procedure or satisfy some condition of precedent fact required by statute.\nA procedural example is Roberts v Chief Constable of the Cheshire Constabulary [1999] 1WLR 662, where the provisions of the Police and Criminal Evidence Act 1984 required detention in police custody to be reviewed every six hours.\nThe claimant had been detained at 11.25pm and the police officers failure to review his detention by 5.25 am on the next day made his detention unlawful until it was reviewed (and his detention continued) at 7.45 am, and the Court of Appeal refused to overturn or reduce the award of 500 damages, even though it accepted that his detention would have continued if a review had been carried out at the right time.\nBy contrast in R (Saadi) v Secretary of State for the Home Department [2002] 1WLR 3131 the statement of incorrect and inappropriate reasons on an official form handed to detained asylum seekers was not treated as a failure to satisfy a condition precedent affecting the legality of their continued detention.\nThe distinction between these two cases is that the relevant statutes were interpreted in one case as imposing a condition which had to be satisfied if continued detention was to be lawful, and as not imposing such a condition in the other case.\nIt is, as Laws LJ emphasised in R (SK (Zimbabwe)) v Secretary of State for the Home Department [2009] 1WLR 1527, paras 21 and 25, an issue of statutory construction.\nIn that case the Court of Appeal held that compliance with rule 9 of the Detention Centre Rules 2001 (calling for a monthly review of detention with written reasons given to the detained person) was not a precondition to the continuation of lawful detention. (See Laws LJ at paras 31 35 and Keene LJ agreeing, with some hesitation, at para 47.)\nLord Browns category (3) is detention beyond the scope of the relevant power.\nLaws LJ in SK (Zimbabwe), para 21, referred to the reach of the power.\nThese expressions, as I understand them, approximate to the object or purpose for which Parliament has conferred the power.\nThe importance of the statutory purpose has been recognised since Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 and (as Lord Dyson notes in para 30 of his judgment) the Hardial Singh principles (see R v Governor of Durham Prison Ex p Hardial Singh [1984] 1 WLR 704) reflect the application of the wide general principle of not deviating from the statutory purpose to the particular field of the detention of foreign nationals pending deportation.\nWoolf J made this clear in Hardial Singh itself at p 706.\nThe wide general principle of not deviating from the statutory purpose is of such fundamental importance in public law that it can be seen as going to the existence of the power, rather than merely to its exercise.\nIn law the power exists only for the purposes for which Parliament has conferred it on the executive.\nIn Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97, 113, the Privy Council put it very simply: If removal is not pending . the director has no power at all.\nSo I would see Lord Browns category (3) as fitting reasonably comfortably into his basic existence\/exercise classification.\nDetermining the purpose for which Parliament has conferred a power is also a process of statutory construction.\nThat process should not, in my opinion, be minutely elaborated.\nI entirely accept the exposition of the Hardial Singh principles by Dyson LJ (as he then was) in R (I) v Secretary of State for the Home Department [2003] INLR 196, para 46.\nIt goes no further than spelling out clearly what is necessarily implicit in the purpose of detention with a view to deportation, and it has been widely cited and followed.\nI have more of a problem in seeing Langley v Liverpool City Council [2006] 1 WLR 375 as a case where the police departed from the statutory purpose in exercising their power of removal under section 46 of the Children Act 1989 when an emergency protection order under section 44 of that Act had already been made.\nThe purpose of both statutory powers (one conferred on the police, the other on the court) was child protection in an emergency situation.\nI regard Langley as a finely balanced decision in which the Court of Appeal held that well intentioned police action, directed to child protection and taken under pressure of circumstances, was nevertheless an unlawful manner of exercising the section 46 power.\nThorpe LJ (at para 79) reached that conclusion with some reluctance.\nIt is with Lord Browns category (4), however, that I have the greatest difficulty.\nHere the issues are concerned with official policies how rigid or flexible they may be, whether and in how much detail they should be published, whether (in these appeals) a policy with a presumption towards detention is permissible.\nOfficial decision makers need policies for obvious reasons.\nAlthough decisions in the field of immigration law are all taken in the name of the Secretary of State, only a tiny handful of cases are actually decided by the Secretary of State personally.\nDecisions are taken by a small army of officials at different levels, and they need guidance in order to achieve consistency in decision making.\nMembers of the public, or those of the public liable to be affected, should know where they stand, and so they are entitled to know, at least in general terms, the content of the official policies.\nThis is not a matter of being faithful to the purposes of statutory powers, but of seeing that they are exercised consistently and fairly.\nThere is a helpful discussion of these points in the judgment of the Court of Appeal in these appeals, prepared by Stanley Burnton LJ, at paras 53 58.\nIt is here that Lord Diplocks dictum in Holgate Mohammed v Duke [1984] AC 437 calls for consideration.\nIn a passage (at p.444) quoted by both Lord Brown and Lord Dyson, Lord Diplock expressed the view that Wednesbury principles are applicable to determining the lawfulness of the exercise of a statutory power of arrest not only in proceedings for judicial review but also in an action for damages for false imprisonment.\nAs Lord Dyson says, there seems to have been little argument on this point in the House of Lords.\nNor has there been much discussion of it in later authorities.\nIt was cited and followed by the Court of Appeal in D v Home Office (Bail for Immigration Detainees intervening) [2006] 1 WLR 1003 (see especially Brooke LJ at para 111).\nIn SK (Zimbabwe), Holgate Mohammed was cited by counsel but not referred to in the judgments in the Court of Appeal.\nHolgate Mohammed and D v Home Office (Bail for Immigration Detainees intervening) were both discussed at some length in the Court of Appeal in these appeals (paras 50 52, and, in relation to causation, paras 82 84).\nThe Court of Appeal rightly regarded itself as bound by the latter decision.\nThis court is not bound to follow the Court of Appeals acceptance of Lord Diplocks dictum, and for my part I would refrain from giving it unequivocal approval.\nMr Beloff QC (appearing for the Secretary of State in this court) put forward some persuasive submissions in favour of an alternative approach.\nThey are noted in paras 76 and 86 of Lord Dysons judgment.\nThe first two submissions would make a qualification or exception, for the purposes of a private law claim for damages for false imprisonment, to the Anisminic equation of any significant public law error with lack of jurisdiction (see Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147).\nLord Dyson, in para 87, dismisses these in a single sentence as putting the clock back to pre Anisminic days.\nWith great respect, I think there may be more to be said about it.\nAnisminic was one of the seminal cases in the development of modern public law.\nBut its full implications are still open to debate.\nThe context in which it equated wrongful exercise of jurisdiction with excess of jurisdiction (the courts response to an ouster clause in the Foreign Compensation Act 1950) was far removed from a private law claim for damages for false imprisonment.\nIt is a big step to extend the principle to a claim for damages for false imprisonment, where a defendant may have his professional reputation at stake and may not enjoy the procedural protections which attend judicial review (strict time limits, and the discretionary nature of the remedy granted).\nI would prefer a more demanding test, that in a case where an extant statutory power to detain has been wrongly used there would be a private law claim only if the misuse amounted to an abuse of power (including but not limited to cases of misfeasance or other conscious misuse of power).\nHowever, it is in my opinion unnecessary to decide the point in these appeals because the conduct of officials, including some senior officials, of the Home Office between April 2006 and September 2008 amounted to a serious abuse of power.\nLord Dyson has in paras 154 165 of his judgment described in restrained language how senior officials were well aware of the risk (indeed the likelihood) of challenge and decided to run the risk, (including the proposal to let immigration judges take any hit), and how further damaging facts were disclosed by stages, some before Davis J, some before the Court of Appeal, and some only in this Court.\nWherever the line is to be drawn (if, as I think, a line does need to be drawn between public law errors in detention policies which do or do not give rise to an action for false imprisonment) these appeals must in my view fall on the wrong side of the line from the Secretary of States point of view.\nI agree with Lord Dyson (paras 165 168) that despite the deplorable official conduct this is not a case for exemplary damages.\nBut in my view it is not a case for nominal damages either.\nApart from cases concerned with constitutional rights in the Caribbean, (the line of authority starts with Attorney General of St Christophers, Nevis and Anguilla v Reynolds [1980] AC 637), the common law has always recognised that an award of more than nominal damages should be made to vindicate an assault on an individuals person or reputation, even if the claimant can prove no special damage. (See Mayne & McGregor on Damages, 18th ed. (2009) paras 42 008 to 009).\nIn these appeals, each claimant had a very bad criminal record and would undoubtedly have been kept in custody under the Secretary of States published policies.\nThey cannot therefore establish a claim to special damages.\nBut the argument on causation does not completely defeat their claims.\nI would award each claimant the sum of 1,000 damages.\nI would remit the case of Mr Lumba as Lord Dyson proposes.\nOn every point on which I have not expressed disagreement or doubt I am in respectful agreement with the judgment of Lord Dyson.\nLADY HALE\nI agree entirely with Lord Brown that far and away the most important issue in this case, as it is in the case of SK (Zimbabwe) [2009] 1 WLR 1527, is whether the breach of a public law duty on the part of the person authorising detention is capable of rendering that detention unlawful.\nIf it is, the second question is which breaches of public law duties have that consequence; and the third question is whether it makes any difference that the person authorising the detention both could and would have done so lawfully, without breaching the public law duty in question, had the point been drawn to his attention.\nIf that does not make a difference to liability, a fourth question is whether the fact that the person detained both could and would have been lawfully detained is of any relevance to the assessment of his damages for false imprisonment.\nBut I differ from Lord Brown in his view that the answer to the last of these questions should govern the answer to the first, second or third question: in other words, that if we take the view that no compensatory damages are payable in a case such as this it should follow that there is no liability in the first place.\nForcefully and attractively though that argument is made, it does put the cart before the horse.\nIt also fails to acknowledge that false imprisonment is a trespass to the person, actionable per se without proof that the claimant has suffered any harm for which the law would normally grant compensation.\nAs to the first question, this is a stronger case than is still before the Court in SK (Zimbabwe) because the illegality alleged (and now admitted) went to the criteria for detention rather than to the procedure for authorising it.\nThe statutory power to detain under paragraph 2(2) and (3) of schedule 3 to the Immigration Act 1971 (quoted by Lord Dyson at paragraph 4 of his judgment) is, on its face, very broad.\nProvided that the detainee has been notified of a decision to make a deportation order against him, and he is not detained in pursuance of the sentence or order of a court, he may be detained pending the actual making of the order (para 2(2)).\nOnce the deportation order is made, he may be detained pending his removal or departure from the United Kingdom (para 2(3)).\nHowever, since at least the case of R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704, it has been recognised that there are limitations implicit in these powers: the detention must be for the statutory purpose of making or implementing a deportation order and for no other purpose; hence it cannot be continued once it becomes clear that it will not be possible to effect deportation within a reasonable period; the Secretary of State must act with reasonable diligence and expedition to bring this about; and in any event the detention cannot continue for longer than a period which is reasonable in all the circumstances.\nThese limitations were devised long before the Human Rights Act and have been accepted without question ever since.\nThey stem from the long established principle of United Kingdom public law that statutory powers must be used for the purpose for which they were conferred and not for some other purpose: Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997.\nThey were not inspired by article 5(1)(f) of the European Convention for the Protection of Human Rights and Fundamental Freedoms and it does not follow that, because detention would be permissible under article 5(1)(f), it is also permissible under United Kingdom law.\nThe last restriction referred to above has not hitherto been questioned but it is the most questionable, for the Secretary of State may genuinely be doing all that she can to effect deportation, and deportation may still be a realistic possibility, but even so the deportee may have been detained for so long that it is no longer lawful to keep him there.\nThat this has never until now been questioned indicates how strong are the objections to indefinite detention by order of the executive.\nBut it undoubtedly gives rise to some difficult questions, as is amply shown by Lord Dysons discussion, in paragraphs 102 to 128 of his judgment, of the matters to be taken into account in deciding whether or not the period of detention is reasonable.\nIn addition to such substantive limitations, the law has also imposed procedural requirements upon apparently open ended statutory powers.\nIn common with Lord Dyson, I do not think that it matters whether these are characterised as implied conditions precedent or implied procedural requirements.\nThe effect is the same.\nThe best known example is Cooper v Wandsworth Board of Works (1863) 14 CB (NS) 180, 143 ER 414.\nThe Board had power to alter or demolish a house if the builder had not given 7 days notice of his intention to build.\nThe Court held that the common law imposed upon the Board a requirement to notify the builder before they decided to demolish the house, so that he could present arguments why they should not.\nAs the Board had not given the builder such an opportunity before demolishing the house, they were liable to him in damages for trespass.\nIt is true that Byles J founded his opinion partly on the basis that the Board had also failed in their express statutory duty to notify the builder of their demolition order: but the majority based their opinions on the broader principle that he had a right to be heard before the order was made: in other words, there were public law duties inherent in the apparently open ended statutory power.\nAnother example of the same principle is Christie v Leachinsky [1947] AC 573 where the common law implied a duty, when exercising a power of arrest, to tell the arrested person the power under which he was being arrested, so that he might know whether or not he could resist arrest.\nOnce again, the police were liable in false imprisonment.\nThe question is whether the same principles apply where the requirement in question is the duty, imposed by the common law, for the Secretary of State and his officials to comply with a published policy, unless there is good reason not to do so.\nAs I understand it, Lord Brown accepts that they may indeed do so, for he agrees that if the published policy further narrows and defines the circumstances in which the power will be exercisable, the Secretary of State may not lawfully depart from that.\nIt is on that basis that he considers R (Nadarajah) v Secretary of State for the Home Department [2004] INLR 139 to have been correctly decided.\nSupport for the proposition that the ordinary requirement to observe public law duties may restrict the lawful exercise of a statutory (or common law) power which would otherwise authorise a trespass can be found in the dictum of Lord Diplock in Holgate Mohammed v Duke [1984] 1 AC 437, 443, quoted by Lord Dyson at para 73 of his judgment.\nOn the face of it, this was a lawful arrest.\nThe argument was that the police officer had arrested the claimant for the wrong reason: to get her to confess.\nThere can be little doubt that, had the House of Lords concluded that this was indeed an impermissible consideration, they would have held that the arrest was unlawful and that the claimant was entitled to the damages she sought.\nThis was, after all, an action for damages for false imprisonment in which the claimant had succeeded in the county court.\nIf the House had thought that she would not have been entitled to damages in any event, it would surely have said so.\nI agree with Lord Walker that it is not necessary to hold that every single departure from policy, or even failure in the decision making process, attracts these consequences in order to hold that they apply in this case.\nThe discrepancy between what the policy said should happen in these cases and what was actually happening is stark.\nThe claimants were being dealt with, not under the published, lawful policy, but under an unpublished, unlawful policy or practice.\nYet it is difficult not to have some sympathy for the officials involved.\nThe Government had been hit by a perfect storm in April 2006 when the popular press discovered that foreign national prisoners were being released after serving their sentences without any consideration being given to whether or not they should be deported.\nIt had cost the then Home Secretary his job.\nThe immediate answer was not to let any of them go.\nThis was at odds with the published policy, which presumed against the use of detention powers.\nOfficials knew this and they also knew that the policy needed amendment.\nBut they found it very difficult to devise a policy for publication which would be both lawful and acceptable to ministers.\nMinisters wanted a near blanket ban on release, whereas the law requires some flexibility to respond to the circumstances of the particular case.\nSo the situation dragged on for many, many months.\nThese are just the sort of circumstances, where both Ministers and their civil servants are under pressure to do what they may know to be wrong, in which the courts must be vigilant to ensure that their decisions are taken in accordance with the law.\nTo borrow from the civil servants correspondence, the courts must be prepared to take the hit even if they are not.\nThe law requires that decisions to detain should be made on rational grounds and in an open and transparent way and not in accordance with arbitrary rules laid down by Government and operated in secret.\nOne of the most disturbing features of this sorry tale is that the case handling officials had to give reasons for their decisions which were not what their real reasons were.\nThe European Convention on Human Rights and the Strasbourg Court have not imposed the same requirements of proportionality upon detention with a view to deportation under article 5(1)(f) as they have upon detention under other provisions in article 5(1).\nBut any deprivation of liberty has to be in accordance with a procedure prescribed by law.\nUnless the law has certain essential characteristics, there is a risk that detentions may be arbitrary.\nThat is why the open ended common law power to detain people who lack the capacity to make decisions for themselves on grounds of necessity was found incompatible with article 5(1)(e): see L v United Kingdom (2005) 40 EHRR 32.\nThere is every reason to think that Strasbourg would find a secret policy which presumed in favour of the detention of every foreign national prisoner open to the same objections.\nThe common law is just as respectful of the liberty of the person, and just as distrustful of arbitrary and secret decision making by officials acting on behalf of Government, as is the Convention.\nI would therefore answer yes to the first question.\nI would also answer the second question in the way proposed by Lord Dyson.\nIn other words, 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.\nThe third question is whether it makes any difference that, in these particular cases, if the officials had been operating the published policy they both could and would have authorised the detention of these appellants.\nThis would not normally make any difference.\nIn Christie v Leachinsky, the officers could have made a lawful arrest and only chose to make an unlawful arrest for convenience, but they were still liable for false imprisonment.\nIn Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, the custody officer could have reviewed the case when he should have done and would no doubt have authorised the continued detention then, but there was still liability in false imprisonment.\nFor all the reasons given by Lord Dyson, there is no basis for drawing a distinction according to the reason why the detention is unlawful, permitting what has been referred to as a causation defence in some cases but not in others.\nThe most difficult question is whether this should make any difference to the measure of damages awarded.\nI quite agree with Lord Brown that the importance of strict adherence to the law when depriving people of their liberty should not be devalued.\nAwarding the same measure of damages, irrespective of whether or not the person could and would have been lawfully detained, serves to reinforce the importance of this principle.\nAlso, if no distinction, according to the reason why the detention is unlawful, is to be drawn in relation to the second question, there should be no such distinction in relation to damages.\nIf we are to hold that a person who could and inevitably would have been detained lawfully had the correct criteria or procedures been applied is not to be compensated for the loss of liberty, then this must apply irrespective of the reason why depriving him of his liberty was unlawful.\nWe cannot single out these public law cases for special treatment.\nIn most cases of false imprisonment, the problem will not arise, because the detainer does not have a choice between acting lawfully and acting unlawfully.\nThe prison governor in R v Governor of Brockhill Prison, Ex p Evans (No 2) [2001] 2 AC 19 had no power to detain the prisoner beyond the properly calculated term of her imprisonment: the fact that he was acting in compliance with the law as it had previously been thought to be was neither here nor there.\nThe police officer in Langley v Liverpool City Council [2006] 1 WLR 375 had, as the Court of Appeal found in what I agree with Lord Walker was a finely balanced decision, no power to use his power to take a child into police protection under section 46 of the Children Act 1989 when the child could and should have been protected by social workers implementing an emergency protection order under section 44.\nThe immigration officers in Kuchenmeister v Home Office [1958] 1 QB 496 had no power to detain the claimant in such a way as to prevent his transiting from one aircraft to another at London airport.\nHowever, where the defendant has failed to comply with a procedural requirement, there is always the possibility that the deed might have been done lawfully.\nBut the whole point of procedural requirements, such as those in Cooper v Wandsworth Board of Works or Christie v Leachinsky, is that the person whose rights are being infringed should have an opportunity of challenging this.\nSo it will rarely be possible to be confident that, had the correct procedure been followed, the outcome would have been the same.\nRoberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662 is an example where it was possible.\nThis case is another, because it would appear that, had the decision makers applied the published, lawful policy rather than the unpublished, unlawful policy, they would inevitably have reached the same conclusion.\nInsofar as damages for false imprisonment are meant to compensate for the loss of liberty, it is difficult to see why a claimant should be compensated for the loss of something which he would never have enjoyed.\nBut, left to myself, I would not regard this as the end of the story.\nTrespass, whether to person or property, has always been actionable per se, without proof of anything which the law regards as damage.\nThe tort is complete when a direct interference with person or property without lawful justification is established.\nUsually, there will also be some harm done which the wrongdoer must remedy, either by damages or in some other way.\nTake, for example, the case of the neighbour who put a row of ridge tiles on his neighbours roof.\nThey did no harm to the roof; they did not diminish the value of the house in any way; indeed many might think them an enhancement; but the claimant did not want them there and successfully sued for trespass.\nThe obvious remedy was to remove the tiles or pay the cost of the claimants doing so.\nBut suppose there is no such harm.\nThe claimant has nevertheless been done wrong.\nLet us also assume, as is the case here, that the circumstances are not such as to attract punitive or exemplary damages.\nIs our law not capable of finding some way of vindicating the claimants rights and the importance of the principles involved? A way which does not purport to compensate him for harm or to punish the defendant for wrongdoing but simply to mark the laws recognition that a wrong has been done?\nAs Lord Collins explains, the concept of vindicatory damages has been developed in some Commonwealth countries with written constitutions enshrining certain fundamental rights and principles and containing broadly worded powers to afford constitutional redress (and also in New Zealand, which has no written Constitution but does have a Bill of Rights: Taunoa v Attorney General [2008] 1 NZLR 429).\nIn an early article on the Canadian Charter, Damages as a remedy for infringement of the Canadian Charter of Rights and Freedoms (1984) 62(4) Canadian Bar Review 517, Marilyn Pilkington argued that an award of damages under section 24(1) of the Charter should not be limited by the common law principles of compensation.\nIn a proper case it might be designed to deter repetition of the breach, or to punish those responsible or to reward those who expose it.\nIn Attorney General of St Christopher, Nevis and Anguilla v Reynolds [1980] AC 607, the Privy Council upheld a modest award of exemplary damages for breach of a constitutional right.\nBut there can be a middle course between compensatory and exemplary damages.\nIn Jorsingh v Attorney General (1997) 52 WIR 501, de la Bastide CJ and Sharma JA in the Court of Appeal of Trinidad and Tobago both said, albeit obiter, that the remedies available under section 14(2) of the Constitution were not limited by common law principles.\nSharma JA said, at p 512, that The court is mandated to do whatever it thinks appropriate for the purpose of enforcing or securing the enforcement of any of the provisions dealing with the fundamental rights.\nNot only can the court enlarge old remedies; it can invent new ones as well, if that is what it takes or is necessary in an appropriate case to secure and vindicate the rights breached.\nSince then, the concept of vindicatory damages for breach of constitutional rights has been recognised by the Judicial Committee of the Privy Council, in Attorney General of Trinidad and Tobago v Ramanoop [2005] UKPC 15, [2006] 1 AC 328 and Merson v Cartright and Attorney General [2005] UKPC 38 (Bahamas); applied to breach of constitutional provisions other than the fundamental rights and freedoms, in Fraser v Judicial and Legal Services Commission [2008] UKPC 25 (St Lucia) and Inniss v Attorney General [2008] UKPC 42 (St Kitts), which involved the dismissal of respectively a magistrate and a High Court registrar in breach of the procedures laid down in the Constitution; and applied to the breach of fundamental rights in Takitota v Attorney General [2009] UKPC 11 (Bahamas), where the Board quoted from Lord Nicholls in Ramanoop, at para 19: An award of compensation will go some distance towards vindicating the infringed constitutional right.\nHow far it goes will depend on the circumstances, but in principle it may well not suffice.\nThe fact that the right violated was a constitutional right adds an extra dimension to the wrong.\nAn additional award, not necessarily of substantial size, may be needed to reflect the sense of public outrage, emphasise the importance of the constitutional right and the gravity of the breach, and deter future breaches.\nAlthough such an award, where called for, is likely in most cases to cover much the same ground in financial terms as would an award by way of punishment in the strict sense of retribution, punishment in the latter sense is not its object.\nAccordingly, the expressions punitive damages or exemplary damages are better avoided .\nWe are not here concerned with a written constitution with a broadly drawn power to grant constitutional redress.\nBut neither are we concerned with a statutory provision, such as section 8(3) and (4) of the Human Rights Act 1998, with a narrowly drawn power to award damages.\nWe are concerned with a decision taken at the highest level of Government to detain certain people irrespective of the statutory purpose of the power to detain.\nThe common law has shown itself capable of growing and adapting to meet new situations.\nIt has recently invented the concept of a conventional sum to mark the invasion of important rights even though no compensatory damages are payable.\nIn the view of the majority of the House of Lords in Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309, there were sound reasons of public policy why damages should not be recoverable for the cost of bringing up a healthy child born as a result of a negligent sterilisation.\nNevertheless, an award limited to the stress and trauma associated with the pregnancy and birth was insufficient to mark the legal wrong which had been done to the mother.\nThis should be marked by a fixed, non negligible, conventional sum (in that case 15,000).\nRees was concerned with the rights to bodily integrity and personal autonomy, the right to limit ones family and to live ones life in the way planned: see Lord Bingham of Cornhill at paragraph 8.\nThese are important rights indeed.\nBut no one can deny that the right to be free from arbitrary imprisonment by the state is of fundamental constitutional importance in this country.\nIt is not the less important because we do not have a written constitution.\nIt is a right which the law should be able to vindicate in some way, irrespective of whether compensatable harm has been suffered or the conduct of the authorities has been so egregious as to merit exemplary damages.\nLeft to myself, therefore, I would mark the false imprisonment in these cases with a modest conventional sum, perhaps 500 rather than the 1000 suggested by Lord Walker, designed to recognise that the claimants fundamental constitutional rights have been breached by the state and to encourage all concerned to avoid anything like it happening again.\nIn reality, this may well be what was happening in the older cases of false imprisonment, before the assessment of damages became such a refined science.\nI therefore agree, and (subject to the additional points made above) for the reasons given by Lord Dyson, that both these appeals should be allowed.\nWhen considering what was a reasonable period for which to detain Mr Lumba in accordance with the Hardial Singh principles, however, I would stress that his psychiatric condition must be among the factors to be taken into account.\nLORD COLLINS\nI agree with Lord Dyson that the appeals should be allowed, substantially for the reasons which he gives.\nThis is a case in which on any view there has been a breach of duty by the executive in the exercise of its power of detention.\nFundamental rights are in play.\nChapter 39 of Magna Carta (1215) said that no free man shall be seized or imprisoned except by the law of the land and the Statute of Westminster (1354) provided that no man of what state or condition he be, shall be imprisoned without being brought in answer by due process of the law.\nThat the liberty of the subject is a fundamental constitutional principle hardly needs the great authority of Sir Thomas Bingham MR (see In re S C (Mental Patient: Habeas Corpus) [1996] QB 599, 603) to support it, but it is worth recalling what he said in his book The Rule of Law (2010), at p 10, about the fundamental provisions of Magna Carta: These are words which should be inscribed on the stationery of the Home Office.\nThe evidence shows that concern was expressed in the Home Office from an early stage about the lawfulness of the policy, and that a deliberate decision was taken to continue an unlawful policy.\nAs Lord Dyson says, caseworkers were directed to conceal the true reason for detention, namely the unpublished policy, and to give other reasons which appeared to conform with the published policy.\nHome Office officials recognised that Ministers preferred position may be to continue to detain all FNPs and let the immigration judges take any hit which is to be had by releasing on bail.\nThe draft policy submission circulated in May 2007 recommended a change in policy, but also set out continued detention as one of the options, recognising that legal advisers considered that the department would lose on any legal challenge.\nThe draft added: we could present any change in our approach as having been forced on us by the courts.\nI am satisfied that the serious breach of public law in this case has the result that the detention of the appellants was unlawful.\nAny other result would negate the rule of law.\nChristie v Leachinsky [1947] AC 573 shows that where an arrest was unlawful because it did not comply with the requirements imposed by the common law there would be a false imprisonment even if the arrest could have been effected in a proper manner.\nHolgate Mohammed v Duke [1984] AC 437, 443, is high authority for the proposition that breach of principles of public law can found an action at common law for damages for false imprisonment.\nAre they entitled to more than nominal damages? In particular are they entitled to vindicatory damages? The expression vindicatory damages has been in common use in the context of proceedings for violation of constitutional rights since Attorney General of Trinidad and Tobago v Ramanoop [2005] UKPC 15, [2006] 1 AC 328 and Merson v Cartright and Attorney General [2005] UKPC 38.\nIt would seem that the expression had its origin in the United States, where it was sometimes used as a synonym for exemplary or punitive damages (e.g. Cole v Tucker, 6 Tex 266 (1851); Blair Iron & Coal Co v Lloyd, 3 WNC 103 (Pa (1874)), but at other times used to mean damages designed to vindicate a right but which were compensatory in nature (e.g. McBride v McLaughlin, 5 Watts 375 (Pa 1836); Hallmark v Stillings, 648 SW 2d 230 (Mo 1983)).\nIn England the expression first emerged in a sense somewhat different from, but in a sense related to, that in which it is now used.\nIn Broome v Cassell & Co Ltd [1972] AC 1027, 1071, Lord Hailsham of Marylebone LC said: In actions of defamation and in any other actions where damages for loss of reputation are involved, the principle of restitutio in integrum has necessarily an even more highly subjective element.\nSuch actions involve a money award which may put the plaintiff in a purely financial sense in a much stronger position than he was before the wrong.\nNot 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.\nAs Windeyer J well said in Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 115, 150: It seems to me that, properly speaking, a man defamed does not get compensation for his damaged reputation.\nHe gets damages because he was injured in his reputation, that is simply because he was publicly defamed.\nFor this reason, compensation by damages operates in two waysas a vindication of the plaintiff to the public and as consolation to him for a wrong done.\nCompensation is here a solatium rather than a monetary recompense for harm measurable in money.\nSee also, e.g. Sutcliffe v Pressdram Ltd [1991] 1 QB 153; Rantzen v Mirror Group Newspapers (1986) Ltd [1994] QB 670; Purnell v Business F1 Magazine Ltd [2007] EWCA Civ 744, [2008] 1 WLR 1.\nAny consideration of the Privy Council decisions on vindicatory damages must be prefaced by three points.\nFirst, they were concerned with alleged violations of constitutional rights.\nSecond, the constitutions contained provision in relation to such violations for redress (Trinidad and Tobago, section 14(1) (without prejudice to any other action which is lawfully available); Bahamas, article 28(1) (but not if adequate means of redress are available under any other law), or relief together with such remedy as the court considers appropriate (Saint Christopher & Nevis, section 96(1), (3); Saint Lucia, section 105(1), (3)).\nThird, although the distinction has sometimes been blurred (as perhaps in Takitota v Attorney General [2009] UKPC 11, 13), the decisions are concerned with two heads of damage, compensatory damages and vindicatory damages.\nIn Attorney General of Trinidad and Tobago v Ramanoop [2005] UKPC 15, [2006] 1 AC 328, at 18 19 Lord Nicholls, speaking for the Board, dealt with both heads of damages in this way: [18] When exercising this constitutional jurisdiction the court is concerned to uphold, or vindicate, the constitutional right which has been contravened.\nA declaration by the court will articulate the fact of the violation, but in most cases more will be required than words.\nIf the person wronged has suffered damage, the court may award him compensation.\nThe comparable common law measure of damages will often be a useful guide in assessing the amount of this compensation.\nBut this measure is no more than a guide because the award of compensation under section 14 is discretionary and, moreover, the violation of the constitutional right will not always be coterminous with the cause of action at law. [19] An award of compensation will go some distance towards vindicating the infringed constitutional right.\nHow far it goes will depend on the circumstances, but in principle it may well not suffice.\nThe fact that the right violated was a constitutional right adds an extra dimension to the wrong.\nAn additional award, not necessarily of substantial size, may be needed to reflect the sense of public outrage, emphasise the importance of the constitutional right and the gravity of the breach, and deter further breaches.\nAll these elements have a place in this additional award.\nRedress in section 14 is apt to encompass such an award if the court considers it is required having regard to all the circumstances.\nAlthough such an award, where called for, is likely in most cases to cover much the same ground in financial terms as would an award by way of punishment in the strict sense of retribution, punishment in the latter sense is not its object.\nAccordingly, the expressions punitive damages or exemplary damages are better avoided as descriptions of this type of additional award.\nIn Merson v Cartright and Attorney General [2005] UKPC 38 the gravity of police misconduct was such as to attract an award of $100,000 for violations of the Constitution in addition to $90,000 in damages for assault, battery and false imprisonment, and $90,000 for malicious prosecution.\nIt was held by the Privy Council that the awards were not duplicative.\nLord Scott said (at 18): The purpose of a vindicatory award is not a punitive purpose.\nIt is not to teach the executive not to misbehave.\nThe purpose is to vindicate the right of the complainant to carry on his or her life in the Bahamas free from unjustified executive interference, mistreatment or oppression.\nThe sum appropriate to be awarded to achieve this purpose will depend upon the nature of the particular infringement and the circumstances relating to that infringement.\nIt will be a sum at the discretion of the trial judge.\nIn some cases a suitable declaration may suffice to vindicate the right; in other cases an award of damages, including substantial damages, may seem to be necessary.\nA vindicatory award of $50,000 was made in Inniss v Attorney General [2008] UKPC 42.\nIn Subiah v Attorney General of Trinidad and Tobago [2008] UKPC 47, at 11 Lord Bingham noted that when deciding whether to award vindicatory damages, the answer is likely to be influenced by the quantum of the compensatory award, as also by the gravity of the constitutional violation in question to the extent that this is not already reflected in the compensatory award.\nSee also Durity v Attorney General of Trinidad and Tobago [2008] UKPC 59, 35.\nBut in Suratt v Attorney General of Trinidad and Tobago (No 2) [2008] UKPC 38 and James v Attorney General of Trinidad and Tobago [2010] UKPC 23 declaratory relief was sufficient.\nThe availability of damages for constitutional wrongs, and in particular, exemplary or vindicatory damages, is, or has been, controversial in many countries.\nIn the United States, nominal damages can be awarded for the deprivation of a constitutional right without proof of actual injury, but substantial damages can be awarded only to compensate for actual injury: e.g. Elkins v District of Columbia, 710 F Supp 2d 53, 63 64 (DDC 2010), citing Carey v Piphus, 435 US 247 (1978); Memphis Community School District v Stachura, 477 US 299 (1986).\nIn Ntandazeli Fose v Minister of Safety and Security in the Constitutional Court of South Africa [1998] 1 LRC 198 Ackermann J considered whether appropriate relief for infringements of the Interim Constitution of South Africa justified, in addition to compensatory damages for assault, an award for vindication of the rights and for punitive damages.\nAfter a full account of the law in other countries he said that he had considerable doubts whether, even where the infringement of the right caused no damage, an award of constitutional damages in order to vindicate the right would be appropriate, and suggested that the court might conclude that a declaratory order combined with a suitable order for costs would be a sufficiently appropriate remedy to vindicate the right even in the absence of an award of damages.\nBut in any event there was no place for constitutional punitive damages: 68, 69.\nIn Taunoa v Attorney General [2008] 1 NZLR 429 the Supreme Court of New Zealand was more sympathetic to vindicatory damages.\nElias CJ said (at para 109) that damages in such cases should be limited to what is adequate to mark any additional wrong in the breach and, where appropriate, to deter future breaches.\nSee also Tipping J at 317 (the interests of the victim require the court to consider what compensation is due, but society is a victim also, and the court must consider also what is necessary by way of vindication to protect fundamental rights and freedoms); also Blanchard J at 258; McGrath J at 370.\nThe most recent consideration of the question was by the Supreme Court of Canada in Vancouver (City of) v Ward [2010] 2 SCR 28, in relation to damages for breach of the Canadian Charter of Rights and Freedoms.\nMcLachlin CJ said that Charter damages had the functions of compensation, vindication and deterrence.\nBy vindication she meant the affirmation of constitutional values, focusing on the harm which breach of the Charter did to society.\nThe fact that the claimant had not suffered personal loss did not preclude an award of damages where the objectives of vindication or deterrence clearly called for an award, and the view that constitutional damages were only available for pecuniary or physical loss had been widely rejected in other constitutional democracies: 28, 30.\nThe present claims are not, of course, for constitutional damages.\nExemplary damages are available where the executive has acted in a way which is oppressive, arbitrary or unconstitutional.\nIn Kuddus v Chief Constable of Leicestershire Constabulary [2001] UKHL 29, [2002] 2 AC 122, 63 Lord Nicholls said: The availability of exemplary damages has played a significant role in buttressing civil liberties, in claims for false imprisonment and wrongful arrest.\nFrom time to time cases do arise where awards of compensatory damages are perceived as inadequate.\nThe nature of the defendants conduct calls for a further response from the courts.\nOn occasion conscious wrongdoing by a defendant is so outrageous, his disregard for the plaintiffs rights so contumelious, that something more is needed to show that the law will not tolerate such behaviour.\nWithout an award of exemplary damages, justice will not have been done.\nExemplary damages, as a remedy of last resort, fill what would otherwise be a regrettable lacuna.\nBut this is not a case for exemplary damages falling within the first head of Rookes v Barnard [1964] AC 1129.\nNor do I consider that the concept of vindicatory damages should be introduced into the law of tort.\nIn truth, despite the suggestions to the contrary in the Privy Council in Ramanoop and Merson, vindicatory damages are akin to punitive or exemplary damages (as in Attorney General of St Christopher, Nevis and Anguilla v Reynolds [1980] AC 607).\nIn Ashley v Chief Constable of Sussex Police [2008] UKHL 25, [2008] AC 962 the question was whether there was an abuse of process to allow a claim against the police for the wrongful death of James Ashley to proceed where the police admitted liability for all damages.\nThe House of Lords held by a majority that for the claim to proceed was not an abuse.\nLord Scott (obiter) suggested that the claim should proceed in order that vindicatory damages could be available.\nHe referred to Lord Hopes observation in Chester v Afshar [2004] UKLH 41, [2005] 1 AC 134, 87 that the function of the law is to enable rights to be vindicated and to provide remedies when duties have been breached.\nLord Scott said at para 22: Although the principal aim of an award of compensatory damages is to compensate the claimant for loss suffered, there is no reason in principle why an award of compensatory damages should not also fulfil a vindicatory purpose.\nBut it is difficult to see how compensatory damages can could ever fulfil a vindicatory purpose in a case of alleged assault where liability for the assault were denied and a trial of that issue never took place.\nDamages awarded for the purpose of vindication are essentially rights centred, awarded in order to demonstrate that the right in question should not have been infringed at all.\nIn Attorney General of Trinidad and Tobago v Ramanoop [2006] 1 AC 328 the Privy Council upheld an award of vindicatory damages in respect of serious misbehaviour by a police officer towards the claimant.\nThese were not exemplary damages; they were not awarded for any punitive purpose.\nThey were awarded, as it was put in Merson v Cartwright [2005] UKPC 38, another case in which the Privy Council upheld an award of vindicatory damages, in order to vindicate the right of the complainant to carry on his or her life in the Bahamas free from unjustified executive interference, mistreatment or oppression: para 18.\nThe rights that had been infringed in the Ramanoop case and in Merson v Cartwright were constitutional rights guaranteed by the respective constitutions of the countries in question.\nBut the right to life, now guaranteed by article 2 of the European Convention [on Human Rights] and incorporated into our domestic law by the Human Rights Act 1998, is at least equivalent to the constitutional rights for infringement of which vindicatory damages were awarded in Ramanoop and Merson v Cartwright.\nBut what Lord Hope said in Chester v Afshar was not said in the context of damages, and it seems clear that neither Lord Bingham nor Lord Rodger agreed.\nIn particular Lord Rodger said that the right to bodily integrity was protected by the tort actionable per se of trespass to the person, where the law vindicates that right by awarding nominal damages (para 60).\nTo make a separate award for vindicatory damages is to confuse the purpose of damages awards with the nature of the award.\nA declaration, or an award of nominal damages, may itself have a vindicatory purpose and effect.\nSo too a conventional award of damages may serve a vindicatory purpose.\nThat is the basis of Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309.\nAs a result of a failed sterilisation negligently performed, the claimant gave birth to a child.\nThe House of Lords held by a majority that although the health authority was not liable to compensate for the childs upbringing, compensation in respect of stress, trauma and the costs associated with pregnancy and birth were recoverable.\nIn addition the claimant was awarded an additional sum of 15,000 of which Lord Bingham said: [the] award would not be, and would not be intended to be, compensatory.\nIt would not be the product of calculation.\nBut it would not be a nominal, let alone a derisory, award.\nIt would afford some measure of recognition of the wrong done (para 8).\nSee also Lords Nicholls, Millett, and Scott: at 17, 123, 148, and the critical views expressed in McGregor, Damages 18th ed (2009), paras 35 29735 299.\nNeither the minority dicta in Ashley v Chief Constable of Sussex Police [2008] UKHL 25, [2008] 1 AC 962 nor the award in Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309 justify a conclusion that there is a separate head of vindicatory damages in English law.\nConsequently I do not consider that there is any basis in the present law for such an award.\nNor do I consider that there is a basis in policy for the creation of a head of vindicatory damages at common law, distinct from the existing law of compensatory or exemplary damages.\nI would therefore restrict the remedy in this case to nominal damages for the reasons given by Lord Dyson.\nLORD KERR\nFor the reasons given by Lord Dyson, with which I agree, I too would allow this appeal.\nA causation test\nFalse imprisonment is established if there has been a detention and an absence of lawful authority justifying it.\nThe question whether lawful authority exists is to be determined according to an objective standard.\nIt either exists or it does not.\nIt is for this elementary but also fundamental reason that a causation test can have no place in the decision whether imprisonment is false or lawful.\nBy a causation test in this context I mean a test which involves an examination of whether the persons held in custody could have been lawfully detained.\nThe fact that a person could have been lawfully detained says nothing on the question whether he was lawfully detained.\nThe Court of Appeal in the present case decided that, since the claimants could have been detained lawfully had the published policy been applied to them, the fact that an unpublished and unlawful policy was in fact applied was immaterial.\nWith great respect, this cannot be right.\nThe unpublished policy was employed in the decision to detain the appellants.\nIt was clearly material to the decision to detain.\nIndeed, it was the foundation for that decision.\nAn ex post facto conclusion that, had the proper policy been applied, the appellants would have been lawfully detained cannot alter that essential fact.\nThe inevitability of the finding that the detention was unlawful can be illustrated in this way.\nIf, some hours after making the decision to detain the appellants (based on the application of the unpublished policy), it was recognised that this did not constitute a legal basis on which they could be held, could their detention be said to be lawful before any consideration was given to whether the application of the published policy would have led to the same result? Surely, at the moment that it became clear that there was no lawful authority for the detention and before any alternative basis on which they might be detained was considered, their detention was unlawful.\nIt is, I believe, important to recognise that lawful detention has two aspects.\nFirst the decision to detain must be lawful in the sense that it has a sound legal basis and, secondly, it must justify the detention.\nThis second aspect has found expression in a large number of judgments, perhaps most succinctly in the speech of Lord Hope in R v Governor of Brockhill Prison Ex p Evans (No 2) [2001] 2 AC 19, 32 D where he said it is of the essence of the tort of false imprisonment that the imprisonment is without lawful justification.\nIt seems to me to be self evident that the justification must relate to the basis on which the detainer has purported to act, and not depend on some abstract grounds wholly different from the actual reasons for detaining.\nAs Mr Husain QC put it, the emphasis here must be on the right of the detained person not to be detained other than on a lawful basis which justifies the detention.\nDetention cannot be justified on some putative basis, unrelated to the actual reasons for it, on which the detention might retrospectively be said to be warranted.\nSimply because some ground for lawfully detaining may exist but has not been resorted to by the detaining authority, the detention cannot be said, on that account, to be lawful.\nThis point was clearly made in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662.\nIn that case the plaintiff had been lawfully arrested and detained in a police cell.\nA review of his detention as required by statute was not carried out within the prescribed time.\nAt p 667 B the submission of counsel for the Chief Constable was recorded as being that if circumstances existed which were or would be sufficient to justify continued detention the plaintiff could not fairly be said to be detained without lawful excuse.\nThat submission was roundly and, in my view, rightly rejected, Clarke LJ saying, As I see it, it is nothing to the point to say that the detention would have been lawful if a review had been carried out or that there were grounds which would have justified continued detention.\nLikewise it is nothing to the point in this case that if the decision had been taken on the basis of the published policy, it would have been immune from challenge.\nAs Professor Cane put it in The Temporal Element in Law (2001) 117 LQR 5, 7 imprisonment can never be justified unless actually [as opposed to hypothetically] authorised by law. (The emphasis and the words enclosed in square brackets are mine).\nThe matter might be considered on the following hypothetical basis.\nSuppose that there were two policies, one lawful published policy for the detention of foreign national prisoners sentenced to more than 5 years imprisonment, the other an unlawful secret policy for detention of those sentenced to more than 2 years imprisonment.\nOn the respondents case an individual detained under the second policy, who would have been detained under the first policy if it had been applied, has not been detained unlawfully.\nI do not consider that such an argument is viable.\nA policy may lawfully be devised for the purpose of dealing generally with a regularly occurring species of case but it must always be possible to depart from the policy if the circumstances of an individual case warrant it.\nAs the author of Wade & Forsyth on Administrative Law 10th ed (2009) at page 270 states: It is a fundamental rule for the exercise of discretionary power that discretion must be brought to bear on every case: each one must be considered on its own merits and decided as the public interest requires at the time.\nIn the mooted example, consideration would be given to departing from a policy which is different from that which the individual is entitled to have applied to him.\nThe possible justification for departing from the policy would be considered on a different basis from that which ought properly to determine the question.\nThis is, in my view, impermissible in public law terms.\nA minister exercising his discretion by applying a published policy is acting lawfully.\nBut if the policy which is applied is unlawful, the exercise of discretion is unlawful.\nThe individual has not had applied to his case the proper exercise of discretion to which he is entitled.\nThe application of an unlawful policy will therefore ipso facto render the decision to detain unlawful.\nIn this context, I consider that it matters not whether the decision is said to be in violation of a public law principle or ultra vires the power to make the decision.\nTo draw such a distinction would mark a radical departure from how error of law has long been understood.\nAgain, a short extract from Wade & Forsyth at p 255 makes the point decisively: Void or voidable was a distinction which could formerly be applied without difficulty to the basic distinction between action which was ultra vires and action which was liable to be quashed for error of law on the face of the record.\nThat distinction no longer survives since the House of Lords [in Anisminic and subsequent cases] declared all error of law to be ultra vires.\nThe nature of the public law breach required to invalidate the detention\nIn R (SK Zimbabwe) v Secretary of State for the Home Department [2009] 1 WLR 1527 it was accepted by the appellant that not every type of public law breach, committed after an initially valid detention, would render continued detention unlawful.\nOn the present appeal the argument on behalf of the detained persons is put thus: a public law error that bears directly on the decision to detain will mean that the authority for detention is ultra vires and unlawful, and will sound in false imprisonment.\nBut breaches which have no direct bearing on the decision to detain do not have that effect.\nSince, therefore, for instance, statutory obligations to permit a detainee to consult with his legal advisers (Cullen v Chief Constable of the Royal Ulster Constabulary [2003] 1 WLR 1763) or to be provided with food or clothing, or to be held in certain conditions (R v Deputy Governor of Parkhurst Prison Ex p Hague [1992] 1 AC 58) did not bear on the legality of detention, breach of those obligations did not render detention unlawful nor did it give rise to a claim for false imprisonment.\nLord Walker has analysed the existence\/exercise of power to detain dichotomy in a way that I find compelling.\nThis has led him to the conclusion that the essential test as to the validity of continued detention which is said to be beyond the scope of the power to detain is whether there has been a departure from the statutory purpose.\nAgain, I find his reasoning on this wholly convincing.\nI do not agree, however, that it is necessary to establish abuse of power in order to show that the decision is beyond the scope of the power to detain, if by abuse of power it is meant that some deliberate misuse of power is required.\nIf a review of a persons detention was inadvertently overlooked and it subsequently became clear that, had the review taken place, he would certainly have been released, it surely could not be suggested that the detention that had in the meantime occurred did not constitute false imprisonment.\nThe statutory purpose of the power to detain foreign nationals after the expiry of their sentence is to facilitate their deportation. (In this connection I agree fully with Lord Dyson in his analysis of the Hardial Singh (R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704) principles and with what he had to say about those principles in R (I) v Secretary of State for the Home Department [2002] EWCA Civ 888, [2003] INLR 196 para 46.) Where the statutory purpose no longer exists, the power to detain falls away.\nThe means of ascertaining whether the statutory purpose remains achievable is the system of review.\nWhere that system is operated on the basis of a policy, it is of obvious and critical importance that the policy be transparent and that those who may be detained on foot of it have the opportunity to make informed representations on its application.\nBreach 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.\nA claim of false imprisonment is the natural, indeed inevitable, entitlement of a person whose detention is no longer justified.\nSince the appellants in the present case were detained by the operation of a secret, unpublished policy, an effective system of review of the justification for their detention was not possible.\nAs a consequence their detention could no longer be said to be justified.\nAs it seems to me, this approach approximates to the way in which the case was put for the appellants but links it more closely to the vital consideration of the statutory purpose of the power to detain.\nDoes the award of nominal damages devalue the tort of false imprisonment?\nAs various members of the court have pointed out, the fact that false imprisonment is a species of trespass to the person and is actionable without proof of special damage must be carefully taken into account in deciding whether nominal damages can ever be considered appropriate.\nThe impact of a finding that the State has been guilty of false imprisonment (whether or not it is also ordered to pay compensation) should not be underestimated, however.\nSuch a finding has the effect, in the words of Lady Hale, of mark[ing] the laws recognition that a wrong has been done.\nAnd it is in the unambiguous recognition and declaration by the law that an individual has been falsely imprisoned that the essential value of the entitlement to assert that claim lies.\nI do not believe, therefore, that the award of nominal damages will, of itself and as a matter of automatic consequence, bring about a devaluation of the tort.\nOn the question whether the award of nominal damages or some other measure of compensation is required in false imprisonment claims, I believe that a distinction is clearly merited between those cases where it is plain that the detainees would have been released and those where it can be shown that they would have been lawfully detained, had the correct procedures been followed.\nBecause false imprisonment is a trespassory tort, it is said that the vindicatory dimension to the assessment of compensation is important.\nI shall examine that claim presently but, whatever may be said about its correctness, it is surely right that the actual impact on the individual who has been falsely imprisoned (or perhaps more importantly, the impact that could have been avoided) should feature prominently in the assessment of the appropriate amount of compensation.\nTraditionally, the primary function of damages has been to compensate the individual for the loss that he or she has suffered (compensatory damages).\nMore recently the concept of restitutionary damages has been recognised where damages for the tort are measured according to the gain that the defendant has obtained or the value that the right infringed might have had to the claimant where, for instance, unknown to the claimant, the defendant has used the claimants property.\nThis category of damages is not relevant here.\nA third type of damages (vindicatory damages) may be.\nIn a number of recent decisions the Judicial Committee of the Privy Council has awarded what might be classified as vindicatory damages where there has been a breach of constitutional rights.\nAttorney General for Trinidad and Tobago v Ramanoop [2006] 1 AC 328 is perhaps the leading of these cases.\nAt para 19 Lord Nicholls, delivering the judgment of the Committee, said : An award of compensation will go some distance towards vindicating the infringed constitutional right.\nHow far it goes will depend on the circumstances, but in principle it may well not suffice.\nThe fact that the right violated was a constitutional right adds an extra dimension to the wrong.\nAn additional award, not necessarily of substantial size, may be needed to reflect the sense of public outrage, emphasise the importance of the constitutional right and the gravity of the breach and deter further breaches.\nAll these elements have a place in this additional award.\nAlthough such an award, where called for, is likely in most cases to cover much the same ground in financial terms as would an award by way of punishment in the strict sense of retribution, punishment in the latter sense is not its object.\nAccordingly, the expressions punitive damages or exemplary damages are better avoided as descriptions of this type of additional award.\nLord Nicholls recognition that this type of award covered much the same ground as that involved in exemplary or punitive damages is reflected in the more recent decision of the Privy Council in Takitota v Attorney General [2009] UKPC 11 where, at para 15, Lord Carswell said : it would not be appropriate to make an award both by way of exemplary damages and for breach of constitutional rights.\nWhen the vindicatory function of the latter head of damages has been discharged, with the element of deterrence that a substantial award carries with it, the purpose of exemplary damages has largely been achieved.\nFor the reasons given by Lord Dyson an award of exemplary damages is not warranted in these cases.\nIf there is any scope for the award of vindicatory damages where exemplary damages are not appropriate, it must be, in my opinion, very limited indeed.\nSuch an award could only be justified where the declaration that a claimants right has been infringed provides insufficiently emphatic recognition of the seriousness of the defendants default.\nThat situation does not arise here.\nThe defendants failures have been thoroughly examined and exposed.\nA finding that those failures have led to the false imprisonment of the appellants constitutes a fully adequate acknowledgement of the defendants default.\nSince the appellants would have been lawfully detained if the published policy had been applied to them, I agree that no more than a nominal award of damages is appropriate in their cases.\nDISSENTING JUDGMENTS LORD PHILLIPS\nIntroduction\nThe appellants are foreign nationals who have served sentences of imprisonment in this country (FNPs) They were detained pursuant to Schedule 3 of the Immigration Act 1971 (Schedule 3).\nThey challenge the legality of their detention.\nAt the times of the decisions to detain them there existed a policy published by the Secretary of State setting out the circumstances in which her power to detain immigrants would be exercised.\nHad the decision maker applied this policy he would have detained each of the appellants.\nIn the event, however, he decided to detain each by the application of a policy which Mr Beloff QC for the Secretary of State has conceded was unlawful.\nWhether the lawful or unlawful policy had been applied the decision would have been the same.\nThe principal common issues raised by these appeals are first whether, in these circumstances, the detention of each of the appellants was unlawful; secondly whether, if it was unlawful, the result was that the detention of each of the appellants constituted the tort of false imprisonment and; if so, thirdly, whether and on what basis the appellants are entitled to damages.\nI have placed the words lawful and unlawful in parentheses because these appeals raise the question of whether there is a material difference between a policy, or a decision, or an act which is unlawful because it violates principles of public law and a policy, or a decision, or an act which is unlawful because it is ultra vires.\nIn the case of Mr Lumba there is a second issue.\nThis is whether his detention was or became unlawful because it infringed what have become known as the Hardial Singh principles which date back to the decision of Woolf J in the case of that name over a quarter of a century ago.\nLord Dyson at para 22 of his judgment rightly states that it has been common ground in these appeals that he correctly summarised the effect of Hardial Singh in the four principles which he set out in R (I) v the Secretary of State for the Home Department [2003] INLR 196.\nAs I shall explain I have reservations about the first two principles which, so far as I am aware, have never been the subject of debate.\nLord Dyson has set out the relevant facts and statutory provisions and I can turn immediately to the common issues raised by these appeals.\nLord Dyson has held that the Secretary of State committed the tort of false imprisonment in relation to each appellant because the decision to detain him was reached in violation of public law.\nThe violation was the failure to apply the Secretary of States published policy and the application of a policy to which there were various objections of public law.\nHe has concluded that, because the reasoning offended the requirements of public law, the acts that the decision maker decided upon were beyond his powers, or ultra vires.\nI have come to a different conclusion.\nI propose in this judgment to address the following questions.\nFirst, what restrictions are implicit, as a matter of statutory interpretation, in the power to detain conferred on the Secretary of State by Schedule 3? Second, what were the policies published by the Secretary of State in relation to the detention of immigrants? Third, what were the practical implications of those policies? Fourth, what were the legal implications of those policies? Fifth, was the detention of each of the appellants contrary to those policies? Sixth, what were the defects in the policy applied when deciding whether the appellants should be detained? Seventh, what were the circumstances in which this policy was applied? Eighth, did the application of that policy render the detention of the appellants unlawful? If so, ninth, are the appellants entitled to damages for false imprisonment?\nImplied limitations on the power to detain conferred by Schedule 3\nI refer to the four principles that Lord Dyson states at para 22 of his judgment are derived from Hardial Singh.\nThe third and fourth principles were an essential part of the reasoning that led Woolf J to the decision that he reached in that case.\nThey are not open to question.\nThis is not true of the first two.\nThe first is that the Secretary of State must intend to deport the person and can only use the power to detain for that purpose.\nLord Dyson explains that by this he means that the power to detain must be exercised for the prescribed purpose of facilitating deportation.\nThe second principle is that the deportee may only be detained for a period that is reasonable in all the circumstances.\nNeither of these principles was stated in these terms in Hardial Singh, although I accept that they are possible interpretations of the words used by Woolf J. Neither of these principles was essential to the conclusion that he reached.\nI do not myself consider that either principle can properly be derived from his judgment.\nThe applicant in Hardial Singh sought a writ of habeas corpus.\nHe was an Indian who had entered the United Kingdom lawfully and been granted indefinite leave to remain.\nHe had been convicted of offences of burglary and been sentenced to a total of two years imprisonment.\nBefore he was due to be released he was served with a deportation order on behalf of the Secretary of State.\nHe was due for release on 20 July 1983 but was then detained by the Secretary of State pursuant to paragraph 2(3) of Schedule 3.\nThe reason given for his detention was the risk that, if released, he would abscond.\nBecause of delay on the part of the Secretary of State in making arrangements for his return to India he was still detained in December 1983.\nIn these circumstances Woolf J, at p 706, said this about the power of detention under Schedule 3: Although the power which is given to the Secretary of State in paragraph 2 to detain individuals is not subject to any express limitation of time, I am quite satisfied that it is subject to limitations.\nFirst of all, it can only authorise detention if the individual is being detained in one case pending the making of a deportation order and, in the other case, pending his removal.\nIt cannot be used for any other purpose.\nSecond, as the power is given in order to enable the machinery of deportation to be carried out, I regard the power of detention as being impliedly limited to a period which is reasonably necessary for that purpose.\nThe period which is reasonable will depend on the circumstances of the particular case.\nWhat is more, if there is a situation where it is apparent to the Secretary of State that he is not going to be able to operate the machinery provided in the Act for removing persons who are intended to be deported within a reasonable period, it seems to me that it would be wrong for the Secretary of State to seek to exercise his power of detention.\nIn addition, I would regard it as implicit that the Secretary of State should exercise all reasonable expedition to ensure that the steps are taken which will be necessary to ensure the removal of the individual within a reasonable time.\nThere is a degree of ambiguity in the earlier part of this passage.\nPending the making of a deportation order is not a purpose.\nNor is pending his removal.\nWhat then did Woolf J mean when he said that the power to remove cannot be used for any other purpose? He goes on to say that the power is given to enable the machinery of deportation to be carried out and that the power of detention is limited to such period as is reasonably necessary for that purpose.\nIf one takes these two passages together it is possible to interpret Woolf J as saying that you can only detain a person for the purpose of facilitating deportation, as Lord Dyson has done.\nIt is, however, also possible to read him as saying that you can only detain a person while you are pursuing the objective of deporting him and that is how I interpret what he said.\nI believe that the interpretation given by Lord Dyson places an unjustified restriction on the Secretary of States power of detention.\nIt is obvious that detention will almost always make the practical task of deporting the detainee easier to arrange.\nMost deportees will be in this country through choice and cannot reasonably be expected to do anything to facilitate their deportation even if they do not try actively to prevent this.\nIt is open to the Secretary of State to detain a person in order to facilitate his deportation and this is often the, or one of the, reasons for doing so.\nBut, as I shall explain, I do not consider that detention of a deportee will only be lawful if used for this purpose.\nThe second principle identified by Lord Dyson is that the deportee may only be detained for a period that is reasonable in all the circumstances.\nThis I understand to be derived from Woolf Js statement The period which is reasonable will depend upon all the circumstances.\nBut that sentence was immediately preceded by the statement that the power to detain was impliedly limited to a period that was reasonably necessary for the purpose of enabling the machinery of deportation to be carried out.\nThus I believe that the circumstances that Woolf J had in mind were restricted to those that related to the task of effecting deportation.\nI am fortified in this belief by the fact that Woolf J went on to cite R v Governor of Richmond Remand Centre, Ex p Asghar [1971] 1 WLR 129.\nIn that case the Secretary of State had detained two persons who were awaiting removal with the object that they should testify in a pending criminal trial.\nLord Parker CJ rejected the suggestion that the detention could be justified as reasonable in these circumstances, stating at p 132 it does seem to me that while a reasonable time is contemplated between the giving of the directions and the final removal, that is a reasonable time necessary to effect the physical removal.\nIn Hardial Singh Woolf J was concerned only with the length of time that was reasonably necessary to effect deportation and the relationship that this bore to the power to detain.\nHe was not concerned with the question of whether there were further implied restrictions on the power to detain during that period.\nThe extent of the power to detain pending deportation was an important, albeit not the most important, issue in Chahal v United Kingdom where the nature of the domestic proceedings is apparent from the judgment of the European Court of Human Rights when the case reached Strasbourg (1996) 23 EHRR 413.\nMr Chahal was a Sikh separatist leader who had been granted indefinite leave to remain in the United Kingdom.\nOn 14 August 1990 the Secretary of State decided that he ought to be deported because his continued presence in the United Kingdom was unconducive to the public good for reasons of national security and other reasons of a political nature, namely the international fight against terrorism.\nTwo days later he was served with a notice of intention to deport.\nHe was then detained pursuant to Schedule 3 and remained in detention up to the time of the judgment of the Strasbourg Court.\nDuring this time he pursued an unsuccessful attempt to be granted asylum.\nHe also, by an application for judicial review, challenged his proposed deportation on the ground that this would violate article 3 of the Convention because it would expose him to the risk of torture and persecution if returned to India.\nHe was unsuccessful in the Divisional Court and the Court of Appeal and was refused leave to appeal to the House of Lords.\nHe then applied to Strasbourg, alleging breaches of articles 3 and 5 of the Convention.\nIn November 1995, while he was awaiting a hearing at Strasbourg, he challenged his continued detention by seeking from the Divisional Court a writ of habeas corpus and judicial review.\nThe Secretary of State opposed his application on the grounds that he could not safely be released because of the substantial threat that he posed to national security.\nIt does not appear to have been suggested that his lengthy detention was necessary to facilitate his deportation.\nHis application was refused on the ground that there was no reason to believe that the Secretary of State did not have good reason for his apprehension.\nMacPherson J ruled that the detention per se was plainly lawful because the Secretary of State [had] the power to detain an individual who [was] the subject of a decision to make a deportation order ( para 43).\nIt is relevant to see how the Strasbourg Court addressed this matter, if only because any interpretation of Schedule 3 must, if possible, be compatible with the requirements of the Convention.\nArticle 5(1) of the Convention provides, in so far as material: Everyone has the right to liberty and security of person.\nNo one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: (f) the lawful arrest or detentionof a person against whom action is being taken with a view to deportation The court said this as to the effect of that provision: 112.\nThe court recalls that it is not in dispute that Mr Chahal has been detained with a view to deportation within the meaning of article 5(1)(f).\nArticle 5(1)(f) does not demand that the detention of a person against whom action is being taken with a view to deportation be reasonably considered necessary, for example to prevent his committing an offence or fleeing; in this respect article 5(1)(f) provides a different level of protection from article 5(1)(c).\nIndeed all that is required under this provision is that action is being taken with a view to deportation.\nIt is therefore immaterial, for the purposes of article 5(1)(f), whether the underlying decision to expel can be justified under national or Convention law. 113.\nThe court recalls, however, that any deprivation of liberty under article 5(1)(f) will be justified only for as long as deportation proceedings are in progress.\nIf such proceedings are not prosecuted with due diligence, the detention will cease to be permissible under article 5(1)(f).\nThese observations echo the Hardial Singh principles, as I would interpret them.\nThe court went on to consider whether the asylum proceedings, which had delayed the stage at which Mr Chahal would have been deported, had taken an excessive length of time, and concluded that they had not.\nThis indicates that the Strasbourg Court, when considering the time reasonably needed for deportation, accepted that this would be prolonged by delay reasonably attributable to attempts to obtain asylum.\nThe court then considered the requirement that the detention should be lawful.\nIt observed at para 119 that there was no doubt that it was lawful under national law but that, because of the extremely long period during which Mr Chahal had been detained it was also necessary to consider whether there existed sufficient guarantees against arbitrariness.\nAt para 122 the court concluded that the domestic procedure under which Mr Chahals appeal against deportation had been considered by an advisory panel provided an adequate guarantee that there were at least prima facie grounds for believing that if Mr Chahal were at liberty, national security would be put at risk and thus, that the executive had not acted arbitrarily when it ordered him to be kept in detention.\nI am not able to accept that under domestic law it had been an implicit requirement of Schedule 3 that Mr Chahals detention was necessary to facilitate his deportation.\nProvided that he was being detained with a view to his removal as soon as reasonably possible I consider that the Secretary of State was entitled to detain him pending that removal on the ground that he would pose a terrorist threat if released.\nThe Hardial Singh principles were applied by analogy by the Judicial Committee of the Privy Council when considering the legitimacy under Hong Kong legislation of the detention of four boat people from Vietnam in Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97.\nTens of thousands of these people had arrived unlawfully in Hong Kong.\nThey were steadily being repatriated, but this was taking a long time.\nSection 2 of the Immigration (Amendment) Ordinance 1991 added to the relevant legislation a provision designed expressly to deal with this situation: The detention of a person under this section shall not be unlawful by reason of the period of the detention if that period is reasonable having regard to all the circumstances affecting that persons detention, including (a) in the case of a person being detained pending a decision under section 13A(1) to grant or refuse him permission to remain in Hong Kong as a refugee (i) the number of persons being detained pending decisions under section 13A(1) whether to grant or refuse them such permission; and (ii) the manpower and financial resources allocated to carry out the work involved in making all such decisions; (b) in the case of a person being detained pending his removal from Hong Kong (i) the extent to which it is possible to make arrangements to effect his removal; and (ii) whether or not the person has declined arrangements made or proposed for his removal. (p 106).\nLord Browne Wilkinson, giving the advice of the Board, said this, at p 111, under the heading The Hardial Singh principles: Section 13D(1) confers a power to detain a Vietnamese migrant pending his removal from Hong Kong.\nTheir Lordships have no doubt that in conferring such a power to interfere with individual liberty, the legislature intended that such power could only be exercised reasonably and that accordingly it was implicitly so limited.\nThe principles enunciated by Woolf J in the Hardial Singh case [1984] 1 WLR 704 are statements of the limitations on a statutory power of detention pending removal.\nIn the absence of contrary indications in the statute which confers the power to detain pending removal their Lordships agree with the principles stated by Woolf J. First, the power can only be exercised during the period necessary, in all the circumstances of the particular case, to effect removal.\nSecondly, if it becomes clear that removal is not going to be possible within a reasonable time, further detention is not authorised.\nThirdly, the person seeking to exercise the power of detention must take all reasonable steps within his power to ensure the removal within a reasonable time.\nThis accords with my reading of Hardial Singh.\nHis Lordship went on to say, however: Their Lordships are unable to agree with the Court of Appeal of Hong Kong that there is any conflict between the Hardial Singh principles and the provisions of section 13D. Section 13D(1A), which was inserted in 1991, expressly envisages that the exercise of the power of detention conferred by section 13D(1) will be unlawful if the period of detention is unreasonable.\nIt expressly provides that The detentionshall not be unlawful by reason of the period of the detention if that period is reasonable having regard to (Emphasis added.) What section 13D(1A) does is to provide expressly that, in deciding whether or not the period is reasonable, regard shall be had to all the circumstances including (in the case of a person detained pending his removal from Hong Kong) the extent to which it is possible to make arrangements to effect his removal and whether or not the person has declined arrangements made or proposed for his removal.\nTherefore the subsection is expressly based on the requirement that detention must be reasonable in all the circumstances (the Hardial Singh principles) but imposes specific requirements that in judging such reasonableness those two factors are to be taken into account.\nThe shorthand summary of the Hardial Singh principles as detention must be reasonable in all the circumstances was made in the context of those circumstances that affected the time reasonably necessary to effect removal and, just as in the case of Hardial Singh itself, I would restrict its ambit to those circumstances.\nThis I believe was, and remained, the understanding of some, at least, of the judges dealing with claims in respect of the detention of immigrants in the Administrative Court.\nThus in R (Konan) v Secretary of State for the Home Department [2004] EWHC 22 (Admin) Collins J, who had appeared as counsel in Hardial Singh, held at para 21: The power to detain pending removal is not dependent on a fear of absconding or of any other misconduct by the person in question.\nProvided it is exercised for the purpose of removal, it is lawful.\nIt must be exercised reasonably, but reasonableness in this context relates to whether removal can be achieved within a reasonable time: see R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704 and Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97 as applied in R (Saadi) v Secretary of State for the Home Department [[2002] 1 WLR 356].\nR (Saadi) v Secretary of State for the Home Department [2001] EWCA Civ 1512; [2002] 1 WLR 356 raised the question of the legality of the detention at Oakington Reception Centre for up to 10 days of aliens seeking leave to enter whose cases appeared susceptible of speedy processing.\nThe power to detain that was relied on was that afforded by paragraph 16(1) of Schedule 2 to the 1971 Act.\nParagraph 2 provides that an immigration officer may examine any person arriving in the United Kingdom to determine whether he should be given leave to enter.\nParagraph 16(1) provides: A person who may be required to submit to examination under paragraph 2 above may be detained under the authority of an immigration officer pending his examination and pending a decision to give or refuse him leave to enter.\nThe Court of Appeal, in a judgment which I delivered, considered both the scope of the power to detain afforded by this paragraph and the effect of article 5(1)(f) of the Human Rights Convention.\nAs to the former the court made the following observations: 14.\nCollins J concluded that the only limitation on the power to detain pending examination and the decision whether to grant or refuse leave to enter is that the detention must be for a reasonable time.\nFor the Secretary of State, the Attorney General supported this conclusion.\nHe argued that the power to detain persisted for so long as was reasonably necessary to conduct the examination and to reach a decision whether or not to grant leave to enter.\nAs a matter of statutory interpretation we accept this submission.\nWere it not correct, the power to grant temporary admission would also be liable to come to an end before an examination could reasonably be completed and a decision whether to grant or refuse leave to enter reasonably be taken. 15.\nWe are not aware that it has ever been the policy of the Secretary of State that applicants for leave to enter should be detained pending the decision of their applications, however long that might take.\nA more liberal policy has been adopted whereby he has approved the exercise of the power to grant temporary admission in place of detention.\nIf the basis upon which immigration officers are detaining asylum seekers at Oakington is in conflict with this policy, then, under established principles of public law, they are acting unlawfully.\nAs to the Convention the court held: 66.\nWe consider that the test of proportionality required by article 5(1)(f) requires the Court simply to consider whether the process of considering an asylum application, or arranging a deportation, has gone on too long to justify the detention of the person concerned having regard to the conditions in which the person is detained and any special circumstances affecting him or her.\nApplying that test no disproportionality is demonstrated in this case.\nThis was not a test of proportionality that the Strasbourg Court had laid down in Chahal and it received no support from that Court when Saadi reached it, as I shall show.\nGiving the only reasoned speech in a unanimous decision of the House of Lords [2002] UKHL 41; [2002] 1 WLR 3131 Lord Slynn of Hadley referred at para 18 to a statement by the Oakington Project Manager that he accepted that an important consideration in relation to detention powers was that no detention should be longer than reasonably necessary.\nLord Slynn went on to express the view at para 22: As the judge and the Court of Appeal stressed, paragraph 16 of Schedule 2 gives power to detain pending examination and a decision; that in my view means for the period up to the time when the examination is concluded and a decision taken.\nThere is no qualification that the Secretary of State must show that it is necessary to detain for the purposes of examination in that the examination could not otherwise be carried out since applicants would run away.\nNor is it limited to those who cannot for whatever reason appropriately be granted temporary admission.\nThe period of detention in order to arrive at a decision must however be reasonable in all the circumstances.\nThe last sentence reflected Government policy, as accepted by the Project Manager.\nOne of the applicants in Saadi took his case to Strasbourg (2008) 47 EHRR 427.\nHe claimed that his detention at Oakington had infringed article 5(1)(f).\nLiberty, and other interveners, contended that a test of necessity and proportionality should be applied to article 5(1)(f), so that an asylum seeker could only be detained if, but for such detention, he would attempt to effect an unauthorised entry into the country.\nThe Grand Chamber rejected this submission.\nDealing first with the interpretation of the express provisions of article 5(1)(f) it said: 64.\nWhilst the general rule set out in article 5(1) is that everyone has the right to liberty, article 5(1)(f) provides an exception to that general rule, permitting states to control the liberty of aliens in an immigration context.\nAs the court has remarked before, subject to their obligations under the Convention, states enjoy an undeniable sovereign right to control aliens entry into and residence in their territory.\nIt is a necessary adjunct to this right that states are permitted to detain would be immigrants who have applied for permission to enter, whether by way of asylum or not.\nIt is evident from the tenor of the judgment in Amuur that the detention of potential immigrants, including asylum seekers, is capable of being compatible with article 5(1)(f). 65.\nOn this point, the Grand Chamber agrees with the Court of Appeal, the House of Lords and the Chamber, that until a state has authorised entry to the country, any entry is unauthorised and the detention of a person who wishes to effect entry and who needs but does not yet have authorisation to do so, can be, without any distortion of language, to prevent his effecting an unauthorised entry.\nIt does not accept that, as soon as an asylum seeker has surrendered himself to the immigration authorities, he is seeking to effect an authorised entry, with the result that detention cannot be justified under the first limb of article 5(1)(f).\nTo interpret the first limb of article 5(1)(f) as permitting detention only of a person who is shown to be trying to evade entry restrictions would be to place too narrow a construction on the terms of the provision and on the power of the state to exercise its undeniable right of control referred to above.\nAs to the argument that a test of proportionality applied to the detention, the Court, referring to Chahal, held: 72.\nSimilarly, where a person has been detained under article 5(1)(f), the Grand Chamber, interpreting the second limb of this sub paragraph, held that, as long as a person was being detained with a view to deportation, that is, as long as action [was] being taken with a view to deportation, there was no requirement that the detention be reasonably considered necessary, for example to prevent the person concerned from committing an offence or fleeing.\nThe Grand Chamber further held in Chahal that the principle of proportionality applied to detention under article 5(1)(f) only to the extent that the detention should not continue for an unreasonable length of time; thus, it held that [A]ny deprivation of liberty under article 5(1)(f) will be justified only for as long as deportation proceedings are in progress.\nIf such proceedings are not prosecuted with due diligence, the detention will cease to be permissible. 73.\nWith regard to the foregoing, the court considers that the principle that detention should not be arbitrary must apply to detention under the first limb of article 5(1)(f) in the same manner as it applies to detention under the second limb.\nSince states enjoy the right to control equally an aliens entry into and residence in their country (see the cases cited in para 63 above), it would be artificial to apply a different proportionality test to cases of detention at the point of entry than that which applies to deportation, extradition or expulsion of a person already in the country. 74.\nTo avoid being branded as arbitrary, therefore, such detention must be carried out in good faith; it must be closely connected to the purpose of preventing unauthorised entry of the person to the country; the place and conditions of detention should be appropriate, bearing in mind that: [T]he measure is applicable not to those who have committed criminal offences but to aliens who, often fearing for their lives, have fled from their own country; and the length of the detention should not exceed that reasonably required for the purpose pursued.\nThis passage reinforces the conclusions of the court in Chahal.\nWhere a person is detained pending deportation, the only proportionality requirement that Strasbourg imposes, if indeed it is right so to describe it, is that the detention should not be for longer than is reasonably necessary to effect the deportation.\nAdded to this, however, is the important requirement that the exercise of the power to detain must not be arbitrary.\nApplying this principle the European Commission of Human Rights held manifestly inadmissible an application of infringement of article 5 by a man who had been detained for five years while he used every means to avoid extradition to Hong Kong.\nSee Osman v United Kingdom (Application No 15933\/89) (unreported) 14 January 1991.\nThe most recent pronouncement of the Grand Chamber on article 5(1)(f) is to be found in A v United Kingdom (2009) 49 EHRR 625, where it was held that article 5(1)(f) did not justify detention of the famous Belmarsh detainees.\nAt para 164 the Grand Chamber stated: To avoid being branded as arbitrary, detention under article 5(1)(f) must be carried out in good faith; it must be closely connected to the ground of detention relied on by the Government; the place and conditions of detention should be appropriate; and the length of the detention should not exceed that reasonably required for the purpose pursued.\nAgainst this background of Strasbourg jurisprudence, I return to domestic consideration of the Hardial Singh principles.\nIn R(I) v Secretary of State for the Home Department [2003] INLR 196 the appellant was an Afghani asylum seeker who had been given exceptional leave to remain.\nHe was then convicted of indecent assaults and sentenced to 3 years imprisonment with a recommendation for deportation.\nThe Secretary of State made a deportation order and detained him pursuant to paragraph 2(3) of Schedule 3 from February 2001 to May 2002.\nThe delay occurred because practical difficulties had caused the Secretary of State to cease removing nationals to that country.\nHe claimed that his further detention was unlawful as there was no reasonable possibility of his being deported within a reasonable period.\nThis raised the question of how such a reasonable period fell to be calculated.\nSimon Brown LJ addressed three issues of principle that had arisen.\nThe first was the relevance of the fact that he was likely to go to ground and re offend if released.\nHis counsel contended that this was irrelevant to the question of whether removal would be possible within a reasonable time.\nSimon Brown LJ disagreed.\nHe held at para 29: The likelihood or otherwise of the detainee absconding and\/or re offending seems to me to be an obviously relevant circumstance.\nIf, say, one could predict with a high degree of certainty that, upon release, the detainee would commit murder or mayhem, that to my mind would justify allowing the Secretary of State a substantially longer period of time within which to arrange the detainees removal abroad.\nThe second issue was whether it was relevant that the appellant refused to accept voluntary repatriation.\nSimon Brown LJ held that it was.\nThe third issue was whether the calculation of the reasonable period should take account of the fact that the appellant had been making asylum applications.\nSimon Brown LJ held that it should not, because it would not have been possible to deport him in any event.\nThe conclusion that he formed at para 37 was that because the Secretary of State could not establish more than a hope of being able to remove him by the summer substantially more in the way of a risk of re offending (and not merely a risk of absconding) than exists here would in my judgment be necessary to have justified continuing his detention for an indeterminate further period.\nMummery LJ gave a short dissent on the facts rather than the applicable principles.\nDyson LJ agreed with Simon Brown LJ.\nHe set out the four principles that he derived from Hardial Singh in the same form as he has in his judgment in the present case.\nHe then made the following observations about the application of those principles. 47.\nPrinciples (ii) and (iii) are conceptually distinct.\nPrinciple (ii) is that the Secretary of State may not lawfully detain a person pending removal for longer than a reasonable period.\nOnce a reasonable period has expired, the detained person must be released.\nBut there may be circumstances where, although a reasonable period has not yet expired, it becomes clear that the Secretary of State will not be able to deport the detained person within a reasonable period.\nIn that event, principle (iii) applies.\nThus, once it becomes apparent that the Secretary of State will not be able to effect the deportation within a reasonable period, the detention becomes unlawful even if the reasonable period has not yet expired. 48.\nIt is not possible or desirable to produce an exhaustive list of all the circumstances that are, or may be, relevant to the question of how long it is reasonable for the Secretary of State to detain a person pending deportation pursuant to paragraph 2(3) of Schedule 3 to the Immigration Act 1971.\nBut in my view they include at least: the length of the period of detention; the nature of the obstacles which stand in the path of the Secretary of State preventing a deportation; the diligence, speed and effectiveness of the steps taken by the Secretary of State to surmount such obstacles; the conditions in which the detained person is being kept; the effect of detention on him and his family; the risk that if he is released from detention he will abscond; and the danger that, if released, he will commit criminal offences. 49.\nSimon Brown LJ has identified the three main points of principle which were in issue in the present appeal, namely, the risk of absconding and reoffending, the appellants refusal to accept voluntary repatriation, and the asylum claim and appeal.\nAs I have already stated, the risk of absconding and offending or reoffending is relevant to the reasonableness of the length of a detention pending deportation.\nIt is, as Simon Brown LJ says an obviously relevant circumstance (at para 29): see also per Lord Phillips of Worth Matravers MR in R v (Saadi) v Secretary of State for the Home Department [2001] EWCA Civ 1512, [2002] 1 WLR 356, at paras 65 67.\nI have accepted that it is possible to derive Lord Dysons first two principles from the language used by Woolf J in Hardial Singh, and explained why I would not do so.\nThe passage from the judgment of the Court of Appeal in Saadi that he cites was dealing with the effect of article 5(1)(f) of the Convention and, as I have shown, advanced a test of proportionality which Strasbourg did not endorse.\nThe problems that have been raised by these appeals suggest that Strasbourg may have had very good reason not to do so.\nThe conceptual difficulty inherent in the first two principles identified by Lord Dyson is apparent in the passage that he has quoted at para 107 from the judgment of Toulson LJ in A.\nIf the risk of re offending can be the determinant factor in deciding how long it is reasonable to detain a FNP why should it not be the determinant, or even the sole reason for detaining him in the first place? Why should it be a pre condition to the power to detain that its use is to facilitate deportation, even if this is not the real reason for detention, as in the case of Chahal? It is that logical inconsistency that underlies the challenge that is made on behalf of Mr Lumba in the present case to the legitimacy of having regard to the risk of his re offending.\nThe interpretation that I would give to the power to detain conferred by the 1971 Act is as follows.\nThe scheme of the Act is simple, and reflects article 5(1)(f) of the Convention.\nThe Secretary of State is not required to permit an immigrant who has unlawfully entered this country to roam free.\nSchedule 3 permits her to detain the immigrant for as long as she reasonably requires in order to decide whether he should have leave to enter.\nIf he is not given leave to enter she may detain him for as long as she reasonably requires to effect his deportation, provided always that deportation is a practical possibility.\nIf the 1971 Act confers powers as wide as this on the Secretary of State, she has not availed herself of them.\nShe adopted a policy under which, on her calculation, only 1.5% of those who were liable to detention under her immigration powers were actually detained, see para 285 below.\nHaving chosen to discriminate between those whom she detains and those whom she does not, she is subject to the established principles of public law in choosing between the two.\nIt is these principles which constrain the exercise of her power to detain rather than restrictions to be implied into the 1971 Act as a matter of statutory interpretation.\nThey include the obligation to act rationally, an obligation also imposed by article 5 of the Convention.\nIt is rational and lawful to detain a FNP pending deportation to prevent his re offending or because he would pose a security risk if at large, just as it is rational and lawful to detain him because of the risk of his absconding.\nPublic law principles include the restraint that a published policy imposes on executive action, a topic that I am about to consider.\nAs I shall show, the guidance published by the Secretary of State includes a requirement to comply with Lord Dysons first two principles, so that to that extent their enunciation has been self fulfilling.\nThe policies published by the Secretary of State in relation to the detention of immigrants.\nLord Dyson has referred to the two White Papers in which in 1998 and 2002 the Secretary of State published her policies in relation to detention.\nThe first of these, Fairer, Faster, Firmer informed the reader at the beginning of Chapter 12 dealing with Detention that at any one time, only about 1.5% of those liable to detention under immigration powers were actually detained.\nThe White Paper dealt with the criteria to be adopted in identifying this small minority of immigrants who were to be detained.\nFNPs awaiting deportation will have formed only a tiny proportion of those liable to detention under those powers.\nIt is, perhaps, not surprising that the White Paper predominantly addressed the position of the vast majority of immigrants who were not criminals.\nThus, in the passage quoted by Lord Dyson at para 11 of his judgment the White Paper spoke of a presumption in favour of granting temporary admission or release, terms that were not appropriate to those recommended for deportation.\nIn dealing with Detention Criteria at 12.3 the White Paper identified three circumstances where detention would normally be justified.\nThe first was where there was a reasonable belief that the individual would fail to keep to the terms of temporary admission or temporary release.\nThe second was to clarify a persons identity and the basis of their claim on entry.\nThe third was where removal was imminent.\n12.11 dealt with detention in relation to removals.\nIt focussed entirely on detention to facilitate removals.\nNothing in that White Paper gave any suggestion that those awaiting deportation might be detained because of concern as to the way they might behave if permitted to be at large.\nThere was no focus on the provisions of Schedule 3.\nThese comments are equally true of the second White Paper, Secure Borders, Safe Haven, save that this had the following statement in para 4.80 under the heading Serious Criminals: We will explore what more we can do, as other countries have done, to stop serious criminals abusing our asylum system by seeking to remain in the UK having completed a custodial sentence.\nThere is there no indication that such criminals would be liable to detention pending deportation.\nThe two White Papers dealt in broad terms with detention.\nThey were supplemented by Chapter 38, headed Detention and Temporary Release, of the Operational Enforcement Manual, which was a published document, available to the public on the internet.\nThe court was provided with the version that was current in April 2006.\nThis included guidance on the law as it was understood to be.\nPara 38.1.1.1 gave the following summary of the effect of article 5 and the domestic case law: (a) The relevant power to detain must only be used for the specific purpose for which it is authorised.\nThis 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).\nDetention 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; (b) The detention may only continue for a period that is reasonable in all the circumstances; (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).\nThis summary of the law reflected aspects of the decision of the Court of Appeal in I with which I have differed.\nNone the less the principles that it expounded were consonant with the general policy of the Secretary of State that there was a presumption against detention.\nPara 38.3 set out the factors that influenced a decision to detain.\nThose in favour of detention were all matters that bore on the likelihood that the individual would abscond or go to ground if not detained.\nThe manual set out the contents of a standard form IS9IR.\nThis set out 6 possible reasons for detention, with instructions that the Immigration Officer should tick the relevant reasons.\nIn contrast to the general focus on the likelihood of absconding, one of these stated Your release is not considered conducive to the public good.\nFactors forming the basis of the reasons also had to be ticked.\nThese included You are excluded from the United Kingdom at the personal direction of the Secretary of State.\nYou are detained for reasons of national security, the reasons are\/will be set out in another letter.\nYour previously unacceptable character, conduct or associates.\nPara 38.5.2 was headed Authority to detain persons subject to deportation action.\nIt summarised the effect of Schedule 3 and required that decisions whether to detain pursuant to the provisions of the Schedule should be made at senior caseworker level in CCT.\nNo specific guidance was given, however, as to the criteria that should be applied when making those decisions.\nIn summary, the general message of these published policies was that detention should be used sparingly and, in the case of detention pending removal or deportation, only where necessary to facilitate this in order to prevent individuals from absconding or otherwise evading the immigration system.\nOfficials were instructed that the law was as held by the Court of Appeal in I and, in particular, that detention could only continue for a period that was reasonable in all the circumstances.\nForm IS9IR raised, however, the possibility that detention could be used for reasons of national security or where the individuals previous character, conduct or associates were unacceptable.\nDespite this, there was no specific guidance as to the approach to be adopted to criminals whom the Secretary of State had decided to deport.\nNot only was it open to the Secretary of State to decide to deport, and to detain pending deportation, criminals in respect of whom the court had made no recommendation, she also had to decide whether to accept recommendations for deportation made by the courts.\nUnder paragraph 2(1) of Schedule 3 those subject to a recommendation remained detained pending the Secretary of States decision whether to deport them unless released by the court or granted bail pursuant to section 54 of the Immigration and Asylum Act 1999, which came into force in February 2003.\nIt may have been thought that paragraph 2(1) created a presumption in favour of detention of FNPs pending deportation but in R (Sedrati) v Secretary of State for the Home Department [2001] EWHC Admin 418, with the agreement of counsel for the Secretary of State, Moses J made a declaration that there was no such presumption.\nWhat then, under the Secretary of States published policies, was the position of FNPs whom the Secretary of State decided to deport? It seems to me that many of these were likely to tick the boxes of those who, exceptionally, could properly be detained in accordance with those policies.\nThey were in this country because this was where they had chosen to live.\nThey had committed offences that had led the Secretary of State to conclude that their continued presence was no longer conducive to the public good.\nMost would be unlikely willingly to submit to deportation.\nThere would be a risk both of re offending and of absconding.\nAs Lord Dyson has explained at paras 14 and 15 of his judgment, on 9 September 2008 the Enforcement Instructions and Guidance, which had replaced the Operational Enforcement Manual, was amended so as to lay down a presumption in favour of detaining immigrants where the deportation criteria were met in order to protect the public from harm and the particular risk of absconding in these cases.\nI agree with the Court of Appeal and with Lord Dyson that this amendment to her policy was one that it was open to the Secretary of State to make.\nHowever, Davis J, at first instance, ruled to the contrary and this led the Secretary of State to withdraw this amendment.\nThe UK Borders Act 2007 has since made provision by section 32 for automatic deportation of foreign criminals in specified circumstances.\nSection 36 requires the Secretary of State to exercise a power of detention of those being deported under section 32 unless in the circumstances the Secretary of State considers it inappropriate.\nThese provisions were not in force at the time of the events that have given rise to these appeals.\nThere is thus a picture of a series of changes to policy, and of legislation, that has been influenced by decisions of the courts, not all of which have been sound.\nThe practical implications of the policies\nUnder this heading I propose to consider the practical implications of complying with the Secretary of States published policies, including her directions as to the effect of article 5 and our domestic case law.\nCompliance with the Hardial Singh guidelines, even as I have interpreted them, gives rise to some practical difficulties.\nDetention pending deportation is permissible for a lengthy period provided that the Secretary of State is taking reasonable steps to effect deportation and provided that there is a reasonable prospect that deportation will be possible.\nIt is the latter proviso that raises particular difficulties for the possibility of deportation may vary from time to time.\nR (Khadir) v Secretary of State for the Home Department [2005] UKHL 39; [2006] 1 AC 207 illustrates this problem.\nIn the case of each detainee it is necessary to keep the practicability of deportation under review.\nThis problem is made more difficult if there is a requirement to detain for no longer than is reasonable in all the circumstances, where those circumstances include the nature of the crimes committed by the FNP and the degree of risk of re offending.\nThe assessment of what period of detention is reasonable in all the circumstances is not an easy one and there will inevitably be cases where, if subjected to judicial review, it will be held not to have been correctly answered.\nFurthermore the material circumstances are likely to be subject to frequent change, so that frequent reviews will be necessary.\nThis last fact was reflected by the requirements in relation to Detention reviews imposed under para 38.8 of the Operational Enforcement Manual which lie at the heart of the appeal in SK (Zimbabwe).\nWhere there are concerns about the risk of absconding, it may be possible to meet these by measures which fall short of detention.\nThe Secretary of State may release a FNP who is subject to deportation under a restriction order setting out terms as to residence, employment or occupation and reporting to the police pursuant to paragraph 2(5) of Schedule 3.\nThe court has the same power in respect of those recommended for deportation under paragraphs 4 to 6 of Schedule 3.\nDetainees also have the right to apply for bail.\nIn para 12.8 of Fairer, Faster, Firmer the Government explained that it believed that there should be a more extensive judicial element in the detention process and proposed that this should be by way of bail hearings, commenting on the resource implications that this would have.\nPara 4.83 of Secure Borders, Safe Haven stated that Part III of the Immigration and Asylum Act 1999 had created a complex system of automatic bail hearings at specific points in a persons detention, that this had never been brought into force and that most of it was to be repealed.\nThere is now a comprehensive statutory scheme for release on bail produced through a series of amendments to Schedule 2 to the 1971 Act.\nAll of this illustrates the practical problems implicit in the implementation of a regime that attempts to give effect to the policy of using the power to detain only as a last resort.\nDespite efforts to implement this policy there will inevitably be cases where individuals are detained when, under the policy, they should not be.\nThe question arises of whether those who find themselves in this position are entitled to claim damages for false imprisonment.\nWhat are the legal implications of the Secretary of States published policies?\nThe appellants in this case should have been detained had the Secretary of States published policy been applied.\nThey claim to be entitled to damages for false imprisonment because those considering their cases reached the right conclusions by applying the wrong policy.\nTheir complaint is as to the manner in which the decisions to detain them were taken, not as to the substance of those decisions.\nThus, the question of the legal effect of the Secretary of States published policies is not directly in issue.\nNonetheless, underlying the appellants case is the premise that it would not have been lawful for the Secretary of State to reach a decision that was in conflict with her published policy.\nFor this reason she was required to reach her decision by applying her published policy, not some other policy.\nIt follows that it is material to consider the effect of the Secretary of States published policies.\nI agree with Lord Dyson that, under principles of public law, it was necessary for the Secretary of State to have policies in relation to the exercise of her powers of detention of immigrants and that those policies had to be published.\nThis necessity springs from the standards of administration that public law requires and by the requirement of article 5 that detention should be lawful and not arbitrary.\nDecisions as to the detention of immigrants had to be taken by a very large number of officials in relation to tens of thousands of immigrants.\nUnless there were uniformly applied practices, decisions would be inconsistent and arbitrary.\nEstablished principles of public law also required that the Secretary of States policies should be published.\nImmigrants needed to be able to ascertain her policies in order to know whether or not the decisions that affected them were open to challenge.\nWhat is the effect of a decision to take action that falls within a power conferred by statute but which conflicts with a published policy as to the manner in which that power will be exercised? This is no easy question.\nIt overlaps with the question of the nature and effect of a legitimate expectation.\nIs a decision that is contrary to policy unlawful, so that action taken pursuant to it is ultra vires? If so a published policy has the same effect as delegated legislation.\nIs this result dictated by the jurisprudence that has its origin in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147? Mr Husain QC for the appellants submitted that it is.\nHe relied on the oft cited catalogue of matters rendering the decision of a tribunal void propounded by Lord Reid in Anisminic at p 171.\nThis included: It may have refused to take into account something which it was required to take into account.\nOr it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account.\nThe words that I have emphasised are significant.\nLord Reids proposition cannot necessarily be extended to the situation where the decision maker fails to have regard to his own policy.\nAnisminic is, however, only the start of the story.\nThe effect of Anisminic was the subject of observations by Lord Diplock, which have been treated as authoritative.\nIn In re Racal Communications Ltd [1981] AC 374, at pp 382 383 he described Anisminic as a legal landmark.\nIt established that when Parliament conferred on an administrative authority the power to decide particular questions defined by the Act conferring the power, and the authority asked itself and answered the wrong question, it did something that the Act did not empower and its decision was a nullity.\nIn OReilly v Mackman [1983] 2 AC 237, at p 278 he observed that if a tribunal mistook the law it must have asked itself the wrong question and one that it had no jurisdiction to determine, so that its decision was a nullity.\nIn R v Hull University Visitor, Ex p Page [1993] AC 682, at pp 701 702 Lord Browne Wilkinson endorsed his comment, adding that any error of law made by an administrative tribunal or inferior court in reaching its decision could be quashed for error of law.\nEarlier at p 701 he had observed that 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 with the effect that an error of law rendered the decision ultra vires.\nThis reasoning cannot readily be extended to a decision which departs from executive policy.\nIt would be totally unrealistic to postulate that when Parliament passes an Act conferring a discretionary power it does so with the intention that if the decision maker publishes a policy in relation to the exercise of that power he will abide by that policy unless he has good reason not to do so.\nIn Boddington v British Transport Police [1999] 2 AC 143 the House of Lords took Anisminic a significant step further.\nThe issue was whether the appellant could raise by way of defence to a criminal charge a contention that the bye law, or an administrative decision taken under it, pursuant to which he was prosecuted, was ultra vires.\nLord Irvine of Lairg LC, giving the leading speech, said at p 155 that an order made by the Secretary of State in the purported exercise of a statutory power would be regarded as void ab initio if it had been made in bad faith, or as a result of taking into account an irrelevant, or ignoring a relevant, consideration.\nAt p 158 he 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.\nNo distinction is to be drawn between a patent (or substantive) error of law or a latent (or procedural) error of law.\nLord Irvine added, at p 159: Also, in my judgment the distinction between orders which are substantively invalid and orders which are procedurally invalid is not a practical distinction which is capable of being maintained in a principled way across the broad range of administrative action.\nOther members of the House were not prepared to reject the possibility that an ultra vires act might have legal consequences before its invalidity was recognised by the court: see Lord Browne Wilkinson, at p 164 and Lord Slynn, at p 165.\nBoddington no longer judged the vires of the exercise of a discretionary power by the assumed intention of Parliament.\nIt held that if a decision was vitiated by procedural impropriety it was ultra vires and a nullity.\nIn the light of Boddington these appeals raise two issues: (i) is a decision of the Secretary of State that, without good reason, conflicts with her published policy outside her powers, so that it is a nullity? (ii) is a decision reached by the Secretary of State by the application of a policy that conflicts with her published policy a nullity, even if the decision itself accords with her published policy? I am currently concerned with the first question.\nThe proposition underlying the appellants case is that if a minister, without good reason, acts in a way that is contrary to her published policy she acts outside her powers.\nHer action is unlawful and can found a claim for damages if it infringes a private law right.\nIt is time to look at the law relating to policy and legitimate expectation.\nWhere a public authority gives an undertaking to an individual that a discretionary power will be used in a particular way, this creates a legitimate expectation in the individual that the authority will comply with that undertaking.\nThe courts will require the authority to give due consideration to that legitimate expectation when exercising its power: see R (Bibi) v Newham London Borough Council [2001] EWCA Civ 607; [2002] 1 WLR 237.\nIn an extreme case the courts can require the authority to comply with its undertaking: see R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213.\nThe same principle applies where a minister publishes a policy that sets out the way in which he intends to exercise a discretionary power.\nThis also creates a legitimate expectation in those affected by the power as to the manner in which it will be exercised.\nIn either case the court can intervene in performance of its duty to ensure that the executive acts fairly and does not abuse the powers conferred on it by Parliament.\nThese principles have quite often been applied in relation to immigration decisions.\nI have already quoted my invocation of them in Saadi: see para 271 above.\nLord Dyson at para 85 has referred to my judgment in Nadarajah v Secretary of State for the Home Department [2003] EWCA Civ 1768.\nIn that case the Court of Appeal held that Ns detention was unlawful because it was in conflict with the Secretary of States policy.\nThe court further held that as the detention was contrary to law, it infringed article 5(1)(f) of the Convention.\nThe Court had earlier stated at para 15 that the consequence of these findings would be that N would be entitled to damages for unlawful detention.\nThe Secretary of State had sought to show that Ns detention was not contrary to his policy.\nHe had not challenged the proposition that if the detention was contrary to his policy it would be unlawful, nor that this would lead to liability in damages.\nThere was no discussion of the nature and effect of the doctrine of legitimate expectation in the context of detention under the 1971 Act.\nThere was, however, a sequel to the case in which the nature of the doctrine of legitimate expectation received detailed consideration.\nThe development of the law of legitimate expectation was pellucidly set out at some length by Laws LJ, giving the only reasoned judgment in the Court of Appeal in R (Nadarajah) v Secretary of State for the Home Department, [2005] EWCA Civ 1363, a decision which, amazingly, does not seem to have found its way into the law reports.\nAt the end of his judgment, in paras 68 and 69, Laws LJ set out his conclusions on the principles to be derived from these authorities.\nThis merits citation at length: The search for principle surely starts with the theme that is current through the legitimate expectation cases.\nIt may be expressed thus.\nWhere a public authority has issued a promise or adopted a practice which represents how it proposes to act in a given area, the law will require the promise or practice to be honoured unless there is good reason not to do so.\nWhat is the principle behind this proposition? It is not far to seek.\nIt is said to be grounded in fairness, and no doubt in general terms that is so.\nI 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.\nIn 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.\nThat 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.\nAccordingly 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.\nThe 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.\nThis approach makes no distinction between procedural and substantive expectations.\nNor should it.\nThe dichotomy between procedure and substance has nothing to say about the reach of the duty of good administration.\nOf course there will be cases where the public body in question justifiably concludes that its statutory duty (it will be statutory in nearly every case) requires it to override an expectation of substantive benefit which it has itself generated.\nSo also there will be cases where a procedural benefit may justifiably be overridden.\nThe difference between the two is not a difference of to a principle.\nStatutory duty may perhaps more often dictate the frustration of a substantive expectation.\nOtherwise the question in either case will be whether denial of the expectation is in the circumstances proportionate legitimate aim pursued.\nProportionality will be judged, as it is generally to be judged, by the respective force of the competing interests arising in the case.\nThus 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.\nOn 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.\nAll these considerations, whatever their direction, are pointers not rules.\nThe balance between an individual's 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.\nThis passage in Laws LJs judgment was obiter, as is my approval of it as setting out a compelling analysis of the law.\nI have, however, some concerns as to the consequences of this extension of the principles of judicial review if a ministers unjustified failure to comply with his policy is to be treated as an unlawful act that subjects him to potential liabilities in private law independently of the discretionary remedies of judicial review.\nThe facts of this case illustrate my concern.\nAssume that I am correct in concluding that Schedule 3 gives the Secretary of State wide ranging powers to detain those who are illegally in this country, whether pending the processing of their applications for permission to enter or pending their removal when such applications have been refused.\nThe Secretary of State did not choose to exercise those powers to their full extent.\nThe policy of only detaining immigrants as a last resort is a benevolent policy.\nThat policy carries with it, however, as I have explained, the risk that, as a result of erroneous decisions in the application of a difficult test, some immigrants may be detained in breach of that policy.\nNot all would agree that it is fair that they should be entitled to compensation, in the form of damages for false imprisonment, on the same scale as those whose detention falls outside any statutory power.\nNotwithstanding these concerns, I have concluded that the detention of a person in circumstances where, under the Secretary of States published policies he should not have been detained, was both a violation of principles of public law and unlawful so as to exclude any justification for the detention under article 5(1)(f) of the Convention and to give rise to liability for false imprisonment.\nWas the detention of each of the appellants contrary to the Secretary of States published policies?\nOn this question all members of the court are agreed.\nEach of the appellants, by reason of the risk of re offending and of absconding, fell into the exceptional category of those who were liable to detention under the Secretary of States published policies.\nHad the decision maker applied those policies each of the appellants would have been detained.\nOn this topic I have nothing to add to the judgment of Lord Dyson.\nWhat were the defects in the policy applied when deciding whether the appellants should be detained?\nMr Beloff conceded that the policy, which I shall call the secret policy, applied by the decision maker when deciding to detain the appellants was unlawful on three counts.\nThe meaning of the word unlawful in this context needs clarification.\nIt is not having a policy but implementing a policy that may infringe the law.\nA policy can be described as unlawful if action taken pursuant to it will, or may, be unlawful under private or public law.\nThe first reason why the policy that was applied was unlawful was that it was a blanket policy.\nIt brooked of no exceptions save rare ones that might be made for compassionate reasons.\nIt was a blanket policy in that it was applied to any FNP recommended for deportation.\nThus it paid no regard to the severity of the offence for which the FNP had been convicted nor to the likelihood and consequence of his re offending.\nIn this I do not consider that it was open to objection on public law grounds.\nOn my interpretation of Schedule 3 it was open to the Secretary of State to decide her own criteria for determining those she wished to detain pending deportation.\nSecondly the policy was a blanket policy in that it gave no scope for the application of discretion, save on compassionate grounds.\nI do not consider that this was objectionable on public law grounds.\nThere is a principle of public law that a minister who is granted a discretionary power must not improperly fetter the exercise of his discretion.\nIn a case such as this, however, a minister has to lay down a firm policy in order to ensure consistency of decision making.\nThe Secretary of State was laying down an exception to the general rule that there was a presumption against detention.\nI can see no reason why she should not lay down a policy under which all those whom she chose to deport should be detained pending their deportation save in circumstances where there were compassionate reasons for departing from the policy.\nWhere the secret policy was objectionable was that it was to be applied without consideration of whether detention would violate the Hardial Singh principles.\nUnder the secret policy FNPs were liable to be detained even if they were nationals of a country to which deportation was not a practical possibility.\nThus application of the secret policy would, in some cases, result in detention that was outside the power conferred by the 1971 Act.\nThe second reason why Mr Beloff conceded that the secret policy was unlawful was that it was inconsistent with the Secretary of States published policy.\nInasmuch as the application of the secret policy would result in the detention of some who would not have been detained on the application of the published policy it was plainly open to objection on this ground.\nThe third reason why Mr Beloff conceded that the secret policy was unlawful was that it was secret.\nThis concession was also properly made, for the reasons given by Lord Dyson.\nWhat were the circumstances in which the secret policy was applied?\nLord Dyson has summarised the circumstances in which the secret policy was applied.\nLord Walker and Lord Collins have described these as a serious abuse of power.\nLady Hale has expressed some sympathy for the predicament in which the civil servants found themselves.\nHaving considered the voluminous discovery, some of it very belated, I share both the concern expressed by Lord Walker and Lord Collins and the sympathy expressed by Lady Hale.\nIt was clear to officials that the Secretary of State wished all FNPs to be deported, and to be detained pending deportation.\nThey were concerned at the legality of such a policy, particularly because it conflicted with the published policy.\nThere was a protracted period preparing and circulating draft advices to ministers in which each of a lengthy circulation list was given the chance to comment.\nMany did, whereupon the draft would be re circulated.\nThere seems to have been a reluctance to grasp the nettle of presenting advice that would be unpalatable.\nThere were considerable delays caused by the perceived need to obtain counsels opinion.\nThe picture is of bureaucracy at its worst with the best proving constantly the enemy of the good.\nThe lamentable fact is that approximately two years elapsed between the identification of the need to publish a revised policy on detention and the publication of such a policy in the new Enforcement Instructions and Guidance in September 2008.\nAlthough it was suggested that ministers might favour a policy that would appear to make the courts responsible for the release from detention of FNPs, this course was neither advocated nor adopted.\nThere was muddle galore, but I am not persuaded having considered the considerable discovery that there was a deliberate attempt to deceive the courts as to the policy that was being applied.\nDid the application of the secret policy render the detention of the appellants unlawful?\nIt is now accepted by the Secretary of State that the decision maker in the case of each of the appellants decided that he should be detained by applying to him the secret policy.\nThe power to detain that he purported to apply was that conferred by Schedule 3.\nHad the appellants been persons whose deportation would not be possible within a reasonable period, so that they fell outside the lawful application of Schedule 3, the application of the secret policy would have resulted in their detention none the less.\nHad the appellants been persons whose detention would have conflicted with the Secretary of States published policy, so that their detention would be unlawful under the principles of public law discussed above, the application of the secret policy would have resulted in their detention none the less.\nIn the event each appellant fell within the group of FNPs for whom detention was appropriate, indeed inevitable, if the Secretary of States published policy was applied to them.\nWas their detention none the less unlawful because of the process of reasoning that had brought it about? Mr Husain submits that it was.\nThe Court of Appeal held that it was not, because the application of the secret policy was not material; it produced the result that would have been produced had the right policy been applied.\nThis is I believe a novel question, not to be answered by the simple answer that the detention was unlawful because the decision that produced it was unlawful.\nIt is also a complex question because of the novel feature of the existence of a published policy that would have predetermined the decisions in relation to the two appellants had it been applied.\nIt is helpful to unpick the secret policy and consider its effect if each objection to it had been the only objection.\nI take first the objection that it was a blanket policy.\nImagine the Secretary of State had publicly announced that all FNPs who were given deportation orders would henceforth be detained pending deportation, subject to exceptions on compassionate grounds.\nThe application of this policy would have been objectionable in that it would have resulted in the detention of those FNPs whose deportation would not be possible within a reasonable period.\nWould this fact have rendered unlawful the detention of the majority of FNPs whose deportation was possible? I see no reason of principle why it should.\nNext I take the objection that the policy was in conflict with the published policy.\nHad the secret policy not been secret, this objection would have melted away.\nThe public policy would simply have been publicly altered.\nThis would not have been objectionable.\nWhat of the objection that the policy was secret? Had this been the only objection to it I do not see how this could have availed the appellants.\nThey were already subject to a policy that would result in their detention.\nThey had no legitimate expectation of being permitted to remain at large.\nIf the secret policy had extended the category of those FNPs who would be detained, those who, without knowing it, were brought within the category of detainees might have had cause to object to their detention, but I do not see how those who were going to be detained under the previous published policy could legitimately complain.\nIf none of the individual objections to the secret policy would have afforded the appellants legitimate grounds for challenging their detention, does the position change when the objections are considered cumulatively? I can see no reason why it should.\nBoth logically and intuitively my conclusion is that the introduction of the secret policy gave those whose detention resulted from it cause to challenge the legality of their detention, but not those whose legitimate expectation was that they would be detained under the application of the published policy.\nThis was also the reaction of those officials who questioned the application of the secret policy.\nTheir concern was that those whose detention infringed the Hardial Singh guidelines or the published policy would have claims for illegal detention, not that every detainee would have such a claim.\nI now turn to some of the authorities relied upon by the appellants to see how they bear on the unusual problem raised by these appeals.\nIn Christie v Leachinsky [1947] AC 573 the plaintiff, who claimed damages for false imprisonment, had been arrested by police officers on a charge of unlawful possession under the Liverpool Corporation Act 1921.\nThat Act did not give a power to arrest for this offence.\nThe defendants raised by way of defence a plea that, at the time of the arrest they reasonably suspected him of receiving stolen goods, which provided a valid ground for his arrest.\nThe House of Lords held that this was no defence as at the time of his arrest he had been given a different ground of arrest.\nThis decision is normally cited for the proposition that an arrest will be unlawful if the person arrested is not told the reason for his arrest at the time that he is arrested.\nIt is also authority for the proposition that if a person is arrested for a reason which is not a valid statutory ground of arrest it is no defence to an action for false imprisonment that he could have been validly arrested on alternative grounds.\nI do not see that this decision bears on the very different facts of the present case.\nIn Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662 the Court of Appeal held that detention by the police without the review required by section 40(1)(b) of the Police and Criminal Evidence Act 1984 was unlawful and the fact that, if the review had taken place authorised detention would have continued was no answer to a claim for substantial damages for false imprisonment.\nThat decision has no bearing on the issue that I am considering, which is whether the detention of the appellants was unlawful.\nIn Langley v Liverpool District Council [2005] EWCA Civ 1173; [2006] 1 WLR 375 a constable had purported to exercise a discretionary power under the Children Act 1989 in removing a child from its family.\nThe Court of Appeal held that his exercise of discretion had been wrongful in that, in the circumstances prevailing, it ran counter to the statutory scheme.\nIt followed that the removal of the child was unlawful and the constable had committed the tort of false imprisonment.\nI have found this decision of no assistance in deciding whether, on the unusual facts of this case, the detention of the appellants was unlawful.\nOne of the cornerstones of the appellants case was the speech of Lord Diplock, with which all other members of the House agreed, in Holgate Mohammed v Duke [1984] AC 437.\nA police officer had arrested the plaintiff on suspicion of the theft of jewellery.\nHe did so pursuant to section 2(4) of the Criminal Law Act 1967, which gave him a discretionary power to arrest her.\nShe alleged, however, that the exercise of this power had been unlawful because, when deciding whether to exercise his discretion the officer had been influenced by a consideration which was irrelevant, namely the likelihood that the fact that she had been arrested would be more likely to induce her to confess to her crime when interviewed.\nLord Diplock held that this consideration was not irrelevant to the proper exercise of the officers discretion.\nIt was a matter to which he could legitimately have regard having regard to the objectives of the statutory power to arrest.\nThus the comments upon which the appellants have relied were obiter.\nThose comments, at p 443 of Lord Diplocks speech, were as follows: The Wednesbury principles, as they are usually referred to, are applicable to determining the lawfulness of the exercise of the statutory discretion of a constable under section 2(4) of the Criminal Law Act 1967, not only in proceedings for judicial review but also for the purpose of founding a cause of action at common law for damages for that species of trespass to the person known as false imprisonment, for which the action in the instant case is brought.\nThe first of the Wednesbury principles is that the discretion must be exercised in good faith.\nThe judge in the county court expressly found that Detective Constable Offin in effecting the initial arrest acted in good faith.\nHe thought that he was making a proper use of his power of arrest.\nSo his exercise of that power by arresting Mrs Holgate Mohammed was lawful, unless it can be shown to have been unreasonable under Wednesbury principles, of which the principle that is germane to the instant case is: He [sc the exerciser of the discretion] must exclude from his consideration matters which are irrelevant to what he has to consider.\nThe way in which the appellants argue that this passage impacts on the facts of the present case is, as I understand it, as follows.\nThe decision to detain the appellants was taken by application of the secret policy.\nThis infringed the Wednesbury principles because it failed to have regard to relevant considerations, namely whether the Hardial Singh principles precluded detention and whether the appellants detention complied with the published policy.\nThe answer given by the Court of Appeal to this point is that, so far as the appellants were concerned, the failure to consider these matters was not material because, had they been considered, the conclusion would have been that neither matter posed an impediment to the appellants detention and had they been considered the decision would inevitably have been the same.\nThe approach of the Court of Appeal involves a refinement of the Wednesbury principles.\nIt is an application of the following reasoning of May LJ in R v Broadcasting Complaints Commissioner, Ex p Owen [1985] QB 1153, 1177: Where the reasons given by a statutory body for taking or not taking a particular course of action are not mixed and can clearly be disentangled, but where the court is quite satisfied that even though one reason may be bad in law, nevertheless the statutory body would have reached precisely the same decision on the other valid reasons, then this court will not interfere by way of judicial review.\nI believe that at least in this new area of the effect of public policy, the approach of the Court of Appeal is a sound one.\nWhere a minister publishes a policy as to the circumstances in which he will exercise a statutory power and then he or his officials apply a different policy which results in the exercise of that power in circumstances which range wider than those published, I do not consider that those whose cases fell within the published policy can automatically contend that the application of the power to them has been unlawful.\nIf the facts are that no reasonable decision maker applying the published policy could have done other than reach the decision which the decision maker arrived at, the fact that he applied a more expansive, but unpublished, policy when reaching his decision will not invalidate that decision.\nFor these reasons, which accord I believe with the reasoning of both the Court of Appeal and Lord Brown, I have concluded that the application of the secret policy did not render the detention of the appellants unlawful.\nDamages\nIn view of my conclusions on liability, the issue of damages does not arise.\nHad I agreed with Lord Dyson on liability, I would have shared his approach to damages.\nI also endorse Lord Collins conclusions in relation to vindicatory damages.\nReviews\nA word about reviews.\nIf the majority are correct in concluding that the application of the secret policy rendered all decisions taken pursuant to it unlawful, then it seems to me that the moment that the secret policy was applied to reviews of the lawfulness of those detained, their continued detention would have been rendered unlawful, even if they were lawfully detained under the published policy before the secret policy was introduced and even if they remained subject to detention within the terms of the published policy.\nThis would be an extraordinary result.\nMR LUMBAS HARDIAL SINGH APPEAL\nMr Lumba has now voluntarily left the country, but the question remains of whether his detention became unlawful in the period before he left.\nBecause of the view that I take of the scope of the Hardial Singh principles, I find the issues in relation to this part of Mr Lumbas appeal easier to resolve than has Lord Dyson.\nThe lengthy period during which Mr Lumba was detained largely resulted from his own efforts to avoid deportation.\nFor most of the period his deportation had been a practical possibility.\nThe Secretary of State had not been dragging her feet in her effort to deport Mr Lumba.\nI agree with the Court of Appeal that Mr Lumba could not be heard to say that it was impossible to deport him within a reasonable time when the difficulty in doing so resulted from his own attempts to avoid deportation and not from extrinsic problems in effecting his deportation.\nOn my view of the interpretation of Schedule 3, whether Mr Lumba posed a risk of re offending was not relevant to the period for which he could lawfully be detained.\nIt seems to me that para 107 of Lord Dysons judgment lends support to my belief that the power to detain is not dependent upon an object of the detention being to facilitate deportation.\nThe question remains, however, in Mr Lumbas case of whether his continued detention, having particular regard to his mental condition, remained consistent with the Secretary of States published policy.\nHe has now voluntarily left the country, but if the issue of the lawfulness of his detention is to be pursued I agree with Lord Dyson that this is a matter to be considered by the Administrative Court on remission.\nSubject to this, for the reasons that I have given I would dismiss these appeals.\nLORD BROWN (with whom Lord Rodger agrees)\nAmongst the many issues to be decided on these appeals far and away the most important concerns the true nature of the tort of false imprisonment.\nLord Dyson having set out all the relevant facts and the detailed legal context in which the many issues here arise for determination, I shall proceed without more to what I recognise is to be a dissenting judgment on this crucial question.\nFreedom from executive detention is arguably the most fundamental right of all.\nThus Lord Bingham of Cornhill in his 2002 Romanes lecture.\nThe tort of false imprisonment is, of course, the remedy provided by law for the violation of this freedom, for the unlawful deprivation of a persons liberty.\nThe outcome of the appeals proposed by the majority of the court is to hold the appellants and, indeed, a large number of others similarly placed to have been unlawfully detained, in many instances for a period of years, and yet to compensate them by no more than a nominal award of damages.\nThey are to be held unlawfully detained because, in his (or her) exercise of the undoubted power to detain them, the Secretary of State breached certain public law duties.\nBut they are to be awarded only nominal damages because, whatever approach had been taken to the exercise of the detaining power, the appellants must inevitably have been detained in any event.\nWhilst I share to the full the majoritys conclusion that it would be quite wrong in the circumstances of these cases to award the appellants any substantial compensation in respect of their detention, for my part I would reach that conclusion by a very different route.\nI would hold that a public law breach of duty in the course of exercising an executive power of detention does not invariably, and did not here, result in the subsequent detention itself being unlawful in short, that these appellants were not the victims of false imprisonment.\nNaturally I recognise the beguiling simplicity and apparent purity of the majoritys approach.\nEver since the House of Lords decision in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147, decisions made within the decision makers jurisdiction but containing a public law error have generally been regarded as precisely equivalent to decisions made entirely without jurisdiction.\nThus, it is said, a decision to detain which is flawed by a public law error is ultra vires and the detention which follows is necessarily unauthorised and therefore unlawful.\nLogically, indeed, this must be so however minor the public law error involved in the making of the decision and however inevitable it is that the decision to detain would have been made in any event. (At one stage in the argument Mr Husain QC for the appellants accepted that some public law failures might be too inconsequential to require this conclusion but unsurprisingly he was unable to formulate any test by which to determine such cases and, indeed, he had argued before this court on behalf of the appellant in R (SK (Zimbabwe)) v Secretary of State for the Home Department [2009] 1WLR 1527 that false imprisonment must follow inexorably even from periodic failures to comply with the Secretary of States self imposed monthly review process.) Given, moreover, that the tort of false imprisonment is actionable per se that it is of the essence of the tort of false imprisonment that the imprisonment is without lawful justification (Lord Hope in R v Governor of Brockhill Prison ex parte Evans [2001] 2 AC 19, 32) logic also suggests that the notion of nominal damages should have no part to play in determining the compensation payable.\nWhy should someone imprisoned without lawful justification be paid nominal damages only? If the answer is that they would have been imprisoned anyway, under the same power and in just the same way, then in reality the Court is saying that the tort may be committed merely in a technical way.\nI have to say that such an approach would to my mind seriously devalue the whole concept of false imprisonment.\nIt is true that in Murray v Ministry of Defence [1988] 1 WLR 692, whilst confirming that an action for false imprisonment lies even if the detainee does not know that he has been imprisoned, Lord Griffiths added (p703 A B): If a person is unaware that he has been falsely imprisoned and has suffered no harm, he can normally expect to recover no more than nominal damages.\nIn my opinion, however, there is a very real difference between a detainee who is in fact unaware of being under physical restraint (perhaps because he is asleep or because he simply does not know that the door has been locked) and a detainee who is fully aware of his loss of freedom.\nTo award the latter nominal damages only, on the basis that, even had he been dealt with lawfully he would still have been deprived of his freedom anyway, is really to say that he was in truth rightly in detention.\nThat seems to me very different from saying that he was wrongly imprisoned but happily unaware of it.\nI have difficulty, therefore, with Lord Dysons criticism (at paras 92 and 93) of the passage on damages in Clarke LJs judgment in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, 668.\nTo compensate (or rather to deny compensation) on the basis that the detainee has suffered no loss because he would have remained in detention whether the tort was committed or not is in my opinion the very negation of the tort: it is to hold that the detainee was at one and the same time both rightly and wrongly imprisoned.\nSearch as one may in the judgments both of the Court of Appeal and of the House of Lords in Christie v Leachinsky (respectively [1946] KB 124 and [1947] AC 573), there is no hint of a suggestion that the false imprisonment which followed upon the unlawful arrest in that case might properly attract only a nominal award of damages.\nI do not say that those falsely imprisoned should be compensated identically irrespective of how deserving they were of liberty rather than restraint during the relevant period of detention; I do say, however, that rather than hold a detainee simultaneously both rightly detained and falsely imprisoned, the law should instead recognise that, notwithstanding a flaw in the decision making process such as to involve the breach of a public law duty, the decision maker has not in those circumstances committed the tort of false imprisonment.\nA court which speaks with two voices risks bringing the law into disrepute.\nIs this court then bound by established law to reach so unsatisfactory a conclusion as the majority of the court suggest: tortious liability but for nominal damages only? To my mind it is not.\nAssuming that a power to detain exists, that any preconditions to its exercise have been satisfied and any limitations upon its scope observed, I know of no case which holds the detainee to have been falsely imprisoned merely because, in the course of exercising the power, the decision maker committed some public law breach of duty.\nOn the contrary, and to my mind hardly surprisingly, the courts have consistently shied away from such a conclusion as is amply and consistently demonstrated by the series of Court of Appeal judgments in this very line of cases.\nSuch was the decision of the Court of Appeal (Laws, Keene and Longmore LJJ) in SK (Zimbabwe), the Court of Appeal (Lord Neuberger of Abbotsbury MR, Carnwath and Stanley Burnton LJJ) in the cases from which the present appeals are brought, and the Court of Appeal (Maurice Kay, Longmore and Black LJJ) more recently still in Anam v Secretary of State for the Home Department [2010] EWCA Civ 1140.\nIn Anam, indeed, Black LJ in giving the leading judgment characterised the appellants argument thus at para 17: At its most radical, the submission advanced by [counsel] is that a failure by the Secretary of State to apply his published policy in making a decision to detain necessarily renders that decision a nullity and the resulting detention unlawful.\nHave all these Lords Justices, many of them distinguished public law jurists, lost sight of the clear and basic principles of public law which, it is said, necessarily compel such a radical conclusion?\nSo far from the authorities supporting such a surprising conclusion they can and should, I suggest, be analysed rather to the following effect. (1) False imprisonment is the inescapable result of detention absent any power to detain R v Governor of Brockhill Prison (No 2) Ex p Evans [2001] 2 AC 19 is itself a good illustration of this basic proposition: the appellant having been kept in prison beyond the date when her custodial sentence, properly calculated, expired, there could hardly have been a clearer case of false imprisonment.\nSuch would also be the position were someone arrested for a non arrestable offence.\nAnalysed in the way I analysed the power of detention under Schedule 2 to the Immigration Act 1971 (directly analogous to the Schedule 3 power under consideration in these appeals) in R (Khadir) v Secretary of State for the Home Department [2006] 1 AC 207, these are cases not about the exercise of the power, but rather about its existence. (2) The tort of false imprisonment is committed too if someone is detained in breach of a condition precedent to the existence of the detention power.\nChristie v Leachinsky [1947] AC 573 illustrates the common laws imposition of such a condition precedent: a right of arrest only arises when the citizen is told why he is being arrested.\nRoberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662 illustrates the imposition of such a precondition by statute (in that case the requirement for review as a precondition of continued detention beyond six hours).\nR v Secretary of State for the Home Department Ex p Khawaja [1984] AC 74 provides another such illustration, the House of Lords there deciding that the power to detain and remove an immigrant as an illegal entrant under Schedule 2 to the 1971 Act was dependent upon establishing such illegality as a precedent fact. (3) Detention beyond the scope of a detaining power similarly constitutes false imprisonment.\nFor example, the limitations imposed by the courts following Woolf Js decision in R v Governor of Durham Prison Ex p Hardial Singh [1984] 1 WLR 704 (the Hardial Singh principles) undoubtedly operate to constrain the power of detention under paragraph 2 of Schedule 3 and it has long been recognised that detention in breach of the Hardial Singh principles gives rise to tortious liability. (Categories 2 and 3, I recognise, may not always be easily distinguishable.\nIt could, for example, be said that the first Hardial Singh principle constitutes a precondition for the exercise of the detention power.\nIt has seemed to me nonetheless worth attempting the distinction.) I would accept too that in certain circumstances a power of detention may (4) be narrowed by a published policy as to how it will be exercised.\nThe Court of Appeals decision in R (Nadarajah) v Secretary of State for the Home Department [2004] INLR 139 is, I think, an illustration of that in the present context.\nThe Secretary of State had in that case adopted a published policy which in substance narrowed the grounds on which the detaining power (in that case under schedule 2 to the 1971 Act) would be exercisable (the stated policy there being to release anyone whose removal was not imminent).\nCertainly it is on that basis alone that I would regard Nadarajah as correctly decided.\nAnd it must, of course, be recognised that, as with any other statement of policy (a policy being, by definition, no more than an advance indication of how it is proposed to exercise the particular discretionary power in question) it is always open to the holder of the power to change that policy see, for example, in relation to the Immigration Rules themselves, MO (Nigeria) v Secretary of State for the Home Department [2009] 1 WLR 1230.\nEvery false imprisonment case on which the appellant relies can, in my opinion, be seen to fall within one or other of the above four categories.\nBesides those already mentioned, two cases in particular call for brief special mention.\nKuchenmeister v Home Office [1958] 1 QB 496 concerned a German national who landed at Heathrow en route to Dublin.\nThe immigration officers, instead of refusing him leave to land (as they had been instructed to do), detained him at the airport until it was too late for him to catch the Dublin flight.\nHolding him to have been wrongfully imprisoned, Barry J said this (p 512): His liberty was restricted to a greater degree than the immigration authorities were entitled to restrict it under [the particular power they sought to rely upon].\nThe fact that they might have restricted his mobility by employing the powers conferred upon them by other articles of the Order seems to me to be immaterial.\nIt is no answer, when a man says I have been unlawfully arrested without a warrant, to say Well, had I (the person making the arrest) taken the trouble to go and ask for a warrant, I would undoubtedly have got it.\nThat would be no answer to a claim for unlawful arrest.\nSimilarly here, although the [immigration officers] could have detained the plaintiff by refusing him leave to land, that does not entitle them to detain him on the grounds on which they did.\nThe case was to my mind correctly decided and can be seen to fall squarely under the first of the above four categories: the immigration officers simply had no power to restrict the plaintiffs movements in the way they did.\nLangley v Liverpool City Council [2006] 1 WLR 375 concerned a child in obvious need of protection.\nTwo relevant powers existed, respectively under sections 44 and 46 of the Children Act 1989.\nSection 44 provides for the grant of an emergency protection order (EPO) authorising the council to remove a child into the care of foster carers; section 46 gives the police power to take a child into police protection.\nThe police officer there having removed the child in purported exercise of his power under section 46, the Court of Appeal held that he had been wrong to do so and accordingly that the child had been falsely imprisoned.\nDyson LJ in giving the leading judgment said that the statutory scheme clearly accords primacy to section 44 [which] is sanctioned by the court and . involves a more elaborate, sophisticated and complete process than removal under section 46 (para 38); that section 46 should be invoked only where it is not practicable to execute an EPO (para 40); and that in the result, albeit the officer had jurisdiction to remove [the child] pursuant to section 46, he could not lawfully invoke that power unless there were compelling reasons for exercising this power when, to his knowledge, an EPO was in force which authorised the council to remove [the child] into the care of foster carers (paras 44 and 46).\nAgain, I have no difficulty in accepting the correctness of this decision: just as the Hardial Singh line of cases imposed restrictions upon the power of detention under the 1971 Act, so the court in Langley thought it right to place a limitation upon the scope of the section 46 power.\nThe case falls neatly into category 3 (or perhaps into category 2, on the basis that the impracticality of executing a concurrent EPO was held to be a precondition to the lawful exercise of the section 46 power).\nIn what circumstances, then, does the breach of a public law duty in the exercise of a power to detain result in the detainee being falsely imprisoned? I have already indicated, at paragraph 347(4) above, one such circumstance, namely when the Secretary of State by his published policy indicates that he will not exercise his power to its fullest extent but rather will confine its exercise within certain limits (for example, as in Nadarajah, by releasing anyone whose removal is not imminent).\nSuch a published policy, unless and until it is changed, as a matter of public law requires the decision maker to decide cases (subject always to reasoned exceptions) in accordance with it.\nIt is my clear present view (subject to any further argument on the point) that SK (Zimbabwe) provides a good illustration of circumstances where, the breach of a public law duty notwithstanding, the detainee should not be regarded as falsely imprisoned.\nThe Secretary of State there breached what was his undoubted public law duty to review all detention cases monthly in accordance with his published policy on procedure.\nAs it seems to me, however, it is one thing to breach a policy under which a detainee is entitled to be released; quite another to breach a policy under which he is entitled merely to be reviewed for release.\nWhereas the former will result in false imprisonment, the latter will not.\nObviously, if the detainee on review would have been entitled to be released under the Hardial Singh principles (or, if more favourable, the published policy statements) then he has a claim for false imprisonment.\nBut the claim in those circumstances arises from his continued detention beyond the date of such entitlement, not from the failure to review his case.\nWhat, however, is the position in a case like the present when the Secretary of States breach of public law duty consists of applying, in place of his published policy, an unpublished policy less favourable to those subject to the detaining power? On the appellants case, of course, that automatically results in the false imprisonment of every single detainee whose continued detention has been considered under the wrong policy, irrespective of whether or not they would have had the least prospect of release whatever policy had been applied.\nApplying the wrong policy, the argument runs, means that the Secretary of State failed to have regard to a material consideration, instead had regard to an immaterial consideration, and therefore reached his decision in an unlawful manner.\nThis renders it a nullity with the result that there was no lawful authority for the ensuing detention.\nThe closest this thesis comes to finding high level support in the authorities is in a much quoted dictum of Lord Diplock in Holgate Mohammed v Duke [1984] 1 AC 437.\nFollowing Mrs Holgate Mohammeds arrest on suspicion of theft and her detention for six hours at a police station for questioning, she was found at first instance to have been wrongfully arrested and was awarded 1,000.\nThis was on the basis that the arresting officer, in deciding that there would be a better prospect of her confessing if she were arrested and detained rather than merely interviewed under caution, wrongfully exercised his power of arrest.\nUpholding the Court of Appeals decision to allow the Chief Constables appeal, the House of Lords held that the better prospect of the plaintiff confessing her guilt if arrested and questioned at a police station was in fact a relevant matter so that the arrest was not after all unlawful.\nIn the course of the only reasoned speech, Lord Diplock (at p443) observed that, the condition precedent to the officers powers of arrest and detention having been fulfilled by his having reasonable cause to suspect the plaintiff to be guilty of an arrestable offence, this left him with an executive discretion whether to arrest her or not.\nIt is the next passage in the speech that is so strongly relied upon by the appellants: Since this is an executive discretion expressly conferred by statute upon a public officer, the constable making the arrest, the lawfulness of the way in which he has exercised it in a particular case cannot be questioned in any court of law except upon those principles laid down by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223, that have become too familiar to call for repetitious citation.\nThe Wednesbury principles, as they are usually referred to, are applicable to determining the lawfulness of the exercise of the statutory discretion of a constable under section 2(4) of the Criminal Law Act 1967, not only in proceedings for judicial review but also for the purpose of founding a cause of action at common law for damages for that species of trespass to the person known as false imprisonment, for which the action in the instant case is brought.\nLord Diplock then noted that amongst the Wednesbury principles was that whoever exercises the discretion must (in Lord Greenes words) exclude from his consideration matters which are irrelevant to what he has to consider.\nIt is, to my mind, critical to a proper understanding of Lord Diplocks speech to recognise that the relevant matter in question there, the matter which the judge at first instance held the officer to have wrongly taken into consideration, was a consideration clearly decisive of the way he had exercised his discretion.\nThe whole reason for the officer exercising his power to arrest and detain the plaintiff was so that she would then be more likely to confess.\nIf that had been an unlawful consideration, nothing could be clearer than that without it the officer would not have exercised the power at all.\nIn short, on the facts of the case, the power would have been exercised for an improper reason and the resultant detention necessarily unlawful.\nCertainly it would in my opinion be quite wrong to regard the case as authority for any wider proposition, least of all a thesis so absolute and unsatisfactory as that contended for here.\nThere had been no argument on the point: the Chief Constable was not even called upon.\nSmall wonder that in the quarter century following, despite the hugely increased scope of public law challenges, not a single case appears to have held an arrested detainee falsely imprisoned on Wednesbury grounds save where the arresting officer acted either in bad faith or for an improper purpose.\nPerhaps the way to put the point is this.\nClassically most public law challenges go to the decision making process rather than to the substance of the decision taken.\nThe substantive decision is for the public body and not for the court to take and generally a successful challenge requires that the impugned decision be taken afresh.\nObviously, if the substantive decision reached is outside the powers conferred upon the public body purporting to make it (ultra vires in the traditional, literal sense), then it must be nullified.\nSo too if it is irrational in the public law (Wednesbury) sense i.e. outside the range of permissible decisions which the public body is empowered to make.\nBut if, as here, the challenge is to the process whereby decisions to continue a detainees detention were taken or, indeed, as in SK (Zimbabwe), if what is challenged is a failure to take decisions (as often as promised by the policy) as to whether a detainees detention should continue then the appropriate remedy is to require the decision maker to act lawfully: to re decide decisions that resulted from a flawed decision making process or, as in SK (Zimbabwe), to take decisions that earlier the decision maker had omitted to take.\nIt simply does not follow from a flawed decision making process that the detainees continued detention immediately thereupon becomes unlawful so as to make him a victim of false imprisonment until a fresh decision comes later to be lawfully taken so that, for example, a detainee whose detention is reviewed every second month instead of monthly as the published policy dictates, alternates yo yo like between lawful detention and false imprisonment.\nNor does it seem to me that the absolutist approach to the consequences of public law error espoused here by the majority of the Court has received universal endorsement over recent years.\nThe decision of the House of Lords in Boddington v British Transport Police [1999] 2 AC 143 is often cited as a modern example of the Anisminic principle being applied in the ordinary course of proceedings (there in the context of a criminal trial).\nBut there are important dicta in the judgments which expressly leave open the question whether legal consequences may nonetheless follow from unlawful action.\nConsider this passage from the speech of Lord Slynn of Hadley, an acknowledged master in the field of public law: In our jurisdiction the effect of invalidity may not be relied on if limitation periods have expired or if the court in its discretion refuses relief, albeit considering that the Act is invalid.\nThese situations are of course different from those where a court has pronounced subordinate legislation or an administrative act to be unlawful or where the presumption in favour of their legality has been overruled by a court of competent jurisdiction.\nBut even in these cases I consider that the question whether the acts or byelaws are to be treated as having at no time had any effect in law is not one which has been fully explored and is not one on which it is necessary to rule in this appeal and I prefer to express no view upon it.\nThe cases referred to in Wade & Forsyth, Administrative Law, 7th ed. (1997), pp.323 324, 342 344 lead the authors to the view that nullity is relative rather than an absolute concept (p.343) and that void is meaningless in any absolute sense.\nIts meaning is relative.\nThis may all be rather imprecise but the law in this area has developed in a pragmatic way on a case by case basis. (p.165 C F) (Wade & Forsyth, now in its tenth edition (2010), continues to recognise the relativity of the concept of nullity in this context.) All I am saying is that if the law is to continue to develop in this area in a pragmatic way on a case by case basis, then in this particular case it should expressly recognise that not every decision to detain affected by a public law breach necessarily carries in its wake an unanswerable claim for false imprisonment.\nThat said, I readily acknowledge that the power of executive detention is one to be exercised with the greatest care and sensitivity and that it is of the first importance that those who exercise it should be ever mindful not merely of the legal limits of the power but also of such public law duties as surround its proper exercise.\nWhere, as here, a wrong and less favourable policy has been applied in deciding whether a person should be, or continue to be, detained, I accept that it must be for the Secretary of State as decision maker to establish that this breach of his or her public law duty did not in fact prejudice the detainee.\nIn short, it is for the Secretary of State in these circumstances, in order to avoid liability for the tort of false imprisonment, to establish that the detainee would have been detained in any event even, that is, had the lawful published policy been followed.\nAssuming, however, that the inevitability of detention in any event can be established, it seems to me nothing short of absurd to hold the tort of false imprisonment nevertheless made out.\nAfter all, had a detainee in such circumstances sought to challenge his continued detention by judicial review (or habeas corpus), the court would have been likely to grant declaratory relief only, declining in its discretion to order the detainees release.\nAssuming, indeed, that the Secretary of States lawful policy in effect dictates the detainees detention, why, one wonders, would a decision to release him not itself be in breach of the Secretary of States public law duty?\nGiven, as the Court of Appeal held, and as I understand each member of this court to accept, that there was no realistic prospect whatever of these appellants having been released even had the Secretary of State applied his more favourable published policy, it follows that for my part, whilst, of course, deeply regretting the public law breaches of which the Secretary of State was here guilty, I would dismiss the appeals.\nThe bulk of this judgment was written upon my understanding that the essential choice facing the court was between (a) no false imprisonment and (b) false imprisonment but nominal damages only.\nIt now appears that some members of the court favour a third outcome: (c) false imprisonment with damages of perhaps 500 1,000 by way of a vindicatory or conventional award.\nDescribe such an award how one will, to my mind it cannot sensibly be justified here.\nIs the court really to award substantial damages to those conceded to have been rightly detained? I have made clear my difficulties with a nominal award of damages.\nA substantial award would appear to me more objectionable still.\nLord Hope (at para 177 of his judgment) refers to Attorney General of Trinidad and Tobago v Ramanoop [2006] 1 AC 328 a constitutional challenge based upon some quite appalling misbehaviour by a police officer (Lord Nicholls at para 2) and calls here for some recognition of the gravity of the breach of the fundamental right which resulted in false imprisonment.\nProperly critical though our judgments may be of the conduct of Home Office officials in these and similar cases, I find it quite impossible to recognise in them any breach (grave or otherwise) of the detainees fundamental rights.\nThe detainees, I can only repeat, were rightly detained and it would have been wrong to release them.\nSave insofar as this judgment indicates the area of my disagreement with Lord Dysons judgment, I wish to say that I am in respectful agreement with it and feel unable to add anything of value on the various other issues arising for decision.\n","output":"The main issue in this appeal is whether, and if so which and in what circumstances, breaches of public law are capable of rendering unlawful the detention of foreign national prisoners (FNPs) pending their deportation.\nSection 3(5)(a) of the Immigration Act 1971 (the 1971 Act) confers on the Secretary of State for the Home Department a power to deport foreign nationals.\nSchedule 3 of the 1971 Act empowers the Secretary of State, in certain specified circumstances, to detain foreign nationals pending deportation.\nFrom at least 1991, the Secretary of State had maintained a published policy on the application of the power to detain.\nThis policy presumed in favour of release whilst justifying detention in some circumstances.\nHowever, following adverse publicity in April 2006, the Secretary of State adopted a new policy which was not published.\nBetween April 2006 and September 2008, the Secretary of State applied this unpublished policy which imposed a near blanket ban on release of FNPs.\nOn 9 September 2008, the Secretary of State amended the published policy to replace all references to a presumption of release with a presumption of detention.\nHowever, on 22 January 2009, following the decision of Davis J in the current proceedings, the published policy was amended again to omit references to a presumption of detention.\nWalumba Lumba is a citizen of the Democratic Republic of Congo.\nHe entered the UK unlawfully in April 1994.\nHe was later convicted of a number of offences and was sentenced to 4 years imprisonment for wounding with intent on 12 January 2004.\nOn 3 April 2006, the Secretary of State informed Mr Lumba of the intention to deport him.\nHe was due to be released from prison in June 2006, but was informed that he was to be detained pending deportation.\nHe left the United Kingdom voluntarily on 13 February 2011.\nKadian Mighty is a citizen of Jamaica.\nHe was granted indefinite leave to remain in the UK in February 2003.\nOn 27 June 2003 he was sentenced to 42 months imprisonment for possession of a Class A drug with intent to supply.\nOn 10 May 2006, the Secretary of State informed Mr Mighty of the intention to deport him.\nOn 19 May 2006, he was detained pending deportation.\nHowever, he was released on bail on 28 July 2008.\nMr Lumba issued proceedings on 18 October 2007 claiming a declaration that his detention was unlawful and damages.\nHis case was joined with that of Mr Mighty who had issued proceedings on 29 May 2008.\nIn addition, Mr Lumba, who remained in detention until his departure from the United Kingdom, challenged the reasonableness of the duration of his detention and sought a mandatory order that he be released.\nAt first instance ([2008] EWHC 3166 (Admin)), Davis J granted declarations to the effect that it was unlawful for the Secretary of State to operate an unpublished policy which presumed in favour of detention.\nHe dismissed the other claims, including the claims for damages for unlawful detention.\nThe appellants appealed and the Secretary of State cross appealed on the issue of the presumption of detention.\nThe Court of Appeal (Lord Neuberger MR, Carnwath and Stanley Burnton LJJ) allowed the cross appeal but otherwise dismissed the appeals ([2010] 1 WLR 2168).\nThe Supreme Court, by a majority, allows the appeals.\nLord Dyson gives the lead judgment.\nThe majority hold that the Secretary of State is liable to both appellants in the tort of false imprisonment as the statutory power to detain them was exercised in breach of public law duties (Lords Phillips, Brown and Rodger dissenting).\nThe appellants are, however, only entitled to nominal damages assessed at 1 (Lords Hope, Walker and Lady Hale\ndissenting).\nThey are not entitled to exemplary damages.\nThe court remits to the High Court the question whether Mr Lumba was detained for longer than a reasonable period in breach of the principles in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704 (the Hardial Singh principles).\nThe court considers five issues: (1) whether the unpublished policy maintained by the Secretary of State between April 2006 and September 2008 is unlawful on grounds of public law error; (2) if so, whether detention on the basis of such a policy is unlawful in circumstances where the appellants would have been lawfully detained in any event; (3) if so, whether the appellants are entitled to recover more than nominal damages; (4) whether the appellants are entitled to an award of exemplary damages; and (5) in the case of Walumba Lumba, whether there has been a breach of the Hardial Singh principles.\nThe requirements of public law The court holds unanimously that it is lawful for the Secretary of State to operate a policy which sets out the practice that she will normally follow in deciding whether or not to detain FNPs pending their deportation, provided that the requirements of public law, Hardial Singh and Article 5(1)(f) of the ECHR are respected: [40] [55].\nHowever, as regards the application of the statutory power to detain, it is unlawful in public law for the Secretary of State to maintain an unpublished policy which is inconsistent with her published policy and which applies a near blanket ban on the release of FNPs: [26] [38].\nSuch a policy was applied to the appellants between April 2006 and September 2008: [21].\nLiability in false imprisonment Breach of a public law duty on the part of the person authorising detention is capable of rendering that detention unlawful and did render it unlawful in this case: [62] [88], [198] [207], [221].\nTrespassory torts (such as false imprisonment) are actionable per se regardless of whether the victim suffers any harm.\nAccordingly, by a majority, the court holds that the fact that the appellants would have lawfully been detained in any event does not affect the Secretary of States liability in false imprisonment: [62], [64] [88], [197], [208] [211], [221], [239] [247].\nLords Phillips and Brown (with whom Lord Rodger agrees) dissent and hold that because the appellants would have been lawfully detained the Secretary of State is not liable to them in false imprisonment: [319] [334], [343] [360].\nDamages By a majority, the court holds that the fact that the appellants would have been lawfully detained is relevant to damages rather than to liability.\nSince the appellants have suffered no loss they should recover no more than nominal damages of 1: [90] [96].\nThey are not additionally entitled to damages to vindicate the importance of the right and the seriousness of the infringement: [97] [101], [222] [237], [253] [256] (Lords Hope, Walker and Lady Hale dissenting: [176] [180], [195], [212] [217]).\nFurther, the court holds unanimously that the appellants are not entitled to exemplary damages: [150] [169].\nReasonableness of the length of detention under the Hardial Singh principles As regards the assessment of whether a reasonable period of detention has elapsed, the court unanimously holds that the risk of reoffending and the legal challenges pursued by the detainee are relevant.\nThe relevance of a refusal to voluntarily return is limited: [106] [128].\nIt is for a court of first instance to decide whether Mr Lumbas detention for almost 56 months was in breach of the Hardial Singh principles.\nAccordingly, his claim is remitted to the High Court: [129] [148].\n","id":16}
{"input":"This appeal raises the issue whether the daily vessel operating expenses of shipowners incurred while they were negotiating to reduce the ransom demands of pirates should be allowed in general average ie whether those expenses should be shared proportionately between all those whose property and entitlements were imperilled as a result of that seizure or whether they must be borne by the shipowner alone.\nGeneral average and the York Antwerp Rules\nGeneral average refers to the system of maritime law by which sacrifices of property made, and loss and expenditure incurred, as a direct result of actions taken for the purpose of preserving a common maritime adventure from peril are rateably shared between all those whose property is at risk in the adventure.\nThe principle of rateable sharing of such losses between parties to a maritime adventure appears to date back at least to the law of the Rhodians.\nHaving been adopted by the Romans, it passed on a customary basis into European sea laws of the Middle Ages, and thence into modern European Codes.\nIt appears that the expression general average started to be used in English judgments around the end of the 18th century and was first authoritatively discussed judicially in this country by Lawrence J in Birkley v Presgrave (1801) 1 East 220, 228 229.\nIt was first recognised statutorily in section 66 of the Marine Insurance Act 1906.\nThe York Antwerp Rules are an internationally agreed sets of rules, the first set (under that name) propounded in 1877, since when they have gone through a number of versions.\nThe latest version was agreed in 2016.\nThe Rules are designed to achieve uniformity in ascertaining which losses fall within the principle, in determining the method of calculating those losses, and in deciding how they are to be shared.\nAlthough internationally agreed between relevant expert and interested bodies, the Rules are not the subject of English legislation or international convention, and they derive legal force only through contractual incorporation.\nIn the present case the 1974 version of the Rules was contractually incorporated into the relevant carriage contract.\nI will refer to that version as the Rules.\nThe Rules are in English and French, and for the most part I shall confine myself to the English version.\nThe Rules are introduced by a Rule of Interpretation, which states that: In the adjustment of general average the following lettered and numbered Rules shall apply to the exclusion of any Law and Practice inconsistent therewith.\nExcept as provided by the numbered Rules, general average shall be adjusted according to the lettered Rules.\nThe seven lettered Rules are shortly expressed and are plainly intended to be of general application, whereas most of the 22 numbered Rules are lengthier, a few of them much lengthier.\nThree of the lettered Rules are of particular relevance to this appeal, namely Rules A, C, and F. Rule A is in these terms: There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure.\nRule C provides: Rule F states: Only such losses, damages or expenses which are the direct consequence of the general average act shall be allowed as general average.\nLoss or damage sustained by the ship or cargo through delay, whether on the voyage or subsequently, such as demurrage, and any indirect loss whatsoever, such as loss of market, shall not be admitted as general average.\nAny extra expense incurred in place of another expense which would have been allowable as general average shall be deemed to be general average and so allowed without regard to the saving, if any, to other interests, but only up to the amount of the general average expense avoided.\nThe numbered Rules play no part in these proceedings, save that some reliance has been placed on Rule XI.\nThat Rule is concerned with Wages and Maintenance of Crew and other expenses bearing up for and in a Port of Refuge etc, and is the second longest of the Rules.\nIt provides among other things for crew wages and maintenance to be recoverable in general average where Rule XI applies.\nThe factual background\nOn 29 January 2009 the chemical carrier MV Longchamp (the vessel) was transiting the Gulf of Aden on a voyage from Rafnes, Norway, to Go Dau, Vietnam, laden with a cargo of 2,728.732 metric tons of Vinyl Chloride Monomer in bulk (the cargo).\nThe cargo was carried under a bill of lading dated 6 January 2009 which stated on its face that General Average, if any, shall be settled in accordance with the York Antwerp Rules 1974.\nAt 06.40, seven heavily armed pirates boarded the vessel.\nThe pirates commanded the master to alter course towards the bay of Eyl, Somalia, where she arrived and dropped anchor at 10.36 on 31 January 2009.\nAt 14.05 on 30 January 2009 a negotiator for the pirates boarded the vessel and demanded a ransom of US$6m.\nThe vessels owners (the owners) had meanwhile formed a crisis management team who had set a target settlement figure of US$1.5m.\nOn 2 February 2009 an initial offer of US$373,000 was put to the pirates.\nNegotiations between the pirates negotiators and the owners crisis management team continued over the following seven weeks with various offers and counter offers being made.\nEventually on 22 March 2009, after a negotiation period of 51 days, a ransom was agreed in the amount of US$1.85m.\nOn 27 March 2009 the ransom sum was delivered by being dropped at sea.\nAt 07.36 on 28 March 2009 the pirates disembarked and at 08.00 that day the vessel continued her voyage.\nIt is accepted that the US$1.85m ransom payment itself can be allowed under Rule A.\nIt is also accepted that the costs and expenses of the negotiator in relation to the ransom, Captain Ganz, and the costs and expenses of his special advisers, NYA International, are allowable.\nThere was a dispute about the allowability of a sum of around US$20,640 in respect of media expenses but that is no longer challenged by the cargo interests.\nThe essential issue on this appeal is whether the vessel operating expenses incurred during the period of negotiation (the negotiation period expenses) are allowable in general average under Rule F.\nThose sums are: (1) US$75,724.80 for crew wages paid to the crew. (2) US$70,058.70 for high risk area bonus paid to the crew by reason of the fact that the vessel was detained within the Gulf of Aden.\nThese are additional wages which the crew were entitled to under their contract of employment whilst at sea within a high risk area. (3) US$3,315 for crew maintenance (ie food and supplies). (4) US$11,115.45 for bunkers consumed.\nIn this judgment, I shall treat the aggregate sum as being US$160,000.\nThe procedural history\nThe average adjuster, Mr Robin Aggersbury of Stichling Hahn Hilbrich, considered that the negotiation period expenses were allowable under Rule F on the basis that they were incurred during a negotiation period of about 51 days which enabled an amount of US$4,150,000 [to be] saved in the common interest of all property owners concerned, which would otherwise have been recoverable as per Rule A.\nThe 51 day period to which he referred was, as explained above, from 30 January to 22 March 2009.\nThe cargo was valued at destination at US$787,186 and the value of the vessel was assessed at US$3,947,096; so cargo interests were liable for 14.44% of the total general average expenditure.\nFollowing publication of the adjustment, the cargo interests requested and obtained a report (the Report) from the Advisory Committee of the Association of Average Adjusters.\nThe Report set out the facts in considerable detail, and concluded, by a majority of four members to one, that the negotiation period expenses did not fall within Rule F.\nThe cargo interests had previously made payments on an account of general average, but following the publication of the adjustment they issued proceedings challenging (in accordance with the Report) the adjusters conclusion that the negotiation period expenses fell within Rule F, and seeking an appropriate repayment.\nThe arguments of the parties\nThe owners argument involves the following steps.\nFirst, it is rightly common ground that the US$1.85m ransom paid to the pirates for the release of the vessel was expenditure which was a general average act within Rule A.\nSecondly, the negotiation period expenses claimed fell within the expression expense incurred by the owners within Rule F. Thirdly, those expenses were incurred in place of another expense, namely the US$4.15m saved as a result of the negotiations.\nFourthly, those expenses, being US$160,000, are less than the general average expense avoided, namely the US$4.15m (and for the sake of simplicity I will treat this as the saving, although the actual saving was somewhat less by virtue of expenses such as those paid to Captain Ganz and NYA).\nFifthly, it follows from this that the negotiation period expenses are properly allowable under Rule F.\nThe cargo interests raise a number of points in answer to this argument, and those points (which I shall take in a slightly different order from that in which they were argued in this court or discussed by Hamblen LJ in his judgment) are as follows: a) The ransom saved was not allowable. b) The ransom saved was not another expense. c) The negotiation period expenses were not incurred with the necessary intention. d) The negotiation period expenses are not extra expense. e) The negotiation period expenses would or may have been incurred anyway. f) The negotiation period expenses are irrecoverable by virtue of Rule C or (by implication) Rule XI.\nI shall consider those arguments in turn, although it is the first and second arguments which justify particular consideration partly because they are the most difficult points and partly they are issues on which my view differs from that of the Court of Appeal.\nIt would not have been reasonable to accept the initial ransom demand\nThe cargo interests first contention is based on the proposition that it would not have been reasonable for the owners to have accepted the pirates initial ransom demand for US$6m.\nOn that basis, it is said that a payment of US$6m (or, more accurately, the saving of US$4.15m) would not have been expenditure reasonably incurred within Rule A, and therefore cannot qualify as an expense which would have been allowable as general average in Rule F.\nThe judge accepted that, in order to succeed in its claim under Rule F, the owners would have to establish that it would have been reasonable for them to have accepted the pirates initial demand, but decided that, in all the circumstances, it would have been reasonable for the owners to have paid US$6m ransom.\nThe Court of Appeal agreed with the judges analysis of the legal position, and declined to interfere with his conclusion that it would have been reasonable of the owners to have met the pirates initial demand.\nIt is a difficult question whether the Court of Appeal ought to have concluded that the judge was entitled to conclude that it would have been reasonable for the ship owner to have paid the pirates the US$6m which they initially demanded.\nWhile an appellate court should be slow to interfere with a trial judges finding of fact, this was not a finding of primary fact.\nAnd, at least on the face of it, one would have thought that it would have required very unusual circumstances for a ship owner not to try and negotiate with pirates who had made such a very high demand.\nFurther, the evidence suggests that no ship owner accepted an initial demand made by Somali pirates and that their demands were generally pitched on the basis that they would be substantially reduced by negotiation.\nOn the other hand, one must beware of the perils of wisdom of hindsight, and it is right to bear in mind that there was a wounded sailor on the vessel and that the cargo was perishable.\nIn my opinion, it is not necessary to resolve this difficult issue, because I do not consider that the judge or the Court of Appeal were correct in assuming that the owners had to establish that it would have been reasonable to accept the pirates initial demand in order to justify the contention that the negotiation period expenses were allowable under Rule F. One does not need to examine the wording of the Rules to appreciate that the assumption made by the courts below would lead to very odd results, as explained by Hamblen LJ at [2016] Bus LR 1285, paras 62 to 64.\nIt would mean that, if a ship owner incurs an expense to avoid paying a reasonable sum, he can in principle recover under Rule F, whereas if he incurs expense to avoid paying an unreasonable sum (ie a larger sum), he cannot recover.\nThe more obvious his duty to mitigate, and the greater the likely benefits of such mitigation, the less likely he would be to be able to recover.\nSuch a state of affairs (apparently known to cognoscenti as the Hudson conundrum, after the writer who first described it) would be a remarkable result.\nFortunately, examination of the wording of Rules A, C and F shows that it does not arise.\nWhere I part company with the judge and the Court of Appeal is in relation to their view that the reference in Rule F to another expense which would have been allowable as general average is to an expense whose quantum is such that it would have qualified as a claim under Rule A.\nIn my opinion, the reference to an expense which would have been allowable is to an expense of a nature which would have been allowable.\nFirst, the word allowable in Rule F naturally takes one to Rule C, where the similar word allowed is used, rather than Rule A, where there is no reference to anything being allowed (the same point applies to the French version admissible in Rule F and admis in Rule C).\nUnlike Rule A, Rule C is concerned purely with the type of expense, and not with quantum.\nSecondly, the opening part of Rule F is unlikely to be concerned with quantum, as that is dealt with in the closing part, which imposes a cap on a sum recoverable under Rule F, namely only up to the amount of the general average expense avoided.\nThirdly, the interpretation assumed in the courts below imposes an unnecessary fetter on the allowability of an extra expense, as there is already a reasonable fetter in the concluding part of Rule F. Fourthly, the interpretation I favour produces an entirely rational outcome: whenever an expense is incurred to avoid a sum of a type which would be allowable, that expense would be allowable, but only to the extent that it does not exceed the sum avoided.\nApplying that reasoning to this case, and subject to the discussion below as to the cargo interests other arguments, the US$160,000 falls within Rule F. The US$160,000 was incurred in order to avoid paying a US$6m ransom (or, more accurately, a ransom of around US$4m more than the ransom actually paid), and as the ransom was an allowable expense in principle, the US$160,000 therefore falls within Rule F, subject to the appellant establishing that it would have been reasonable to have paid a ransom of around US$2.4m (ie the ransom it did pay plus the US$160,000 together with the further expenses such as those paid to Captain Ganz and NYA).\nIf the judge was even arguably entitled to reach the conclusion that paying a US$6m ransom was reasonable, it must have been reasonable to pay a ransom well under half that figure.\nEven if the analysis in para 19 above were not right, I would have reached the same conclusion.\nAs pointed out by Lord Sumption in the course of the argument, where an unreasonably high sum is expended, there would be no reason not to hold that Rule F applied, albeit only to the extent of a reasonable sum, on the basis that the greater includes the less.\nThus, if (contrary to the analysis in para 19 above), Rule F only applied where a sum was reasonably incurred, and in this case the judge had concluded that the maximum reasonable ransom would have been US$4m, then Rule F would have applied to US$4m of the US$6m ransom.\nThe reduction in ransom was not an alternative course of action\nI turn then to the second contention raised by cargo interests, which was the ground on which they succeeded in the Court of Appeal.\nThat contention is that the negotiation period expenses do not fall within Rule F, because the payment of a reduced ransom of US$1.85m was not an alternative course of action to the payment of the ransom originally demanded, namely US$6m: it was merely a variant.\nThis contention involves arguing that to trigger Rule F, it is not enough for a claimant to incur expense in achieving a result which costs less than what an allowable item would otherwise have cost: the expense must be incurred to achieve a result which involves replacing that allowable item with a different and cheaper item.\nAs Lord Mance expressed it during the argument, this argument involves saying that Rule F applies only where some means is adopted to complete the adventure, and that means is different from that which might normally be expected.\nThe notion that Rule F is only engaged in a case where the claimant achieves an alternative course of action in that sense was said by Hamblen LJ at [2016] Bus LR 1285, paras 38 to 40 to be supported by passages in the two leading books in English on general average.\nIn paras F.01 and F.29, the editors of Lowndes & Rudolf, The Law of General Average and the York Antwerp Rules, 14th ed (2013) write: As the name implies, substituted expenses are the expenses incurred in respect of a course of action undertaken as an alternative to or in substitution for the expense that would be allowable as general average.\nFor this rule to have any application there must have been an alternative course which, if adopted, would have involved expenditure which could properly be charged to general average.\nIn Hudson & Harvey, The York Antwerp Rules: The Principles and Practice of General Average Adjustment, 3rd ed (2010), para 11.33, there is this: Although Rule F is phrased in terms which refer to the incurring of the expense, its application in practice presupposes a choice between two (and sometimes more) different courses of action.\nI am not convinced that, as a matter of language, those passages support the conclusion that Rule F can only be invoked when the claimant has taken an alternative course of action, but I accept that the prevailing view among the writers on the subject, and among those who work in the field, of general average may well be as Hamblen LJ suggested.\nThus, it certainly seems to have been assumed to be the generally accepted position by Hoffmann LJ in his striking dissenting judgment in Marida Ltd v Oswal Steel (The Bijela) [1993] 1 Lloyds Rep 411, where, at p 423 he quotes with approval a passage from the 11th ed (1990) of Lowndes & Rudolf which is identical to that quoted by Hamblen LJ from the 14th ed.\nHowever, the law cannot be decided by what is understood among writers and practitioners in the relevant field (or even by views expressed by Hoffmann LJ in a dissenting judgment, especially in a case where the point did not strictly arise and does not appear to have been argued).\nExperience shows that in many areas of practical and professional endeavour generally accepted points of principle and practice, when tested in court, sometimes turn out to be unsustainable.\nI accept that it may be right for a court to have regard to practices which have developed and principles which have been adopted by practitioners, but they cannot determine the outcome when the issue is ultimately one of law.\nFurther, as the opinions of the average adjuster and of the majority of the Advisory Committee of the Association of Average Adjusters in this case demonstrate, there is certainly no question of there being a universal view on the issue.\nTurning to the language of Rule F, I consider that this alternative course of action contention goes nowhere.\nEven if one accepts that the extra expense must involve an alternative course of action, it seems to me that the owners claim satisfies that requirement.\nIt appears to me that (ignoring other sums for present purposes) the right analysis of the owners claim is that it is for (i) US$1.85m under Rule A and (ii) US$160,000 under Rule F, on the basis that (i) the US$1.85m, as a reasonable sum paid to ransom the vessel and the cargo, is admittedly within Rule A, and (ii) the US$160,000, as negotiation period expenses, represents extra expense incurred in place of the US$4.15m, the amount by which the ransom was reduced.\nOn that basis, as I see it, the incurring of the US$160,000 did represent an alternative course of action, in the sense that the cargo interests use that expression, from the payment of the US$4.15m: the former involved incurring vessel operating expenses whereas the latter involved paying a ransom.\nThere is an alternative analysis of the owners claim, which is that it should be treated as being for a single sum of US$2.01m, namely the US$1.85m ransom actually paid plus the US$160,000 negotiation period expenses, under Rule F on the basis that this combined sum was extra expense incurred in place of the US$6m originally demanded.\nHowever, I do not see how that helps the cargo interests.\nLogically, their argument on this basis should be that the US$1.85m is disallowable under Rule F as it was not an alternative course of action from paying the originally demanded US$6m ransom, but the negotiation period expenses are recoverable under Rule F, as they did involve an alternative course of action which is precisely the opposite of the cargo interests actual case, and indeed a nonsensical result.\nAccordingly, the cargo interests second contention cannot simply be based on the wording of Rule F. Their contention, as I see it, must be that the expenses incurred in negotiating a reduction in the cost of an allowable item do not fall within Rule F because the reduction in the cost of an allowable item which would be paid for anyway, and which falls within Rule A, cannot be within the scope of Rule F.\nI do not find it easy to see how one can get that out of the words of Rule A or Rule F.\nI suppose that one could take the analysis in para 27 above and argue that it works perfectly well where, as a result of the negotiation, an alternative course of action, within the restrictive use of that expression as urged by the cargo interests, was taken.\nHowever, given the problem identified in para 27 above with such an approach where the reduced sum is not such an alternative course of action, I am very dubious whether the approach can be justified anyway.\nGiven that the Rules represent an international arrangement, it is particularly inappropriate to adopt an approach to their interpretation which involves reading in any words or qualification.\nAs already mentioned, it appears to me that, as a matter of ordinary language, Rule F applies to the negotiation period expenses for the reasons given in para 26 above.\nTo imply some qualification such as the requirement that those expenses must have been incurred so as to achieve an alternative course of action appears to me to be very dangerous.\nIn the same way as an international convention or treaty, the Rules should be interpreted by a United Kingdom court unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptation, to quote Lord Wilberforce in James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd [1978] AC 141, 152.\nAs Lord Hobhouse said in King v Bristow Helicopters Ltd [2002] 2 AC 628, para 148, in relation to an article in the Warsaw Convention, it is the unadorned language of the article to which attention must be directed.\nQuite apart from this, the cargo interests second contention appears to me to lead to difficulties and potential anomalies in practice.\nThus, there would be difficulties about deciding whether a particular variant was an alternative course of action.\nTowage to destination, extra costs of arranging dry docking with cargo on board, overtime worked on repair or cargo operations (at least sometimes), and (historically) air freight instead of sea freight for spare parts were examples given by the respondents of alternative courses of action (mostly taken from Lowndes & Rudolf, op cit).\nBut it is hard to see where the line is to be drawn.\nThe difficulties about deciding whether overtime payments qualify is plain from reading Lowndes & Rudolf, op cit, para F.25; in addition, overtime payments are enhanced payments for the same work whose cost would have been recoverable under Rule A in any event.\nAnd if air freight can qualify if it is incurred instead of sea freight, it is hard to see much logic in disqualifying sea freight at a lower rate negotiated with a new party on a different type of vessel.\nFurther, given that, on the cargo interests case, negotiation period expenses could not be claimed if they were incurred as a result of negotiating a reduction in the cost of repair with one shipyard, what would the position be if the negotiations were with a competing shipyard and\/or in respect of a novel and different way of effecting the repairs?\nIt also appears to me to be somewhat inconsistent in terms of logic that (as has been agreed between the parties in this case) the costs and expenses of Captain Ganz and NYA are subject to general average whereas the negotiation period expenses are not.\nIt is clear that the costs and expenses claimed by and paid to Captain Ganz and NYA included costs and expenses attributable to the negotiations with the pirates (for instance, hotel bills for most of the 51 day period).\nThey can only be justified on the basis that they were referable to the negotiations to reduce the ransom, in the sense that they were incurred solely because of the negotiations taking place.\nAccordingly, if they are claimable, it is hard to understand why the negotiation period expenses should not also be claimable.\nAt [2016] Bus LR 1285, para 47, Hamblen LJ suggested that there were a number of anomalies if the negotiation period expenses were allowable.\nFirst, he mentioned the difficulty of establishing that the expenses would not have been incurred even if the initial demand for US$6m ransom had been accepted.\nI doubt that that problem would arise in most cases where the vessel operating costs are said to fall within Rule F, and it may well arise in some cases where it would be common ground that Rule F would apply.\nIn any event, it is for the claimant in each case to establish, on the balance of probabilities, that the delay caused by the negotiation would not have occurred if there had been no negotiation.\nSecondly, he said that, in a case such as this there could be no entitlement to claim vessel operating costs as Rule F expenses until a demand had been made.\nI agree, but fail to see why it is an anomaly.\nThirdly, Hamblen LJ pointed out that, in the absence of a demand, eg if there were simply negotiations, it might be hard to say when, or even whether, Rule F was engaged.\nI accept that there may be ransom cases where it is hard to determine at what precise point Rule F is engaged, but it would, I think, be a rare case where at some point early in the negotiations the pirates did not come up with a figure.\nAnyway, I suspect that point could apply to cases where Rule F is undoubtedly engaged.\nQuite apart from that, I do not accept that the fact that there may be difficulties for claimants in a few other ransom cases is a reason for holding that Rule F is not engaged in this case.\nMore broadly, if (as appears to me to be appropriate) one views Rule F simply as entitling a claimant to claim in respect of an expense successfully incurred for the purpose of mitigating a loss, it seems to me that none of these points should give rise to concerns.\nThe cargo interests other arguments\nThe cargo interests third contention is that, in order to be recoverable under Rule F, the negotiation period expenses must be shown to have been consciously and intentionally incurred by the owners, and there was no evidence that the owners or their agent had consciously decided to incur those expenses in order to reduce the ransom payable to the pirates.\nIndeed, Hamblen LJ said at [2016] Bus LR 1285, para 43 that it does not appear that the owners ever considered that they faced a choice and that there was no evidence to suggest that they ever considered choosing between paying the ransom on demand and paying a lesser sum following negotiation.\nAccordingly, runs the argument, the owners cannot recover under Rule F as they never made a conscious choice between paying the US$6m ransom initially demanded by the pirates or negotiating with the pirates.\nI do not accept that contention.\nThe question whether one expense has been incurred in place of another expense must be assessed objectively.\nIn this case, it is clear (and must have been clear at the time) that negotiations were (and would be) needed if the ransom was to be reduced, that such negotiations took (and would take) time, and that the passage of time resulted in the negotiation period expenses (and would result in expenses of that nature) being incurred.\nAs the negotiations resulted in the ransom being reduced, it seems to me that, subject to any other argument, it must follow that the expenses incurred as a result of those negotiations were incurred in place of the US$4.15m saved (or that the expenses incurred plus the US$1.85m actual ransom were incurred in place of the original US$6m ransom demand).\nThe cargo interests further contend that the negotiation period expenses were not extra expense within the meaning of that word in Rule F.\nThis contention is based on the proposition that, in order to qualify as extra expense, an expense would have to be of a nature which would not normally have been incurred in response to the peril threatening the adventure.\nI can see no reason for giving the word extra such a restrictive meaning.\nFirst, it is not its natural contextual meaning, which, in my view, is simply an expense which would not otherwise have been incurred (but for the saving of the other expense).\nSecondly, such a meaning is supported by the contrast with the word extraordinary in Rule A.\nThirdly, such a restrictive meaning lies unhappily with the French equivalent adjective, which is supplmentaire.\nI take some comfort from, but do not rely on, the fact that the word extra in Rule F has now been replaced, in later versions of the Rules, by the word additional.\nThe cargo interests next contention is that the delay which led to the negotiation period expenses may well have occurred even if the owners had agreed to the pirates initial demand of US$6m.\nFor instance, if the owners had accepted the US$6m, the pirates may have thought that they had pitched their initial demand too low, and would have increased it, leading to further negotiations and consequent delay.\nThat is of course a possibility.\nHowever, it is inherent in the judges conclusion that he considered it more likely than not that the vessel and cargo would have been released promptly if the US$6m ransom demand had been accepted and paid.\nThat was the sort of finding (albeit an implied finding, but necessarily so, in his conclusion) with which an appellate court should be very slow to interfere.\nAnd in this case it appears to me that we should clearly not question it: it was an eminently defensible finding.\nIt is clear that a delay of some period would be inevitable as a result of the negotiations, and it is clear that the 51 days (between the initial demand of US$6m and the final agreement at US$1.85m) was inevitable as a result of the negotiations; on the other hand, to put it at its very lowest, it is not unlikely that none of the 51 days delay would have been suffered if the US$6m demand had been met.\nThe cargo interests final contention is that, as Rule C excludes from general average expenditure which is an indirect loss including demurrage, and\/or because Rule XI includes crew wages and maintenance where it applies, the claim in the present case must fail.\nIn my opinion, there is nothing in that point.\nI accept that the negotiation period expenses, if consequential on a general average act, would have fallen within the exclusion in Rule C of loss sustained through delay, but I do not accept that it follows that they must therefore fall outside Rule F. Rule C applies to expenses and other sums claimed by way of general average as consequences of a general average act (as defined by Rule A).\nIt does not apply to expenses covered by Rule F, which is concerned with sums which are expended or lost in mitigating or avoiding the sums which would otherwise be claimable as general average.\nBy definition, sums recoverable under Rule F are not themselves allowable in general average, but are alternatives to sums which would be allowable.\nOne can understand why, as a matter of policy, demurrage and similar indirect liabilities are not recoverable as general average, but it does not follow that such indirect liabilities should be irrecoverable if they are expended in order to mitigate what would otherwise be a larger general average claim.\nAs for the cargo interests reliance on Rule XI, I find it hard to see why the fact that vessel operating expenses are specifically allowed in one specific type of case, means that it should be presumed that they are excluded from every other type of case.\nIn any event, the Rules start by saying that the lettered Rules apply save where the numbered Rules apply, and that makes it particularly difficult to justify the notion that a specific allowance in a numbered Rule should impliedly rule out such an allowance in a lettered Rule.\nIndeed, I understood the cargo interests in this case to accept that vessel operating costs would be recoverable in a case where Rule F did apply (subject to their Rule C argument considered in para 37 above), and that seems to be consistent with what is said in the two books on general average to which I have referred.\nI agree with the judgment of Lord Neuberger.\nConclusion\nFor these reasons, I would allow this appeal and restore the decision of the deputy judge.\nLORD SUMPTION: (with whom Lord Hodge and Lord Clarke agree)\nThe York Antwerp Rules have a status in shipping law similar to that of the Uniform Customs and Practices in the law relating to documentary credits.\nThey depend wholly on contractual incorporation for their binding force.\nBut they are designed to create a body of principle applicable internationally in a uniform way, although incorporated in shipping agreements of different kinds, governed by different laws.\nIt will therefore rarely if ever be appropriate to imply matter into them which is not apparent from the natural meaning of the words, unless the implication is necessary to make them workable or intelligible or to avoid absurdity.\nRule F is simplicity itself.\nIt provides for the allowance of expenditure which is not allowable as general average expenditure but has successfully mitigated expenditure or sacrifice which would have been allowable as general average.\nThe cost of maintaining the ship and crew during a period of delay which would not have occurred but for the peril but was necessary to enable the ransom to be reduced, is deemed to be general average up to the amount of the reduction.\nI appreciate that the practice of most average adjusters has been to disallow such expenditure.\nIn the absence of a comprehensive body of case law (general average rarely reaches the courts), adjusters have adopted a variety of practices or rules of thumb to supplement the Rules.\nThis is perhaps inevitable, but such practices are not law and there is a tendency in this field for them to lose sight of the basic concepts expressed in the Rules themselves.\nI suspect that this particular practice has been influenced by the second paragraph of Rule C and the limited scope of application of Rule XI.\nBut the second paragraph of Rule C serves to limit the permissible heads of general average expenditure so as to exclude delay.\nThere is no textual, indeed no rational reason why it should be taken to limit the permissible heads of expenditure which although not general average expenditure successfully mitigates something else that is.\nAs for Rule XI, like the other numbered rules, that is a specific rule relating to ships entering a port or place of refuge, which does not impinge upon the general principles set out in the lettered rules, as applied to other situations.\nIn my opinion, the appeal should be allowed.\nI agree that the appeal should be allowed for the reasons given by Lord LORD CLARKE:\nNeuberger and Lord Sumption.\nLORD MANCE: (dissenting)\nAlthough a general average case was the origin of the English Commercial Court, general average cases are few and far between.\nThe correct resolution of the present case has divided both general average practitioners and the courts, and the number of issues raised has tended to multiply as the case has progressed.\nThe core question is simple.\nWhere a vessel with its cargo has been seized by pirates, and the owners over a period succeed in negotiating down an initial ransom demand, can the owners include in general average not merely the ransom payment ultimately made, but also vessel and crew costs totalling US$160,213.95 incurred during the period of negotiation (the negotiation period expenses).\nThe vessel MV Longchamp was boarded by pirates at 06.40 hours on 29 January 2009.\nA ransom demand of US$6m was made by the pirates at 14.05 on 30 January 2009 and was rejected by the owners as too high on 31 January 2009.\nThe vessel had by then been taken to a position off Eyl on the coast of Somalia.\nThereafter, negotiations took place lasting until 18.25 on 22 March 2009, when the pirates accepted the owners last offer of US$1.85m.\nThe ransom was dropped at sea off Eyl on 27 March and the vessel was released to proceed on her voyage at 07.36 on 28 March 2009.\nThe negotiation was in practice conducted by the owners.\nThe negotiation period to which the relevant expenses relate runs from 14.05 on 30 January to 08.25 on 22 March 2009.\nThe relevant bill of lading provided for any general average to be adjusted according to the York Antwerp Rules 1974.\nThe ransom payment and the costs of specialist negotiators are accepted as direct general average costs, falling within Rule A of those Rules.\nThe question is whether the negotiation period expenses fall to be included in general average under Rule F, reading: Any extra expense incurred in place of another expense which would have been allowable as general average shall be deemed to be general average and so allowed without regard to the saving, if any, to other interests, but only up to the amount of the general average expense avoided.\nThe owners case is that: (i) if they had paid the US$6m ransom initially demanded, that would have been allowable as general average within the meaning of Rule F; (ii) instead of doing this, they entered into successful negotiations; (iii) the resulting reduction in the ransom payable from US$6m to US$1.85m avoided general average expense of US$4.15m; and (iv) the negotiation period expenses totalling US$160,213.95 can and should be treated as an extra expense incurred in place of the general average expense of US$4.15m avoided.\nBefore the deputy judge, Mr Stephen Hofmeyr QC [2015] 1 Lloyds Rep 76, the focus was on point (i), whether the US$6m would, if paid, have been allowable as general average.\nHe held that it would have been.\nThe Court of Appeal agreed with the judge on this point.\nBut it focused on a different aspect, whether Rule F was in principle applicable when all that had occurred was negotiation, in the event a long, rather than a short negotiation, but not an alternative course of action by which expenditure different in kind was incurred.\nIn the Court of Appeals view, this was not a case of extra expense being incurred in place of another expense, but a case where the owners had no real choice or true alternative to pursue (per Hamblen LJ [2016] Bus LR 1285, paras 51 53) and there was only one course of action open namely to treat with the pirates however long that might take (per Sir Timothy Lloyd, para 99).\nI have considerable sympathy with the Court of Appeals instinct that Rule F was not designed with the present situation in mind.\nThe classic circumstances in which it is treated as applying are cases where there is one obvious or natural course of action open to the owners following a general average event, but there is also some different action, which might if taken lead to a more generally beneficial outcome overall.\nThis, it is common ground that Rule F in the 1974 Rules embraces situations where, instead of undergoing repairs in a port of refuge, the vessel is towed as is to destination, or the cargo is forwarded on another vessel, or, where, instead of discharging cargo in order to undertake dry docking and repair, extra equipment is obtained to enable dry docking and repair without such discharging.\nIn the Canadian case of Western Canada Steamship Co Ltd v Canadian Commercial Corp [1960] 2 Lloyds Rep 313, decided in an era when sea transport was the norm, the cost of airfreighting a new propeller shaft from Wales to Singapore was allowed on the same basis.\nHowever, it is also clear that Rule F can apply in situations where the general average expense avoided would have been allowable under one of the numbered rules, setting out various specific situations in which various types of vessel or crewing costs are in principle recoverable as general average.\nIn short, the focus of Rule F seems to me to have been correctly identified by Hoffmann LJ in Marida Ltd v Oswal Steel (The Bijela) [1993] 1 Lloyds Rep 411, 421, when he quoted with approval the then most recent edition of Lowndes & Rudolf on General Average and the York Antwerp Rules (11th ed (1990), p 144), as saying that the substituted expenses must be: an alternative to, or in substitution for what might prima facie be thought of as being the normal or standard means of dealing with a given situation.\nHoffmann LJ went on (p 422) to leave open the question whether under Rule F the course of conduct giving rise to the substituted expense should have fallen outside the obligations contained in the contract of affreightment or whether it is sufficient that the expenditure was a less usual and more [sic] expensive way by which the owner complied with his contractual obligation, eg to repair the ship.\nHe concluded by noting that Lowndes & Rudolf suggest that expenditure of the latter kind could fall within the Rule, but that Rule F certainly contemplates that there was a practical alternative by which the adventure could have been completed.\nThe cargo interests conceded in their written case, and I am prepared for present purposes to accept, that this does not exclude all possibility that Rule F might cover a situation in which, by some unusual or non standard step, the owners are able to replace or reduce in amount an expense of one kind by incurring a lesser expense of the same kind.\nIt does not however seem to me necessary to go even that far in the present case, since what is submitted is that the owners have, by incurring negotiation period expenses, consisting of vessel and crew costs, avoided a different kind of expense, namely extra ransom costs.\nWhat is however clear on any view is that Rule F is not intended to cover general average situations in which owners simply do what would in the ordinary course be expected of them in the interests of the common adventure.\nWhere this is the position, the expenses incurred will be admissible, potentially, as the direct consequence of the general average act, allowable as general average under the first paragraph of Rule C, unless they are excluded as loss or damage incurred through delay under the second paragraph of Rule C. One qualification to this is however significant.\nEven if expenses would otherwise be excluded as loss or damage incurred through delay, they may nevertheless be admitted if they fall within one of the numbered heads.\nRule XI(a) in particular covers costs of crew and vessels fuel and stores during the prolongation of a voyage occasioned by a vessel entering a port or place of refuge or returning to her loading port or place in circumstances falling within Rule X(a).\nRule XI(b) covers, broadly, crew costs when a vessel has entered or been detained in any port of place in consequence of, or for repairs following, a general average event.\nIt is unnecessary to examine the precise ambit of these provisions.\nWhat matters is that they constitute very specific qualifications of the exclusion by the second paragraph of Rule C of loss or damage through delay.\nThere is no equivalent qualification which could cover the present case.\nHence the owners reliance on Rule F.\nIn order to bring the case within Rule F, the owners have to show and the onus is on them both as a matter of general principle and specifically under Rule E that they incurred extra expense, that this was in place of another expense and that that other expense would have been allowable as general average; and, once they have done that, the extra expense is only allowable up to the amount of the general average expense avoided.\nI have little difficulty with accepting the negotiation period expenses as an extra expense in the sense that they were over and above anything that would, taking Mr Hofmeyr QCs words ([2015] 1 Lloyds Rep 76, para 89), ordinarily have been incurred on such a voyage.\nI have already covered what may have been contemplated in Rule F by the use of the phrase in place of another expense.\nRule F only applies if the other expense would have been allowable as general average and subject to the condition that the extra or substituted expense is allowable only up to the amount of the general average expense avoided by not incurring that other expense.\nViewing Rule F as a whole, it is clear that the owners must show that, had they incurred the other expense, the costs it would have involved could validly have been treated as general average their right to include extra or substituted expenses as general average being limited under Rule F by the extent to which the hypothetical other expense could have been so treated.\nThe last sentence of para 19 of Lord Neubergers judgment accepts this.\nIt seems therefore of only academic interest to debate whether the same conclusion would flow from the words would have been allowable as general average by themselves.\nFor my part, however, I consider that it would have done.\nThe word allowable must take one back to the requirements of Rule A as well as Rule C. Rule A apart, there would be no indication what is meant by general average or an expense allowable in general average.\nThe onus placed under Rule E on any party claiming in general average to show that the loss or expense claimed is properly allowable as general average must carry one back to Rule A as well as C.\nIn this connection, it is also notable that the French word used throughout Rules C, E and F (admis, admise, admission or admissible) has in each case the same root.\nThe Hudson conundrum, to which Lord Neuberger refers (para 18 above), does not lead to any different conclusion.\nIn most, if not all, circumstances in which Rule F applies, there will be a prima facie or standard course of action to be taken in the face of the general average event, but the owners will, by adopting some unusual means, have arrived at an alternative solution to further the common adventure.\nIn such cases, the other paying parties will be hard pressed to suggest that the prima facie or standard reaction would have been unreasonable.\nThere is a parallel here with the duty to mitigate, which is not lightly to be imposed or treated as broken.\nThe Court of Appeal ([2016] Bus LR 1285, paras 73 74) was in this respect right in my view to agree with the deputy judges general conclusion of principle ([2015] 1 Lloyds Rep 73, para 77) that the hypothetical other expense must be one which would have been reasonably incurred in a sense interpreted and applied with a sufficient degree of latitude to give rule F practical effect.\nIn many cases, the differences between the two courses (the standard and that adopted) may not be large, and both may easily be reconciled as reasonable reactions.\nRule F is also careful, by its concluding words, to recognise that the extra expense may not be less than that which would have resulted from taking the standard course.\nIn such a case, Rule F performs the valuable function of allowing recovery up to the amount which would have been recoverable had the standard course been adopted.\nTurning specifically to an unusual situation like the present: if there is no course at all open to take, the expenses of which would have been allowable as general average, then matters must run their course.\nIf a ransom is demanded and paid in an amount which is unreasonable to pay, the only amount allowable in general average will be whatever lesser amount it would have been reasonable, after negotiation, to pay.\nIf the negotiation period expenses are regarded as an extra expense incurred in place of the amount of the ransom avoided by the negotiation, they can be recoverable at most only so far as the negotiation avoided the making of a ransom payment which it would have been reasonable to pay.\nOn no view is there any basis for reading into the clear language of Rule F an entirely artificial assumption that, when judging whether the other expense would have been allowable as general average, the possibility of incurring the extra expense in place of that other expense must be ignored.\nTo do so would be flatly contrary to the language and evident intent of Rule F. The reasoning and decision of the House of Lords in Marida Ltd v Oswal Steel (The Bijela) [1994] 1 WLR 615 turned on the very different wording of Rules X(b) and XIV, under which the express assumption in Rule XIV that such [temporary] repairs had not been effected there could be, and fell to be, read into Rule X(b) when considering what repair expenses would have been necessary and allowed in general average for the purposes of Rules X(b) and XIV, read together.\nBoth the courts below have in this case concluded that it would have been reasonable for the owners to accept and pay the first ransom demand of US$6m.\nThe Court of Appeal has however decided the case against the owners on the basis that they faced no real choice but to negotiate, however long the negotiation might take.\nThere is to my mind a tension between the two strands of the Court of Appeals reasoning.\nIf it would have been reasonable to accept and pay the first demand, then the owners were on the face of it taking a stand by seeking an even more reasonable deal in the interests of all concerned in the common adventure.\nIt is not apparent that Rule F could not extend to such a course, if, as here, it involved the owners in some expense in the form of additional crew and vessel expenses.\nBut I find even more difficult the joint conclusion of both courts below that it would have been reasonable for the owners to meet the first ransom demand.\nThe deputy judge found difficulty in seeing how any ransom payment could be described as reasonable: [2015] 1 Lloyds Rep 76, para 98.\nHe said: At least in one sense, no ransom payment could ever be described as reasonable.\nPirates are criminals engaged in extortion and their demands are unlawful and deplorable.\nHow can a payment extorted by pirates be described as reasonable? In my view, it cannot.\nThe idea of a reasonable ransom is radically misconceived and the term an oxymoron.\nThat is however to look at the point from only one direction.\nThe relevant viewpoint is that of the unfortunate victims involved in a common adventure.\nFrom their viewpoint, there must be some ransom demands to which it is reasonable and others to which it is unreasonable to respond.\nEven the deputy judge appeared prepared to accept that the latter would include a ransom demand well in excess of the value of the vessel and cargo.\nHowever, this was as far as the deputy judge was prepared to go.\nLeaving aside exceptional circumstances, where the value of the ransom demanded clearly exceeded the value of the property involved in the venture, he thought it obvious that it would not be reasonable to say that an owner under an obligation to proceed with due despatch had not reasonably incurred a ransom paid.\nHe went on, at para 99: Even if it may be said that, by January 2009, a pattern of dealing between Somali pirates and shipowners had developed, as described by David Steel J in Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua) [2010] 2 All ER 593 [2010] 1 Lloyds Rep 509 at paras 19, 23, 25 and 26 (affirmed on appeal: [2011] 1 Lloyds Rep 630; [2011] 1 WLR 2012), such a pattern would not remove the potential for unreasonable, irrational and illogical behaviour.\nIn support, the deputy judge said that negotiation was an uncertain process and it was not possible to state with reasonable certainty when the ransom demand was made that the amount of the ransom would inevitably be significantly reduced by the process of negotiation (para 100).\nWhether or not it is possible to state with reasonable certainty that a negotiation will achieve significant success cannot however be the test of whether or not negotiation should reasonably be essayed.\nThe deputy judge also derived comfort from his conclusion on this point from the consideration that natural justice requires that all should contribute to the substituted expenses incurred (para 103).\nA difficulty about this observation is that nothing in Rule F could enable cargo interests to recover any matching loss or damage that they might suffer from the delay during negotiations.\nThe cargo was in fact perishable, even though in the event it survived the rigours it underwent without apparent deterioration.\nAs the Court of Appeal correctly recognised in this connection (para 51), whether or not an item falls within general average depends on the proper interpretation of the York Antwerp Rules.\nThey represent a balanced framework, negotiated over time between all interests involved.\nAs I have already observed, the Court of Appeals reasoning involves a potential tension between the approaches taken to the scope of Rule F and to the issue of the reasonableness of paying the initial ransom demand.\nIn the former context, Hamblen LJ said this [2016] Bus LR 1285, paras 43 46: 43.\nSome support for the cargo interests approach is to be found in the evidence.\nThus, it does not appear that the owners ever considered that they faced a choice.\nThe owners crisis management and negotiation team were set up before any ransom demand had been made.\nFrom the outset the goal was to negotiate to obtain release of the vessel upon payment of a ransom, but in a reduced amount.\nThere is no evidence to suggest that they ever considered choosing between paying the ransom on demand and paying a lesser sum following negotiation. 44.\nThis is also borne out by the advisory committees stated experience, which is that in all Somali piracy cases the same course of action is taken, namely to negotiate and pay a reduced ransom leading to release of the vessel.\nAgain it does not appear that there is considered to be a choice of payment on demand. 45.\nIn my judgment this failure to recognise that there is a choice reflects the reality, which is that payment on demand is simply a different way of going about the same course of action and not a true alternative course of action.\nWhether or not the ransom is paid on demand there will still be a negotiation, there will still be delay, there will still be the incurring of vessel and crew running costs during the period of delay.\nIn either case the same expenses will be incurred; the difference is only in their extent. 46.\nIn this case, for example, there was a period of delay between the hijacking and the first ransom demand.\nEven if that first demand had been accepted, it does not follow that it would have been agreed.\nAs the majority of the advisory committee state, the unprecedented acceptance of the ransom on demand may well have been met by a demand from the pirates for a still higher figure.\nEven if that was not the case, it would still have been necessary to negotiate and agree matters relating to place and method of payment and to the release of vessel and crew.\nThus in this case it is to be noted that there was a period of six days between the agreement of the ransom and the release of the vessel.\nIn the latter context, however, Hamblen LJ said, at paras 77 84: 77.\nThe cargo interests contend that the judge was wrong to conclude that payment on demand would have been reasonable and that account should have been taken (but was not) of the following matters: (1) The established modus operandi for Somali pirates as at the date of the hijacking, namely invariably to negotiate down the amount of the ransom demanded over a period of time with little or no risk to cargo or crew. (2) In the experience of the majority of the advisory committee, the negotiation period is common in all piracy cases and there is always a period of negotiation before a vessel is released and it is the normal means of dealing with such situations. (3) The minority member accepted that there was a reasonable period of customary negotiation and that clearly, the ransom amount initially demanded cannot automatically be allowed in general average. (4) The position adopted by the owners in their skeleton argument at trial, That is not to say that paying the first demanded ransom is ever likely in fact to be a reasonable course of action.\nIn reality, where there is the option of entering into negotiations with pirates, it will almost always be the right thing to do. 78.\nThey submit that if proper regard is had to these matters it should be concluded that it would be unreasonable to pay the originally demanded ransom without even attempting to negotiate the amount of the ransom payment, contrary to the established practice, and that the judge was wrong to conclude otherwise.\nThey further submit that payment on demand would be an artificial invention. 79.\nThe owners do not accept that there is satisfactory evidence to establish the matters sought to be relied upon by the cargo interests, but that in any event they do not render payment of the full ransom demand unreasonable. 80.\nThe owners accept that the evidence at that time was that Somali pirates would release a vessel upon payment of a ransom.\nAs they point out, that being so, the sooner the ransom was paid, the quicker the vessel would be released and the vessel, cargo and crew removed from danger. 81.\nIn my judgment, if, as stated in the Masefield case [2010] 2 All ER 593, the safest, most timely and effective means to secure the release of a ship and crew was to pay a ransom, it follows that the most safe, timely and effective means of so doing is to pay as soon as possible.\nIt may be that the general practice was to try to negotiate the ransom down, but that does not mean that it would be unreasonable to pay the ransom straight away so as to avert the very real danger to vessel, cargo and crew as quickly and effectively as possible.\nNor can a course of action which procures such real and tangible benefits be regarded as an artificial invention. 82.\nFurther, in my judgment the reasons given by the judge are all cogent and compelling reasons for concluding that payment of the initial ransom sum would have been reasonable. 83.\nFurther reasons for supporting that conclusion include the following: (1) The effect of the delay involved in seeking to negotiate a lower ransom is to keep the vessel, cargo and crew in peril, with all the risks of saying no to pirates, who are violent, armed criminals. (2) The vessel and cargo were under the control of the pirates.\nAs such, there were obvious dangers should there be a storm or other peril of the sea. (3) The owners knew that there had been a firefight during the capture of the vessel and that a crew member had been wounded. (4) Although, as matters turned out, the pirates main negotiator was said to be a calm, rational communicator who never resorted to threats or other coercive tactics, the owners had no reason to assume that. (5) This was just one of many known unknowns facing the owners. 84.\nFor all these reasons I conclude that it cannot be shown that the judge was wrong to find that payment of the initial ransom demand would have been reasonable.\nIt follows that I would dismiss the appeal on this issue.\nI note that, after the quotation from the Masefield case [2010] 2 All ER 593 in para 81 of Hamblen LJs judgment, the words to pay a ransom are not a correct citation.\nThe actual words in the Masefield judgment were to negotiate and subsequently pay a ransom.\nThe cargo interests rely on the apparent acceptance both by the deputy judge ([2015] 1 Lloyds Rep 76, para 99, quoted in para 61 above) and by the Court of Appeal ([2016] Bus LR 1285, paras 43, 44, 46 and 81) of a general practice to negotiate any ransom demand down over a period.\nThe owners object that there is no evidence justifying any such conclusion.\nBut their own skeleton argument for the trial stated that: This is not to say that paying the first demanded ransom is ever likely in fact to be a reasonable course of action.\nIn reality, where there is the option of entering into negotiations with pirates, it will almost always be the right thing to do.\nBut when considering the allowability in GA of the costs of the negotiation, the relevant alternative scenario to be considered is the one in which there is no negotiation possible\/available.\nThe last sentence reflects the owners then case, which relied on a suggested analogy with the reasoning of the House of Lords in The Bijela, discussed in para 58 above.\nThe trial in the present case was a Commercial Court trial on the documents.\nIt seems clear that the deputy judge treated himself as entitled to rely on all the material before him when considering the factual position, including the statements in the Masefield case and the Report of the Advisory Committee of the Association of Average Adjusters on the present case, which he summarised at some length, while recording that it was common ground that it was not binding on the court.\nI see no reason to regard either the deputy judge or the Court of Appeal as having erred in this respect.\nDavid Steel Js judgment in the Masefield case noted ([2010] 2 All ER 593, para 14) that the initial ransom demand in that case of US$2m in August 2008 was all of a piece with the process of Somali hijacking.\nFortunately the process of negotiating such a demand and making an agreed payment had invariably led to the release of all vessels involved.\nAgainst that background, I did not understand it to be controversial that the actual prospects of recovery of the cargo as at 18 September 2008 were good.\nOther relevant factors on the issue of reasonableness are that the range of potential values as assessed at the time was between US$5m and US$7m (with US$5.4m being later established as the correct figure).\nA demand of US$6m self evidently exhausted or very nearly exhausted all interests involved.\nFurther, any indication of agreement to pay anything like the initial demand would almost inevitably have fed a suspicion on the pirates part that they had demanded far too little, and would have complicated matters then and for the future.\nIn contrast, and in the light of the past experience of other shipowners whose vessels had been seized by Somalian pirates, there was on the face of it every reason to give effect to what was evidently the present owners immediate reaction, that is to hire experienced negotiators and engage on a time consuming and painstaking process of negotiation.\nIn reaching a conclusion that it would have been reasonable for the owners to capitulate in response to the very first demand, the courts below were making an evaluative judgment on the basis of documentary evidence and material.\nThis is not a situation in which their evaluation commands a large inherent advantage, compared with that which the Supreme Court is in a position to make, although of course it merits weight and it is for the cargo interests to show that it was wrong.\nIn the light of all the circumstances, the cargo interests have satisfied me that it was wrong.\nI am unable to accept the evaluative judgment reached by both courts below to the effect that it would have been reasonable for the owners to pay the initial ransom, and that, had they done so, they could have required the full US$6m to be treated as general average.\nThe reasoning of the courts below appears to me contrary to all the relevant indications as to how the owners actually acted and would have been expected to act.\nIt is clear that the owners never contemplated the sort of remarkable capitulation that payment of the initial ransom would have involved, and that it would have taken them and other shipowners into uncharted territory, as opposed to a relatively familiar negotiation process, had they ever done so.\nThey would in my opinion clearly have been acting unreasonably in the circumstances had they done so.\nThe case has been fought and decided on the basis that this is the critical issue.\nNo alternative case has been advanced to the effect that negotiations would or might have led to a settlement at some lesser figure which might have covered some, no doubt lesser figure of negotiation period expenses.\nLord Neuberger notes (para 20 above) that the actual negotiation period expenses claimed of US$160,000 would have been covered (together with the negotiators expenses) by a ransom payment of around US$2.4m.\nThat is mathematically correct.\nBut it does not reflect the reality which has to be addressed.\nIt postulates immediate agreement on or about 30 January 2009 on a ransom of US$2.4m.\nYet, even in early March 2009 the pirates were still looking for a ransom of US$3m, reduced on 2 March 2009 to US$2m.\nDepending on where one dates and places a reasonable settlement at a reasonable settlement figure, it is clear that, on this basis, any recoverable negotiation period expenses would be considerably reduced below the US$160,000 odd claimed.\nThe case has not been put on a basis which required or allows now for any such hypothetical exercise (of assessing when and at what figure below US$6m a reasonable settlement could have been achieved) to be undertaken.\nThe owners have established that Rule F is in principle capable of applying to negotiation period expenses, which may well be the principle which this litigation is about.\nBut I do not think that they have established on the facts that they have any claim on the only factual basis on which the case has been put.\nI would therefore dismiss this appeal, albeit for reasons different from those given by the Court of Appeal.\n","output":"On 29 January 2009, the chemical carrier mv LONGCHAMP (the vessel) was transiting the Gulf of Aden.\nPirates boarded the vessel and ordered its course to be altered towards the Bay of Eyl, Somalia.\nAfter seven weeks of negotiations, the crisis management team formed by the vessels owners (the Appellants) agreed a ransom in the amount of US $1.85m (the initial demand had been for US$6m).\nThe cargo on the vessel was carried by the cargo interests (the Respondents) under a bill of lading which stated on its face that General Average, if any, shall be settled in accordance with the York Antwerp Rules 1974 (the Rules).\nGeneral Average refers to the system of maritime law by which sacrifices of property made, and loss and expenditure incurred, as a direct result of actions taken for preserving a common maritime adventure from peril, are rateably shared between all those whose property is at risk.\nThe Rules are internationally agreed and derive legal force through contractual incorporation.\nThey aim to achieve uniformity in ascertaining whether losses fall within the principle of general average, the method of calculating those losses and deciding how they are to be shared.\nThe essential issue in this appeal was whether the vessel operating expenses incurred during the period of negotiation (the negotiation period expenses) were allowable in general average under Rule F of the Rules which provides that any extra expense incurred in place of another expense which would have been allowable as general average shall be deemed to be general average and so allowed without regard to the saving, if any, to other interests, but only up to the amount of the general average expense avoided.\nAn adjudicator found that the negotiation period expenses fell within Rule F.\nThe Respondents challenge to the adjudicators decision was dismissed in the Commercial Court.\nThe Court of Appeal allowed the Respondents subsequent appeal.\nThe Appeal is allowed.\nLord Neuberger gives the lead judgment with which Lord Clarke, Lord Sumption and Lord Hodge agree.\nLord Sumption gives a concurring judgment.\nLord Mance dissents on the facts.\nThe Appellants submitted that the negotiation period expenses fell within the expression expense incurred by the owners within Rule F and those expenses were incurred in place of another expense (i.e. the $4.15m saved as a result of the negotiations with the pirates).\nFurther, the negotiation period expenses were less than the general average expense avoided and it thereby followed that they were properly allowable under Rule F [14].\nThe Court found that the Judge and Court of Appeal incorrectly assumed that the owners had to establish that it would have been reasonable to accept the pirates initial demand in order to justify the contention that the negotiation period expenses were allowable under Rule F. Such an assumption would lead to very odd results.\nIt would mean that, if a ship owner incurs an expense to avoid paying a reasonable sum, he can in principle recover under Rule F, whereas if he incurs expense to avoid paying an unreasonable sum (i.e. a larger sum), he cannot recover [18].\nFurther, the reference in Rule F to another expense which would have been allowable as general average does not mean an expense whose quantum is such that it would have qualified as a claim under Rule A of the Rules (which refers to extraordinary sacrifice or expenditure) [19].\nTherefore, subject to the Respondents other arguments, the negotiation period expenses fell under Rule F as they were incurred to avoid paying $6m [20].\nThe Respondents submitted that the negotiation period expenses did not fall within Rule F because the payment of reduced ransom of $1.85m was not an alternative course of action to the payment of the ransom originally demanded but was merely a variant [22].\nThe Court found that the incurring of the negotiation period expenses did represent an alternative course of action from the payment of the $4.15m (the amount by which the ransom was reduced).\nThe former involved incurring vessel operating expenses and the latter involved paying a ransom [26].\nTo imply some qualification such as the requirement that the negotiation period expenses must be incurred so as to achieve an alternative course of action was very dangerous [29].\nThe Rules are an international arrangement and should be interpreted in the same way as an international convention or treaty, unconstrained by technical rules of English law or by English legal precedent, on broadly accepted general principles [29].\nThe Respondents raised four further points.\nFirstly, they contended that the Appellants could not recover under Rule F as they had never made a conscious and intentional choice between paying the $6m ransom initially demanded or negotiating [33].\nThe Court held that the question of whether one expense has been incurred in the place of another expense must be assessed objectively [34].\nSecondly, the Respondents contended that the negotiation period expenses were not extra expenses within the meaning of Rule F. The Court found that there was no reason for restrictively interpreting the word extra so as to require an expense to be of a nature which would not normally have been incurred in response to the peril threatening the adventure [35].\nThirdly, the Respondents contended that the negotiation period expenses may have been incurred even if the owners had agreed to the pirates initial demand.\nHowever, the Judge considered that it was more likely than not that the vessel would have been released promptly if the $6m demand had been accepted.\nIt was not appropriate for the Supreme Court to interfere with this finding of the Judge [36].\nFinally, the Respondents contended that because Rule C of the Rules excludes indirect loss from general average expenditure and\/or because Rule IX includes crew wages and maintenance where it applies, the claim in the present case must fail.\nThe Court held that even though negotiation period expenses fall within Rule C it does not follow that they fall outside Rule F. By definition, sums recoverable under Rule F are not themselves allowable in general average, but are alternatives to sums which would be allowable [37].\nFurther, in terms of Rule IX, the Court did not agree that because vessel operating expenses were specifically allowed in one type of case that it should be presumed that they are excluded from every other type of case [38].\nBoth the lead judgment by Lord Neuberger [25] and the concurring judgment by Lord Sumption [42] observed that a variety of practices have been developed by practitioners in relation to the Rules but that the law cannot be determined by reference to these practices.\nIn his dissenting judgment [45 68], Lord Mance concluded that whilst the Appellants had established that Rule F is in principle capable of applying to negotiation period expenses, they had not established on the only factual basis on which their case had been put that they had a claim under Rule F [68].\n","id":17}
{"input":"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).\nIn 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.\nThe 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.\nThe right of residence is a derivative right, that is, one derived from the dependent Union citizen.\nA 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.\nThis case is about the nature or intensity of that compulsion.\nThe derivative residence right was implemented in UK law by regulation 15A(4A) of the Immigration (European Economic Area) Regulations 2006.\nAt 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.\nthe relevant British citizen is residing in the United\nSo the relevant wording of the domestic legislation is unable to reside.\nThese words must be interpreted so far as possible compatibly with EU law.\nThis depends upon the jurisprudence of the CJEU.\nIn 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.\nHe has Indian nationality.\nHe cares for his parents, both of whom are British citizens and both of whom are ill.\nHis father suffers from end stage kidney disease and needs dialysis for some eight hours per day.\nMr Patel, though not medically qualified, is able through training and experience to administer this.\nHis mother is also ill and immobile.\nMr Patels case is that that his parents are dependent on him.\nThe First tier Tribunal (FTT) accepted that they were dependent on him.\nHowever, 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.\nThe 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.\nMr Patels subsequent appeals to the Upper Tribunal (UT) and the Court of Appeal were similarly unsuccessful.\nMr 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.\nOn 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.\nIn the second appeal, Mr Shah, a Pakistani national, is the primary carer of his infant son, who is a British citizen.\nHis wife also has British nationality.\nMr and Mrs Shah and their son all live together.\nMrs Shah is in full time work outside the home to earn an income for the family.\nWhile she is at work, the son remains with Mr Shah, who has no right to live or work in the UK.\nIf 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.\nIn 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.\nThe Court of Appeal came to a different conclusion.\nThey 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.\nZambrano jurisprudence\nThe 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.\nIt 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.\nThis 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.\nThe 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.\nArticle 20 TFEU provides: Article 20 (ex article 17 TEC) 1.\nCitizenship of the Union is hereby established.\nEvery person holding the nationality of a member state shall be a citizen of the Union.\nCitizenship of the Union shall be additional to and not replace national citizenship. 2.\nCitizens of the Union shall enjoy the rights and be subject to the duties provided for in the Treaties.\nThey shall have, inter alia: the right to move and reside freely within the a) territory of the member states;\nThe right to EU citizenship is, therefore, a Treaty right.\nIt lies at the heart of the European legal architecture.\nIn UK law, prominence is not generally given to the distinction between citizenship of, and nationality within, the UK.\nThe 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.\nThe purport of the TFEU is that a person may have both EU citizenship and member state nationality.\nEU citizenship is a Treaty right and it is to be anticipated that it may be treated as a dynamic concept.\nThis 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.\nArticles 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.\nArticle 24 The rights of the child 1.\nChildren shall have the right to such protection and care as is necessary for their well being.\nThey may express their views freely.\nSuch views shall be taken into consideration on matters which concern them in accordance with their age and maturity. 2.\nIn all actions relating to children, whether taken by public authorities or private institutions, the childs best interests must be a primary consideration.\nArticle 7 reflects article 8 of the Convention.\nArticle 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.\nNeedless to say, adults cannot rely on article 24.\nThere is a further right in article 25 of the Charter.\nThis 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.\nPassing 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.\nThe 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.\nImportantly, the CJEU drew a distinction between the case of a Union citizen\nwho is an adult and one who is a child.\nThe CJEUs process of reasoning leading up to the conclusions in para 76 began with article 20 TFEU.\nThe CJEU emphasised the importance of the right to Union citizenship, being a Treaty right.\nThe 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.\nIt 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.\nCitizenship 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).\nIn 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.\nOn the other hand, the Treaty provisions on citizenship of the Union do not confer any autonomous right on third country nationals.\nAny rights conferred on third country nationals are not autonomous rights of those nationals but rights derived from those enjoyed by a Union citizen.\nThe 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).\nThe 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.\nThose limits are very important in considering these appeals because Charter rights are not engaged unless an EU law right is triggered.\nAs stated, the TCNs derived right of residence is only given in order that the Union citizens rights should be effective.\nThat would be the limit of the entitlement under EU law of the TCN to reside in the Union.\nMoreover, there must be a relationship of dependency between the Union citizen and the TCN: 51.\nIn 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.\nHowever, 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).\nThe distinction noted between dependence in the case of an adult Union citizen and that of a Union citizen child is then explored.\nA 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.\nAs 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.\nIt 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)\nMr 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.\nThese 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.\nIn 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.\nHe applied for a residence permit, but this was refused.\nThe 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.\nThe Union citizen children lived with their mother and so were not emotionally dependent on Mr Dereci, although he gave them financial support.\nIt 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.\nThat 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.\nConsequently, 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.\nThe CJEU held that any interference with Mr Derecis right to a family life would have to be raised under the Convention, not the Charter.\nThe CJEU held that the Charter right to respect for private and family life did not extend further than the Convention in any event.\nNor did the Charter extend the application of EU law beyond the powers of the Union because of article 51(1), which so provides.\nThe 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).\nThus, the CJEU went on to hold [2012] All ER (EC) 373: 70.\nAs 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.\nHowever, 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.\nUnder 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.\nAccordingly, 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.\nThus, 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.\nOn 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].\nMr Blundell placed considerable reliance on Dereci in relation to the Patel appeal.\nHe 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.\nHis 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.\nThe 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).\nTherefore, the appellant was not entitled to a derivative residence card.\nMr Roes response to that was to rely on the parents right to family life and their rights under article 25 of the Charter.\nHe contends that they should have been given greater weight.\nHe 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.\nThat decision relates to a Union child and, as explained, different considerations apply to a child.\nThe 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.\nMoreover, the Charter cannot extend the application of EU law, which imposes limits on entitlement to derivative residence rights, as explained above.\nWhat 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.\nAs 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.\nIn this case, the FTT found against Mr Patel and concluded that his father would not accompany him to India.\nThat means that, unless Chavez Vilchez adopts a different approach to compulsion, Mr Patels appeal must fail.\nThere 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.\nAs explained, in KA, the CJEU drew a distinction between an adult Union citizen and a Union citizen who is a child.\nIn 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.\nAs 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.\nMore 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.\nAs 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.\nThe 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.\nIn 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.\nAccordingly, 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.\nOn 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).\nIt is not necessary to cite further passages from KA.\nIt will be observed that in KA the CJEU drew on its earlier decision in Chavez Vilchez.\nThat case concerned several TCN mothers, whose children were Dutch and who claimed a derivative right to reside in The Netherlands.\nThe Dutch Government rejected these claims on the basis that the fathers of the children were also Dutch.\nSome 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.\nThe 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.\nThe 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.\nThe CJEU held [2018] QB 103: 70.\nIn 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.\nAs 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.\nFor 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.\nIn 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.\nThe 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.\nChavez 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.\nThere is no direct analogy with a case, such as the Shah appeal, where the family is living together.\nIn 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.\nBecause Mr Shah was the primary carer, the need for a relationship of dependency with the TCN was fulfilled.\nMoreover, 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).\nIt 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.\nIt 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.\nIn 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.\nI do not consider that this deduction can be made.\nIn 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.\nAn 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.\nIt 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.\nAccordingly, 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.\nNor does Chavez Vilchez in fact have any impact on the Shah appeal.\nThe 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.\nThe 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).\nAccordingly, the child had the relevant relationship of dependency with Mr Shah.\nThe 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.\nThe mothers evidence that if Mr Shah was not allowed to stay in this country they would move as a family was also unchallenged.\nThe 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.\nThe 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).\nThe Court of Appeal considered that it followed that there was no question of compulsion.\nMr 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).\nI do not accept that submission.\nThe overarching question is whether the son would be compelled to leave by reason of his relationship of dependency with his father.\nIn 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).\nThe test of compulsion is thus a practical test to be applied to the actual facts and not to a theoretical set of facts.\nAs 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.\nThat was sufficient compulsion for the purposes of the Zambrano test.\nThere 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.\nIt follows that the Court of Appeal was wrong in this case to bring the question of the mothers choice into the assessment of compulsion.\nIt 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.\nOn 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.\nIn 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.\nIn 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.\nFor these reasons I would allow the Shah appeal and dismiss the Patel appeal.\n","output":"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.\nZambrano 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.\nThis 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].\nThe first appeal is Mr Patels.\nMr Patel is an Indian national who has no right to remain in the UK.\nHe cares for his parents, who are British citizens.\nMr Patel has been trained to help with his fathers kidney dialysis, and he cares for his immobile mother.\nMr Patels parents are reliant on him.\nThe medication required for dialysis may not be available in India.\nThe 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.\nMr Patel was unsuccessful in invoking the Zambrano principle in the FTT, the Upper Tribunal (UT) and Court of Appeal (CA) [5].\nMr Patel appeals.\nThe second appeal is Mr Shahs.\nMr Shah is a Pakistani national.\nHe is the primary carer of his British citizen infant son.\nMr Shahs wife is also a British national.\nMr and Mrs Shah live with their son.\nMrs Shah works full time.\nWhilst Mrs Shah works, Mr Shah cares for their son.\nThe 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.\nTheir child would also leave the UK.\nAs a result, the FTT and UT found that Mr Shah was entitled to remain.\nThe 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].\nMr Shah appeals.\nThe Supreme Court unanimously allows Mr Shahs appeal and dismisses Mr Patels appeal.\nLady Arden writes the sole judgment [33].\nArticle 20 of the Treaty on the Functioning of the European Union (TFEU) provides for a right to EU citizenship.\nThis lies at the heart of the EU legal architecture [9].\nArticle 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].\nHowever, 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)\nThe TCNs derived right of residence is only provided to ensure that the EU citizens rights are effective.\nThis limits the entitlement of a TCN to reside in the EU.\nThere must be a relationship of dependency between the EU citizen and the TCN [16].\nKA 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].\nA 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].\nWhat 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].\nWith that context, the judgment examines Mr Patel and Mr Shahs respective cases in turn.\nRegarding Mr Patel, the FTT concluded that Mr Patels father would not accompany him to India.\nUnless 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.\nHowever, any possible qualification Chavez Vilchez makes to the general principle of compulsion does not apply in the case of adults.\nChavez Vilchez is about children.\nKA 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.\nChavez Vilchez does not relax the level of compulsion required in the case of adults.\nIt is of no assistance to Mr Patel.\nHis appeal must fail as his parents would not be compelled to leave the UK [27].\nChavez Vilchez does not impact Mr Shahs appeal.\nThat appeal depends on the FTTs findings of fact and whether the CA correctly identified the relevant findings for the purposes of the compulsion test.\nThe 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.\nFurther, Mrs Shahs evidence was that if Mr Shah were removed from the UK then the family would move out of the EU.\nThis was accepted by the FTT, who held that it was an inescapable conclusion that the son would have to leave with his parents.\nTherefore, the FTT found the requirement of compulsion was met [28].\nThe 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].\nThe Supreme Court disagreed.\nThe 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.\nIn 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.\nThe compulsion test is practical.\nIt is to be applied to the actual facts.\nThe FTT found the son would be compelled to leave.\nThat is sufficient compulsion for the purposes of Zambrano [30].\nTherefore, Mr Shahs appeal was allowed [32] [33].\n","id":18}
{"input":"By these proceedings, a mother seeks to prevent a father from publishing a book about his life containing certain passages which she considers risk causing psychological harm to their son who is now aged 12.\nMother and son now live in the United States of America and so the family court in England and Wales has no jurisdiction to grant orders protecting the childs welfare.\nInstead, these proceedings have been brought in his name, originally by his mother and now by his godfather as his litigation friend, alleging that publication would constitute a tort against him.\nThe tort in question is that recognised in the case of Wilkinson v Downton [1897] 2 QB 57 and generally known as intentionally causing physical or psychological harm.\nWhat, then, is the proper scope of the tort in the modern law? In particular, can it ever be used to prevent a person from publishing true information about himself?\nAs the object of the proceedings has been to protect the child from harm, all the parties have until now been anonymous, as has the country where the child now lives.\nThis court has decided that the tort does not have the scope contended for on the childs behalf and hence that the book may be published including the specific passages to which objection is taken.\nThis means that the book will inevitably be published in the very near future.\nIn those circumstances there can be no justification for keeping secret the information contained in the book.\nThis includes, obviously, the authors name and also the country where mother and son are now living.\nThe book, however, uses pseudonyms for both the mother and the child and so this judgment will continue to do so.\nBut this court is now able to describe the book and its contents more fully than the lower courts were able to do.\nIn this way, the reasons why both the mother and the father have been motivated to act as they have should become much clearer than perhaps they have been hitherto.\nThe book\nThe father is James Rhodes, the concert pianist, author and television filmmaker.\nThe book is entitled Instrumental.\nThe author believes that music has, quite literally saved my life and, I believe, the lives of countless others.\nIt has provided company where there is none, understanding where there is confusion, comfort where there is distress, and sheer, unpolluted energy where there is a hollow shell of brokenness and fatigue.\nHe wants to communicate some of what music can do, by providing a sound track to the story of his life.\nAnd woven throughout is going to be my life story.\nBecause its a story that provides proof that music is the answer to the unanswerable.\nThe basis for my conviction about that is that I would not exist, let alone exist productively, solidly and, on occasion, happily without music.\nSo the book juxtaposes descriptions of particular pieces of music, why he has chosen them, what they mean to him, and the composers who wrote them, with episodes of autobiography.\nHe wants the reader to listen to the 20 music tracks while reading the chapters to which they relate.\nThus far, there would be nothing for anyone to worry about.\nBut the authors life has been a shocking one.\nAnd this is because, as he explains in the first of the passages to which exception is taken, I was used, fucked, broken, toyed with and violated from the age of six.\nOver and over for years and years.\nIn the second of those passages, he explains how he was groomed and abused by Mr Lee, the boxing coach at his first prep school, and how wrong it is to call what happened to him abuse: Abuse.\nWhat a word.\nRape is better.\nAbuse is when you tell a traffic warden to fuck off.\nIt isnt abuse when a 40 year old man forces his cock inside a six year old boys ass.\nThat doesnt even come close to abuse.\nThat is aggressive rape.\nIt leads to multiple surgeries, scars (inside and out), tics, OCD, depression, suicidal ideation, vigorous self harm, alcoholism, drug addiction, the most fucked up of sexual hang ups, gender confusion (you look like a girl, are you sure youre not a little girl?), sexuality confusion, paranoia, mistrust, compulsive lying, eating disorders, PTSD, DID (the shinier name for multiple personality disorder) and so on and on and on.\nI went, literally overnight, from a dancing, spinning, gigglingly alive kid who was enjoying the safety and adventure of a new school, to a walled off, cement shoed, lights out automaton.\nIt was immediate and shocking, like happily walking down a sunny path and suddenly having a trapdoor open and dump you into a freezing cold lake.\nYou want to know how to rip the child out of a child? Fuck him.\nFuck him repeatedly.\nHit him.\nHold him down and shove things inside him.\nTell him things about himself that can only be true in the youngest of minds before logic and reason are fully formed and they will take hold of him and become an integral, unquestioned part of his being.\nHe describes how he learnt to dissociate himself from what was happening, to block it out of his memory, how when he moved to other schools he had learnt to offer sexual favours to older boys and teachers in return for sweets and other treats.\nHe gives a searing account of the physical harms he suffered as a result of the years of rape and of the psychological effects, which made it hard for him to form relationships and left him with an enduring sense of shame and self loathing.\nHe recounts the ups and downs of his adult life: a year at Edinburgh University filled with drugs and alcohol, leading to his first admission to a psychiatric hospital; a year working and sobering up in Paris; three years studying psychology at University College London, leading to a highly successful career as a salesman in financial publishing; meeting and marrying the mother, whom he calls Jane, an American novelist then living in London; making a perfect home with her.\nHe is kind about his wife The poor thing didnt stand a chance and hard upon himself: Ive honestly no idea what I was thinking, beyond that rather sad hope that if I continued to do what normal people did then I would somehow become normal.\nBut the idea that a man like me could not only get married, but maintain, nurture, commit to a marriage was fucking ridiculous.\nMy whole concept of love was skewed.\nThen their child, whom he calls Jack, was born: My son was and is a miracle.\nThere is nothing I will experience in my life that will ever match the incandescent atomic bomb of love which exploded in me when he was born.\nHe wanted to be a perfect father, but I dont think that I will ever be able to make my peace with the fact that the ripples of my past became tidal waves when he was born.\nHis past had installed an unshakeable belief that all children suffer through childhood in the most abominable ways and that nothing and no one can protect them from it.\nEventually, he looked for professional help from a charity specialising in helping victims of child sexual abuse and was told that he must tell his wife about the abuse.\nSo he did.\nTheir child was then four years old.\nIt is, apparently, very common for the world to spin completely off its axis when your child approaches the age you were when the abuse began.\nInstead of returning to drink and drugs he resorted to self harm: Thats the thing about cutting not only do you get high, but you can express your disgust at yourself and the world, control the pain yourself, enjoy the ritual, the endorphins, the seedy, gritty self violence privately and hurt no one other than yourself.\nBut his wife found out and he was persuaded to go into hospital again.\nAmong the passages which have not been challenged is a graphic account of the effect of the psychotropic drugs which he was forced to take in hospital.\nHe tried to commit suicide, escaped from the hospital, planned a second attempt at suicide but rang his wife for a last word with his son, and was persuaded to meet her.\nSo he was returned to hospital.\nHe worked hard at being a model patient so that he could be let out.\nBut it was not a cure.\nEven out of hospital, off meds, physically present for my family, I was a ghost.\nA friend offered him a life line, treatment in a hospital in the United States, where he spent two months.\nBy the end of it I had, miraculously, stopped hating myself quite so much.\nId put on weight, cleared away a lot of the wreckage of the past, repaired some relationships and found a way to live with myself that, most days, left me relatively calm and composed.\nThere is a moving passage about rebuilding his relationship with his son: Thats the weird thing about kids they have a capacity for forgiveness that most adults can only aspire to.\nHe has always loved me it was inbuilt and immutable and I him.\nAfter a few weeks of playing, singing, hanging out, we felt absolutely connected and back to normal.\nBut the marriage could not be repaired.\nMother and father agreed to a trial separation and he moved out.\nThings started to get more and more wobbly, not helped by his going to the police for the first time in the hope of exorcising some of the past horrors, where he found the process brutal, shaming, vile.\nHe began self harming once more.\nEventually, the mother decided to move back to the United States.\nOnce again, he is generous: She had, understandably and justifiably, had enough.\nThere had been so much destruction, so much uncertainty and pain, and clearly Jane had decided that Jacks needs had to come first.\nShe was a mother first and foremost and not some patron saint of lost causes.\nThey got into a routine.\nHe would go over there twice a year, she would bring him over here twice a year, they would Skype twice a week.\nInterwoven with this painful story is the story of his relationship with music.\nHe discovered music, specifically, Bachs Chaconne for solo violin in D minor, transcribed for piano by Busoni, while still at the preparatory school where he was being so brutally abused: that piece became my safe place.\nAny time I felt anxious (any time I was awake) it was going round in my head.\nIts rhythms were being tapped out, its voices played again and again, altered, explored, experimented with.\nI dove inside it as if it were some kind of musical maze and wandered around happily lost.\nIt set me up for life; without it I would have died years ago, Ive no doubt.\nBut with it, and with all the other music that it led me to discover, it acted like a force field that only the most toxic and brutal pain could penetrate.\nAt his next preparatory school he largely taught himself to read music and play the piano.\nAt Harrow, he had his first proper teacher, who was awesome.\nHe discovered that literally the only thing in the universe I realised I wanted was to travel the world, alone, playing the piano in concert halls.\nThen he gave it up during the ten years of university, building a career and getting married.\nBut after his son was born and the demons returned, I looked for distractions.\nI looked for a way out that didnt involve homicide or suicide.\nHe found it in music.\nHe set about building a business partnership with the agent of the greatest pianist in the world, but was persuaded instead to train as a pianist himself.\nHe worked hard.\nAnd when he had begun to resort to self harm, he decided to organise his first public concert.\nHe rented a hall on the South Bank, the hall was filled, and the concert went well: I realise that all those fantasies about giving concerts that I had as a kid, that kept me alive and safe in my head, were accurate.\nIt really is that powerful.\nAnd I knew I wanted to do it forever.\nNo matter what.\nThen the suicidal ideas and attempts and hospitalisation took over.\nBut a friend visiting him in hospital brought him an iPod nano loaded with music inside a giant bottle of shampoo (toiletries being the only gifts allowed).\nOnce again music was his salvation.\nIt persuaded him to do what he needed to do to get out.\nAfter separating from his wife, he started to get more involved in the piano again.\nAnd in a caf he met the man who was to become his manager.\nTogether they arranged for him to record his first CD, Razor Blades, Little Pills and Big Pianos.\nHe found a sponsor to enable him to concentrate on his music.\nHe did a documentary about Chopin for the BBC.\nHis manager arranged concerts at the Roundhouse and the Queen Elizabeth Hall.\nTogether they devised a new sort of concert, in which the pianist talked about the music, the composer and what it meant to him, in an informal way quite unlike the usual classical music concert.\nIt was a success.\nThrough his manager he met the woman who was to become his second wife.\nThe concerts led to some press interest, including an interview with the Sunday Times in which he mentioned the abuse which had happened at school.\nThis prompted the head of the junior school in his first school, who had known that something was wrong but not what it was, to get in touch and to provide a police statement.\nMr Lee was found, still coaching small boys boxing, and prosecuted.\nBut he died before he could stand trial: Maybe one day I will forgive Mr Lee.\nThats much likelier to happen if I find a way to forgive myself.\nBut the truth, for me at any rate, is that the sexual abuse of children rarely, if ever, ends in forgiveness.\nIt leads only to self blame, visceral, self directed rage and shame But shining a light on topics like this is hugely important.\nAnd getting hundreds of supportive and grateful messages from people who had also gone through similar experiences was an indicator to me that it needs to be talked about even more.\nFrom then his career went from strength to strength.\nThere have been many concerts, all over the world.\nThere have been four more albums.\nThere was a television series for Sky Arts, Piano Man.\nThere was even talk, though it came to nothing, of his appearing in the Royal Variety Show.\nHe and his manager had found a new and different way of presenting classical music to the world and it worked.\nThere have been bad times since as well as good times Sadly I am only ever two weeks away from a locked ward but the overall message is one of hope: I lost my childhood but gained a child.\nI lost a marriage but gained a soulmate.\nI lost my way but gained a career and a fourth or fifth chance at a life which is second to none.\nThese proceedings\nDuring their divorce, the mother and father agreed to include the following recital, recital K, in a residence and contact order made in London on 15 June 2009: And upon the parties agreeing to use their best endeavours to protect the child from any information concerning the past previous history of either parent which would have a detrimental effect upon the childs\nwell being\nA first draft of the book was sent to the publishers in December 2013.\nIn February 2014 it was leaked to the mother and some changes were made as a result, including the use of pseudonyms for mother and child.\nThe mother did not consider that those changes had gone far enough.\nIn June 2014, she launched these proceedings on behalf of the child, claiming against the father and the publishers an injunction prohibiting publication without the deletion of a large number of passages.\nThe causes of action alleged were misuse of private information, negligence and the intentional infliction of harm.\nAn anonymity order was made at the same time, prohibiting the publication of any information which might lead to the identification of the child as a party to the proceedings or the subject of the information to which the proceedings related.\nAll parties have since filed evidence but there have been no findings on the factual matters in dispute.\nThe mother has filed a report from Dr Christine Tizzard, a consultant child psychologist who interviewed the child in June 2014.\nHer opinion was that he is likely to suffer severe emotional distress and psychological harm in the event that he is exposed to the material in the publication.\nThe child has been diagnosed with Aspergers syndrome, attention deficit hyperactivity disorder, dyspraxia and dysgraphia.\nHe qualifies for an Individualised Educational Program in the United States and receives specialist support and counselling.\nIn her view, the information in the book would be inappropriate for any 11 year old child to read and have access to, but it would be even more devastating for this child, because of his difficulties in processing information: his psychological schemas are not malleable, he receives information in a literal way and is unable to conceptualise it in an alternative way, and he would view himself as responsible for some of his fathers distress and an extension of his father.\nHe is already prone to self harm and emotional outbursts and these would probably increase.\nBoth parties accept that it is most unlikely that the child will come into possession of the book itself.\nThe publishers plan to publish it in hard copy in the UK and much of the rest of the English speaking world, and to retail it in shops and on line, but there are no plans at present to publish it in the USA.\nIt will also be available for purchase as an e book.\nThe father accepts that knowing what happened to him would upset and embarrass the child, but not that it will be harmful if dealt with in the right way and at the right time.\nThe bare bones of his story have already appeared in articles and interviews which are available on line.\nThe mother is concerned that the child who is proud of his father, has googled him in the past.\nIf he did so in future he would be likely to come across reviews and references to the book.\nThe application for an interim injunction came before Bean J in private in July 2014.\nHis judgment has not been published.\nHe dismissed the application and struck the proceedings out on the basis that the child had no cause of action in tort against the father or the publishers.\nHe said that there was no precedent for an order preventing a person from publishing their life story for fear of its causing psychiatric harm to a vulnerable person, nor should there be.\nHe held that a cause of action under Wilkinson v Downton did not extend beyond false or threatening words.\nThe childs appeal was heard in August 2014 and judgment given in October: [2014] EWCA Civ 1277.\nThe Court of Appeal held that there was no claim in misuse of private information or in negligence, but that the claim for intentionally causing harm should go for trial.\nThe factual issues would be the fathers intention in publishing the book, the level of harm which the child was likely to suffer and the cause of such harm.\nThe leading judgment was given by Arden LJ.\nShe held that the action under Wilkinson v Downton was not limited to false or intimidatory statements, but she considered other ways in which the tort might be kept within acceptable limits.\nShe said that it was inconceivable that the law would render all intentional statements which cause psychiatric harm actionable in damages.\nIn some cases a person may have to tell bad news which is liable to cause psychiatric harm.\nBut there may be many ways in which the court could draw the line between acceptable intentional statements or acts which cause psychiatric harm, and those which are actionable under this head (para 68).\nShe added (para 69) that it had to be shown that the act was unjustified in the sense that the defendant was not entitled to do it vis vis the particular claimant (original emphasis).\nThus she met the objection that many disturbing publications may foreseeably cause psychiatric harm to someone of sufficient vulnerability by treating the cause of action as confined to the person at whom the act was directed, and therefore the question of justification was similarly confined.\nArden LJ had noted at the outset of her judgment that the book was dedicated to the child, and the fact that the father had accepted a responsibility to use his best endeavours to ensure that OPO is protected from harmful information was sufficient in her judgment to mean that there is no justification for his words, if they are likely to produce psychiatric harm.\nAs to the mental element of the tort, Arden LJ held that the necessary intent to cause harm could be imputed to the father, since he was aware of the psychiatric evidence about the harm which his son would be likely suffer if he read some of the contents of the book.\nShe said, correctly, that there was a consistent line of authority from Wilkinson v Downton that even if a person did not intend to cause such harm, an intent to do so could be imputed to him if that was the likely consequence.\nIn a short concurring judgment Jackson LJ said that for a statement to give rise to liability under Wilkinson v Downton it need not be false.\nRather, it must meet the essential characteristics that the statement is unjustified and that the defendant intends to cause or is reckless about causing physical or psychiatric injury to the claimant.\nJackson LJ considered that the following facts were sufficient to establish that the claimant had a good prospect of success for the purposes of granting an interlocutory injunction: The book contained graphic descriptions of the abuse which the i) appellant had suffered and his incidents of self harm. ii) Those passages were likely to be quoted by reviewers or newspapers who serialised the book. iii) On the uncontradicted expert evidence those passages were likely to cause psychological harm to the claimant. iv) The book was dedicated to the claimant and partly addressed to him. v) The appellant knew of the risks posed to the claimant because of his vulnerabilities and had for that reason subscribed to Recital K. McFarlane LJ agreed with both judgments.\nThe form of order was the subject of a supplemental judgment after a further hearing in private.\nThe court granted an interim injunction, restraining the defendants from making generally available to the public by any means all or any part of the information referred to in Confidential Schedule 2 to this Order (the information) whether by publishing the particular extracts identified in Confidential Schedule 3 or by publishing any substantially similar words to like effect.\nConfidential Schedule 2 reads thus: Information referred to in the Order (1) The information or purported information that the respondents intended to publish in a book entitled Instrumental (the Book) (extracts of which are particularised in Confidential Schedule 3) which give graphic accounts of the First defendants account of sexual abuse he suffered as a child; his suicidal thoughts and attempts; his history of and treatment for mental illness and incidents of self harming; his thoughts about killing the appellant; his fears that the appellant would also be a victim of sexual abuse and linking this account to the appellant. (2) Any information liable to or which might lead to the identification of the appellant (whether directly or indirectly) as the subject of these proceedings or the material referred to above.\nIn the judgment about the form of order Arden LJ emphasised the use of word\ngraphic in the order, which she explained as follows: We take the word graphic to mean vividly descriptive.\nIn judging what is vividly descriptive, we have borne in mind that the person to be protected is a vulnerable child.\nIn these circumstances, we consider that what should be injuncted is that which we consider to be seriously liable to being understood by a child as vividly descriptive so as to be disturbing.\nConfidential Schedule 3 contains some 40 extracts from the book.\nSome fall within the general description in Confidential Schedule 2 as explained by Arden LJ and some do not.\nBy no means all the passages in the book which might be thought to fall within that general description are included.\nNowhere in the listed extracts or in the current version of the book is there mention of thoughts about killing the child.\nSome of the quotations in paras 3 to 15 above are among the 40 extracts listed; many are not.\nThe prohibition does not relate to information contained in the book apart from the Confidential Schedules or contained in the public judgment of the court.\nNor does it apply to any material which had been placed in the public domain before 1 September 2014 and either appeared on the internet in the fathers name in a form and on a site accessible at 1 September 2014 or was attributed to the father and contained in a national television programme transmitted in England within the previous 12 months.\nThe trial of the action was listed for April 2015.\nThe father and the publishers contend that on the agreed facts the child has no cause of action against them.\nWilkinson v Downton\nMr Downton secured a place for himself in legal history by a misconceived practical joke.\nHe thought that it would be a cause of harmless amusement among the clientele of the Albion public house in Limehouse to tell the landlords wife, Mrs Wilkinson, a false tale that her husband had fractured his legs in an accident while on his way back from a race meeting and that he had sent a message to ask for her help to get him home.\nIt cost her 1 shilling and 10 pence to send her son and another helper on this fools errand, but a matter of far greater concern was the effect on her health.\nShe suffered severe shock to her nervous system, which manifested itself in vomiting and weeks of physical suffering.\nMrs Wilkinson had not shown any previous sign of predisposition to nervous shock.\nShe and her husband sued Mr Downton, and the matter came to trial before Wright J and a jury.\nRecovery of the transport costs incurred in response to Mr Wilkinsons supposed request for help presented no legal difficulty.\nSuch costs were recoverable as damages for deceit.\nThe jury assessed damages for the illness caused to Mrs Wilkinson by her nervous shock (together with her husbands claim for the resulting loss of her services) at 100, but the legal basis for making such an award was problematic.\nWright J rejected the argument that damages for deceit could include an award for Mrs Wilkinsons suffering, because the essence of liability for deceit was that a maker of a false representation, intended to be acted upon, was liable to make good any loss naturally resulting from the representee acting on it, but the illness suffered by Mrs Wilkinson was not a consequence of her acting on what she was told.\nIt was simply a consequence of the shock brought about by the news reported to her.\nWright J held, at pp 58 59, that a cause of action could be stated in law where a defendant has wilfully done an act calculated to cause physical harm to the plaintiff that is to say, to infringe her legal right to personal safety, and has in fact thereby caused physical harm to her.\nHe continued That proposition without more appears to me to state a good cause of action, there being no justification alleged for the act.\nThis wilful injuria is in law malicious, although no malicious purpose to cause the harm which was caused nor any motive of spite is imputed to the defendant.\nThis compact statement of law contained a number of key features.\nFirst, he identified the plaintiffs protected interest as her legal right to personal safety.\nSecondly, he identified the defendants act as wilful.\nThirdly, he described the act as calculated to cause physical harm to the plaintiff.\nFourthly, he noted the absence of any alleged justification.\nFifthly, he characterised the wilful injuria as in law malicious despite the absence of any purpose (ie desire) to cause the harm which was caused.\nHaving stated the law in that way, Wright J then considered whether it covered Mrs Wilkinsons claim.\nHe held that it did.\nHe said: One question is whether the defendants act was so plainly calculated to produce some effect of the kind which was produced that an intention to produce it ought to be imputed to the defendant, regard being had to the fact that the effect was produced on a person proved to be in an ordinary state of health and mind.\nI think that it was.\nIt is difficult to imagine that such a statement, made suddenly and with apparent seriousness, could fail to produce grave effects under the circumstances upon any but an exceptionally indifferent person, and\ntherefore an intention to produce such an effect must be imputed\nThis passage removes any doubt that Wright J was using the word calculated in the sense of likely to have an effect of the kind which was produced, and that the result was taken in law to be intended by a process of imputation.\nThe work of modern scholars is helpful to understanding Wright Js judgment by placing it in its historical context.\nThe latter part of the 19th century was a formative period in the law of tort, as in other areas of the common law.\nThere was a movement towards general principles of liability for intentional or malicious torts, as there was also for negligence. (See Professor Oliphants chapter, The Structure of the Intentional Torts, in Emerging Issues in Tort Law, 2007, edited by Professor Neyers and others.) The first edition of Pollock on Torts was published in 1887.\nIn it he began his discussion of principles by stating it as a general proposition of English law that it is a wrong to do wilful harm to ones neighbour without lawful justification (p 21).\nHe acknowledged that this was a modern principle for which there was no express authority, but he reasoned that as the modern law of negligence enforced the duty of fellow citizens to observe in varying circumstances an appropriate measure of prudence to avoid causing harm to one another, much more must there exist, whether it be so expressed in the books or not, the negative duty of not doing wilful harm; subject, as all general duties must be subject, to the necessary exceptions (p 22).\nIn later editions he cited an obiter dictum of Bowen LJ in Skinner & Co v Shew & Co [1893] 1 Ch 413, 422 that at common law there was a cause of action whenever one person did damage to another wilfully and intentionally, and without just cause or excuse.\nWright J was familiar with Pollock on Torts and he referred to the 4th edition in Wilkinson v Downton at p 60.\nThe word maliciously was much used both in the law of tort and in criminal law.\nIn the famous case of Mogul Steamship Co Ltd v McGregor, Gow & Co (in which the plaintiffs complained about being kept out of the conference of shipowners trading between China and London) Bowen LJ said that the word had an accurate meaning, well known to the law as well as a popular and less precise signification.\nAs a legal term it meant an intention to do an act which is wrongful, to the detriment of another: (1889) 23 QBD 598, 612.\nHe continued, at p 613: Now, intentionally to do that which is calculated in the ordinary course of events to damage, and which does, in fact, damage another in that other persons property or trade, is actionable if done without just cause or excuse.\nSuch intentional action when done without just cause or excuse is what the law calls a malicious wrong (see Bromage v Prosser (1825) 4 B & C 247; Capital and Counties Bank v Henty (1882) 7 App Cas 741, 772, per Lord Blackburn).\nIn Bromage v Prosser Bayley J distinguished malice in law, inferred from the defendants intentional interference with the plaintiffs rights, from malice in fact (p 255).\nIn the Mogul Steamship case Bowen LJ held that the defendants had just cause to act as they did, because they were free to carry on their trade freely to their best advantage, and the House of Lords agreed [1892] AC 25.\nJust as absence of actual ill will was not a defence if the defendants act wilfully interfered with an interest of the plaintiff which carried a right to legal protection, conversely the existence of ill will was held not to be enough to create a cause of action in the absence of such a right.\nThis was the ratio decidendi in the celebrated case of Mayor of Bradford v Pickles [1895] AC 587, from which it followed that insofar as Bowen LJ suggested that any act of interference with anothers trade was prima facie unlawful his dictum was too wide.\nThe chief source of water supplied for the citizens of Bradford was a collection of springs on land owned by the corporation at the foot of a hillside on the outskirts of the city.\nAbove that land was a tract owned by Mr Pickles, and the springs were fed by water flowing underground from Mr Pickless land.\nMr Pickles embarked on the work of sinking a shaft on his land which had the effect of altering the flow of water and reducing the volume which fed the springs.\nThe corporation brought proceedings for an injunction to restrain him from doing the work.\nThe pleader alleged that he was acting maliciously.\nIt was argued that he was not acting for the improvement of his own land, but that he simply intended to deprive the corporation of water which it would otherwise have received, with the motive of forcing it to buy him out at a price satisfactory to himself.\nThe corporation was granted an interim injunction at first instance, but the injunction was set aside by the Court of Appeal (Lord Herschell, LC, and Lindley and AL Smith LJJ, [1895] 1 Ch 145) and the Court of Appeals judgment was upheld by the House of Lords.\nIt was held that Mr Pickles had acted throughout in accordance with his legal rights.\nThe corporation had no legal right to the flow of water from his land and, that being so, his motives were irrelevant.\nLord Halsbury LC said at p 594: This is not a case in which the state of mind of the person doing the act can affect the right to do it.\nIf it was a lawful act, however ill the motive might be, he had a right to do it.\nIf it was an unlawful act, however good his motive might be, he would have no right to do it.\nMotives and intentions in such a question as is now before your Lordships seem to me to be absolutely irrelevant.\nAll this would have been familiar to Wright J. Shortly before he gave judgment in Wilkinson v Downton he had been summoned with other judges to give his opinion to the House of Lords in the famous case of Allen v Flood [1898] AC 1.\nHe delivered his judgment in Wilkinson v Downton on 8 May 1897 and his opinion in Allen v Flood on 3 June 1897.\nIn his opinion in Allen v Flood, at [1898] AC 63, he said that in circumstances where: there was not otherwise any wrong or injuria, it follows that there could not be malice in the ordinary legal sense of that term, as compendiously stating the wilful infringement of a legal right or breach of a legal duty without matter of legal justification or excuse: upon which may be cited Bromage v Prosser [and other authorities].\nThese and other authorities show that in general wherever the term malice or maliciously forms part of a statement of a cause of action or of a crime, it imports not an inference of motive to be found by the jury, but a conclusion of law which follows on a finding that the defendant has violated a right and has done so knowingly, unless he shows some overriding justification.\nLord Herschell said in his judgment in Allen v Flood at p 124: More than one of the learned judges who were summoned refers with approval to the definition of malice by Bayley J in the case of Bromage v Prosser: Malice in common acceptation of the term means ill will against a person, but in its legal sense it means a wrongful act done intentionally without just cause or excuse.\nIt will be observed that this definition eliminates motive altogether.\nIt is interesting to compare and contrast Wright Js opinion in Allen v Flood with his judgment in Wilkinson v Downton.\nIn his opinion in Allen v Flood Wright J made the point (as the House of Lords had held in Mayor of Bradford v Pickles) that if the defendants conduct did not interfere with any right of the plaintiff, malice in its popular meaning would not be enough to create a wrong or injuria.\nBut in Wilkinson v Downton he treated the defendants wilfulness in telling a deliberate falsehood as an element of the injuria.\nThe two approaches were not incompatible, for it is perfectly possible for the law to recognise an interest deserving some form of legal protection, but to require an appropriate degree of fault for an interference with it to constitute a legal injuria; the appropriate fault element may vary, typically between negligence and intention (although they are not the only possibilities); and the measure of protection provided by the law may vary as between different types of interest (be it a persons property, trade or personal safety).\nIn Wilkinson v Downton Wright J identified the plaintiffs protected interest as her right to personal safety.\nThere may be good reasons of social policy for the law to treat a person who deliberately does something which causes another to suffer physical or psychological injury or illness by telling them a false story (Wilkinson v Downton) more harshly than one who carelessly passes on false information.\nIn the passage cited above from his opinion in Allen v Flood, Wright J referred to cases where malice forms part of a statement of a cause of action or of a crime.\nIn relation to the criminal law, Professor Mark Lunney has drawn attention in an illuminating article, Practical joking and its penalty: Wilkinson v Downton in context (2002) 10 Tort Law Review 168, 178, to the decision of the Court of Crown Cases Reserved in R v Martin (1881) 8 QBD 54.\nThe defendant caused panic in a theatre by barricading an exit door and extinguishing the gas lighting.\nIn the resulting confusion several people were seriously injured.\nHis conduct was intended as a prank, but any sane person would have realised that it was dangerous.\nThe court upheld his conviction for unlawfully and maliciously inflicting grievous bodily harm, contrary to section 20 of the Offences Against the Person Act 1861.\nLord Coleridge CJ said (at p 58): The prisoner must be taken to have intended the natural consequences of that which he did.\nHe acted unlawfully and maliciously, not that he had any personal malice against the particular individuals injured, but in the sense of doing an unlawful act calculated to injure Stephen J said (also at p 58) that: if the prisoner did that which he did as a mere piece of foolish mischief unlawfully and without excuse, he did it wilfully, that is, maliciously, within the meaning of the statute.\nThere is a striking parallel between the language and reasoning in R v Martin and in Wilkinson v Downton.\nWright Js proposition that the injuria was in law malicious, despite the absence of any malicious purpose or motive of spite contained a clear echo of the criminal law.\nHistorically the doctrine of imputed intention, that is to say that a person is to be taken as a matter of law to intend the natural and probable consequences of his acts, survived in the criminal law as late as the decision of the House of Lords in DPP v Smith [1961] AC 290.\nThe decision surprised most criminal lawyers and was described by Professor Glanville Williams in his Textbook of the Criminal Law, (1st ed) (1978), p 61, as the most criticised judgment ever to be delivered by an English court.\nThe doctrine was abolished by section 8 of the Criminal Justice Act 1967.\nThis states: A court or jury, in determining whether a person has committed an offence, (a) shall not be bound in law to infer that he intended or foresaw a result of his actions by reason only of its being a natural and probable consequence of those actions; but (b) shall decide whether he did intend or foresee that result by reference to all the evidence, drawing such inferences from the evidence as appear proper in the circumstances.\nThe final matter which Wright J addressed in his judgment in Wilkinson v Downton was whether the effect on Mrs Wilkinson of the report about her husband was, to use the ordinary phrase, too remote to be regarded in law as a consequence for which the defendant is answerable.\nHaving expressed the view that it was difficult to imagine that such a report could fail to produce grave effects, unsurprisingly he said that apart from authority he would hold that it was not too remote.\nHe then considered two authorities advanced for the proposition that illness through mental shock is a too remote or unnatural consequence of an injuria to entitle the plaintiff to recover in a case where damage is a necessary part of the cause of action: Victorian Railways Commissioners v Coultas (1888) 13 App Cas 222 and Allsop v Allsop (1860) 5 H & N 534, approved by the House of Lords in Lynch v Knight (1861) 9 HL Cas 577.\nIn Victorian Railways Commissioners v Coultas the plaintiff narrowly escaped serious injury at a level crossing.\nShe was a passenger in a buggy driven by her brother.\nThe gate keeper negligently opened the gates for them to cross when a train was approaching.\nThere was no collision, but the plaintiff was found by a jury to have suffered illness as a result of the shock of seeing the train approaching and thinking that they were going to be killed.\nThe Privy Council held that mere sudden terror unaccompanied by actual physical injury could not in such circumstances be considered a consequence which in the ordinary course would flow from the negligence of the gate keeper.\nWright J declined to follow that authority.\nHe observed that it had been doubted by the Court of Appeal (Pugh v London, Brighton and South Coast Railway Co [1896] 2 QB 248, 250, per Lord Esher MR) and had been rejected in Ireland (Bell v Great Northern Railway Co of Ireland (1890) 26 LR Ir 428, per Palles CB) and by the Supreme Court of New York (Mitchell v Rochester Railway Co (1896) 151 NY Rep 107, cited by Pollock).\nHe did not go further and express the view that it was wrong, but it was unnecessary for him to do so, for he also described the case as not in point since there was not in that case any element of wilful wrong.\nAllsop v Allsop was a case of illness allegedly caused by a slanderous imputation of unchastity to a married woman.\nThe woman heard the slander at third hand.\nIt was held that the woman could not claim special damages for her illness in an action for slander against the originator of the slander.\nWright J took a narrow view of the case as an authority on the type of damages recoverable in an action for slander.\nHe said that to adopt it as a rule of general application that illness resulting from a false statement could never give rise to a claim for damages would be difficult or impossible to defend.\nWright Js essential reasoning is clear, once the terms that he used are properly understood.\nHe did not attempt to define physical harm of a psychiatric nature, but on the facts it was unnecessary for him to say more than he did.\nWe have analysed his reasoning at some length because of the uncertainty to which it has given rise.\nSubsequent case law\nWilkinson v Downton has been a source of much discussion and debate in legal textbooks and academic articles but seldom invoked in practice.\nThis may be due to the development of the law of negligence in the area of recognised illness resulting from nervous shock.\nBut a distinctive feature of the present case is that the courts below have held that there is no arguable case against the father in negligence (applying Barrett v Enfield London Borough Council [2001] 2 AC 550), and the claimant has therefore been constrained to rely on Wilkinson v Downton.\nWilkinson v Downton was considered by the Divisional Court (Kennedy and Phillimore JJ) in Dulieu v White & Sons [1901] 2 KB 669.\nThe plaintiff was working behind the bar at the Bonner Arms in Bethnal Green when an employee of the defendant negligently drove a horse drawn van into the room where she was.\nShe was pregnant at the time and claimed damages for illness allegedly resulting from her severe shock.\nThe defendant pleaded that the damages claimed were too remote.\nThe issue came before the Divisional Court on a demurrer.\nThe court rejected the defence and declined to follow Victorian Railways Commissioners v Coultas.\nThe judges observed that the decision of the Privy Council was entitled to great respect but was no more binding on the court than it was on the Exchequer Division in Ireland.\nKennedy J put to one side cases of wilful wrong doing, such as Wilkinson v Downton, as perhaps involving special considerations.\nIn cases of negligence, he said that he was inclined to limit liability to injury from shock arising from a reasonable fear of immediate personal injury to oneself.\nPhillimore J, at p 683, said that he agreed with the decision of Wright J in Wilkinson v Downton that everyone has a right to his personal safety, and that it is a tort to destroy this safety by wilfully false statements and thereby to cause a physical injury to the sufferer.\nFrom that and other authorities he drew the principle that terror wrongfully induced and inducing physical mischief gives a cause of action.\nWilkinson v Downton was approved by the Court of Appeal in Janvier v Sweeney [1919] 2 KB 316.\nThe plaintiff was a French woman engaged to a German who was interned in the Isle of Man during World War 1.\nShe lived as the paid companion of another woman who had a house in Mayfair.\nThe defendants were an ex police officer who ran a private detective agency and his assistant.\nThe first defendant wanted to inspect surreptitiously some letters written to the plaintiffs employer.\nIn July 1917 he sent his assistant to see the plaintiff and trick her into cooperating by pretending that he was a police officer and that she was suspected of corresponding with a German spy.\nShe claimed that this caused her to suffer severe shock resulting in a period of nervous illness.\nShe sued for damages and won.\nOn the appeal it was conceded that the threatening conduct found by the jury would amount to an actionable wrong if damage which the law recognised could be shown to have flowed directly from it.\nBut it was argued that the plaintiffs illness was too remote in law and that Wilkinson v Downton was wrongly decided.\nThe court approved the reasoning of Wright J and the statement of Phillimore J in Dulieu v White that terror wrongfully induced and inducing physical mischief gives a cause of action.\nDuke LJ described Janvier v Sweeney as a stronger case than Wilkinson v Downton because there was an intention to terrify the plaintiff for the purpose of attaining an unlawful object.\nThere appear to have been no reported cases in this country on Wilkinson v Downton for the next 70 years or so.\nIn the last 25 years it has had a modest resurgence in the context of harassment: Khorasandjian v Bush [1993] QB 727; Wong v Parkside Health NHS Trust [2001] EWCA Civ 1721, [2003] 3 All ER 932; Wainwright v Home Office [2001] EWCA Civ 2081, [2002] QB 1334 (CA), [2003] UKHL 53, [2004] 2 AC 406 (HL).\nIn Khorasandjian v Bush the plaintiff obtained an injunction, in reliance on Wilkinson v Downton and Janvier v Sweeney, to prevent a former partner from making threatening phone calls.\nDillon LJ (with whom Rose LJ agreed) described those authorities as establishing that false words or verbal threats calculated to cause, uttered with the knowledge that they are likely to cause, and actually causing physical injury to the person to whom they are uttered are actionable (p 735). (This was a direct quotation from the headnote in Janvier v Sweeney.) Dillon LJ interpreted injury in the sense of recognisable psychiatric illness with or without psychosomatic symptoms, as distinct from mere emotional distress (p 736).\nIn Wong v Parkside Health NHS Trust the claimant sued her former employer for post traumatic stress resulting from alleged harassment at her place of work.\nHale LJ, giving the judgment of the court, said that it followed from Wright Js formulation in Wilkinson v Downton that although the tort is commonly labelled intentional infliction of harm, it was not necessary to prove actual (subjective) intention to injure; it was sufficient to prove that the conduct was calculated to do so in the sense of being deliberate conduct which was likely in the nature of things to cause injury (para 10).\nAs explained above, Hale LJ was correct that this was indeed the effect of Wright Js formulation, which the Court of Appeal endorsed in Janvier v Sweeney.\nWhether it should be endorsed by this court is a different question.\nHale LJ also confirmed the view expressed in Khorasandjian v Bush that for liability to arise under Wilkinson v Downton there must be physical harm or recognised psychiatric illness.\nThe interesting question is whether it should be sufficient to establish conduct intended to cause severe alarm or distress falling short of a recognised psychiatric illness but in fact causing the latter.\nThis question was touched on in Wainwright v Home Office.\nIn Wainwright v Home Office a young adult who suffered from cerebral palsy and severe arrested social and intellectual development was wrongly subjected by prison officers to a strip search, which was carried out in a particularly humiliating fashion.\nHe was greatly distressed by the episode and was subsequently diagnosed as suffering post traumatic stress disorder.\nHe claimed damages under Wilkinson v Downton.\nIt was argued on his behalf that the ambit of harm covered by the tort should extend beyond cases of recognised physical or psychiatric injury and should include distress of the kind which was the natural consequence of the prison officers treatment of him.\nIn the Court of Appeal Lord Woolf CJ said that he had no difficulty with the statement in Salmond & Heuston on Torts, (21st ed) (1996), p 215, that one who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is liable for such emotional distress, provided that bodily harm results from it: [2002] QB 1334, para 49. (This statement was taken from the American Law Institute, Restatement of the Law, Torts, (2nd ed) (1965), section 46.) But the trial judge had not made any finding that there was such intention or recklessness, and for that reason Lord Woolf held that the claim failed.\nBuxton LJ agreed that the claim failed on the facts, but he disagreed with the formulation in Salmond & Heuston.\nHe considered that the headnote in Janvier v Sweeney, adopted by Dillon LJ in Khorasandjian v Bush, came as close as it is possible to do to a general statement of the rule in Wilkinson v Downton (para 79).\nBut if that was not correct, he held that the rule must be limited to Wright Js statement that the defendants act was so clearly likely to produce an effect of the kind that occurred that an intention to produce it should be imputed to him (objective recklessness).\nThe reformulation in Khorasandjian v Bush required subjective recklessness as to the causation of physical injury in the sense of recognisable psychiatric distress.\nIntention or recklessness merely as to severe emotional distress, from which bodily harm happened to result, was not enough.\nBuxton LJ regarded the court in Wongs case as treating the two formulations as equivalent in their effect.\nIn the House of Lords the principal judgment was given by Lord Hoffmann.\nHis analysis of Wilkinson v Downton was that Wright J was prevented by the decision of the Privy Council in Victorian Railway Commissioners v Coultas from finding in negligence, and Wright J devised a concept of imputed intention which sailed as close to negligence as he felt that he could; that it was not entirely clear what he meant by finding that the defendant intended to cause injury; but that by the time of Janvier v Sweeney the law was able comfortably to accommodate the facts of Wilkinson v Downton, since the court in Dulieu v White had declined to follow Victorian Railway Commissioners v Coultas. (See paras 44, 37 and 39 to 40.)\nThis interesting reconstruction shows the pitfalls of interpreting a decision more than a century earlier without a full understanding of jurisprudence and common legal terminology of the earlier period.\nThe concept of imputed intention was certainly not a novel concept devised by Wright J to get around a perceived stumbling block in the law of negligence.\nThe concept was in the mainstream of legal thinking at that time.\nMoreover there is no reason for supposing that Wright J would have felt obliged to follow the decision of the Privy Council unless he could find a means of distinguishing it.\nHe pointed out that it had been doubted by the Court of Appeal, was inconsistent with a decision of the Court of Appeal in Ireland and had been criticised in the USA and by Pollock.\nJust as Kennedy and Phillimore JJ said in Dulieu v White that they were not bound by the decision of the Privy Council, Wright J would have known that he was not bound to follow it as a matter of precedent (and respect for it would have been reduced by the comments of the eminent judges, Lord Esher and Palles, CB, who had either doubted it or judged it to be wrong).\nThere is no reason to suppose that Wright J was being artful when he described the Privy Councils decision as not in point because it did not involve wilful wrongdoing.\nHis reasoning may seem unclear to modern readers, but it would not have been unclear to those familiar at the time with his use of the terms malicious, calculated and imputed.\nIt is also incorrect to suggest that after Dulieu v White the law would have comfortably accommodated the facts of Wilkinson v Downton within the law of nervous shock caused by negligence.\nKennedy Js judgment in Dulieu v White would have limited a cause of action in negligence for damages for nervous shock to cases in which the nervous shock resulted from fear for the plaintiffs own personal safety, which would not have included Mrs Wilkinsons case, since her fear was for her husband.\nThis limitation was disapproved by a majority of the Court of Appeal in Hambrook v Stokes Brothers [1925] 1 KB 141 (Sargant LJ dissenting) and was finally put to rest in McLoughlin v OBrian [1983] 1 AC 410.\nIn any event negligence and intent are very different fault elements and there are principled reasons for differentiating between the bases (and possible extent) of liability for causing personal injury in either case.\nLord Hoffmann rejected the argument on behalf of Mr Wainwright that there should be liability under Wilkinson v Downton for distress, not amounting to recognised psychiatric injury, on the basis of imputed intent.\nHe said at para 45: If one is going to draw a principled distinction which justifies abandoning the rule that damages for mere distress are not recoverable, imputed intention will not do.\nThe defendant must actually have acted in a way which he knew to be unjustifiable and either intended to cause harm or at least acted without caring whether he caused harm or not.\nLord Hoffmann said that he read Lord Woolfs judgment as suggesting a willingness to accept such a principle, but that the facts did not support it.\nAs we read Lord Woolfs judgment, the proposition from Salmond & Heuston which he was willing to accept was slightly different.\nIt was that damages should be recoverable only in cases where the claimant suffered recognised bodily or psychiatric injury (and not mere emotional distress), but that in order to be entitled to damages for such injury it should be sufficient to show that the injury resulted from severe emotional distress which was intentionally or recklessly caused by the defendants outrageous conduct.\nLord Hoffmann was open to the idea that compensation should be available in cases where there was a genuine intention to cause distress, but he added a strong note of caution.\nHe observed that in institutions and workplaces all over the country, people constantly say and do things with the intention of causing distress and humiliation to others.\nThis, he said at para 46, shows lack of consideration and appalling manners but I am not sure that the right way to deal with it is always by litigation.\nHe referred also to the Protection from Harassment Act 1997, which provides a remedy in damages for a course of conduct amounting to harassment.\nHe observed that the requirement of a course of conduct showed that Parliament was conscious that it might not be in the public interest to allow the law to be set in motion for one boorish incident, and that it might be that any development of the common law should show similar caution (para 46).\nLord Hoffmann concluded that Wilkinson v Downton as an authority did not provide a remedy for distress falling short of recognised psychiatric injury, and that in so far as there might be a remedy for distress (without psychiatric injury) intentionally caused, the necessary intention was not established (para 47).\nOther common law jurisdictions\nMost common law jurisdictions have adopted Wilkinson v Downton.\nIn Australia it was cited with approval by the High Court in Bunyan v Jordan (1937) 57 CLR 1.\nDespite some later cases in which the courts have tended to treat it as subsumed within the law of negligence, Spigelman CJ in the New South Wales Court of Appeal treated it as an intentional tort in Nationwide News Pty Ltd v Naidu [2007] NSWCA 377, paras 71 72.\nIt has also been followed in New Zealand (Stevenson v Basham [1922] NZLR 225; Bradley v Wingnut Films Ltd [1993] 1 NZLR 415), Ireland (Sullivan v Boylan [2013] IEHC 104) and Hong Kong (Wong Kwai Fun v Li Fung [1994] 1 HKC 549).\nIn the USA and Canada there has been significant further development.\nThe American Law Institutes Restatement of the Law: Torts (2nd ed) (1965), section 46(1) stated: One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress, and if bodily harm to the other results from it, for such bodily harm. 45 states accepted this definition and others adopted a modified version of it. (See R Fraker, Reformulating Outrage: a critical analysis of the problematic tort of IEED (2008) 61 Vand L Rev 983.) In the Restatement (Third) of Torts: Liability for Physical and Emotional Harm (2012) the wording of section 46 is marginally different but the meaning is unchanged: An actor who by extreme and outrageous conduct intentionally or recklessly causes severe emotional harm to another is subject to liability for that emotional harm and, if the emotional harm causes bodily harm, also for the bodily harm.\nThe commentary to the current version states: The outrage tort originated as a catchall to permit recovery in the narrow instance when an actors conduct exceeded all permissible bounds of a civilized society but an existing tort claim was unavailable.\nThis tort potentially encompasses a broad swath of behaviour and can easily, but often inappropriately, be added as a supplement to a suit in which the gravamen is another tort or a statutory violation.\nThe intent requirement is satisfied when an actor knows that conduct is substantially certain to cause harm.\nBecause emotional harm is often a predictable outcome of otherwise legitimate conduct, such as terminating an employee, liability for this tort could be expansive.\nCourts have played an especially critical role in cabining this tort by requiring extreme and outrageous conduct and severe emotional harm.\nA great deal of conduct may cause emotional harm, but the requisite conduct for this claim extreme and outrageous describes a very small slice of human behaviour.\nThe requirement that the resulting harm be severe further limits claims.\nThese limits are essential in preventing this tort from being so broad as to intrude on important countervailing policies, while permitting its judicious use for the occasions when it is appropriate.\nIn Canada it is settled law that The tort of intentional infliction of mental distress or shock has three elements: (1) an act or statement that is extreme, flagrant or outrageous; (2) the act or statement is calculated to produce harm; and (3) the act or statement causes harm (High Parklane Consulting Inc v Lewis (2007) Can LII 410, para 31, per Perell J).\nThis three limbed test is derived from a line of earlier authorities including particularly the decision of McLachlin J, sitting as she then was in the British Columbia Supreme Court, in Rahemtulla v Vanfed Credit Union [1984] 3 WWR 296.\nIn that case the plaintiff was harassed at work, falsely accused of theft in threatening circumstances and summarily dismissed without proper cause in a humiliating fashion.\nThe defendant submitted that to be liable for wilful infliction of nervous shock its conduct must be outrageous.\nMcLachlin J said, at para 52: This submission appears to be founded on the distinction drawn in American cases between mere insult, which is not actionable, and extreme and outrageous conduct which is: Linden: Canadian Tort Law (3rd ed) (1982), p 48.\nWhile this distinction appears not to have been expressly adopted in the Canadian and Commonwealth cases, the conduct considered in the leading authorities such as Wilkinson v Downton, and Janvier v Sweeney, was in fact flagrant and extreme.\nMoreover, it is difficult to accept that the courts should protect persons from every practical joke or unkind comment.\nMcLachlin J said that assuming that only flagrant and extreme conduct inflicting mental suffering was actionable, the defendants conduct could be so described.\nShe identified the two further ingredients of the tort as being: that the conduct was plainly calculated to produce some effect of the kind which was produced (quoting from Wright Js judgment in Wilkinson v Downton), and that the conduct produced provable illness.\nShe found that the conduct was plainly calculated to cause profound distress because it was clearly foreseeable.\nSince that decision the courts have followed the approach of imputing the necessary intention where severe emotional distress was foreseeable (see Professor Denise Raumes chapter, The Role of Intention in the Tort in Wilkinson v Downton, in Emerging Issues in Tort Law).\nAnalysis\nThe order made by the Court of Appeal was novel in two respects.\nThe material which the appellant was banned from publishing was not deceptive or intimidatory but autobiographical; and the ban was principally directed, not to the substance of the autobiographical material, but to the vivid form of language used to communicate it.\nThe appeal therefore raises important questions about freedom of speech and about the nature and limits of liability under Wilkinson v Downton.\nIn Wilkinson v Downton Wright J recognised that wilful infringement of the right to personal safety was a tort.\nIt has three elements: a conduct element, a mental element and a consequence element.\nThe issues in this case relate to the first and second elements.\nIt is common ground that the consequence required for liability is physical harm or recognised psychiatric illness.\nIn Wainwright v Home Office Lord Hoffmann discussed and left open (with expressions of caution) the question whether intentional causation of severe distress might be actionable, but no one in this case has suggested that it is.\nThe conduct element requires words or conduct directed towards the claimant for which there is no justification or reasonable excuse, and the burden of proof is on the claimant.\nWe are concerned in this case with the curtailment of freedom of speech, which gives rise to its own particular considerations.\nWe agree with the approach of the Court of Appeal in regarding the tort as confined to those towards whom the relevant words or conduct were directed, but they may be a group.\nA person who shouts fire in a cinema, when there is no fire, is addressing himself to the audience.\nIn the present case the Court of Appeal treated the publication of the book as conduct directed towards the claimant and considered that the question of justification had therefore to be judged vis vis him.\nIn this respect we consider that they erred.\nThe book is for a wide audience and the question of justification has to be considered accordingly, not in relation to the claimant in isolation.\nIn point of fact, the fathers case is that although the book is dedicated to the claimant, he would not expect him to see it until he is much older.\nArden LJ said that the father could not be heard to say that he did not intend the book to reach the child, since it was dedicated to him and some parts of it are addressed to him.\nWe have only found one passage addressed to him, which is in the acknowledgments, but more fundamentally we do not understand why the appellant may not be heard to say that the book is not intended for his eyes at this stage of his life.\nArden LJ also held that there could be no justification for the publication if it was likely to cause psychiatric harm to him.\nThat approach excluded consideration of the wider question of justification based on the legitimate interest of the defendant in telling his story to the world at large in the way in which he wishes to tell it, and the corresponding interest of the public in hearing his story.\nWhen those factors are taken into account, as they must be, the only proper conclusion is that there is every justification for the publication.\nA person who has suffered in the way that the appellant has suffered, and has struggled to cope with the consequences of his suffering in the way that he has struggled, has the right to tell the world about it.\nAnd there is a corresponding public interest in others being able to listen to his life story in all its searing detail.\nOf course vulnerable children need to be protected as far as reasonably practicable from exposure to material which would harm them, but the right way of doing so is not to expand Wilkinson v Downton to ban the publication of a work of general interest.\nBut in pointing out the general interest attaching to this publication, we do not mean to suggest that there needs to be some identifiable general interest in the subject matter of a publication for it to be justified within the meaning of Wilkinson v Downton.\nFreedom to report the truth is a basic right to which the law gives a very high level of protection. (See, for example, Napier v Pressdram Ltd [2009] EWCA Civ 443, [2010] 1 WLR 934, para 42.) It is difficult to envisage any circumstances in which speech which is not deceptive, threatening or possibly abusive, could give rise to liability in tort for wilful infringement of anothers right to personal safety.\nThe right to report the truth is justification in itself.\nThat is not to say that the right of disclosure is absolute, for a person may owe a duty to treat information as private or confidential.\nBut there is no general law prohibiting the publication of facts which will cause distress to another, even if that is the persons intention.\nThe question whether (and, if so, in what circumstances) liability under Wilkinson v Downton might arise from words which are not deceptive or threatening, but are abusive, has not so far arisen and does not arise for consideration in this case.\nThe Court of Appeal recognised that the appellant had a right to tell his story, but they held for the purposes of an interlocutory injunction that it was arguably unjustifiable for him to do so in graphic language.\nThe injunction permits publication of the book only in a bowdlerised version.\nThis presents problems both as a matter of principle and in the form of the injunction.\nAs to the former, the books revelation of what it meant to the appellant to undergo his experience of abuse as a child, and how it has continued to affect him throughout his life, is communicated through the brutal language which he uses.\nHis writing contains dark descriptions of emotional hell, self hatred and rage, as can be seen in the extracts which we have set out.\nThe reader gains an insight into his pain but also his resilience and achievements.\nTo lighten the darkness would reduce its effect.\nThe court has taken editorial control over the manner in which the appellants story is expressed.\nA right to convey information to the public carries with it a right to choose the language in which it is expressed in order to convey the information most effectively. (See Campbell v MGN Ltd [2004] UKHL 22, [2004] 2 AC 457, para 59, and In re Guardian News and Media Ltd [2010] UKSC 1, [2010] 2 AC 697, para 63)\nThe problem with the form of the injunction is that Schedule 2 defines the information which it is forbidden to publish not only by reference to its substantive content, but also by the descriptive quality of being graphic.\nWhat is sufficiently graphic to fall within the ban is a matter of impression.\nThe amplification of graphic in the courts supplementary judgment as meaning seriously liable to being understood by a child as vividly descriptive so as to be disturbing similarly lacks the clarity and certainty which an injunction properly requires.\nAny injunction must be framed in terms sufficiently specific to leave no uncertainty about what the affected person is or is not allowed to do.\nThe principle has been stated in many cases and nowhere more clearly than by Lord Nicholls in Attorney General v Punch Ltd [2002] UKHL 50, [2003] 1 AC 1046 at para 35: An interlocutory injunction, like any other injunction, must be expressed in terms which are clear and certain.\nThe injunction must define precisely what acts are prohibited.\nThe court must ensure that the language of its order makes plain what is permitted and what is prohibited.\nThis is a well established, soundly based principle.\nA person should not be put at risk of being in contempt of court by an ambiguous prohibition, or a prohibition the scope of which is obviously open to dispute.\nOur conclusion that the publication of the appellants book is not within the scope of the conduct element of the tort is enough to decide this case.\nHowever, the issue of the mental element required for the tort has been argued before us and it is right that we should address it.\nThe Court of Appeal found that the necessary intention could be imputed to the appellant.\nThe court cannot be criticised for doing so, since it was bound by previous decisions of the court which upheld that approach (in particular, Janvier v Sweeney and Wong v Parkside Health NHS Trust).\nThere is a critical difference, not always recognised in the authorities, between imputing the existence of an intention as a matter of law and inferring the existence of an intention as a matter of fact.\nImputation of an intention by operation of a rule of law is a vestige of a previous age and has no proper role in the modern law of tort.\nIt is unsound in principle.\nIt was abolished in the criminal law nearly 50 years ago and its continued survival in the tort of wilful infringement of the right to personal safety is unjustifiable.\nIt required the intervention of Parliament to expunge it from the criminal law, but that was only because of the retrograde decision in DPP v Smith.\nThe doctrine was created by the courts and it is high time now for this court to declare its demise.\nThe abolition of imputed intent clears the way to proper consideration of two important questions about the mental element of this particular tort.\nFirst, where a recognised psychiatric illness is the product of severe mental or emotional distress, a) is it necessary that the defendant should have intended to cause illness or b) is it sufficient that he intended to cause severe distress which in fact results in recognisable illness? Option b) is close to the version stated by Salmond & Heuston which attracted Lord Woolf in Wainwright v Home Office.\nSecondly, is recklessness sufficient and, if so, how is recklessness to be defined for this purpose? Recklessness is a word capable of different shades of meaning.\nIn everyday usage it may include thoughtlessness about the likely consequences in circumstances where there is an obvious high risk, or in other words gross negligence.\nIn R v G [2003] UKHL 50, [2004] 1 AC 1034, the House of Lords construed recklessly in the Criminal Damage Act 1971 as meaning that A person acts recklessly with respect to a result when he is aware of a risk that it will occur; and it is, in the circumstances known to him, unreasonable to take the risk.\nThe House of Lords based its interpretation on the definition proposed by the Law Commission in clause 18(c) of the Criminal Code Bill annexed to its Report on Criminal Law: A Criminal Code for England and Wales and Draft Criminal Code Bill, Vol 1 (Law Com No 177, 1989).\nA similar definition of recklessness was included in a draft Bill for reforming the law of offences against the person, which the Government published in 1998 but did not take forward.\nThe Law Commission has repeated its proposal in a scoping consultation paper on Reform of Offences against the Person (LCCP 217, 2015).\nThe exact wording of its proposed definition is: A person acts recklessly with respect to a result if he is aware of a risk that it will occur and it is unreasonable to take that risk having regard to the circumstances as he knows or believes them to be.\nIn thinking about these questions it is pertinent to consider the practical implications.\nSuppose that a hostage taker demands money from the family of the hostage (H) for his safe release, or that a blackmailer threatens harm to a person unless the family of the victim (V) meets his demands.\nThe wife or parent of H or V suffers severe distress causing them to develop a recognised psychiatric illness.\nWe doubt that anyone would dispute that in those circumstances the hostage taker or blackmailer ought to be held liable for the consequences of his evil conduct.\nThere would be no difficulty in inferring as a matter of fact that he intended to cause severe distress to the claimant; it was the means of trying to achieve his demand.\nBut the wrongdoer may not have had the intention to cause psychiatric illness, and he may well have given no thought to its likelihood.\nCompare that scenario with an example at the other end of the spectrum.\nThe defendant has a dispute with his neighbour.\nTempers become flared and he makes a deliberately insulting remark.\nHe intends it to be upsetting, but he does not anticipate or intend that the neighbour will suffer severe emotional distress.\nUnfortunately the episode and in particular the insult have that effect, and the distress leads to a recognised form of psychiatric illness.\nIt would be disproportionate to hold the defendant liable when he never intended to cause the neighbour to be seriously upset.\nOur answer to the first question is that of option (b) (para 83 above).\nOur answer to the second question is not to include recklessness in the definition of the mental element.\nTo hold that the necessary mental element is intention to cause physical harm or severe mental or emotional distress strikes a just balance.\nIt would lead to liability in the examples in para 85 but not in the example in para 86.\nIt means that a person who actually intends to cause another to suffer severe mental or emotional distress (which should not be understated) bears the risk of legal liability if the deliberately inflicted severe distress causes the other to suffer a recognised psychiatric illness.\nA loose analogy may be drawn with the egg shell skull doctrine, which has an established place in the law of tort.\nThis formulation of the mental element is preferable to including recklessness as an alternative to intention.\nRecklessness was not a term used in Wilkinson v Downton or Janvier v Sweeney and it presents problems of definition.\nThe Law Commissions definition would be clear, but it would not cover the example of the hostage taker or the blackmailer, because it would require proof of actual foresight of the risk of the claimant suffering psychiatric illness.\nIt would be possible to limit liability for the tort to cases in which the defendants conduct was extreme, flagrant or outrageous, as in Canada.\nBut this argument has not so far been advanced in this country, and, although Arden LJ adverted to it as a possibility, the appellant has not sought to pursue it.\nWe are inclined to the view, which is necessarily obiter, that the tort is sufficiently contained by the combination of a) the conduct element requiring words or conduct directed at the claimant for which there is no justification or excuse, b) the mental element requiring an intention to cause at least severe mental or emotional distress, and c) the consequence element requiring physical harm or recognised psychiatric illness.\nIn the present case there is no basis for supposing that the appellant has an actual intention to cause psychiatric harm or severe mental or emotional distress to the claimant.\nWe conclude that there is no arguable case that the publication of the book would constitute the requisite conduct element of the tort or that the appellant has the requisite mental element.\nOn both grounds the appeal must be allowed and the order of Bean J restored.\nLORD NEUBERGER: (with whom Lord Wilson agrees)\nI agree that this appeal should be allowed for the reasons given by Lady Hale and Lord Toulson.\nBecause the issue involved is of importance and could raise some points of difficulty in other cases, I add some remarks of my own.\nThere are various familiar circumstances in which a defendant can be liable to a claimant as a result of a statement made by the defendant.\nExamples include a statement which is unlawful statutorily, a breach of contract, defamatory, a breach of duty because of a pre existing relationship, and a statement which amounts to misuse of information or a breach of the claimants confidence, copyright, or right to privacy.\nThis appeal concerns the circumstances in which a claimant has a cause of action for distress or psychiatric illness which he suffers as a result of a statement made by the defendant, where the statement would not otherwise give rise to a claim.\nIt is a fundamental issue, and, particularly given the importance attached to both freedom of expression and human dignity, it can raise questions which are difficult to resolve.\nHaving said that, the answer to the question whether there is a valid claim in the present case appears to me to be quite plain.\nThe facts of this case are fully set out by Lady Hale and Lord Toulson in paras 1 30 above.\nI agree that the interlocutory injunction granted by the Court of Appeal was flawed for two reasons.\nFirst, there should have been no injunction at all, because the claimants claim to restrain publication of the defendants book had no prospects of success.\nSecondly, the terms of the injunction were flawed both conceptually and procedurally.\nThe claimants claim had no prospects of success because publication of the defendants book would plainly not have given rise to a cause of action in his favour.\nIt is true that the claimant is the defendants son and is psychologically vulnerable, and it was argued in the Court of Appeal that this relationship gave rise to a duty of care on the part of the defendant which publication of the book would breach.\nHowever, as the Court of Appeal rightly held, that argument cannot assist the claimant in this case see the reasoning of Arden LJ at [2014] EWCA Civ 1277, paras 48 57, upholding the conclusion of Bean J at first instance on this aspect.\nThere is, rightly, no appeal on that ground.\nOnce that ground is disposed of, it appears to me that the books contents simply have nothing to do with the claimant, at least from a legal perspective.\nThe book describes the defendants searing experiences of sexual abuse as a boy and its consequential effects.\nIt is true, that the book is dedicated to the claimant and it expresses fears about the claimant being at risk of abuse as a child, but the furthest that that point could go would be to negative the idea that the defendant could have been unaware of the fact that the contents of the book would come to the claimants attention at some point (which was unsurprisingly not in issue anyway).\nWhile I agree that many people would regard the book as being in some respects in the public interest, it is not necessary to decide this appeal on that ground.\nUnless it is necessary to do so, I am unenthusiastic about deciding whether a book, or any other work, should be published by reference to a judges assessment of the importance of the publication to the public or even to the writer.\nIn the present case, I do not consider that it would make any difference if the experiences which the defendant describes could be shown to have been invented, or if the book had been written as a novel by someone who had not been sexually abused.\nIt is true that the book contained material which some people might find offensive, in terms of what was described and how it was expressed, but free speech includes not only the inoffensive but the irritating, the contentious, the eccentric, the heretical, the unwelcome and the provocative provided it does not tend to provoke violence see Redmond Bate v Director of Public Prosecutions (1999) 7 BHRC 375, para 20, per Sedley LJ.\nAs he memorably added, [f]reedom only to speak inoffensively is not worth having.\nQuite apart from this, it would, I think, be an inappropriate restriction on freedom of expression, an unacceptable form of judicial censorship, if a court could restrain publication of a book written by a defendant, whose contents could otherwise be freely promulgated, only refer in general and unobjectionable terms to the claimant, and are neither intended nor expected by the defendant to harm the claimant, simply because the claimant might suffer psychological harm if he got to read it (or extracts from it).\nWhatever the nature and ingredients of the tort whose origin can be traced to Wilkinson v Downton [1897] 2 QB 57, it therefore cannot possibly apply in this case.\nAnd that, at least in a narrow sense, is in my view the beginning and the end of this case.\nAs to the terms of the injunction, the Court of Appeal accepted that the defendant should be entitled to describe the ordeals which he had undergone.\nHowever, they decided that he could not publish certain specified passages in his book or any other accounts of his ordeals in so far as those accounts were graphic, a description which was explained by Arden LJ as meaning seriously liable to being understood by a child as vividly descriptive so as to be disturbing.\nThere are two problems with such a form of injunction.\nFirst, it treats the terms in which events are described in the book as detachable from the inclusion of the events themselves.\nFreedom of expression extends not merely to what is said but also to how it is said.\nWhether a communication is made orally or in writing, the manner or style in which it is expressed can have a very substantial effect on what is actually conveyed to the listener or reader.\nOne cannot realistically detach style from content in law any more than one can do so in literature or linguistic philosophy.\nI agree with what is said in para 78 above in this connection.\nThe second problem with the form of injunction granted by the Court of Appeal is that it is insufficiently specific, and in that connection there is nothing which I wish to add to what is said in para 79 above.\nIt would not, however, be right to leave matters there, in the light of the decision in Wilkinson (on which the Court of Appeal relied) and the subsequent cases in this and other common law jurisdictions, discussed by Lady Hale and Lord Toulson in paras 51 71 above.\nIn Wilkinson, the defendant was held liable to a plaintiff for severe mental distress caused to her by an untrue statement, which was misconceivedly intended as a cruel joke, namely that her husband had suffered serious injuries in an accident.\nThe way in which the trial judge, Wright J, expressed himself in his judgment must, like all statements, be seen in its context, and that context is illuminatingly explained in paras 34 50 above.\nGiven that there was a valid claim in that case and there is none in this case, it raises the question as to the characterisation of the tort in question, which could perhaps be characterised as the tort of making distressing statements.\nThe tort has been identified as terror wrongfully induced and inducing physical mischief (see Dulieu v White & Sons [1901] 2 KB 669, 683 and Janvier v Sweeney [1919] 2 KB 316, 322).\nHowever, I am not happy with that characterisation, as it lumps together physical actions and statements, it begs the question by the use of the word wrongful, and it is limited to terror, and, as explained below, I would leave open whether physical mischief is a necessary ingredient.\nWhile I would certainly accept that an action not otherwise tortious which causes a claimant distress could give rise to a cause of action, I would be reluctant to decide definitively that liability for distressing actions and distressing words should be subject to the same rules, at this stage at any rate.\nThere is of course a substantial overlap between words and actions: after all, words can threaten or promise actions, and freedom of expression can in some respects extend to actions as well as words.\nAnd, in the light of what I say below, it might be the case that the tort of making distressing statements is to be limited to statements which are the verbal equivalent of physical assaults.\nHowever, there are relevant differences between words and actions.\nThe reasons for a difference in legal treatment between liability for actions and liability for words were identified by Lord Reid, Lord Devlin and Lord Pearce in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, 482 483, 516 519 and 534 respectively.\nIn order to decide when a statement, which is not otherwise tortious, and which causes a claimant distress, should be capable of founding a cause of action, it is necessary to bear in mind five points, some of which are in tension.\nFirst, that there must be circumstances in which such a cause of action should exist: the facts of Wilkinson and Janvier make that point good.\nSecondly, given the importance of freedom of expression, which includes the need to avoid constraining ordinary (even much offensive) discourse, it is vital that the boundaries of the cause of action are relatively narrow.\nThirdly, because of the importance of legal certainty, particularly in the area of what people can say, the tort should be defined as clearly as possible.\nFourthly, in the light of the almost literally infinite permutations of possible human interactions, it is realistic to proceed on the basis that it may well be that no set of parameters can be devised which would cater for absolutely every possibility.\nFifthly, given all these factors, there will almost inevitably be aspects of the parameters on which it would be wrong to express a concluded view, and to let the law develop in a characteristic common law way, namely on a case by case basis.\nIn other words, the tort exists, and should be defined narrowly and as clearly as possible, but it would be dangerous to say categorically that each ingredient of the tort must always be present.\nNonetheless, it seems to me that it is worth identifying what are, at least normally, and hopefully almost always, the essential ingredients of the tort.\nWilkinson and Janvier were cases where the statement made by the defendant was untrue, gratuitous, intended to distress the plaintiff, directed at the plaintiff, and caused the plaintiff serious distress amounting to psychiatric illness.\nClearly, where all these ingredients are present, the tort would be established, but the question is whether they are all strictly required.\nFirst, if it is possible at all, it will be a very rare case where a statement which is not untrue could give rise to a claim, save, perhaps where the statement was a threat or (possibly) an insult.\nSometimes, a threat will be unlawful anyway: for instance a threat of immediate assault or a blackmail.\nIn some cases there is statutory liability for an offensive statement.\nThus, a statement may be covered by the Protection from Harassment Act 1997 (as amended) which provides for both civil remedies (section 3) and criminal liability (sections 2, 2A, 4, 4A).\nSimilarly Part IV of the Family Law Act 1996 (as amended) allows a court to make an order to protect an individual from molestation, and provides that the breach of such an order is a criminal offence.\nHarassment requires a course of action, so I do not think that a one off statement could be caught by the 1997 Act.\nSection 4A of the Public Order Act 1986 (added by the Public Order Act 1994) provides that it is an offence to use threatening, abusive or insulting words or behaviour which causes harassment, alarm or distress and which is intended to have that effect.\nHowever, section 4A only creates a criminal offence, and it does not apply where the words are used by a person inside a dwelling and the person who is harassed, alarmed or distressed is also inside that or another dwelling.\nFurther, section 1 of the Malicious Communications Act 1988 criminalises communications which are grossly offensive, a threat or known to be false if at least one of the purposes is to cause distress or anxiety, unless the sender had reasonable grounds, but it does not appear to give rise to civil liability.\nAnd section 127 of the Communications Act 2003 criminalises electronic sending of grossly offensive or menacing messages, or false messages for the purpose of causing annoyance, inconvenience or needless anxiety to another, but it is limited to electronic communications and appears to give rise to no civil liability.\nI do not consider that this is a case where it can be said that Parliament has intervened in such terms that the common law should, as it were, keep out.\nAfter all, Parliament has not legislated so as to cover, or to suggest disapproval of, claims in tort based on one off distressing statements as in Wilkinson and Janvier.\nOn the contrary, the last 20 years have seen legislation which actually suggests that the legislature considers it appropriate for the courts to be involved, albeit in relatively limited and extreme cases, where words are used offensively.\nThis does not, of course, mean that every untruthful statement, threat or insult could give rise to a claim.\nBecause of the importance of freedom of expression and of the law not impeding ordinary discourse, there must be a second and demanding requirement which has to be satisfied before liability can attach to an untruth, an insult or a threat which was intended to, and did, cause distress, but would not otherwise be civilly actionable.\nLady Hale and Lord Toulson have suggested a test of justification or reasonable excuse in paras 74 76 above, and I have used the adjective gratuitous in para 106 above.\nNeither description is ideal as it can be said to be question begging (virtually every threat, untruth or insult can be said to be unjustified, inexcusable and gratuitous), and it involves a subjective assessment.\nThere may be something to be said for the adjectives outrageous, flagrant or extreme, which seem to have been applied by the US and Canadian courts (discussed in paras 69 71 above).\nOf course, even with a test of outrageousness a subjective judgment will be involved to some extent, but that cannot be avoided.\nAs mentioned, it seems to me to be vital that the tort does not interfere with the give and take of ordinary human discourse (including unpleasant, heated arguments, whether in domestic, social, business or other contexts, sometimes involving the trading of insults or threats), or with normal, including trenchant, journalism and other writing.\nInevitably, whether a particular statement is gratuitous must depend on the context.\nAn unprompted statement made simply because the defendant wanted to say it or because he was inspired by malice, as in Janvier, or something very close to malice, as in Wilkinson, may be different from the same statement made in the course of a heated argument, especially if provoked by a series of wounding statements by the defendant.\nSimilarly, it would be wrong for this tort to be invoked to justify relief against a polemic op ed newspaper article or a strongly worded and antipathetic biography, save in the most unusual circumstances.\nThe tort should not somehow be used to extend or supplement the law of defamation.\nThirdly, I consider that there must be an intention on the part of the defendant to cause the claimant distress.\nThis requirement might seem at first sight to be too narrow, not least because it might appear that it would not have caught the defendant in Wilkinson: he merely intended his cruel statement as a joke.\nHowever, the fact that a statement is intended to be a joke is not inconsistent with the notion that it was intended to upset.\nHow, it might be asked rhetorically, could Mr Downton not have intended to cause the apparently happily married Mrs Wilkinson significant distress by falsely telling her that her husband had been very seriously injured? That was the very purpose of the so called joke.\nThere are statements (and indeed actions) whose consequences or potential consequences are so obvious that the perpetrator cannot realistically say that those consequences were unintended.\nIntentionality may seem to be a fairly strict requirement, as it excludes not merely negligently harmful statements, but also recklessly harmful statements.\nHowever, in agreement with Lady Hale and Lord Toulson, I consider that recklessness is not enough.\nIn truth, I doubt it would add much.\nFurther, in practice, recklessness is a somewhat tricky concept.\nQuite apart from this, bearing in mind the importance of freedom of expression and of the law not sticking its nose into human discourse except where necessary, it appears to me that the line should be drawn at intentionality.\nI am inclined to think that distressing the claimant has to be the primary purpose, but I do not consider that it need be the sole purpose.\nThe degree of distress which is actually intended must be significant, and not trivial, and it can amount to feelings such as despair, misery, terror, fear or even serious worry.\nBut it plainly does not have to amount to a recognised psychiatric disease (even if such disease is an essential ingredient, as to which see below).\nIt is, I think, hard to be more specific than that.\nFourthly, the statement must, I think, be directed at the claimant in order to be tortious.\nIn most cases this will add nothing to the requirements already mentioned.\nHowever, I would have thought that a statement which is aimed at upsetting a large group of addressees, without any particular individual (or relatively small group of individuals) in mind, should not be caught.\nThen there is the question as to whether a claimant can only bring an action if he suffers distress to a sufficient degree to amount to a recognised illness or condition (whether psychological or physiological assuming that the distinction is a valid one).\nLike Lord Hoffmann in Wainwright v Home Office [2003] UKHL 53, [2004] 2 AC 406, I consider that there is much to be said for the view that the class of potential claimants should not be limited to those who can establish that they suffered from a recognised psychiatric illness as a result of the actionable statement of the defendant.\nSuch a limitation seems to have been imposed by Kennedy J at pp 672 673 in Dulieu, when he referred to terror which operates through parts of the physical organism to produce bodily illness.\nHowever, that was a case involving a negligent act, and, as already explained, I am unconvinced that it involved the same tort as Wilkinson, although it was relied on by Kennedy J.\nIt would seem that the reasoning in Dulieu was consistent with the principle that damages for distress in negligence are only recoverable for a recognisable psychiatric illness and not merely for grief and sorrow, as Lord Denning MR put it in Hinz v Berry [1970] 2 QB 40, 42 43, an approach which was followed by Lord Bridge of Harwich in McLoughlin v O'Brian [1983] 1 AC 410, 437.\nThis limitation appears to have been imposed in cases of negligence as a matter of policy, and it has been justified in a number of cases on the ground that grief and distress are part of normal life, whereas psychiatric illness is not see eg McLoughlin at p 431 per Lord Bridge and White v Chief Constable of South Yorkshire Police [1999] 2 AC 455, 465 per Lord Griffiths.\nThe Australian High Court has justified the rule by reference to the undesirability of encouraging litigation see Tame v New South Wales (2002) 211 CLR 317, para 194 per Gummow and Kirby JJ.\nHowever, in some negligence cases, it appears that damages for distress falling short of psychiatric illness may be recoverable see the observations of Brooke LJ in Robinson v St Helens Metropolitan Borough Council [2002] EWCA Civ 1099, paras 36 37.\nAnd, as is pointed out in McGregor on Damages (19th ed) (2014), paras 5 012 and 5 013, injury to feelings is taken into account when assessing general damages in claims, by way of example, for assault, invasion of privacy, malicious prosecution and defamation.\nAs I see it, therefore, there is plainly a powerful case for saying that, in relation to the instant tort, liability for distressing statements, where intent to cause distress is an essential ingredient, it should be enough for the claimant to establish that he suffered significant distress as a result of the defendants statement.\nIt is not entirely easy to see why, if an intention to cause the claimant significant distress is an ingredient of the tort and is enough to establish the tort in principle, the claimant should have to establish that he suffered something more serious than significant distress before he can recover any compensation.\nFurther, the narrow restrictions on the tort should ensure that it is rarely invoked anyway.\nIn the light of article 10 of the European Convention on Human Rights, it is appropriate to consider the jurisprudence of the Strasbourg court.\nThis is a case which involves a purely common law issue, but the common law should be generally consistent with the Convention and it would be arrogant to assume that there may be no assistance to be gained from the Strasbourg jurisprudence see Lord Reeds illuminating analysis in R (Osborn) v Parole Board [2013] UKSC 61, [2014] AC 1115, paras 56 63.\nIn that connection, there have been a number of cases where the Strasbourg court has been called on to rule on the compatibility of a ruling of a national court or tribunal that an offensive statement was unlawful.\nA number of those decisions were summarised in R (Gaunt) v Office of Communications [2011] EWCA Civ 692, [2011] 1 WLR 2355, paras 25 30.\nThey all involved statements made in public, but some of them involved statements which had been held unlawful because they were personally insulting.\nI do not think that these cases take matters much further for present purposes, other than to confirm the vital nature of freedom of expression, the consequent requirement to establish that there is a cause of action convincingly, the importance of taking into account the context, and the need for proportionality both in deciding whether there is a cause of action and in determining the sanction.\nThe final point I should make is that this case has been argued in this court on the basis that the issue between the parties has to be resolved according to English law, rather than the law of the US, where the claimant resides.\nIt may well be that that is right (as the Court of Appeal held), or that, even if United States law is in fact applicable, it is the same as our law.\nIn all these circumstances, it seems to me clear, even at this interlocutory stage, that the claimants case plainly fails all but one of the requirements of the tort on which it is said to be based.\nWhile there is some (disputed) evidence that they could cause the claimant serious distress, the contents of the defendants book are not untrue, threatening or insulting, they are not gratuitous or unjustified, let alone outrageous, they are not directed at the claimant, and they are not intended to distress the claimant.\nAccordingly, I have no hesitation in agreeing that the appeal should be allowed, and the order of Bean J striking out the claim restored.\n","output":"The Appellant (the Father), James Rhodes, is a concert pianist, author and television film maker.\nHe has written a book titled Instrumental, which he is hoping to publish, and it is aimed at providing a sound track to the story of his life.\nIt includes searing accounts of the physical and sexual abuse and rape inflicted on him from the age of six by the boxing coach at his school.\nIt goes on to chart his subsequent resorting to drink, drugs, self harm, attempts at suicide as well as his time in psychiatric hospital culminating in his redemption through learning, listening to and playing music.\nThe book also refers to his first marriage, to an American novelist then living in London (the Mother), and the child they had together (the Son) to whom the book is dedicated.\nThe Mother and Father divorced some years ago.\nDuring the divorce, they made a residence and contact order in London on 15 June 2009.\nThis included a recital by which the Mother and Father agreed to use their best endeavours to protect the Son from any information concerning the past previous history of either parent which would have a detrimental effect upon the childs well being.\nThe Mother and Son now live overseas.\nThe Son has been diagnosed with Aspergers syndrome, attention deficit hyperactivity order, dyspraxia and dysgraphia.\nA first draft of the book, sent to the publishers in December 2013, was leaked to the Mother in February 2014.\nSome changes were made, such as the use of pseudonyms.\nHowever, the Mother wanted more significant changes as she was concerned that the book would cause psychological harm to the Son, now aged 11, if he came to read it.\nIn June 2014, she brought proceedings (later taken over by the Sons godfather), on behalf of the Son, on various grounds seeking an injunction prohibiting publication or the deletion of a large number of passages.\nShe adduced evidence from a consultant child psychologist whose opinion was that the Son was likely to suffer severe emotional distress and psychological harm if exposed to the material in the book because of his difficulties in processing information.\nIn July 2014, Bean J in the High Court dismissed the application for an interim injunction.\nIn October 2014, the Court of Appeal reversed the High Court, finding that only the claim for intentionally causing harm under the tort in Wilkinson v Downton should go to trial.\nIt also granted an interim injunction restraining the Father from publishing certain information such as, for example, graphic accounts ofsexual abuse he suffered as a child.\nThe Father appealed to the Supreme Court.\nThe Supreme Court unanimously allows the appeal.\nLady Hale and Lord Toulson (with whom Lord Clarke and Lord Wilson agree) deliver the judgment of the Court.\nLord Neuberger (with whom Lord Wilson agrees) gives a concurring judgment.\nLady Hale and Lord Toulson consider the domestic case law [31 67] and other common law authorities [68 71] in relation to the tort in Wilkinson v Downton.\nIt consists of three elements: (1) a conduct element; (2) a mental element; and, (3) a consequence element.\nOnly (1) and (2) are issues in this case [73].\nThe conduct element requires words or conduct directed towards the claimant for which there was no justification or reasonable excuse, and the burden of proof is on the claimant [74].\nIn this case, there is every justification for the publication.\nThe Father has the right to tell the world about his story.\nThe law places a very high value on freedom of speech.\nThe right to disclosure is not absolute because a person may, for example, owe a duty to treat information as confidential, but there is no general law prohibiting the publication of facts which will distress another person.\nIt is hard to envisage any case where words which are not deceptive, threatening or (possibly) abusive could be actionable under the tort recognised in Wilkinson v Downton [75 77].\nIn addition, the injunction prohibiting graphic language was wrong in principle and in form; it is insufficiently clear what graphic means and, in any event, a right to convey information to the public includes a right to choose the language in which it is expressed in order to convey the information most effectively [78 79].\nThe required mental element is an intention to cause physical harm or severe mental or emotional distress.\nRecklessness is not enough [87].\nIn this case, there is no evidence that the Father intends to cause psychiatric harm or severe mental or emotional distress to his Son [89], and there is no justification for imputing an intention to cause harm on the basis of harm being foreseeable.\nIntention is a matter of fact.\nIt may be inferred in an appropriate case from the evidence, but is not to be imputed as a matter of law [81 82].\nThere is no real prospect of establishing either the conduct element or the mental element of the tort [90].\nLord Neuberger allows the appeal for the same reasons.\nIt would be an inappropriate restriction on freedom of expression to restrain publication of a book simply because another, to whom the book is not directed, might suffer psychological harm from reading it [97].\nHe adds some further remarks as to the scope of the tort in Wilkinson v Downton [101 121].\n","id":19}
{"input":"In November 1999 Mr Alexander Gibson was appointed as managing director of Grays Timber Products Ltd (Timber Products), a wholly owned subsidiary of Grays Group Ltd (Group).\nHe also became a director of Group.\nHe entered into a written service agreement with Timber Products and was also party to a subscription and shareholders agreement (the subscription agreement) under which he paid 50,000 to take up ordinary shares (amounting to about 6% of the issued ordinary capital) in Group.\nIn November 2003 all the issued ordinary shares in Group were acquired by an outside purchaser, Jewson Ltd (Jewson) for 6m, about 5.4m of which was paid in cash.\nUnder the terms of the subscription agreement (to which Group and shareholders owning over four fifths of its ordinary shares were parties) Mr Gibson became entitled to a disproportionately large part of the consideration paid by Jewson just over 1.4m, whereas a rateable part would have been just under 0.4m.\nThe issue for the Court is whether the difference between these two sums is (as HM Revenue & Customs HMRC contend) taxable as employment income of Mr Gibson, subject to income tax and national insurance contribution (NIC), or is (as Mr Gibson contends) taxable as a chargeable gain subject to capital gains tax.\nThe claim for income tax and NIC is primarily against Timber Products as Mr Gibsons employer at the time, but if it succeeds the burden will fall on Mr Gibson and others who have covenanted with Jewson to bear those liabilities.\nThat issue depends primarily on the correct construction and application of Chapter 3D of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) as inserted by the Finance Act 2003, Schedule 22.\nChapter 3D consists of only three sections which are, by comparison with other chapters in Part 7 of ITEPA 2003 (as amended), relatively simple and straightforward.\nThey are as follows: CHAPTER 3D Securities Disposed of for More Than Market Value 446X Application of this Chapter This Chapter applies if (a) (b) employment related securities are disposed of by an associated person so that no associated person is any longer beneficially entitled to them, and the disposal is for a consideration which exceeds the market value of the employment related securities at the time of the disposal. 446Y Amount treated as income (1) Where this Chapter applies the amount determined under subsection (3) counts as employment income of the employee for the relevant tax year. (2) The relevant tax year is the tax year in which the disposal occurs. (3) The amount is CD MV DA. where CD is the amount of the consideration given on the disposal, MV is the market value of the employment related securities at the time of the disposal, and DA is the amount of any expenses incurred in connection with the disposal. 446Z Definitions (1) In this Chapter market value has the meaning indicated in section 421(1). (2) For the purposes of this Chapter sections 421(2) and 421A apply for determining the amount of the consideration given for anything.\nIn this Chapter the employee, and employment related securities, have the meaning indicated in section 421B(8).\nIn this Chapter associated person has the meaning indicated in section 421C. (3) (4) It is common ground that Mr Gibsons shares were employment related securities.\nHe was an associated person and no issue arises as to any other associated person.\nThe main area of controversy is market value, which is defined by reference to the Taxation of Chargeable Gains Act 1992.\nHowever Chapter 3D forms part of a complex code with fairly deep and tangled legislative roots.\nMany of the submissions made on behalf of Timber Products (which has been the appellant at every stage in these proceedings) relied on the need for the expression market value to be given a uniform meaning throughout the different chapters comprised in Part 7 of ITEPA 2003.\nIt is therefore appropriate to attempt at least an outline sketch of Chapter 3Ds larger context, without going far into complexities which are not directly relevant.\nPart 7 of ITEPA 2003 is headed Employment income: income and exemptions relating to securities.\nIts provisions reflect three different, and to some extent conflicting, legislative purposes.\nFirst there is Parliaments recognition that it is good for the economy, and for social cohesion, for employees to own shares in the company for which they work.\nVarious forms of incentive schemes are therefore encouraged by favourable tax treatment (those in force in 2003 are covered in Chapters 6 to 9 inclusive of Part 7).\nSecond, if arrangements of this sort are to act as effective long term incentives, the benefits which they confer have to be made contingent, in one way or another, on satisfactory performance.\nThis creates a problem because it runs counter to the general principle that employee benefits are taxable as emoluments only if they can be converted into money, but that if convertible they should be taxed when first acquired.\nThat principle was stated by Lord Radcliffe in Abbott v Philbin [1961] AC 352, 379: I think that the conferring of a right of this kind as an incident of service is a profit or perquisite which is taxable as such in the year of receipt, so long as the right itself can fairly be given a monetary value, and it is no more relevant for this purpose whether the option is exercised or not in that year, than it would be if the advantage received were in the form of some tangible form of commercial property.\nThat was a case about share options, which are now dealt with separately in Chapter 5, but it illustrates the general approach that applied in the days when the taxation of employee benefits was very much simpler than it is now.\nThe principle of taxing an employee as soon as he received a right or opportunity which might or might not prove valuable to him, depending on future events, was an uncertain exercise which might turn out to be unfair either to the individual employee or to the public purse.\nAt first the uncertainty was eased by extra statutory concessions.\nBut Parliament soon recognised that in many cases the only satisfactory solution was to wait and see, and to charge tax on some chargeable event (an expression which recurs throughout Part 7) either instead of, or in addition to, a charge on the employees original acquisition of rights.\nThat inevitably led to opportunities for tax avoidance.\nThe ingenuity of lawyers and accountants made full use of the wait and see principle embodied in these changes in order to find ways of avoiding or reducing the tax charge on a chargeable event, which might be the occasion on which an employees shares became freely disposable (Chapter 2) or the occasion of the exercise of conversion rights (Chapter 3).\nThe third legislative purpose is to eliminate opportunities for unacceptable tax avoidance.\nMuch of the complication of the provisions in Part 7 (and especially Chapters 3A, 3B, 3C and 3D) is directed to counteracting artificial tax avoidance.\nThere is a further layer of complication in provisions which regulate the inevitable overlaps between different chapters.\nIt is regrettable that ITEPA 2003, which came into force on 6 April 2003 and was intended to rewrite income tax law (as affecting employment and pensions) in plain English, was almost at once overtaken by massive amendments which are in anything but plain English.\nThis case is, it seems, the first case concerned with any of the provisions of Part 7.\nTimber Products appeal from a revised determination dated 3 November 2005 was dismissed by a single Special Commissioner (Mr Demack) by a written decision released on 21 March 2007.\nTimber Products appeal to an Extra Division of the Inner House of the Court of Session (Lord Kingarth and Lord Mackay of Drumadoon, Lord Osborne dissenting) was dismissed on 13 February 2009.\nThe reasoning of the majority of the Inner House was rather different from that of the Special Commissioner, and counsel for Timber Products has sought to deploy further arguments in this Court.\nThe subscription agreement and the sale agreement\nThe facts relevant to this appeal are set out in some detail in the decisions of the Special Commissioner and the Inner House (especially the judgment of Lord Osborne).\nThose decisions are readily accessible, being reported together at [2009] STC 889.\nI need not therefore add a lot of detail to the brief summary at the beginning of this judgment.\nBut I must give a fuller account of the subscription agreement entered into in 1999 and the sale agreement dated 29 November 2003, especially as they affected Mr Gibsons shares in Group.\nThe subscription agreement was not dated but was signed at different dates between 2 December and 18 December 1999.\nThe parties to it were (1) Group (2) Mr Gibson and (3) Mr J R Nicholson (who owned about 60% of the ordinary shares) and other shareholders who (together with Mr Nicholson) owned about 84% of the ordinary shares.\nRecital (B) provided: Mr Gibson wishes to subscribe up to 14,465 ordinary shares of 1 each in the share capital of [Group] and [Group] has agreed to issue such shares to him on the terms and conditions set out below.\nClause 3 provided for what was to happen to the shares if Mr Gibsons employment ended while he still owned them.\nIf he was dismissed for a serious breach of contract, he was to sell them back to Group for 50,000.\nIf he resigned voluntarily (with no element of constructive dismissal) he was to sell back to Group all his shares for a consideration representing 74% of their net asset value (the net asset value of the whole company being taken to be not less than 1.3m) together with 25% of the amount by which the net asset value (of the whole company) exceeded the target net asset value (defined as 1.3m with an indexed escalation of 0.08m for each complete year, but subject to a possible adjustment for newly paid up preference shares).\nIf Mr Gibsons service terminated in other circumstances (including death or incapacity) clause 3.2.3 provided for all but one of his shares to be sold back under a similar formula, but with Mr Gibson receiving 50% of the growth in net assets.\nNone of these provisions was put into effect, since Mr Gibson was still in service when Jewson took over Group.\nBut the evident intention that Mr Gibson should participate disproportionately in growth in net assets occurring during his period of service was also reflected in clause 4.2.1, which did take effect on Jewsons takeover of Group more than two years into Mr Gibsons service.\nClause 4.2.1 was as follows: In the event of a Shares Disposal taking place on or after the second anniversary of the Completion Date, Mr Gibson shall sell and the Shareholders shall procure that [Group] or that the purchaser in terms of the Shares Disposal shall purchase Mr Gibsons Shares at a price equal to the aggregate of the sums calculated in accordance with (i) and (ii) below.\nItem (i) was, in the event, 50,000.\nItem (ii) was one third of D (E+F), that is (D) the consideration (6m) less the total of (E) the target net asset value of the company at the date of the disposal (approximately 1.46m) and (F) item (i) (0.05m).\nThe total consideration was therefore about 1.5m.\nHMRCs revised notice of determination proceeded on the basis that this sum exceeded the statutory market value of the shares by 1,059,737, and that the latter sum attracted income tax and NIC.\nInitially HMRC relied on Chapter 4 of Part 7 of ITEPA 2003, and only later on Chapter 3D, which led to an adjustment as mentioned in paras 1 and 50 of the Special Commissioners decision.\nClause 4.2.2 contained similar provisions applying on a sale of Groups business.\nClause 5 provided for Mr Gibson to obtain an additional payment in consideration of his shares if a buy back took place under clause 3.2.3 and there was a takeover of Group or its business within eighteen months of the buy back.\nThese provisions were extremely complicated and did not take effect.\nIt is sufficient to say that they reflected the same approach as in clause 4.2.1 and 4.2.2.\nThe underlying purpose of clauses 3.2.2, 3.2.3, 4.2.1, 4.2.2 and 5.2 is set out in clause 6.1: The Shareholders acknowledge and accept that Mr Gibson is to become an executive director of [Timber Products] and shareholder of [Group] on the agreement that, if by reason of his efforts as such an executive director, Net Asset Value plus the Notional Goodwill exceeds the Target Net Asset Value on a return of his investment by share buy back or the Consideration exceeds the Target Net Asset Value on a return of his investment on a sale, he will in certain circumstances and in accordance with clauses 3 and 4 be entitled to an agreed extra payment in addition to the return of his initial investment and, on such a sale, disproportionately greater than the amounts received by other shareholders or (sic) his percentage of the equity share capital of [Group].\nFurther provisions in clause 6 ensured that these rights were not to be prejudiced by any distribution or reduction of Groups assets.\nBy Clause 7.1 Mr Gibson warranted not to dispose of or encumber any of his shares otherwise than in accordance with the subscription agreement or the articles of Group.\nClause 7.3 provided that in the event of a breach of that warranty his service contract and directorships could be terminated.\nIt also provided that this should be the sole rights or remedies of the Shareholders and [Group] arising from such breach.\nClause 9 provided that the agreement, and rights and obligations under it, should not be assignable.\nBy clause 11.1 the agreement was to be governed by the law of Scotland.\nClause 11.2 provided: The provisions of this Agreement shall prevail over the Articles (and any other Articles of Association of [Group] subsequently amending or replacing the same) such that if there is any conflict between the two the provisions of this Agreement shall prevail and rule to the exclusion of any such conflicting provisions of the Articles or such other Articles of Association.\nThe subscription agreement provided for Group to adopt new articles of association in a form scheduled to the agreement, and they were duly adopted on 9 December 1999.\nThese provided for the redemption of all the companys A preference shares not later than 31 March 2000.\nThey also referred expressly to the 14,465 ordinary shares to be issued to Mr Gibson (freeing them from pre emption rights on their issue).\nThey did not however confer any other special rights on these shares.\nUnder para 5(a) and (b) of the articles ordinary shares participated pari passu in income and return of capital.\nDuring 2000 Mr Gibson acquired a further 258 ordinary shares under the pre emption provisions in the articles.\nThese seem to have been accepted as constituting part of Mr Gibsons shares for the purposes of the subscription agreement, despite their apparent exclusion under the definition in clause 1.\nThe sale agreement was made on 29 November 2003 between (1) Mr Nicholson, Mr Gibson and five other holders of Group ordinary shares and (2) Jewson.\nClause 3.2.1 provided for the cash consideration of 5,403,219 to be paid to the vendors solicitors as their agents who are hereby authorised to receive the same whose receipt shall be a complete discharge to the Purchaser who shall not be obliged to enquire as to the distribution thereof.\nBy clause 3.2.2 Elbora Ltd, one of the holders of ordinary shares, was to receive 500,000 loan notes issued by Jewson.\nClause 3.2.3 provided for a retention of 96,781.\nThe agreement contained numerous warranties, covenants and indemnities.\nIn particular clause 4A provided for the retention in respect of potential NIC liability, and clause 9 and schedule 9 made further provision for potential PAYE income tax and NIC in respect of Mr Gibson.\nBy clause 3.4 and schedule 1 Mr Gibson was to receive 1,451,172 for his shares.\nThe other shareholders received sums proportionate (as between themselves) to their respective holdings (except that Elbora Ltd received less because of the loan notes).\nIn a disclosure letter dated 29 November 2003 the vendors gave information about the subscription agreement (among other matters).\nThe letter stated, However, this agreement is to be terminated at completion.\nMarket Value\nAs already noted, Part 7 of ITEPA 2003 incorporates the statutory definition of market value for capital gains tax purposes.\nThat definition is in sections 272 and 273 of the Taxation of Chargeable Gains Act 1992 which are (so far as relevant) as follows: 272 Valuation: general (1) In this Act market value in relation to any assets means the price which those assets might reasonably be expected to fetch on a sale in the open market. (2) In estimating the market value of any assets no reduction shall be made in the estimate on account of the estimate being made on the assumption that the whole of the assets is to be placed on the market at one and the same time. 273 Unquoted shares and securities (1) The provisions of subsection (3) below shall have effect in any case where, in relation to an asset to which this section applies, there falls to be determined by virtue of section 272(1) the price which the asset might reasonably be expected to fetch on a sale in the open market. (2) The assets to which this section applies are shares and securities which are not quoted on a recognised stock exchange at the time as at which their market value for the purposes of tax on chargeable gains falls to be determined. (3) For the purposes of a determination falling within subsection (1) above, it shall be assumed that, in the open market which is postulated for the purposes of that determination, there is available to any prospective purchaser of the asset in question all the information which a prudent prospective purchaser of the asset might reasonably require if he were proposing to purchase it from a willing vendor by private treaty and at arms length.\nThe definition in section 272 can be traced back to section 44 of the Finance Act 1965 and from there to the estate duty valuation provisions in section 7(5) of the Finance Act 1894.\nBoth sides referred to many of the leading cases on the estate duty definition, including Attorney General v Jameson [1905] 2 IR 218, Salvesens Trustees v Inland Revenue Comrs 1930 SLT 387, Inland Revenue Comrs v Crossman [1937] AC 26 (in which the House of Lords was divided by three to two) and Lynall v Inland Revenue Comrs [1972] AC 680 (in which Crossman was challenged but unanimously upheld on the wider issue, but the taxpayer succeeded on the narrower issue as to access to information, so leading to the rule now embodied in section 273 of the 1992 Act).\nReference was also made to Inland Revenue Comrs v Gray [1994] STC 360, which was concerned with the same definition as used for the purposes of capital transfer tax (now inheritance tax).\nAll these cases, apart from Gray, were concerned with the valuation of shares in private companies where the articles contained restrictions on transfer and rights of pre emption.\nThere is not, as it seems to me, much difference in the general conclusions which the parties seek to draw from these authorities.\nIt is not therefore necessary to multiply citations.\nIt is sufficient to repeat two passages which were quoted with approval in Lynall (by Lord Reid at p 693 and Lord Pearson at p 704 respectively).\nThe first is from the judgment of Holmes LJ in Jameson at p 239: The Attorney General and the defendants agree in saying that in this case there cannot be an actual sale in open market.\nTherefore, argues the former, we must assume that there is no restriction of any kind on the disposition of the shares and estimate that [sic] would be given therefor by a purchaser, who upon registration would have complete control over them.\nMy objection to this mode of ascertaining the value is that the property bought in the imaginary sale would be a different property from that which Henry Jameson held at the time of his death.\nThe defendants, on the other hand, contend that the only sale possible is a sale at which the highest price would be 100 per share, and that this ought to be the estimated value.\nMy objection is that this estimate is not based on a sale in open market as required by the Act.\nBeing unable to accept either solution, I go back to my own, which is in strict accordance with the language of the section.\nI assume that there is such a sale of the shares as is contemplated by article 11, the effect of which would be to place the purchaser in the same position as that occupied by Henry Jameson.\nAn expert would have no difficulty in estimating their value on this basis.\nIt would be less than the Crown claims, and more than the defendants offer; but I believe that it would be arrived at in accordance not only with the language of the Act, but with the methods usually employed in valuing property.\nThe second is from the judgment of Lord Fleming in Salvesen at p 391: The Act of Parliament requires, however, that the assumed sale, which is to guide the Commissioners in estimating the value, is to take place in the open market.\nUnder these circumstances I think that there is no escape from the conclusion that any restrictions which prevent the shares being sold in an open market must be disregarded so far as the assumed sale under section 7(5) of the Act of 1894 is concerned.\nBut, on the other hand, the terms of that subsection do not require or authorise the Commissioners to disregard such restrictions in considering the nature and value of the subject which the hypothetical buyer acquires at the assumed sale.\nThough he is deemed to buy in an open and unrestricted market, he buys a share which, after it is transferred to him, is subject to all the conditions in the articles of association, including the restrictions on the right of transfer, and this circumstance may affect the price which he would be willing to offer.\nThe importance of identifying precisely the property to be valued was emphasised in Crossman (especially by Viscount Hailsham LC at pp 39 40 and Lord Blanesburgh at pp 49 50) and this emphasis is reflected in many of the later cases.\nIt is the first major point of controversy in this appeal: are Mr Gibsons ordinary shares to be valued simply as ordinary shares whose rights are set out in the articles, or are his special rights under clause 4 of the subscription agreement to be taken into account as if they were set out in the articles? (This difference has been described in argument as the difference between intrinsic and extrinsic rights, and that terminology will serve, at least as shorthand.) The second major point of controversy is: if Mr Gibsons special rights are treated as intrinsic in the shares to be valued, what effect (if any) do they have on the valuation exercise? Are they to be treated as enuring for the benefit of the hypothetical purchaser, or are they to be disregarded as being, even though intrinsic, exclusively personal to Mr Gibson, and worthless to anyone else?\nIntrinsic and extrinsic rights\nThe first of these controversies has two strands.\nOne is concerned with shareholder rights as a matter of company law.\nThe other is concerned with the language used in different chapters of Part 7 which, it is argued (especially because of the statutes emphasis on market value having the same meaning throughout Part 7) demonstrates that Parliament must have intended to extend the field of relevant material beyond what would conventionally be regarded as intrinsic shareholder rights.\nThis is a difficult and intricate argument and it is probably best to start off with company law (though even that area is not, in this case, without its difficulties)\nIn Crossman (at pp 40, 51 and 66) the Lord Chancellor and Lord Blanesburgh (in the majority) and Lord Russell of Killowen (dissenting) all referred to Farwell Js classic definition (in Borlands Trustee v Steel Bros & Co Ltd [1901] 1 Ch 279, 288) of a share as consisting partly of mutual obligations entered into by all the shareholders (at the same time Lord Blanesburgh emphasised at p 51 that it is still one indivisible piece of property).\nThe shareholders mutual obligations are normally set out transparently in the articles of association, and Groups new articles (even though adopted in accordance with the subscription agreement) said nothing about special rights attaching to Mr Gibsons shares on their disposal.\nMr Sherry (for Timber Products) argued that the rights attaching to shares might be found in arrangements made outside a companys articles.\nThey could be found, he submitted, in a shareholders agreement or in the terms on which shares were issued.\nHe relied on the observations of Lord Hoffmann in ONeill v Phillips [1999] 1 WLR 1092, 1098: First, a company is an association of persons for an economic purpose, usually entered into with legal advice and some degree of formality.\nThe terms of the association are contained in the articles of association and sometimes in collateral agreements between the shareholders.\nLord Hoffmann also stated at p 1101: But there may be later promises, by words or conduct, which it would be unfair to allow a member to ignore.\nNor is it necessary that such promises should be independently enforceable as a matter of contract.\nA promise may be binding as a matter of justice and equity although for one reason or another (for example, because in favour of a third party) it would not be enforceable in law.\nMr Sherry also relied on the decision of the Court of Appeal in Harman v BML Group Ltd [1994] 2 BCLC 674.\nIn that case Dillon LJ, in a single extempore judgment with which Leggatt and Henry LJJ agreed, made the general observation (at p 678) that a shareholders agreement signed by all the shareholders attaching rights to shares must have the same effect as if the rights had been set out as class rights in the articles.\nBut it seems reasonably clear from the report (at p 675) that in that case the division of the share capital into A and B shares, and some of the rights attached to those respective shares, were set out in the articles.\nIn my opinion these passages give Mr Sherry only limited assistance.\nIn ONeill v Phillips Lord Hoffmann was addressing the equitable nature of the courts jurisdiction under section 459 of the Companies Act 1985 to counteract unfair treatment of minority shareholders.\nHe was not addressing the subject of contractual share rights capable of enuring for the benefit of third parties.\nThe context of Harman v BML Group Ltd was the courts discretionary jurisdiction under section 371 of the Companies Act 1985 to order the holding of a general meeting.\nMoreover in the present case not all the shareholders were parties to the subscription agreement.\nMr Sherry also placed reliance on clause 11.2 of the subscription agreement, which states that its provisions shall prevail over the articles (and any further articles amending or replacing the current articles).\nHowever there is House of Lords authority that a provision in a shareholders agreement excluding or restricting the companys statutory power to amend its articles is a nullity: Russell v Northern Bank Development Corpn Ltd [1992] 1 WLR 588, mentioned by Nigel Doran in (2007) 888 Tax Journal 10.\nThat case concerned an agreement to which the company in question had also been made a party.\nThe House of Lords held that it could take effect only as a personal contract.\nLord Jauncey of Tullichettle (with whom the rest of the Appellate Committee agreed), at p 593, quoted Lord Davey in Welton v Saffery [1897] AC 299, 331: Of course, individual shareholders may deal with their own interests by contract in such way as they may think fit.\nBut such contracts, whether made by all or some only of the shareholders, would create personal obligations, or an exceptio personalis against themselves only, and would not become a regulation of the company, or be binding on the transferees of the parties to it, or upon new or non assenting shareholders.\nUnfortunately Russell v Northern Bank Development Corpn Ltd was not cited or referred to in the course of argument.\nIt is a decision which has attracted a good deal of discussion as to its extent: see for instance [1992] CLJ 437 (Sealey), [1994] CLJ 343 (Ferran), (1993) 109 LQR 210 (Shapira), 553 (Davenport).\nIf it were likely to be decisive of this appeal, it would not be satisfactory for the Court to decide the case without inviting further written submissions as to its significance.\nLeaving that strand of Mr Sherrys argument on one side for the present, I come to the other strand, which relies on the use of the expression market value in chapters of Part 7 other than Chapter 3D, that is Chapter 2 (restricted securities), Chapter 3 (convertible securities), Chapter 3A (securities with artificially depressed market value) and Chapter 3B (securities with artificially enhanced market value).\nAll these chapters describe the relevant restriction, conversion right or value shifting mechanism in the most general terms, which would include extrinsic arrangements: see sections 423(1)(a), 436, 446A(2) and 446K(2).\nBut they also proceed on the footing that that restriction, conversion right or value shifting mechanism affects the market value of the securities in question: see sections 428(2), 431(1), 441(6) and (7), 442(5), 446C(2), 446D(1), 446E(3) 446F(4), 446G(1) and (2), 446H(3), 446I(3) and 446L(6).\nIn all these contexts the restriction, conversion right or value shifting mechanism cannot, it seems to me, be dismissed as something collateral or personal to the particular employee and irrelevant to the valuation.\nThis point was not referred to in the judgments in the Court of Session.\nMr Sherry told the Court that it was raised below but as he did not appear in the Court of Session he could not give a detailed account of what happened.\nNevertheless it is a point of law which needs to be considered.\nIt is a very puzzling feature of the legislation, and the confusion is increased by the official answers to frequently asked questions published by HMRCs predecessor in 2003 (and made available to taxpayers and their advisers until 2005).\nQuestion 1(k) and its answer were: Q: Market value is now based on the CGT definition.\nDoes this mean that personal restrictions on the share no longer have to be taken into account in arriving at its value? A: no. Even where there is, for example, a restriction on sale the shares must be valued as if that restriction would still apply to their hypothetical purchaser.\nIt is the asset (as it is) that is being valued, not some other unrestricted asset.\nQuestion 1(m) and its answer were: Q: The Inland Revenue has confirmed that market value will take into account personal rights and restrictions and not just those rights and restrictions attaching to the shares.\nCan you confirm that this interpretation of market value will be applied consistently throughout Schedule 22 [to the Finance Act 2003] and that you will not adopt a different interpretation for each Chapter of Part 7? A: Market value will be determined on a consistent basis throughout Chapters 1 to 5 of Part 7.\nMr Johnston QC (appearing for HMRC in this Court, as he did in the Court of Session) was unable to explain or defend these answers.\nHe said that they were not clear, but to my mind they are perfectly clear and, on HMRCs case, clearly wrong.\nIn the respondents printed case Mr Johnston sought to meet the difficulty by submitting that throughout Part 7 market value has the same meaning, but that the particular asset being valued is not the same under each chapter.\nHe did not accept that there is any inconsistency in treating extrinsic rights as relevant to valuation under Chapters 2, 3, 3A and 3B but as irrelevant to valuation under Chapter 3D. (Chapter 3C is an exceptional case because the fact that shares are not fully paid up must be an intrinsic matter: see sections 446Q(3), 446R(2) and 446T(2).)\nOne possible reason for the difficulties in applying Part 7 consistently is the very wide definition of securities in section 420(1).\nIt includes not only shares and debentures but also (in paras (c), (d), (f) and (g)) a wide variety of contractual choses in action under financial instruments.\nSome chapters of Part 7 also refer to interests in securities (defined in section 420(8)).\nThe distinction between intrinsic and extrinsic rights is much less obvious when some of these extended meanings of securities are in play.\nThat may help to explain why Part 7 is so difficult, but it does not solve the difficulties.\nThe principle that tax is to be charged only by clear words may be less potent than it was, but it is still relevant to the construction of taxing statutes.\nI am left in real doubt as to whether Parliament has, in Part 7 of ITEPA 2003, enacted a scheme which draws a coherent and consistent distinction between intrinsic and extrinsic rights attaching to shares and other financial instruments.\nFor that reason I think it unnecessary to invite further submissions on Russell v Northern Bank Development Corpn Ltd. But that is not the end of the matter, since some rights, even if properly described as intrinsic to the property to be valued, are nevertheless worthless to the hypothetical purchaser posited by the statutory definition of market value.\nSo I go on to the second point of controversy, that is whether Mr Gibsons rights under the subscription agreement, even if assumed to be, or treated as, intrinsic, produce the result that Timber Products contends for.\nIt is implicit in that contention that on their acquisition by Jewson each of Mr Gibsons shares had a market value about three times greater than each of the shares owned by the other shareholders.\nStanding in the shareholders shoes\nThat would be a very surprising result.\nJewson agreed to buy Group for 6m less a retention, and all the ordinary shares which it acquired were of equal value to it.\nIt was not concerned with the division of the sale price between the vendors (clause 3.2.1 of the sale agreement) except so far as it might involve adverse tax consequences to Groups subsidiary, Timber Products (clause 4A, clause 9 and schedule 9 of the sale agreement).\nThe same would have been true of any other open market purchaser.\nMr Gibsons special rights were peculiar to his position as a director of Group and managing director of Timber Products, as was clearly acknowledged in clause 6.1 of the subscription agreement.\nHis rights were not assignable (clause 9 of the subscription agreement).\nThese rights would have been personal to Mr Gibson even if they had been set out expressly in the new articles adopted by Group when the subscription agreement was entered into.\nA right can be personal even though it is intrinsic in the sense previously discussed, since class rights can be enjoyed by a class with only one member.\nSuch rights were quite common in the articles of family estate companies formed during the 1930s with a view to saving estate duty.\nThere is an illustration in Dymonds Death Duties, 10th edition (1946) p.61 of a man who owned all the A shares of an estate company, the B shares being held by other members of his family.\nThe A shares were entitled, during his lifetime, to dividends of up to 150% in priority to the B shares; on the deceaseds death they became 6% non participating preference shares.\nThis device was blocked by section 46 of the Finance Act 1940, but until then it avoided estate duty because the A shares had little value on the deceaseds death.\nThe Estate Duty Office accepted that the special rights that he had during his lifetime could not be attributed to the hypothetical open market vendor, and could not benefit the hypothetical open market purchaser, on the notional sale on the deceaseds death posited by section 7(5) of the Finance Act 1894.\nMr Sherry argued that Mr Gibsons special rights must be taken into account and treated as enuring for the benefit of the hypothetical vendor.\nIn the Court of Session Lord Osborne accepted that submission (para 46) but I respectfully consider that he went on to undermine his own conclusion when he referred (para 47) to clause 6.1 of the subscription agreement.\nThat clause made it plain that Mr Gibson was to get a special price for his shares, not because the shares themselves had a special value, but in recognition of his personal services as managing director.\nLord Kingarth (paras 67 and 68) recognised the significance of clause 6.1 and considered that Mr Gibsons rights were personal rights that did not attach to the shares.\nLord Mackay of Drumadoon (paras 87 89) took the same, or a very similar, view.\nI am in substantial agreement with the majority of the Court of Session, except that I would reach the same conclusion even if the rights did in some sense attach to Mr Gibsons shares: whether attached or unattached, they were of no value to the hypothetical purchaser, and he would pay the hypothetical vendor nothing extra on account of them.\nMr Sherrys argument on this point relied on the homely metaphor which judges have often used, of asking what the hypothetical purchaser would pay to stand in the shoes of the hypothetical vendor.\nThe first use of this expression seems to have been by Lord Ashbourne C and Fitzgibbon LJ in Jameson at pp 227 and 230.\nThe point of the metaphor, I think, is to emphasise that the valuer is concerned with the position of the hypothetical purchaser immediately after the notional sale, rather than worrying about how that sale could take place (perhaps in contravention of the companys articles, which was the real point of dispute in Jameson).\nThere is nothing in the speeches to suggest that the hypothetical purchaser was to be presumed to be a male member of the Jameson family in order to facilitate a transfer under article 18 of the articles of John Jameson & Son Ltd.\nMr Sherry also relied on the decision of the Court of Appeal in Alexander v Inland Revenue Comrs (1991) 64 TC 59.\nThat was a case about valuation of a flat for the purposes of capital transfer tax on the death of Mrs Alexander.\nShe had bought a flat in the Barbican under the right to buy provisions of the Housing Act 1980 at the discounted price of 35,400, representing a discount of 24,600.\nShe died within a year.\nThe flat was (both before and after her death) subject to a charge to repay all or part of the discount if the flat was assigned within five years of its acquisition.\nThis liability would not be triggered by an assent in favour of a beneficiary under the deceaseds will or intestacy.\nHer executor contended for a valuation of 35,400, deducting the full discount.\nThe Inland Revenues valuer contended for a reduced deduction of about 13,000, reflecting his assessment of the likelihood of an actual sale during the remainder of the five year period.\nThere was a procedural issue as to whether the matter should be determined by the Lands Tribunal or the Special Commissioners.\nThe Court of Appeal remitted the case to the Lands Tribunal but gave a clear direction as to the valuation principle to be applied.\nIts decision would have given some support to the appellant if it had directed that the notional sale of Mrs Alexanders flat must for valuation purposes be treated as having triggered an immediate liability for the full 24,600 under the Housing Act charge.\nBut that was not the direction.\nIt was that the notional sale should not be treated as triggering the repayment liability, but that the hypothetical purchaser would be in the position of having to pay off the charge if he made an assignment during the remainder of the five year period (see Ralph Gibson LJ at pp 70 72 and Nicholls LJ at pp 75 76).\nThe implications of the hypothesis of a sale are not to be taken too far.\nRalph Gibson LJ, at p 73, referred to what Lord Guest had said in In re Sutherland, decd [1963] AC 235, 262: The purpose of section 7(5) . is to value the property.\nIt does not as Lord Evershed said require you to assume that the sale . has occurred.\nIt simply prescribes, as the criterion for value, price in the open market as between a willing seller and a willing buyer, which is a familiar basis for valuation.\nSimilarly, in this case, the valuation does not have to take account of the actual sale of Mr Gibsons shares at a special price enhanced for reasons related to Mr Gibsons special position as managing director.\nMr Sherry asked permission to raise an entirely new argument, set out in para 12 of his printed case, to the effect that the subscription agreement constituted an employment related security in its own right.\nThis argument would have represented a wholly novel approach to the case and would have occupied some time in oral argument.\nThe Court would not have had the benefit of the views of the Court of Session on it.\nThe Court decided that it would not be right to entertain this argument, which seems to fall far short of the test (for admission of an entirely new point on a final appeal) laid down in Brady v Brady [1989] AC 755.\nFor these reasons I would dismiss the appeal.\nI express the hope that Parliament may find time to review the complex and obscure provisions of Part 7 of ITEPA 2003.\nLORD HOPE\nI accept with gratitude Lord Walkers summary of the facts of this case and of the statutory provisions which have given rise to this appeal.\nAs he has said, it is common ground that Mr Gibsons shares were employment related securities within the meaning indicated by section 421B(8) of ITEPA 2003 as inserted by section 140 of and Schedule 22 to the Finance Act 2003, that he was an associated person within the meaning indicated in section 421C and that no other associated person was beneficially entitled to those shares after they had been acquired by Jewson.\nThe question is whether his disposal of those shares was for a consideration that exceeded their market value at the time of the disposal, with the result that Chapter 3D of Part 7 of ITEPA 2003 applies to the transaction.\nThe argument in the Inner House of the Court of Session concentrated on the question whether the market value of the shares falls to be assessed by reference to the price that Mr Gibson was entitled to receive for his shares or by reference to the price that Jewson had to pay to acquire them.\nThis, as Lord Walker has explained in paras 25 and 26, is the first point of controversy in this appeal.\nThe second point of controversy, which was not discussed by the judges of the Extra Division in their opinions, was whether the way the concept of market value is dealt with elsewhere in Part 7 of ITEPA 2003 indicates that Mr Gibsons right on a disposal of the shares to a disproportionately large part of the price paid by Jewson must be taken into account in assessing their market value.\nMr Sherry for Mr Gibson sought permission to raise a third argument.\nThis was that, if the subscription agreement created rights which were not part and parcel of the shares issued to Mr Gibson, it should be treated as an employment related security in its own right and that giving effect to its provisions did not give rise to a payment in excess of its market value for the purposes of Chapter 3D.\nMr Sherry said that in the Extra Division Lord Mackay of Drumadoon had in substance adopted this approach: 2009 SLT 307, para 90.\nIt is true that Lord Mackay said there that payment of the enhanced amount to Mr Gibson was the equivalent of the settlement of a debt due under the subscription agreement.\nBut the consequences of that approach were not explored below, and they are not at all easy to determine.\nThe argument that Mr Sherry sought to develop on this point is not one that can properly be raised for the first time in this court.\nThere was a division of opinion in the Inner House on the first question.\nLord Osborne said that the formula which was described in clause 4.2.1 of the subscription agreement should be seen as conferring rights on Mr Gibsons shares as regards the payment to be received on their disposal, and that the effect of the sale agreement was that the purchaser specifically agreed with each and every vendor that the payments specified in column (3) of schedule 1 would be made to the appropriate vendor: paras 46 49.\nI agree with these propositions as far as they go.\nBut I think, with respect, that this approach fails to address the crucial question under section 272 of the Taxation of Chargeable Gains Act 1992 which defines the expression market value.\nIn estimating the market value attention must be focussed on the asset that requires to be valued.\nIn this case it is the rights attached to the shares acquired by the purchaser, no more and no less.\nI agree with the majority that what has to be considered, to determine their market value for the purposes of the statute, is what the hypothetical purchaser would pay to acquire those rights at the relevant date: Lord Kingarth at para 59 and Lord Mackay of Drumadoon at para 87.\nMr Gibsons right to an enhanced payment had a value to him, but that right was not the subject of the transaction as it did not transmit to the purchaser.\nWhat the purchaser acquired and paid for was the rights attached to the shares themselves and nothing else.\nMr Gibsons rights under the subscription agreement between him and the other shareholders who were parties to it were given effect when the transaction was entered into, but for the purposes of section 446X of ITEPA 2003 they must be disregarded.\nMr Sherry submitted that the rights which Mr Gibson had under the subscription agreement were close enough to being class rights and that, even if that was not so, they attached to the shares for the time being as the terms on which they were issued to him.\nThe fact that the subscription agreement had been approved by a special resolution that was passed at an extraordinary meeting was also significant.\nThe holders of 83.8 per cent of the issued share capital, who were the parties to the subscription agreement, were in a position to secure the passing of that resolution, and it was inevitable that the purchaser would pay Mr Gibson a share of the price which satisfied his entitlement under that agreement.\nThe practical result of these arrangements was that no purchaser would be able to acquire the share capital of the company without seeing that the subscription agreement was satisfied or brought to an end.\nAttractively put though his argument was, it seemed to me to miss the point.\nNo doubt Mr Gibson was assured that he would be entitled upon a sale of the companys share capital to the enhanced price that the subscription agreement provided for.\nBut that was, in essence, because of the agreement entered into between him and the other 83.8 per cent shareholders.\nIt was for this reason that the terms agreed with the purchaser extended to how the price was to be divided up between the shareholders.\nThey were designed to give effect to the rights enjoyed by Mr Gibson.\nBut those rights, which were extinguished by the payment which Mr Gibson received, were not part of the assets acquired by the purchaser.\nThe authorities on which Mr Sherry relied did not seem to me to meet this fundamental objection to this part of his argument.\nIn Attorney General v Jameson [1905] 2 IR 218, 226 227 the question was what market value should be attached to shares in a private company on the death of the shareholder.\nThe directors had power under the articles of association to refuse to register a transfer and there was a right of pre emption in favour of the other members of the company.\nThe argument was that the shares should be deemed to be sold subject to these conditions and restrictions, but it was rejected.\nThe court held that the shares should be valued at the price that they would fetch in the open market on the terms that the purchaser would stand in the shoes of the deceased in other words, that he would take the shares subject to the restrictions and conditions on transfer in terms of the articles.\nMr Sherry said that this reasoning should be extended to the terms on which the shares were issued to Mr Gibson, to reflect their value to the holder of the shares.\nBut the terms on which the shares were issued to Mr Gibson were personal to him.\nThey were not provided for in the articles of association of the company and they were of no interest to a hypothetical purchaser.\nIn Salvesen's Trustees v Inland Revenue Comrs 1930 SLT 387, in which the same point was contended for by the taxpayer, Lord Fleming followed the decision in Attorney General v Jameson.\nAs he said at p 391, if the taxpayer was right, it would mean that there could not be a real sale in the open market at all.\nThe shares should be valued at the price which they would fetch if sold in the open market on the terms that the purchaser would be entitled to be registered as the holder of the shares and should take and hold them subject to the provisions in the articles.\nThose decisions were approved and applied in Inland Revenue Comrs v Crossman [1937] AC 26 and the same reasoning was adopted in In re Lynall, decd [1972] AC 680.\nMr Sherry said that in the light of these decisions and the others mentioned by Lord Walker the hypothetical purchaser must be assumed to have had the benefit of the rights vested in Mr Gibson under the subscription agreement at the time of the transaction, whether or not they were real or personal.\nBut I do not find anything in these cases that supports that approach.\nIt is the terms subject to which the purchaser will take and hold the shares that must be considered.\nIn this case they did not include Mr Gibsons rights under the subscription agreement, as they were extinguished on settlement of the transaction.\nTheir purpose was to enable Mr Gibson to enhance the benefits available to him in recognition of his services as managing director of Timber Products.\nThat purpose was served when he received the enhanced share of the consideration that he was entitled to.\nAll the shares in Group that Jewson acquired were of equal value to them from and after the date of settlement.\nMr Sherrys alternative argument was that the provisions which were substituted by the Finance Act 2003 for those that were originally enacted in ITEPA 2003 were to be read as a code and that the expression market value should be applied consistently throughout Part 7.\nHe said that the definitions of restricted securities and restricted interest in securities for the purposes of Chapter 2 in the substituted section 423 indicated that Parliament must have had in mind that restrictions and conditions outside the articles could affect their market value.\nThis was because section 423(1) provides: For the purposes of this Chapter employment related securities are restricted securities or a restricted interest in securities if (a) there is any contract, agreement, arrangement or condition which makes provision to which any of subsections (2) to (4) applies, and (b) the market value of the employment related securities is less than it would be but for that provision.\nHe drew attention to the width of this definition.\nFurthermore, the calculation of the amount of the charge under that Chapter that section 428 takes account of what the market value of the employment related securities would be immediately after the chargeable event but for any restrictions: section 428(2).\nThis provision, said Mr Sherry, indicated that it was to be assumed for the purposes of this calculation that restrictions outside the articles as well as those contained within them could affect market value.\nHe submitted that this approach should be carried forward consistently into Chapters 3, 3A, 3B, 3C and 3D.\nFor example, section 436, which defines convertible securities for the purposes of Chapter 3, refers to a contract, agreement, arrangement or condition which makes provision for the conversion of the securities, which must be taken to be something found in the governing instrument and outside the articles.\nAs in Chapter 2, this approach was carried through into the charging provisions under this Chapter: sections 437, 440.\nHe sought to draw support for this reading of the substituted provisions from the answers to the frequently asked questions that Lord Walker has quoted in para 34.\nThe Finance Act 2003 received the Royal Assent on 10 July 2003 and they were published on or about that date.\nThe key points were that personal restrictions were to be taken into account and that market value would be determined on a consistent basis throughout Chapters 1 to 5 of Part 7.\nHe submitted that post enactment official statements of that kind could be taken into account as persuasive authority as to the meaning of these provisions: Bennion, Statutory Interpretation, 4th ed (2002), section 232; R v Montila [2004] UKHL 50, [2004] 1 WLR 3141, para 40; Chief Constable of Cumbria v Wright [2006] EWHC 3574 (Admin), [2007] 1 WLR 1407, para 17.\nBut, as Lloyd Jones J said in Chief Constable of Cumbria v Wright, para 17, it is for the courts to interpret legislation, not the executive.\nMr Johnston QC for the respondents said that the answers on which Mr Sherry sought to rely, which he accepted could not be reconciled with his argument, were not accurate.\nThe point which mattered in this case was that, while the definition of market value was to be applied consistently, the property to be valued under each Chapter varied.\nThe answers had been withdrawn towards the end of 2005 and replaced by a manual dealing with the taxation of employment related securities from which the points made in the answers were absent.\nHe invited the court not to attach a great deal of weight to them.\nI agree.\nI do not think that the points that they make are sufficiently precisely framed to amount to an official statement on the particular issue that arises in this case to carry the persuasive authority that the statement in Bennion contemplates.\nThe provisions that are set out in the various Chapters that appear in Part 7 of ITEPA 2003 are complex, and it is not easy to draw conclusions as to how the charging provisions in each Chapter are to be applied if the overall aim is to achieve consistency.\nI am in any event not persuaded that it would be right to approach these provisions on the basis that the overriding consideration is that each Chapter should be applied consistently with all the others.\nAs the commentator on the Finance Act 2003 in Current Law Statutes observed, if there is any theme in the Act it is one of anti avoidance and the closing down of perceived tax loopholes.\nThis suggests that the correct approach is to take each Chapter according to its own terms without trying to draw conclusions from the way the common definition of market value is applied elsewhere in Part 7.\nI would adopt that approach.\nIt is worth noting too that the interval between the enactment of ITEPA 2003, which received the Royal Assent on 6 March 2003, and the enactment of the Finance Act 2003 was very short.\nITEPA 2003 was a product of the Tax Law Rewrite Project, which was set up specifically to rewrite most direct legislation in user friendly language.\nIt is regrettable that the substituted provisions in the Finance Act 2003 depart from that approach.\nThat, however, was probably inevitable if the Revenue was to achieve the aim of combating tax mitigation planning which is plain from these provisions.\nAs for Chapter 3D, which is the only Chapter with which we need to concern ourselves in this case, it is as Lord Walker said in para 2 relatively simple and straightforward.\nI see no escape from the conclusion that the enhanced payment that Mr Gibson received was caught by it and that it is taxable accordingly.\nFor these reasons, and those given by Lord Walker with which I am in full agreement, I would dismiss this appeal and affirm the Extra Divisions interlocutor.\nLORD RODGER, LORD BROWN AND LORD KERR\nWe are in complete agreement with the judgments of Lord Hope and Lord Walker and, for the reasons that they give, we too would dismiss the appeal.\n","output":"The main controversy in the appeal was whether, under the test laid out in section 446X of ITEPA, the disposal of the shares had been for a price which exceeded the market value of the shares at the time of the disposal [2].\nIf so, then the excess (less the costs associated with completing the transaction) would be treated as employment income [2].\nITEPA 2003 had adopted the definition of market value set out in capital gains tax legislation [22].\nThis required consideration of what a hypothetical purchaser would pay to acquire the rights attached to the shares [49].\nTwo questions emerged: (1) whether Gs shares were to be valued simply as shares whose rights were set out in Grays Groups articles of association, or whether his special rights under the subscription agreement were to be taken into account as if they were set out in the articles and (2) if the latter, what effect those special rights had on the valuation exercise [25].\nThe first question could be divided into two parts: (a) whether the special rights should be taken as attaching to the shares as a matter of company law and (b) whether Part 7 of ITEPA, which also dealt with other financial instruments, should be taken as consistently requiring such special rights to be taken into account in the assessment of market value [26].\nOn (a), shareholders mutual obligations were normally set out in the companys articles of association, and Grays Groups articles said nothing about special rights attaching to Gs shares on their disposal [27].\nA clause in the subscription agreement did state that the agreements provisions should prevail over the articles, but there was a previous House of Lords case which suggested that such a provision would have no effect [31].\nThat case had not been cited in argument before the court, and might require further legal submissions, but was not decisive owing to the conclusions reached on other points [32].\nOn (b), elsewhere in Part 7 of ITEPA, in relation to other financial instruments, similar special rights did affect the market value of the asset in question [33].\nThe principle that tax is to be charged only by clear words was less potent than it had been, but was still relevant to interpreting tax laws.\nThere was real doubt as to whether Parliament, in Part 7 of ITEPA, had enacted a scheme which drew a coherent distinction between the treatment of rights attaching to shares and those attaching to other financial instruments [37].\nThe appeal was dismissed on the second question.\nWhen P purchased Grays Group Ltd, it was not concerned with the division of the sale price between the vendors, except in so far as that might have adverse tax consequences for Timber Products [38].\nWhether it was right to say that Gs special rights did in some sense attach to the shares or not, those rights had no value to the hypothetical purchaser [40, 49].\nThey were rights personal to G [51] and were extinguished by the payment which G received [50].\nThe valuation did not have to take account of the actual sale of Gs shares at a special price enhanced for reasons relating to Gs special position as managing director [43].\n","id":20}
{"input":"Act) provide as follows: Sections (1) and (2) of section 123 of the Insolvency Act 1986 (the 1986 (1) A company is deemed unable to pay its debts (a) [non compliance with a statutory demand for a debt exceeding 750 presently due] (b) to (d) [unsatisfied execution on judgment debt in terms appropriate to England and Wales, Scotland and Northern Ireland respectively] (e) if it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due. (2) A company is also deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of the companys assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.\nA company in the situation described in subsection (1)(e) is often said to be cash flow insolvent.\nA company in the situation described in subsection (2) is often said to be balance sheet insolvent, but that expression is not to be taken literally.\nIt is a convenient shorthand expression, but a companys statutory balance sheet, properly prepared in accordance with the requirements of company law, may omit some contingent assets or some contingent liabilities.\nThere is no statutory provision which links section 123(2) of the 1986 Act to the detailed provisions of the Companies Act 2006 as to the form and contents of a companys financial statements.\nThis appeal is concerned with the construction and effect of section 123(1)(e) and (2) as incorporated into the documentation of an issue of loan notes.\nThe statutory provisions were incorporated, with some small modifications, into the conditions applicable to loan notes issued in the course of a securitisation transaction comprising a portfolio of non conforming mortgage loans secured on residential property in the United Kingdom.\nThe issuer is Eurosail UK 2007 3BL plc (Eurosail), one of many similar single purpose entities (SPEs) set up by the Lehman Brothers group (but off the balance sheet of any of that groups companies) not long before its collapse.\nEurosail is the principal respondent to this appeal, and it has a cross appeal on a subs idiary issue.\nThe other respondent appearing before this court, BNY Corporate Trustee Services Ltd (the Trustee) is part of the BNY Mellon Group.\nIt is the trustee for the holders (Noteholders) of loan notes of various classes issued by Eurosail.\nIt has adopted a neutral attitude in the proceedings (as explained in its written case), and has not appeared by counsel before this court.\nBut it will, in the event that the appeal succeeds and the cross appeal fails, have an important judgment to make as to material prejudice to the Noteholders interests.\nIn 2007 Eurosail (described in the documentation as the Issuer) acquired a portfolio of mortgage loans, secured on residential property in England and Scotland and denominated in sterling, to the principal amount of approximately 650m.\nMost of the mortgages were regarded as non conforming in that they did not meet the lending requirements of building societies and banks.\nThis purchase was funded by the issue on 16 July 2007 of loan notes in five principal classes (A, B, C, D and E) comprising 14 different subclasses, some denominated in sterling, some in US dollars and some in euros.\nIn the designation of the classes a indicated that the loan was denominated in euros, b US dollars and c pounds sterling.\nThe senior (class A) notes were divided into three sub classes, denominated in one of the three currencies, designated and issued as follows: A1b A1c A2a A2b A2c A3a A3c US$200,000,000 102,500,000 64,500,000 US$100,000,000 63,000,000 215,000,000 64,500,000 The B, C, D and E Notes were issued in smaller amounts, with variations in currency but no subclasses having different priorities as between themselves.\nThere were also some notes designated as ETc revenue backed notes.\nThe total sum raised was just under 660,000,000.\nAfter payment of costs and expenses of the issue the initial surplus of assets over prospective liabilities (if taken at face value) was quite small.\nThe provisions of section 123(1) and (2) of the 1986 Act are incorporated into an important provision in the co nditions of issue of the Notes (the Conditions).\nCondition 9(a) (events of default) provides that the Trustee may on the occurrence of any of five specified events (an Event of Default) serve on Eurosail a written notice (an Enforcement Notice) declaring the Notes to be due and repayable.\nIn some circumstances the Trustee is obliged to serve such a notice.\nIn the absence of an Event of Default the A1 Notes were repayable in 2027 at latest (in fact they have already been repaid, as have the revenue backed notes).\nAll the other Notes are repayable in 2045 at latest.\nThe Events of Default include (Condition 9(a)(iii)): The Issuer, otherwise than for the purposes of such amalgamation or reconstruction as is referred to in sub paragraph (iv) below, ceasing or, through or consequent upon an official action of the Board of Directors of the Issuer, threatens to cease to carry on business or a substantial part of its business or being unable to pay its debts as and when they fall due or, within the meaning of section 123(1) or (2) (as if the words it is proved to the satisfaction of the court did not appear in section 123(2) of the Insolvency Act 1986 (as that section may be amended from time to time), being deemed unable to pay its debts Under a proviso to Condition 9(a), an occurrence falling within sub paragraph (iii) counts as an Event of Default only if the Trustee certifies to Eurosail that it is, in the Trustees sole opinion, materially prejudicial to the interests of the Noteholders.\nThe service of an Enforcement Notice would have immediate and far reaching consequences for all the Noteholders (o ther than the A1 and ETc Noteholders, whose Notes have already been fully redeemed).\nAs described in more detail below, an Enforcement Notice shifts their rights from the regime prescribed in Condition 2(g) (priority of payments prior to enforcement) to the regime prescribed in Condition 2(h) (priority of payments post enforcement).\nUnder the latter regime Noteholders of Class A3 (A3 Noteholders) rank pari passu with Noteholders of Cla ss A2 (A2 Noteholders) for repayment of principal.\nThat is in contrast with the present regime, under which A2 and A3 A2 payments (clause 2(g)(vi)) but Noteholders rank pari passu for interest Noteholders have priority over A3 Noteholders in receiving repayments of principal out of funds representing principal sums received on the redemption of mortgages in the portfolio (those funds being included in the definition of Actual Redemption Funds in the preamble to the Conditions): Condition 5(b)(i)(2) and (3).\nIt is in these circumstances that the construction of section 123(2) of the 1986 Act, as incorporated into Condition 9(a)(iii), has assumed such importance.\nEurosail, together with those of the A2 Noteholders who appeared below, succeeded before Sir Andrew Morritt C [2010] EWHC 2005 (Ch), [2011] 1 WLR 1200, and the Court of Appeal [2011] EWCA Civ 227, [2011] 1 WLR 2524.\nThe Court of Appeal considered that section 123(2) should be interpreted broadly and in line with standards of commercial probity: A balance has to be drawn between the right of an honest and prudent businessman, who is prepared to work hard, to continue to trade out of his difficulties if he can genuinely see a light at the end of the tunnel, and the corresponding obligation to put up the shutters, when, by continuing to trade, he would be doing so at the expense of his creditors and in hose business considerations which a reasonable businessman is expected to observe. disregard of t (That is a quotation from paragraph 216 of the Report of the Review Committee on Insolvency Law and Practice (1982) (Cmnd 8558), better known as the Cork Report, reflecting the view of Professor Goode; this passage is quoted in para 54 of the judgment of Lord Neuberger MR in the Court of Appeal).\nThe appellant A3 Noteholders say that this passage is not in point.\nThey have argued for a much stricter construction.\nThey have emphasised that a companys inability to pay its debts is no more than a precondition to the exercise of the courts jurisdiction, which is discretionary, to make a winding up order or an administration order.\nThe precondition to be satisfied should be, they have argued, transparent and certain, leaving scope for the exercise of discretion on the hearing of the petition.\nThere has also been argument as to whether the statutory text (as incorporated in an amended form, and also allowing for possible future legislative amendment) must bear the same meaning as it would in actual winding up proceedings, or whether it can and should, as incorporated, take account of the commercial context of the Conditions.\nThose, in outline summary, are the positions of the opposing parties on the appeal.\nThe cross appeal, which is relevant only if the appeal is successful, is concerned with the so called Post Enforcement Call Option (PECO) which is a subsidiary (but technically important) part of the securitisation transaction.\nBefore going further into the complexities of the appeal I would comment that the image invoked by Professor Goode of an honest and prudent trader working hard to turn his business round relates, as was pointed out by Mr Moss QC for the appellants, to the law of insolvency as it applies to individuals.\nEven if translated into corporate terms, it has very little bearing on the situation in which Eurosail now finds itself.\nIts present financial position and future prospects are not matters for which Eurosail and its managers merit either praise or criticism, since those matters are almost entirely out of their control.\nThey depend on three imponderables: first, (since the currency and interest rate hedging arrangements with the Lehman Brothers group have failed, leaving Eurosail with a claim in its insolvency) the movements of the US dollar and the euro relative to the pound sterling; secondly, movements in LIBOR or equivalent interest rates on loans denominated in those three currencies; and thirdly, the performance of the United Kingdom economy in general, and the United Kingdom residential property market in particular, as influencing the performance of the mortgage portfolio.\nThe transaction documents\nThe legal documents relating to the securitisation issue are, as Lord Neuberger MR put it, regrettably and forbiddingly voluminous.\nApart from the Conditions themselves there was a formal trust deed made between the Trustee and Eurosail, a Liquidity Facility Agreem ent, currency swaps agreements, a Fixed\/Floating Swap Agreement, a BBR Swap Agreement and other agreements relating to administrative matters (there is a full list of transaction documents in the definition of that expression in the preamble to the Conditions).\nSeveral expressions used in the Conditions involve a paperchase to other documents in order to find their definitions.\nMr Moss opened the documents very lightly, moving rapidly from Condition 9(a)(iii) to concentrate his submissions on the construction of section 123(1) and (2) of the 1986 Act.\nMr Dicker QC (for Eurosail) went into the Conditions more fully to pave the way for his contextual arguments.\nWithout pre judging those arguments I think it is necessary, if only in order to appreciate the consequences of the opposing arguments, to have an outline understanding of how the SPE (which counsel concurred in describing as a closed system or wrapper) operated before the collapse of Lehman Brothers, of how it operates now (after the collapse of Lehman Brothers but before any Enforcement Notice), and of how it would operate after the service of an Enforcement Notice.\nInterest is payable on all unredeemed Notes quarterly in arrears, the first payment having been made on 13 September 2007.\nThe annual rate of interest is linked to LIBOR or its dollar or euro equivalents (Condition 4(c)(i)), exceeding that rate by a margin (the Relevant Margin as defined in the preamble) which varies from 0.07% for A1b Notes to 4% for E Notes.\nMortgage interest received by Eurosail (the principal component in the Available Revenue Fund) cascades down the metaphorical waterfall set out in the 24 sub paragraphs of Condition 2(g) (priority of payments prior to enforcement).\nThe first claims on the income stream are for remuneration, charges and expenses; then (sub paragraph (iv)) sums due to the Liquidity Facility Provider, and (sub paragraph (v), but only until the collapse of Lehman Brothers) sums payable under or in connection with the Fixed\/Floating Swap Agreement and the BBR Swap Agreement (but not any currency swaps).\nPayments to currency swaps counterparties were linked to interest payments to particular classes of Noteholders, so that payments to counterparties in respect of A Noteholders come into the provision for payment of interest to those Noteholders, which is made pari passu as between all the A sub classes (Condition 2(g)(vi)).\nThe next priority (Condition 2(g)(vii)) was for payment off of any A Principal Deficiency (another expression defined in the preamble), but in practice such a deficiency could arise only if all the junior classes of Notes had become valueless.\nNext in the waterfall come similar groups of provisions for payment of interest, sums due to the currency swaps counterparties (and any B Principal Deficiency) in respect of B Notes (Condition 2(g)(viii) and (ix)) and so on for all the other classes (Condition 2(g)(x) to (xv)).\nOn 15 September 2008 Lehman Brothers Holdings Inc (LBHI), the guarantor of the swaps counterparty, Lehman Brothers Special Financing Ltd (LBSF) filed for Chapter 11 bankruptcy, as did LBSF on 3 October 2008.\nThe swaps were terminated on 13 November 2009.\nEurosail has made a claim against LBHIs and LBSFs bankrupt estates for about $221,000,000.\nAt the time of the hearings below, the claim had not been admitted and no distribution has been made in respect of it.\nDuring the last three years sterling has depreciated significantly against both the euro and the dollar, but the prevailing low level of interest rates has resulted in a surplus (excess spread) of mortgage interest received by Eurosail, which has enabled it to continue to pay in full the interest on all the outstanding Notes of every class.\nIn the meantime, both before and after the collapse of Lehman Brothers, Eurosail received principal sums from time to time as principal secured by the mortgages was repaid, either by way of partial or total redemption by mortgagors, or by enforcement of the security against mortgagors who were in default.\nThese sums have been and are at present applied under Condition 5(b)(i) as Actual Redemption Funds, on each date for payment of interest, in repaying the principal of the Notes in the order of priority A1 (now fully repaid), A2, A3, B, and so on.\nThere is a proviso to Condition 5(b) under which the order of priority may be altered.\nThe first possible variation (proviso (A)) applies if all the A1 and A2 Notes have been redeemed and other (favourable) specified conditions are satisfied: the A3 to E1c Notes then rank pari passu.\nConversely, under the other variation (proviso (B)), which applies if there is an A Principal Deficiency, priority is granted to the A Notes as a single class ranking pari passu.\nEvents of default are regulated by Condition 9.\nThe events specified in t in Condition 9(a) are, apart from that alre ady set out (para 5 above): defaul payment for three business days of any principal or interest due on any of the Notes; breach by Eurosail of any of its obligations and failure to remedy the breach the breach given by the Trustee; the (if remediable) for 14 days after notice of making of an order or resolution for the winding up of Eurosail, otherwise than for an approved amalgamation or reconstruction; and the initiation of insolvency or ious administration proceedings, or the levying of execution (subject to var qualifications which it is unnecessary to set out in detail).\nIf the Event of Default is an event under Condition 9(a)(iii) or a breach of\nEurosails obligations, there is a further requirement that the Trustee shall have certified to Eurosail that such event is, in its sole opinion, materially prejudicial to the interests of the Noteholders.\nFor this purpose the Trustee may under the trust deed (as recorded in Condition 2(c)) have regard only to (i) the interests of the A Noteholders if, in the Trustees sole opinion, there is a conflict between the interests of the A Noteholders (or any Class thereof) and the interests of the B Noteholders, the C Noteholders, the D Noteholders and\/or the E Noteholders.\nThis provision does not indicate how the Trustee is to exercise its discretion in the event of a conflict (such as there now potentially is) between the interests of the A2 Noteholders and the A3 Noteholders.\nIf there is an Event of Default (and, in the cases just mentioned, it is materia lly prejudicial) the Trustee may at its discretion serve an Enforcement Notice on Eurosail.\nMoreover it is obliged to do so if requested or directed (i) by holders of at least 25% of the outstanding Most Senior Class of Notes (defined as meaning the A Noteholders, rather than a subclass of them) or (ii) by an extraordinary resolution of the holders of that class.\nThis court was not shown any evidence, and did not hear any submissions, as to whether either of those requirements would be likely to be satisfied in practice.\nOn service of the Enforcement Notice the Notes become immediately due and payable and the Noteholders security becomes enforceable (Condition 9(b)).\nThereupon the order of priority shifts fro m that in Condition 2(g) to that in Condition 2(h).\nIt is unnecessary to go through all the detail of Condition 2(h).\nThe all important change is that under Condition 2(h)(v) the available funds are applicable to pay pari passu and pro rata (1) all amounts of interest and principal then due and payable on the A1c Notes, the A2c Notes and the A3c Notes and (2) [subject to provisions about currency swaps that have now lapsed] any interest and principal then due and payable on the A1b Notes, the A2a Notes, the A2b Notes and the A3a Notes, respectively.\nIn practical terms, the A2 Notes would no longer have priority, in terms of principal, to the A3 Notes.\nThe opening words of condition 2(h) express the Trustees obligation as being to make payments to the extent of the funds available to [Eurosail] and from the proceeds of enforcement of the Security (with exceptions that need not be detailed).\nThe penultimate provisio n of Condition 2(h) provides: The Noteholders have full recourse to [Eurosail] in respect of the payments prescribed above and accordingly are entitled to bring a claim under English law, subject to the Trust Deed, for the full amount of such payments in accordance with Condition 10 (Enforcement of Notes).\nMr Dicker did not challenge Mr Mosss submission that the opening words do not contradict the penultimate provision, and that seems to be correct.\nThe opening words are directed to the Trustees obligations, not to those of Eurosail.\nCondition 5(j) contains the PECO (Post Enforcement Call Option) which is the subject of the cross appeal.\nThis option (which has been given effect to as a separate written agreement between the Trustee and a company named or referred to as OptionCo) is regarded in the industry as a means of achieving the effect of limited recourse without the adverse tax consequences that would then have followed from a simple express non recourse provision.\nThe operative part of Clause 5(j) is as follows: All of the Noteholders will, at the request of the holder of the Post Enforcement Call Option, sell all (but not som e only) of their holdings of the Notes to the holder of the Post Enforcement Call Option, pursuant to the option granted to it by the Trustee (as agent for the Noteholders) to acquire all (but not some only) of the Notes (plus accrued interest thereon), for the consideration of one euro cent per Euro Note outstanding, one dollar cent per Dollar Note outstanding and one penny per Sterling Note outstanding (and for these purposes, each Global Note shall be one Note) in the event that the Security for the Notes is enforced, at any time after the date on which the Trustee determines that the proceeds of such enforcement are insufficient, after payment of all other claims ranking higher in priority to the Notes and pro rata payment of all claims ranking in ter the application of any such equal priority to the Notes and af proceeds to the Notes under the Deed of Charge, to pay any further principal and interest and any other amounts whatsoever due in respect of the Notes.\nBankruptcy remoteness\nBankruptcy remoteness was the expression used by Standard & Poors credit rating agency, and generally in the industry, to describe one criterion for a SPE to obtain a satisfactory credit rating for its loan notes (see European Legal Criteria for Structured Finance Transactions published by Standard & Poors (28 August 2008), and the comments of the Chancellor [2011] 1 WLR 1200, para 8 and Lord Neuberger of Abbotsbury MR [2011] 1 WLR 2524, para 28).\nThis is not the place to consider either the reliability of the credit rating agencies judgments on Notes secured by sub prime mortgages, or the influence that their judgments seem to have had in the market (caused, some have suggested, by the industrys general inability to comprehend the risks inherent in its own creations).\nBut the notion of bankruptcy remoteness, even if imperfectly understood, underlay many features of the Conditions and the arrangements of which they formed part.\nIn developing his contextual argument that this court should (if necessary)\nmould the meaning of section 123(1) and (2), as incorporated into Condition 9(a)(3) so as to take account of commercial realities, Mr Dicker drew particular attention to five features of the arrangements.\nThey are set out and discussed in section B2 of Eurosails case.\nMost of them have been mentioned already, at least in passing, but it may be helpful to bring them together in summary form.\nThey are relevant not only (arguably) to the issue of construction but also (without room for argument) to determining the likely length of deferment of Eurosails long term liabilities under the Conditions, in the absence of an Event of Default which triggers an Enforcement Notice.\nThese points are covered at some length in the witness statements of Mr Mark Filer, a director of Wilmington Trust SP Services (London) Ltd, Eurosails corporate services provider.\nThe five salient features of the Conditions and the supporting documentation bearing on the likely deferment of Eurosails obligations in respect of principal and interest are as follows: (1) Condition 2(g) defines Eurosails obligations for payment of interest on the Notes (after remuneration, charges and expenses) in terms of the Available Revenue Fund (see para 12 above).\nIf that source is insufficient for payment of interest on any of the Junior Notes (that is, those which are not A Notes) the obligation is deferred (while accruing interest) under Condition 6(i) and (j), if necessary until the final redemption date in 2045. (2) Temporary shortages of income can be provided for by the Liquidity Facility (reimbursements to which have a high order of priority under Condition 2(g)(iv)). (3) As to principal, redemption of Notes (other than the redeemed A1 Notes and the revenue backed Notes) is not due until 2045.\nUntil then redemption is limited to the Actual Redemption Funds (as defined in the preamble) which are applied in the appropriate order of priority under Condition 5(b) (see para 14 above). (4) Any loss of principal resulting from default on mortgages is termed a Principal Deficiency and is recorded in the Principal Deficiency Ledger (the detailed provisions as to this are found not in the Conditions but in Clauses 8 and 9 of the Cash\/B ond Administration Agreement).\nIf there is surplus income from the mortgage payments, the excess spread can be used to reduce or eliminate any Principal Deficiency on whatever is the highest ranking class of Notes with a deficiency.\nRecoupment of a Principal Deficiency takes priority to the payment of interest on lower ranking Notes (see para 12 above). (5) Finally there is the PECO, which is intended to produce the same, or a similar result as an express limited recourse provision (see paras 18 and 19 above).\nThe legislation\nThis court was taken to the legislative history of sections 122 and 123 of the 1986 Act, and it will be necessary to refer to it in some detail.\nBut it may be better to start with the sections themselves.\nThe 1986 Act was a consolidating statute which gave effect to the amendments made by the Insolvency Act 1985.\nSection 122(1), as amended, provides seven cases in which a company may be wound up by the court, of which the most important are the last two: (f) the company is unable to pay its debts, (g) the court is of the opinion that company should be wound up. it is just and equitable that the Section 123(1) then sets out five cases (stated or summarised in para 1 above) in which a company is deemed unable to pay its debts.\nThe four cases in paragraphs (a) to (d) of section 123(1) are true deeming provisions.\nA companys non compliance with a statutory demand, or non satisfaction of execution of a judgment debt, is a matter that can be proved quite simply, usually by a single short witness statement.\nIf proved, it establishes the courts jurisdiction to make a winding up order, even if the company is in fact well able to pay its debts.\nIf however a debt which has been made the subject of a statutory demand is disputed on reasonable grounds, the petitioner is adopting what has been called a high risk strategy, and the petition may be dismissed with indemnity costs: In Re a Company 12209 of 1991 [1992] BCLC 865, 868 (Hoffmann J).\nSection 123(1)(e) is significantly different in form: if it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due.\nThis is not what would usually be described as a deeming provision.\nIt does not treat proof of a single specific default by a company as conclusive of the general issue of its inability to pay its debts.\nInstead it goes to that very issue.\nIt may open up for inquiry a much wider range of factual matters, on which there may be conflicting evidence.\nThe range is wider because section 123(1)(e) focuses not on a single debt (which under paragraphs (a) to (d) has necessarily accrued due) but on all the companys debts as they fall due (words which look to the future as well as to the present).\nThe words as they fall due did not appear in the legislation until the Insolvency Act 1985.\nSimilarly the express reference in section 123(2) to the test of the value of the companys assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities did not appear before the Insolvency Act 1985.\nIn the present case both the Chancellor and the Court of Appeal treated the present legislative provisions as materially different from those previously in force: [2011] 1 WLR 1200, para 24; [2011] 1 WLR 2524, para 53.\nYet when this point was raised during the passage of the Insolvency Bill in 1985, the government spokesman in House of Lords, Lord Lucas of Chilworth, stated: Commons Amendment No 458 gives effect to the way in which the courts have interpreted section 518 of the Companies Act [1985]; that was previously section [223] of the 1948 Act.\nWe are not seeking to amend the law by this amendment; merely to give effect to that interpretation by the courts, namely, that section 518 contains both a cash flow and a balance sheet test.\nHansard (HL Debates, 23 October 1985, col 1247) In these circumstances it is necessary to look quite closely at the legislative history.\nIn considering it I have derived great assistance from a variety of academic commentary, including an article by Dr Peter Walton, Inability to pay debts: beyond the point of no return? [2013] JBL 212.\nThe starting point is sections 79 and 80 of the Companies Act 1862 (25 & 26 Vict, c 89), the general structure of which is similar to that of sections 122 and 123 of the 1986 Act.\nSection 80(4) of the 1862 Act stated the test simply as: tisfaction of the court that the Whenever it is proved to the sa company is unable to pay its debts.\nHowever, it is to be noted that under section 158, once a winding up order had been made, all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as is possible, of the value of all such debts or claims as may be subject to any contingency or sound only in damages, or for some other reason do not bear a certain value.\nSo a contingent or prospective creditor could not present a petition, but if another creditor presented a petition and secured a winding up order, contingent and prospective liabilities were admitted to proof.\nIn In Re European Life Assurance Society (1869) LR 9 Eq 122 Sir William\nJames V C dismissed a petition for the winding up of a company which had issued large numbers of life policies and annuity contracts, and appeared to be in financial difficulties.\nIn an extempore judgment he decided, with very little reasoning, that (p127) inability to pay debt solutely due.\nHe then proceeded to consider at greater length, but to dismiss, the alternative just and equitable ground in section 79(5) of the Companies Act 1862.\nAs to this ground he said at p128: s must refer to debts ab And in my view of the law of the case it would be just and equitable to wind up a company like this assurance company if it were made out to my satisfaction that it is, not in any technical sense but, plainly and commercially insolvent that is to say, that its assets are such, and its existing liabilities are such, as to make it reasonably certain as to make the court feel satisfied that the existing and probable assets would be insufficient to meet the existing liabilities.\nI take it that the court has nothing whatever to do with any question of future liabilities, that it has nothing whatever to do with the question of the probability whether any business which the company may carry on tomorrow or hereafter will be profitable or unprofitable.\nThat is a matter for those who may choose to be the customers of the company and for the shareholder to consider. 13 Page So here, it seems, the Vice Chancellor was applying a balance sheet test, but only to existing liabilities, in the context of the just and equitable ground.\nHe did not refer to any of the authorities that had been cited.\nIt may be unfortunate that his judgment has come to be regarded as a leading case.\nShortly afterwards the law was changed in relation to life offices by the Life Assurance Companies Act 1870 (33 & 34 Vict, c 61), which was effectively the beginning of the modern statutory regulation of life assurance.\nThere was no general change until section 28 of the Companies Act 1907, which made an amendment which was then consolidated by the Companies (Consolidation) Act 1908.\nThe latter provided in section 130(iv) that a company should be deemed to be unable to pay its debts: if it is proved to the satisfaction of the court that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the court shall take into account the contingent and prospective liabilities of the company.\nThe amendment made by the Companies Act 1907 was introduced on the recommendation of the Loreburn Committee (Report of the Company Law Amendment Committee) (1906) (Cd 3052), para 43, which was influenced by section 21 of the Life Assurance Comp anies Act 1870.\nThe amendment is described by Dr Walton [2013] JBL 212, 228 as an abbreviated version of section 21.\nBut there is not a very close parallel, since section 21 referred to a life office being insolvent (meaning, apparently, balance sheet insolvent) rather than its being unable to pay its debts.\nBut the admission of contingent and prospective liabilities, and especially long term liabilities, must tend to focus attention on balance sheet considerations.\nThus in In Re Capital Annuities Ltd [1979] 1 WLR 170, 185, Slade J observed: From 1907 onwards, therefore, one species of inability to pay its debts specifically recognised by the legislature as a ground for the making of a windi ompany incorporated under the Companies Acts was the possession of assets ng, contingent and prospective insufficient to meet its existi liabilities. ng up order in respect of any c Essentially the same wording appeared in section 223(d) of the Companies Act 1948 and in section 518(e) of the Companies Act 1985.\nTwo cases decided under section 223(d) call for mention.\nThe first is In Re a Company (also referred to as Bond Jewellers) [1986] BCLC 261, decided by Nourse J on 21 December 1983.\nLike In Re European Life Assurance Society, it was an extempore judgment given without citation of authority, in order to avoid delay, but it has been much cited.\nIt was referred to in both Houses of Parliament during the committee stages of the Insolvency Bill.\nIt concerned a tenant company with a propensity for postponing payment of its debts until threatened with litigation.\nNourse J felt unable to make an order under section 223(d), and considered, but ultimately did not make an order, on the just and equitable ground in section 222(f).\nThe case is of interest as illustrating (at p 263) that the phrase as they fall due, although not part of the statutory text, was understood to be implicit in section 223(d).\nIt is also of interest for the judges observation on the second point in section 223(d) (now embodied, in different words, in section 123(2) of the 1986 Act): into account the contingent and Counsel says that if I take prospective liabilities of the company, it is clearly insolvent in balance sheet terms.\nSo indeed it is if I treat the loans made by the associated companies as loans which are currently repaya ble.\nHowever, what I am required to do is to take into account the contingent and prospective liabilities.\nThat cannot mean that I must simply add them up and strike a balance against assets.\nIn regard to prospective liabilities I must principally consider whether, and if so when, they are likely to become present liabilities.\nThe second case, Byblos Bank SAL v Al Khudhairy [1987] BCLC 232, was a considered judgment of Nicholls LJ (with whom Slade and Neill LJJ agreed) delivered after 11 days of argument.\nIt concerned the disputed validity of the appointment of a receiver in June 1985, before either the Companies Act 1985 or the Insolvency Act 1985 was in force.\nThe ostensible ground for appointment of the receiver was not made out, but the bank relied on a new ground, section 223(d).\nNicholls LJ observed (p 247): Construing this section first without reference to authority, it seems to me plain that, in a case where none of the deeming paras (a), (b) or (c) is applicable, what is contemplated is evidence of (and, if necessary, an investigation into) the present capacity of a company to pay all its debts.\nIf a debt presently payable is not paid because of lack of means, that will normally suffice to prove that the company is unable to pay its debts.\nThat will be so even if, on an assessment of all the assets and liabilities of the company, there is a surplus of assets over liabilities.\nThat is trite law.\nIt is equally trite to observe that the fact that a company can meet all its presently payable debts is not necessarily the end of the matter, because para (d) requires account to be taken of contingent and prospective liabilities.\nTake the simple, if extreme, case of a company whose liabilities consist of an obligation to repay a loan of 100,000 one year hence, and whose only assets are worth 10,000.\nIt is obvious that, taking into account its future liabilities, such a company does not have the present capacity to pay its debts and as such it is unable to pay its debts.\nIn Nicholls LJ then referred to Re European Life Assurance Society LR 9 Eq 122, including the passage quoted at para 28 above, and commented (p 248): the judgment of James V C in In my view the exercise described by James V C is the exercise required to be done under section 223 (now section 518 of the 1985 Act).\nHe also referred to the decisions of Slade J in In Re Capital Annuities Ltd [1979] 1 WLR 170 and Nourse J in In Re A Company [1986] BCLC 261 as consistent with the views he had expressed.\nIn my view these authorities go quite a long way to establishing that neither the notion of paying debts as they fall due, nor the notion of balance sheet insolvency, was unfamiliar before the enactment of the Insolvency Act 1985.\nBut petitions by contingent or prospective creditors have been rare even after the repeal in 1986 of the standard requirement for such a creditor to provide security for costs.\nOne reason for that is no doubt the difficulty of quantifying contingent and prospective liabilities to the satisfaction of the court.\nAnother may be the fact that well advised commercial lenders will insist on contractual conditions under which deferred liabilities are accelerated in th e event of the borrower getting into financial difficulties.\nThe far reaching reforms effected by the Insolvency Acts of 1985 and 1986, together with related subordinate legislation, were influenced by the report of the Cork Committee, published in 1982.\nOne of its recommendations (para 535) was that the sole ground upon which the court may make an insolvency order in respect of a debtor, whether individual or corporate, will be that the debtor is unable to pay his or its debts.\nThe Committee proposed three cases in which the debtor would be deemed to be insolvent and unable to pay his or its debts.\nThe first two corresponded to the cases in section 123(1)(a) to (d) of the 1986 Act.\nThe third case was: (c) Where the applicant is a contingent or prospective creditor to whom the debtor is or may become indebted in a sum of not less than the prescribed amount, being a debt not yet presently due and payable, and it is proved to the satisfaction of the court that the ultimate repayment of the debt is in jeopardy because the debtors liabilities, including contingent and prospective liabilities, exceed the debtors assets.\nThis proposal limited the balance sheet insolvency test to applications by contingent or prospective creditors whereas the Byblos Bank case suggested that it was also relevant to the payment of debts as they fall due.\nThat point was noted by Briggs J in his perceptive judgment In Re Cheyne Finance plc (No 2) [2008] Bus LR 1562.\nHe referred at paras 42 43 to similar language (as they become due) used in Australian companies legislation, which until 1992 had a single test based on an inability to pay debts as they become due a phrase which looks to the future, as Griffith CJ said in Bank of Australasia v Hall (1907) 4 CLR 1514, 1527.\nThere is a good deal of later Australian authority, mentioned in the judgment of Briggs J, to the same effect.\nIn Re Cheyne Finance Plc (No 2) was concerned with a security trust deed\nwhich (in contrast to Condition 9(a)(iii) in the present appeal) incorporated into its rms of section 123(1), but not section definition of insolvency event the te 123(2).\nIt was therefore necessary to was consider how far section 123(1)(e) concerned, not only with debts that were immediately payable, but also with those that would be payable in the future.\nBriggs J decided, rightly in my view, that that is what section 123(1)(e) requires (para 56): In my judgment, the effect of the alterations to the insolvency test made in 1985 and now found in section 123 of the 1986 Act was to replace in the commercial solvency test now in section 123(1)(e), one futurity requirement, name ontingent and prospective liabilities, with another more flexible and fact sensitive requirement encapsulated in the new phrase as they fall due. ly to include c Briggs J considered (para 35), again rightly in my view, that the Byblos Bank case was a case about ability to pay debts as they became due, but that the Court of Appeal recognised that balance sheet insolvency is not irrelevant to that issue.\nThe practical effect of section 123\nThere is no doubt that, as a matter of form, the statutory test for a company being unable to pay its debts is materially different (as the Chancellor and the Court of Appeal observed) from the position under the Companies Act 1985.\nSection 123(1)(e) introduced the words as they fall due and section 123(2) has introduced a direct reference to a companys assets and liabilities.\nThese two provisions, both labelled as deeming provisions (though neither is obviously of that character) stand side by side in section 123(1)(e) and section 123(2) with no indication of how they are to interact.\nIt seems likely that part of the explanation lies in the history of the passage through Parliament of the Insolvency Bill in 1985, and the lengthy and interrupted process of review and consultation which had preceded it.\nThis process began as long ago as October 1976 when the Secretary of State announced his intention of setting up what became the Review Committee chaired by Mr (later Sir) Kenneth rim report in October 1979 (after a change of Cork.\nIt produced an inte government) and its final report in 1982.\nThe whole protracted process is described by Professor Ian Fletcher QC in his Law of Insolvency 4th ed (2009), pp 16 22.\nHe explains how there was no official reaction to the final report until a spate of financial scandals early in 1984: At relatively short notice the government White Paper, referred to above, was published in February 1984 together with an indication that legislation was imminent.\nIn consequence, very little time was allowed for interested parties to submit comments before the drafting of the Insolvency Bill was embarked upon, and the Bill itself was introduced in the House of Lords on 10 December 1984.\nThis regrettable mishandling of the period of preparation for the first major overhaul of insolvency law for over 100 years cannot but be lamented.\nThe inadequate manner in which consultation was conducted, coupled with the near total lack of any form of public debate about the issues of policy and principle at the heart of any radical recasting of insolvency law, were an inauspicious prelude to what was to become a most contentious and confused episode of legislative history.\nThereby, what ought to have been a largely non controversial, non Party Bill became the subject of highly dramatic proceedings before both Houses, and also in Committee, and damage was unquestionably inflicted upon the ultimate quality of a highly technical piece of legislation whose detailed provisions were but vaguely understood by all but a minority of those participating in its enactment, but whose social and econom ic importance was nonetheless immense.\nThe Bills deficiencies, due to haste in tary preparation, together with the vicissitudes of the parliamen 18 Page process, resulted in a quite exceptional number of amendments being tabled to the Insolvency Bill, estimated to have approached 1,200 by the time of Royal Assent.\nA high proportion of these amendments were tabled by the Government itself, and many were adopted virtually without debate during the closing stages of proceedings. (para 1 034)\nDespite the difference of form, the provisions of section 123(1) and (2) should in my view be seen, as the Government spokesman in the House of Lords indicated, as making little significant change in the law.\nThe changes in form served, in my view, to underline that the cash flow test is concerned, not simply with the petitioners own presently due debt, nor only with other presently due debt owed by the company, but also with debts falling due from time to time in the reasonably near future.\nWhat is the reasonably near future, for this purpose, will depend on all the circumstances, but especially on the nature of the companys business.\nThat is consistent with Bond Jewellers, Byblos Bank and Cheyne Finance.\nThe express reference to assets and liabilities is in my view a practical recognition that once the court has to move beyond the reasonably near future (the length of which depends, again, on all the circumstances) any attempt to apply a cash flow test will become completely speculative, and a comparison of present future liabilities (discounted for contingencies and assets with present and deferment) becomes the only sensible test.\nBut it is still very far from an exact test, and the burden of proof must be on the party which asserts balance sheet insolvency.\nThe omission from Condition 9(a)(iii) of the reference to proof to the satisfaction of the court cannot alter that.\nWhether or not the test of balance sheet insolvency is satisfied must depend on the available evidence as to the circ umstances of the particular case.\nThe circumstances of Eurosails business, so far as it can be said to have a business at all, are quite unlike those of a compan trading activities. y engaged in normal There are no decisions to be made about choice of suppliers, stock levels, pricing policy, the raising of new capital, or other matters such as would constantly engage the attention of a trading companys board of directors.\nInstead Eurosail is (in Mr Mosss phrase) in a closed system with some resemblance to a life office which is no longer accepting new business.\nThe only important management decision that could possibly be made would be to attempt to arrange new hedging cover in place of that which was lost when Lehman Brothers collapsed.\nTo that extent Eurosails present assets should be a better guide to its ability to meet its long term liabilities than would be the case with a company actively engaged in trading.\nBut against that, the three imponderable factors identified in para 9 above c urrency movements, interest rates and the United Kingdom economy and housing market are and always have been outside its control.\nOver the period of more than 30 years until the final redemption date in 2045, they are a matter of speculation rather than calculation and prediction on any scientific basis.\nAt first instance the Chancellor started with three propositions derived from the case law (paras 29 to 32): that the assets to be valued are the present assets of the company; that contingent and prospective liabilities are not to be taken at their full face value; and that: Taking account of must be recognised in the context of the overall question posed by the subsection, namely whether the company is to be deemed to be insolvent because the amount of its liabilities exceeds the value of its assets.\nThis will involve consideration of the relevant facts of the case, including when the prospective liability falls due, whether it is payable in sterling or some other currency, what assets will be available to meet it and what if any provision is made for the allocation of losses in relation to those assets. (para 32) He then set out four reasons (paras 34 to 37) for concluding (para 38) that the value of Eurosails assets exceeded its liabilities, having taken account of its contingent and prospective liabilities to such extent as appears to be necessary at this stage.\nIn the Court of Appeal Lord Neuberger MR did not disagree with anything in the Chancellors judgment so far as it related to statutory construction.\nHe did however go further in his detailed discussion of section 123(2).\nHe observed (para 44): In practical terms, it would be rather extraordinary if section 123(2) was satisfied every time a companys liabilities exceeded the value of its assets.\nMany companies which are solvent and successful, and many companies early on in their lives, would be deemed unable to pay their debts if this was the meaning of section 123(2).\nIndeed, the issuer is a good example of this: its assets only just exceeded its liabilities when it was formed, and it was more than possible that, even if things went well, it would fall from time to time within the ambit of section 123(2) if the appellants are right as to the meaning of that provision.\nLord Neuberger MR developed this at paras 47 to 49 of his judgment: 47.\nMore generally, I find it hard to discern any conceivable policy reason why a company should be at risk of being wound up simply because the aggregate value (however calculated) of its liabilities exceeds that of its assets.\nMany companies in that position are successful and creditworthy, and cannot in any way be characterised as unable to pay [their] debts.\nSuch a mechanistic, even artificial, reason for permitting a creditor to present a petition to wind up a company could, in my view, only be justified if the words of section 123(2) compelled that conclusion, and in my opinion they do not. 48.\nIn my view, the purpose of section 123(2) has been accurately characterised by Professor Sir Roy Goode in Principles of Corporate Insolvency Law, 3rd ed (2005).\nHaving referred to section 123(1)(e) as being the cash flow test and to section 123(2) as being the balance sheet test, he said this, at para 4 06: the only relevant test [for If the cash flow test were insolvency] then current and short term creditors would in effect be paid at the expense of creditors to whom liabilities were incurred after the company had reached the point of no return because of an incurable deficiency in its assets. 49.\nIn my judgment, both the purpose and the applicable test of section 123(2) are accurately encapsulated in that brief passage.\nToulson LJ agreed with Lord Neuberger MR but expressed himself in a more guarded way.\nHe agreed that Professor Sir Roy Goode had rightly discerned the underlying policy (para 115) but added (para 119) that Professor Goodes reference to a company having reached the point of no return because of an incurable deficiency in its assets illuminates the purpose of the subsection but does not purport to be a paraphrase of it.\nHe continued: Essentially, section 123(2) requires the court to make a judgment whether it has been established that, looking at the companys assets its prospective and contingent and making proper allowance for liabilities, it cannot reasonably be expected to be able to meet those liabilities.\nIf so, it will be deemed insolvent although it is currently able to pay its debts as they fall due.\nThe more distant the liabilities, the harder this will be to establish.\nI agree with what Toulson LJ said here, and with great respect to Lord Neuberger MR I consider that the point of no return should not pass into common usage as a paraphrase of the effect of section 123(2).\nBut in the case of a companys liabilities that can as matters now stand be deferred for over 30 years, and where the company is (without any permanent increase in its borrowings) paying its debts as they fall due, the court should proceed with the greatest caution in deciding that the company is in a state of balance sheet insolvency under section 123(2).\nReasoning in the courts below\nSir Andrew Morritt C, having set out some general propositions as to the effect of section 123 (1)(e) and (2) (in paras 29 to 32 of his judgment, summarized above), rejected the A3 Noteholders submission that Eurosail was plainly insolvent for the purposes of section 123(2) as applied by Condition 9(a)(iii).\nHe relied on four points, set out in paras 34 to 37 of his judgment.\nFirst, Eurosails claims in the insolvencies of LBHI and LBSF, though not admitted, could not be ignored.\nThe secondary market indicated that the claim was worth 35% to 37% of US$221m (that is, a value of the order of 60m).\nSecond, a large part of the total deficiency that was claimed to exist was due to conversion into sterling at the prevailing spot rate of liabilities not due for payment until 2045.\nThird, the future liabilities were fully funded in the limited sense that deficiencies resulting from mortgage defaults reduced Eurosails liability to the Noteholders through the operation of the Principal Deficiency Ledger.\nFourth, the Chancellor was able to infer that a calculation of the then present values of assets and liabilities would not show a deficiency, since Eurosail was well able to pay its debts as they fell due, there was no deficiency on the Principal Deficiency Ledger, and projected redemptions of each class of A Notes were in advance of the maturity dates.\nIn the Court of Appeal counsel appearing for the A2 Noteholders did not feel able to give complete support to the Chancellors second point, and Lord Neuberger MR accepted (para 67) the submission of counsel for the appellants: As Mr Sheldon [then appearing for the A3 Noteholders] said, one has to value a future or contingent liability in a foreign currency at the present exchange rate.\nBy definition, that is the present sterling market value of the liability.\nI would also respectfully question the Chancellors third point.\nThe Chancellor had earlier in his judgment, at para 13, referred to clause 8 of the Cash\/Bond Administration Agreement, which provides for the maintenance of Principal Deficiency Ledgers.\nThat seems to be the basis of his point about liabilities being self cancelling.\nBut clause 8 seems to be concerned with no more than an accountancy exercise, not with a permanent extinction of liabilities.\nIt operates to nal redemption date, if circumstances defer liabilities for principal until the fi require, and provided that an Enforcement Notice is not given in the meantime.\nBut Condition 2(h) provides for Eurosail to be liable on a full recourse basis post enforcement, as already noted (para 18 above).\nLord Neuberger MR did not accept that a forecast deficiency based on then current exchange rates could be dismissed as entirely speculative.\nHe started (para 63) from Eurosails audited accounts for the year ending 30 November 2009, which showed a net liability of 74.557m.\nHe noted (paras 63 to 74) that this figure required two substantial amendments (one for the Lehman Brothers claim, and the other for the full recourse factor) which, ironically and coincidentally, virtually cancel each other out (para 69).\nSo his final discussion and conclusion (paras 75 to 83) starts with an assumed deficiency of the order of 75m.\nAgainst that Lord Neuberger MR set three factors.\nThe first was that a deficiency of 75m, with an aggregate principal sum of just over 420m outstanding on the mortgages, was less than 17% of the assets.\nSecondly, the deficit was largely based on the assumption that exchange rates would remain constant (para 76): Of course, they are as likely to move in an adverse direction as they are to move in a favourable direction, but the volatility of those rates tell against the appellants given that they have to establish that the issuer has reached the point of no return.\nThirdly, the court was looking a long way ahead (para 78): Not only do all the unredeemed notes have a final redemption date in 2045, but it appears from the evidence that the weighted average term of the remaining mortgages is in the region of 18 years, and the rate of early redemption has slowed significantly and is likely, according to expert assessment, to remain low for the time being.\nLord Neuberger MR accepted that there was a real possibility that, if no Enforcement Notice was served, events might turn out to the disadvantage of the A3 Noteholders (para 79): However, as mentioned, a future or contingent creditor of a company can very often show that he would be better off if the company were wound up rather than being permitted to carry on business.\nIn a commercially sensible legal system that cannot of itself justify the creditor seeking to wind up the company.\nToulson and Wilson LJJ agreed with this reasoning.\nToulson LJ emphasised the importance of the liabilities being distant in time (para 119, quoted in para 42 above).\nThe appeal was therefore dismissed, as was the cross appeal.\nConclusions\nThe crucial issue, to my mind, is how far the Court of Appeals conclusion depended on the point of no return test.\nFor reasons already mentioned, I consider that that is not the correct test, if and in so far as it goes beyond the need for a petitioner to satisfy the court, on the balance of probabilities, that a company has insufficient assets to be able to meet all its liabilities, including prospective and contingent liabilities.\nIf it means no more than that, it is unhelpful, except as illuminating (as Toulson LJ put it) the purpose of section 123(2).\nIn my view the Court of Appeal would have reached the same conclusion without reference to any point of no return test; and I would myself reach the same conclusion.\nEurosails ability or inability to pay all its debts, present or future, may not be finally determined until much closer to 2045, that is more than 30 years from now.\nThe complex documentation under which the loan notes were issued contains several mechanisms (identified in para 22(1) to (4) above, the PECO being disregarded for present purposes) for ensuring that liabilities in respect of principal are, if necessary, deferred until the final redemption date, unless the post enforcement regime comes into operation.\nThe movements of currencies and interest rates in the mean time, if not entirely speculative, are incapable of prediction with any confidence.\nThe court cannot be satisfied that there will eventually be a deficiency.\nI would therefore dismiss the appeal.\nI would also dismiss the cross appeal, for the same reasons as were given by the Chancellor and the Court of Appeal.\nIt is onsider Mr Dickers arguments based on suppose not necessary to c d inconsistencies and commercial realities, except to say that they would have encountered serious difficulties in the light of this courts decision in Enviroco Ltd v Farstad Supply A\/S [2011] UKSC 16, [2011] 1 WLR 921: see the judgment of Lord Collins of Mapesbury, with which the other members of the court agreed, at paras 51 and 52.\nThe loan notes documentation did indeed contain some provisions (identified in paras 128 to 134 of Eurosails case) which are inconsistent with the post enforcement regime being triggered by a temporary deficiency of assets.\nBut the court might well have taken the view, on documents of such complexity, that the draftsman had simply failed to grasp all its many and various implications, and that it was not for the court to rewrite the documents for the parties.\nLORD HOPE\nI would dismiss the appeal for the reasons given by Lord Walker.\nI would also dismiss the cross appeal, which concerns the effect of the PECO on the application of section 123(2) of the 1986 Act as in corporated into Condition 9(a)(iii).\nThe question which it raises no longer needs to be answered as th e Noteholders appeal on the question whether Eurosail (the Issuer) was unable to pay its debts was not successful.\nBut Sir Andrew Morritt C [2011] 1 WLR 122 gave his view on it in paras 39 44 of his judgment, and so too did Lord Neuberger MR in the Court of Appeal [2011] 1 WLR 2524 in paras 84 100.\nA PECO is widely used in securitisation transactions of the kind that was entered into in this case, and we have been told that the question is of some importance to the securitisation market more generally.\nSo it is appropriate that we should give our reasons for agreeing with the Chancellor and the Court of Appeal that it has no effect on the way the liability of the Issuer to the Noteholders for the purposes of the default provision in Condition 9(a)(iii) is to be calculated.\nThe Trustee entered into a PECO Agreement on behalf of the Noteholders on 16 July 2007, which is the same date as that on which the Notes were issued.\nBy Clause 3.1 it granted an option to a company called Eurosail Options Ltd (referred to in the Agreement as OptionCo): to acquire all (but not some only) of the Notes (plus accrued interest thereon) in the event that the Security for the Notes is enforced and the Trustee, after the payment of the proceeds of such enforcement, determines that the proceeds of such enforcement are insufficient, after payment of all claims ranking in priority to or pari passu with the Notes pursuant to the Deed of Charge, to pay in full all principal and\/or interest and any other amounts whatsoever due in respect of the Notes.\nThe Trustee shall promptly after the Security is enforced and the proceeds of such enforcement are paid, make a determination of whether or not there is such an insufficiency.\nIf the Trustee determines that there is such an insufficiency the Trustee shall forthwith give notice (the In sufficiency Notice) of such determination to OptionCo and the Issuer.\nClause 3.1 has to be read together with Condition 5(j) (see para 19, above), which provides that each Noteholder will, on the exercise of the option conferred on OptionCo, sell to the company the whole of his holding of notes for the nominal consideration for which the PECO provides.\nIt also has to be read together with the Event of Default described in Condition 9(a)(iii): see para 5, above.\nUnder that provision a default occurs, among other things, in the event of the Issuer: being unable to pay its debts as and when they fall due or, within the meaning of section 123(1) or (2) (as if the words it is proved to the satisfaction of the court did not appear in section 123(2)) of the Insolvency Act 1986 (as that section may be amended from time to time), being deemed unable to pay its debts.\nThe Prospectus at p 26 contains this explanation of the effect of these provisions, under the heading Considerations related to the Instruments, for prospective purchasers: Although the Instruments will be full recourse obligations of the Issuer, upon enforcement of the security for the Instruments, the Trustee will, in practice, have recourse only to the Loans and Collateral Security, and to any other assets of the Issuer then in\nexistence as described in this document\nThe purpose of a PECO is to achieve bankruptcy remoteness for the issuer.\nIts aim is to prevent the issuer from being susceptible to insolvent winding up proceedings by ensuring so far as possible that, if its assets prove to be insufficient the issuer will not instigate bankruptcy to meet its liabilities, a director of proceedings in respect of it.\nBankruptcy remoteness is one of the criteria used by the rating agencies which issuers of notes seek to satisfy so that their instruments will achieve the highest possible credit rating.\nThat criterion is satisfied in other jurisdictions by provisions which limit the rights of noteholders against the issuer to the value of the issuers assets.\nUntil recent tax legislation altered the position, limited recourse provisions of that kind gave rise to UK stamp duty reserve tax at the rate of 1.5% of the amount subscribed for them.\nAs the Chancellor explained in para 40, the PECO is designed to achieve the same result as limited recourse provisions, but without the adverse tax consequences.\nThe Issuer accepts that, as a matter of contract, the liabilities were unlimited in recourse.\nBut it maintains that the commercial reality was that the liabilities alleged to be the debts that the issuer was unable to pay to the Noteholder were liabilities which it would never have to meet.\nIn the event that the assets of the Issuer were exhausted, any claim that the Noteholder had against the Issuer would be assigned to the option holder.\nThat, it is said, would bring an end to the claim.\nSo it would be wrong to treat the Issuer ion 123(2) as as falling within sect incorporated into Condition 9(a)(iii) on the ground that it was unable to pay its debts, as in practice it was never intended or expected that the liabilities would be paid except out of the underlying assets available to the Issuer.\nThe soundness of this approach depends however on whether, in law, the the Issuer to the Noteholder.\nIn answering this PECO affects the liability of question it is important to appreciate that the question is not whether the Issuer should actually be wound up on the grounds described in section 123(2), but whether its financial position is such that it falls within that subsection for the purposes of the default provision in C ondition 9(a)(iii).\nThe answer to that question is to be found by examining the wording of the Condition in the context of the provisions of the transaction documents as a whole.\nDoes the PECO in any way alter the conclusion that would otherwise be drawn that the Issuers assets were less than its liabilities and that it was unable to pay its debts?\nThe Chancellor based his judgment that it did not on the wording of section 123(2), as amended for the purposes of Condition 9(a)(iii).\nHe held that if, in the application of that subsection the court concluded that the value of the companys assets was less than the amount of its liabilities, taking into account its contingent and prospective liabilities, the PECO had no effect on those liabilities at all: para 43.\nAs he put it, the liabilities of the Issuer remain the same, whether or not there is a PECO or, if there is, whether or not the call option has been exercised.\nUnless and until the option holder releases the Issuer from all further liability, which it is under no obligation to do, the liability of the Issuer is unaffected.\nLord Neuberger reached the same conclusion, but for fuller reasons: see paras 92 97.\nHe said that, reading the relevant provisions of the documents together, they established that the Issuers liability to the Noteholders was to be treated as a liability of full recourse at least until the security was enforced and, arguably, until the option was exercised and the transfer to the option holder was completed.\nThere was the statement in the Prospectus mentioned in para 54, above.\nIt suggested a two stage process, under which the Issuers liability was treated initially as full recourse and liability would become limited recourse only on enforcement of the security.\nThere was the closing part of clause 6.7 of the Deed of Charge which, having restricted the ability of the Trustee to enforce the Noteholders rights on enforcement of the Security beyond the Issuers assets, provided that this shall not apply to and shall not limit the obligations of the Issuer to the [Noteholders] under the Instruments and this Deed.\nAnd there was the provision in Condition 2(h), which stated in terms that the Noteholders had full recourse to the Issuer in respect of payments due and that they were entitled to bring a claim under English law for the full amount of such payments.\nFinally Lord Neuberger referred to the wording of Condition 9(a)(iii) itself.\nIt was hard to see why any reference should be made in that Condition to section 123(2) if the Noteholders rights against the Issuer were not to be treated as full recourse until the enforcement of the security.\nHe also said that there was nothing commercially insensible in the conclusion that, for the purpose of Condition 9(a)(iii), the Noteholders rights against the Issuer were treated as being of full recourse, notwithstanding the PECO: para 100.\nThe A3 Noteholders submit that the key operative provision is Clause 3.1 of the PECO itself.\nIt makes it plain that it does not have the effect of limiting the liability of the Issuer in respect of the Notes to the value of the Issuers assets.\nIts reference to there being an insufficiency of assets after enforcement to meet whatever is due in respect of the Notes is a clear indication that it contemplates that the amount of the liabilities that the Notes have created must be capable of exceeding the value of the assets of the Issuer.\nThen there is the time at which the option is exercisable.\nIt is not said to have any operative effect at all prior to enforcement of the security.\nSo at all times prior to its exercise the Noteholders remain entitled to payment in accordance with the Conditions.\nAnd even when exercised all it does is provide a mechanism by which the right to be paid under the Notes is assigned to OptionCo.\nAs the Issuer relies on commercial reality rather than legal form, the legal effect of the documents is not really in dispute.\nThe common intention of the parties is said by the Issuer to be quite different.\nIts argument is that, as inclusion of a PECO rather than a contractual limited recourse provision was done solely for tax reasons, it was not intended or unders tood to alter the commercial nature, effect and operation of the asset backed securitisation.\nAs a matter of contract the liabilities were unlimited in recourse.\nAs a matter of commercial substance and in valent of a provision by which the rights of practice, they were the equi Noteholders were expressly limited.\nThe Issuers case is that its future obligations to pay principal under the Notes should be taken into account only to the extent that its assets were sufficient to pay for them.\nAs Mr Dicker QC for the Issuer put it at the end of his argument, legal fo rm should not triumph over commercial substance.\ndistinguish the intended commercial effect of these provisions from their legal effect in this way.\nThe exercise that Condition 9(a)(iii) predicates is the quantification of the amount of the Issuers assets and liabilities in order to determine whether there has been an Event of Default.\nThe legal effect and the commerc ial effect of the PECO, on its true analysis, both point in the same direction.\nIt has no effect, for the purpose of that quantification, on the amount of the Issuers liabilities.\nTo limit those liabilities as the Issuer contends would contradict the parties clearly expressed commercial intention as found in the contractual documents.\nThe fact that the economic result of the PECO may be the same as if the Noteholders right of recourse had been limited to the Issuers assets is beside the point.\nIt can be expected to achieve bankruptcy remoteness as effectively.\nBut it would not be in accordance with the true meaning of the documents to treat the two methods as if they had the same effect in law.\nPage I do not think that it is possible to\nwhen the provisions are open to different interpretations.\nThe court should adopt the more, rather than the less, commercial construction: Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900.\nBut, for the reasons given by the Chancellor and Lord Neuberger MR, the meaning to be given to the language that the parties used in this case is not open to doubt.\nThe suggestion that to give effect to that meaning is to surrender to legal form over commercial substance amounts, in effect, to an invitation to depart from the settled role of commercial good sense.\nIts role is to find out what the par ties meant when they entered into the arrangement, not to replace it with something which is not to be found in the language of the documents at all.\nThe ultimate aim in construing provisions of the kind that are in issue in this case, as it is when construing any contract, is to determine what the parties meant by the language that they have used.\nCommercial good sense has a role to play\n","output":"Interest bearing loan notes (the notes) to the value of 660m were issued to certain companies (the Noteholders) by a special purpose vehicle formed by the Lehman Brothers group, Eurosail UK 2007 3BL (the Issuer).\nThe Issuer used the issue of the notes to fund the purchase of a portfolio of mortgage loans, to the value of 650m, secured on residential property in the United Kingdom.\nThe notes were issued in 5 principal classes in order of priority for repayment.\nThose classes run from A through to E, and comprise a total of 14 sub classes.\nThe A notes hold highest priority, are of the highest value, and are designated either A1, A2 or A3.\nThe final redemption date of the lowest priority notes is in 2045.\nThe terms governing the issue of the notes (the Conditions) provide that in the event of an Event of Default, an Enforcement Notice may be served by the trustee of the Noteholders rights, namely BNY Corporate Trustee Services Ltd (the Trustee).\nIf the Issuer becomes unable to pay its debts under the terms of section 123 of the Insolvency Act 1986 (the 1986 Act), that would constitute an Event of Default.\nThat section provides that a company is deemed unable to pay its debts, first, if it is unable to pay those debts as they fall due or, secondly, if the value of the companys assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.\nThe former is often referred to as the cash flow test, and the latter as the balance sheet test.\nThe effect of section 123 was incorporated into the Conditions.\nFurther, on the date on which the notes were issued, on behalf of the Noteholders the Trustee entered into an agreement (PECO) with another company (OptionCo).\nOptionCo was granted the option to purchase all of the notes from the Noteholders, plus the accrued interest, for a nominal consideration in the event that the Trustee determines that the Issuer is unable to pay its debts under section 123.\nThe intended effect of this was that, in the event that the assets of the Issuer were exhausted, the remaining claims of the Noteholders against the Issuer would be assigned to OptionCo, and the Issuer would not be regarded as unable to pay its debts.\nThe Issuer had entered into swap agreements with two of Lehman Brothers companies, with the consequence that when the latter became insolvent the Issuer suffered a significant deficiency in its net asset position, though it continued to pay its debts.\nThe holders of the A1 and certain other of the notes had been repaid by this time.\nThe A2 Noteholders were to have priority over A3 Noteholders in receiving repayments of principal out of sums raised by the Issuer from the redemption of mortgages in the portfolio, though those two groups would rank equally for repayment of interest.\nHowever, a finding that the Issuer was unable to pay its debts, and the consequent issuing of an Enforcement Notice, would alter this position significantly: all notes would become immediately due and payable and, importantly, A2 and A3 Noteholders would rank equally for repayment of principal.\nAgainst that background, though adopting a neutral position, the Trustee commenced these proceedings to seek a determination of whether the difficulties suffered by the Issuer constituted an Event of Default on the basis that it was unable to pay its debts within the meaning of section 123 of the 1986 Act.\nThis appeal is therefore concerned with the construction of section 123.\nThe Issuer and certain of the A2 Noteholders successfully argued in both the High Court and the Court of Appeal that the Issuer was not unable to pay its debts within the meaning of section 123.\nThe Appellants, who are A3 Noteholders, argue to the contrary, and seek a stricter construction of section 123 than that which was applied by the lower courts.\nBy way of cross appeal the Issuer renews its argument, rejected by the Court of Appeal, that in the event that the Issuer was otherwise deemed unable to pay its debts under section 123, the effect of the PECO should serve to alter that conclusion.\nThe Supreme Court unanimously dismisses the appeals and the Issuers cross appeal.\nLord Walker, with whom Lord Mance, Lord Sumption and Lord Carnwath agree, gives the lead judgment.\nLord Hope gives a concurring judgment.\nHaving regard to previous relevant legislation, to the authorities pertaining to those provisions and to section 123 of the 1986 Act itself, the enactment of section 123 should be seen as having made little significant change in the law.\nThe changes in form therein emphasise that the cash flow test is concerned with debts falling due from time to time in the reasonably near future, in addition to those debts presently due.\nWhat is to be regarded as the reasonably near future will depend on the circumstances at hand, but especially the nature of the companys business [37].\nHowever, once one moves beyond the reasonably near future, any attempt to apply the cash flow test will become completely speculative.\nIn that situation, a comparison of present assets with present and future liabilities, the latter having been discounted to account for contingencies and deferment of payments, becomes the only sensible test.\nThat is the reason for the inclusion of the balance sheet test in section 123, though it is still very far from an exact test.\nIt is for the party asserting balance sheet insolvency to establish insolvency of that nature [37].\nWhether or not the balance sheet test of insolvency is satisfied must depend on the available evidence as to the circumstances of the particular case.\nIn that regard, the Issuer is not engaged in normal, on going trading activities, and therefore its present assets should be a better guide to its ability to meet its long term liabilities.\nAgainst that, the impact of factors relevant to its business in the period until the final redemption rate in 2045, such as currency movements, interest rates and the economy and housing market of the United Kingdom, must be considered.\nHowever, they are a matter of speculation rather than calculation or prediction on a scientific basis [38, 49].\nAs the Issuers liabilities can, as matters stand, be deferred until 2045, and as it is currently paying its debts as they fall due, the Court should proceed with the greatest caution in deciding that it is in a state of balance sheet insolvency [42].\nIts ability to pay all its debts, present or future, may not be finally determined until much closer to 2045.\nThe Conditions contain several mechanisms to ensure that liabilities in respect of principal can be deferred until that date.\nThat being so, the Court cannot be satisfied that there will eventually be an inability on the part of the Issuer to pay its debts [49].\nThough it is not required to decide the point because the appeal is dismissed, PECO agreements are of importance to the securitisation market.\nSo the Court gives reasons for its decision to dismiss the cross appeal [51].\nIn that regard, the intended legal and commercial effects of the PECO, having regard to the wording of the documents pertaining to the transaction as a whole, point in the same direction: they do not affect the quantification of the Issuers liabilities.\nThe meaning to be given to the language used by the parties on this point is not open to doubt.\nIt would not be consistent with commercial good sense to depart from it [64].\n","id":21}
{"input":"Payment Protection Insurance (or PPI) is sold to borrowers to cover the repayment of specified borrowings upon the occurrence of an insured event, generally sickness, accidental injury, or unemployment.\nIn its report, Market Investigation into Payment Protection Insurance (29 January 2009), the Competition Commission recorded that PPI was commonly sold as part of a package with the loan itself, and in those cases usually provided for a single premium to be paid upfront at the time of the transaction and added to the amount borrowed.\nCommissions payable to intermediaries were high, typically between 50 and 80 per cent of gross written premium for policies sold in connection with a personal loan.\nThese levels of commission were much higher than those payable for introducing the loan itself, which meant that a large proportion of the profits of loan brokers was derived from selling PPI policies.\nThe Commission found that the market for PPI sold as a package with loans was characterised by limited competition and low levels of substitutability, and that these factors resulted in high premiums relative to what would be expected in a well functioning market.\nThey made a number of recommendations, including a prohibition of selling PPI in a package with the loan and a prohibition on single premium policies.\nThese recommendations have since been adopted.\nSections 140A to 140D of the Consumer Credit Act 1974 confer wide powers on the court to reopen unfair credit transactions.\nThis appeal is about the application of those provisions to a PPI policy issued in 2006 to Mrs Susan Plevin. 3.\nMrs Plevin was then a widowed college lecturer of fifty nine living in her own house, with a mortgage and various unsecured personal debts.\nShe responded to an unsolicited leaflet put through her letter box by an independent credit broker called LLP Processing (UK) Ltd, which has since gone into liquidation.\nThey offered to arrange the refinancing of her existing liabilities at a competitive rate of interest over a long term, secured on her home.\nShe telephoned LLP and told them that she was interested in borrowing money to pay off her existing debts and fund some home improvements.\nDuring the call, LLP completed an internal form called a Demands and Needs Statement on the basis of information provided by her.\nThey then proposed that she should borrow 34,000 from Paragon Personal Finance Ltd, repayable in instalments over ten years, and take out PPI for five years with Norwich Union.\nThe PPI premium was 5,780, which was payable at the outset and added to the amount of the loan making a total borrowing of 39,780.\nParagon was one of eleven lenders with whom LLP had arrangements to introduce clients.\nThese arrangements allowed them to input details of the proposed loan into a Paragon computer system and obtain a preliminary indication of whether the transaction was likely to be acceptable.\nEach lender had an arrangement with a designated insurer who underwrote PPI policies associated with its loans.\nNorwich Union was the insurer designated by Paragon. 5. 4.\nAfter the telephone conversation, LLP sent Mrs Plevin a letter recording their proposal, and quoting a premium for PPI cover at 5,780.\nIt enclosed a Key Facts document describing the insurance cover, a Borrower Information Guide produced by the Finance Industry Standards Association (FISA) and an application form.\nThe application form, which Mrs Plevin completed and dated 6 March 2006, recorded brief details of her income and outgoings, including her current mortgage, and that she wished to borrow 34,000 and buy a PPI policy.\nThe form was returned to LLP.\nSubsequently, she was telephoned by an employee of Paragon.\nThis call was made in accordance with a standard internal procedure and was known as a speak with.\nIt resulted in the generation within Paragon of a computerised form headed Money Laundering Details.\nThe body of the form confirms what the title would lead one to expect, namely that it is concerned with satisfying Paragons obligations under the money laundering legislation and regulations.\nIt established Mrs Plevins identity, that she had applied for the loan in the amount stated in the application form, the purpose for which she required it and the amount and date of the first payment.\nIt also confirmed that no upfront application fee had been charged by LLP, which would have been contrary to the FISA code of practice.\nThe speak with was not intended to appraise the suitability of the transaction for Mrs Plevins purposes.\nOn 21 March 2006, Paragon sent her a copy of the credit agreement, the PPI certificate and four cheques, three of which were payable to her designated creditors and the fourth to her personally.\nThese were the only instances of direct contact between Mrs Plevin and Paragon. 6.\nOf the 5,780 premium, 71.8% was taken in commissions from the premium before it was remitted by Paragon to Norwich Union.\nLLP received 1,870 and Paragon retained 2,280.\nThe net sum of 1,630 was then remitted by Paragon to Norwich Union.\nThe FISA borrowers guide told Mrs Plevin that commission is paid by the lending company.\nBut neither the amount of the commission nor the identity of the recipients was disclosed.\nSections 140A to 140C: General considerations 7.\nThese provisions were added to the Consumer Credit Act 1974 by sections 19 22 of the Consumer Credit Act 2006.\nThey replaced provisions which had conferred a limited power to reopen extortionate credit bargains (sections 137 140 of the 1974 Act) but set too high a bar to debtors and sureties wishing to challenge the terms of their agreements.\nThe new provisions came into force on 6 April 2007, after the agreement with Mrs Plevin was made, but they apply by virtue of the transitional provisions of Schedule 3 of the Act.\nSection 140A provides, so far as relevant, as follows: 8. 140A Unfair relationships between creditors and debtors (1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following (a) any of the terms of the agreement or of any related agreement; (b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement; (c) any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement). (2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor). (3) For the purposes of this section the court shall (except to the extent that it is not appropriate to do so) treat anything done (or not done) by, or on behalf of, or in relation to, an associate 9. or a former associate of the creditor as if done (or not done) by, or on behalf of, or in relation to, the creditor.\nSection 140B(9) provides that where the debtor (or a surety) alleges that the relationship is unfair, it is for the creditor to prove that it is not.\nSection 140B lists the orders which a court may make if it finds the debtor creditor relationship to be unfair including, under subsection (1)(a) an order requiring the creditor to repay (in whole or in part) any sum paid by the debtor . by virtue of the agreement or any related agreement. 10.\nSection 140A is deliberately framed in wide terms with very little in the way of guidance about the criteria for its application, such as is to be found in other provisions of the Act conferring discretionary powers on the courts.\nIt is not possible to state a precise or universal test for its application, which must depend on the courts judgment of all the relevant facts.\nSome general points may, however, be made.\nFirst, what must be unfair is the relationship between the debtor and the creditor.\nIn a case like the present one, where the terms themselves are not intrinsically unfair, this will often be because the relationship is so one sided as substantially to limit the debtors ability to choose.\nSecondly, although the court is concerned with hardship to the debtor, subsection 140A(2) envisages that matters relating to the creditor or the debtor may also be relevant.\nThere may be features of the transaction which operate harshly against the debtor but it does not necessarily follow that the relationship is unfair.\nThese features may be required in order to protect what the court regards as a legitimate interest of the creditor.\nThirdly, the alleged unfairness must arise from one of the three categories of cause listed at sub paras (a) to (c).\nFourthly, the great majority of relationships between commercial lenders and private borrowers are probably characterised by large differences of financial knowledge and expertise.\nIt is an inherently unequal relationship.\nBut it cannot have been Parliaments intention that the generality of such relationships should be liable to be reopened for that reason alone.\nThe proceedings 11.\nIn January 2009, Mrs Plevin brought proceedings against LLP and Paragon.\nAs against LLP, she claimed damages or equitable compensation on the basis that they were in breach of their duties as her fiduciary agents.\nNothing more needs to be said about that.\nThe claim against LLP was settled in 2010 for 3,000, which was ultimately paid from the Financial Services Compensation Scheme.\nAs against Paragon, the pleaded case was described by Recorder Yip QC as grossly over complicated (para 11), but the issues were narrowed in the course of the trial and some of them fell away in the light of the Recorders findings of fact.\nThe main point taken on Mrs Plevins behalf, and the only one still in issue, is that so far as it related to the PPI policy Mrs Plevins relationship with Paragon was unfair within the meaning of section 140A(1)(c) of the Consumer Credit Act, because of something done (or not done) by, or on behalf of, the creditor.\nThe unfairness was said to arise from (i) the non disclosure of the amount of the commissions, (ii) the failure of any of those involved to assess and advise upon the suitability of the PPI for her needs, given that it covered only half the term of the loan, that she had no dependents, that she already had life insurance and that her terms of employment included generous sickness and redundancy benefits.\nSo far as these two matters represented defaults on the part of LLP, Mrs Plevins case was that LLP committed the defaults on behalf of Paragon.\nThe regulatory framework 12.\nThe sale and administration of general insurance and non investment life business is now a heavily regulated field.\nThe conduct of insurance intermediaries is governed by a statutory scheme which implements the Directive 2002\/92\/EC on Insurance Mediation.\nThe relevant parts of the scheme were at the time of this transaction contained in the Insurance Conduct of Business Rules (ICOB) made by the Financial Services Authority under powers conferred by the Financial Services and Markets Act 2000.\nThese rules created duties owed directly by the provider of the service to the insured, actionable under what was then section 150 of the Act.\nI shall refer to them in the form in which they stood at the time of Mrs Plevins transaction. 13.\nFor the purpose of the rules an insurance intermediary means any natural or legal person who, for remuneration, takes up or pursues insurance mediation.\nInsurance mediation includes the activities of introducing, proposing or carrying out other work preparatory to the conclusion of contracts of insurance, or of concluding such contracts (article 2 of the Directive).\nIn this case, both LLP and Paragon acted as insurance intermediaries, LLP because it proposed the PPI policy to Mrs Plevin and carried out work preparatory to its conclusion, and Paragon because it arranged the contract with Norwich Union pursuant to its existing arrangements with them.\nHowever, the rules do not necessarily apply to all insurance intermediaries involved in a particular transaction.\nICOB 1.2.3(2) provides: Where there is a chain of insurance intermediaries between the insurer and the customer, ICOB applies only to the insurance intermediary in contact with the customer.\nThe question who is in contact with the customer may admit of more than one answer, depending on what the relevant ICOB obligation is and who performed the corresponding function.\nFor most purposes, the intermediary in contact with Mrs Plevin in this case was LLP.\nThe only direct contact that she had with Paragon before the contract was concluded consisted in the speak with. 15.\nNon disclosure of the commission arrangements 14.\nArticle 12 of the Insurance Mediation Directive requires the disclosure by an insurance intermediary of certain minimum categories of information, which do not include commissions.\nThe disclosure requirements under the ICOB rules are more extensive.\nICOB 4.6.1 requires the disclosure by an insurance intermediary which is not itself an insurer of commissions receivable by it or its associates, but only to commercial customers and then only if the customer asks for the information.\nThe ICOB rules do not require an insurance intermediary to volunteer the amount or even the existence of commissions, or to disclose this information even on request to a non commercial customer.\nThe only disclosure obligations owed to non commercial customers are those arising under the general law.\nICOB 4.6.2 points out that where the insurance intermediary is the agent of the insured, he may have an obligation under the general law to tell a customer of whatever description about commissions if asked, but it imposes no corresponding statutory obligation.\nIt is clear that the absence of a statutory obligation to disclose commissions to a non commercial customer resulted from a considered policy of the Financial Services Authority.\nThe Authoritys Consultation Paper No 160, published in December 2002, at para 11.7 gave two reasons why it thought that commission disclosure may not be necessary.\nThe first was that the purchase of insurance was different from the purchase of investments, because when the customer is laying out money for investment he needs to know how much of his money is being invested, whereas when he is buying an insurance contract he knows what he is getting because the premium and the cover are disclosed.\nIn effect, the Authority was saying that commissions in an insurance transaction are simply a marketing cost of the supplier, like the cost of advertising or employing a sales force, and are no more relevant than any other part of its costs.\nThe Authoritys second reason was that customers tend to shop around for insurance and can compare policies and spot poor value products.\nWhere (as in this case) insurance was sold as part of a package with other services, the scope for shopping around is diminished, but consumers would be sufficiently protected by requiring the premium to be separately disclosed.\nIt added that commissions were not always straightforward to calculate, especially when there was a number of intermediaries involved, and that their disclosure might cause confusion or information overload.\nIn its Consultation Paper No 187 (June 2003) reporting on the outcome of the consultation, the Authority maintained its position. 16.\nThe current leading case on the relationship between section 140A and the ICOB rules is the decision of the Court of Appeal in Harrison v Black Horse Ltd [2012] Lloyds Rep IR 521.\nThe Court of Appeal considered an application by a borrower under section 140A to recover the single premium paid on a PPI policy sold with a loan.\nThere was no credit broker involved.\nThe borrower dealt directly with the lender, who acted as an intermediary with the insurer.\nThe commission taken by the lender was 87%.\nTomlinson LJ, delivering the only reasoned judgment, described this level of commission as quite startling, adding that there would be many who would regard it as unacceptable conduct on the part of lending institutions to have profited in this way.\nBut he declined to find that the relationship was thereby rendered unfair, because the lender had committed no breach of the ICOB rules either in charging the commission or in failing to disclose it.\nAt para 58, he said: the touchstone must in my view be the standard imposed by the regulatory authorities pursuant to their statutory duties, not resort to a visceral instinct that the relevant conduct is beyond the Pale, In that regard it is clear that the ICOB regime, after due consultation and consideration, does not require the disclosure of the receipt of commission.\nIt would be an anomalous result if a lender was obliged to disclose receipt of a commission in order to escape a finding of unfairness under section 140A of the Act but yet not obliged to disclose it pursuant to the statutorily imposed regulatory framework under which it operates.\nThe result of this decision was that in the present case both the Recorder and the Court of Appeal were bound to dismiss Mrs Plevins claim so far as it was based on non disclosure of the commission.\nThe Court of Appeal expressed dismay at this outcome.\nIn my opinion, the dismay was justified.\nI think that Harrison was wrongly decided. 17.\nThe view which a court takes of the fairness or unfairness of a debtor creditor relationship may legitimately be influenced by the standard of commercial conduct reasonably to be expected of the creditor.\nThe ICOB rules are some evidence of what that standard is.\nBut they cannot be determinative of the question posed by section 140A, because they are doing different things.\nThe fundamental difference is that the ICOB rules impose obligations on insurers 18. and insurance intermediaries.\nSection 140A, by comparison, does not impose any obligation and is not concerned with the question whether the creditor or anyone else is in breach of a duty.\nIt is concerned with the question whether the creditors relationship with the debtor was unfair.\nIt may be unfair for a variety of reasons, which do not have to involve a breach of duty.\nThere are other differences, which flow from this.\nThe ICOB rules impose a minimum standard of conduct applicable in a wide range of situations, enforceable by action and sounding in damages.\nSection 140A introduces a broader test of fairness applied to the particular debtor creditor relationship, which may lead to the transaction being reopened as a matter of judicial discretion.\nThe standard of conduct required of practitioners by the ICOB rules is laid down in advance by the Financial Services Authority (now the Financial Conduct Authority), whereas the standard of fairness in a debtor creditor relationship is a matter for the court, on which it must make its own assessment.\nMost of the ICOB rules, including those relating to the disclosure of commission, impose hard edged requirements, whereas the question of fairness involves a large element of forensic judgment.\nIt follows that the question whether the debtor creditor relationship is fair cannot be the same as the question whether the creditor has complied with the ICOB rules, and the facts which may be relevant to answer it are manifestly different.\nAn altogether wider range of considerations may be relevant to the fairness of the relationship, most of which would not be relevant to the application of the rules.\nThey include the characteristics of the borrower, her sophistication or vulnerability, the facts which she could reasonably be expected to know or assume, the range of choices available to her, and the degree to which the creditor was or should have been aware of these matters.\nI turn therefore to the question whether the non disclosure of the commissions payable out of Mrs Plevins PPI premium made her relationship with Paragon unfair.\nIn my opinion, it did.\nA sufficiently extreme inequality of knowledge and understanding is a classic source of unfairness in any relationship between a creditor and a non commercial debtor.\nIt is a question of degree.\nMrs Plevin must be taken to have known that some commission would be payable to intermediaries out of the premium before it reached the insurer.\nThe fact was stated in the FISA borrowers guide and, given that she was not paying LLP for their services, there was no other way that they could have been remunerated.\nBut at some point commissions may become so large that the relationship cannot be regarded as fair if the customer is kept in ignorance.\nAt what point is difficult to say, but wherever the tipping point may lie the commissions paid in this case are a long way beyond it.\nMrs Plevins evidence, as recorded by the Recorder, was that if she had known that 71.8% of the premium would be paid out in commissions, she would have certainly questioned this.\nI do not find that evidence surprising.\nThe information was of critical relevance.\nOf course, had she shopped around, she would not necessarily have got better terms.\nAs the Competition Commissions report suggests, this was not a competitive market.\nBut Mrs Plevin did not have to take PPI at all.\nAny reasonable person in her position who was told that more than two thirds of the premium was going to intermediaries, would be bound to question whether the insurance represented value for money, and whether it was a sensible transaction to enter into.\nThe fact that she was left in ignorance in my opinion made the relationship unfair. 19.\nThe next question is whether that state of affairs arose from something done or not done by or on behalf of Paragon.\nFor this purpose it is enough to consider the acts or omissions of Paragon itself, without exploring the conduct of others acting on its behalf.\nParagon owed no legal duty to Mrs Plevin under the ICOB rules to disclose the commissions and, not being her agent or adviser, they owed no such duty under the general law either.\nHowever, as I have already pointed out, the question which arises under section 140A(1)(c) is not whether there was a legal duty to disclose the commissions.\nIt is whether the unfairness arising from their non disclosure was due to something done or not done by Paragon.\nWhere the creditor has done a positive act which makes the relationship unfair, this gives rise to no particular conceptual difficulty.\nBut the concept of causing a relationship to be unfair by not doing something is more problematical.\nIt necessarily implies that the Act treats the creditor as being responsible for the unfairness which results from his inaction, even if that responsibility falls short of a legal duty.\nWhat is it that engages that responsibility? Bearing in mind the breadth of section 140A and the incidence of the burden of proof according to section 140B(9), the creditor must normally be regarded as responsible for an omission making his relationship with the debtor unfair if he fails to take such steps as (i) it would be reasonable to expect the creditor or someone acting on his behalf to take in the interests of fairness, and (ii) would have removed the source of that unfairness or mitigated its consequences so that the relationship as a whole can no longer be regarded as unfair. 20.\nOn that footing, I think it clear that the unfairness which arose from the non disclosure of the amount of the commissions was the responsibility of Paragon.\nParagon were the only party who must necessarily have known the size of both commissions.\nThey could have disclosed them to Mrs Plevin.\nGiven its significance for her decision, I consider that in the interests of fairness it would have been reasonable to expect them to do so.\nHad they done so this particular source of unfairness would have been removed because Mrs Plevin would then have been able to make a properly informed judgment about the value of the PPI policy.\nThis is sufficiently demonstrated by her evidence that she would have questioned the commissions if she had known about them, even if the evidence does not establish what decision she would ultimately have made.\nFailure to assess the suitability of PPI for Mrs Plevins needs 21.\nICOB 4.3.1 provides: Requirements for suitability (1) An insurance intermediary must take reasonable steps to ensure that, if in the course of insurance mediation activities it makes any personal recommendation to a customer to buy or sell a non investment insurance contract, the personal recommendation is suitable for the customer's demands and needs at the time the personal recommendation is made. (2) The personal recommendation in (1) must be based on the scope of the service disclosed in accordance with ICOB 4.2.8 R(6). (3) An insurance intermediary may make a personal recommendation of a non investment insurance contract that does not meet all of the customer's demands and needs, provided that: there is no non investment insurance contract within the insurance intermediary's scope, as determined by ICOB 4.2.8 R(6), that meets all of the customer's demands and needs; and the insurance intermediary identifies to the customer, at the point at which the personal recommendation is made, the demands and needs that are not met by the contract that it personally recommends. 22.\nICOB 4.3.2 provides: Information about the customers demands and needs In assessing the customer's demands and needs, the insurance intermediary must: (1) seek such information about the customer's circumstances and objectives as might reasonably be expected to be relevant in enabling the insurance intermediary to identify the customer's requirements.\nThis must include any facts that would affect the type of insurance recommended, such as any relevant existing insurance; (2) have regard to any relevant details about the customer that are readily available and accessible to the insurance intermediary, for example, in respect of other contracts of insurance on which the insurance intermediary has provided advice or information; and (3) explain to the customer his duty to disclose all circumstances material to the insurance and the consequences of any failure to make such a disclosure, both before the non investment insurance contract commences and throughout the duration of the contract; and take account of the information that the customer discloses. 23.\nThe obligation under ICOB 4.3.1 and 4.3.2 arises where a personal recommendation to buy an insurance contract is made by an insurance intermediary.\nFor that purpose, the relevant intermediary in Mrs Plevins case was LLP, which was the only party that made a personal recommendation to her.\nMoreover, LLP was the only intermediary in the chain in contact with her for this purpose.\nIt follows that ICOB 4.3.1 applied in this transaction only to LLP.\nIt did not apply to Paragon.\nNor did Paragon owe any other legal duty to assess Mrs Plevins needs and advise her on the suitability of PPI for her. 24.\nThe Recorder thought that that was the end of the matter and dismissed this part of Mrs Plevins claim along with the rest of it.\nI think that that was an error.\nTwo further questions arose.\nThe first was whether it was reasonable in the interests of fairness to expect Paragon to assess Mrs Plevins needs themselves, notwithstanding the absence of any legal obligation to do so.\nNeither the Recorder nor the Court of Appeal addressed that question because they were bound by Harrison to treat the absence of a regulatory duty as conclusive.\nThe second question, which arose whether or not Harrison was rightly decided, was whether in the relevant respects LLP, who undoubtedly did have a regulatory duty to assess Mrs Plevins needs, were acting on behalf of Paragon for the purpose of section 140A(1)(c). 25.\nI approach both questions on the footing that beyond a point, inequality of financial expertise as between the debtor and the creditor is capable of making their relationship unfair.\nThe provision to a financially unsophisticated debtor of bad advice or no advice about the suitability of a relatively complex product like PPI will commonly result in a one sided relationship substantially limiting the debtors ability to choose.\nI shall assume for present purposes that that was true of Mrs Plevins case, although the Recorder made no findings of fact about it. 26.\nEven on that assumption, however, I consider that Paragon could not reasonably have been expected in the interests of fairness to conduct their own needs assessment and give Mrs Plevin advice about it.\nAlthough the absence of a regulatory duty is not conclusive, in this particular context it is highly relevant.\nIn relation to the disclosure of commissions, the ICOB rules impose no duty on any one.\nBy comparison it does impose a duty to assess and advise upon the suitability of the product, but assigns that duty to LLP as the party dealing directly with the customer.\nI do not think that Paragon could reasonably have been expected to perform a function which the relevant statutory code of regulation expressly assigned to someone else. 27.\nThe real question is therefore the second one, namely whether the acts or omissions of LLP were done (or not done) on behalf of Paragon.\nThe Court of Appeal [2014] Bus LR 553 considered that they were.\nBriggs LJ, in a judgment with which Moses and Beatson LJJ agreed, accepted an argument advanced on behalf of Mrs Plevin which he summarised as follows: 48.\nFor Mrs Plevin, Mr. Strachan submitted that the phrase on behalf of was designed to bring within the purview of the court's consideration any relevant act or omission by a person who, in a non technical sense, would be viewed by the man on the Clapham omnibus as having played some part in the bringing about of the credit agreement for the creditor.\nThus it typically applied to any intermediary paid a commission for introducing the customer to the creditor, or (which may be the same thing) procuring the business represented by the credit agreement (and any related agreement) for the creditor.\nThus it applied to the acts and omissions of any intermediary, whether acting as agent for the creditor or as a mere broker without an agency relationship with either party to the credit agreement, at least where the broker received commission from (or via) the creditor. 49.\nPut shortly, the difference between the rival submissions is that Mr Elliott submitted that on behalf of is designed only to capture conduct (including omissions) for which the creditor can be said to bear or share some responsibility, whereas Mr Strachan submits that it captures all conduct beneficial to the creditor, in the sense that it played some material part in the bringing about of the transaction giving rise to the allegedly unfair relationship.\nProof that the person whose conduct is prayed in aid received a commission from, or via, the creditor brings on board the whole of that person's conduct, within section 140A(1)(c) 28.\nBriggs LJs reason for preferring Mr Strachans argument was, in summary, that any limitation of section 140A(1)(c) to acts or omissions for which the creditor was personally or vicariously responsible would imply that the subsection extended only to breaches of duty under the ICOB rules or the general law.\nSince the creditor would be legally liable for those anyway, even without section 140A, Mr Elliotts argument would give section 140A very little additional effect.\nBriggs LJ considered that unfairness did not have to arise from a breach of duty.\nHe therefore rejected what he called the narrower view of the words by or behalf of the creditor advanced on behalf of Paragon.\nI am afraid that I do not understand this.\nWhat limited section 140A(1)(c) to cases of breach of duty was not Mr Elliotts argument, but the decision of the Court of Appeal in Harrison that the ICOB rules were the touchstone of unfairness.\nIt will be apparent from what I have already said that I agree with Briggs LJ that unfairness in section 140A does not have to involve a breach of duty.\nBut I do not follow why it should be thought inconsistent with that to limit section 140A(1)(c) to cases where the relevant act or omission engages the responsibility of the creditor.\nIf the section is limited in that way, the creditor is still responsible for acts or omissions making the relationship unfair, whether or not it is also a breach of duty. envisage a relationship between the creditor and the person whose acts or omissions have made the relationship unfair.\nIf it had been intended to extend the sub paragraph to any conduct beneficial to the creditor or contributing to bringing about the transaction, irrespective of that persons relationship with the creditor, it would have been easy enough to say so, and very strange to use the language which the legislator actually employed.\nIn their ordinary and natural meaning the words on behalf of import agency, which is how the courts have ordinarily construed them: see Gaspet Ltd v Elliss (Inspector of Taxes) [1985] 1 WLR 1214, 1220 (Peter Gibson J); Clixby v Pountney (Inspector of Taxes) [1968] Ch 719, at paras 728 729 (Cross J).\nI would accept that a special statutory or contractual context may require the phrase on behalf of to be read more widely as meaning in the place of, or for the benefit of or in the interests of: see R (Cherwell District Council) v First Secretary of State [2005] 1 WLR 1128 at para. 56 (Chadwick LJ); R(S) v Social Security Commissioner [2010] PTSR 1785, at paras 27 28; Rochdale Metropolitan Borough Council v Dixon [2012] PTSR 1336, at paras 49 50 (Rix J).\nBut there is nothing in the present statutory context to suggest any of these wider meanings, and much that is inconsistent with them.\nIn the first place, the full phrase is by or on behalf of the creditor.\nIn other words, acts or omissions on behalf of the creditor are treated as equivalent to acts or omissions by the creditor.\nThey refer to things done or not done either by the creditor itself, or by someone else whose acts or omissions engaged the creditors responsibility as if the creditor had done or not done it itself.\nThey indicate as clearly as language can do that sub paragraph (c) applies only where the thing is done or not done by someone whose acts or omissions engage the responsibility of the creditor.\nThey are used in the same sense throughout the Consumer Credit Act whenever it refers to some act such as the execution of a document or the receipt of a notice or the occurrence of any other act which the legislator intends to engage the responsibility of the creditor. 31.\nSecondly, the Consumer Credit Act makes extensive use of the technique of imputing responsibility to the creditor for the acts or omissions of other parties who are not (or not necessarily) the creditors agents.\nBut when it does this it invariably does it in express and clear terms.\nA notable example appears in section 140A itself.\nSubsection (3) is ancillary to subsection (1)(c).\nIt provides that things done or not done by an associate or former associate of the creditor are to be treated as if they were done or not done by, or on behalf of, or in relation to, the creditor.\nAn associate includes certain categories of relative or, in relation to a body corporate, its controller or another body corporate under common control: see section 184.\nThis provision is pointless except on the footing that otherwise subsection (1)(c) would have been confined to the acts of the creditor or his agents.\nMore generally, section 56 provides that where antecedent negotiations for a debtor creditor supplier agreement are conducted by a credit broker or the supplier, the negotiations are deemed to be conducted by the negotiator in the capacity of agent of the creditor as well as in his actual capacity.\nThe result is that the debtors statutory rights of withdrawal from prospective agreements, cancellation and rescission may arise on account of the conduct of the negotiator whether or not he was the creditors agent: see sections 57, 67, 69, 73 and 102.\nSections 56 and 140A(3) provide for a deemed agency, even in a case where there is no actual one.\nSection 75 does not provide for a deemed agency, but it imposes liability under a debtor creditor supplier agreement for the misrepresentations and breaches of contract of the supplier.\nThese provisions are there because without them the creditors responsibility would be engaged only by its own acts or omissions or those of its agents.\nNone of them is applicable to the present case.\nSections 56 and 75 apply only to debtor creditor supplier agreements, and not to agreements for unrestricted use credit like the one that Mrs Plevin entered into.\nNor has any remotely comparable legislative technique been adopted in section 140A, except for the acts or omissions of associates or agents of associates, a category which does not include LLP. 32.\nFinally, if the simple words by, or on behalf of, the creditor in section 140A(1)(c) extend beyond agency relationships and deemed agency relationships, there are no coherent criteria, statutory or otherwise, by which to determine what if any connection is required between the creditor and acts or omissions causing the unfairness.\nThis may be illustrated by the difficulty which Briggs LJ had in formulating his test.\nAt paragraph 49 of his judgment, he appears to say that no connection is required between the creditor and the person whose acts or omission cause the unfairness, provided that the latters conduct played some material part in bringing about of the transaction.\nAt paragraph 48 it is suggested that that person must have played some part in bringing about the transaction for the creditor.\nIf that is the test, it is quite unclear what relationship short of agency constitutes doing or not doing something for him.\nIn both paragraphs, it is suggested that this would be established by the intermediarys receipt of a commission from, or via, the creditor.\nIf it is enough that the intermediary must have contributed to the conclusion of the transaction for the creditor, it is unclear what relationship with the creditor short of agency that implies. 33.\nThe difficulty of applying these formulae can be seen when Briggs LJ comes to explain why his test is satisfied in the present case.\nHe appears to have regarded LLP as having become closely involved in the transaction on the creditors side (para 59).\nThis is not correct.\nLLP was not only not the agent of Paragon.\nIt was the agent of Mrs Plevin, as her pleadings correctly assert.\nLLP was not on the creditors side and could not have been consistently 34. with its status as the debtors agent.\nLLPs only relationship with Paragon consisted in the facility that they must have arranged with Paragon (and ten other lenders) to introduce its principals to them.\nNo doubt it was in Paragons interest to do more business, but even in a non technical sense that does not amount to acting for Paragon or becoming involved on Paragons side.\nIt is, moreover, important not to lose sight of the particular function of LLP which is relevant for present purposes, namely assessing Mrs Plevins needs and advising on the suitability of the product.\nThat was what was said to have been done on behalf of of Paragon for the purpose of the section.\nBut it was not even in the loosest sense a function that they performed for or for the benefit of Paragon.\nIt was a function which they performed, however defectively, for the sole benefit of Mrs Plevin.\nThe only basis on which the contrary is asserted by Briggs LJ is that LLP received a commission from (or via) the creditor.\nBut even that is not correct.\nLLP received their commission on the PPI policy from Norwich Union, arguably at the expense of Mrs Plevin if one assumes that it increased the premium.\nParagon merely accounted for the commission out of Mrs Plevins loan moneys before remitting the net sum to Norwich Union.\nThe practice by which the agent of a consumer of financial services is remunerated by the supplier of those services has often been criticised.\nIt is, however, an almost universal feature of the business, and it is of the utmost legal and commercial importance to maintain the principle that the source of the commission has no bearing on the identity of the person for whom the intermediary is acting or the nature of his functions.\nI conclude that the Court of Appeal was wrong to say that the acts or omissions of LLP were capable of making Mrs Plevins relationship with Paragon unfair.\nNor do I accept that this conclusion frustrates the purpose of section 140A, even in part.\nThe fact that section 140A is intended to protect the debtor does not dispense the court from considering what degree of protection was intended; nor does it mean that the legislator cannot have intended to protect the interests of the creditor in a situation for which he was not responsible.\nOnce the decision in Harrison is discarded, the section can be seen to give extensive protection to the debtor extending beyond the right to enforce the creditors legal duties, in any situation where the creditor or his associates (or their agents) have made the relationship unfair.\nThe voluntary codes 35.\nI should, finally, refer to two voluntary codes of conduct which assumed some importance in the judgment of the Court of Appeal.\nParagon and LLP were both members of FISA, and Paragon was also a member of the Finance & Leasing Association (FLA).\nBoth associations publish voluntary codes.\nThey are the FLA Lending Code (2004) and the FISA Codes and Disciplinary Procedures (as at March 2006).\nThe Court of Appeal considered that the effect of these codes was to create a shared responsibility for assessing Mrs Plevins needs and the suitability of the PPI policy, and remitted the case to the County Court for a trial of the question whether that responsibility was engaged. 36.\nThe FLA and FISA codes are lending codes.\nThey are primarily concerned with responsible lending standards, i.e. with ensuring that borrowers do not borrow beyond their means, with avoiding high pressure salesmanship and with the provision of proper documentation, and so on, although they also contain provisions relating to the sale of associated insurance products, to which I shall return.\nThe main significance of the codes in the present context is that they envisage some responsibility on the part of the creditor for the conduct of at least some intermediaries.\nSection 5.3 of the FLA code provides that the creditor will monitor the activities of any credit broker that it deals with and that in particular it will require them to follow either the FLA Code or the FISA code and refuse to deal with any who fail do so or are dishonest or incompetent.\nThis focuses attention on the FISA code, which was the one to which LLP subscribed.\nUnfortunately the FISA code is at critical points rather obscure.\nIt defines intermediaries in the widest terms as including any person or firm involved in the procurement of business.\nBut the substantive provisions of the FISA code refer not to intermediaries tout court, but to supporting or subordinate intermediaries, or Members and their Intermediaries, without defining what makes an intermediary a Members intermediary or a supporting or subordinate intermediary.\nIt is therefore far from clear whether these provisions extend to the conduct of an intermediary such as LLP which was not the agent of the creditor or in some way tied to the creditor.\nI will assume, without deciding, that they do.\nOn that footing, the relevant provisions of the FISA code are sections 2 and 19.\nSection 2 provides that where a member accepts business from a supporting or subordinate Intermediary it will ensure that the intermediary complies with the code.\nThe particular obligations spelled out in the following sections are generally imposed on Members and their Intermediaries.\nThese include section 19, which provides: 37.\nMembers and their Intermediaries will not use sales techniques relating to optional insurance products such as payment protection policies which might encourage consumers to take out such cover in inappropriate circumstances.\nIn complying with this requirement, Members and their Intermediaries shall have regard to the consumers circumstances and have particular regard to restrictions or exclusions contained within the relevant insurance policy. 39. 38.\nThe difficulty about the Court of Appeals approach to the codes is that they were proceeding on the footing of a broad construction of the words by or on behalf of the creditor, which required little if any connection between the creditor and the source of the unfairness.\nBut it follows from the construction of section 140A which I have proposed in the preceding parts of this judgment that the codes are relevant to the operation of that section only if their effect is to make an intermediary in the position of LLP the agent of the creditor.\nThat is plainly not their effect.\nIn the first place, the codes have no legal status except as between the associations and their members.\nThey have no statutory force.\nThey formed no part of the contractual distribution of responsibilities.\nIn its covering letter of 21 March 2006 to Mrs Plevin, Paragon informed her that they were members of FLA and FISA and followed their lending codes, but the codes themselves were not communicated to Mrs Plevin and there is no evidence that she was aware of their contents.\nThe most that can be said about them is that they may be some evidence of what constitutes reasonable standards of commercial conduct in this field.\nThis was in fact the sole purpose for which Mrs Plevins counsel relied upon them before the Recorder.\nSecondly, the terms of the codes do not in my view justify the Court of Appeals conclusion that they envisaged a shared responsibility for dealings with the customer.\nNot all lending transactions governed by the codes are introduced by intermediaries.\nIn many cases the lender deals directly with the debtor.\nWhere the FISA code imposes an obligation on Members and their Intermediaries, it is not requiring both of them to comply in every case thereby duplicating every function covered in the code.\nA more natural reading, more consonant with the regulatory background (in particular ICOB 1.2.3) is that the obligation is imposed on whichever of them performs the relevant function.\nIn the case of the obligation under section 19 of the FISA code to tailor the sales technique used to sell optional insurance products to the customers circumstances, the relevant function was performed by LLP as the intermediary who was dealing directly with Mrs Plevin at the relevant stage of the transaction.\nWhere it is the intermediary who performs the relevant function, the creditors obligation under the FISA code is to satisfy itself that the intermediary complies with the code.\nThis does not mean that the creditor has to verify compliance in each individual transaction.\nIt means, as is clear from section 5 of the FLA code, that the creditor will satisfy itself about the general standard to which the intermediary conducts its business.\nAny related agreement 40.\nI record for completeness that Mrs Plevin did not rely on the reference to any related agreement in section 140A(1)(c) either in the courts below or (after some initial hesitation) before us.\nWe have not therefore heard argument on whether the PPI policy was a related agreement for the purpose of sections 19 and 140C(4), or in what if any respects its terms were themselves the cause of unfairness.\nConclusion 41.\nMy conclusion that the non disclosure of the amount of the commissions made Paragons relationship with Mrs Plevin unfair is enough to justify the reopening of the transaction under section 140A.\nIt is, however, the only basis on which the transaction can be reopened.\nIt follows that the appeal must be dismissed, although for reasons different from those given by the Court of Appeal, but that the case must be remitted to the Manchester County Court to decide what if any relief under section 140B should be ordered unless that can be agreed.\nParagraph 2 of the Court of Appeals order of 17 March 2014, which remitted the case for rehearing generally, will be varied accordingly. 29.\nThis particular misconception on the part of the Court of Appeal seems to me to have distracted them from the language of the section and its place in the broader scheme of the Act.\nThese seem to me to be very clear.\nSection 140A was undoubtedly intended to introduce a broad definition of unfairness, in place of the narrowly framed provisions which had previously governed extortionate credit bargains.\nThat much is clear from section 140A(1)(c), whose effect is to extend the concept of unfairness beyond cases where the terms or the way that the creditor applied them makes the relationship unfair.\nUnder that subsection, it extends to any case whatever in which human action (or inaction) produces unfairness.\nThe only limitation on the extreme breadth of sub paragraph (c) is that the action or inaction in question must be by or on behalf of the creditor.\nPutting the matter at its very lowest, those words 30.\n","output":"Payment protection insurance (PPI) is sold to borrowers to cover the repayment of specific borrowing on the occurrence of an insured event, such as accidental injury.\nPPI used to be sold to borrowers as part of a package with the loan itself, with a single premium paid upfront and added to the amount borrowed.\nA high commission would be paid to intermediaries.\nMrs Plevin took out a personal loan through LLP Processing (UK) Ltd (LLP).\nLLP proposed that she borrow 34,000 from Paragon Personal Finance Ltd (Paragon), repayable in instalments over ten years, and that she take out PPI for five years with Norwich Union, Paragons designated insurer.\nThe PPI premium of 5,780 was payable at the outset and added to the amount of the loan. 71.8% of the premium was taken in commission: LLP retained 1,870 and Paragon retained 2,280.\nThe Financial Industry Standards Association guide which LLP gave to Mrs Plevin told her that commission is paid by the lending company, but she was not told the amount of the commission or the identity of the recipients.\nSections 140A to 140D of the Consumer Credit Act 1974 apply to Mrs Plevins loan and PPI.\nThey allow a court to reopen a credit agreement which is unfair because of any of the terms of the agreement or a related agreement, the way in which the creditor has exercised or enforced his rights, or any other thing done (or not done) by, or on behalf of, the creditor (s 140A(1)(c)).\nMrs Plevin argues that the relationship between herself and Paragon was unfair under s 140A(1)(c) because of (i) the non disclosure of the commissions and (ii) the failure of anyone involved to advise on the suitability of the PPI for her needs.\nInsofar as LLP committed these defaults, she says it did so on behalf of Paragon.\nThe Insurance Conduct of Business Rules (ICOB Rules) are the statutory rules which regulate the insurance industry.\nThey do not require insurance intermediaries to disclose commissions to their customers.\nThey do require an insurance intermediary which makes a personal recommendation to a customer to buy an insurance contract to take reasonable steps to ensure that the recommendation is suitable for the customers demands and needs.\nBoth the Manchester County Court and the Court of Appeal held that the non disclosure of the commission by LLP and Paragon and the failure by Paragon to assess the suitability of PPI for Mrs Plevin did not make the relationship unfair, because they were bound to do so by Harrison v Black Horse Ltd [2012] Lloyds Rep IR 521, where the presence or absence of a regulatory duty under the ICOB Rules had been treated as conclusive.\nThe Court of Appeal in this case also held that LLPs failure to conduct a needs assessment of Mrs Plevin, in breach of the ICOB Rules, was something done by or on behalf of Paragon which made its relationship with Mrs Plevin unfair.\nThe Supreme Court unanimously dismisses the appeal, but for reasons different from those given by the Court of Appeal.\nLord Sumption delivers the sole judgment.\nHe holds that the non disclosure of the amount of commissions and the identity of the recipients did make Mrs Plevins relationship with Paragon unfair under s 140A(1)(c) of the Consumer Credit Act 1974, but the failure to conduct a needs assessment of Mrs Plevin did not.\nThe case is remitted to the Manchester County Court to decide what if any relief under s 140B should be ordered unless that can be agreed.\nThe non disclosure of the commissions The Court of Appeals decision in Harrison v Black Horse Ltd [2012] Lloyds Rep IR 521 was wrong.\nThe ICOB Rules are hard edged, imposing a minimum standard of conduct applicable in a wide range of situations and providing for damages in the event of breach, whereas s 140A of the Consumer Credit Act 1974 introduces a broader test of fairness which is a matter for the courts judgment and which potentially takes into account a much wider range of factors.\nThey are asking different questions [14 17].\nApplying s 140A, Lord Sumption concludes that the non disclosure of the commissions did make the relationship between Paragon and Mrs Plevin unfair.\nAt some point, the commissions may become so large that the relationship cannot be regarded as fair if the customer is kept in ignorance.\nThis case lay far beyond the tipping point.\nMrs Plevin would have questioned whether the PPI represented value for money if she had been aware of the commission amounts and might not have taken out PPI at all [18].\nThis unfairness was the responsibility of Paragon, the only party which knew the size of both commissions [19 20].\nFailure to assess the suitability of PPI insurance for Mrs Plevins needs Paragons own failure to conduct their own needs assessment of Mrs Plevin did not make its relationship with her unfair.\nThe absence of a regulatory duty under the ICOB Rules was not conclusive, but it was highly relevant: Paragon could not reasonably be expected to perform a duty which the relevant statutory code assigned to someone else, namely LLP [26].\nLLPs failure to conduct a needs assessment of Mrs Plevin could not be treated as something done by or on behalf of Paragon, because LLP was not acting as Paragons agent.\nThe ordinary and natural meaning of the words on behalf of imports agency, and that is how the courts have ordinarily construed them.\nNothing in this case demands a broader interpretation.\nThe phrase by or on behalf of suggests that the act or omission must be done by the creditor itself, or by someone else whose acts and omissions engage the creditors responsibility as if the creditor had done or not done it itself.\nFurther, the Consumer Credit Act 1974 makes extensive use of the technique of imputing responsibility to the creditor for the acts or omissions of other parties who are not (or not necessarily) the creditors agents, including in s 140A(3), and when it does so, it does so in clear terms.\nFinally, there would be no coherent criteria for determining what connection other than agency would be required between the creditor and the acts or omissions causing the unfairness [27 34].\n","id":22}
{"input":"This is a reference made by the Attorney General for England and Wales (the Attorney General) under section 112 of the Government of Wales Act 2006 (the 2006 Act) for a determination on whether sections 6 and 9 of the Local Government Byelaws (Wales) Bill 2012 are within the legislative competence of the National Assembly for Wales (the Assembly).\nThe background to the reference\nFollowing a referendum held in 1997, the Government of Wales Act 1998 (the 1998 Act) set out the initial devolution settlement for Wales.\nThis included the establishment of the Assembly, a body corporate which had the legal responsibility for discharging the devolved executive and legislative functions.\nSections 21 and 22 of the 1998 Act governed the functions of the Assembly, and they included provisions for transferring functions vested in a Minister of the Crown to the Assembly, by Order in Council.\nSchedule 2 to the 1998 Act set out the fields of functions which were to be devolved to the Assembly in the first such Order in Council, including [t]he environment and [l]ocal government.\nThe first Order in Council making such provision was the National Assembly for Wales (Transfer of Functions) Order 1999, SI 1999 No 672 (the 1999 Order).\nThe Assemblys legislative powers were limited, and a White Paper, Better Governance for Wales (Cm 6582) published in June 2005, proposed increasing those powers in three respects: (i) giving the Assembly wider powers to make subordinate legislation; (ii) allowing the United Kingdom Parliament (Parliament) to confer enhanced legislative powers on the Assembly in relation to specified matters in devolved fields; and (iii) following a referendum, enabling the Assembly to make laws in all devolved fields without recourse to Parliament.\nThese proposals were adopted by Parliament, and implemented by the 2006 Act.\nPart 1 of the 2006 Act re-enacts many of the provisions of the 1998 Act, but it omits any reference to the Assembly being a corporate body.\nSection 45 establishes the Welsh Assembly Government, which comprises the First Minister, the Welsh Ministers, the Counsel General to the Welsh Assembly Government and the Deputy Welsh Ministers.\nSection 46 provides for the First Minister to be appointed by Her Majesty.\nSections 48 and 50 confer on the First Minister the power to appoint, with the approval of Her Majesty, the Welsh Ministers and the Deputy Welsh Ministers from among the Assembly members.\nSections 56 to 92 make provision about the functions of the First Minister, the Welsh Ministers, and the Counsel General.\nPart 3 of, and Schedule 5 to, the 2006 Act contain what were anticipated to be transitional provisions regarding the Assemblys powers with effect from the day after the Assembly election in 2007.\nThey were intended to be replaced by the Assembly Act provisions, contained in Part 4 of, and Schedule 7 to, the 2006 Act.\nThese provisions are intended, inter alia, to give the Assembly primary legislative powers for certain areas, and are provided by section 105 to come into force pursuant to an order made by Welsh Ministers following a referendum.\nThat referendum duly took place, and the Welsh Ministers duly made the order contemplated, as a consequence of which the provisions of Part 3 and Schedule 5 lapsed, and the provisions of Part 4 and Schedule 7 took effect, on 5 May 2011.\nAs a result of this, the Assembly has power to make primary legislation, which powers are delimited by provisions which identified the extent of the Assemblys legislative competence.\nIf there is an issue as to whether a Bill, or a provision in a Bill, passed by the Assembly exceeds that competence, the issue can be referred to this court under the terms of section 112 of the 2006 Act.\nThe first Bill to be passed by the Assembly under its new power was the Local Government Byelaws (Wales) Bill 2012 (the Bill), the aim of which is to simplify procedures for making and enforcing local authority byelaws in Wales.\nCertain provisions of the Bill, in particular section 6 and section 91, are intended to remove the need for the confirmation of byelaws by the Welsh Ministers or by the Secretary of State.\nSection 6 (through Part 1 of Schedule 1 to the Bill) refers to certain specific enactments (the scheduled enactments) which currently require confirmation, and section 9 would empower the Welsh Ministers to add to those enactments.\nThe Secretary of States consent to the inclusion of these two sections in the Bill was sought.\nShe was prepared to agree to section 6 of the Bill (section 6), because she was content to give up her right to confirm byelaws made under the specific provisions identified in Part 1 of Schedule 1 to the Bill, but she was not prepared to agree to the inclusion of section 9 of the Bill (section 9).\nThe Assembly nonetheless proceeded to pass the Bill with sections 6 and 9 in their 1 What would be, or become, sections of a Statute enacted by the UK Parliament are conventionally referred to as clauses in the Bill until it becomes a Statute.\nHowever, in this judgment, I follow the language used in Standing Orders 26 and 26A of the National Assembly for Wales (June 2012), which deal with Acts of the Assembly, and refer to sections of a Bill.\noriginal form.\nThe Attorney General then referred to this court the question whether sections 6 and 9 were outwith the Assemblys legislative competence.\nThe parties who were identified as respondents to the reference were (i) the National Assembly for Wales Commission, representing the Assembly, and (ii) the Counsel General, both of whom appeared before us.\nThe Assembly was represented by Mr Rhodri Williams QC, with Ms Rebecca Stickler, and the Counsel General, Mr Theodore Huckle QC, was assisted by Mr Clive Lewis QC.\nThe Attorney General for Northern Ireland, Mr John Larkin QC (who appeared with Mr David McAlister) also appeared, having been permitted to intervene, as the issues raised by this reference have potential implications for the extent of the legislative competence of the Northern Ireland Assembly under the Northern Ireland Act 1998.\nI propose first to explain the position (under the Local Government Act 1972 and the 1999 Order) relating to the confirmation of many of the byelaws identified in Schedule 1 to the Bill, following which I will identify the relevant provisions of the Bill and of the 2006 Act.\nHaving set the scene, as it were, I will then discuss certain preliminary issues, following which I will address the central issue on this reference.\nFinally, I must deal with certain procedural issues which have arisen on this reference.\nThe Local Government Act 1972 and the 1999 Order\nThe power to make byelaws is conferred by a host of statutes, mostly on local authorities and similar bodies.\nMany of those statutes contain specific provisions whereby a byelaw must be confirmed by some other body or person (normally the Secretary of State or another Minister of the Crown), but many do not.\nThe Local Government Act 1972 (the 1972 Act), as its long title states, includes many provisions concerning local government and the functions of local authorities in England and Wales.\nSection 236 of the 1972 Act (section 236) is entitled Procedure, etc, for byelaws.\nSubsection (1) explains that, subject to certain exceptions (irrelevant for present purposes), the section appl[ies] to byelaws to be made by a local authority under this Act and to byelaws made by a local authority under any other enactment and conferring on the authority a power to make byelaws and for which specific provision is not otherwise made.\nSection 236(3) sets out the technical requirements for a local authority making a byelaw (under its common seal or, where there is no seal, under the hands and seals of two members).\nSubsections (3), (4) and (5) of section 236 make reference to confirmation of a byelaw, and subsection (7) states that [t]he confirming authority may confirm, or refuse to confirm, any byelaw submitted under this section.\nCrucially for present purposes, section 236(11) is in these terms: In this section the expression the confirming authority means the authority or person, if any, specified in the enactment (including any enactment in this Act) under which the byelaws are made, as the authority or person by whom the byelaws are to be confirmed, or if no authority or person is so specified, means the Secretary of State.\nThe effect of this provision is that, where a statutory provision giving the local authority the power or duty to make the byelaw either so provides or is silent as to the existence or identity of a confirmatory body or person, before any byelaw made under that provision by a local authority can be effective, the Secretary of State has to confirm the byelaw.\nThe National Assembly for Wales (Transfer of Functions) Order 1999\nThe 1998 Act provided in section 22(1) that: Her Majesty may by Order in Council (a) provide for the transfer to the Assembly of any function so far as exercisable by a Minister of the Crown in relation to Wales, (b) direct that any function so far as so exercisable shall be exercisable by the Assembly concurrently with the Minister of the Crown, or (c) direct that any function so far as exercisable by a Minister of the Crown in relation to Wales shall be exercisable by the Minister only with the agreement of, or after consultation with, the Assembly.\nThe 1999 Order was made pursuant to that provision, and was concerned with transferring a large number of functions of Ministers of the Crown to the Assembly.\nIt did this by identifying each specific function which was to be so transferred.\nIn some cases, there had to be qualifications to, and in other cases there had to be exceptions from or variations to, the transfer of functions.\nThus, article 2 of the 1999 Order is to this effect: Schedule 1 to this Order shall have effect as follows (a) except as provided [below], all functions of a Minister of the Crown under the enactments specified in Schedule 1 are, so far as exercisable in relation to Wales, transferred to the Assembly; (b) where so directed in Schedule 1 functions exercisable by a Minister of the Crown shall, so far as exercisable in relation to Wales, be exercisable by the Assembly concurrently with the Minister; (c) it is directed that (except in the case of functions which are exercisable by the Assembly jointly with a Minister of the Crown) ..\nSchedule 1 to the 1999 Order sets out Enactments Conferring Functions Transferred by Article 2.\nThe list of those enactments includes the 1972 Act, in respect of which it is expressly directed that the functions of the Secretary of State under section 236(11) shall be exercisable by the Assembly concurrently with the Secretary of State.\nThe Local Government Byelaws (Wales) Bill 2012\nSection 1 is entitled Overview, and it is in these terms, so far as relevant: This Act - (a) reforms procedures for making byelaws in Wales, including removing a requirement for confirmation of byelaws by the Welsh Ministers; .\n(d) restates for Wales a general power to make byelaws.\nSection 2 delimits the powers of a county or county borough to make byelaws, which must be for the good rule and government of the whole or any part of its area or to prevent nuisances in its area.\nSection 3 defines legislating councils, which extends to counties, county borough councils, community councils, National Park authorities in Wales, and the Countryside Council for Wales.\nSections 4 and 5 deal with the powers of legislating authorities and the Welsh Ministers to revoke byelaws.\nSection 6 is entitled Byelaws not requiring confirmation, and the first two subsections are in these terms: (1) This section applies to byelaws made by a legislating authority under the enactments listed in Part 1 of Schedule 1 .\n(2) Before it makes a byelaw, an authority must (a) publish on the authoritys website an initial written statement which describes the issue which the authority thinks may be addressed by making a byelaw; (b) consult any person who the authority thinks is likely to be interested in, or affected by, the issue.\nThe remaining six subsections set out the procedural requirements which a legislating authority must then satisfy before making a byelaw not requiring confirmation.\nThese requirements include considering responses to the subsection (2) consultations, publishing on its website a further statement, followed by notice of the intention to make the byelaw, and then the draft byelaw, ensuring that the draft byelaw is available for inspection to those who want to see it, and making the byelaw within six months of the date of the notice of intention.\nPart 1 of Schedule 1 to the Bill has the same heading as section 6, and sets out what I call the scheduled enactments, which are specific sections of certain statutes, including a number of sections in respect of which it is common ground between all parties that section 236(11), as varied by the 1999 Order, applies.\nMost of these sections are in the Public Health Act 1936, and they include, for example, byelaw-making powers in relation to preventing the occurrence of nuisances from snow, filth, dust, ashes and rubbish (section 81), for regulation of sanitary conveniences (section 87), for regulating management of, and charges for, the use of mortuaries and post-mortem rooms (section 198), and regulating baths, washhouses, swimming baths and bathing places (section 223).\nSection 7 is concerned with Byelaws requiring confirmation, which subsection (1) explains are byelaws made by a legislating authority under any enactment other than those listed in Part 1 of Schedule 1, subject to exceptions set out in subsection (2), namely to the extent that the statutory power under which a particular byelaw is made makes different provision in relation to the requisite procedure.\nSubsections (3) to (9) then set out procedures which have to be followed by the legislating authority, which are similar to those in subsections (2) to (7) of Section 6.\nSubsections (10) to (12) of section 7 provide as follows: (10) The confirming authority may confirm, or refuse to confirm, any byelaw submitted to it under this section.\n(11) For the purposes of this Act, the confirming authority is (a) the person specified in the enactment under which the byelaws are made as the person who is to confirm the byelaws, or (b) if no person is specified, the Welsh Ministers.\n(12) The functions of the Welsh Ministers under subsection (11)(b) are exercisable concurrently with the Secretary of State.\nSection 8 is concerned with formalities for making byelaws.\nSection 9 is headed Power to amend Part 1 of Schedule 1, and is in these terms: The Welsh Ministers may by order amend Part 1 of Schedule 1 by adding to or subtracting from the list of enactments, or by amending the type of authority that may make byelaws without confirmation.\nSections 10 and 11 are concerned with enforcement of byelaws, and sections 12 to 16 (and Part 2 of Schedule 1) with fixed penalty notices.\nSections 18 to 23 are headed Miscellaneous and general, and only section 20, which is entitled Consequential amendments and incorporates Schedule 2, needs to be mentioned.\nSchedule 2 sets out a number of Minor and consequential amendments to other statutes.\nParagraph 9(3) amends section 236, effectively limiting its ambit in local authorities to England.\nParagraph 17 amends the 1999 Order, inter alia, by deleting the words directing that the functions of the Secretary of State under section 236(11) shall be exercisable by the Assembly concurrently with the Secretary of State.\nThe question whether any of the provisions of the Bill are within the competence of the Assembly must be judged by reference to the 2006 Act, to which I now turn.\nThe Government of Wales Act 2006\nThe provisions of the 2006 Act which are directly relevant for present purposes are in Part 4 and Schedule 7.\nThe provisions which are of central importance are section 108, and paragraph 1 of Part 2, and paragraph 6 of Part 3, of Schedule 7.\nSection 108 is entitled Legislative competence and subsections (1) to (3) provide as follows: (1) Subject to the provisions of this Part, an Act of the Assembly may make any provision that could be made by an Act of Parliament.\n(2) An Act of the Assembly is not law so far as any provision of the Act is outside the Assemblys legislative competence.\n(3) A provision of an Act of the Assembly is within the Assemblys legislative competence only if it falls within subsection (4) or (5).\nIt is common ground that subsections (4) and (5) present no problems for the Bill in the present case.\nSubsection (4) requires every provision in an Act of the Assembly to relate to one or more of the subjects listed in Part 1 of Schedule 7, which every provision in the Bill does.\nSubsection (6) states: (6) But a provision which falls within subsection (4) or (5) is outside the Assemblys legislative competence if (a) it breaches any of the restrictions in Part 2 of Schedule 7, having regard to any exception in Part 3 of that Schedule from those restrictions, . .\nPart 2 of Schedule 7 is headed General Restrictions, and the first of those restrictions is in paragraph 1, which is headed Functions of a Minister of the Crown, and is in these terms: (1) A provision of an Act of the Assembly cannot remove or modify, or confer power by subordinate legislation to remove or modify, any pre-commencement function of a Minister of the Crown.\n(3) In this Schedule pre-commencement function means a function which is exercisable by a Minister of the Crown before [5 May 2011].\nPart 3 of Schedule 7 is headed Exceptions from Part 2, the first of which is in paragraph 6, which has a very similar heading to paragraph 1 of Part 2, and states: (1) Part 2 does not prevent a provision of an Act of the Assembly removing or modifying, or conferring power by subordinate legislation to remove or modify, any pre-commencement function of a Minister of the Crown if (a) the Secretary of State consents to the provision, or (b) the provision is incidental to, or consequential on, any other provision contained in the Act of the Assembly.\nI must also refer to section 112(1), which explains how this reference arises.\nIt empowers the Counsel General or the Attorney General to refer the question whether a Bill, or any provision of a Bill, would be within the Assemblys legislative competence to the Supreme Court for decision.\nPending such a reference, a Bill cannot be given Royal Assent see section 115.\nIt is also appropriate to refer to section 154, which provides: (1) This section applies to (b) any provision of an Act of the Assembly, or a Bill for such an Act, which could be read in such a way as to be outside the Assemblys legislative competence, (2) The provision is to be read as narrowly as is required for it to be within competence or within the powers, if such a reading is possible, and is to have effect accordingly .\nPreliminary issues: the meaning of concurrently\nWhile the central issue on this reference is whether section 6 and section 9 are outside the legislative competence of the Assembly, there are two preliminary points which have been debated and which need to be resolved before turning to that central issue.\nFirst, there is the question of what is meant by the direction in the 1999 Order that the functions of the Secretary of State under section 236(11) shall be exercisable by the Assembly concurrently with the Secretary of State.\nThree possible interpretations were aired.\nThe first interpretation, which arose in argument, is that the Assembly is to exercise each of the functions, but needs the Secretary of States agreement before it does so.\nThe second and third interpretations both involve the Assembly and the Secretary of State each having the right to exercise the functions.\nThe second interpretation, favoured by Mr Williams for the Assembly, is that, in relation to any particular function, it is, as a matter of law, only the Assembly or, as the case may be, the Secretary of State who can exercise the function.\nThe third interpretation, favoured by Mr Jonathan Swift QC (who appeared with Ms Joanne Clement for the Attorney General) and by the Counsel General, is that, subject to the normal public law principle of rationality, it is open to either the Secretary of State or the Assembly to exercise any of the functions.\nI have reached the clear conclusion that the third of these interpretations is correct.\nFirst, the natural meaning of concurrently in a provision such as the 1999 Order, which involves two persons or entities having concurrent functions, is that they each have the right to exercise the functions separately.\nThe primary meaning of the word concurrent is running with rather than agreeing.\nAnd it would involve implying some qualification to the provision, if only one of the two persons or entities could exercise any particular function.\nIndeed, if each function could only be exercised by the Assembly or the Secretary of State, it would be the antithesis of their having concurrent power.\nSecondly, the notion that the Assembly can exercise any of the functions, but only with the consent of the Secretary of State, would effectively mean that there is no difference between concurrent functions and joint functions.\nThat is unlikely as the 1999 Order refers in a number of places to joint exercise of functions, including in article 2(c).\nThat point is reinforced when one looks at section 22(1) of the 1998 Act, under which the 1999 Order was made: subsection (b) deals with concurrently exercisable functions, and subsection (c) is concerned with functions exercisable by the Secretary of State with the agreement of the Assembly.\nThirdly, Craies on Legislation 10th ed, (2012) supports the notion that the concept of concurrent power to exercise functions has an established meaning in legislation.\nAt para 3.12.6, it is stated that [w]here a function is vested in two Ministers concurrently, either may perform it, acting alone, on any occasion.\nWhile no case law is cited in support of this proposition, such an unequivocal statement in a respected book on the subject deserves respect, and is likely to be familiar to those responsible for drafting statutes.\nFourthly, it seems far more sensible and consistent with the purpose of the Welsh devolution legislation to conclude that it was intended that the Assembly and the Secretary of State were each intended to have the power to exercise the concurrent functions, and that it was to be left to their good sense to decide which should exercise a particular function in a particular case.\nAs Lord Carnwath said during argument, the courts should only be involved where normal public law principles justify quashing a particular exercise of a function on the ground that it should not have been exercised by the particular person or entity.\nPreliminary issues: does any question of legislative competence arise?\nThe Attorney General for Northern Ireland contends that the instant reference is, in effect, misconceived, at least in relation to section 6, because that section would not have the effect which the Attorney General contends, namely removing any right vested in the Secretary of State to confirm byelaws.\nHe puts this point in two ways.\nThe first way in which the argument is put is that Section 6 itself does not remove any right.\nI will discuss that point when considering the central issue on this reference.\nHowever, even if it is right, it could be no more than a technical point, as there can be no doubt but that paragraphs 9 and 17 of Schedule 2 to the Bill indubitably remove the Secretary of States right to confirm byelaws under section 236(11).\nAccordingly, the first way of putting the Attorney General for Northern Irelands point goes nowhere in substantive terms (albeit that it has some relevance to the central issue, and it gives rise to a procedural point which Lord Hope discusses in his judgment).\nThe second way in which the Attorney General for Northern Ireland puts his case is that section 236(11) states in terms that it applies only to those byelaws for which there is no statutory provision for confirmation by someone other than the Secretary of State.\nAccordingly, runs the argument, section 236(11) specifically contemplates, and therefore effectively permits, a subsequent statutory provision conferring the confirmatory function, in respect of any byelaw to which section 236(11) currently applies, on some other person or entity.\nThis argument is ingenious, but I would reject it.\nIt seems to me clear that the effect of section 236(11) was to confer a function on the Secretary of State, and the Bill, if it becomes an Act, will remove that function from the Secretary of State in relation to the scheduled enactments, and accordingly, paragraph 1 of Part 2 of Schedule 7 to the 2006 Act appears to be engaged.\nThe fact that the function concerned was conferred by a default statutory provision, which specifically envisages that there may be legislation which transfers the function to someone else, does not alter the fact that the confirmatory function of the Secretary of State falls within the ambit of paragraph 1(3) of Part 2 of Schedule 7.\nThe central issue on this reference: Section 6 of the Bill\nIt is common ground between the original parties to this reference that section 6 is within paragraph 1 of Part 2 of Schedule 7 to the 2006 Act, in that it would have the effect of remov[ing] [a] pre-commencement function of a Minister of the Crown, namely the Secretary of States role in confirming (or refusing to confirm) byelaws made under the statutory provisions which are (i) scheduled enactments, and (ii) provisions to which section 236(11) applies.\nOn that basis the only issue is whether, as the Counsel General contends (with the support of Mr Williams and the Attorney General for Northern Ireland), the section can be saved on the basis that, in so far as it would remove the pre- commencement function, it would be within paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act, as it is incidental to, or consequential on, [an] other provision contained in the [Bill].\nHowever, as already mentioned, the Attorney General for Northern Ireland challenges the otherwise agreed proposition that section 6 would remove the Secretary of States confirmatory role under section 236(11) in relation to any scheduled enactments.\nHe makes the point that section 1 only refers to the confirmatory powers of the Welsh Ministers, not to the Secretary of States powers, and that no part of section 6 refers to his powers either.\nIn my view, this point highlights the way in which the Bill is structured, and, more importantly for present purposes, it tends to support the argument advanced by the Counsel General, namely that the removal by the Bill of the Secretary of States power to confirm byelaws under section 236(11) is indeed incidental to, or consequential on one of the principal purposes of section 6 of the Bill, which is, as section 1 states, to remove the requirement for confirmation by the Welsh Ministers, as part of the overall streamlining and modernising of the way in which byelaws are made in Wales.\nThe answer to the question whether a particular provision in an enactment is incidental to, or consequential on another provision, obviously turns on the facts of the particular case.\nThe answer may to some extent be a question of fact and degree, and it should turn on substance rather than form, although, of course, in any well drafted Bill, the substance will be reflected in the form, at least in relation to that sort of question.\nAssistance on the point may be gleaned from what was said in this court in Martin v Most [2010] UKSC 10; [2010] SC (UKSC) 40, about paragraph 3(1)(a) of Schedule 4 to the Scotland Act 1998, which permits the Scottish Parliament to modify the law on reserved matters if, inter alia, the modification is incidental to, or consequential on, provision made which does not relate to reserved matters.\nThere is a close similarity between those words and the words in paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act, and the two provisions are concerned with similar material.\nHowever, they are found in different statutes, and one must therefore be wary of assuming that they have precisely the same effect, as context is so crucially important when interpreting any expression, perhaps particularly an expression as potentially fact-sensitive as incidental to, or consequential on.\nNonetheless, I consider that the approach adopted in that case is of assistance here.\nIn a brief passage at [2010] UKSC 10, paragraph 40, Lord Hope described a point as important in explaining why it was not incidental or consequential on provisions found elsewhere in the enactment.\nLord Rodger described certain amendments as falling within paragraph 3(1)(a) of Schedule 4 to the Scotland Act 1998, if they raise[d] no separate issue of principle, and were safely stowed away in a schedule in paragraph 93.\nHe referred back to that observation at paragraph 128, where he described paragraph 3(1)(a) of Schedule 4 to the Scotland Act 1998 as intended to cover the kinds of minor modifications which are obviously necessary to give effect to a piece of devolved legislation, but which raise no separate issue of principle.\nHe contrasted them with other provisions which were independent and deal with distinct aspects of the situation.\nSection 6 of the Bill plainly is intended to have the effect of removing the need for confirmation by the Welsh Ministers of any byelaw made under the scheduled enactments.\nThat is a primary purpose of the Bill, as is clear from reading the provisions quoted above, both in itself and for the purpose of streamlining and modernising the making of byelaws.\nI consider that, applying the approach of Lord Hope and Lord Rodger in Martin v Most [2010] UKSC 10, the removal of the Secretary of States confirmatory powers by the Bill in relation to the scheduled enactments would be incidental to, and consequential on, this primary purpose.\nIn summary form, I reach this conclusion because of the following combination of circumstances, of which points (i) and (iv) are particularly telling.\n(i) The primary purpose of the Bill cannot be achieved without that removal, (ii) the Secretary of States confirmatory power is concurrent with that of the Welsh Ministers, (iii) the confirmatory power arises from what is in effect a fall-back provision, (iv) the scheduled enactments relate to byelaws in respect of which the Secretary of State is very unlikely indeed ever to exercise his confirmatory power, (v) section 7 of the Bill reinforces this conclusion, and (vi) the contrary view would risk depriving paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act of any real effect.\nThe first of these reasons is obvious.\nOne of the streamlining and modernising purposes of the Bill would be undermined if the Secretary of States confirmatory function remained in respect of any of the scheduled enactments.\nThere would be no point in removing the Welsh Ministers confirmatory function in relation to the scheduled enactments unless the Secretary of States concurrent function was also disposed of.\nIndeed, the notion that the Assembly would intend to remove the Welsh Ministers confirmatory function while retaining that of the Secretary of State is bizarre.\nSecondly, there is attraction in the point that the Secretary of States confirmatory function has become redundant on the basis that, as Lord Clarke put it, the enactment by the Assembly of section 6(1) amounted to a blanket confirmation in advance by the Welsh Ministers of any future byelaw made under the scheduled enactments, provided the procedures laid down by sections 6(2) to (8) are complied with.\nWhile a blanket confirmation in advance of any byelaw cannot be a valid exercise of the Welsh Ministers confirmatory function, the argument highlights the oddity of the Secretary of States confirmatory power surviving the removal of the Welsh Ministers confirmatory power.\nThirdly, there is the fact that the confirmatory function bestowed on the Secretary of State by section 236(11) is really a default function.\nThe confirmatory function is only given to the Secretary of State if no other statute (including one passed after the 1972 Act) confers the function on any other body or person.\nTo my mind, that feature tends to support the notion that it is not, to use Lord Hopes word in Martin v Most [2010] UKSC 10, paragraph 40, an important function.\nThus, the point made by the Attorney General for Northern Ireland assists my conclusion.\nFourthly, and most crucially, the scheduled enactments concern byelaws whose nature is such that it would be for the Welsh Ministers, rather than the Secretary of State, to confirm them.\nThis is because they are very much directed to local, small-scale (but important) issues.\nThat point is strongly supported by the fact that it appears that, since the 1999 Order came into force, it has always been the Welsh Ministers, rather than the Secretary of State, who have exercised the confirmatory function in relation to byelaws made under any of the scheduled enactments.\nIt seems to me that, in those circumstances, given the purpose of section 6, and the purpose of the Bill as explained in section 1, it would be positively perverse if the Secretary of State should retain the confirmatory function when the Welsh Ministers have disclaimed their confirmatory function.\nIt was not suggested by Mr Swift that there were any circumstances envisaged by the Secretary of State in which she would wish to exercise her confirmatory function in relation to the scheduled enactments.\nIn practical terms, this conclusion is supported by the fact that the only reason the Secretary of State did not consent to section 6 had nothing to do with the contents of that section or of Schedule 1, but with the inclusion of section 9 in the Bill.\nFifthly, as pointed out by Lord Reed, the provisions of section 7 of the Bill give some support for this conclusion.\nIt establishes new concurrent powers in relation to byelaws (other than the scheduled enactments) which previously fell within section 236(11).\nWhere subsections (11)(b) and (12) of section 7 apply, the confirmatory power of the Welsh Ministers is exercisable concurrently with that of the Secretary of State.\nThis reinforces the argument that the Secretary of States confirmatory function under section 236(11) is redundant as a result of the enactment of sections 6 and 7.\nFinally, it is important, as the Counsel General argued, to arrive at a conclusion which gives a provision such as paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act some real effect.\nIt is difficult to think of circumstances in which it would have effect if it does not apply to section 6.\nMr Swift suggested that, if it did not apply to section 6, it could still apply in a case where the Assembly abolished a statutory provision for byelaws altogether.\nI do not find that very persuasive.\nFirst, if he is right in the present case, it suggests that the provision can apply in a more extreme type of case than the present case, but not in the present case.\nSecondly, I am not convinced that it would be necessary to remove a power to confirm byelaws in relation to a given activity if the power to make byelaws in relation to that activity was abolished.\nThe central issue on this reference: section 9 of the Bill\nSection 9 of the Bill would have the effect of enabling the Welsh Ministers to add to (and to subtract from) the scheduled enactments, which would then become subject to the section 6 procedure, rather than the section 7 procedure.\nAs already explained, the crucial difference for present purposes between the two procedures is the requirement under section 7 for confirmation of the byelaw by Welsh Ministers and\/or the Secretary of State or other Minister of the Crown (depending on the statutory provision under which the byelaw is made) see, in particular, section 7(10) to (12).\nThe Attorney Generals argument is that section 9 would confer power on the Welsh Ministers by subordinate legislation to remove or modify pre- commencement function[s] of a Minister of the Crown.\nAccordingly, he argues, by virtue of section 108(6)(a) of, and paragraph 1(1) of Part 2 of Schedule 7 to, the 2006 Act, the section is outside the legislative competence of the Assembly.\nIf section 9 is to be interpreted as giving the Welsh Ministers power to add to the scheduled enactments any enactment which gives the Secretary of State or another Minister of the Crown a confirmatory function in relation to byelaws, then I would accept that argument.\nHowever, there could be no objection to the section, if the scope of the power it would confer on the Welsh Ministers was limited to byelaws made under enactments which currently satisfy one of two requirements.\nThose requirements are that the enactment concerned (i) identifies the Welsh Ministers, and not a Minister of the Crown, as having the confirmatory power, or (ii) identifies a Minister of the Crown as having the confirmatory power, but the removal of that power would be incidental or consequential within the meaning of paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act.\nThe basis for requirement (i) is self-evident, and the basis for requirement (ii) is the same as that for concluding that section 6 is within the legislative competence of the Assembly.\nAlthough it is perfectly true that there are no express words in section 9 which limit its scope in this way, I am satisfied that it does have such a limited effect.\nThat is because of the simple legal principle, identified by Lord Reed, embodied in the Latin maxim nemo dat quod non habet.\nGiven that the jurisdiction of the Assembly is limited to removing, or delegating the power to remove, functions of Ministers of the Crown when the removal satisfies the requirements of paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act, the Assembly cannot confer a wider power on Welsh Ministers.\nAccordingly, the wide words of section 9 must be read as being circumscribed in their scope so as to render the section valid.\nThe same conclusion can be arrived at by invoking section 154(2) of the 2006 Act.\nIt would not be permissible to invoke that statutory provision if it was inconsistent with the plain words of section 9.\nHowever, it would, in my view, be permissible to invoke it to limit the apparently unlimited and general effect of that briefly expressed section.\nSuch an interpretation is consistent with the thrust of the Bill as a whole, and it does not conflict with any other provision in the Bill.\nAnd that point is reinforced by the fact that all the currently scheduled enactments satisfy requirements (i) or (ii).\nSome procedural issues\nI have read in draft the judgment to be given by Lord Hope.\nHe discusses certain practical issues in paragraphs 85 to 100, and I agree with what he says.\nI should add that I also agree with his further observations at paragraphs 71 to 84.\nConclusion\nFor these reasons, I would make a declaration on the reference that the Assembly had the legislative competence to enact sections 6 and 9 of the Bill.\nIt should be added that, although this is a successful outcome for the Assembly and the Counsel General, it cannot be regarded as a setback in practical terms for the Secretary of State.\nSomewhat curiously, the conclusion I have reached as to the effect of section 9 is one which reflects the terms on which she was prepared to give her consent to Section 6 of the Bill.\nIt is also right to say that, standing back, and considering the general purpose of the 2006 Act and the 1999 Order, this appears to be a sensible conclusion.\nAs Lord Carnwath said, the desirability of streamlining and modernising the system for making byelaws is reflected in section 236A of the 1972 Act, which only applies to England, and was inserted by section 129 of the Local Government and Public Involvement in Health Act 2007.\nA similar system of modernising and streamlining the system in Wales is hard to object to.\nAnd, if that system removes the confirmatory function of the Secretary of State, or other Ministers of the Crown, but only where (i) the function is concurrently exercisable with Welsh Ministers, and (ii) the byelaws concerned would probably always be for the Welsh Ministers to confirm, it would be entirely consistent with the general thrust of the extended powers given to the Assembly and Welsh Ministers by Part 4 of, and Schedule 7 to, the 2006 Act.\nFinally, it is right to record that various other issues were canvassed in the written and oral arguments.\nThey included the proper approach to the interpretation of the 2006 Act as a constitutional enactment, and whether certain statutory provisions mentioned in Part 1 of Schedule 1 were governed by section 236(11).\nGiven my conclusions on the issues considered in this judgment, it is unnecessary to determine those other issues, and it therefore seems to me appropriate to leave them to be resolved if and when it is necessary to do so in a future appeal or reference.\nLORD HOPE (with whom Lord Clarke, Lord Reed and Lord Carnwath agree)\nI add this supplement to Lord Neubergers judgment, with which I am in full agreement, in order to do two things.\nThe first is to make some general observations on the approach to issues about the legislative competence of the National Assembly for Wales in the light of the Scottish experience.\nThe second is to provide guidance on some matters of practice which require clarification in the light of the way this reference has been dealt with.\nBackground\nThe making of this reference to the Supreme Court is a significant event in Welsh law.\nThe Local Government Byelaws (Wales) Bill 2012 is the first Bill to have been passed by the Assembly.\nThat in itself is important, as it has provided the Assembly with the first opportunity to put into practice its power to make laws.\nThat power was given to it by section 107(1) of the Government of Wales Act 2006 (the 2006 Act) upon the coming into force on 5 May 2011 of the Assembly Act provisions in Part 4 of the Act.\nNow there is the making of the reference.\nThis is an even more significant milestone than, in the words of Lady Cosgrove, the case of A v Scottish Ministers [2002] SC (PC) 63 was for Scotland: see para 2.\nIn that case the first Act of the Scottish Parliament, the Mental Health (Public Safety and Appeals) (Scotland) Act 1999, received the Royal Assent 13 days after the Bill had been introduced in the Parliament as a matter of urgency.\nA restricted patient who was being detained in the State Hospital then challenged the Parliaments legislative competence on the ground that the Act was incompatible with his Convention rights.\nIt took nearly two years before, after working its way through the devolution issues procedure, the challenge was finally dismissed by the Judicial Committee of the Privy Council.\nHere use is being made, for the first time, of the power that is given by section 112 of the 2006 Act to the Counsel General or the Attorney General to refer the question whether a Bill would be within the Assemblys legislative competence to the Supreme Court for decision before it is submitted for Royal Assent under section 115.\nA similar provision was included in section 33 of the Scotland Act 1998 (the 1998 Act) to ensure that the Lord Advocate and the law officers of the United Kingdom Government were content that Bills of the Scottish Parliament were within competence before they were submitted for Royal Assent under section 32 by the Presiding Officer.\nThe Scottish Parliament has passed many Bills since that Act came into force.\nBut none of them has been challenged before enactment by any of the relevant law officers.\nSo there has not yet been an occasion for the making use in relation to any of its Bills of the power under section 33 for pre-legislative scrutiny.\nThe reason why a reference has been made in this case, in contrast to the lack of use of the equivalent provision in Scotland, is likely to lie in differences between the systems that have been used to devolve legislative power to the devolved legislatures from the United Kingdom Parliament at Westminster and executive power to the devolved governments from Ministers of the United Kingdom Government.\nUnder the Scottish system, the general power to make laws conferred on the Scottish Parliament by section 28 is subject to section 29 of the 1998 Act, which provides that an Act of the Scottish Parliament is outside its competence so far as, among other things, it relates to matters reserved to Westminster or is in breach of the restrictions in Schedule 4.\nA list of the reserved matters is set out in Schedule 5 to the 1998 Act.\nThese provisions were accompanied by a general transfer of functions conferred on Ministers of the Crown to the Scottish Ministers by section 53, so far as these functions are exercisable within devolved competence.\nThis difference of approach can be illustrated by comparing the restrictions on the powers of the Assembly under Part 2 of Schedule 7 to the 2006 Act, read together with the exceptions in Part 3, with the restrictions on the powers of the Scottish Parliament under Schedule 4 to the 1998 Act.\nThe Assembly cannot remove or modify, or confer power by subordinate legislation to remove or modify, any pre-commencement function of the Minster of the Crown unless (a) the Secretary of State consents to the provision or (b) the provision is incidental to, or consequential on, any other provision contained in the Act of the Assembly: paragraph 1 of Part 2 read together with paragraphs 6(1)(a) and (b) of Part 3.\nThe phrase incidental to, or consequential on is used in paragraph 3(1)(a) of Schedule 4 to the 1998 Act, which provides that the restriction on the power of the Scottish Parliament to modify, or confer power by subordinate legislation to modify, the law on reserved matters does not apply to modifications which are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters.\nBut there is no reference here or anywhere else in the 1998 Act which defines devolved competence differently, to removing a pre-commencement function of a Minister of the Crown.\nA proper understanding of the effect of Schedule 7 to the 2006 Act, and of paragraph 6(1)(b) of Part 3 in particular, is of central importance to the resolution of the issue raised by this reference.\nSo I think that it was entirely proper for the Attorney General to refer sections 6 and 9 of the Bill to this court for pre- legislative scrutiny under section 112 rather than raise the issue after its enactment as a devolution issue under section 149 and Schedule 9.\nAny delay in the submitting of a Bill which has been passed by the Assembly for Royal Assent is, of course, to be regretted.\nIt was with that in mind that the hearing was given the earliest possible date in the courts programme.\nBut it is to be hoped that it will be more than compensated for by the benefits that will come from the removal of uncertainty at the first opportunity as to whether sections 6 and 9 are within legislative competence.\nGeneral principles\nIt may be helpful to restate, in the Welsh context, some principles of general application that have guided the court when dealing with issues about the legislative competence of the Scottish Parliament.\nFirst, the question whether a Bill of the Assembly is within its legislative competence is a question of law which, if the issue is referred to it, the court must decide.\nThe judicial function in this regard has been carefully structured.\nIt is not for the judges to say whether legislation on any particular issue is better made by the Assembly or by the Parliament of the United Kingdom at Westminster.\nHow that issue is to be dealt with has already been addressed by the United Kingdom Parliament.\nIt must be determined according to the particular rules that section 108 of the 2006 Act and Schedule 7 have laid down.\nThose rules, just like any other rules, have to be interpreted.\nIt is for the court to say what the rules mean and how, in a case such as this, they must be applied in order to resolve the issue whether the measure in question was within competence.\nSecond, the question whether the Bill is within competence must be determined simply by examining the provisions by which the scheme of devolution has been laid out.\nThat is not to say that this will always be a simple exercise.\nBut, as Lord Walker observed in Martin v Most [2010] UKSC 10; 2010 SC (UKSC) 40, para 44 when discussing the system of devolution for Scotland, the task of the United Kingdom Parliament in relation to Wales was to define the legislative competence of the Assembly, while itself continuing as the sovereign legislature of the United Kingdom.\nIt had to define, necessarily in fairly general and abstract terms, permitted or prohibited areas of legislative activity.\nThe aim was to achieve a constitutional settlement, the terms of which the 2006 Act was designed to set out.\nReference was made in the course of the argument in the present case to the fact that the 2006 Act was a constitutional enactment.\nIt was, of course, an Act of great constitutional significance, and its significance has been enhanced by the coming into operation of Schedule 7.\nBut I do not think that this description, in itself, can be taken to be a guide to its interpretation.\nThe rules to which the court must apply in order to give effect to it are those laid down by the statute, and the statute must be interpreted like any other statute.\nBut the purpose of the Act has informed the statutory language, and it is proper to have regard to it if help is needed as to what the words mean.\nThird, the question whether measures passed under devolved powers by the legislatures in Wales, Scotland and Northern Ireland are amenable to judicial review, and if so on what grounds, was considered in AXA General Insurance Company Ltd v Lord Advocate [2011] UKSC 46, [2012] 1 AC 868.\nThe court in that case had the benefit of submissions by the Counsel General.\nIt was common ground that, while there are some differences of detail between the 2006 Act and the corresponding legislation for Scotland and Northern Ireland, these differences do not matter for that purpose.\nThe essential nature of the legislatures that the devolution statutes have created in each case is the same.\nBut it has not been suggested that the Bill is the result of an unreasonable, irrational and arbitrary exercise of the Assemblys legislative authority.\nThis case is concerned only with the question whether the Bill is outside competence under the provisions laid down by the statute.\nIn the light of these principles the issue at the heart of the argument about section 6 of the Bill resolves itself into a simple question: what is meant by the phrase incidental to, or consequential on in paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act? Section 6 would have the effect of removing a pre- commencement function of a Minister of the Crown.\nAccording to the rules that section 108 read together with Part 2 of Schedule 7 have laid down, a provision of an Act of the Assembly cannot do this unless it falls within one of the exceptions in paragraph 6 of Part 3.\nI agree with Lord Neuberger that section 6 falls within the exception in paragraph 6(1)(b).\nThe words incidental to, or consequential on, any other provision contained in the Act of the Assembly make it clear that the interpretative exercise to which it points is one of comparison.\nHow significant is the removal of the pre-commencement function, when it is seen in the context of the Act as a whole? If the removal has an end and purpose of its own, that will be one thing.\nIt will be outside competence.\nIf its purpose or effect is merely subsidiary to something else in the Act, and its consequence when it is put into effect can be seen to be minor or unimportant in the context of the Act as a whole, that will be another.\nIt can then be regarded as merely incidental to, or consequential on, the purpose that the Bill seeks to achieve.\nThe provision in question meets this test.\nSo it is within competence.\nI also agree with what he says about section 9.\nOn the face of it, the power that it gives to add or subtract from the list of enactments is open-ended.\nThis, no doubt, is why the UK Government has thought it right to raise the question whether it too is within competence.\nBut it falls to be read as narrowly as is required for it to be within competence, if such a reading is possible, and to have effect accordingly: see section 154(2).\nThat can be done by reading it in a way that brings it within the exception in paragraph 6(1)(b) of Part 3 of Schedule 7.\nThe Assembly does not have legislative competence to confer on the Welsh Ministers powers that are wider than those which have been given to it by the 2006 Act.\nSo it will be open to the Welsh Ministers to add to the list of enactments in Part 1 of Schedule 1 to the Bill by removing a pre-commencement function of a Minister of the Crown without the consent of the Secretary of State only if it meets the test in paragraph 6(1)(b).\nI see no difficulty in reading section 9 in this way, and in holding that the power is to have effect subject to that limitation.\nSo it too is within competence.\nPractice\nThe method which the Attorney General used for the bringing of this reference was to file a Notice of Appeal in the form for applications for permission to appeal or appeals which is described as Form 1 in UKSC Practice Direction 7.3.2 and its Annex.\nIt named the National Assembly for Wales as the only respondent and its Chief Legal Advisor, on whom the Notice of Appeal was served, as its solicitor.\nThe Counsel General for Wales and the Attorney General for Northern Ireland were later joined as respondents at their own request.\nThe use of this procedure raises two questions.\nThe first is as to the correct procedure that should be adopted under Rule 41 of the Supreme Court Rules 2009 and Practice Direction 10 for the making of a reference under section 112 of the 2006 Act and its counterparts in Scotland and Northern Ireland.\nThe second has two parts.\nFirst, was it appropriate for the Assembly to be called as a respondent to these proceedings? Second, what are the circumstances in which the Assembly, although not called as respondent, would have standing to appear in proceedings which raise questions as to the legislative competence of one of its enactments?\nThe only previous example of a reference being made to the Supreme Court of a Bill passed by a devolved legislature is a reference that was made by the Attorney General for Northern Ireland in 2011.\nAs was noted in AXA General Insurance Co Ltd v Lord Advocate [2012] 1 AC 868, para 15, he referred the question whether the Damages (Asbestos-related Conditions) (Northern Ireland) Bill was within the competence of the Northern Ireland Assembly for pre- enactment scrutiny under section 11 of the Northern Ireland Act 1998.\nHe too used Form 1 for this purpose and the reference was served on the Northern Ireland Assembly, which was named on the form as the only respondent.\nThe Northern Ireland Assembly responded by serving a notice of objection indicating its opposition to the grounds of the reference.\nIt used the form which is described as Form 3 in Practice Direction 7.3.2 and its Annex.\nBut the reference was withdrawn before the hearing of the appeal in AXA took place.\nSo there was no opportunity for a discussion of the procedural issues in that case.\n(a) the reference procedure\nRule 41 of the Supreme Court Rules 2009 (SI 2009\/1603 (L17)) provides: (2) A reference made by the relevant officer is made by filing the reference and by serving a copy on any other relevant officer who is not already a party and who has a potential interest in the proceedings.\n[emphasis added] (3) A reference must state the question or issue to be decided by the Court.\n(4) The Registrar shall give notice of the question or issue to the appropriate relevant officer where that officer is not already a party to any proceedings.\nRule 3(2) of the Supreme Court Rules defines the expression relevant officer as meaning, in relation to proceedings in England and Wales, the Attorney General and, in relation to proceedings that particularly affect Wales, the Counsel General to the Welsh Assembly Government.\nThe procedure to be used in cases which raise devolution issues is dealt with in Practice Direction 10.\nIt is pointed out in Practice Direction 10.1.3 that such a case can reach the Supreme Court in four ways, one of which is by way of a reference by a relevant officer.\nPractice Direction 10.1.4 repeats the definition of the expression relevant officer which is set out in Rule 3(2).\nThe four ways in which a devolution issue may reach the Supreme Court are then dealt with under four separate headings.\nPractice Direction 10.2, under the heading references of a question by a relevant officer, states: 10.2.1 A reference of a question by a relevant officer is made by filing the reference, and serving a copy on any other relevant officer who is not already a party and who has a potential interest in the proceedings, within any time limits specified by the relevant statute.\n[emphasis added] 10.2.2 The reference should state the question to be determined with respect to the proposed Order in Council, proposed Assembly Measure or Bill to which the reference relates; whether it applies to the whole Order in Council, proposed Assembly Measure or Bill or to a provision of it, and the reference shall have annexed to it a copy of the Order in Council, Assembly Measure or Bill to which it relates.\n10.2.3 Any relevant officer (other than the one making the reference) who wishes to participate in the proceedings shall within 7 days of service of the reference on him notify the Registrar and the other parties.\nAny relevant officer who gives notice automatically becomes a respondent to the proceedings.\nAs these provisions make clear, the reference should be served on any other relevant officer.\nThose words are to be read together with the definition of the expression relevant officer in Rule 3(2) and Practice Direction 10.1.4.\nThere ought not to have been any room for doubt that, in the case of a reference by the Attorney General of a Bill of the National Assembly for Wales, the Counsel General had a potential interest in the proceedings.\nSo the reference should have been served on him.\nIt should not have been served on the Assembly which is not referred to in any of these provisions.\nIt is not a relevant officer.\nIt should also be noted that, in contrast to what is set out in the part of Practice Direction 10 which deals with appeals to the Supreme Court (see Practice Direction 10.3.5), the procedure set out in Practice Direction 10.2 does not lay down any particular form for use in such proceedings: see also Practice Direction 10.4.1 for references by courts and Practice Direction 10.5.1 for direct references by a law officer.\nThese Practice Directions do not refer to Form 1.\nThat form is designed for use only for notices of appeal and applications for permission to appeal.\nAs the wording of Practice Direction 7.3.2 makes clear, it is not designed for use in the case of references.\nCounsel for the Attorney General submitted that these provisions fail to identify who is the respondent to a section 112 reference, and that there is a lack of coherence in the combination of Rule 41 and Practice Direction 10.\nI do not think that this does justice to the provisions which I have quoted.\nThey require service of the reference on any other relevant officer, and they provide that he will automatically become a respondent to the proceedings if he notifies the Registrar that he wishes to participate in them.\nThe phrase any other relevant officer reflects the fact that section 112 does not state that there must be a respondent to a reference that is made under it.\nCircumstances can be envisaged where that would not be appropriate.\nIt would, for example, be open to the Counsel General, to make a reference of a question about legislative competency in which no other relevant officer has an interest on the ground, for example, that a provision was incompatible with the Convention rights: see section 108(6)(c).\nThe court will, of course, benefit from the argument of a contradictor.\nBut it is not in a position to compel the appearance of a law officer who does not wish to participate.\nWhat it seeks to ensure is that any other relevant officer is notified.\nWhat then happens is up to the relevant officer.\nIt should be understood therefore (a) that proceedings on a reference under section 112 of the 2006 Act and its counterparts in Scotland and Northern Ireland are proceedings sui generis and (b) that they should be served on, and only on, any other relevant officer in his capacity as a relevant officer, not as a respondent.\nHe will become a respondent if, and only if, he notifies the Registrar that he wishes to participate.\nThere is no requirement for the reference to be served on the National Assembly, although Practice Direction 10.2.6 states that it must be notified.\nNotification also should be given to the Clerk of the Assembly appointed under section 26.\nThis is because it is her function to submit the Bill for Royal Assent under section 115.\nShe may not do this if a reference has been made and not yet disposed of by the Supreme Court: section 115(2).\nThe Presiding Officer has the same function in Scotland, and is under the same prohibition, with regard to Acts of the Scottish Parliament under section 32(2) of the 1998 Act; see, as regards Northern Ireland, section 11(2) of the Northern Ireland Act 1998.\nNo form has been laid down for use in the case of references.\nSo it is open to the law officer or court, on making the reference, to adopt whatever style and layout is thought to be most appropriate in the circumstances.\nThe Registrar must however be provided with the following information for administrative purposes: (a) the names, addresses and contact details of the party making the reference and his legal representatives; (b) the names, addresses and contact details of any relevant officer on whom the reference has been served and his legal representatives; and (c) similar details of any person who has been notified.\nThese details should be set out in a covering document, to which the reference and any accompanying documents should be attached.\nThe Practice Directions are kept under continuous review and amended from time as required.\nAmendments are needed to take account of changes in the systems for devolution.\nFor example, references to a Measure of the National Assembly for Wales in Practice Direction 10 are no longer appropriate as Part 3 of the 2006 Act has ceased to have effect.\nThey will need to be deleted.\nChanges will be needed to take account of a new system for appeals to the Supreme Court in devolution questions arising in criminal cases under the Scotland Act 2012 which are classified as compatibility issues.\nAccount will be also have to be taken of the points mentioned in this judgment.\nA revised version of the Practice Directions will be issued in due course.\n(b) participation of the Assembly\nThe 2006 Act confers no legal personality on the National Assembly for Wales.\nInstead the National Assembly for Wales Commission was established by section 27, which does have legal personality.\nThe Commission has the duty of providing the Assembly with the property, staff and premises required for its purposes: section 27(5).\nFurther provisions about the Commission are set out in Schedule 2 to the 2006 Act.\nAmong them is paragraph 4 which sets out its powers.\nThese include, in particular, entering into contracts, charging for goods and services, investing sums not immediately required for its functions and accepting gifts: paragraph 4(2).\nThere is no indication either in section 27 itself or in the Schedule that it was contemplated that either the Assembly or the Commission should have the right to institute, defend or appear in legal proceedings in which the legislative competence of a Bill passed by the Assembly was under scrutiny.\nSection 112(1) of the 2006 Act confers the function of referring a question about legislative competence on the Counsel General or the Attorney General.\nThe Counsel General represents the interests of the Welsh Ministers on the one hand and the Attorney General represents the interests of the Ministers of the Crown on the other.\nSo their positions under this provision can be regarded as reciprocal.\nEach can be taken to have the right to appear in proceedings raised by the other, which he can exercise if he wishes to do so.\nReferences to the right of the Counsel General to bring and defend proceedings are also to be found in Schedule 9: see, for example, paragraphs 4, 13, 14 and 30.\nNo reference is made anywhere in such terms to the Assembly or the Commission.\nIn Adams v Advocate General 2003 SC 171 a challenge was made by way of a petition for judicial review to the validity of the Protection of Wild Mammals (Scotland) Act 2002, which was an Act of the Scottish Parliament.\nAmong the questions raised was whether the Act was outside the Parliaments legislative competence.\nThe Advocate General for Scotland lodged answers in which she contended that the Scottish Parliament was the appropriate respondent and that, since proceedings instituted against the Parliament must be instituted against the Parliamentary corporation in terms of section 40(1) of the 1998 Act, the corporation ought to have been called as respondent.\nLord Nimmo Smith rejected this contention: see para 31.\nHe said that the proceedings were not proceedings against the Parliament within the meaning of section 40(1), as by the stage when they were brought the Act had passed out of its hands.\nAppearing as a contradictor did not appear to be one of the corporations functions, and it was clear from the scheme of the Act that the Lord Advocate, as the Scottish law officer acting in the public interest, was the appropriate person to perform that role.\nI would apply the same reasoning to a case where the challenge to legislative competence was made after a Bill had been enacted and become an Act of the Assembly.\nThe situation in this case is different, as the Bill is still in the hands of the Clerk.\nSo it cannot be said to have passed out of the hands of the Assembly.\nBut the more important point is that appearing as a contradictor to a challenge of that kind is not one of the Commissions functions under the 2006 Act.\nThe way that Act has set out its functions and those of the Counsel General must be respected.\nThe appropriate person to represent the public interest in resisting a challenge of that kind is the Counsel General, whose functions include making appropriate representations about any matter affecting Wales: section 62.\nThe scope that is given to him by that section makes any intervention by the Assembly or the Commission in such proceedings unnecessary.\nThis is not to say that the Assembly or the Commission may not have standing to appear in proceedings in which such questions are raised.\nThere may be cases where the views of the Assembly or the Commission, one way or the other, might be of assistance.\nIn that event the court would be willing to give permission to these bodies, or either of them, to intervene under Rule 26 if it was asked to do so.\nThis should not be regarded, however, as detracting from the rule that the appropriate person on whom such proceedings should be served is the Counsel General or, if the proceedings are brought by the Counsel General, the Attorney General.\nConclusion\nFor the reasons given by Lord Neuberger, I would determine this reference by declaring that sections 6 and 9 of the Local Government Byelaws (Wales) Bill 2012 are within the legislative competence of the Assembly.\n","output":"Following a referendum, various provisions of the Government of Wales Act 2006 (the 2006 Act) came into force on 5 May 2011.\nThese provisions gave the National Assembly for Wales (the Assembly) primary legislative competence in certain areas [5].\nIf there is an issue as to whether a Bill, or a provision in a Bill, passed by the Assembly exceeds legislative competence, the issue can be referred to the Supreme Court [6].\nThe Local Government Byelaws (Wales) Bill 2012 (the Bill) was the first Bill to be enacted by the Assembly under these new powers.\nThe aim of the Bill is to simplify procedures for making and enforcing local authority byelaws in Wales [7].\nCertain provisions of the Bill are intended to remove the need for the confirmation of byelaws by the Welsh Ministers and by the Secretary of State [8].\nThis need arises by virtue of the Local Government Act 1972 (the 1972 Act) and the National Assembly for Wales (Transfer of Functions) Order 1999 (the 1999 Order).\nThe effect of section 236(11) of the 1972 Act is that, where a statutory provision giving a local authority the power or duty to make the byelaw either so provides or is silent as to the existence or identity of a confirmatory body or person, before any byelaw made under that provision by a local authority can be effective, the Secretary of State has to confirm the byelaw [16].\nSchedule 1 to the 1999 Order provides that the functions of the Secretary of State under section 236(11) of the 1972 Act shall be exercisable by the Assembly concurrently with the Secretary of State [20].\nThe Attorney General referred to the Supreme Court the question whether sections 6 and 9 of the Bill were within the Assemblys legislative competence [1].\nSection 6 of the Bill (through Part 1 of Schedule 1 to the Bill) removes the need for the confirmation of byelaws under certain specific enactments (the scheduled enactments) which currently require confirmation under section 236(11) of the 1972 Act.\nSection 9 would empower the Welsh Ministers to add to the scheduled enactments [8].\nThe specific issue in relation to sections 6 and 9 was whether either section removed the Secretary of States role in confirming (or refusing to confirm) byelaws made under statutory provisions which are (i) scheduled enactments, and (ii) provisions to which section 236(11) applies.\nIf either section removed this role, they would be beyond the legislative competence of the Assembly, unless they were incidental to, or consequential on another provision contained in the Bill [46].\nThe Supreme Court unanimously declares that the Assembly had the legislative competence to enact sections 6 and 9 of the Bill.\nLord Neuberger gives the leading judgment.\nLord Hope gives guidance on some matters of practice regarding the making of such references.\nSection 6 is within the legislative competence of the Assembly [66],[83].\nThe removal of the Secretary of States confirmatory powers in relation to the scheduled enactments would be incidental to, and consequential on, the primary purpose of removing the need for confirmation by the Welsh Ministers of any byelaw made under the scheduled enactments [52],[53].\nThe primary purpose of the Bill cannot be achieved without that removal [54].\nThe Secretary of States confirmatory power is concurrent with that of the Welsh Ministers [55].\nIt is open to either the Secretary of State or the Assembly to exercise any functions which are exercisable concurrently [37].\nWhere a function is vested in two Ministers concurrently, either may perform it, acting alone, on any occasion [40].\nIt is far more sensible and consistent with the purpose of the Welsh Government legislation to conclude that the Assembly and the Secretary of State were each intended to have the power to exercise the concurrent functions, and that it was to be left to their good sense to decide which should exercise a particular function in a particular case [41].\nThe confirmatory power is only given to the Secretary of State if no other statute (including one passed after the 1972 Act) confers the function on any other body or person, which supports the notion that it is not an important function [56].\nThe scheduled enactments relate to byelaws in respect of which the Secretary of State is very unlikely ever to exercise his confirmatory power [57].\nSection 9 is within the legislative competence of the Assembly [66],[84].\nSection 9 has a limited effect, because the jurisdiction of the Assembly is limited to removing, or delegating the power to remove, functions of the Secretary of State where this would be incidental to, or consequential on, the purpose of removing the need for confirmation by the Welsh Ministers of any byelaw made under the scheduled enactments, and the Assembly cannot therefore bestow wider powers than this on the Welsh Ministers [63].\nThe same conclusion can be arrived at by invoking section 154(2) of the 2006 Act, which provides that a provision of a Bill which could be read in a way as to be outside the Assemblys legislative competence is to be read as narrowly as is required for it to be within that competence [64].\nThe outcome of this reference is in favour of the Assembly, but it cannot be regarded as a setback in practical terms for the Secretary of State, because the conclusion the Supreme Court has reached as to the effect of section 9 of the Bill is one which reflects the terms on which the Secretary of State was prepared to give consent to section 6 of the Bill [67].\nThe outcome is also entirely consistent with the general thrust of the extended powers given to the Welsh Ministers by the 2006 Act [68].\nGuidance on matters of practice In terms of the relevant rules and practice direction, the reference should not have been served on the Assembly.\nRather, it should have been served on the Counsel General in his capacity as a relevant officer having a potential interest in the proceedings.\nHe can then become a respondent if he notifies the Registrar that he wishes to participate [90],[93].\nAs no form has been laid down for use in the case of references (as opposed to appeals) involving devolution issues, it is open to the referring law officer or court to adopt whatever style and layout is thought to be most appropriate in the circumstances.\nThe Registrar must however be provided with certain information for administrative purposes [94].\nAppearing as a contradictor to a challenge to the legislative competence of a Bill or an Act of the Assembly is not one of the Assembly Commissions functions under the 2006 Act.\nThe appropriate person to represent the public interest in resisting such a challenge is the Counsel General.\nThere may however be cases in which the court will allow the Assembly or the Assembly Commission to participate as an intervener [99],[100].\n","id":23}
{"input":"A limited company not in liquidation cannot lawfully return capital to its shareholders except by way of a reduction of capital approved by the court.\nProfits may be distributed to shareholders (normally by way of dividend) but only out of distributable profits computed in accordance with the complicated provisions of the Companies Act 2006 (replacing similar provisions in the Companies Act 1985).\nWhether a transaction amounts to an unlawful distribution of capital is not simply a matter of form.\nAs Hoffmann J said in Aveling Barford Ltd v Perion Ltd [1989] BCLC 626, 631, Whether or not the transaction is a distribution to shareholders does not depend exclusively on what the parties choose to call it.\nThe court looks at the substance rather than the outward appearance.\nSimilarly Pennycuick J observed in Ridge Securities Ltd v Inland Revenue Commissioners [1964] 1 WLR 479, 495, A company can only lawfully deal with its assets in furtherance of its objects.\nThe corporators may take assets out of the company by way of dividend, or, with the leave of the court, by way of reduction of capital, or in a winding-up.\nThey may of course acquire them for full consideration.\nThey cannot take assets out of the company by way of voluntary distribution, however described, and if they attempt to do so, the distribution is ultra vires the company.\nThe sole issue in this appeal is whether there may have been an unlawful distribution of capital when the appellant company, Progress Property Company Ltd (PPC), sold the whole issued share capital of a wholly-owned subsidiary, YMS Properties (No. 1) Ltd (YMS1) to another company, Moorgarth Group Ltd (Moorgarth).\nAll these companies were indirectly controlled by Dr Cristo Wiese, a South African investor.\nThe facts have not yet been fully established, which is why the issue must be stated in this inconclusive way.\nPPC was originally called Tradegro (UK) Property Holdings Ltd and has since changed its name to BLN Property Company Ltd. Moorgarth was originally called Foldfree Ltd. But it is simplest to use the names used by Mummery LJ in his judgment in the Court of Appeal.\nThe transaction between PPC and Moorgarth has been vigorously attacked by the appellant PPC on the ground that it was (as must be assumed for the purposes of this appeal) at an undervalue (PPC says, a gross undervalue).\nYMS1, a company whose net assets might on PPCs most ambitious case have been worth as much as 4m, was sold for little more than 60,000.\nBut the attack has been stoutly resisted on the ground that (as is now no longer in dispute) Mr Cornus Moore (Dr Wieses right-hand man, and a director of both PPC and Moorgarth) genuinely believed that the sale of the shares in YMS1 was at market value.\nIt is also to be assumed for the purposes of this appeal that Mr Moore was in breach of duty in failing to realise that the transaction was in fact a sale at an undervalue.\nHad this appeal been allowed, the correctness of these undetermined assumptions (and also issues of valuation and quantum) might have had to be decided in further proceedings.\nThe facts\nThe scale of the undervaluation alleged by PPC, in a transaction negotiated between experienced businessmen advised by experienced surveyors, solicitors and accountants, is truly remarkable.\nIt suggests that the circumstances were such as to call for close enquiry; and the deputy judge, Mr David Donaldson QC, did enquire into them closely in the course of a fourteen-day trial of this action (together with two other actions in which there has been no appeal).\nThe deputy judges task in fact-finding was difficult, as he found Mr Charles Price, the individual indirectly interested (as a minority shareholder in PPC and as prospective purchaser of the majority holding) in the disposal of the YMS1 shares, to be an unreliable witness.\nPPCs failure to call as a witness its solicitor, Mr Gerber, added to the deputy judges difficulties in making full and clear findings of fact.\nHe dismissed the action on the basis that it could not succeed even if there had been an unintentional sale at an undervalue, and even if Mr Moore was in breach of duty in failing to recognise it.\nThe Court of Appeal (Mummery, Toulson and Elias LJJ) [2009] EWCA Civ 629, [2010] 1 BCLC 1 unanimously upheld the deputy judges dismissal of the action.\nIn doing so Mummery LJ (with whom Toulson and Elias LJJ concurred) did not find it necessary to go far into the factual circumstances.\nHe summarised the essential facts with admirable brevity in paras 6 and 12 of his judgment: The sale and purchase agreement was made on 20 October 2003 at an agreed price of 63,225.72.\nThe sale price was calculated on the basis of the open market value of the YMS1 properties (11.83m), from which there was subtracted liabilities for creditors approaching 8m and the sum of 4m in respect of a repairing liability.\nThe subtraction of 4m was made in the belief that PPC had given an indemnity or counter-indemnity under which that liability would ultimately fall on PPC.\nAs part of the transaction that liability of PPC was to be released.\nIn fact, it turned out that there was no such indemnity liability and there was nothing from which PPC could be released.\nIn consequence there was no 4m to subtract from the value of the YMS1 properties.\nThere was no justification for the reduction in the sale price.\nSo it was said that the sale of the shares was at a gross undervalue. . . .\nThere was no dispute before the deputy judge that Mr Moore genuinely believed that the price of the shares in YMS1 sold by PPC to Moorgarth was their market value.\nIt was not alleged that there was any intention on his part to prefer Moorgarth or to commit a fraud on the creditors of PPC.\nHe acted in the honest belief that the sale of the shares in YMS1 was a commercial transaction.\nI am reluctant to expand on Mummery LJs summary unless there is a good reason to do so.\nBut in an appeal which is centrally concerned with the substance and reality of the impugned transaction, I think it is appropriate to set out some of the deputy judges findings of fact in rather more detail.\nThey help to answer some (but not all) of the questions prompted by Mummery LJs summary.\nAt the material time (roughly April to October 2003) Dr Wieses investments included interests in the value (or down-market) sector of the United Kingdom retail market.\nHe indirectly controlled (through Brown & Jackson Plc B & J) two retail chains, Poundstretcher and Your More Store.\nThese businesses (especially Your More Store) were not flourishing, and in the early months of 2003 he took various steps intended to improve their prosperity.\nYour More Store Limited (YMS), which ran Your More Store and two other retail businesses, became a subsidiary of Tradegro (UK) Ltd (Tradegro), another company controlled by Dr Wiese.\nMr Carel Stassen was appointed as managing director of YMS and became a minority shareholder in YMS.\nMr Price was appointed as managing director of PPC, which was at that time a wholly-owned subsidiary of Tradegro.\nMr Price became the holder of 24.9% of the shares in PPC, leaving Tradegro with 75.1%.\nThe freehold interest in the Your More Store premises was vested in a company called YMS Properties (No. 2) Ltd (YMS2).\nYMS2 was a wholly-owned subsidiary of YMS1, which was a wholly-owned subsidiary of PPC.\nIn the short term YMS continued to occupy its retail premises informally, without any leases from YMS2.\nThere was a similar reorganization of the Poundstretcher business.\nYMSs informal occupation of the retail premises did not last long.\nAn essential part of Mr Prices task was to manage and raise finance from YMS2s property portfolio.\nMr Price embarked on negotiations with Nationwide Building Society (Nationwide) and on 2 May 2003 Nationwide entered into a facilities agreement to advance funds of more than 20m secured on the YMS and Poundstretcher freeholds.\nBut Nationwide insisted that formal leases, with tenants covenants including full repairing and insurance obligations, should be entered into between YMS2 as landlord and YMS as tenant and between the corresponding Poundstretcher companies.\nThe deputy judge summarised the resulting situation in paras 8 and 9 of his judgment: This posed a problem.\nThe properties in the portfolio, and in particular those occupied by YMS, were in significant disrepair.\nA survey produced by independent surveyors GRD in early 2003 estimated the existing cost of repairs to the YMS properties at more than 4.6m.\nYMS, whose trading position was already parlous, was in no position to shoulder a liability of this magnitude, and Mr Stassen refused to agree.\nMoreover, the execution of FRI leases would at a stroke bring about a substantial increase in the value of the [freeholds the judge wrote leases but this must have been a slip] compared with the vacant possession value at which they currently stood in the books of YMS1.\nAs all parties recognised, commercial logic and indeed fairness required that the costs of this benefit should not rest with YMS.\nIt might be that no serious problem would arise so long as both the freeholds and YMS remained within the [Tradegro] group (though a question might still be posed as a result of the minority interests of Mr Stassen and Mr Price in, respectively, YMS and PPC), but that position was always open to change.\nIn the event, YMS did sign FRI leases.\nMr Stassen did not however agree to this course until he had obtained an assurance from Mr Moore, with the approval of Dr Wiese, that YMS would be given an indemnity against the costs it might be required to incur in satisfying the repairing liability.\nAt that stage there was a falling out between Mr Price and Dr Wieses management team, and in July 2003 Dr Wiese gave six months notice to terminate the arrangements with Mr Price.\nBut during the next two months there were negotiations which led to an agreement for Mr Price to acquire Tradegros 75.1% shareholding in PPC.\nThe agreed terms were quite complex and were embodied in a share purchase agreement (the SPA), the parties to which were (1) Wigmore Street Investments Ltd (WSIL), then called Real Estate Property Corporation Ltd, a Bermuda company controlled by Mr Price, as purchaser and (2) Tradegro as vendor.\nThe dispute in this appeal is not concerned with the sale of the PPC shares themselves, but with a preliminary step provided for in clause 4.1 of the SPA, that is, the sale by PPC, before completion of the SPA, of the whole share capital of YMS1 to Moorgarth (a direct subsidiary of Tradegro).\nThe deputy judge commented (in para 12 of his judgment) on how matters stood as the negotiations progressed: Since ownership of the freeholds would now move out of the [Tradegro] group, it became imperative to honour Mr Moores assurance to Mr Stassen that YMS would be given an indemnity against the FRI liability.\nLogic also suggested that in the new circumstances the ultimate liability should pass to the new owner of YMS2.\nConsistent with this, the running document entitled Summary of principal commercial terms passing between the parties indicated that (1) a deed of indemnity was being discussed between Tradegro and YMS (2) there was broad agreement on the provision of a counter-indemnity by PPC.\nThe same applied to the [Poundstretcher] properties.\nHis comment about what logic suggested must have been directed at the position before the change of plan (embodied in clause 4.1 of the SPA) to extract the YMS freeholds from PPC before the sale of its shares was completed.\nThere would have been no logic in PPC accepting ultimate responsibility for an unquantifiable liability for repairs to dilapidated YMS properties that it was not going to own.\nWhat happened instead, and gave rise to the issue in this appeal, was the extraction of the YMS freeholds by the sale of YMS1 by PPC to Moorgarth at the price of 63,225.72.\nThis took place under a simple written agreement entered into on 20 October 2003.\nIt was negotiated mainly by two solicitors, Mr Gerber instructed by Mr Price on behalf of PPC and Mr Emmett instructed by Mr Moore on behalf of Moorgarth.\nThe agreement was signed by Mr Paul Clarke (who was a director of both PPC and Moorgarth) on behalf of both companies.\nHe signed it after a board meeting of the directors of PPC attended by Mr Clarke in person and by Mr Price by telephone.\nOn the same day Tradegro and its overseas holding company gave a formal release of PPC from any possible liability under the supposed indemnity or counter-indemnity.\nThat liability had never actually come into existence, though it had been much discussed.\nThe deputy judges judgment (paras 13 to 31) gives a detailed account of the fairly hectic negotiations leading up to 20 October 2003, and of the events of that day.\nThat is for the present sufficient, and perhaps more than sufficient, as to the factual findings made at first instance in relation to the issue of sale at an undervalue.\nTo recapitulate, that there was a sale at an undervalue is an undetermined assumption made for the purposes of this appeal, as is Mr Moores breach of duty, but his genuine belief in an arms length sale is common ground.\nI shall return to the facts briefly at the end of this judgment.\nThe authorities\nPPCs case, as finally formulated at first instance, relied not on section 263 of the Companies Act 1985 (now replaced by sections 829 and 830 of the Companies Act 2006) but on what Mummery LJ referred to (para 23) as the common law rule: The common law rule devised for the protection of the creditors of a company is well settled: a distribution of a companys assets to a shareholder, except in accordance with specific statutory procedures, such as a winding up of the company, is a return of capital, which is unlawful and ultra vires the company.\nThe rule is essentially a judge-made rule, almost as old as company law itself, derived from the fundamental principles embodied in the statutes by which Parliament has permitted companies to be incorporated with limited liability.\nMummery LJs reference to ultra vires must be understood in the wider and looser sense of the term identified in Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246 at 276-278 (Slade LJ) and 302 (Browne-Wilkinson LJ).\nBut in this appeal there is no difference between the parties as to the narrower and wider meanings of ultra vires in the company law context.\nWhether a transaction infringes the common law rule is a matter of substance, not form.\nThe label attached to the transaction by the parties is not decisive.\nThat is a theme running through the authorities, including Ridge Securities Ltd v Inland Revenue Commissions [1964] 1 WLR 479 and Aveling Barford Ltd v Perion Ltd [1989] BCLC 626 to which I have already referred.\nI shall take some of the best-known cases in chronological order.\nRidge Securities was concerned with a complicated and artificial tax- avoidance scheme carried out at a time when companies were still subject to income tax (rather than corporation tax).\nPennycuick J (at p493), upheld the Special Commissioners disallowance of payments of interest grotesquely out of proportion to the principal amounts secured as not being interest within the meaning of section 169 of the Income Tax Act 1952.\nThat was simply a point of construction on the taxing statute.\nMore radically, Pennycuick J also dealt with a company law point not raised before the Special Commissioners, and held that the payments of so-called interest were in fact gratuitous (and so unlawful) dispositions of the companys money.\nIn the crucial passage ([1964] 1 WLR 479, 495, set out at para 1 above) the words however described are important.\nRe Halt Garage (1964) Ltd [1982] 3 All ER 1016 was, on its facts, at the other extreme from Ridge Securities as regards the sophistication of the parties involved and the outlandishness of the impugned transaction.\nThe company owned what was essentially a husband-and-wife business running a garage near Woburn Sands.\nFrom 1964 the couple worked very hard to build up the business, which included recovering broken-down vehicles from the newly-opened M1.\nThey paid themselves modest remuneration as directors.\nBut unfortunately in 1967 the wife became seriously ill and they decided to move to the Isle of Wight.\nThey tried to sell the business but repeatedly failed to do so, and at one stage the husband was commuting between the Isle of Wight and Bedfordshire in an attempt to look after his invalid wife and the ailing business.\nOther misfortunes followed and the company went into insolvent liquidation in 1971.\nThe liquidator challenged the propriety of directors remuneration paid to the husband and wife during the companys decline.\nOliver J upheld the husbands remuneration but reluctantly disallowed most of the wifes last two years remuneration.\nHe observed (at 1043) The real question is, were these payments genuinely directors remuneration? If your intention is to make a gift out of the capital of the company, you do not alter the nature of that by giving it another label and calling it remuneration.\nThat was, with respect, hardly apt on the facts of the case.\nThe evidence suggested that the couple knew little about company law and took the advice of their accountant.\nBut the case does show that if the label of remuneration does not square with the facts, the facts will prevail and the result may be an unlawful distribution, even if the directors in question intended no impropriety.\nLater in his judgment Oliver J recognized that, observing (at 1044): In the absence of any evidence of actual motive, the court must, I think, look at the matter objectively and apply the standard of reasonableness.\nIn Aveling Barford Ltd v Perion Ltd [1989] BCLC 626 a Singapore businessman, Dr Lee, who indirectly owned and controlled Aveling Barford, procured the sale by it to Perion (a Jersey company also controlled by Dr Lee) of a country house and 18 acres of land at Grantham, formerly used as an employees social and sports club.\nThis property had development potential and had been valued by Strutt and Parker at 650,000 and by Humberts (for prospective mortgagees) at 1,150,000.\nThe price on the sale to Perion was 350,000 (with a provision of doubtful authenticity for 400,000 overage if the property sold for over 800,000 within a year).\nIn the event it was sold within a year for over 1.5m.\nThat was the context in which Hoffmann J made the observations set out in para 1 above.\nThe need to look at substance rather than form also extended to Dr Lees being treated as the real shareholder in Aveling Barford and the real purchaser of the land: Hoffmann J made a passing reference to this at p632 but it was not an issue in the case.\nHoffmann J referred to Ridge Securities and Halt Garage and concluded (at 633) with an instructive passage referring to Rolled Steel: It is clear however that Slade LJ excepted from his general principle cases which he described as involving a fraud on creditors (see . . .\n[1986] Ch246 at 296).\nAs an example of such a case, he cited Re Halt Garage.\nCounsel for the defendants said that frauds on creditors meant transactions entered into when the company was insolvent.\nIn this case Aveling Barford was not at the relevant time insolvent.\nBut I do not think that the phrase was intended to have such a narrow meaning.\nThe rule that capital may not be returned to shareholders is a rule for the protection of creditors and the evasion of that rule falls within what I think Slade LJ had in mind when he spoke of a fraud on creditors.\nThere is certainly nothing in his judgment to suggest that he disapproved of the actual decisions in Re Halt Garage or Ridge Securities.\nAs for the transaction not being a sham, I accept that it was in law a sale.\nThe false dressing it wore was that of a sale at arms length or at market value.\nIt was the fact that it was known and intended to be a sale at an undervalue which made it an unlawful distribution.\nHoffmann Js acceptance that the sale was not a sham, but was a transaction in a false dressing, has an obvious parallel in developments which were taking place at the same time in landlord and tenant law.\nIn Street v Mountford [1985] AC 809 Lord Templeman famously struck down an artificial arrangement designed to avoid a tenancy protected by the Rent Acts.\nHe declared (at 825) that the court should be astute to detect and frustrate sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the Rent Acts.\nBut three years later in Antoniades v Villiers [1990] 1 AC 417, 462 Lord Templeman said that it would have been more accurate to have used the word pretence, and the rest of the Appellate Committee took the same line (Lord Bridge at 454 an attempt to disguise the true character of the agreement; Lord Ackner at 466 the substance and reality of the transaction . . .\nhe sought vigorously to disguise them; Lord Oliver at 467 an air of total unreality about these documents ; Lord Jauncey at 477 mere dressing up in an endeavour to clothe the agreement with a legal character which it would not otherwise have possessed).\nAntoniades v Villiers was decided before Aveling Barford and Hoffmann J may well have had it in mind when writing his judgment.\nThere is however one obvious difference between the typical case of a disguised company distribution and the typical case of a tenancy disguised as a licence in order to avoid the Rent Acts.\nThere is no identity of interest between the landlord and the putative licensee quite the reverse and the latter agrees to enter an artificial arrangement, against his or her interest, because of the weak bargaining position of anyone looking for affordable accommodation in an overcrowded city.\nIn the disguised company distribution case, by contrast, the same human beings are usually interested directly or indirectly, on both sides of the corporate manoeuvring: Dr Lee in Aveling Barford, anonymous financiers in Ridge Securities.\nThe fact that the same individuals are interested on both sides is not of course, by itself, a cause for alarm, since company reconstructions are carried out for all sorts of entirely proper purposes (and now have the benefit of sections 845 and 846 of the Companies Act 2006).\nThe point to which I draw attention is simply that where there is a degree of identity of interest between both sides to a corporate transaction, both sides are likely to be in agreement as to its real purpose and its true nature and substance.\nA question of characterisation\nThe essential issue then, is how the sale by PPC of its shareholding in YMS is to be characterised.\nThat is how it was put by Sir Owen Dixon CJ in Davis Investments Pty Ltd v Commissioner of Stamp Duties (New South Wales) (1957) 100 CLR 392, 406 (a case about a company reorganisation effected at book value in which the High Court of Australia were divided on what was ultimately an issue of construction on a stamp duty statute).\nThe same expression was used by Buxton LJ in MacPherson v European Strategic Bureau Ltd [2000] 2 BCLC 683, para 59.\nThe deputy judge did not ask himself (or answer) that precise question.\nBut he did (at paras 39-41) roundly reject the submission made on behalf of PPC that there is an unlawful return of capital whenever the company has entered into a transaction with a shareholder which results in a transfer of value not covered by distributable profits, and regardless of the purpose of the transaction.\nA relentlessly objective rule of that sort would be oppressive and unworkable.\nIt would tend to cast doubt on any transaction between a company and a shareholder, even if negotiated at arms length and in perfect good faith, whenever the company proved, with hindsight, to have got significantly the worse of the transaction.\nIn the Court of Appeal Mummery LJ developed the deputy judges line of thought into a more rounded conclusion (para 30): In this case the deputy judge noted that it had been accepted by PPC that the sale was entered into in the belief on the part of the director, Mr Moore, that the agreed price was at market value.\nIn those circumstances there was no knowledge or intention that the shares should be disposed of at an undervalue.\nThere was no reason to doubt the genuineness of the transaction as a commercial sale of the YMS1 shares.\nThis was so, even though it appeared that the sale price was calculated on the basis of the value of the properties that was misunderstood by all concerned.\nIn seeking to undermine that conclusion Mr Collings QC (for PPC) argued strenuously that an objective approach is called for.\nThe same general line is taken in a recent article by Dr Eva Micheler commenting on the Court of Appeals decision, Disguised Returns of Capital An Arms Length Approach, [2010] CLJ 151.\nThis interesting article refers to a number of cases not cited to this court or to the courts below, and argues for what the author calls an arms length approach.\nIf there were a stark choice between a subjective and an objective approach, the least unsatisfactory choice would be to opt for the latter.\nBut in cases of this sort the courts real task is to inquire into the true purpose and substance of the impugned transaction.\nThat calls for an investigation of all the relevant facts, which sometimes include the state of mind of the human beings who are orchestrating the corporate activity.\nSometimes their states of mind are totally irrelevant.\nA distribution described as a dividend but actually paid out of capital is unlawful, however technical the error and however well-meaning the directors who paid it.\nThe same is true of a payment which is on analysis the equivalent of a dividend, such as the unusual cases (mentioned by Dr Micheler) of In re Walters Deed of Guarantee [1933] Ch 321 (claim by guarantor of preference dividends) and Barclays Bank plc v British & Commonwealth Holdings plc [1996] 1 BCLC 1 (claim for damages for contractual breach of scheme for redemption of shares).\nWhere there is a challenge to the propriety of a directors remuneration the test is objective (Halt Garage), but probably subject in practice to what has been called, in a recent Scottish case, a margin of appreciation: Clydebank Football Club Ltd v Steedman 2002 SLT 109, para 76 (discussed further below).\nIf a controlling shareholder simply treats a company as his own property, as the domineering master-builder did in In re George Newman & Co Ltd [1895] 1 Ch 674, his state of mind (and that of his fellow-directors) is irrelevant.\nIt does not matter whether they were consciously in breach of duty, or just woefully ignorant of their duties.\nWhat they do is enough by itself to establish the unlawful character of the transaction.\nThe participants subjective intentions are however sometimes relevant, and a distribution disguised as an arms length commercial transaction is the paradigm example.\nIf a company sells to a shareholder at a low value assets which are difficult to value precisely, but which are potentially very valuable, the transaction may call for close scrutiny, and the companys financial position, and the actual motives and intentions of the directors, will be highly relevant.\nThere may be questions to be asked as to whether the company was under financial pressure compelling it to sell at an inopportune time, as to what advice was taken, how the market was tested, and how the terms of the deal were negotiated.\nIf the conclusion is that it was a genuine arms length transaction then it will stand, even if it may, with hindsight, appear to have been a bad bargain.\nIf it was an improper attempt to extract value by the pretence of an arms length sale, it will be held unlawful.\nBut either conclusion will depend on a realistic assessment of all the relevant facts, not simply a retrospective valuation exercise in isolation from all other inquiries.\nPretence is often a badge of a bad conscience.\nAny attempt to dress up a transaction as something different from what it is is likely to provoke suspicion.\nIn Aveling Barford there were suspicious factors, such as Dr Lees surprising evidence that he was ignorant of the Humberts valuation, and the dubious authenticity of the overage document.\nBut in the end the disparity between the valuations and the sale price of the land was sufficient, by itself, to satisfy Hoffmann J that the transaction could not stand.\nThe right approach is in my opinion well illustrated by the careful judgment of Lord Hamilton in Clydebank Football Club Ltd v Steedman 2002 SLT 109.\nIt is an example of the problems which can arise with football clubs owned by limited companies, where some small shareholders see the club as essentially a community enterprise, and other more commercially-minded shareholders are concerned with what they see as underused premises ripe for profitable redevelopment.\nThe facts are complicated, and the main issue was on section 320 of the Companies Act 1985 (approval by company in general meeting of acquisition of non-cash asset by director or connected person).\nBut the judge also dealt with a claim under section 263 (unlawful distribution).\nHe held that the sale of the clubs derelict ground at Kilbowie Park, and another site originally purchased under an abortive plan for a new ground, was a genuine arms-length sale even though effected at a price 165,000 less than the value as eventually determined by the court after hearing expert evidence.\nIn para 76 Lord Hamilton said: It is also clear, in my view, that a mere arithmetical difference between the consideration given for the asset or assets and the figure or figures at which it or they are in subsequent proceedings valued retrospectively will not of itself mean that there has been a distribution.\nIf the transaction is genuinely conceived of and effected as an exchange for value and the difference ultimately found does not reflect a payment manifestly beyond any possible justifiable reward for that in respect of which allegedly it is paid, does not give rise to an exchange at a gross undervalue and is not otherwise unreasonably large, there will not to any extent be a dressed up return of capital.\nIn assessing the adequacy of the consideration, a margin of appreciation may properly be allowed.\nThe words quoted by Lord Hamilton are from Halt Garage and Aveling Barford.\nIn para 79 Lord Hamilton said: It is plain, in my view, that directors are liable only if it is established that in effecting the unlawful distribution they were in breach of their fiduciary duties (or possibly of contractual obligations, though that does not arise in the present case).\nWhether or not they were so in breach will involve consideration not only of whether or not the directors knew at the time that what they were doing was unlawful but also of their state of knowledge at that time of the material facts.\nIn reviewing the then authorities Vaughan Williams J in Re Kingston Cotton Mill Co (No 2) said at [1896] 1 Ch, p347: In no one of [the cases cited] can I find that directors were held liable unless the payments were made with actual knowledge that the funds of the company were being misappropriated or with knowledge of the facts that established the misappropriation.\nAlthough this case went to the Court of Appeal, this aspect of the decision was not quarrelled with (see [1896] 2 Ch 279).\nI agree with both those passages.\nIn this case there are concurrent findings that the sale of YMS1 to Moorgarth was a genuine commercial sale.\nThe contrary was not pleaded or put to Mr Moore in cross-examination.\nI would dismiss this appeal.\nThe facts briefly revisited\nAlthough the deputy judge refrained from making any findings about the true value of the YMS freeholds, he set out a good deal of information about valuations in the latter part of his judgment (paras 78 and following, dealing with a tax indemnity claim).\nCrucially, he recorded, at para 80, that the figure of 11.83m in the DTZ valuation of September 2003 explicitly refrained from considering or taking account of the covenant strength of YMS and the state of repair of the property.\nThe valuation disregarding those matters was no doubt prepared on that basis on instructions, and it seems almost certain that if those matters had been taken into account, it would have been much lower.\nOne retrospective valuation produced a figure of just under 8m, and in 2006 Mr Farr, instructed by Tradegro, produced a figure of 5.85m (the deputy judge described this as sitting at an extreme end of pessimism).\nIn October 2003 YMS1s liabilities to Nationwide and Tradegro totalled about 7.6m, according to the minutes of the PPC board meeting on 20 October 2003 (Mummery LJ, para 6, says approaching 8m).\nSo a figure approaching 8m for the true value of the YMS freeholds was the break-even point for whether or not YMS1 had any positive value, in the absence of large-scale financial support from elsewhere in the Tradegro group so as to enable YMS to perform its extensive repairing obligations.\nIn the absence of such financial support the disrepair was a black hole making the DTZ figure of 11.83m unsupportable, and the non-existence of a counter-indemnity from PPC was totally irrelevant.\nSo long as PPC owned the YMS freeholds, it owned property which had been overvalued (on instructions) by about 4m.\nOn this analysis the sale negotiated between Mr Price and Mr Moore, two experienced businessmen, was not at a gross undervalue, and perhaps not at an undervalue at all.\nBut the dismissal of this appeal means that these matters will not be the subject of any further adjudication by the court.\nI gratefully adopt the statement of the facts contained in Lord Walkers judgment, and I agree with his reasoning and conclusions.\nI write only to underline aspects of the facts which make this, in my view, both an odd case and one in which the suggestion that the relevant transaction should be re-categorised as an illegitimate distribution of capital at common law is particularly artificial and unappealing.\nThe question is whether the agreement dated 20 October 2003 involved a return of capital by PPC to its shareholder TUK through TUKs subsidiary Moorgarth (it being common ground that no relevant distinction exists in this context between TUK and Moorgarth).\nPPC submits that the value of its freehold properties was some 11.83 million, from which fell to be deducted some 8 million for creditors, leaving a net value on the face of it in the region of 4 million.\nPPC further submits that Moorgarth and so Tradegro were aware of these facts through Mr Cornus Moore, then a director of TUK, PPC and Moorgarth.\nThe appeal comes before us on the hypothesis that these submissions can be made good, although they are in issue.\nAs explained by the deputy judge, Mr David Donaldson QC, in his judgment dated 15 October 2008, the reason for a net purchase price of only 63,225.72 appears from a Summary of principal commercial terms and from minutes for a board meeting of PPC held on 20 October 2003 to approve the sale.\nThe summary was prepared before the idea of stripping YMS1 and YMS2 out of PPC had emerged.\nIt indicated that a deed of indemnity was being discussed between TUK and YMS and that there was broad agreement that PPC should provide TUK with a (back-to-back) counter-indemnity.\nThe minutes were prepared after it had been decided that YMS1 and YMS2 should be stripped out of PPC, to explain the basis of the agreement by which this was achieved.\nClause 2.2 of the minutes, drafted by solicitors, reads: It was further noted that the Company had previously agreed to counter indemnify [TUK] in respect of TUKs indemnity to Your More Store Ltd. (YMS) in relation to the repairing obligations referred to in paragraph 2.1 and it was a precondition of the Sale that TUK (which is Foldfrees parent company) release the Company from those indemnity obligations.\nCopies of deeds under which TUK had agreed to indemnify YMS in respect of those repairing obligations were produced to the meeting and its contents noted.\nConsistently with this, the agreement itself recites (clause 4.1.4) that on completion: the Purchaser shall hand over to the Seller: (a) a certified copy of a deed of indemnity executed by [TUK] and Tradegro Limited in favour of [YMS]; and (b) a deed in favour of the Seller executed by [TUK] and Tradegro Limited under which the Seller is released from any and all liabilities to [TUK] and Tradegro Limited and [they] waive any and all rights and\/or claims which they may have against the Seller under or arising out of repairing obligations in respect of properties owned by [YMS2] ..\nThe stated indemnity by TUK to YMS would have ensured that YMS did not suffer loss through having entered into the full repairing and insuring (FRI) leases in order to assist YMS2 to raise money, while PPCs counter-indemnity to TUK ensured that PPC as owner of YMS1, and through it of YMS2, did not benefit from YMSs willingness to do this.\nThe indemnity and counter-indemnity were valued at around 4 million.\nWhen YMS1 and YMS2 were stripped out of PPC, PPCs counter-indemnity could either have been maintained in place, in which case the amount payable for YMS1 would have had to be around 4 million, or the counter-indemnity could have been released, in which case TUK\/Moorgarth would be entitled to credit for its value (around 4 million).\nThe latter course was chosen, which explains why the actual net payment to be made under the agreement dated 20 October 2003 was only 63,225.72.\nThe illogicality, noted perceptively by the deputy judge, is that the credit for release of the counter- indemnity, which in fact was a credit due between TUK\/Moorgarth and PPC, was expressed as if it reduced the value of YMS1, with which it had nothing in reality to do.\nAt trial PPC accepted that Mr Moore genuinely believed in the existence of TUKs indemnity to YMS and of PPCs counter-indemnity to TUK.\nBut it was by the time of trial conceded by TUK\/Moorgarth that they could not establish the existence of either TUKs indemnity or PPCs counter-indemnity.\nI confess to some surprise at this concession, and also at the absence of any suggestion of an estoppel, based in particular on the minutes to which I have referred.\nBut the concession must be accepted, and PPC seeks to build on it by arguing that, although Mr Moore in fact believed in the existence of both the indemnity and the counter-indemnity, he should have appreciated that they did not exist.\nThis is not an attractive submission, in circumstances where the judge disbelieved Mr Price when he denied any knowledge of and agreement to the minutes of 20 October 2003.\nThe judge thus found, in effect, that Mr Price was willing for the transaction to go ahead on a basis which he knew to be incorrect.\nThere appear to be two possible explanations for this attitude.\nOne is that Mr Price took it because he thought that the whole transaction, including the sale of PPC to his own company, would not have gone ahead on any other basis.\n(In parenthesis, I note that Mr Collings did not controvert Mr McGhees answer during oral submissions, to the effect that, had the transactions relating to PPC and YMS1 not proceeded on the basis that the indemnity and counter-indemnity already existed as TUK\/Moorgarth believed, TUK\/Moorgarth could have insisted on their being put into express form, as a pre-condition to any such transactions proceeding.) The other, appearing clearly from the exchange of notes by the parties after the oral hearing, is that any increase in the amount of the price payable by Moorgarth to PPC for YMS1 would, under the terms of clause 5.6 of the agreement dated 3 October 2003 for the sale of TUKs 75.1% shareholding in PPC to WSIL, simply have resulted in an equivalent increase in the consideration payable by WSIL to TUK for such shares with the two increases, in commercial terms, cancelling each other out precisely.\nHowever, Mr Collings for PPC submits that this is irrelevant.\nThe Court must look only at PPC and its position as a separate legal entity.\nOn this basis, the question now before the Court is one of characterisation.\nDid the agreement between PPC and Moorgarth involve a distribution of PPCs capital to TUK through Moorgarth? This is a question of substance (or of examining the essence of the agreement, as the New Zealand Court of Appeal put it in Jenkins v Harbour View Courts Ltd. [1966] 1 NZLR 1).\nIt is not necessarily answered by the way in which the parties have expressed themselves.\nLike Lord Walker, I would not go so far as Mr McGhee QC for Moorgarth in his submission that the ultimate test is always one of the directors (subjective) motives in effecting the transaction.\nThe courts will not second-guess companies with regard to the appropriateness or wisdom of the terms of any transaction (see e.g. re Halt Garage (1964) Ltd. [1982] 3 AER 1016.\nBut there may come a point at which, looking at all the relevant factors, an agreement cannot be regarded as involving in substance anything other than a return or distribution of capital, whatever the label attached to it by its parties.\nI do not regard Aveling Barford Ltd v Perion Ltd [1989] BCLC 626 as inconsistent with this.\nThe facts in that case made it possible to speak of knowledge and intention to sell at an undervalue, but that does not mean that such knowledge or intention are always necessary factors.\nIn the present case, it is however unnecessary in my view to go further into such areas.\nHere, the expressed justification for the payment to PPC of only 63,225.72 consisted in PPCs stated liability to TUK under the counter-indemnity stated to have been given by PPC to TUK.\nIt was illogical to treat that liability as reducing the value of YMS1.\nThe court can and must look at the substance of what happened.\nThe amount payable by Moorgarth to PPC was reduced by reference to an independent liability supposed to exist against a somewhat complicated commercial background in which Mr Moore believed PPC to have such liability to TUK under a counter-indemnity.\nThe fact that Mr Price, PPCs managing director, did not believe this can be put aside as irrelevant.\nHe was not a director of TUK or Moorgarth and Mr Collings QC for PPC stated explicitly that PPCs case depends upon attributing to both Moorgarth and PPC the knowledge (about the absence of any indemnity or counter-indemnity) which it is said that Mr Moore had or should have had as a director of both companies.\nThat, he said, was what made the agreement between PPC and Moorgarth one under which PPC was distributing assets at an undervalue.\nThus, he accepted that a shareholder (like TUK\/Moorgarth) might agree to buy, at what it believed to be a fair price, even though the company selling knew or ought to know that the asset being sold was under-valued on the sale.\nI will proceed on this basis, namely that it is essential, at least in circumstances such as the present, to attribute to both seller and buyer at least notice of the circumstances involving the alleged undervalue.\nI need not examine whether it is correct as a general proposition that a companys rights to challenge a transaction as involving a disposition at an under-value necessarily depend upon establishing knowledge or notice of such circumstances by both parties to the transaction, or that they depend upon establishing fault on the part of a director, still less a common director.\nThe argument before us did not examine any such general proposition.\nOn the facts found by the judge, I am unable to accept PPCs case that the agreement between PPC and Moorgarth can or should be treated as involving an element of distribution of capital.\nFirst, even putting aside the telling points made in the last two paragraphs of Lord Walkers judgment regarding the probable weakness of YMSs covenant, I cannot see how as a matter of substance it can be said that YMS1 was sold at an under-value.\nThe reason why only 63,225.72 was paid by Moorgarth was unrelated to any view that YMS1 had a net value less than about 4 million.\nThe reason was that PPC (not YMS1) was seen as having independent counter-indemnity obligations to TUK, which fell to reduce (in effect by agreed set-off) any net sum otherwise payable by Moorgarth to PPC on account of the value of YMS1.\nIn so far as PPCs obligations to TUK were seen or presented as reducing the value of YMS1, that was, as the deputy judge said, illogical.\nThe court must look at the real position, not at the parties illogical presentation of the position in an agreement which, read in context, makes clear what was actually happening and motivating the parties.\nSecond, with regard to the value attached as between PPC and Moorgarth to the release of PPCs supposed counter-indemnity, directors can make mistakes about the nature or extent of liabilities attaching to their companies, and can accept or settle supposed liabilities, even though they ought to have known or could have done better.\nTheir acceptance or settlement of such supposed liabilities remains just that, even though it may have been ill-advised or unwise.\nIt does not axiomatically fall to be re-categorised as a distribution of capital, even if it is in relation to a shareholder.\nAccordingly, if one assumes that Mr Moore as a director ought to have known that PPC had not in fact entered into the counter-indemnity which he believed had been entered into, it does not follow that the release of the supposed counter-indemnity should be regarded as a distribution of capital.\nThis point alone is in my view sufficient to answer PPCs present case.\nThird, the way PPC has chosen to put its case depends, as I have said, upon the knowledge which it is said that Mr Moore ought to have acquired, being treated as knowledge that he ought to have had as a director of TUK\/Moorgarth.\nI would not, as presently advised, accept this.\nAs a director of TUK and Moorgarth, Mr Moore achieved all that was in their interests.\nHe achieved a recognition and recital of the existence of the indemnity and counter-indemnity in which he believed, and on that basis a credit in the region of 4 million, reducing the net payment to PPC for YMS1 and YMS2 to 63,225.72.\nIf the agreement of 20 October 2003 stands, Mr Moore therefore achieved for TUK and Moorgarth what it was, from the time when the FRI leases were executed, always understood that they would receive.\nOnly if the agreement fails, might it sensibly be said that he was in breach of duty to TUK and Moorgarth.\nBut it is circular to start with an assumption which depends upon the agreement failing.\nViewing the position overall, PPCs current case depends upon re- categorising an understandable commercial agreement, involving on its face the giving of value for the release of a counter-indemnity, which Moorgarth genuinely believed to exist and the acknowledgement of which was made a pre-condition to the agreement, and treating it as an entirely different nature of transaction.\nThe case is very far from any previous case in which any such exercise has ever been undertaken, and I see no basis for any such re-categorisation.\nWe have read the judgments of Lord Walker and Lord Mance and we agree that, for the reasons they give, this appeal should be dismissed.\nThe essential question in this case is whether, on the assumed facts, the sale by the appellant to the respondent of the whole issued share capital of a wholly owned subsidiary of the appellant was in truth an unlawful distribution of capital dressed up as a sale.\nI agree with Lord Walker and Lord Mance that, for the reasons they give, it was not.\nIt follows that I agree that the appeal should be dismissed.\n","output":"The issue in this appeal is whether there may have been an unlawful distribution of capital to a shareholder when the Appellant (PPC) sold the whole issued share capital of a wholly owned subsidiary YMS Properties (No 1) Ltd (YMS1) to the Respondent (Moorgarth).\nPPC and Moorgarth were both subsidiaries of Tradegro (UK) Ltd (Tradegro).\nIt was accepted that Mr Moore, a director of both PPC and Moorgarth, had genuinely believed that the sale of the shares was at market value.\nHowever PPC later claimed that the sale had been at an undervalue.\nThe appeal raises a question as to the approach to be taken to establishing whether there has been an unlawful distribution of capital by a company.\nThe factual background to the sale lies in the corporate structure being used to carry on the business of another company, called simply YMS Limited (YMS), which at the relevant time had also become a subsidiary of Tradegro.\nMr Price was appointed as managing director of PPC and became holder of 24.9% of its shares.\nTradegro retained 75.1% of PPCs shares.\nThe freehold interests in the properties from which YMS traded were held by another company, YMS Properties (No 2) Ltd (YMS2).\nYMS2 was a wholly owned subsidiary of YMS1, which was itself a wholly owned subsidiary of PPC.\nYMS occupied the properties on an informal basis.\nYMS2s property portfolio was used as security to borrow money.\nThe lender insisted that formal leases be entered into between YMS2 (as holder of the freeholds) and YMS (as occupiers of the properties).\nThese were to include full repairing and insuring obligations on the tenants.\nThe properties were in significant disrepair at the time.\nThe cost of repairs was estimated at 4.6m and YMS was not able to bear that liability.\nIt therefore sought an assurance that it would be given an indemnity against the costs which it might have to pay to satisfy the repairing liability to YMS2.\nAlthough it received that assurance, no indemnity or counter indemnity was ever entered into.\nLater, following a falling out of those involved in managing the business, it was agreed that Mr Price should acquire Tradegros 75.1% holding of PPC.\nA preliminary step was to be the sale by PPC of the whole share capital of YMS1 to Moorgarth, another subsidiary of Tradegro.\nIn effect, the YMS properties were being extracted from PPC prior to its sale to Mr Price.\nOn 20 October 2003, PPC agreed to sell the whole issued share capital of YMS1 to Moorgarth for 63,225.72.\nThe sale price was calculated on the basis of the open market value of the YMS1 properties (said to be 11.83m), less liabilities for creditors approaching 8m and the sum of 4m in respect of repairing obligations.\nThe deduction of 4m was made in the belief that PPC had given an indemnity or a counter indemnity in respect of YMSs repairing liabilities under the leases, under which that liability would ultimately fall on PPC.\nAs part of the sale by PPC to Moorgarth, PPCs liability under that indemnity or counter indemnity was to be released.\nIn fact, there was no indemnity or counter indemnity.\nPPC (now under the control of its new owner) claimed that the sale was at an undervalue, by as much as 4m, and was in breach of the common law rule against unlawful distributions of capital.\nIt was not, however, disputed that Mr Moore, a director of both PCC and Moorgarth at the time the sale was negotiated, genuinely believed that the sale of the shares was at market value.\nThe claim was dismissed in the High Court and by the Court of Appeal.\nThe Supreme Court unanimously dismisses the appeal.\nLord Walker gives the main judgment.\nLord Mance agrees with it, but issues a separate judgment.\nLords Phillips, Collins and Clarke agree with both.\nLord Walker holds that that whether a transaction infringes the common law rule against unlawful distributions is a matter of substance and not form.\nThe label attached by the parties is not decisive: [16].\nThe essential issue was how the sale is to be characterised: [24].\nPPC argued that the court should adopt an objective approach, so that there is an unlawful distribution whenever a company enters into a transaction with a shareholder which results in a transfer of value not covered by distributable profits, regardless of the purpose of the transaction.\nSuch a relentlessly objective rule would be oppressive and unworkable.\nIt would tend to cast doubt on any transaction between a company and a shareholder, even if negotiated at arms length and in perfect good faith, whenever the company proved, with hindsight, to have got significantly the worse of the transaction: [24].\nThe courts task is to inquire into the true purpose and substance of the transaction.\nThat calls for an investigation of all the relevant facts, which sometimes include the state of mind of the human beings involved: [27].\nSometimes their states of mind are totally irrelevant.\nThey will be irrelevant, for example, where a distribution described as a dividend is actually paid out of capital.\nWhere there is a challenge to the level of directors remuneration, the test is objective but probably subject to a margin of appreciation: [28].\nThe participants subjective intentions are, however, sometimes relevant.\nSomething said to be an arms length commercial transaction is the paradigm example: [29].\nIf the transaction was a genuine arms length transaction then it will stand, even if it may, with hindsight, appear to have been a bad bargain for the company.\nIf, however, it was an improper attempt to extract value from the company by the pretence of an arms length sale, it will be held unlawful.\nDeciding which category the transaction falls into will depend on a realistic assessment of all the relevant facts, not simply a retrospective valuation exercise in isolation from all other inquiries: [29].\nHere there were findings by the Deputy Judge and the Court of Appeal that this was a genuine commercial sale.\nThe appeal was therefore dismissed: [33].\nLord Mance agreed with Lord Walkers reasoning and conclusions.\nThe courts will not second guess companies with regard to the appropriateness or wisdom of the terms of any transaction.\nThere may, however, come a point at which, looking at all the relevant factors, an agreement cannot be regarded as involving in substance anything other than a return or distribution of capital, whatever label the parties attach to it: [42].\nThat was not the position here: [45].\nIt could not be said that YMS1 was sold at an undervalue.\nThe reason why only 63,225.72 was paid to PPC was not related to the question of the net value of the YMS properties.\nIt was because PPC itself was seen as having independent counter indemnity obligations to Tradegro which would reduce any sum payable by Moorgarth to PPC (such as the purchase price for YMS1 shares): [45].\nDirectors can make mistakes about the extent of liabilities attaching to their companies.\nEven if ill advised or unwise, it does not follow that settlement of such a liability must be re categorised as a distribution of capital, even if it is in relation to a shareholder: [46].\n","id":24}
{"input":"Almost all long leases of flats contain an obligation on the landlord (or a service company) to provide services, such as repairing the exterior and common parts of the block, and a concomitant obligation on the tenants to pay service charges, ie a specified proportion of the cost of providing such services.\nThe right of a landlord to recover such service charges obviously depends on the terms of the particular lease, but, since 1972, Parliament has imposed certain statutory requirements and restrictions on a landlord, which impinge on its ability to recover service charges.\nThe current statutory requirements are contained in the Landlord and Tenant Act 1985 (the 1985 Act), which has been frequently amended, most relevantly for present purposes by the Commonhold and Leasehold Reform Act 2002 (the 2002 Act).\nAll references hereafter to sections are to sections of the 1985 Act as amended, unless the contrary is stated.\nSection 20(1) provides that unless certain consultation requirements are (a) complied with by the landlord (or service company), or (b) dispensed with by the Leasehold Valuation Tribunal (LVT), the landlord cannot recover more than a specified sum in respect of works for which the service charge would otherwise be greater.\nThe issue on this appeal concerns the width and flexibility of the LVTs jurisdiction to dispense with the consultation requirements, and the principles upon which that jurisdiction should be exercised.\nThe statutory provisions\nSections 18 to 30 are in a portion of the 1985 Act headed Service charges.\nSection 18 is headed Meaning of service charge and relevant costs.\nSubsection (1) defines service charge as being an amount payable by a tenant of a dwelling for repairs, maintenance the whole or part of which varies according to the relevant costs.\nSection 18(2) defines relevant costs as the costs incurred in connection with the matters for which the service charge is payable.\nSection 19 is headed Limitation of service charges: reasonableness.\nSubsection (1) provides that relevant costs shall be taken into account in determining the amount of a service charge (a) only to the extent that they are reasonably incurred, and (b) only if the works are of a reasonable standard.\nSection 20 is headed Limitation of service charges: consultation\nrequirements, and section 20ZA is headed Consultation requirements: supplementary.\nBy virtue of section 20(3), (4)(a) and (5) and section 20ZA(2), section 20 applies where the cost of qualifying works exceed an appropriate amount set by regulations.\nRegulation 6 of the Service Charges (Consultation Requirements) (England) Regulations 2003, SI 2003\/1987 (the 2003 Regulations) sets that amount at a sum which results in the service charge contribution of any tenant to the cost of the relevant works being more than 250.\nThe centrally relevant provisions for present purposes are to be found in sections 20(1) and 20ZA(1).\nSection 20(1) states that:\n[T]he relevant contributions of the tenants are limited in accordance with subsection (6) unless the consultation requirements have been either a) b) complied with in relation to the works , or dispensed with in relation to the works by (or on appeal from) a [LVT].\nSection 20ZA(1) provides that: Where an application is made to [an LVT] for a determination to dispense with all or any of the consultation requirements in relation to any qualifying works , the tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements.\nSection 20(2) defines relevant contribution as being, in effect, the amount due under the service charge provisions in respect of the works, and section 20(7) limits the contribution to 250 per flat see regulation 6 of the 2003 Regulations.\nThe consultation requirements are defined in section 20ZA(4) as being requirements prescribed by regulations, which section 20ZA(5) states may in particular include provisions requiring the landlord to take certain steps.\nThose steps include providing details of the proposed works to the tenants, obtaining estimates, inviting the tenants to propose possible bidders, and having regard to the tenants observations on the proposed works and estimates.\nThe consultation requirements applicable in the present case are contained in Part 2 of Schedule 4 to the 2003 Regulations.\nA summary of those requirements were helpfully agreed between the parties in the following terms (which I have slightly abbreviated): Stage 1: Notice of intention to do the works Notice must be given to each tenant and any tenants association, describing the works, or saying where and when a description may be inspected, stating the reasons for the works, specifying where and when observations and nominations for possible contractors should be sent, allowing at least 30 days.\nThe landlord must have regard to those observations.\nStage 2: Estimates The landlord must seek estimates for the works, including from any nominee identified by any tenants or the association.\nStage 3: Notices about Estimates The landlord must issue a statement to tenants and the association, with two or more estimates, a summary of the observations, and its responses.\nAny nominees estimate must be included.\nThe statement must say where and when estimates may be inspected, and where and by when observations can be sent, allowing at least 30 days.\nThe landlord must have regard to such observations.\nStage 4: Notification of reasons Unless the chosen contractor is a nominee or submitted the lowest estimate, the landlord must, within 21 days of contracting, give a statement to each tenant and the association of its reasons, or specifying where and when such a statement may be inspected.\nSections 20A to 20C set out certain further Limitation[s] of service charges, and sections 21 to 23A give rights to tenants and impose obligations on landlords with respect to the provision of information about service charges.\nSections 26 to 30 contain other ancillary provisions with regard to service charges.\nThe factual background\nQueens Mansions (the building) is a building in Muswell Hill, north London, the freehold of which is owned by Daejan Investments Ltd (Daejan), the appellant in this appeal.\nThe building consists of shops on the ground floor and seven flats on the upper floors.\nFive of the seven flats are held under long leases, and each of those leases is held by a respondent to this appeal (collectively the respondents).\nEach lease includes an obligation on the landlord to provide services, including the repair and decoration of the structure, exterior, and common parts of the building.\nEach lease also includes an obligation on the tenant to pay a specified fixed proportion of the cost of providing, inter alia, the services which the landlord is obliged to provide.\nThe five respondents were, at all material times, members of the Queens Mansions Residents Association (QMRA), which is chaired by Ms Marks, who is the partner of one of the respondents.\nThe building is managed by Highdorn Co Ltd, In his judgment at para 98, Lord Wilson has given a fairly full account as to which, like Daejan, is part of the Freshwater group of companies, and which carries on business under the name of Freshwater Property Management (FPM).\nBy early 2005, it was clear that major works were required to the building, and, in February that year, FPM told the respondents and QMRA that Daejan intended to carry out such works.\nThree weeks later, FPM sent QMRA a specification in respect of the proposed works.\nThereafter, pursuant to a request from Ms Marks, FPM appointed Robert Edward Associates (REA), who had been advising QMRA on the proposed works, as contract administrator.\nwhat then happened.\nA briefer summary is as follows.\nREA prepared a fresh specification, which was sent to QMRA and the respondents on 30 August 2005, a few weeks after a stage 1 notice of intention to carry out works had been sent, on 6 July 2005.\nThis specification was then the subject of discussion with Ms Marks, some of whose observations were then incorporated into the specification.\nFollowing that, tenders were sought, and priced tenders were received by REA from four contractors.\nIn a fairly full report sent to the respondents on 6 February 2006, REA stated that two of those tenders appeared to be the most competitive.\nOne was from Rosewood Building Contractors (Rosewood), who had quoted 453,980 for a 24 week contract period; the other was from Mitre Construction Ltd (Mitre), who had quoted 421,000 for a 32 week contract period, although its tender did not comply entirely with the tender directions.\nThe respondents and QMRA were only provided with the priced specification submitted by Mitre and not that submitted by Rosewood.\nDuring 2006, Ms Marks was pressing FPM for the opportunity to inspect the priced tenders, and, although this request had not yet been satisfied, FPM was indicating a preference for instructing Mitre.\nIn the meantime, in a letter of 14 July 2006, Ms Marks made a large number of fairly detailed points about the proposed Works to FPM, making it clear that those points were provisional until she had seen all the priced tenders.\nFPM purportedly served Stage 3 notices on QMRA and the respondents on 14 June and on 28 July 2006, each of which stated when the priced estimates could be inspected.\nHowever, such estimates were not available for inspection by the respondents or QMRA until 31 July 2006.\nBefore the estimates were inspected, the respondents and QMRA were informed by Daejan (orally on 8 August and by letter two days later) that the contract for the proposed works had been awarded to Mitre, and, at least by implication, that the statutory consultation process had accordingly ended.\nIt appears that this information was, in fact, inaccurate, but it was never corrected.\nDespite this, there were some further communications between Ms Marks and FPM about the proposed works.\nIt appears that it was, in fact, only on 11 September 2006 that Daejan contracted for the proposed works (the Works) with Mitre, and this was formally communicated to the respondents and QMRA 16 days later.\nOn 3 October 2006, Mitre started carrying out the Works, and completed them, albeit apparently late and not without criticisms from the respondents and QMRA.\nThe procedural history\nOn 14 July 2006, four of the respondents applied to the LVT for a determination of the service charges payable under their respective leases for the period between 1994 and 2007 (as they were entitled to do under section 27A).\nThose proceedings were concerned with the respondents allegations of failures on the part of Daejan in relation to (i) the provision of services over 14 years, and (ii) the Works.\nInevitably, a number of issues and sub issues were raised.\nOf those issues, only one is directly relevant to the present appeal.\nIt is what the LVT called Issue 10, which was whether Daejan had complied with the requirements of part 2 of Schedule 4 to the 2003 Regulations (the Requirements) in relation to the Works.\nFollowing a hearing and determination on a preliminary point, there was an eight day hearing which took place in disconnected periods between February and November 2007 (partly explained by illness of counsel).\nThereafter, the LVT (Miss A Seifert FCI Arb, Mr MA Matthews FRICS and Mr LG Packer MA MPhil) issued its decision on 11 March 2008 Case Reference LON\/00AP\/LSC\/2006\/0246.\nCrucially for present purposes, the LVT concluded on Issue 10 that Daejan had failed to comply with the stage 3 Requirements in two respects.\nFirst, neither of the purported stage 3 notices contained any summary of observations.\nSecondly, the estimates were not available for inspection as stated [in either notice], and were only inspected on 11 August.\nIt is also worth mentioning that the LVT considered, under what it called Issue 11, a number of criticisms of the Works, which were being carried out during the hearing, and dismissed almost all of them.\nThere was then a further, one day, hearing before the LVT, devoted to the issue of whether the Requirements should be dispensed with in relation to the Works pursuant to sections 20(1)(b) and 20ZA(1).\nDaejan relied on the fact that, if it had been free to enforce the service charge provisions in all the leases held by the respondents, it would be entitled to recover just under 280,000 in total from the respondents by way of service charge payments in respect of the Works, whereas, if no dispensation was granted, it would be limited to recovering service charges of 250 per respondent in respect of the Works, ie a total of 1,250.\nOn 8 August 2008, the LVT issued its decision that it should not dispense with the Requirements in relation to the Works LON\/00AP\/LSC\/2007\/0076.\nThe LVT observed in para 98 that it was matter of speculation what comments may or may not have been made by Ms Marks and [the respondents] and how this may have influenced the carrying out of the major works had they had the opportunity to comment having seen all the estimates.\nIt had earlier said in paras 86 87 that the failure by Daejan to comply with the [Requirements] [had] caused substantial prejudice to the respondents, and that it was a matter of great concern to Ms Marks that Daejan had not provided copies of all the estimates.\nThe LVT continued at para 90: the cutting short of the consultation period, by indicating that the decision had been made to award the contract to Mitre removed from the leaseholders the opportunity to make observations on the estimates to which landlord was obliged to have regard.\nThis opportunity to make informed comment on these matters was central to the consultation process.\nIt had been stressed in correspondence how important this was to the leaseholders.\nThe LVT concluded in paras 96 98 that: Although this was not a case where the landlord made no attempt to comply with the Regulations, and some extra statutory consultation was carried out this did not make good the landlord's omission in failing to provide the estimates and an opportunity to make observations.\nThe Tribunal considers that the fact that they did not have this opportunity amounts to significant prejudice.\nThe LVT then referred at para 99 to a proposal from Daejan that if, contrary to [its] submissions, the Tribunal considered that there has been prejudice to the [respondents], the Tribunal should consider the fair figure to compensate [them] for any prejudice, such sum to be deducted from the cost of the eventual charge when calculating the service charges for the [W]orks.\nDuring the course of the hearing, Daejan had proposed a deduction of 50,000, which it had described as more than generous, but which had not been accepted by the respondents.\nThe LVT rejected this proposal at para 101, saying that there was no explanation of [how] the figure of 50,000 could be regarded as generous or as sufficient compensation for the prejudice suffered.\nIt also said at para 103 that the offer does not alter the existence of substantial prejudice to the leaseholders.\nDaejan appealed to the Upper Tribunal (Lands Chamber) (Carnwath LJ and Mr NJ Rose FRICS), which rejected the appeal [2009] UKUT 233 (LC), [2010] 2 P&CR 116.\nThe Upper Tribunal agreed with the LVT that Daejan had failed to comply with the stage 3 Requirements in the two respects identified by the LVT.\nHowever, the Upper Tribunal considered that the failure to include a summary of observations in the stage 3 notice was a relatively minor breach, which caused no prejudice to the respondents, as there [was] no reason to think that [it] would have assisted them, because they all knew what observations Daejan had received about the proposed works see paras 47 48.\nDaejans more important failure, according to the Upper Tribunal in para 52, was the fact that the consultation process was for all practical purposes curtailed, a finding which had been open to the LVT.\nThe Upper Tribunal was, however, troubled by the LVTs finding that the respondents had suffered any consequential prejudice.\nOnly one specific item was seen to be of any weight, namely the respondents preference for Rosewood over Mitre, but, as the Upper Tribunal pointed out, this was based on evidence two years after the event, and it was hard to see why it could not have been raised by the respondents during the period of consultation which Daejan had allowed.\nNonetheless, at para 61, the Upper Tribunal said that the LVT was entitled to regard this as a [case involving a] serious breach, rather than a technical or excusable oversight, as the respondents right to make further representations [at stage 3] was nullified.\nThe Upper Tribunal also said that it was not for the respondents to show prejudice, but for Daejan to show that they had suffered no prejudice, as a result of Daejans default, and that, in that connection, it was enough that there was a realistic possibility that further representations might have influenced Daejans decision to engage Mitre rather than Rosewood.\nThe Upper Tribunal said that it had not found this an easy case, because the evidence of actual prejudice is weak.\nNonetheless, at para 62, it decided that, as the LVT was the primary decision maker, its decision to reject Daejans application to dispense with the Requirements in relation to the Works should be respected, as it was a view which the LVT had been entitled to arrive at.\nDaejan was given permission to appeal to the Court of Appeal, on terms that it would not seek its costs if the appeal succeeded.\nThe court (Sedley, Pitchford and Gross LJJ) dismissed the appeal, for reasons principally given by Gross LJ [2011] EWCA Civ 38, [2011] 1 WLR 2330.\nIn his judgment, Gross LJ concentrated on what he considered to have been the three principal points which had been debated.\nFirst, he held in para 59 that the financial effect of the grant or refusal of dispensation [on the individual landlord and tenants] is an irrelevant consideration when exercising the discretion under section 20ZA(1).\nSecondly, in paras 66 67, he held that the LVT had not erred in treating Daejan more harshly than if it had been a landlord controlled or owned by the lessees.\nThirdly, in para 72, Gross LJ accepted Daejans contention that significant prejudice to the tenants is a consideration of first importance in exercising the dispensatory discretion under section 20ZA(1).\nHowever, in the following paragraph, Gross LJ said that Daejans failure in this case constituted a serious failing and did cause the respondents serious prejudice, and he echoed the LVT and Upper Tribunal in saying that this was not a technical, minor or excusable oversight.\nHe also said that the LVT was entitled not to speculate on what would have happened if there had been no breach, on the ground that the respondents loss of opportunity (to make further representations and have them considered) itself amount[ed] to significant prejudice.\nIn para 76, in agreement with the Upper Tribunal, Gross LJ doubted that the LVT would have been entitled to accede to Daejans offer to reduce the chargeable amount by 50,000, and that, anyway, the LVT was entitled to reject that proposal.\nSedley LJ delivered a short concurring judgment, and Pitchford LJ agreed with both judgments.\nDaejan was given permission to appeal to this court on terms similar to those which were imposed when permission was given to appeal to the Court of Appeal.\nThe issues on this appeal\nIn the light of the arguments which have been addressed to us, it appears to me that three questions of principle arise, and need to be answered, before deciding how to resolve this appeal.\nThose questions are: (i) The proper approach to be adopted on an application under section 20ZA(1) to dispense with compliance with the Requirements; (ii) Whether the decision on such an application must be binary, or whether the LVT can grant a section 20(1)(b) dispensation on terms; (iii) The approach to be adopted when prejudice is alleged by tenants owing to the landlords failure to comply with the Requirements.\nI propose to consider those three questions (which inevitably overlap to some\nextent) in turn, and then to address the resolution of this appeal.\nThe proper approach to dispensing under section 20ZA(1)\nSection 20ZA(1) gives little specific guidance as to how an LVT is to exercise its jurisdiction to dispense with all or any of the [Requirements] in a particular case.\nThe only express stipulation is that the LVT must be satisfied that it is reasonable to do so.\nThere is obvious value in identifying the proper approach to the exercise of this jurisdiction, as it is important that decisions on this topic are reasonably consistent and reasonably predictable.\nOtherwise, there is a real risk that the law will be brought into disrepute, and that landlords and tenants will not be able to receive clear or reliable advice as to how this jurisdiction will be exercised.\nHowever, the very fact that section 20ZA(1) is expressed as it is means that it would be inappropriate to interpret it as imposing any fetter on the LVTs exercise of the jurisdiction beyond what can be gathered from the 1985 Act itself, and any other relevant admissible material.\nFurther, the circumstances in which a section 20ZA(1) application is made could be almost infinitely various, so any principles that can be derived should not be regarded as representing rigid rules.\nSo I turn to consider section 20ZA(1) in its statutory context.\nIt seems clear that sections 19 to 20ZA are directed towards ensuring that tenants of flats are not required (i) to pay for unnecessary services or services which are provided to a defective standard, and (ii) to pay more than they should for services which are necessary and are provided to an acceptable standard.\nThe former purpose is encapsulated in section 19(1)(b) and the latter in section 19(1)(a).\nThe following two sections, namely sections 20 and 20ZA appear to me to be intended to reinforce, and to give practical effect to, those two purposes.\nThis view is confirmed by the titles to those two sections, which echo the title of section 19.\nThus, the obligation to consult the tenants in advance about proposed works goes to the issue of the appropriateness of those works, and the obligations to obtain more than one estimate and to consult about them go to both the quality and the cost of the proposed works.\nMr Rainey QC and Mr Fieldsend for the respondents point out that sometimes the tenants may want the landlord to accept a more expensive quote, for instance because they consider it will lead to a better or quicker job being done.\nI agree, but I do not consider that it invalidates my conclusion: loss suffered as a result of building work or repairs being carried out to a lower standard or more slowly is something for which courts routinely assess financial compensation.\nGiven that the purpose of the Requirements is to ensure that the tenants are protected from (i) paying for inappropriate works or (ii) paying more than would be appropriate, it seems to me that the issue on which the LVT should focus when entertaining an application by a landlord under section 20ZA(1) must be the extent, if any, to which the tenants were prejudiced in either respect by the failure of the landlord to comply with the Requirements.\nThus, in a case where it was common ground that the extent, quality and cost of the works were in no way affected by the landlords failure to comply with the Requirements, I find it hard to see why the dispensation should not be granted (at least in the absence of some very good reason): in such a case the tenants would be in precisely the position that the legislation intended them to be ie as if the Requirements had been complied with.\nI do not accept the view that a dispensation should be refused in such a case solely because the landlord seriously breached, or departed from, the Requirements.\nThat view could only be justified on the grounds that adherence to the Requirements was an end in itself, or that the dispensing jurisdiction was a punitive or exemplary exercise.\nThe Requirements are a means to an end, not an end in themselves, and the end to which they are directed is the protection of tenants in relation to service charges, to the extent identified above.\nAfter all, the Requirements leave untouched the fact that it is the landlord who decides what works need to be done, when they are to be done, who they are to be done by, and what amount is to be paid for them.\nFurthermore, it does not seem to be convenient or sensible to distinguish in this context, as the LVT, Upper Tribunal and Court of Appeal all thought appropriate, between a serious failing and a technical, minor or excusable oversight, save in relation to the prejudice it causes.\nSuch a distinction could lead to an unpredictable outcome, as it would involve a subjective assessment of the nature of the breach, and could often also depend on the view one took of the state of mind or degree of culpability of the landlord.\nSometimes such questions are, of course, central to the enquiry a court has to carry out, but I think it unlikely that it was the sort of exercise which Parliament had in mind when enacting section 20ZA(1).\nThe predecessor of section 20ZA(1), namely the original section 20(9), stated that the power (vested at that time in the County Court rather than the LVT) to dispense with the Requirements was to be exercised if it was satisfied that the landlord acted reasonably.\nWhen Parliament replaced that provision with section 20ZA(1) in 2002, it presumably intended a different test to be applied.\nThe distinction could also, I think, often lead to uncertainty.\nViews as to the gravity of a landlords failure to comply with the Requirements could vary from one LVT to another.\nAnd questions could arise as to the relevance of certain factors, such as the landlords state of mind.\nThe present case provides an example of the possible uncertainties.\nIn para 99 of his judgment, Lord Wilson understandably expresses a very unfavourable view of Daejans failure in this case.\nHowever, to some people it might seem that Daejans failure in the present case was not a serious failing, given that (i) the evidence of any resulting prejudice to the respondents is weak, (ii) Daejan adhered fully to stages 1 and 2, and to a significant extent to stage 3, (iii) Daejan did consult the respondents, through both REA and FPM, (iv) Daejan did some things which went beyond the Requirements (eg employing REA at Ms Markss request), and (v) Daejan did give summary details of the tenders even though it did not accord the respondents sight of the tenders themselves.\nSo, too, views may differ as to whether Daejan should be blamed for not taking up the time of the LVT with attempts to excuse its failures, and as to whether it was an innocent misunderstanding or flagrant incompetence which caused Daejans representatives to tell the LVT that the contract had been placed with Mitre weeks before it had been. (None of those points undermines the basic fact that there was an undoubted failure by Daejan to comply with the Requirements).\nI also consider that the distinction favoured in the tribunals below could lead to inappropriate outcomes.\nOne can, for instance, easily conceive of a situation where a minor or excusable oversight could cause severe prejudice, and one where a gross breach causes the tenants no prejudice.\nFor instance, where the landlord miscalculates by a day, and places a contract for works a few hours before receiving some very telling criticisms about the proposed works or costings.\nOr, on the other hand, where the landlord fails to get more than one estimate despite being reminded by the tenants, but there is only one contractor competent to carry out undoubtedly necessary works.\nIn their respective judgments, the LVT, the Upper Tribunal and the Court of Appeal also emphasised the importance of real prejudice to the tenants flowing from the landlords breach of the Requirements, and in that they were right.\nThat is the main, indeed normally, the sole question for the LVT when considering how to exercise its jurisdiction in accordance with section 20ZA(1).\nAnd it is fair to the courts below to add that where the landlord is guilty of a serious failing it is more likely to result in real prejudice to the tenants than where the landlord has been guilty of a technical, minor or excusable oversight.\nIt also follows from this analysis that I consider that Daejan is wrong in its contention that the financial consequences to the landlord of not granting a dispensation is a relevant factor when the LVT is considering how to exercise its jurisdiction under sections 20(1)(b) and 20ZA(1).\nIn that, I agree with the views of the courts below (although it can be said that such consequences are often inversely reflective of the relevant prejudice to the tenants, which is, as already mentioned, centrally important).\nIt also seems to me that the nature of the landlord is not a relevant factor either, and I think that was the view of the Court of Appeal as well.\nAs already indicated, I do not agree with the courts below in so far as they support the proposition that sections 20 and 20ZA were included for the purpose of transparency and accountability, if by that it is intended to add anything to the two purposes identified in section 19(1)(a) and (b).\nIt is true that that proposition may arguably receive some support from Lewison J in Paddington Basin Developments Ltd v West End Quay Ltd [2010] EWHC 833 (Ch), [2010] 1 WLR 2735, para 26.\nHowever, I consider that there are no grounds for treating the obligations in sections 20 and 20ZA as doing any more than providing practical support for the two purposes identified in section 19(1).\nThe sections are not concerned with public law issues or public duties, so there is no justification for treating consultation or transparency as appropriate ends in themselves.\nIs the LVT faced with a binary choice on a section 20ZA(1) application?\nThe respondents contend that, on an application under section 20ZA(1), the LVT has to choose between two simple alternatives: it must either dispense with the Requirements unconditionally or refuse to dispense with the Requirements.\nIf this argument is correct, then as the Upper Tribunal held, and the Court of Appeal thought probable, it would not have been possible for the LVT in this case to grant Daejans section 20ZA(1) application on the terms offered by Daejan, namely to reduce the aggregate of the sum payable by the respondents in respect of the Works by 50,000.\nIn my view, the LVT is not so constrained when exercising its jurisdiction under section 20ZA(1): it has power to grant a dispensation on such terms as it thinks fit provided, of course, that any such terms are appropriate in their nature and their effect.\nIn the absence of clear words precluding the LVT imposing terms, I consider that one would expect it to have power to impose appropriate terms as a condition of exercising its power of dispensation.\nThe circumstances in which an application could be made are, as already mentioned, potentially almost infinitely various, and, given the purpose of sections 20 and 20ZA, it seems unlikely that the LVTs powers could have been intended to be as limited as the respondents suggest.\nMore detailed consideration of the circumstances in which the jurisdiction can be invoked confirms this conclusion.\nIt is clear that a landlord may ask for a dispensation in advance.\nThe most obvious cases would be where it was necessary to carry out some works very urgently, or where it only became apparent that it was necessary to carry out some works while contractors were already on site carrying out other work.\nIn such cases, it would be odd if, for instance, the LVT could not dispense with the Requirements on terms which required the landlord, for instance, (i) to convene a meeting of the tenants at short notice to explain and discuss the necessary works, or (ii) to comply with stage 1 and\/or stage 3, but with (for example) 5 days instead of 30 days for the tenants to reply.\nFurther, consider a case where a landlord carried out works costing, say, 1m, and failed to comply with the Requirements to a small extent (eg in accidentally not having regard to an observation), and the tenants establish that the works might well have cost, at the most, 25,000 more as a result of the failure.\nIt would seem grossly disproportionate to refuse the landlord a dispensation, but, equally, it would seem rather unfair on the tenants to grant a dispensation without reducing the recoverable sum by 25,000.\nIn some cases, such a reduction could be achieved by the tenants invoking section 19(1)(b), but there is no necessary equivalence between a reduction which might have been achieved if the Requirements had been strictly adhered to and a deduction which would be granted under section 19(1)(b) see the next section of this judgment.\nAccordingly, where it is appropriate to do so, it seems clear to me that the LVT can impose conditions on the grant of a dispensation under section 20(1)(b).\nIn effect, the LVT would be concluding that, applying the approach laid down in section 20ZA(1), it would be reasonable to grant a dispensation, but only if the landlord accepts certain conditions.\nIn the example just given, the condition would be that the landlord agrees to reduce the recoverable cost of the works from 1m to 975,000.\nI also consider that the LVT would have power to impose a condition as to\ncosts eg that the landlord pays the tenants reasonable costs incurred in connection with the landlords application under section 20ZA(1).\nIt is true that the powers of the LVT to make an actual order for costs are very limited.\nThe effect of para 10 of Schedule 12 to the 2002 Act is that the LVT can only award costs (in a limited amount) (i) where an application is dismissed on the ground that it is frivolous, vexatious or an abuse of process, or (ii) where the applicant has acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with the proceedings.\nHowever, in my view, that does not preclude the LVT from imposing, as a condition for dispensing with all or any of the Requirements under section 20(1)(b), a term that the landlord pays the costs incurred by the tenants in resisting the landlords application for such dispensation.\nThe condition would be a term on which the LVT granted the statutory indulgence of a dispensation to the landlord, not a free standing order for costs, which is what para 10 of Schedule 12 to the 2002 Act is concerned with.\nTo put it another way, the LVT would require the landlord to pay the tenants costs on the ground that it would not consider it reasonable to dispense with the Requirements unless such a term was imposed.\nThe case law relating to the approach of courts to the grant to tenants of relief from forfeiture of their leases is instructive in this connection.\nWhere a landlord forfeits a lease, a tenant is entitled to seek relief from forfeiture.\nWhen the court grants relief from forfeiture, it will often do so on terms that the tenant pays the costs of the landlord in connection with the tenants application for relief, at least in so far as the landlord has acted reasonably see eg Egerton v Jones [1939] 2 KB 702, 705 706, 709.\nHowever, if and in so far as the landlord opposes the tenants application for relief unreasonably, it will not recover its costs, and may even find itself paying the tenants costs, as in Howard v Fanshawe [1895] 2 Ch 581, 592.\nAs Mr Dowding QC, for Daejan, pointed out, in Factors (Sundries) Ltd v Miller [1952] 2 All ER 630, the tenant was legally aided and the court was precluded by statute from making an order for costs against him, but the Court of Appeal held that there was nonetheless jurisdiction to require him to pay the landlords costs as a condition of being granted relief from forfeiture.\nAs Somervell LJ explained it at 633D F, the liability under such a condition was not an order to pay costs in the ordinary sense, but a payment of a sum equal to the costs as a condition of relief.\nLike a party seeking a dispensation under section 20(1)(b), a party seeking relief from forfeiture is claiming what can be characterised as an indulgence from a tribunal at the expense of another party.\nAccordingly, in so far as the other party reasonably incurs costs in considering the claim, and arguing whether it should be granted, and, if so, on what terms, it seems appropriate that the first party should pay those costs as a term of being accorded the indulgence.\nThe correct approach to prejudice to the tenants\nWhere a landlord has failed to comply with the Requirements, there may often be a dispute as to whether, and if so to what extent, the tenants would relevantly suffer if an unconditional dispensation was accorded. (I add the word relevantly, because the tenants can always contend that they will suffer a disadvantage if a dispensation is accorded; however, as explained above, the only disadvantage of which they could legitimately complain is one which they would not have suffered if the Requirements had been fully complied with, but which they will suffer if an unconditional dispensation were granted.)\nIt was suggested by Mr Rainey QC and Mr Fieldsend that the determination of such a question would often involve a very difficult exercise (or an invidious exercise in speculation as Gross LJ put it at para 73(iv) in the Court of Appeal) and would frequently be unfair on the tenants.\nIt may occasionally involve a difficult exercise, but the fact that an assessment is difficult has never been regarded as a valid reason for the court refusing to carry it out (although in some cases disproportionality may be a good reason for such a refusal).\nWhile each case must, inevitably, be decided on its particular facts, I do not think that many cases should give rise to great difficulties.\nAs to the contention that my conclusion would place an unfair burden on tenants where the LVT is considering prejudice, it is true that, while the legal burden of proof would be, and would remain throughout, on the landlord, the factual burden of identifying some relevant prejudice that they would or might have suffered would be on the tenants.\nHowever, given that the landlord will have failed to comply with the Requirements, the landlord can scarcely complain if the LVT views the tenants arguments sympathetically, for instance by resolving in their favour any doubts as to whether the works would have cost less (or, for instance, that some of the works would not have been carried out or would have been carried out in a different way), if the tenants had been given a proper opportunity to make their points.\nAs Lord Sumption said during the argument, if the tenants show that, because of the landlords non compliance with the Requirements, they were unable to make a reasonable point which, if adopted, would have been likely to have reduced the costs of the works or to have resulted in some other advantage, the LVT would be likely to proceed on the assumption that the point would have been accepted by the landlord.\nFurther, the more egregious the landlords failure, the more readily an LVT would be likely to accept that the tenants had suffered prejudice.\nThe LVT should be sympathetic to the tenants not merely because the landlord is in default of its statutory duty to the tenants, and the LVT is deciding whether to grant the landlord a dispensation.\nSuch an approach is also justified because the LVT is having to undertake the exercise of reconstructing what would have happened, and it is because of the landlords failure to comply with its duty to the tenants that it is having to do so.\nFor the same reasons, the LVT should not be too ready to deprive the tenants of the costs of investigating relevant prejudice, or seeking to establish that they would suffer such prejudice.\nThis does not mean that LVT should uncritically accept any suggested prejudice, however far fetched, or that the tenants and their advisers should have carte blanche as to recovering their costs of investigating, or seeking to establish, prejudice.\nBut, once the tenants have shown a credible case for prejudice, the LVT should look to the landlord to rebut it.\nAnd, save where the expenditure is self evidently unreasonable, it would be for the landlord to show that any costs incurred by the tenants were unreasonably incurred before it could avoid being required to repay as a term of dispensing with the Requirements.\nApart from the fact that the LVT should be sympathetic to any points they may raise, it is worth remembering that the tenants complaint will normally be, as in this case, that they were not given the requisite opportunity to make representations about proposed works to the landlord.\nAccordingly, it does not appear onerous to suggest that the tenants have an obligation to identify what they would have said, given that their complaint is that they have been deprived of the opportunity to say it.\nIndeed, in most cases, they will be better off, as, knowing how the works have progressed, they will have the added benefit of wisdom of hindsight to assist them before the LVT, and they are likely to have their costs of consulting a surveyor and\/or solicitor paid by the landlord.\nOverview of the analysis so far\nBefore turning to the disposition of this appeal, it is worth considering the effect of the conclusions I have reached so far.\nIf a landlord fails to comply with the Requirements in connection with qualifying works, then it must get a dispensation under section 20(1)(b) if it is to recover service charges in respect of those works in a sum greater than the statutory minimum.\nInsofar as the tenants will suffer relevant prejudice as a result of the landlords failure, the LVT should, at least in the absence of some good reason to the contrary, effectively require the landlord to reduce the amount claimed as service charges to compensate the tenants fully for that prejudice.\nThat outcome seems fair on the face of it, as the tenants will be in the same position as if the Requirements have been satisfied, and they will not be getting something of a windfall.\nOn the approach adopted by the courts below, as the Upper Tribunal said at the very end of its judgment, requiring the landlord to limit the recoverable service charge to the statutory minimum in a case such as this may be thought to be disproportionately damaging to the landlord, and disproportionately advantageous to the lessees.\nThat criticism could not, it seems to me, be fairly made of the conclusion I have reached.\nHowever, drilling a little deeper, if matters rested there, the simple conclusion described in para 71 could be too favourable to the landlord.\nIt might fairly be said that it would enable a landlord to buy its way out of having failed to comply with the Requirements.\nHowever, that concern is, I believe, answered by the significant disadvantages which a landlord would face if it fails to comply with the Requirements.\nI have in mind that the landlord would have (i) to pay its own costs of making and pursuing an application to the LVT for a section 20(1)(b) dispensation, (ii) to pay the tenants reasonable costs in connection of investigating and challenging that application, (iii) to accord the tenants a reduction to compensate fully for any relevant prejudice, knowing that the LVT will adopt a sympathetic (albeit not unrealistically sympathetic) attitude to the tenants on that issue.\nAll in all, it appears to me that the conclusions which I have reached, taken together, will result in (i) the power to dispense with the Requirements being exercised in a proportionate way consistent with their purpose, and (ii) a fair balance between (a) ensuring that tenants do not receive a windfall because the power is exercised too sparingly and (b) ensuring that landlords are not cavalier, or worse, about adhering to the Requirements because the power is exercised too loosely.\nThe resolution of this appeal\nTurning now to this case, I consider that the LVT, the Upper Tribunal, and the Court of Appeal adopted the wrong approach to Daejans section 20ZA(1) application.\nThat is because (i) they took into account the gravity (as they saw it) of the failure to comply with stage 3 of the Requirements, not only in the prejudice it may have caused to the tenants, but as a free standing matter, (ii) they considered that the mere possibility of prejudice, apparently however speculative, and in the absence of any evidence to support its existence, would be enough to preclude the grant of a dispensation, and (iii) (in the case of the Upper Tribunal and the Court of Appeal) they did not consider (or doubted) that it was open to the LVT to grant a dispensation on terms, and (in the case of the LVT) they did not address the question whether the 50,000 offered by Daejan exceeded any relevant prejudice which the tenants could establish.\nIn adopting their approach, the courts below based themselves in part on the reasoning in the Upper Tribunals decision in Camden London Borough Council v Leaseholders of 37 Flats at 30 40 Grafton Way (LRX\/185\/2006).\nThat case may have been rightly decided, but, if so, it was for the wrong reasons.\nAs explained above, the correct question which the LVT should have asked itself was, whether the respondents would suffer any relevant prejudice, and, if so, what relevant prejudice, as a result of Daejans failure, if the section 20(1)(b) dispensation was granted unconditionally.\nOn the basis of the evidence before the LVT, it seems to me, substantially in agreement with the Upper Tribunal, that it is highly questionable whether any such prejudice at all would have been suffered.\nThe only specific prejudice identified by the Upper Tribunal was in relation to what the LVT called in para 98 of its decision a matter of speculation, namely that the respondents lost the opportunity of making out the case for using Rosewood to carry out the Works, rather than Mitre.\nMr Rainey QC and Mr Fieldsend make the additional points that (i) the respondents were deprived of their right to be consulted properly, and (ii) it was difficult for the respondents to identify any relevant prejudice that they would suffer if Daejan was entitled to recover a service charge based on the full cost of the Works.\nI have already dealt with these points in general terms.\nAs to (i), the right to be consulted in accordance with sections 20 and 20ZA is not a free standing right.\nAs to (ii), difficulty is not a good argument in itself, and the LVT should in any event be sympathetic to the respondents on any credible allegation of relevant prejudice.\nIn any event, it is clear from the first decision of the LVT that, even after Daejans and the respondents respective experts had met and agreed a number of items, there were still many items of dispute which were contested by the respondents before the LVT on issue 11: the respondents were therefore well able to identify any complaints they had in relation to the Works.\nThat leaves the issue whether it is possible for this court to conclude that the 50,000 offer by Daejan was sufficient to compensate the tenants for any relevant prejudice they suffered in this case.\nGiven that the LVT did not address this issue properly, there is, at least on the face of it, a strong case for saying that that is an issue which should be remitted, on the ground that we cannot fairly decide it.\nHowever, on closer examination of the facts, I am of the view that we can fairly decide the issue, and that we should therefore do so.\nThis view is based on two reasons, which, when taken together, seem to me to establish that it would be pointless to remit the case.\nFirst, the tenants do not appear to have identified to the LVT any relevant prejudice which they suffered, or may have suffered, as a result of Daejans failure to comply with the Requirements.\nAs mentioned, the Upper Tribunal described the evidence of any such prejudice as weak.\nIn this court, no contention as to the existence of possible relevant prejudice was advanced by Mr Rainey QC or Mr Fieldsend, save that they suggested that (i) Rosewood may have agreed to carry out the Works for some 11,000 less than the contract sum ultimately agreed with Mitre, and (ii) they relied on the fact that Mitre overran the six month contract substantially.\nAs to (i), I am not sure where the 11,000 comes from, but it is substantially less than the 50,000 offered by Daejan.\nAs to (ii), I would have thought that the prejudice has to be measured as at the date of the breach of the Requirements, and anyway there was no attempt to show that Rosewood would have been any quicker or to quantify any prejudice.\nSecondly, the tenants had been given a substantial opportunity to comment on the proposed works, and took full advantage of that opportunity.\nREAs detailed tender report of February 2006 was based on Mitres detailed tender, and resulted in a very detailed response from Ms Marks in July 2006.\nI agree with Mr Dowding QC that it is hard to see what further submissions or suggestions the respondents could have presented if Daejan had complied fully with the Requirements.\nAgain, no argument appears to have been advanced at any level of these proceedings on behalf of the tenants that any specific points, which had not been made, would or might have been made if Daejan had fully complied with the Requirements.\nThere appears to have been no evidence called before the LVT, and no suggestion made to the LVT, the Upper Tribunal or the Court of Appeal or indeed this court, to support the contention that the tenants suffered relevant prejudice worth as much as 50,000 as a result of Daejans failure to comply with the Requirements.\nIf they were to justify resisting the LVT accepting Daejans proposal, it was, in my I would accordingly allow this appeal, set aside the orders below, and grant the judgment, incumbent on the tenants to advance some credible evidence and some rational argument which established that they had suffered, or at least may well have suffered such relevant prejudice.\nAccordingly, although there was an undoubted, albeit partial, failure by Daejan to comply with stage 3 of the Requirements, the relevant prejudice to the respondents of granting the dispensation could not be higher than the 50,000 discount offered by Daejan.\nThe fact that the 50,000 can fairly be said to have been plucked out of the air is irrelevant: the essential point is that it exceeds any possible relevant prejudice which, on the evidence and arguments put before it, the LVT could have concluded that the respondents would suffer if an unqualified dispensation were granted.\nIn those circumstances, as there are no other relevant factors in this case, it seems to me that the LVT ought to have decided that Daejans application for a dispensation under section 20(1)(b) should be granted on terms that (i) the respondents aggregate liability to pay for the Works be reduced (presumably on a pro rata basis) by 50,000, and (ii) Daejan pay the reasonable costs of the respondents in so far as they reasonably tested its claim for a dispensation and reasonably canvassed any relevant prejudice which they might suffer.\ndispensation under section 20(1)(b) on the terms indicated.\nLORD HOPE (dissenting)\nI am, with respect, unable to agree with the approach that Lord Neuberger has\ntaken to this case.\nI think that the issues which I wish to raise are sufficiently important to justify taking a second look at what he says.\nThey also affect how I think this appeal should be disposed of.\nThe fundamental point of principle to which I would attach greater importance is that the issues to which section 20ZA(1) of the Landlord and Tenant Act 1985, as amended, directs attention have been entrusted by the statute to an expert tribunal.\nThe leasehold valuation tribunal (the LVT) amply qualifies for that description, both in respect of the expertise and experience of its members and in respect of its familiarity with the subject matter.\nQuestions such as whether or not a landlords breach or departure from the consultation requirements was serious or was technical, minor or excusable (see para 47, above) are questions of fact and degree.\nQuestions of that kind are best left to its judgment.\nSo too are questions as to whether a breach or departure is sufficiently serious to justify refusal of a dispensation or whether an offer to reduce the chargeable amount is acceptable.\nThe wording of section 20ZA(1) adopts this approach.\nIt is open ended and unqualified.\nIt leaves these matters to the tribunals determination.\nThis is an area of tribunal law and practice where it has been recognised, out of respect for the tribunals expertise, that judicial restraint should be exercised: see Lady Hales observations in Cooke v Secretary of State for Social Security [2002] 3 All ER 279, paras 15 17 and R (Cart) v Upper Tribunal (Public Law Project Intervening) [2011] UKSC 28, [2012] 1 AC 663, para 49; Ravat v Halliburton Manufacturing and Services Ltd [2012] UKSC 1; [2012] ICR 389, para 35.\nThe context for the exercise of that restraint is usually a challenge to the lawfulness of the decision on the ground, for example, that it was based on an error of law.\nIn my opinion, however, judicial restraint is just as much in point where, as here, an appellate court is prescribing limits on the way the expert tribunal is to perform the tasks as to issues of fact that have been delegated to it by the statute.\nI would be reluctant, therefore, to rule out the possibility that a LVT may\nlawfully refuse dispensation simply on the ground of the seriousness of the breach or departure.\nIt is true that the end to which the consultation requirements are directed is the protection of tenants in relation to service charges.\nBut I do not agree that there is a factual burden on the tenants in every case to identify some element of relevant prejudice (by which I understand Lord Neuberger to mean financial prejudice or other disadvantage that can be quantified) that they would or might suffer if dispensation were to be given before it would be open to the LVT to refuse to dispense: see paras 67 69.\nI can accept that it would almost always be appropriate for the tribunal to require the tenants to provide some indication of the respects, if any, in which they would be prejudiced.\nThat would, of course, be so if the breach or departure appeared to be technical, minor or excusable.\nIt would be necessary then for some relevant prejudice to be inquired into and identified.\nSo too as cases are encountered on an ascending scale of gravity.\nBut I do not think that it is fanciful to assume that there could be extreme cases where the breach or departure was so serious, or so flagrant, that it would on that ground alone not be reasonable, as section 20ZA(1) puts it, to dispense with the consultation requirements.\nIn my opinion it should be, and is, open to the tribunal to take that view in the interests of preserving the integrity of the legislation, and to do so without conducting any such inquiry.\nFor these reasons I am unable to agree with the conclusion in para 47 that the LVT, the Upper Tribunal and the Court of Appeal were wrong to hold that it should be open to the LVT to distinguish, in the exercise of its judgment, between breaches or departures according to their level of seriousness, without having first to consider the amount of prejudice they may cause or may have caused.\nOf course, these two things may run together.\nBut I do not think that it would be right for us in this court, relatively remote as we are from the day to day business of the tribunals, to hold that to separate the two can never be appropriate.\nIt seems to me that this rather more cautious, less prescriptive, approach is consistent with the conclusion that is reached in para 74, that the power to dispense with the consultation requirements should be exercised in a proportionate way that is consistent with their purpose.\nIt is also more consistent with the language of the section, which does not place any limits on the way the tribunal may exercise the power that is given to it to make the determination.\nAll it says is that the tribunal must be satisfied that it is reasonable to dispense with the requirements.\nI would hold that judicial restraint has a part to play, too, in an examination of the question whether the LVT was entitled to decline to accept Daejans offer to reduce the chargeable amount by 50,000.\nIt rejected the proposal on the ground that there was no explanation of how that figure could be regarded as generous or as sufficient compensation for the prejudice suffered.\nNeither the Upper Tribunal nor the Court of Appeal thought it right to reverse the LVT on this point, holding that it was entitled to reject the proposal.\nI agree that the essential point is that the figure suggested should exceed, or at least be commensurate with, any possible prejudice which the respondents would suffer if an unqualified dispensation were to be granted: see para 84.\nThe LVT did not express its reasoning in that way.\nBut I am not prepared to assume from this that the proposal was rejected simply because it was a figure plucked out of the air.\nThe question whether or not an explanation was required from Daejan was one for the judgment of the expert tribunal.\nIt was for it, after all, to decide whether or not to accept the proposal.\nIt was for it to determine, as a matter of fact, whether it had been properly quantified.\nI am not persuaded that its decision to reject the proposal was based on an error of law that would entitle this court to interfere with it.\nAs Lord Wilson says in para 117, it was entitled in its discretion to decline to accept a reduction without knowing the proportion which it bore to the overall cost of the works.\nFor these reasons, and for those given by Lord Wilson with which I am in full agreement, I would dismiss the appeal and affirm the order of the Court of Appeal.\nLORD WILSON (dissenting)\nI respectfully disagree with central aspects of the exposition by Lord Neuberger of the principles to be applied by the LVT in its determination of an application that it should dispense with one or more of the Requirements specified in the Schedules to the 2003 Regulations.\nI have had greater hesitation about the proper disposal of the actual appeal but I have concluded that this court should dismiss it.\nWhen in 2002 it inserted into the 1985 Act the new section 20 and the additional section 20ZA, and when it accepted the 2003 Regulations made thereunder, Parliament made various provisions about a landlords consultation with a tenant in relation to proposed works of a specified character for which, through the service charge, the tenant would later be required to pay.\nOn the face of them, the provisions seem to impact severely upon the landlord; and the severity is in my view testament to the importance which Parliament attached to his compliance with the Requirements.\nThus dispensation with them is available only if the LVT is satisfied (ie by the landlord) that it is reasonable to grant it (section 20ZA(1)); even if so satisfied, the LVT has a discretion in that, under that subsection, it then may grant the dispensation; and, in the absence of compliance or dispensation, the contribution of the tenant to the cost of such works is limited to 250 irrespective of the size of the cost (section 20(1)(3) and (5) and Regulation 6).\nLord Neubergers conclusion at para 47 that the gravity of the landlords non compliance with the Requirements is relevant to dispensation not of itself but only insofar as it causes financial prejudice to the tenant seems to me to subvert Parliaments intention.\nThe concern which he expresses at paras 47 and 48 about the difficulties which would confront the LVT in making reasonably consistent assessments of the gravity of breaches is not one which I share.\nHis conclusion at para 50 that real prejudice to the tenant should normally be the sole consideration for the LVT seems to me to depart from the width of the criterion (reasonable) which Parliament has specified.\nHis inevitable further conclusion at para 67 that the factual burden lies on the tenant to prove such prejudice seems to me, as a matter of reality, to reverse the burden of proof which Parliament has identified.\nAnd in my view the hypothetical exercise in which his conclusions require the parties to engage (and upon which they require the LVT to adjudicate) fails to recognise the complications which often attend a comparison of, for example, one estimate with another in terms not just of overall cost but of individual costings, of the proposed starting date for the works, of the period of the works to which the rival contractors will commit themselves and of their perceived capacity to perform the works satisfactorily.\nWhether the burden which Lord Neuberger casts upon the tenant is one which he can often discharge seems to me to be very doubtful.\nFirst, however, I wish in the following respects to amplify the summary of the facts helpfully given by Lord Neuberger at paras 14 to 22: In August 2005, in response to Daejans stage 1 notice, four of the five (a) respondents nominated Rosewood as their preferred contractor.\nIn its report to Daejan dated 30 November 2005, REA, the contract (b) administrator, (i) analysed the four tenders which Daejan had received and appended a comparative schedule of the individual costings of three of them, including Rosewood; (ii) noted that Rosewood had offered to reduce its quotation from 454,000 to 432,000, which therefore became only 11,000 higher than that of the contractor, namely Mitre, for which Daejan had at all times indicated a provisional preference; (iii) observed that the contract period proposed by Rosewood was 24 weeks, whereas that proposed by Mitre was 32 weeks; (iv) indicated that the choice was between Rosewood and Mitre; (v) suggested that Rosewoods tender was the most complete and possibly the more realistic; (vi) said that it could vouch for Rosewood as a quality contractor but that Daejan could presumably vouch analogously for Mitre; and (vii) concluded that, were it to reduce its contract period to 24 weeks (which indeed it subsequently did), Mitre should be awarded the contract.\nIn February 2006 Daejan forwarded to the respondents copies of (c) Mitres tender and of REAs report on the tenders. (d) But the respondents also wanted to see a copy of Rosewoods tender.\nApart from reference to it in the schedule of individual costings, REAs report had made only general observations upon its tender over one page. (e) On five separate occasions between January and July 2006 the respondents in vain asked Daejan for a copy of Rosewoods tender. (f) Daejan admits that its first stage 3 notice, dated 14 June 2006, did not comply with some of the Requirements.\nIts main defect was to fail to refer to Rosewoods tender in breach of para 4(8) of Part 2 of Schedule 4. (g) So Daejan served a second stage 3 notice dated 28 July 2006.\nIn the notice Daejan said (as required by para 4(5)(c)) that Rosewoods tender was available for inspection.\nMoreover, in accordance with para 4(10)(c)(iii) and regulation 2(1), which require that a tenant be allowed 30 days in which to make observations, it also stated that, subject to any observations made by the respondents, it proposed to award the contract to Mitre but that it would not do so prior to 31 August 2006. (h) Meanwhile, on 17 July 2006, four of the respondents had applied to the LVT for a determination of their liability to pay service charges to Daejan for each year since 1994.\nFor the then current year, namely 2006, the respondents explained in their application that the issue related to major works costing 600,000 and that one of the questions for determination by the tribunal would be was the consultation process properly carried out? (i) At the LVTs pre trial review, held on 8 August 2006, there was a remarkable development: for Daejans solicitor announced that the contract had already been awarded to Mitre.\nBy letter to Daejan, written later that day, the respondents referred to the solicitors announcement and protested about it. (j) Daejan wrote two letters to the respondents dated 10 August 2006.\nIt did not deny that its solicitor had made the announcement.\nOn the contrary, in one letter it appeared to confirm that Mitre had been awarded the contract.\nIn the other letter, however, it said only that Mitre would be awarded the contract. (k) It transpires that Daejan awarded the contract to Mitre only on 11 September 2006.\nBut it had made clear to the respondents on 8 and 10 August that it had made its decision to do so.\nThereafter, and although on 11 August they finally received a copy of Rosewoods 50 page tender, the respondents reasonably concluded (as the LVT found) that it would be futile for them to accede to Daejans previous invitation to make observations prior to 31 August.\nIndeed Daejan never suggested otherwise.\nThus, to speak plainly, Daejan aborted the stage 3 consultation.\nHaving correctly invited the respondents to make observations by 31 August 2006, it made clear on and after 8 August that the decision had been made.\nEven more extraordinarily, Daejan made it clear at a hearing before a tribunal which was beginning to investigate whether, among other things, it had consulted the respondents in compliance with the Requirements.\nIn my view the LVT was clearly entitled to conclude that the opportunity for the respondents to make informed observations on the rival tenders prior to 31 August had been central to the consultation process.\nNotwithstanding positive aspects of the earlier stages of the consultation to which Lord Neuberger refers at para 48, the sudden termination of the process, which Daejan never sought to reverse nor even to explain, represented, as both of the tribunals and the Court of Appeal all concluded, serious non compliance with the Requirements.\nIn my view therefore this appeal requires the court to consider the LVTs proper treatment of serious non compliance with the Requirements when invited to dispense with them.\nWhat financial prejudice did the respondents suffer from Daejans termination of their opportunity to make submissions, in particular, of course, submissions in favour of Rosewood? Albeit without access to Rosewoods tender, they had already made extensive submissions.\nThe LVT concluded that the REA report had raised numerous points which might have been clarified by the respondents access to all the relevant tenders.\nIt was an unsurprising conclusion.\nNevertheless the Upper Tribunal was correct to observe that the LVT had not elaborated upon it.\nMoreover, at all four stages of these proceedings, Daejan has been at pains to make the point that, in their evidence before the LVT, the respondents never identified specific aspects of Rosewoods tender to which, had the consultation not been terminated, they would have referred in their intended observations.\nIn that this is an appeal on a point of law from, originally, the exercise of a discretionary jurisdiction, it is worthwhile to note that, in its conclusions, the LVT expressly addressed the point before concluding that it was speculative.\nBut it remains Daejans strongest point.\nIf, as Lord Neuberger considers, the respondents are now to be told that, when they opposed the dispensation, the initial burden had been on them to prove that the termination caused significant financial prejudice to them, the conclusion must indeed be that they failed to discharge it.\nBut is the gravity of non compliance relevant to whether dispensation is reasonable irrespective of consequential financial prejudice?\nIn giving a negative answer to this question Lord Neuberger refers to what one might call the basic jurisdiction, conferred on the LVT by sections 19 and 27A of the 1985 Act, to determine the limit of a service charge by reference to whether the underlying costs were reasonably incurred by the landlord and whether the services thereby provided, or the works thereby carried out, were of a reasonable standard.\nHe suggests at paras 42 and 52 that the Requirements set out in section 20 and in the 2003 Regulations are intended only to reinforce the purposes behind sections 19 and 27A and to give practical support to them; and he proceeds to suggest at para 44 that the LVT should therefore focus upon whether non compliance with the Requirements has led the landlord to incur costs in an unreasonable amount or to incur them in the provision of services, or in the carrying out of works, which fell below a reasonable standard, in other words upon whether the non compliance has in that sense caused prejudice to the tenant.\nWith great respect, I consider that the legislative history of the Requirements for consultation runs counter to the above suggestion.\nWhat I have described as the basic jurisdiction, now exercised under sections 19 and 27A of the 1985 Act, originated in section 124(1) of the Housing Act 1974 through its insertion of section 91A into the Housing Finance Act 1972.\nThe jurisdiction was then conferred only on the High Court or the county court; it applied only to flats and to certain types of tenancy; but otherwise it was described in terminology quite similar to the present (section 91A(3)).\nIt was by the same insertion that Parliament introduced an embryonic requirement for consultation (section 91A(1)).\nThat subsection provided that, in case of any dispute about the recoverability of a service charge thereunder, evidence of the views of the tenant obtained during the requisite consultation should be admitted.\nThere was no express provision about the effect of a landlords failure to conduct the consultation; but it was clearly intended that a tenant could also deploy such a failure in a dispute with the landlord before a court which was exercising the basic jurisdiction to determine whether an amount or a standard was reasonable.\nIn other words the section inserted in 1974 into the 1972 Act made the link which Lord Neuberger perceives in the current legislation.\nBut Parliament replaced section 91A of the 1972 Act by provisions contained in Schedule 19 to the Housing Act 1980.\nBy paragraphs 2 and 3, it reiterated the basic jurisdiction.\nBy paragraph 5, it amplified the Requirements for consultation.\nBy paragraph 4, it provided that, unless the Requirements had been complied with or dispensed with, the excess of a landlords costs above a prescribed amount should not be recoverable through the service charge.\nAnd, by paragraph 6, it provided that, if satisfied that the landlord acted reasonably, the court had power to dispense with a Requirement.\nThe pattern of provisions contained in paras 1 to 6 of schedule 19 to the 1980 Act has broadly been maintained to date.\nThose paragraphs were replaced by sections 18 to 20 of the Landlord and Tenant Act 1985.\nThe basic jurisdiction was then placed into section 19.\nThe consultation jurisdiction was then placed into section 20; and, by subsection (5), the threshold criterion for exercise of the power to grant dispensation with the Requirements, namely that the landlord acted reasonably, was retained.\nBy section 151 of the Commonhold and Leasehold Reform Act 2002, the consultation jurisdiction was changed into its present form by the substitution of section 20, the insertion of section 20ZA and the making thereunder of the 2003 Regulations.\nIn order to underline the distinction between the basic jurisdiction in section 19 and the consultation jurisdiction in section 20, the headnote of the former referred to reasonableness whereas that of the latter referred to consultation requirements.\nThe pattern of provisions introduced by the 1980 Act and maintained to date is important for present purposes.\nFor the link which Lord Neuberger perceives in the current legislation seems to me to have been broken by that Act.\nNon compliance with a Requirement for consultation was no longer simply a factor to be weighed in the exercise of the basic jurisdiction.\nAn independent sanction was attached to it, namely that, unless the Requirement was dispensed with, the costs incurred by the landlord in the specified circumstances and above the statutory limit were irrecoverable through the service charge.\nThey were irrecoverable even if they had been reasonably incurred and had been incurred in the provision of services, or in the carrying out of works, to a reasonable standard, ie even if there was no scope for them to be disallowed in the exercise of the basic jurisdiction.\nEven if, in that respect, the tenant had suffered no prejudice, they were irrecoverable.\nSuch was the free standing importance which Parliament has for 33 years attached to compliance with the Requirements.\nI therefore agree with the analysis of Lewison J in Paddington Basin Developments Ltd v West End Quay Estate Management Ltd [2010] EWHC 833 (Ch), [2010] 1 WLR 2735, at para 26 as follows: [T] here are two separate strands to the policy underlying the regulation of service charges.\nParliament gave two types of protection to tenants.\nFirst, they are protected by section 19 from having to pay excessive and unreasonable service charges or charges for work and services that are not carried out to a reasonable standard.\nSecond, even if service charges are reasonable in amount, reasonably incurred and are for work and services that are provided to a reasonable standard, they will not be recoverable above the statutory maximum if they relate to qualifying works or a qualifying long term agreement and the consultation process has not been complied with or dispensed with.\nIt follows that the consultation provisions are imposed for an additional reason; namely, to ensure a degree of transparency and accountability when a landlord decides to undertake qualifying works or enter into a qualifying long term agreement.\nAs Robert Walker LJ observed in Martin & Seale v Maryland Estates Ltd (1999) 32 HLR 116, 125 in relation to a previous version of the consultation requirements: Parliament has recognised that it is of great concern to tenants, and a potential cause of great friction between landlord and tenants, that tenants may not know what is going on, what is being done, ultimately at their expense.\nThe statutory changes wrought by the 2002 Act, which, together with the Regulations, came into force in 2003, not only enabled the LVT to exercise each of the service charge jurisdictions but altered the threshold criterion for exercise of the power to grant dispensation with the Requirements.\nThe criterion was no longer whether the landlord had acted reasonably but whether it was reasonable to dispense with the requirements (section 20ZA(1), as inserted into the 1985 Act).\nThe new criterion was therefore wider and, no doubt, more favourable to the landlord.\nIt certainly included appraisal of any financial prejudice suffered by the tenant as a result of the non compliance, being an aspect which could be said only with great difficulty, if at all, to have been embraced in the old criterion.\nOn any view the focus of the old criterion had been the gravity of the landlords non compliance.\nWhat, however, I find impossible to conclude is that the change in effect banished consideration of what had previously been the focus: the words of the new criterion are inapt to yield such a conclusion.\nIn August 2002, just after the 2002 Act had received royal assent, the Office of the Deputy Prime Minister published a consultation paper in relation to a draft of the Regulations, entitled Revised Procedures for Consulting Service Charge Payers about Service Charges.\nIn Chapter 4 it explained: 3.\nThe dispensation procedure is intended to cover situations where consultation was not practicable (eg for emergency works) and to avoid penalising landlords for minor breaches of procedure which do not adversely effect service charge payers interests. [Emphasis supplied] The paragraph tends to confirm my view that substantial non compliance with the Requirements is, without more, intended to entitle the LVT, in the exercise of its discretion, to refuse to dispense with them in order, in Lord Hopes phrase at para 91, to preserve the integrity of the legislation.\nLord Neuberger points out at para 46 that the Requirements leave untouched the fact that it is the landlord who decides what works should be done and what amount should be paid for them.\nWhat, however, the Requirements recognise is surely the more significant fact that most if not all of that amount is likely to be recoverable from the tenant.\nIn Camden London Borough Council v The Leaseholders of 37 Flats at 30 40 Grafton Way LRX\/185\/2006 30 June 2008, the Lands Tribunal (George Bartlett QC, President, and NJ Rose FRICS) dismissed Camdens appeal against the LVTs refusal to dispense with the stage 3 Requirements.\nCamden had prepared the requisite statement, including the offer to afford inspection of the tenders, but had failed to send it to the tenants and had proceeded to enter into the contract.\nThe Lands Tribunal, at para 35, described Camdens error as gross.\nI agree; and I do not perceive much difference between a landlords total failure to send the statement and its sending a statement which, after 11 days, it deprives of all further significance.\nThe Lands Tribunal concluded: The extent to which, had [the tenants] been told of the estimates, [they] would have wished to examine them and make observations upon them can only be a matter of speculation.\nThe fact is that they did not have the opportunity and this amounted to significant prejudice.\nThe above analysis by the Lands Tribunal in the Grafton Way case, namely that a substantial failure of a landlord to consult in compliance with the Requirements could, in itself, amount to significant prejudice to a tenant, was adopted by the Court of Appeal in the present case (Gross LJ [2011] 1 WLR 2330, para 73 (iii)).\nFor reasons already given, I am not persuaded that a failure of that gravity needs to be described as amounting to prejudice to the tenant.\nI consider, with respect, that it is reasonable for Lord Neuberger to adopt a narrower definition of the word prejudice, to be calculated only in monetary terms and by reference to the likely ultimate outcome of a duly conducted consultation.\nBut the semantics are unimportant.\nI believe that, along with any prejudice in that narrower sense (which I accept will often be a matter of prime importance), the LVT should weigh the gravity of the non compliance with a Requirement in determining whether to dispense with it.\nIn the present case the LVT did so.\nThe LVT also proceeded to reject Daejans contention that it was relevant for it to consider the size of the difference between the amounts recoverable from the respondents in the event of dispensation on the one hand and of its refusal on the other.\nHere too the LVT made no error.\nIn this respect I agree with Lord Neuberger at para 51 that the size of the difference is irrelevant.\nIt remains only to consider whether the LVT fell into error in its rejection of Daejans offer to accept the attachment to a grant of dispensation of a condition that it should reduce the cost of the works to be charged to the respondents by 50,000.\nI agree with Lord Neuberger that it is open to the LVT to attach a condition of that character; and I regard it as valuable for the LVT that this court should so rule.\nIn making provision for the consequences of non compliance with the Requirements, Parliament will have had in mind the established ability of a court or tribunal to attach conditions to its exercise of a discretion: for example a condition that undertakings be given by an applicant before it grants a freezing order; or a condition which (so this court was told) the LVT itself already sometimes attaches to the grant of an adjournment, namely that the applicant for it, whom the tribunal has no power actually to order to pay the costs thrown away, should nevertheless do so.\nLord Neuberger also explains at para 56 that urgent applications for dispensation in advance of carrying out the works may be particularly suited to be granted on conditions.\nNevertheless I regard the exercise of the jurisdiction to attach a condition to the grant of dispensation with a Requirement as not being without difficulty.\nConsequential prejudice to the respondents in the narrow sense of that word will sometimes arise not from works which might have been done more cheaply but, for example, from works which, for good reason, should have been conducted at somewhat greater expense or which were conducted over an unreasonably long period or which did not extend to everything that was reasonably required to be done; prejudice of that sort may be hard to quantify in monetary terms.\nMy own view, namely that the gravity of the non compliance remains relevant independently of prejudice, makes the identification of an appropriate figure harder still.\nSo it seems to me that, as Lord Hope suggests in paras 88 and 93, considerable latitude is to be afforded to the LVT, as the specialist decision maker, in relation to its determination whether to accept a landlords offer or to reject it outright or, in rejecting it, to identify some higher figure which, if offered, it would accept as a condition of a grant of dispensation.\nAppeals from these aspects of the exercise of the LVTs discretion should not lightly be permitted to proceed.\nHad the LVT in the present case concluded that it had no jurisdiction to incorporate Daejans offer into a condition attached to a grant of dispensation, it would have made an error of law which would have required re exercise of its discretion at an appellate level.\nBut it did not so conclude.\nIt was the Upper Tribunal which, at para 40, wrongly concluded that the LVT had no such jurisdiction; and it was the Court of Appeal which, at para 76(i), overcautiously doubted whether the jurisdiction existed.\nBefore the LVT, by contrast, the parties agreed that it existed and the LVT proceeded on that basis.\nIt is important to note that, having embarked on the works in October 2007, Mitre was still engaged upon them at the time of the LVTs hearing of Daejans application for dispensation in March 2008 and probably at the time of its decision in August 2008.\nThe evidence does not permit a conclusion to be drawn about the reasons for the overrun.\nAt all events the LVTs expressed reason for rejecting Daejans offer of a reduction of 50,000 was that it was impossible to assess it in the light of the cost of the works already undertaken and of the estimated cost of the works still to be undertaken, as to neither of which had Daejan adduced evidence.\nThe gravity of Daejans non compliance with the Requirements made the LVTs appraisal of any offer extremely difficult.\nBut it was in any event entitled, in its discretion, to decline to accept the offered reduction without knowing the proportion which it bore to the overall cost of the works.\nAfter receiving the parties submissions as to the form of order and costs, Lord Neuberger gave the following judgment with which Lord Hope, Lord Clarke, Lord Wilson and Lord Sumption agreed.\nTrinity Term [2013] UKSC 54 On appeal from: [2011] EWCA Civ 38 JUDGMENT Daejan Investments Limited (Appellant) v Benson and others (Respondents) (no. 2) before Lord Neuberger, President Lord Hope, Deputy President Lord Clarke Lord Wilson Lord Sumption JUDGMENT GIVEN ON 24 July 2013 Heard on 4 December 2012 Appellant Nicholas Dowding QC Stephen Jourdan QC (Instructed by GSC Solicitors LLP) 1st 4th Respondents Philip Rainey QC Jonathan Upton (Instructed by Excello Law Limited) 5th Respondent James Fieldsend (Instructed by Jaffe Porter Crossick LLP) LORD NEUBERGER (with whom Lord Hope, Lord Clarke, Lord Wilson and Lord Sumption agree) 1.\nOn 6 March 2013, by a majority of three to two, this Court allowed an appeal brought by Daejan Investments Ltd (Daejan) against the decision of the Court of Appeal, which had unanimously upheld a decision of the Upper Tribunal (Lands Chamber) (the UT), which had in turn upheld a decision of the Leasehold Valuation Tribunal (the LVT).\nThe effect of the decisions below was that Daejan was not entitled to a dispensation under section 20ZA(1) of the Landlord and Tenant Act 1985 (the 1985 Act), as amended, which it had sought from the LVT, to enable it to recover any payment by way of service charges from the respondent tenants, in respect of the cost of certain works of repair (the works) which it had carried out to a block of flats.\nIn our decision, we decided that Daejan was entitled to such a dispensation 2. (a dispensation), albeit on terms.\nThe effect of our decision is that, notwithstanding its failure to comply with some of the procedural steps set out in Part 2 of Schedule 4 to the Service Charges (Consultation Requirements) (England) Regulations 2003 (SI 2003\/1987) (the Regulations), Daejan is entitled to recover service charges in respect of the cost of the works from the respondents, subject to (i) a deduction of 50,000 and (ii) terms as to costs. 3.\nThe issues which now arise between the parties concern the details of the consequential order (the Order) which the Court should make as a result.\nIn order to deal with those issues, it is unnecessary to set out the factual history, the relevant law, the procedural background, or the reasons for the decision, as they are fully set out in our earlier judgment (the main judgment) [2013] UKSC 14, [2013] 1 WLR 854. 4.\nThe parties are agreed that the Order should contain the following provisions: i. A statement that Daejans appeal is allowed; ii.\nA statement that the decisions of the LVT, the UT and the Court of Appeal are set aside; iii.\nA direction that, as a condition of the dispensation, Daejan is to pay the reasonable costs of the respondents: (a) already incurred in the proceedings in the LVT, albeit that the scope of this direction is in dispute; (b) which may be incurred in their being determined by the LVT if and to the extent that the [LVT] determines that the costs of that application were reasonably incurred; iv.\nA direction (subject to the wording) that, as a condition of the dispensation, Daejans costs of applying for a dispensation (or of any appeal in that connection) cannot be claimed back through service charges; vs A direction that, subject to an argument in relation to part of those costs, there be no order for costs in this Court and in the Court of Appeal (save that Daejan does not seek to recover 3,000 it was ordered to pay to the Access to Justice Foundation); vi.\nA direction that, if the dispensation is effective and Daejan is able to recover the cost of the works, the liability of each respondent to pay by way of service charge is reduced by an agreed sum, to reflect the 50,000 deduction; vii.\nA direction that the proceedings be restored before the LVT for the costs issues under sub para (iii) to be determined. 5.\nThe parties are not agreed about a number of other terms of the Order, and the purpose of this judgment is to deal with those disputed terms.\nIn their written submissions, the respondents suggest that our decision on some of the points which divide the parties may be relied on in future cases where a landlord seeks a dispensation.\nPartly for that reason, and partly because the submissions raise a number of issues, some of which are not straightforward, it is right not merely to give our decision on the terms of the Order, but also our reasons, in the form of this brief judgment, for that decision. 6.\nTo get one point out of the way, there is an arid argument as to whether the provisions which Daejan must comply with in order to obtain the dispensation (i.e. under paras 4(iii), (iv) and (vi) above) are terms or conditions.\nNothing hangs on this, although it is probably preferable to call them conditions, which is the description which I shall adopt.\nThe important point is that, unless and until Daejan has complied with the conditions in so far as they require compliance, it is not entitled to give effect to the dispensation and to recover the service charges the subject of these proceedings. 7.\nThe first issue concerns the point touched on in para 4(iii)(a) above.\nIt has three aspects. (i) Daejan contends that the respondents are only entitled to their costs in the LVT insofar as those costs were incurred in reasonably testing [Daejans] claim for dispensation or in reasonably canvassing any prejudice which [the respondents] might suffer, whereas the respondents contend that their costs should be recoverable from Daejan insofar as they were incurred in reasonably investigating and establishing non compliance with the Regulations, investigating or seeking to establish prejudice, and investigating and challenging [Daejans] application for dispensation. (ii) The respondents also contend that the Order should provide that these costs are not limited to those incurred after the issue of Daejans application for a dispensation. (iii) The respondents further contend that the Order should state that these costs can include costs incurred in connection with the hearing which resulted in the earlier determination referred to in para 24 of the main judgment. 8.\nOn analysis, there is, in truth, little, if any, difference between the two formulations, but that of the respondents is to be preferred.\nAs to (i), the respondents wording spells things out more fully and leaves less room for argument.\nIt is true that Daejans wording follows para 85 of the main judgment, but the meaning of the respondents wording is quite consistent with what is said in that paragraph.\nSo far as (ii) is concerned, the only objection to the respondents proposal is that it amounts to surplusage: an order for costs in relation to proceedings is not limited to costs incurred after the proceedings start.\nHowever, as Daejan opposes the respondents proposal, it should be adopted to ensure there can be no dispute.\nAs to (iii), at first sight it may appear surprising that the respondents can claim as costs in relation to the issue decided in a later determination (viz. that mentioned in para 26 of the main judgment) expenditure incurred on issues decided in an earlier determination.\nHowever, as Daejan appears to accept, although there were two determinations, at least some of the evidence and the arguments in relation to the first were important and relevant in relation to the second determination. 9.\nThe second issue between the parties is touched on in para 4(v) above.\nDaejan says that there should be no order for costs in the UT, in the Court of Appeal and in this Court, whereas the respondents contend that they should be able to recover their costs from Daejan in all three tribunals insofar as they fall within the scope of the form of order they have proposed as quoted in point (i) in para 7 above (and which is accepted in relation to the LVT costs see para 8 above). 10.\nIt is not open to Daejan to seek any costs in the Court of Appeal or in this Court, as it was granted permission to appeal to each court on terms that it did not seek its costs (see paras 33 and 37 of the main judgment).\nThat was for the very good reason that Daejan, as a large landlord, had a significant interest in the issue in this case being conclusively determined, whereas the respondents had no such interest.\nWhen one adds to that point the fact that it was Daejans default which ultimately caused these appeals to be necessary, and the fact that the decision of this Court can be said to have represented a change in what the law was perceived to be, it seems right that Daejan should not claim its costs in the UT any more than in the Court of Appeal or in this Court. 11.\nHowever, although one must have some sympathy for the respondents, it would not be appropriate to go further by making any order in their favour so far as the costs in the UT, the Court of Appeal or the Supreme Court are concerned.\nIn the absence of special circumstances, Daejan can fairly say that the normal order for costs in a case where the ultimate appeal court decides in favour of one party (the successful party) is that that party recovers all its costs from the opposing party.\nIn this case, there are undoubtedly two special factors, namely (i) the successful party only succeeded on the basis that it should have succeeded at first instance on terms that it paid some of the opposing partys costs (see paras 59 64, 73(ii) and 85(ii) of the main judgment, and paras 7 and 8 above), and (ii) the successful party is precluded from seeking its costs in this Court and the Court of Appeal (see paras 33 and 37 of the main judgment). 12.\nIn these circumstances, to deprive Daejan of its costs of the hearing before the UT (in addition to the Court of Appeal and this Court) could be said to be generous to the respondents, although, for the reasons briefly given in para 10, it is appropriate in this case.\nHowever, it would not be right to make an order for costs in the UT or higher courts which was more favourable to the respondents than no order for costs. 13.\nIt is said by the respondents that they acted reasonably in resisting Daejans successive appeals.\nThat is true, but Daejan also acted reasonably in pursuing the appeals, and, unlike the respondents, Daejan was ultimately successful. 14.\nIt is also true that Daejan has to pay a large proportion of the respondents costs before the LVT, even though it obtained the dispensation it was seeking, but that is because it was asking for an indulgence from the LVT (as explained in paras 58 64 of the main judgment).\nHowever, the appeals concerned a point of law, namely the correct approach to a dispensation application by a landlord who had failed to comply with the Regulations, and it was a point on which, ultimately, Daejan won and the respondents lost.\nPrima facie, therefore, Daejan should have its costs of the appeals, but, as explained in para 10, the correct order in respect of the appeal costs is that there be no order. 15.\nIt is also argued by the respondents that, as Daejan raised the argument at all levels of appeal that the financial consequences to it of refusing a dispensation represented a relevant factor when deciding whether to grant it a dispensation, the fact that this argument failed should be reflected in any order for costs on the appeals.\nIn arguments about costs, it is normally inappropriate to single out a particular strand of argument (in this instance, prejudice to the landlord) in connection with what is in reality a single point (the principles applicable to granting a dispensation), particularly on an appeal, where no question of the cost of particular evidence arises.\nThis case is no exception.\nFurthermore, while prejudice to the landlord was rejected as a relevant factor, it does represent the windfall to the tenants which is relevant (see para 51 and 71 of the main judgment). 16.\nThis leads to the third issue.\nAs a result of the conclusion on the second issue, Daejan is entitled to recover any costs which it has paid to the respondents in respect of the UT or Court of Appeal hearings.\nHowever, the respondents should be entitled, despite Daejans objection to the contrary, to a direction for a stay on any order that they repay these costs, while the parties await the decision of the LVT as to the sums which Daejan should be required to pay to them pursuant to the order referred to in para 4(iii) above, with a view to setting off any such costs liabilities against each other.\nHowever, if the respondents unreasonably delay matters being determined by the LVT, Daejan has the right to apply to the LVT to lift this stay. 17.\nThe fourth issue arises from an argument about the wording of the provision which gives effect to the term described in para 4(iv) above.\nDaejan suggests that it is not to include in the service charge costs its costs of applying for dispensation in the [LVT] or its costs of appealing from a refusal of that dispensation.\nThe respondents proposal is that it should be the costs which Daejan incurred in resisting a determination that it had failed to comply with the Regulations or in respect of its application for dispensation.\nDaejans formulation is arguably too narrow, and the respondents formulation could apply to any application in the future.\nThe appropriate form of words is that Daejan must not include in the service charge costs its costs of (i) resisting the respondents application for a determination that it had failed to comply with the Regulations, (ii) supporting its application for dispensation (including any costs it has to pay to the respondents), or (iii) appealing from a refusal of that dispensation. 18.\nThe fifth issue arises from the respondents request for a direction under section 20C(1) of the 1985 Act (section 20C) in connection with the costs incurred by Daejan in relation to its application for a dispensation.\nSection 20C permits a tenant to apply for an order that all or any of the costs incurred by the landlord in connection with proceedings before a court, [LVT], or [UT], are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge .\nAt first sight, there seems little point in including such a direction, given the agreement to the provision set out in para 4(iv), and discussed in para 17 above.\nHowever, as the respondents point out, the agreed provision in para 4(iv) is, strictly speaking at least, no more than a condition imposed on Daejan as a term of granting it the dispensation it seeks.\nIn theory, Daejan might not take up the dispensation.\nAccordingly, as it would be wrong for Daejan to seek to include the costs involved in a future service charge demand, the order sought by the respondents under section 20C should be granted. 19.\nSixthly, the respondents wish the Order to record that any dispensation will take effect on the date on which Daejan complies with the conditions set out in para 4(iii).\nAt first sight, the question of when the dispensation takes effect may well not matter, and, if it does, it should be determined as and when the reason for which it matters is identified.\nThis point appears to be linked to another issue. 20.\nThat is the seventh issue which divides the parties.\nIt arises from the fact that the lease under which each respondent holds his or its flat from Daejan provides for interest on late payments of money due under the lease at the rate of 14% per annum.\nThe respondents seek to be released from liability for this interest in relation to the service charges which Daejan anticipates recovering in the light of the main judgment. 21.\nThere is no need for the respondents to seek a release of this liability to pay contractual interest.\nIt seems clear from the wording of section 20(1)(b) of the 1985 Act (which applies in this case and limits the service charge contribution as explained in para 10 of the main judgment unless the consultation requirements have been .,. complied with) that, where that provision applies, the date on which any service charge would fall due (the due date) must be the later of (i) the date when the service charge would fall contractually due in the absence of any statutory restriction, and (ii) the date when any dispensation becomes effective.\nAnd, in this case, the due date must be the day on which the conditions imposed on Daejan for the grant of the dispensation are complied with. 22.\nThis means that interest will only start to run on the service charges the subject of these proceedings once the costs payable by Daejan in accordance with para 4(iii) above have been determined and, if appropriate, paid (within fourteen days of the determination).\nIt may well be that the costs will be less than the costs already paid to the respondents in relation to the orders for costs made on the appeals in the courts below (see para 16 above), and therefore no payment will be due from Daejan to the respondents.\nHowever, that would not undermine the point made in para 21 above: until the conditions on which the dispensation is granted are known and quantified, there is no operative dispensation, and time does not begin to run for interest. 23.\nIf the respondents were to delay paying Daejan the service charges assessed in accordance with the Order (beyond fourteen days, to allow time to organise payment) once the dispensation becomes operative, there would (at least in the absence of special facts which have not so far arisen) be no basis for depriving Daejan of its contractual right to claim interest at 14% per annum. 24.\nAccordingly, the Order should include a provision to deal with the sixth and seventh issues.\nThat provision should state that the dispensation will take effect once all conditions subject to which the dispensation is granted have been determined (and, where appropriate, satisfied), and that interest pursuant to the terms of the respondents leases can only run from a date fourteen days after the dispensation takes effect. 25.\nThe eighth issue relates to the agreed remission of the matter to the LVT, referred to in para 4(vii) above.\nThe respondents wish the remission to be to the same panel as heard the proceedings and gave the decisions referred to in paras 23 28 of the main judgment (the original panel), whereas Daejan argues for a different panel.\nThere is possible advantages in having the original panel, given that it heard this matter, including evidence and arguments, over more than eight days, but the benefit is likely to be slight as that hearing was some time ago, and a different panel would have the benefit of two very full decisions of the original panel.\nThere is nothing in Daejans argument that the original panel would be, or would appear to be, inappropriate because its decision has been reversed.\nThe reversal was based on an issue of law, and does not cast doubt on the panels ability to determine the issues which are now to be determined, if they cannot be agreed. 26.\nThe correct direction to give in this connection is simply to remit the issues, which remain to be determined as a result of the Order, to the LVT, on the basis that it can be, but need not be, the same panel who heard the proceedings in 2007 and 2008.\nThis is on the basis that there may be some value in the original panel hearing the matter, but it is unlikely to be very advantageous, and that there may be difficulties in getting the original panel to reconvene. 27.\nThe parties can no doubt now agree a form of order which reflects what they have agreed as augmented by what we have decided in this further judgment.\nI conclude that the LVT made no error of law in refusing Daejans application for dispensation with the Requirements; that the Upper Tribunal and the Court of Appeal were correct in determining not to set its refusal aside; and that this court should determine likewise.\n","output":"Provisions in the Landlord and Tenant Act 1985 (the 1985 Act) and the Service Charges (Consultation requirements) (England) Regulations 2003 (SI 2003\/1987) impose statutory requirements and restrictions on a landlord, which impinge on its ability to recover service charges from tenants, typically of flats in a block of flats.\nUnless certain consultation requirements (the Requirements), which can be conveniently divided into four stages, are complied with by the landlord, or dispensed with by the Leasehold Valuation Tribunal (the LVT), the landlord cannot recover more than 250 from each tenant in respect of works for which the service charge would otherwise be greater.\nSection 20ZA(1) of the 1985 Act provides that the LVT may dispense with the Requirements if satisfied that it is reasonable to do so.\nThe issue on this appeal concerns the width and flexibility of the LVTs jurisdiction to dispense with the Requirements, and the principles upon which that jurisdiction should be exercised.\nDaejan Investments Limited (Daejan) is the owner of the freehold of Queens Mansions (the Building).\nThe Building is managed by Highdorn Co Ltd, which carries on business under the name of Freshwater Property Management (FPM).\nFive of the seven flats in the building are held under long leases, each of which is held by a respondent to this appeal (collectively the respondents).\nEach lease includes an obligation on the tenant to pay a specified fixed proportion of the cost of providing, among other things, the services which the landlord is obliged to provide, which include the repair of the structure, exterior and common parts of the building.\nThe respondents were, at all material times, members of the Queens Mansions Residents Association (QMRA).\nIn 2005, FPM sent QMRA a specification in respect of proposed works to the building (the Works), and appointed Robert Edward Associates (REA) as contract administrator.\nREA sent to QMRA and the respondents a notice of intention to carry out the Works, and provided estimates for them, thereby complying with stages 1 and 2 of the Requirements.\nREA informed the respondents and QMRA that two tenders appeared to be the most competitive: one from Rosewood Building Contractors (Rosewood); the other from Mitre Construction Ltd (Mitre).\nThe respondents and QMRA were only provided with the priced specification submitted by Mitre.\nDaejan contracted for the Works with Mitre, but in so doing failed to comply with the third of the four stages of the Requirements, which required, among other things, Daejan to issue a statement to QMRA with a summary of observations on the estimates, its responses to them, and notice of where they would be available for inspection.\nDaejan requested the LVT to grant it dispensation from the Requirements, so that Daejan would be entitled to recover just under 280,000 in total from the respondents, as opposed to 1,250 in the absence of dispensation.\nDuring the course of the proceedings, Daejan proposed a 50,000 deduction to the 280,000.\nThe LVT regarded Daejans failure as a serious breach of the Requirements, which amounted to serious prejudice to the respondents.\nAccordingly, the LVT refused dispensation.\nThe Upper Tribunal and the Court of Appeal agreed with this refusal.\nThe Supreme Court, by a majority of three to two (Lord Hope and Lord Wilson dissenting), allows the appeal, granting Daejan dispensation from the Requirements on terms that (i) the respondents aggregate\nliability to pay for the works be reduced by 50,000, and (ii) Daejan pay the reasonable costs of the respondents in relation to the proceedings before the LVT.\nLord Neuberger gives the majority judgment.\nThe correct question in this case was whether, if dispensation was granted, the respondents would suffer any relevant prejudice, and, if so, what relevant prejudice, as a result of Daejans failure to comply with the Requirements.\nIt is highly questionable whether any such prejudice would have been suffered.\nThe only specific prejudice was a matter of speculation, namely that the respondents lost the opportunity of making out the case for using Rosewood to carry out the Works, rather than Mitre [77].\nAlthough there was a partial failure by Daejan to comply with the third stage of the Requirements, the relevant prejudice to the respondents could not be higher than the 50,000 effectively offered by Daejan [84].\nIt would be pointless to remit to the LVT the issue as to whether the 50,000 was sufficient compensation [80].\nThe purpose of the Requirements is to ensure that tenants are protected from paying for inappropriate works, or paying more than would be appropriate.\nIn considering dispensation requests, the LVT should focus on whether the tenants were prejudiced in either respect by the failure of the landlord to comply with the Requirements [44].\nThe Requirements are a means to the end of the protection of tenants in relation to service charges [46].\nThere is no justification for treating consultation and transparency as appropriate ends in themselves [52].\nThe right to be consulted is not a free standing right [78].\nAs regards compliance with the Requirements, it is neither convenient nor sensible to distinguish between a serious failing, and a minor oversight, save in relation to the prejudice it causes.\nSuch a distinction could lead to uncertainty, and to inappropriate and unpredictable outcomes [47] [49].\nThe LVT has power to grant dispensation on appropriate terms [54], and can impose conditions on the grant of dispensation [58], including a condition as to costs that the landlord pays the tenants reasonable costs incurred in connection with the dispensation application [59] [61].\nWhere a landlord has failed to comply with the Requirements, there may often be a dispute as to whether the tenants would relevantly suffer if an unconditional dispensation was granted [65].\nWhile the legal burden is on the landlord throughout, the factual burden of identifying some relevant prejudice is on the tenants [67].\nThey have an obligation to identify what they would have said, given that their complaint is that they have been deprived of the opportunity to say it [69].\nOnce the tenants have shown a credible case for prejudice, the LVT should look to the landlord to rebut it and should be sympathetic to the tenants case [68].\nInsofar as the tenants will suffer relevant prejudice, the LVT should, in the absence of some good reason to the contrary, effectively require the landlord to reduce the amount claimed to compensate the tenants fully for that prejudice.\nThis is a fair outcome, as the tenants will be in the same position as if the Requirements have been satisfied [71].\nThis conclusion does not enable a landlord to buy its way out of having failed to comply with the Requirements, because a landlord faces significant disadvantages for non compliance [73].\nThis conclusion achieves a fair balance between ensuring that tenants do not receive a windfall, and that landlords are not cavalier about observing the Requirements strictly [74].\nThe minority considers that the LVT should weigh the gravity of the non compliance with the Requirements in determining whether to grant dispensation [111].\nThis includes distinguishing between breaches or departures according to their level of seriousness, without having first to consider the amount of prejudice they may cause or may have caused [92].\nThe legislative history of the Requirements suggests that the gravity of non compliance is relevant [103] [109].\nSubstantial non compliance with the Requirements entitles the LVT to refuse to grant dispensation [91],[110].\nDaejans termination of the consultation process represented serious non compliance with the Requirements [99].\nQuestions as to the gravity of non compliance are questions of fact and degree best left to the judgment of the LVT [88].\nJudicial restraint should be exercised by an appellate court where it is prescribing limits on the way an expert tribunal is to perform its functions [89].\nThe LVTs decision to reject the 50,000 proposal was not based on an error of law that would entitle the Supreme Court to interfere with it [94],[117].\n","id":25}
{"input":"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.\nThe 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).\nVarious daily living activities are examined as markers, and the one in question here is engaging with other people face to face.\nThe general scheme of the Welfare Reform Act 2012 and the Social Security\n(Personal Independence Payment) Regulations 2013\nPIP is dealt with in Part 4 of the Welfare Reform Act 2012 (the Act).\nSection 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.\nThis case is concerned with the daily living component.\nEntitlement 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.\nThe 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.\nBy 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).\nSo far as is material, the section reads: 78.\nDaily 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\nthe daily living component\nSection 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.\nThe 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.\nThe 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.\nThe table lists ten activities.\nColumn 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.\nFor 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.\nEach sub paragraph in column 2 is called a descriptor.\nIn 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.\nSo, 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.\nThere 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.\nThe same ascending scale of difficulty, reflected in increasing numbers of points, can be seen in relation to each of the activities in the table.\nRegulation 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.\nRegulation 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.\nRegulation 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.\nThe 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).\nSection 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.\nFor present purposes, the relevant ability is, of course, the ability to carry out daily living activities (section 81(2)).\nSection 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.\nThe 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.\nThe detail does not matter for the issue presently under consideration.\nWhat 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.\nFurthermore, it is clear from the Regulations that some degree of fluctuation in the claimants presentation is anticipated.\nRegulation 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.\nIt 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.\nRegulation 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.\nThe provision under consideration in the present case\nIt is Activity 9 in the table in Part 2 of Schedule 1 to the Regulations which gives rise to the issues in this appeal.\nIn relation to this activity, the table provides: Column 1 Activity 9.\nEngaging with other people face to face.\nColumn 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.\nDifficulty 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.\nA 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.\nDefinitions 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.\nThere is no definition of engaging with other people face to face or of engage.\nAs can be seen, Part 1 provides, instead, a definition of engage socially, a term which does not appear anywhere else in the Schedule.\nIt is thought that this is an error, arising when Activity 9, which was originally entitled engaging socially, was refined following consultation on the provisions.\nThe 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.\nThe context in which the present issues arise\nThe respondent is a man in his forties.\nHe made a claim for PIP relying, inter alia, upon the effects that his mental health has upon his ability to engage with other people.\nWhen his claim was refused because he had not been awarded the required eight points, he appealed unsuccessfully to the First tier Tribunal (FTT).\nA central issue in the appeal was the number of points that should be attributed to him under Activity 9.\nThe FTT considered that the decision maker had correctly found him to fall within descriptor 9b (prompting), rather than 9c (social support).\nExplaining this, the FTT Judge simply said: Two points have been awarded in respect of 9b.\nFrom the activities of daily living and our findings in fact above we consider that this is the appropriate descriptor.\nThe 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.\nTwo points are due as awarded.\nThe 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.\nThe 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.\nThe Upper Tribunal judge remitted the case to the FTT for rehearing, providing directions as to how the tribunal should approach Activity 9.\nThe 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.\nthe qualified person needs to be present or available to provide the\nThe Secretary of State appealed to the Inner House of the Court of Session.\nThe 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.\nThe 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.\nThe Inner House refused the appeal.\nIt 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.\nHowever, 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).\nAs 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.\nThis 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)).\nIn 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).\nIt held that they are not mutually exclusive categories.\nAs 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).\nHaving 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.\nIn 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.\nThe 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.\nThe case was remitted to the FTT for determination in accordance with the guidance given in the Inner Houses opinion.\nThe 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).\nThe 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.\nHe maintains that the Inner Houses ruling is substantially correct.\nMind was given permission to intervene and has provided helpful submissions, both in writing and orally.\nIt 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.\nIt concentrates its submissions on the qualitative issue, aligning itself with the respondent and the courts below.\nThe Secretary of States argument: the qualitative issue\nContrary 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.\nIf 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.\nSo, 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.\nFamiliarity is not enough.\nThe 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.\nHowever, the need for help from someone familiar or trusted on its own does not turn prompting into social support.\nThere 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.\nThe 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.\nDiscussion: the qualitative issue\nThe 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.\nRather 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.\nIt 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.\nAs 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.\nSimilarly, the sort of assistance that enables the engagement to occur will take many differing forms.\nThe 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.\nIt 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.\nHaving 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.\nEarly 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.\nThe starting point was that descriptor 9a concerns a person who can engage with other people unaided.\nThe 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;\nand other forms of support are therefore irrelevant in considering what\nThere are difficulties with this proposed interpretation, but there is nothing to be gained in elaborating them.\nIt 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.\nThis 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.\nIn practice, support might take many forms, responding, no doubt, to the varied needs of claimants, and the varied forms of face to face engagement.\nThe examples provided by Mind underline the wide variation in the help people have\/require in order to engage with other people.\nPrompting 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.\nThe 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.\nI 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.\nI 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.\nIt is inherent in the scheme that, broadly speaking, descriptor 9c reflects a greater degree of disability than descriptor 9b, so attracting increased points.\nResponding 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.\nThat is what differentiates prompting for the purposes of 9b from prompting which is social support for the purposes of 9c.\nAnd 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.\nThe 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.\nApplied 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.\nIt 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.\nHaving 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.\nThere is no need to complicate them.\nAs 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.\nWhat 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.\nAs the Inner House helpfully put it, the support will only be effective if delivered by someone who is trained or experienced.\nI 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.\nIt 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.\nBut I cannot endorse the addition of the italicised words.\nDescriptor 9c revolves around what the claimant needs, and need is not a relative term.\nThe claimant either needs or does not need trained\/experienced help in order to be able to engage with other people.\nIf only trained\/experienced help will be effective in achieving the objective, the claimant can be said to need it.\nIf 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.\nAnd, of course, if not even trained\/experienced help would work, the claimant might fall within 9d.\nThere 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.\nAlthough 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.\nWhere 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.\nExploring these issues will no doubt be a sensitive task.\nMind points out that people often struggle to convey the relevant information or they put it in terms which are misunderstood.\nClaimants are likely to be handling their applications for PIP themselves, or with assistance only from family and friends.\nHere, for example, the respondent and his partner attended the hearing before the FTT, both gave evidence, and the partner acted as the respondents representative.\nDuring 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.\nBy 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.\nEverything 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?\nThe Secretary of States argument: the timing issue\nThe 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.\nThe contrary interpretation would, submits the Secretary of State, leave matters so open that it would inevitably generate inconsistencies and arbitrariness in decision making.\nThe 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.\nThis 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.\nThe 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.\nHow 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.\nDiscussion: the timing issue\nIt 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.\nGiven 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.\nPreparation might occur prior to the engagement which enables it to occur without, for example, overwhelming psychological distress.\nOne technique that can be deployed is to look together, in advance of the meeting, at the worst case scenario.\nDuring 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.\nWhere memory is a problem, the supporter can remind the claimant of things they have forgotten.\nPrivate signs of reassurance can be given where required.\nAnd, where required, the supporter might recognise the need to remove the person from the meeting.\nIt 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.\nIt 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.\nIt 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.\nDiscussion 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.\nAt 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.\nIt is also relevant to consider the sensitivity of some of the face to face engagements that a claimant may need to undertake.\nSocial 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.\nFor 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.\nIt 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.\nThere 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.\nThe use of the present tense (needs) does not carry the Secretary of State this far.\nIt 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).\nThe 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.\nHe would not be able to say, on the strength of that previous intervention, that he continued to fall within Activity 9, descriptor c.\nBut 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.\nThis 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.\nThe 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.\nIn 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.\nComparisons 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.\nNor 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.\nSometimes 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.\nIn 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.\nGiven 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.\nIt 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.\nI am hopeful that it will prove possible to do this without the Secretary of States fears of inconsistent and arbitrary decisions being realised.\nBefore 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).\nThis is not a formulation that should, in my view, be adopted.\nA detailed explanation of why not is unlikely to be of assistance, and one illustration of the problem will perhaps suffice.\nThe 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).\nIt 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.\nSometimes, explaining and elaborating upon a provision confuses rather than assists, and this might be one of those situations.\nThe 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.\nThis 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.\nConclusion\nI 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.\n","output":"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.\nThe 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.\nThe 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).\nThe Regulations are made under Part 4 of the Welfare Reform Act 2012 (the Act).\nDescriptor 9c reads: Needs social support to be able to engage with other people.\nThe respondent is a man in his forties.\nHe made a claim for PIP in February 2015.\nHis 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.\nHis 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.\nThe respondent appealed unsuccessfully to the First tier Tribunal (FTT).\nHis 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.\nThe case was remitted to the FTT for rehearing and directions were given as to the interpretation of descriptor 9c.\nThe appellant Secretary of State appealed to the Inner House of the Court of Session in relation to the directions.\nThe Inner House refused the appeal while modifying some of the directions.\nThe Secretary of State appealed to the Supreme Court.\nBefore 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.\nWhilst 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).\nHe 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).\nThe Supreme Court unanimously allows the appeal in the limited sense of interpreting the relevant legal provisions differently from the Inner House.\nThe respondents claim will now return to the FTT for determination in accordance with this interpretation.\nThe judgment is given by Lady Black.\nThe 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].\nA 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].\nWhat 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].\nCareful 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].\nThe 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.\nFor 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].\nThe 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].\nIt 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.\nThe 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].\nGiven 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.\nIt 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].\nThe Inner Houses acceptance that a temporal or causal link was required between the help given and the activity should not be adopted.\nIt 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].\n","id":26}
{"input":"The appellant is the chair of the Chagos Refugees Group.\nThe Group represents Chagossians whose removal from the British Indian Overseas Territory (the Chagos Islands BIOT) and resettlement elsewhere was procured by the United Kingdom government in the years 1971 to 1973.\nThe circumstances have generated much national and now also international litigation.\nThe sad history has been told on a number of occasions.\nIt suffices to mention Chagos Islanders v The Attorney General [2003] EWHC 2222 (QB), R (Bancoult) Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61; [2009] AC 453 and most recently in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 4) [2016] UKSC 35; [2017] AC 300.\nFollowing the last two decisions, it remains prohibited, under the BIOT Constitution and Immigration Orders 2004, for Chagossians to return to BIOT.\nSince the last judgment, the United Kingdom government has on 16 November 2016 announced its decision to maintain the ban on resettlement, after a study carried out by KPMG published on 31 January 2015.\nThat decision is itself the subject of further judicial review proceedings.\nThe present appeal concerns the establishing for BIOT of a marine reserve to be known as the Marine Protected Area by Proclamation No 1 of 2010.\nThe Proclamation was issued by Mr Colin Roberts, Commissioner for BIOT, acting in pursuance of instructions given by Her Majesty through a Secretary of State.\nThe Marine Protected Area (MPA) was established in a 200 mile Environment (Protection and Preservation) Zone (EPPZ) which had existed since Proclamation No 1 of 2003 dated 17 September 2003.\nProclamation No 1 of 2010 said (para 2) that, within the MPA: Her Majesty will exercise sovereign rights and jurisdiction enjoyed under international law, including the United Nations Convention on the Law of the Sea, with regard to the protection and preservation of the environment of the [MPA].\nThe detailed legislation and regulations governing the said [MPA] and the implications for fishing and other activities in the [MPA] and the Territory will be addressed in future legislation of the Territory.\nThe creation of the MPA was accompanied by a statement issued by the respondent, stating that it will include a no take marine reserve where commercial fishing will be banned.\nNo fresh legislation or regulations relating to fishing were in the event issued or necessary.\nFishing was already controlled.\nFrom 1984 it was controlled within the three mile territorial waters and the contiguous zone which extended a further nine miles (to 12 miles from shore) under Proclamation No 8 of 1984 and the Fishery Limits Ordinance 1984.\nControl was subject to a power (exercised on 21 February 1985) to designate Mauritius for the purpose of enabling fishing traditionally carried on within those limits.\nProclamation No 1 of 1991 and the Fisheries (Conservation and Management) Ordinance 1991 (the 1991 Ordinance) established a Fisheries Conservation and Management Zone extending 200 miles from shore, within which a fee carrying licence was required for any fishing.\nThe Mauritian government was, however, informed that a limited number of licences would continue to be offered free of charge in view of the traditional fishing interests of Mauritius in the waters surrounding BIOT.\nProclamation No 1 of 2003 establishing the EPPZ had no impact on fishing.\nThe 1991 Ordinance was superseded by similarly entitled Ordinances in 1998 and then 2007, under which the licensing system was continued.\nThe majority of fishing from Mauritius was inshore fishing carried out by the Talbot Fishing Company, owned by the Talbot brothers, one of whom was Chagossian.\nTheir vessels were flagged to Mauritius until 2006 or 2007, when for economic reasons they were reflagged to Madagascar and the Comoros.\nA number of regular crew members on these boats were Chagossians.\nAfter the establishing of the MPA, and the accompanying announcement, the achievement of a no take reserve or zone was in practice accomplished by allowing existing licences to expire and by not issuing any fresh licences to the Talbot vessels or other vessels from outside BIOT for inshore or other fishing in the MPA.\nThe present challenge has two limbs.\nOne is that the decision to create the MPA had an improper ulterior motive, namely to make resettlement by the Chagossians impracticable.\nThe other is that the consultation preceding the decision was flawed by a failure to disclose the arguable existence on the part of Mauritius of inshore fishing rights (ie within the 12 mile limit from shore).\nBoth challenges are associated with the enforcement of a no take zone by the refusal since 2009 of fishing licences, since the impracticality of resettlement is said to derive from the loss by Chagossians of occupational skills and possibilities, now and at any future time when resettlement might be contemplated.\nAt the core of the appellants case on improper purpose is a document published by The Guardian on 2 December 2010 and by The Telegraph on 4 February 2011, purporting to be a communication or cable sent on 15 May 2009 by the United States Embassy in London to departments of the US Federal Government in Washington, to elements in its military command structure and to its Embassy in Port Louis, Mauritius.\nThe cable is recorded as having been passed to The Telegraph (and was presumably also passed to The Guardian) by Wikileaks.\nIts text purports to be a record, by a United States political counsellor, evidently a Mr Richard Mills, of conversation at a meeting on 12 May at the Foreign Office, London with Mr Roberts, Ms Joanne Yeadon, the Administrator for BIOT, and Mr Ashley Smith, the Ministry of Defences Assistant Head of International Policy and Planning.\nIt also purports to refer to some previous meetings and a subsequent conversation involving Ms Yeadon.\nIt starts with a one paragraph summary and ends with two paragraphs of comment, and contains 12 paragraphs of purported record in between.\nReliance is placed on passages in it, which it is submitted show, or could be used to suggest, that Mr Roberts, Commissioner for BIOT, had and disclosed an improper motive in relation to the creation of the MPA.\nIt is common ground that there was in fact a meeting between US officials and Mr Roberts and Ms Yeadon at the Foreign Office on 12 May 2009.\nThe present proceedings took an unfortunate turn in this respect before the Administrative Court (Richards LJ and Mitting J).\nBurnton LJ had on 25 July 2012 given permission for Mr Roberts and Ms Yeadon to be cross examined on the purported cable, acknowledging that it must have been obtained unlawfully and in probability by committing an offence under US law, but saying: I do not see how the present claim can be fairly or justly determined without resolving the allegation made by the [appellant], based on the Wikileaks documents, as to what transpired at the meeting of 12 May 2009, and more widely whether at least one of the motives for the creation of the MPA was the desire to prevent resettlement.\nBefore the Administrative Court, objections were made to the use of the cable in cross examination of Mr Roberts.\nOne objection, which did not find favour with the Administrative Court (and which is not live before the Supreme Court), was that the Official Secrets Act and the UK governments policy of neither confirm nor deny (NCND) in relation to documents of this nature meant that Mr Roberts should not be required to answer questions relating to the purported cable.\nIn relation to this objection, the Court ruled that Mr Roberts could be questioned on an assumption that the cable was what it purported to be, and that it would be open to the appellant at the end of the hearing to invite the Court to accept it as an accurate record of the meeting, and to rely on it evidentially.\nVarious questions were put to Mr Roberts and answered on that basis, before Mr Kovats QC for the respondent asked for and obtained further time overnight to consider the position.\nThe other objection was that use of the cable would be contrary to the principle of inviolability of the US missions diplomatic archive in breach of articles 24 and 27(2) of the Vienna Convention on Diplomatic Relations 1961, given effect in the United Kingdom by section 2(1) of the Diplomatic Privileges Act 1964.\nThis further objection only occurred to the respondent during the second day.\nIt was therefore only made the subject of submissions on the third day.\nThis led to the first ruling being effectively over taken, by a further ruling that it would not be open to the appellant to invite the court to treat the cable as genuine or to find that it contained an accurate record of the meeting and that any further cross examination should proceed on that basis, without any suggestion that the purported cable was genuine.\nMr Pleming applied for, but was refused immediate permission to appeal that ruling.\nIn these circumstances, he indicated that he had no further cross examination of Mr Roberts, and on the next day conducted a cross examination of Ms Yeadon, limited as directed by the Courts ruling.\nBy a judgment dated 11 June 2013, the Administrative Court rejected the appellants case both in so far as it was based on improper purpose and in so far as it was based on failure to disclose the arguable existence of Mauritian fishing rights.\nThe Court of Appeal (the Master of the Rolls, Gloster and Vos LJJ) [2014] 1 WLR 2921 reached the same overall conclusions, but after taking a different view of the admissibility of the purported cable.\nIt held that, since the cable had already been disclosed to the world by a third party, admitting it in evidence would not have violated the US London missions diplomatic archive.\nThe Court of Appeal had therefore to consider whether the exclusion of the cable from use before the Administrative Court would or could have made any difference to that Courts decision on the issue of improper purpose.\nBy a judgment given 23 May 2014, it decided against the appellant on both this issue and the issue relating to the omission of reference to arguable Mauritian fishing rights.\nThe Supreme Court by order dated 7 July 2016 gave permission to appeal on the issue of improper purpose and directed that the application for permission to appeal on the issue relating to the omission of reference to arguable Mauritian fishing rights be listed for hearing with the appeal to follow if permission is granted.\nThe respondent has in turn challenged the correctness of the Court of Appeals conclusion that use of the cable would not have contravened article 24 and\/or 27(2) of the Vienna Convention.\nThe admissibility of the cable\nI will take this issue first.\nIn order to give some context to articles 24 and 27(2), the whole of articles 24, 25 and 27 of the Vienna Convention on Diplomatic Relations are set out: Article 24 The archives and documents of the mission shall be inviolable at any time and wherever they may be.\nArticle 25 The receiving State shall accord full facilities for the performance of the functions of the mission.\nArticle 27 1.\nThe receiving State shall permit and protect free communication on the part of the mission for all official purposes.\nIn communicating with the Government and the other missions and consulates of the sending State, wherever situated, the mission may employ all appropriate means, including diplomatic couriers and messages in code or cipher.\nHowever, the mission may install and use a wireless transmitter only with the consent of the receiving State. 2.\nThe official correspondence of the mission shall be inviolable.\nOfficial correspondence means all correspondence relating to the mission and its functions. 3.\nThe diplomatic bag shall not be opened or detained. 4.\nThe packages constituting the diplomatic bag must bear visible external marks of their character and may contain only diplomatic documents or articles intended for official use. 5.\nThe diplomatic courier, who shall be provided with an official document indicating his status and the number of packages constituting the diplomatic bag, shall be protected by the receiving State in the performance of his functions.\nHe shall enjoy person inviolability and shall not be liable to any form of arrest or detention. 6.\nThe sending State or the mission may designate diplomatic couriers ad hoc.\nIn such cases the provisions of paragraph 5 of this article shall also apply, except that the immunities therein mentioned shall cease to apply when such a courier has delivered to the consignee the diplomatic bag in his charge. 7.\nA diplomatic bag may be entrusted to the captain of a commercial aircraft scheduled to land at an authorized port of entry.\nHe shall be provided with an official document indicating the number of packages constituting the bag but he shall not be considered to be a diplomatic courier.\nThe mission may send one of its members to take possession of the diplomatic bag directly and freely from the captain of the aircraft.\nThe submissions on inviolability under these provisions range widely.\nThey cover the nature of the archive, its location, the circumstances in which material originating from the archive may continue inviolable and the reach of the concept of inviolability itself.\nAs to the nature of the archive, Professor Denza concludes in Diplomatic Law, Commentary on the Vienna Convention on Diplomatic Relations (4th ed) (2016), at p 161, that, instead of trying to list all modern methods of information storage, it is probably better simply to rely on the clear intention of article 24 to cover all physical items storing information.\nWriting jointly in Satows Diplomatic Practice (7th ed, edited by Sir Ivor Roberts) (2017), at p 238, para 13.31, Professor Denza and Joanne Foakes, former Legal Counsellor to the Foreign and Commonwealth Office, say, after noting that the term archives is not defined in the 1961 Vienna Convention: but it is normally understood to cover any form of storage of information or records in words or pictures and to include modern forms of storage such as tapes, sound recordings and films, or computer disks.\nThat can be readily accepted, as can be the proposition that copies taken of documents which are part of the archive must necessarily also be inviolable.\nAs to location, Mr Kovats on behalf of the respondent points to the words at any time and wherever they may be in article 24, and to commentaries by Professor Eileen Denza in her work, cited above, pp 158 159, and by Professor Rosalyn Higgins (as she then was) in Problems and Process: International Law and how we use it (OUP) (1995), pp 88 89.\nProfessor Denza observes that the words quoted mean that archives not on the premises of the mission and not in the custody of a member of the mission are entitled to inviolability, and that: If archives fall into the hands of the receiving State after being lost or stolen they must therefore be returned forthwith and may not be used in legal proceedings or for any other purpose of the receiving State.\nProfessor Higgins wrote: Article 24 stipulates that the archives and documents shall be inviolable at any time and wherever they may be.\nIt is clear that this last phrase is meant to cover circumstances where a building other than embassy premises is used for storage of the archives; and also the circumstances in which an archived document has been, for example, taken there by a member of the Secretariat staff for overnight work or even inadvertently left by him on the train or in a restaurant.\nWhat would happen if the Secretariat member, or a diplomat, took an overseas trip, and mislaid the document while abroad? The English High Court [in the Tin Council case: International Law Reports Vol 77 (1988) pp 107 145 at pp 122 123] was disturbed by the idea that wherever located could, on the face of it, mean even in Australia or Japan.\nIt is true that an English court is not likely to be in a position to enforce the inviolability of a document from the authorities of another country where that particular document happens to be located.\nBut it is entirely another thing to say that, because a document happens to be outside the jurisdiction, an English court is thereby entitled to treat it, in matters that do fall within its own competence, as non archival and thus without benefit of such inviolability as it is in a position to bestow.\nAgain, so long as the document can be said to constitute part of the archive, a point to which I shall return, these statements appear not only authoritative in their sources, but convincing.\nAs will appear, they also receive support from Shearson Lehman Bros Inc v Maclaine, Watson and Co Ltd; International Tin Council (Intervener) (No 2) [1988] 1 WLR 16.\nThat is the House of Lords judgment in the Tin Council case, to the first instance decision in which Professor Higgins referred.\nThe House in that case on any view accepted that there were some circumstances in which a document which was part of an archive, but for some reason no longer physically within the archive, remains inviolable.\nThis brings me to the circumstances in which material originating from the archive may continue inviolable and the reach of the concept of inviolability itself.\nThe appellant, whose case on this aspect was presented by Professor Robert McCorquodale, submits that the word inviolable, read in the context of the Convention, does not embrace inadmissibility.\nIn his submission, the concept is directed at some degree of interference, of a more or less forceful nature, and this limited sense is the only sense which applies in all the places where the concept is deployed.\nThe submission corresponds with the approach taken by the Court of Appeal, which picked up the characteristically trenchant view of Dr F A Mann, that Inviolability, let it be stated once more, simply means freedom from official interferences.\nOfficial correspondence of the mission over the removal of which the receiving state has had no control can be freely used in judicial proceedings.\nSee Inviolability and Other Problems of the Vienna Convention on Diplomatic Relations in Further Studies in International Law, (1990) pp 326 327 and also [1988] 104 LQR, p 178.\nBut Professor McCorquodales submission does not allow for the fact that a concept may embrace different shades of meaning according to the particular context in which it is deployed.\nThe meaning of inviolability in the context of use of archive material in evidence was in fact the very subject of the House of Lords judgment in the Tin Council case.\nThe issue arose there under article 7(1) of the International Tin Council (Immunities and Privileges) Order 1972, whereby it was provided: The council shall have the like inviolability of official archives as in accordance with the 1961 Convention Articles is accorded in respect of the official archives of a diplomatic mission.\nThe Tin Council intervened in civil proceedings between private parties, relying on article 7(1) as rendering inadmissible various documents that the parties were proposing to adduce in evidence.\nThe House was in these circumstances asked to address the operation of article 7(1) on various Agreed Assumptions of Fact set out in a document so entitled.\nOne such assumption was that a Tin Council document was supplied to a third party by an officer or other staff member of the Tin Council without any authority.\nMr Kentridge QC submitted that article 24 of the Vienna Convention and article 7(1) of the 1972 Order only afforded protection against executive or judicial action by the host state, so that, even if a document was stolen, or otherwise obtained by improper means, from a diplomatic mission, inviolability could not be relied on to prevent the thief or other violator from putting it in evidence.\nLord Bridge, giving the sole fully reasoned judgment in the House, rejected this submission, saying (p 27F) that: The underlying purpose of the inviolability conferred is to protect the privacy of diplomatic communications.\nIf that privacy is violated by a citizen, it would be wholly inimical to the underlying purpose that the judicial authorities of the host state should countenance the violation by permitting the violator, or anyone who receives the document from the violator, to make use of the document in judicial proceedings.\nThe House went on to limit this to circumstances in which the third party receiving the document was aware of the absence of any authority to pass it to him (p 29B C).\nTo a limited extent therefore, the Tin Council succeeded in establishing that its documents would have inviolability, precluding their use in civil proceedings.\nThis was part of the ratio of the House of Lords decision, as appears at p 31D E, even though Lord Bridge went on to add that In the event the rejection of that [Mr Kentridges] argument turns out to be of minimal significance in the context of the overall dispute.\nThe Canadian case of Rex v Rose An Dig 1946, Case No 76, p 161 was cited to the House in the Tin Council case, but not referred to by Lord Bridge in his judgment.\nRose was convicted of furnishing secret material to the Soviet Embassy in reliance on documents stolen from the Embassy archive by a defector.\nRoses claim that the stolen documents used against him were immune from use was rejected, on the grounds that such a claim could not be admitted where the recognition of such immunity was inconsistent with the fundamental right of self preservation belonging to a State or where the executive had impliedly refused to recognise such immunity.\nThe absence of inviolability in cases where state security is involved has a pedigree going back to the extraordinary Cellamare conspiracy in 1718 by Antonio dei Giudice, Prince of Cellamare and Ambassador of Spain to France, to kidnap and depose Philippe dOrlans, Regent of France, and replace him as Regent by Philip V of Spain: see Martens, Causes clbres du droit des gens, I, p 149.\nRex v Rose is nonetheless controversial, and, more importantly for present purposes, neither of the grounds on which it rests applies to this case.\nIn his LQR article, cited above, Dr Mann was taking direct issue with the House of Lords rejection in the Tin Council case of Mr Kentridges submission.\nThe Court of Appeal was in my opinion bound to reject Dr Manns analysis, and I see no reason for adopting it.\nI also consider that the Court of Appeal was incorrect to identify Dr Manns analysis as representing the weight of opinion (para 64).\nProfessor Denza says, at p 189, that: As regards use of the correspondence as evidence, article 27.2 may be regarded as duplicating the protection under article 24 of the Convention which gives inviolability to the archives and documents of the mission wherever they may be.\nProfessor Jean Salmon of The Free University, Brussels, describes F A Manns view as regards article 27(2), in Further Studies in international law (OUP) (1990), p 226, as une vue trop restrictive de linviolabilit: Manuel de Droit Diplomatique (1994), p 244.\nThe quotation from Professor Higgins, set out in para 12 above does not fit well with Dr Manns approach.\nS E Nahlik, Development of Diplomatic Law, Selected Problems, 222(III) Recueil des Cours (1990), 291 292 and B S Murty, The International Law of Diplomacy: The Diplomatic Instrument and World Order (1989) at p 382 comment critically on Rex v Rose, while J Wouters, S Duquet & K Meuwissen, The Vienna Conventions on Diplomatic and Consular Relations (OUP, 2013) at para 28.4.5.1 state, citing Professor Salmon, that: The inviolability of diplomatic\/consular archives and documents entails that they cannot be opened, searched, or requisitioned without consent, and cannot be used as evidence.\nIn Fayed v Al Tajir [1988] QB 712 the de facto head, later Ambassador, of the Embassy of the United Arab Emirates in London was sued by Mr Fayed in respect of an Embassy communication addressed to an Embassy counsellor.\nFor unclear reasons diplomatic immunity was waived, but the question remained whether the document could be used in court.\nThe Court of Appeal held that the document enjoyed immunity from use, and the dispute was non justiciable.\nKerr LJ noted at p 736C E that the judge in Rex v Rose had concluded that diplomatic documents generally enjoyed inviolability, so anticipating the use of that term in the Vienna Convention, and that he had expressed the concept of inviolability at p 646 in wide terms: International law creates a presumption of law that documents coming from an embassy have a diplomatic character and that every court of justice must refuse to acknowledge jurisdiction or competence with regard to them.\nKerr LJ also noted that this conclusion was supported by Denza on Diplomatic Law (1976), p 110.\nAt p 736F G, he distinguished the actual decision in Rex v Rose as having been reached on the basis that a citizen could not invoke immunity in litigation with his own government and on the basis of the principle said to derive from the Cellamare conspiracy, neither of which bases had any relevance in Fayed v Al Tajir.\nIn principle, therefore, inviolability of documents which are part of the mission archive under articles 24 and 27(2) extends to make it impermissible to use such documents or copies in a domestic court of the host country, at any event absent extraordinary circumstances such as those of the Cellamare conspiracy or Rex v Rose and absent express waiver of the inviolability by the mission state.\nBut the application of this principle to any particular document is subject to two qualifications.\nFirst, the document must constitute or remain part of the mission archive, and, second, its contents must not have become so widely disseminated in the public domain as to destroy any confidentiality or inviolability that could sensibly attach to it.\nThese two qualifications may sometimes, but certainly not always, coincide.\nTaking the first, in the present case, there is no indication from where the Wikileaks document emanates, but there is no suggestion that it is likely to have emanated from the United States Embassy in London.\nIt was sent both to the State Department in Washington and elsewhere.\nThere is no indication that the United States Embassy in London attached any reservation to or placed any limitation on the use or distribution of the cable by the State Department or any other authority to whom the cable went.\nThe cable was simply classified as Confidential.\nIn these circumstances, once the document reached the State Department or any other addressee, it was, so far as appears and in the form in which it was there held, a document in the custody of the Federal Government of the United States or that other authority, and not part of the London Embassy archive.\nBearing in mind the probability that the Wikileaks cable was extracted from the State Department or some other unknown foreign location to which it had been remitted for information and use there, it is not therefore established, even as a matter of probability that the cable remained part of the archive of the London mission, when it was so extracted.\nOn that simple basis, the Wikileaks cable was available for use and admissible as evidence of its contents in the present proceedings.\nI therefore arrive as the same conclusion on this point as the Court of Appeal, albeit for different reasons.\nTaking, second, the possibility of loss of inviolability due to a document from the mission archive coming into the public domain, I have come to the conclusion that this must in principle be possible, even in circumstances where the document can be shown to have been wrongly extracted from the mission archive.\nWhether it has occurred in any particular case will however depend on the context as well as the extent and circumstances of the dissemination.\nThat seems to me to follow by analogy with the reasoning concerning the protection afforded by the law to confidential material (as opposed to that afforded on grounds of privacy and\/or human rights) in cases such as Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 and PJS v News Group Newspapers Ltd [2016] UKSC 26; [2016] AC 1081, see also Passmore on Privilege, paras 7 039 and 7 042.\nIn the present case, the cable has been put into the public domain by the Wikileaks publication and the newspaper articles which followed, in circumstances for which the appellant has no responsibility.\nIn my opinion, the cable has as a result lost its inviolability, for all purposes including its use in cross examination or evidence in the present proceedings.\nOn that ground, I would therefore reach the same conclusion as the Court of Appeal expressed in para 64 of its judgment.\nThe allegation of improper purpose\nOn the above basis, the question arising is whether the Court of Appeal was right to conclude that the Administrative Courts ruling that the cable was not available for use or admissible had no material effect on the proceedings and was not a ground for allowing the appeal.\nThe Court of Appeal, after reviewing all the material available, including the cable, the evidence given and the Administrative Courts findings, concluded (para 93) that even if the cable had been admitted in evidence, the court would have decided that the MPA was not actuated by the improper motive of intending to create an effective long term way to prevent Chagossians and their descendants from resettling in the BIOT.\nA little earlier in its judgment, in para 89, the Court said that it did not accept that there is a realistic possibility that the [Administrative Courts] assessment of the evidence of Mr Roberts and Ms Yeadon would have been affected if the cable had been formally admitted as an authentic document; that in reaching this conclusion, it had borne in mind the need to exercise caution in denying relief on the ground that the legally correct approach would have made no difference to the outcome; but that it was satisfied that the admission of the cable in evidence would have made no difference.\nBefore the Supreme Court, criticism was directed at the Court of Appeal for formulating its conclusions in terms of what would, rather than could have made a difference.\nReference was made to well known authorities on the test applicable in cases of breach of natural justice (or unfairness) by public authorities, including Malloch v Aberdeen Corpn [1971] 1 WLR 1578 and R (Cotton) v Chief Constable of the Thames Valley Police [1990] IRLR 344, paras 59 60, per Bingham LJ.\nReference was also made to the discussion, without decision, on the test applicable on an application to the Supreme Court to set aside a prior judgment of its own in Bancoult (No 4), cited in para 1 of this judgment.\nThe precise test must depend on the context, including, in particular, how well placed the court is to judge the effect of any unfairness.\nIn the present case, the complaint is of lack of opportunity for full cross examination and for the trial court to weigh the evidence it heard in the light of the cable, treating the cable as admissible.\nIn these circumstances, I am prepared for present purposes to accept that the appropriate question is whether the admission of the cable for use in these ways could have made a difference.\nHowever, I also consider that this is in substance how the Court of Appeal approached the issue.\nThe conclusion it reached (see para 22 above) was that there was no realistic possibility that the [Administrative Courts] assessment of the evidence of Mr Roberts and Ms Yeadon would have been affected if the cable had been formally admitted in evidence as an authentic document.\nIts statement at the end of para 89 that the admission of the cable in evidence would have made no difference must be read, in context, as a shorthand resum of this conclusion.\nA conclusion that there was no realistic possibility that the assessment would have been affected amounts, in substance, to a conclusion that the admission of the cable could not realistically have made a difference.\nNonetheless, it is incumbent upon the Supreme Court to consider for itself whether the Court of Appeal erred in reaching that conclusion.\nThe Administrative Court undertook in paras 53 to 77 of its judgment a full and careful review of the genesis and development of and decision to announce the MPA and a no take zone, which the Court of Appeal accurately summarised as follows: to Professor Sheppard, 75.\nThe catalyst for making the MPA was a proposal made in July 2007 by an American environmental group, Pew Environmental Group, the environmental adviser for the BIOT.\nOn 5 May 2009, Mr Roberts submitted a briefing note to the Secretary of State which explained the benefits of the proposal.\nThese included that, because of the absence of a settled population and the strict environmental regime already in force, the BIOT was one of the few places in which a large scale approach to conservation was possible; and it offered great scope for scientific and climate change research.\nThe Secretary of States reaction was enthusiastic.\nHis private secretary emailed Mr Roberts to say that the Secretary of State was fired up after the meeting and enthusiastic to press ahead with the proposal. 76.\nThis was followed by a meeting to discuss the proposal with US Embassy officials on 12 May 2009.\nThis is the crucial meeting the gist of which was purportedly summarised in the copy cable dated 15 May 2009.\nBoth Mr Roberts and Ms Yeadon attended the meeting and were cross examined about it.\nMr Roberts denied making any reference to Man Fridays.\nHe said that he recognised that the declaration of an MPA, if entrenched, would create a serious obstacle to resettlement.\nMs Yeadon also denied that Mr Roberts had used the words Man Fridays or that he had said that establishing a marine park would put paid to resettlement claims.\nThe Divisional Court said (para 61) that it found Ms Yeadon to be an impressive and truthful witness.\nHaving referred to an important note of a meeting held on 25 March 2009, the court said at para 63: as Ms Yeadon understood, at official level, HM Government regarded the resettlement issue as settled by the 2004 Order, subject only to the pending decision of the Strasbourg Court (this is a reference to the claimants application which was eventually dismissed by the ECtHR on 20 December 2012: see para 7 above). 77.\nBy a note dated 29 October 2009, Ms Yeadon proposed to Mr Roberts and the Secretary of State that consultation on the proposal to declare an MPA be launched on 10 November.\nUnder the heading Risks, she noted that the risk of an aggressive reaction from the Chagossians and their supporters was high and said: they may claim that we are establishing a Marine Protected Area in order to ensure that they can never return to BIOT.\nThis is not the case .\nThe court said (para 65) that it was satisfied that in this passage Ms Yeadon again stated what she genuinely believed: that the proposal to establish an MPA was not to ensure that the Chagossians could never return. 78.\nIn a note dated 30 March 2010, Ms Yeadon proposed that the Secretary of State should publish the report on consultation and declare his belief that an MPA should be established, but only after further work had been done.\nThere followed a flurry of emails between officials.\nThe Secretary of State did not accept Ms Yeadons advice.\nOn 1 April, he announced the creation of an MPA in the BIOT which included a no take Marine Reserve where commercial fishing would be banned.\nMr Roberts duly made the proclamation on 1 April. 79.\nThe Divisional Court expressed its conclusion on the improper motive point in these terms: 74.\nThis material makes it clear that it was the personal decision of the Foreign Secretary to declare an MPA on 1 April 2010, against the advice of his officials.\nThere is no evidence that, in doing so, he was motivated to any extent by an intention to create an effective long term way to prevent Chagossians and their descendants from resettling in the BIOT.\nHis Private Secretary could hardly have written on 7 May 2009, the day after the presentation of the proposal by Professor Sheppard to him, that he was really fired up about this if the proposal was presented as a cynical ploy to frustrate Chagossian ambitions.\nIt is obvious that he was responding to a proposal presented by a man, Professor Sheppard, who was keen to see it adopted and put into effect for scientific and conservation purposes only.\nLater, on 31 March 2010, when the Foreign Secretary made the decision to go ahead immediately, the decision had nothing to do with Chagossian ambitions.\nThe decision to override official advice can best be understood in the political context: Parliament was about to be dissolved.\nThe Foreign Secretary no doubt believed that the decision would redound to the credit of the Government and, perhaps, to his own credit.\nIt would do so the more if a decision with immediate effect was taken.\nOfficials thought that this would create difficulties but it was the Foreign Secretarys prerogative to override their reservations and make the decision which he did.\nThere is simply no ground to suspect, let alone to believe or to find proved, that the Foreign Secretary was motivated by the improper purpose for which the claimant contends. 75.\nIt is significant that the Foreign Secretarys announcement contained the caveat which always accompanied public and private statements by officials: that the decision was subject to the pending judgment of the Strasbourg Court.\nUnless there was some deep plot to frustrate an adverse judgment, of which there is no evidence at all, this fact alone demonstrates that no sensible official in the FCO could have believed that the establishment of an MPA would fulfil the improper purpose alleged.\nNor could it have done.\nThe proclamation made by Mr Roberts on 1 April 2010 stated that: legislation and regulations The detailed governing the said Marine Protected Area and the implications for fishing and other activities in the Marine Protected Area and the territory will be addressed in future legislation of the territory.\nThe only step taken since then has been to allow fishing licences current at 1 April 2010 to expire and to issue no more.\nWhat prevents the return of Chagossians to the islands is the 2004 Order, not the MPA.\nIf, at some future date, HM Government decided or was constrained by a judgment of a court to permit resettlement or the resumption of fishing by Chagossians, nothing in the measures so far taken would prevent it or even make it more difficult to achieve. 76.\nFor the claimants case on improper purpose to be right a truly remarkable set of circumstances would have to have existed.\nSomewhere deep in government a long term decision would have to have been taken to frustrate Chagossian ambitions by promoting the MPA.\nBoth the administrator of the territory in which it was to be declared, Ms Yeadon, and the person who made the decision, the Foreign Secretary, would have to have been kept in ignorance of the true purpose.\nSomeone Mr Roberts? would have been the only relevant official to have known the truth.\nHe, and whoever else was privy to the secret, must then have decided to promote a measure which could not achieve their purpose, for the reasons explained above, while explaining to all concerned that the MPA would have to be reconsidered in the light of an adverse judgment of the Strasbourg Court.\nThose circumstances would provide an unconvincing plot for a novel.\nThey cannot found a finding for the claimant on this issue. 80.\nIn order to test Mr Plemings submission that the effect of the Divisional Courts ruling was to deprive him of the opportunity of properly testing the evidence of the witnesses, it is necessary to see what cross examination he was able to undertake.\nDuring day 1 and day 2 of the hearing, Mr Pleming cross examined Mr Roberts extensively about the meeting of 12 May 2009 by reference to various documents, including the cable.\nAlthough Mr Roberts was not prepared to answer questions as to whether the contents of the cable were accurate (because of the NCND policy), nevertheless he answered questions as to what he might or might not have said at the meeting: see day 1 pp 155 to 169 and day 2 at pp 9 to 41.\nMr Pleming confirmed to the court that his general purpose in cross examining on the cable, paragraph by paragraph, was to establish its general accuracy by reference to relatively uncontroversial passages in it. 81.\nDespite his repeated reliance on the NCND policy, Mr Roberts gave extensive evidence of what was discussed at the meeting on 12 May.\nFor example, in relation to one passage from the cable, he said: I can confirm that the general content and sense of the issues that you have just read out is consistent with the discussion we were having with the United States at the time.\nIn relation to another passage, he said: I dont recall what language I would have used at the time but it would have been consistent with the general position that we were trying to set out to the United States. 82.\nAt p 36 on day 2, Mr Roberts accepted that he did say to the US officials that the establishment of an MPA would in effect put paid to the resettlement claims.\nHe said that this was a recognition of a reality that, if the MPA was entrenched (ie a law which would be impossible or difficult to repeal), this would be a serious obstacle to resettlement.\nHe denied that he had said anything about footprints or Man Fridays: that was not the nature of the conversation.\nMr Pleming sought to persuade the court to give a ruling as to whether Mr Roberts should be required to answer questions about the accuracy of the contents of the cable.\nMitting J asked whether it was necessary to have this debate, since Mr Roberts had accepted that a consequence of establishing an MPA would be that the hopes of the Chagossians to return would be thwarted.\nRichards LJ was not sure how much more Mr Roberts could say.\nHe had indicated why he declined to answer the ultimate question; but he had answered all the intermediate questions. 83.\nThe court did not make any final ruling at this stage and Mr Pleming continued with his cross examination of Mr Roberts by reference to the cable: see day 2 pp 78 to 80.\nHe put it to Mr Roberts that his purpose was to use the MPA to prevent or kill off the claims for resettlement; and that this policy shines out of the record of that meeting and is not a policy you would want to put in written form so that it could ever be seen by the Chagossians or in any litigation.\nMr Roberts replied: No, I reject that suggestion entirely.\nI do not believe it is possible to keep a policy of that significance quiet.\nIt is worth underlining some points about the history which arise from this account.\nFirst, the whole idea of an MPA and a no take zone was generated by independent environmental activity.\nAn American environmental group, Pew, made the initial proposal to Professor Charles Sheppard, BIOTs independent environmental adviser, in July 2007.\nThis led on 22 April 2008 to discussions between Pew and Ms Yeadon about the creation of an MPA, in which there would be a no take zone.\nOn the same day, the Chagos Conservation Network, whose founders included Pew and Professor Sheppard, held its inaugural meeting at the Linnean Society, and expressed the view that there should be a no take zone within BIOT waters.\nOn February 2009, The Independent reported in an article that the Chagos Conservation Trust, the RSPB, the Zoological Society of London and Pew were launching a plan for an MPA, which would be compatible with defence interests and would offer a possibility that some Chagossians might return as environmental wardens; a marine biologist from York University was reported as describing the attitude of the British government towards the Chagos Islands up to that time as one of benign neglect; and the British government itself was reported as saying it would work with the international environmental and scientific community to develop further the preservation of the unique environment. (The Mauritian governments response to this article was that the Chagos Islands were under its sovereignty, so that its consent would be required.)\nSecond, it is clear that, from the outset, the relevant decision maker was to be the Secretary of State for Foreign and Commonwealth Affairs, Mr David Miliband, in person, not the civil servants who were directly or indirectly reporting to or advising him.\nMr Miliband was first briefed on the idea of an MPA by a six and a half page note from Mr Roberts dated 5 May 2009.\nThis was in terms to which no objection is or could be taken, and was followed up by a meeting with Mr Roberts and Professor Sheppard.\nThe note identified and examined the numerous benefits and wide range of potential beneficiaries of an MPA.\nThe benefits fell under the heads of conservation, climate change, scientific [research], development, reputational\/political and security (the last being explained by Mr Roberts in a witness statement dated 1 May 2012 as relating to control of illegal, unregulated and unreported fishing).\nThe note went on to examine risks.\nIn that connection, it identified Mauritian sovereignty claims and a side deal done at the time of excision which gave Mauritius the right to apply for fishing licences free of charge, the Chagossian movements and the US military.\nThe US military were not thought likely to oppose, and the note expressed confidence that reassurances could be given that they would not experience any rise in the security risk, impediment to freedom of manoeuvres or significant increase in environmental regulation.\nIn relation to the Chagossian movements, the note said: Their plans for resettlement are based on the establishment of an economy based on fishing and tourism.\nIn the specific context of BIOT this would be incompatible with a marine reserve.\nThey are therefore hostile to the proposal, unless the right of return comes with it.\nThey have expressed unrealistic hopes that the reserve would create permanent resident employment based on the outer islands for Chagossians.\nAssuming we win in Strasbourg [as in the event occurred], we should be aiming to calm down the resettlement debate.\nCreating a reserve will not achieve this, but it could create a context for a raft of measures designed to weaken the movement.\nThis could include: presenting new evidence about the precariousness of any settlement (climate change, rising sea levels, known coastal defences costs on Diego Garcia) activating the environmental lobby contributing to the establishment of community institutions in the UK and possibly elsewhere committing to an annual visit for representatives of the communities to the outer islands on All Saints Day inclusion of a Chagossian representative in the reserve government. [an irrelevant redaction]\nIt is not suggested that this note was other than an objective assessment of the proposal, or that it contains or suggests any improper motivation.\nAs the Administrative Court stated (para 77), the only collateral factor relating to Chagossian ambitions which it shows is that the proposal might, in various ways, permit the Government to calm down the resettlement debate and attract support for the Governments position from the environmental lobby.\nThe Administrative Court went on: This could not have the effect of creating an effective long term way to prevent resettlement and Mr Pleming rightly conceded that it would not taint a decision genuinely to further environmental and scientific purposes.\nThat remains the position before the Supreme Court.\nThe note was followed up by a meeting between the Secretary of State, Mr Roberts and Professor Sheppard, which was on the evidence principally devoted to a slide show by Professor Sheppard showing the environmental benefits of an MPA.\nAs a result of the note and meeting, Mr Miliband was fired up by the proposal and enthusiastic to press ahead.\nThirdly, the meeting a week later between Mr Roberts, Ms Yeadon and representatives of the United States Embassy was aimed at briefing a United States counsellor (Mr Richard Mills) interested in knowing more about the Chagos Islands position, no doubt as it related to the United States concerns identified in the note dated 5 May 2009.\nIn his initial summary in para 1 of the cable, its author recorded Mr Roberts as saying that the BIOTs former inhabitants would find it difficult, if not impossible to pursue their claim for resettlement on the islands if the entire Chagos Archipelago were a marine reserve.\nThe ensuing paragraphs included the following: 7.\nRoberts stated that according to the HGMs [sic] current thinking on a reserve, there would be no human footprints or Man Fridays on the BIOTs uninhabited islands.\nHe asserted that establishing a marine park would, in effect, put paid to resettlement claims of the archipelagos former residents The final paragraph of comment included this: 15.\nEstablishing a marine reserve might indeed, as FCOs Roberts stated, be the most effective long term way to prevent any of the Chagos Islands former inhabitants or their descendants from resettling in the BIOT.\nAccepting the Wikileaks memorandum as a genuine record of the meeting, it must be seen in that context.\nWhat would have concerned the United States were the consequences of an MPA, not the motivation.\nFurther, the opening and the final two paragraphs are evidently comment or attempted summary by Mr Mills, while it is the intermediate paragraphs that purport to record the actual course of the discussion.\nIn the case of The Guardian report of the cable, the intermediate paragraphs have interposed what are evidently journalistic captions.\nI note at this point Lord Kerrs suggestion (paras 84 and 86) that US military needs provided no reason for Mr Roberts and Ms Yeadon to assure the Americans, or ask them to confirm their requirement, that no resettlement would occur elsewhere in the BIOT.\nThe obvious question which Lord Kerr considers to arise in this regard was not raised before the Supreme Court.\nBut the answer is clear.\nThe original exchange of notes between the United States and United Kingdom in 1966 provided that all of the BIOT be set aside for defence purposes and that any significant change of the BIOTs status that could impact the BIOTs strategic use would require US consent.\nHence also, Mr Roberts statement in this connection in his note dated 5 May 2009 that We expect we will have our work cut out to reassure the US military that creation of a reserve will not result in trouble for them.\nTrouble could be any rise in the security risk, any impediment to the freedom of manoeuvre, or any significant raising of the bar in terms of environmental regulation.\nLord Kerr himself says in para 88 that the theme that the MPA would prevent any resettlement of the islands . certainly preoccupied the Americans in May 2009.\nIn November 2009 a consultation was launched in respect of the proposal.\nThe motivation for the proposal was explained as being environmental and scientific, and various options were presented for public consideration.\nThe consultation process ended in early March.\nThe proposal then returned to the political arena, where the same picture of independent decision making by the Secretary of State emerges as nearly a year before.\nThis concluded with Mr Miliband instructing Mr Roberts as Commissioner for BIOT to issue Proclamation No 1 of 2010 (para 2 above), and with an FCO statement dated 1 April 2010 to the effect that This will include a no take marine reserve where commercial fishing will be banned.\nMore specifically, the events leading to this decision were as follows.\nA submission dated 30 March 2010 from Ms Yeadon had discussed how best to progress the proposal.\nIn it, Ms Yeadon pointed to likely opposition and possible international moves by the Mauritian government and advised that, rather than any immediate decision, more time should be taken to work through the various issues and a positive, but not definitive, announcement should be made.\nHowever, at 18.06 on the same day, Mr Milibands office informed Ms Yeadon that Mr Milibands inclination [was] to be bolder and actually to decide to go ahead.\nAt 8.30 next morning, Mr John Murton, at that time, it appears, the British High Commissioner in Mauritius, commented that he had no idea whether Mr Miliband would follow the recommendations of the day before, but that, if he went for the MPA immediately, they would face problems.\nShortly before 11.47 next day, Mr Milibands office informed Ms Yeadon by telephone that Mr Miliband was minded to ask Mr Roberts to declare an MPA and a full no take zone, that no final decision has yet been taken, and that he would like to find some way of mitigating the Mauritian reaction.\nAn internal email reaction by Mr Roberts at 12.07 proposed to give Mr Miliband a clearer steer.\nThis led to an immediate rejection by another civil servant, Mr Andrew Allen, who at 12.31 stated his view that this approach risks deciding (and being seen to decide) policy on the hoof for political time tabling reasons rather than on the basis of expert advice and public consultation and was a very different approach to the one recommended the day before, which Mr Miliband was still considering.\nThe reference to political time tabling is a clear reference to the general election due not later than five years after 5 May 2005, and in fact announced on 6 April 2010 for 6 May 2010.\nMr Allens view was endorsed by Mr John Murton at 12.45, with the additional comment that while Obviously the Foreign Secretary is free to make whatever decision he chooses to declare the MPA today could have very significant negative consequences for the bilateral relationship with Mauritius, where an announcement of general elections was also expected, that same day, where ministers were uncontactable as a result and where the prime minister would greatly resent our timing.\nMr Murton thought that there might be a market for a proposal to work with Mauritius as a privileged partner on management issues etc prior to a final decision on an MPA.\nThese exchanges led to the preparation of a further note from Ms Yeadon addressed to Mr Roberts, and, when finalised, evidently also forwarded to the Secretary of State.\nThe note reported the views expressed and repeated the previous days recommendation against any rapid decision.\nMr Miliband did not accept the advice tendered on 30 and 31 March 2010.\nHe said he had carefully considered it and given serious thought to the different possible options.\nBut his decision was to instruct Mr Roberts to declare the full MPA on 1 April 2010.\nIn these circumstances, the present issue can be approached, as the courts below have done, at two different levels.\nThe first involves considering whether there is any real likelihood or risk that the Administrative Courts assessment of Mr Roberts and\/or Ms Yeadons motivation would have been different if the Administrative Court had permitted further cross examination on the Wikileaks memorandum and had accepted that memorandum as evidence of what its contents purport to record.\nThe second is whether there is any real likelihood or risk that any improper motivation on the part of Mr Roberts and\/or Ms Yeadon affected the ultimate decision maker (Mr Miliband) or his decision.\nAs to the first level, the Administrative Court heard both Mr Roberts and Ms Yeadon being cross examined on the most important passages of the cable, particularly the summary in the first and last paragraphs and the purported recital of actual discussion in para 7.\nMr Roberts accepted that he said words to the effect that it was governmental policy that there should be no human footprint on the Chagos Islands (other of course than Diego Garcia), embracing within that term absence of scientific or wardens offices, temporary workers as well as resettlement.\nHe accepted that he had said that establishing an MPA would in effect put paid to resettlement claims, but explained that this was recognition of a reality that the Chagossians themselves had originally raised and that it only related to an MPA entrenched by law.\nHe said that entrenchment was in the event never pursued, and that the proposal for an MPA was at the time always subject to the outcome of the proceedings in Strasbourg.\nMs Yeadon on the other hand denied that Mr Roberts had said that establishing an MPA would in effect put paid to resettlement claims.\nResettlement was, in her view, already precluded by the 2004 Order (subject only to the pending decision of the Strasbourg Court), a point on which the Administrative Court accepted her evidence, finding it to be supported in a note of a meeting of 25 March 2009 between Mr Roberts, Ms Yeadon and a Chagossian delegation including the appellant and their solicitor, Mr Gifford.\nBoth Mr Roberts and Ms Yeadon were adamant that Mr Roberts had not used, and would never have used, the highly emotive words Man (or Men) Fridays.\nThe first tier question in these circumstances is whether further cross examination might have led to more material favourable to the appellants case of improper motivation on the part of Mr Roberts and\/or Ms Yeadon and whether admission of the cable in evidence to counterbalance the evidence of Mr Roberts and Ms Yeadon might have led the Administrative Court to accept that either or both was, when advancing the proposal for an MPA, improperly motivated by the desire to prevent resettlement.\nAs to this question, the extensive evidence given by Mr Roberts about the meeting on 12 May and Ms Yeadons own evidence give a picture which is generally and substantially consistent with that presented by the cable.\nIn my opinion, Lord Kerrs references to an account or statements inconsistent with, or directly contrary to or flatly contradict[ing] or in obvious conflict (paras 91, 92, 94 and 107) are not borne out by comparison of the evidence and the cable.\nThat too was how the Court of Appeal evidently saw the position: see its paras 80 to 82 quoted in para 24 above; and see also para 37 above.\nWhen it came to considering whether the Foreign Office representatives had some ulterior motive in their proposal for an MPA, the Administrative Court was also impressed by the evidence of Mr Roberts and Ms Yeadon.\nIt is true that it did not directly address the contradiction between their evidence on the question whether Mr Roberts had said that an MPA would put paid to resettlement.\nBut it accepted that a wish to preclude resettlement was not part of Ms Yeadons motivation, because she regarded resettlement as off the table anyway as a result of the 2004 Order, and it must also have accepted Mr Roberts evidence that what he was explaining to the United States counsellor was the practical consequences of an MPA, which is what would have been of interest to Mr Mills, rather than its motivation.\nIt is difficult to see what further cross examination by reference to Mr Mills memorandum could have achieved.\nIt is also difficult to think that admission of the memorandum, without more, would have outweighed the impression which the Court obtained from the oral evidence it heard.\nThe memorandum is at the very lowest ambiguous as to whether the references to resettlement were uttered in circumstances indicating that they had a role in motivating the proposal for an MPA.\nOn the face of it, it seems very unlikely that a British civil servant would have disclosed an improper motivation of this nature, rather than have been outlining the practical consequences of an MPA which is what would have concerned the Americans.\nIt is equally difficult to think that the Administrative Court could have concluded, by reference either to further cross examination or to the cable itself, that Mr Roberts in fact used the phrase Man Fridays, which he and Ms Yeadon adamantly denied that he would ever have used.\nThe phrase had already had considerable currency, including in court judgments, and was well known known in British circles as infamous.\nLord Kerr in para 97 notes the Court of Appeals reference in para 82 of its judgment to the fact that Mr Pleming QC was not permitted to put to Mr Roberts the ultimate question.\nThis the Court of Appeal identified as being whether the cable was accurate, before continuing but Mr Roberts had answered all the intermediate questions.\nLord Kerr treats the ultimate question as being whether [Mr Roberts] had an explanation for the fact that he was recorded as having made certain statements which he denied having uttered.\nHowever, as to this, Mr Roberts was not party to the cable, and had, by his answers to the intermediate questions, given the only explanation that he could be expected to give about any differences, namely that the cable was wrong.\nEven more importantly in this connection, it is difficult to see that the Administrative Court could have been assisted in its task on the central issue, even if it had concluded that the phrase Man Fridays was used.\nIn these circumstances, I do not consider that it has been shown that the Court of Appeal erred in concluding that neither further cross examination on the cable nor the cable itself, if admitted as evidence, would have led to any different outcome before the Administrative Court.\nAssuming that the test should be whether this could realistically have led to any different outcome, the answer would still, in my opinion, be negative.\nLet me assume however that this is wrong, and that Mr Roberts and\/or Ms Yeadon did have and voice to the United States Embassy officials an illegitimate motive for the proposal for an MPA.\nThe second level question then arises whether there is or can be any conceivable basis for thinking that this affected the ultimate decision maker, Mr Miliband, or his decision.\nIn my opinion, the answer to this is even more clearly in the negative.\nThe Administrative Courts conclusion in para 74, summarised in para 91 of the Court of Appeals judgment was that it was clear that it was the personal decision of the Foreign Secretary to declare an MPA on 1 April 2010, against the advice of his officials. and that this can best be understood in the political context: Parliament was about to be dissolved.\nThe Foreign Secretary no doubt believed that the decision would redound to the credit of the Government and, perhaps, to his own credit.\nIt would do so the more if a decision with immediate effect was taken.\nThe documentation and exchanges available all show that the proposal was put up by civil servants to the Secretary of State.\nBearing in mind its nature and context, this was bound to occur.\nIt was put up in appropriate terms without any suggestion of any improper motive, both initially in May 2009 and ultimately in March 2010.\nThe documentation and exchanges also show that he made his decision of 31 March 2010 on that basis, against his civil servants recommendation to give the proposal further thought and attention.\nAny suggestion that further cross examination of Mr Roberts and\/or Ms Yeadon or the admission of the cable as evidence of its contents might have led the Administrative Court to conclude that Mr Miliband was motivated in his enthusiasm, not by his assessment of the merits of the proposal as such, but by extraneous considerations relating to a desire to make return difficult for the Chagossians, finds no basis in the documentation or exchanges and has to my mind no plausibility at all.\nThere is no basis whatever for impugning Mr Milibands motivation.\nThere is in particular no basis for suggesting that he may have connived at or joined with Mr Roberts and\/or Ms Yeadon in a collusive exercise of documenting an objective decision making process, while at the same time pursuing and concealing an illicit agenda.\nThe final matter for consideration on this basis is whether any relevance could attach to improper motivation on the part of one or more civil servants, when there is no indication whatever that it shaped or in any way influenced ministerial thinking.\nThe answer must in my opinion be negative.\nIf the Secretary of State as the ultimate decision maker, the actual decision making process and the decision were unaffected by an improper motive held by a civil servant, on a proposal bound because of its significance to be put up to the Secretary of State, the decision can and should stand by itself.\nThat would on all the evidence be the present position, even if one assumes that the cable discloses, or would if deployed have led to a conclusion, that there was, some improper motivation on the part of Mr Roberts and\/or Ms Yeadon in (or after) May 2009.\nMr Pleming QC submits that an opposite conclusion flows from a form of reconfiguration of the principle in Carltona Ltd v Commissioners of Works [1943] 2 All ER 560, and that the Secretary of State can be fixed with the knowledge, motives and considerations of civil servants when relying on them unless he proves otherwise.\nThe problem with that submission is that, even if one or more civil servants had improper motives or considerations in mind, Mr Miliband did not rely on any decision or conduct of those civil servants to which such motives and considerations had any relevance.\nThe relevant civil servants were, as stated, bound to put the matter before the Secretary of State.\nThey did so in proper terms, ultimately counselling against any immediate decision to declare an MPA and no take zone.\nThe Secretary of State rejected their recommendation, and made his own decision.\nCarltona does not have any bearing on this situation.\nIt stands for the proposition that ministerial powers are commonly delegable and that, where this is the case and delegation occurs, the decision of an authorised official falls to be treated as the decision of the minister.\nHere, therefore, it may readily be accepted that, if a Minister were simply to rely on a civil servant, in effect to take a decision in the Ministers name, then it would be the knowledge, motives and considerations held by and influencing the civil servant that would be relevant.\nA ministerial decision may also be vulnerable to challenge if taken in ignorance of or on the basis of some mistake as to some material factor.\nSimilarly, if a ministerial decision is arrived at by a collective decision making process involving a minister and his departmental civil servants, it may well be impossible to separate the ultimate ministerial decision from the knowledge and motives of civil servants involved in its preparation: see eg Bushell v Secretary of State for the Environment [1981] AC 75, 95 96, per Lord Diplock.\nBut these are situations very far from the present case.\nIn the present case, far from the relevant decision being taken by an official on behalf of the minister or being a collective decision, it is clear that the minister, Mr Miliband, took his own decision on the relevant matters.\nHis civil servants put the matter up to him in terms to which no objection is taken as such, he formed his own strong views on the basis of the material put before him and he made the relevant decision.\nIn these circumstances it is his state of mind that is critical, not that of his civil servants.\nI note here Lord Kerrs suggestion that the Secretary of States decision could be regarded as having been reached without regard to material factors or considerations if taken in ignorance of a concealed reason for the recommendation on which he acted (para 117) and\/or without awareness of the view of the civil servants that the MPA would eliminate the chances of resettlement of the Chagos Islands, contrary to the advice on which he in fact acted (para 118).\nNeither of these points was part of the applicants case before the Supreme Court, which focused on the existence of an allegedly improper motive on the part of Mr Roberts and\/or Ms Yeadon.\nReliance on their suggested views as material information which should have been made available to the Secretary of State is a quite different matter.\nIf this were sufficient to undermine a ministerial decision, then logically any irrelevant misconception possessed by any civil servant at any level in the civil service hierarchy in relation to any proposal ultimately reaching Cabinet level could undermine a Cabinet decision.\nThere is in any event no basis for regarding any such views as material, since the appeal has been conducted on the basis that the creation of the MPA could not have the effect of creating an effective long term way to prevent resettlement: see para 28 above.\nThe only suggested reason why an MPA or no take zone might preclude resettlement was that it would deprive Chagossians of an important source of food and livelihood.\nBut this is not an objection deriving from the establishment of an MPA, but from a policy, reversible at any time, of refusing fishing licences.\nFor these reasons, I would hold that no basis exists on which the Supreme Court would be justified in reaching a different conclusion to that reached in the Court of Appeal, upholding the Administrative Court, though for different reasons, on the point.\nFishing rights\nThe position in respect of this adjourned application for permission to appeal is unusual.\nI say at the outset that I consider that permission to appeal should be given.\nBut permission to raise the issue of Mauritian fishing rights at all was only given by the Administrative Court on the limited basis that the appellant does not contend in these proceedings that the traditional or historical fishing rights relied on are legally enforceable, so that the question whether there are enforceable rights under international law would not arise for decision.\nThe appellants case, as explained by Mr Pleming before the Administrative Court, was simply that there is credible evidence that HMG gave an undertaking to the Government of Mauritius which has subsequently been evidenced by preferential treatment for Mauritius registered vessels, and that this was an important part of the background yet was not put before consultees, who were in consequence misled.\nThe Administrative Court held the appellant to that position, and Mr Pleming has not sought to resile from it before the Court of Appeal or Supreme Court.\nFurther, he made clear that before the Supreme Court the only fishing rights relied on are Mauritian fishing rights.\nThat means (and it is unnecessary to attempt any precise definition) fishing rights enjoyed by Mauritian registered and, quite probably, owned vessels, on which in practice Chagossians are often also found as crew.\nYet, since the Court of Appeals judgment in May 2014, an arbitration between the Republic of Mauritius and the United Kingdom under Annex VII of the United Nations Convention on the Law of the Sea (UNCLOS) has concluded in an award dated 18 March 2015, finding, inter alia: that the United Kingdoms undertaking to ensure that fishing rights in the Chagos Archipelago would remain available to Mauritius as far as practicable is legally binding insofar as it relates to the territorial sea.\nDuring the course of the hearing before the Supreme Court, the Government put before the Court a statement that: HM Government is committed to implementing the Dispositif made in 2015 following Arbitration between the UK and Mauritius over the Marine Protected Zone (MPA) around the British Indian Overseas Territory (BIOT).\nIn line with the Dispositif, the UK will continue to work with Mauritius to agree the best way to meet our obligation to ensure fishing rights in the territorial sea remain available to Mauritius, so far as practicable.\nThe Arbitral Award did not require the termination of the MPA but the UK will continue to approach discussions with an open mind about the best way to ensure proper conservation management of this unique marine environment.\nIt therefore appears that, at the international level, the fishing rights, the arguable existence of which the appellant claims should have been recognised in the consultation paper, have not only been held to exist, but are rights, to which so far as they have been held to exist, the United Kingdom is committed to giving effect.\nIn these circumstances, it is possible to wonder what further purpose these proceedings might have, since it is on these rights that the appellants objections to the MPA and\/or no take zone centre.\nOstensibly, the appellants case is that, if there was improper motivation and\/or a failure properly to consult about arguable fishing rights, the MPA and no take zone should be declared to have been invalidly declared.\nBut Mr Pleming indicated at the outset of the hearing before the Supreme Court that, at any rate in relation to the latter failure if accepted, it would be possible for a court to limit any invalidity to the extent of the arguable fishing rights.\nA later draft declaration which Mr Pleming submitted showed that, if it were feasible to contemplate a declaration of limited invalidity, the identification of what was involved in Mauritian fishing rights could still be controversial.\nThat is however, as already indicated, another matter.\nI would accept that, if there was a failure properly to consult about arguable fishing rights, that could lead to a declaration of limited validity.\nIn parenthesis, I add that the case based on improper motivation can also be related to fishing rights, since the reason why it is suggested that an MPA or no take zone might preclude resettlement is that it would deprive Chagossians of an important source of food and livelihood.\nI would therefore also have been attracted by (but do not, in the light of my conclusion in para 49 above, need to consider further) the suggestion that improper motivation might also have led to a limited declaration.\nFurther, in either case, I would be minded to accept the Secretary of States case that any declaration could be related and limited to the no take zone, rather than the MPA.\nMr Pleming objected that this was a new point, only raised by the Secretary of State after the hearing.\nBut it is a pure point of law and the Administrative Court itself pointed out in para 75 of its judgment that the restrictions on fishing did not derive from the MPA itself.\nOn the contrary, the MPA stated that the implications for fishing would be addressed in future legislation, and the only actual step taken regarding fishing was to allow existing fishing licences to expire and to withhold further fishing licences.\nThe appellants real complaint can therefore be identified as being to the current policy, in so far as it has been to refuse fishing licences giving effect to the Mauritian fishing rights now recognised by the UNCLOS tribunals award.\nThat is essentially a limited complaint, which could, it seems to me, appropriately be addressed by a limited declaration as to the invalidity of such a policy of refusal.\nI must however revert to the case as it stands, however artificially, before the Supreme Court, on the basis that the appellants only complaint is that there was, at the time of the consultation, credible evidence that the United Kingdom had given an undertaking to the Government of Mauritius to permit Mauritian fishing in the territorial waters of the Chagos Islands (free of charge), that these arguable rights should have been mentioned, that the consultation process was defective accordingly and that the MPA, or (for reasons I have indicated) at least the no take zone, was invalid, at least to the extent that it excluded Mauritian fishing.\nThe UNCLOS tribunal in its award found that the United Kingdom was in breach of its obligations under UNCLOS article 2(3) (sovereignty over the territorial sea is exercised subject to the Convention and to other rules of international law) and article 56(2), which reads, less ambiguously: In exercising its rights and performing its duties under this Convention in the exclusive economic zone, the coastal State shall have due regard to the rights and duties of other States and shall act in a manner compatible with the provisions of this Convention.\nThe breaches so found concerned the relationship between the United Kingdom and Mauritius.\nIt was the tribunals view that, after a second meeting between United Kingdom and Mauritian representatives on 21 July 2009, there remained outstanding a number of unanswered issues, as well as information that the United Kingdom promised to provide to Mauritius, but that, despite this, the United Kingdom had in March 2010 elected to press ahead with the final approval and proclamation of the MPA without providing any convincing explanation for the urgency with which it did this on 31 March and 1 April 2010.\nThe issues of both law and fact before the tribunal were, therefore, very different from that now before the Supreme Court, which is narrowly focused on the adequacy of the public consultation.\nIt is unnecessary to go back in detail over all the issues which were considered in the courts below.\nI can summarise the position as it emerges, in my opinion, from the evidence and documents as follows.\nFirst, the actual extent of inshore fishing by Mauritian vessels in territorial waters, after the Chagossians left and until the no take zone affected licensing, was always limited, but it was significant for those involved, including the owners and Chagossian crew members.\nThe principal vessels involved were those of the Talbot brothers.\nSecondly, there was credible evidence in the United Kingdom Governments possession (though not all of it necessarily available to Mr Roberts or Ms Yeadon) as to the existence of Mauritian fishing rights dating back to undertakings given in 1965.\nHowever, thirdly, extensive legal advice (for which privilege has not been waived) was taken on this subject during the period January to November 2009, and, on the basis of that advice, both Mr Roberts and Ms Yeadon understood that Mauritius did not have legal rights to fish in BIOT territorial waters, which prevented the United Kingdom Government from establishing an MPA, including a complete no take zone.\nFourthly, for that reason, after considering the position and receiving legal advice Mr Roberts and Ms Yeadon did not believe that Mauritius or the Chagossians had, or might have had, any such rights, and Ms Yeadon in particular saw the 1965 undertaking as being of a political, not legal, nature; and, as a result, no reference was made in the consultation document to any such rights.\nFifthly, despite the appellants reliance on a paper prepared by Professor Brownlie for and read at a United Kingdom Mauritius meeting in January 2009, containing at most only a fleeting suggestion of such rights, Mauritius never really advanced such rights with any clarity at any time throughout 2009 to March 2010, referring instead constantly to its sovereignty claim and refusing on that basis to engage with any consultation.\nIn particular, it made no suggestion of any such rights in the second United Kingdom Mauritius meeting in July 2009 or in a submission to the House of Lords in February 2010.\nThe Administrative Court correctly so concluded (para 158).\nSixthly, Mauritius had the opportunity of responding to the consultation and making the point that it had fishing rights, but did not avail itself of this.\nChagossians and others also had the opportunity of responding, and some did: i) Mr Gifford and Chagossians resident in Crawley made representations against any no take ban in the territorial waters, on a basis summarised as follows: Very limited fishing anyway, so limited environmental benefit from a ban.\nCould have significant consequences for the Chagossians.\nWhat effect on the Chagossian community? Should not be possible to use MPA as a way of entrenching no right of abode.\nInconsistent, as far as concerns fishing, with the law of the sea (UNCLOS). ii) The Diego Garcian Society also representing Chagossians wrote in favour of: 4th option, a no take marine reserve for the whole of the territorial waters and EPPZ\/FCMZ with exceptions for certain types of pelagic fishery (eg tuna) and artisanal fishing by Diego Garcians and other Chagossian fishing projects only. iii) The members of the Chagos Refugees Group, led by the appellant and joined by Mr Gifford as their lawyer submitted that the consultation process was premature (and flawed) as putting the cart before the horse, inter alia, because it needed to be with the consent of the Chagossians, rather than pushed ahead unilaterally, because the sovereignty of Mauritius was also involved and because: [There] Are fishing rights which they need in their sea. and Need human rights first wrong to come before ECHR judgment.\nThe Divisional Court observed (para 160): The potential impact of an MPA on commercial fishing was squarely raised and must have been obvious to all concerned.\nThe responses from fishing interests show that the impact was clearly understood.\nIf anyone wished to raise an argument that a ban on fishing would be incompatible with Mauritian fishing rights, they were free to do so.\nAgainst that background, the omission of express reference to the point in the consultation document itself is in our view a matter of no significance.\nIt did not affect the fairness of the consultation or the validity of the MPA decision taken following that consultation.\nThe Court of Appeal rejected the appeal on this ground, largely for the same reasons given by the Divisional Court (para 108), and specifically agreed with the last two sentences quoted above (para 111).\nThe case open to the appellant is that there was credible evidence of Mauritian fishing rights, deriving from an undertaking given by the United Kingdom Government to the Government of Mauritius and subsequently evidenced by preferential treatment given to Mauritius registered or owned vessels.\nApproaching this case in the light of the matters which I have mentioned, I have no hesitation in agreeing with the assessment of both courts below that the absence of any mention of such evidence or of the arguable fishing rights to which it related does not undermine the consultation, make it unfair or justify setting it or any decision consequent upon it aside.\nIt was obvious, as the Court of Appeal also said (para 112), that at least one of the options would affect inshore fishing, and threaten the livelihood of vessels which had previously been licensed to fish in territorial waters.\nIt was open to Mauritius or anyone affected to raise this objection in response to the consultation.\nMauritius notably did not respond at all.\nOthers made various points about the option of a no take ban in territorial waters and\/or the loss of alleged fishing rights.\nIt would be wholly inappropriate to treat the consultation process as invalid, when the party to whom the alleged rights belonged (the Republic of Mauritius) had full opportunity of asserting them in response to the consultation, and when others indirectly involved actually took advantage of the opportunity of raising them.\nFinally, there is also no reason to believe that the ultimate decision would or could have been any different, if the consultation had specifically drawn attention to the possible existence of such fishing rights.\nConclusion\nFor these reasons, I would grant permission to appeal on the issue of fishing rights, but dismiss the appeal both on the issue of improper motivation and on the issue arising from the failure to mention the possible Mauritian inshore fishing rights in the consultation document before the decision to declare an MPA and a no take zone.\nI repeat that the latter issue has been before the Supreme Court solely on the basis that there was convincing evidence that such Mauritian fishing rights existed.\nThe significance of the finding in the UNCLOS tribunals arbitration award dated 18 March 2015 that such fishing rights do actually exist is not before us.\nIn particular, whether that finding is capable of having any and if so what effect in domestic law, as regards either the MPA or the no take zone is not before us.\nLORD SUMPTION: (with whom Lord Neuberger, Lord Clarke and Lord Reed agree)\nI agree with the disposal proposed by Lord Mance and with his reasons.\nI add a judgment of my own to address the status and use in evidence of information about the contents of diplomatic correspondence which has come into the hands of third parties.\nThis question is the subject of the Secretary of States cross appeal, and raises points of some general importance.\nThe leaking of governmental documents and their widespread distribution through the internet is a phenomenon of our time.\nThe status of leaked documents in the public domain is an issue which is likely to recur.\nThe basis in modern international law for the protection of the documents of a diplomatic mission is article 24 of the Vienna Convention on Diplomatic Relations (1961), which provides that the archives and documents of the diplomatic mission shall be inviolable at any time and wherever they may be.\nArticle 27.2, which provides for the inviolability of the official correspondence of the mission, was added (as part of an article about freedom of communication) in order to deal with the problem of the interception en route of communications not made by diplomatic courier or diplomatic bag, which would not necessarily be part of the missions archives or documents at the time of interception: see ILC Yearbook 1958, i, 143, paras 34 35, and Denza, Diplomatic Law, 4th ed (2016), 189 190.\nThese provisions have the force of law by statute in the United Kingdom, under the Diplomatic Privileges Act 1964.\nAny issue of this kind is likely to give rise to two fundamental questions.\nThe first is how a document is to be identified as part of archives and documents of a diplomatic mission.\nThe second is what it means to describe such a document as inviolate.\nTraditionally, the protection accorded to a missions documents was viewed as a particular aspect of the inviolability of its premises and the diplomatic bag, and of the immunities of diplomatic couriers.\nThis was why, upon a cessation of diplomatic relations, when the premises of the mission would become entitled to a lesser degree of protection, the practice was to destroy the missions archives or entrust them to a protecting power as the diplomats left.\nAs a general rule, the movable property of a mission was protected only so far as it was located on its premises, and indeed this is still the position today: see article 22.3 of the Convention.\nBefore the Vienna Convention came into force in 1964, the status of a missions archives located outside diplomatic premises was therefore uncertain.\nTo resolve that uncertainty, the words at any time and wherever they may be were added to article 24 at the United Nations Conference on Diplomatic Intercourse and Immunities which approved the final text of the Convention.\nThe archives and documents of a mission were now to be protected as such and not only by virtue of their presence in a protected location or in protected hands.\nAs the French delegate explained when introducing the amendment, the object was to establish clearly the absolute inviolability of the missions archives and documents as such, and not merely as part of the furniture of the mission: Official Records, i, (1962), 148 (para 2).\nA diplomatic mission is not a separate legal entity.\nIts archives and documents belong to the sending state.\nBut the protection of article 24 is limited to the archives and documents of the mission.\nIt does not extend to those of any other organ of the sending state.\nThe latter may be protected by other rules of law: for example by the criminal law, the law of confidence or the law of copyright.\nBut they are not protected by the Vienna Convention.\nAgainst that background, what is it that identifies a document as belonging to the archives or documents of the mission, as opposed to some other organ of the sending state? (I will return below to the particular problems raised by their unauthorised possession by third parties).\nThe test is not their location, for they are protected wherever they may be.\nIt must necessarily be whether they are under the control of the missions personnel, as opposed to other agents of the sending state.\nThe draftsmen of article 24 were thinking in terms of physical documents.\nBut retrievable electronic files are also documents and may be part of an archive.\nThe same protection therefore applies to them, provided that access to them is under the control of the missions personnel, whether directly or by virtue of the terms on which the mission transmitted the document to another governmental entity.\nThis appeal is not the occasion for determining the exact circumstances in which a mission will be treated as having control over a document by virtue of the terms on which it transmits it, because there is no suggestion that the US diplomatic cable was released on terms.\nThe relevant point for present purposes is that because the designation of a document as that of the mission depends on control, its origin and content is in itself irrelevant.\nThus the archives and documents of a mission may include original or copy documents which emanate from some other organ of the sending state or from a third party, in which case so far as they are under the control of the missions personnel they will enjoy the same protection as the missions internally generated documents.\nCorrespondingly, copy documents or originals emanating from the mission may be found in the archives of another organ of the state (say, its foreign ministry) where they will not enjoy the protection of article 24.\nInviolability is a term variously used in the Convention about diplomatic premises (articles 22, 30), documents (articles 24, 30), official correspondence (article 27), diplomatic personnel (articles 27, 29, 31, 38, 40) and personal property (article 30).\nBut it is a protean word, whose meaning is necessarily sensitive to its context and purpose.\nIt used to be thought that all diplomatic privileges and immunities reflected the extra territorial character of a foreign sovereign and, by extension, of its diplomatic representatives.\nBut in the modern law, its justification is pragmatic and wholly functional.\nIn the words of the fourth recital to the Convention, it is intended to ensure the efficient performance of the functions of diplomatic missions as representing States.\nIt has been recognised ever since Vattel (Droit des Gens, Bk IV, 123), the first writer to deal with the question, that the basis of the rule of international law is that the confidentiality of diplomatic papers and correspondence is necessary to an ambassadors ability to perform his functions of communicating with the sovereign who sent him and reporting on conditions in the country to which he is posted.\nThe purpose of article 24 in protecting a missions archives qua archives, and not as mere items of property, is to protect the confidentiality of the missions work, without which it is conceived that it cannot effectively represent the sending state.\nIn particular, it is to protect the privacy of diplomatic communications: Shearson Lehman Bros Inc v Maclaine Watson & Co (International Tin Council intervener) (No 2) [1988] 1 WLR 16, 27G (Lord Bridge).\nThe confidentiality of such documents does not depend on their particular contents or subject matter, which is not a matter which a domestic court could properly examine, but on their status as part of the archives and documents of a diplomatic mission protected by article 24 of the Convention.\nDr F A Mann, a notable opponent of the larger claims of international law in the domestic legal world, was of the opinion that the inviolability of a missions archives and documents served only to protect them from interference by the receiving state, for example by seizing them or allowing them to be the subject of compulsory legal process: Inviolability and other Problems of the Vienna Convention on Diplomatic Relations, Further Studies in International Law (1990), 326 338.\nA rather similar view was put forward at the United Nations Conference preceding the adoption of the Convention, as a reason for rejecting the addition of the words wherever they may be, but it is clear that this objection did not find favour with the majority: see Official Records, i (1962), 149, 150 (paras 9, 22).\nThe Court of Appeal, however, appear (paras 39 42, 58 61) to have adopted it in the present case.\nI agree with Lord Mance that so narrow an approach is not supported by the generality of commentators.\nIt is also, in my view, inconsistent with the concept of inviolability.\nWhatever may be involved in that concept, it is clear that article 24 is not only concerned with the duties of the receiving state but describes the status of a missions archives and documents erga omnes.\nIt is the obligation of the receiving state to give effect to that status.\nThat obligation, extends beyond simply refraining from violating it itself.\nAs the International Law Commission observed in its report of 1957 to the United Nations General Assembly, the receiving State is obliged to respect the inviolability itself and to prevent its infringement by other parties: ILC Yearbook 1957, ii, 137.\nIt was on this basis that the International Court of Justice held in US Diplomatic and Consular Staff in Tehran (1980) ICJ Rep, 3, at paras 61 63, 66 67, 69, 77 that the failure of the government of Iran to intervene to prevent or terminate the occupation of the US embassy in Tehran by militants was a violation not only of articles 22 (premises) and 29 (diplomatic agents), which impose express obligations on the receiving state to protect against action by third parties, but also of article 24 (archives and documents), which contains no express provision of that kind.\nI make this point in order to correct what I regard as an error of the Court of Appeal.\nBut it is not decisive of the present appeal, which is concerned with the legitimacy of a court receiving into evidence a document emanating from the archives and documents of a diplomatic mission.\nIf this is a violation of article 24, the violation does not consist only in the receiving state failing to protect the archives and documents against third party action.\nThe court is itself an organ of the receiving state, and the violation consists also in its receipt and use of the material.\nNo one doubts that if the document has been communicated to a third party with the actual or ostensible authority of the responsible personnel of the mission, any immunity in respect of it is lost.\nIn the form communicated, it is no longer the missions document: Shearson Lehman Bros Inc v Maclaine Watson & Co (International Tin Council intervener) (No 2) [1988] 1 WLR 16, 27 28.\nBut what if the document, or more plausibly a copy of the document or information about it, has come into the hands of a third party without authority? Subject to an important reservation (see below) I think that in that case there is a violation if the courts of the receiving state receive it in evidence.\nThis is not, as is sometimes suggested, because of the words wherever they may be.\nThey have a different purpose, as I have explained.\nIt is because of what is involved in the notion of inviolability, and in the receiving states obligation to give effect to it.\nThe real objection is to the receiving state employing them for a purpose inconsistent with their confidential status.\nArticle 25 of the Convention, which is not one of the articles scheduled to the Diplomatic Privileges Act but informs the interpretation of those that are, requires the receiving state to accord full facilities for the performance of the functions of the mission.\nAs Professor Denza observes (Diplomatic Law, 4th ed (2016), 170), article 25 is not an additional source of rights but an ancillary provision intended to make effective those facilities which are assured by other provisions of the Convention.\nThus it has been held that as a matter of public international law it prevents the courts of the receiving state from acting in such manner as to obstruct the mission in carrying out its functions, for example by permitting the judicial enforcement of judgments against embassy property: Alcom Ltd v Republic of Colombia [1984] AC 580, 599.\nA similar view was expressed by the German Constitutional Court in the Philippine Embassy Bank Account Case (1977) 46 BVerfGE 342, 395, 397 398 and by the United States District Court for the District of Columbia in Liberian Eastern Timber Corp v Government of the Republic of Liberia (1987) 89 ILR 360, 363.\nIn my opinion, similar considerations apply to the reception in evidence by the courts of the receiving state of confidential documents obtained directly or indirectly through a violation of a missions archives and documents.\nArticle 24 gives effect to the confidential status of these documents, which is necessary to the functioning of the mission.\nTheir inviolability necessarily imports that the state will take reasonable steps to prevent the violation of that status and will not itself be party to its violation.\nIn Rose v The King [1947] 3 DLR 618, a decision of the Appellate Division of the Supreme Court of Quebec, the appellant had been convicted on charges of conspiracy with (among others) members of the embassy of the Soviet Union in Ottawa to violate the provisions of the Official Secrets Act.\nThe evidence against him had included documents abstracted by a defector without authority from the files of the Russian military attach and delivered to the Canadian government.\nThe appeal was dismissed on the controversial ground that diplomatic immunity was subject to an exception for cases where embassy personnel had conspired against the security of the receiving state.\nBut, subject to this supposed exception, Bissonnette J, in a judgment with which the rest of the court concurred, considered that as a matter of customary international law no court had jurisdiction or competence to take cognizance of documents emanating from a foreign embassy without the consent of the sending state.\nAt p 646, he observed: International law creates a presumption of law that documents coming from an embassy have a diplomatic character and that every court of justice must refuse to acknowledge jurisdiction or competence in regard to them.\nFayed v Al Tajir [1988] QB 712 was a decision of the Court of Appeal in England in a defamation action.\nThe defendant, who was described as the de facto ambassador of the United Arab Emirates in London, had made the statements complained of in internal correspondence of the embassy, copied to the foreign minister.\nThe relevant letter was subsequently communicated to the plaintiff by its recipient, a counsellor at the embassy, without authority.\nThe issue was held to be non justiciable, and the letter subject to absolute privilege.\nBut Kerr LJ (with whom Croom Johnson LJ agreed) considered that the letter was also protected by article 24 of the Vienna Convention.\nIn Shearson Lehman Bros Inc v Maclaine Watson & Co (International Tin Council intervener) (No 2) [1988] 1 WLR 16, the House of Lords considered the deployment in evidence of copies of documents of the International Tin Council which had been obtained by third parties.\nBy statute, the Councils official archives enjoyed the same protection as those of a diplomatic mission.\nThe Appellate Committee held that the question depended on whether the third party had obtained them with the authority of the Council or in circumstances where he could reasonably assume authority.\nOn the assumption that a document forming part of the Councils archives had been communicated to the third party without authority, Lord Bridge (with whom the rest of the Appellate Committee agreed) held at p 27G H that it would be wholly inimical to the underlying purpose that the judicial authorities of the host state should countenance the violation by permitting the violator, or any one who receives the document from the violator, to make use of the document in judicial proceedings.\nCases in other jurisdictions are rare, but it may be noted that the German Federal Court has applied a similar principle to evidence derived from the monitoring of telephone lines contrary to the corresponding principle of the Vienna Convention on Consular Relations (1963): BGHSt 36, 396 (4.4.1990).\nThere is, however, a reservation of some importance which follows from the nature of the protection accorded by article 24 of the Convention, as I have analysed it.\nIt concerns documents which, although indirectly obtained without authority from the archives and documents of a mission, have entered the public domain.\nBy that I mean that they have been disclosed not simply to a few people or in circumstances where it would take some significant effort on the part of others to discover their contents, but that they are freely available to any one who cares to know.\nThis was not a question considered in any of the cases cited in the previous paragraph, and may not have arisen on the facts.\nIn principle, as I have explained, article 24 protects documents under the control of the mission, but not documents which never were or are no longer under its control.\nThe extension of the protection to documents under a missions control which (or the contents of which) have come into the hands of third parties without authority is necessary in order make article 24 effective by preserving the confidentiality of unlawfully communicated documents in accordance with the articles purpose.\nThe English courts cannot, consistently with the privileges and immunities of a diplomatic mission, allow themselves to be made the instrument by which that confidentiality is destroyed.\nBut once the documents have been published to the world, it has already been destroyed.\nThere is nothing left to be preserved of the interest protected by article 24.\nIt is arguable that where a document has been put into the public domain by the very person who has violated the archives and documents of the mission, he should not be allowed to rely on the fact, although the difficulties of the argument have often been pointed out, for example by Lord Goff in Attorney General v Guardian Newspapers (No 2) 1990] 1 AC 109, 286 287.\nBut that is a refinement which does not arise on the facts in the present appeal, and I need not consider it further.\nThe Secretary of States cross appeal faces, as it seems to me, two distinct and equally insuperable difficulties.\nThe first is that, although the cable relied upon by Mr Bancoult must have emanated directly or indirectly from a US government source, the Secretary of State is unable to establish that it was obtained by Wikileaks, and through them by The Guardian and The Telegraph, from the archives of the US embassy in London as opposed to some other unprotected organ of the US government.\nHe has not therefore established the essential factual foundation for reliance on article 24 of the Vienna Convention.\nSecondly, even if the cable had come from the archives of the US embassy, the document has entered the public domain.\nMr Bancoult was not party to the leaking of the cable and has not put it in the public domain.\nHe has merely made use of what is now the common knowledge of any one who cares to interest himself in these matters.\nIn my opinion it cannot possibly be a violation of the US embassys archives or documents for Mr Bancoult to make use in litigation of the common knowledge of mankind simply because it was once confidential to the US embassy in London.\nNor could it be a violation for the English courts to take cognizance of a document which has escaped from the control of the US embassy and whose confidential status long ago came to an end.\nIt was suggested to us that even if there was no remaining confidence in the document or its contents, the missions archives and documents would be violated by making findings about its authenticity, since those findings would inevitably increase their interest and value.\nFor the same reason it was suggested that to do this without the consent of the sending state would amount to the exercise of compulsion.\nI do not accept this.\nIf the contents of the document are no longer protected from public scrutiny because they are in the public domain, I cannot see that any greater protection can attach to inferences drawn from those same contents, whether about its authenticity or anything else.\nalbeit for reasons somewhat different from those of the Court of Appeal.\nIn those circumstances, I would dismiss the Secretary of States cross appeal, LORD KERR: (dissenting) Improper motive\n(i) Background\nThe only legitimate purpose for introducing a marine protected area (MPA) around the Chagos Islands was to protect marine life.\nIf it could be demonstrated that this was not the reason that it was introduced, or that there was a collateral purpose for its introduction, the establishment of an MPA would be unlawful.\nIt is a centrepiece of the appellants case that his counsel was denied the opportunity to pursue a line of cross examination that would have revealed an ulterior motive for the MPA.\nThis claim prompts the need for a careful examination of the circumstances in which Mr Plemings cross examination of Mr Roberts and Ms Yeadon before the Divisional Court was curtailed.\nIt is also necessary to look closely at how this matter was considered by the Court of Appeal.\nThe appellant also argues, however, that the refusal to admit a critical item of evidence meant that the Divisional Court did not assess that evidence for its potential to undermine the case for the respondent.\nBefore considering these arguments, one must be clear about the importance of that item of evidence, a cable which, the appellant claims, was sent on 15 May 2009 by the United States Embassy in London to departments of the US Federal Government in Washington.\nThat cable, it is claimed, contained a record of what was said at a meeting on 12 May 2009 between a United States political counsellor, Mr Richard Mills, and Mr Colin Roberts, Head of Overseas Territories Directorate, Commissioner for British Indian Ocean Territory (BIOT) and Ms Joanne Yeadon, Administrator of BIOT and Mr Ashley Smith, the Ministry of Defences Assistant Head of International Policy and Planning.\nAs the Court of Appeal said (at para 10 of its judgment), the cable is the only near contemporaneous record of the meeting.\nIt purports to have been composed three days after the meeting took place.\nIf it is authentic, or, perhaps more pertinently, if there is no reason to doubt its authenticity, it is, at least potentially, a significant source of evidence about the reasons for making the MPA.\nThe first paragraph of the cable stated that a senior Foreign and Commonwealth Office official (Mr Roberts) had assured his American counterparts that the establishment of the MPA would in no way impinge on the US governments use of the British Indian Ocean Territory (BIOT).\nIn that context, Mr Roberts is said to have asserted that the BIOTs former inhabitants [the Chagos Islanders] would find it difficult, if not impossible, to pursue their claim for resettlement on the islands if the entire Chagos Archipelago were a marine reserve.\nIt is, of course, understandable that Mr Roberts would want to make it clear that the establishment of the MPA would not affect Americas use of BIOT as a military base.\nBut, whether that also required the statement that the Chagos Islanders would find it difficult to resettle if the entire Chagos Archipelago became a marine reserve is more imponderable.\nAfter all, many of the islands in the archipelago were not required by the US for their military activities in the area.\nThe obvious question arises, therefore, why it was necessary to state that the MPA would have the effect of preventing resettlement in any of the islands.\nIt has been pointed out that this issue was not raised in argument in the Supreme Court.\nThat, as it seems to me, is beside the point.\nThe unalterable fact is that no evidence has been produced which established that the entire archipelago was required for American military activities.\nWhat was at stake here was the denial of the opportunity to the Chagos Islanders to return to their ancestral homeland and whether that denial was required in order to achieve the reasonable requirements of the USA.\nThat circumstance should concern this court, whether or not it was raised in argument, when we are asked to consider the impact which the introduction of the cable in evidence might have had on the outcome of the proceedings before the Divisional Court.\nThere was no evidence that the continuation of military activities required the depopulation of all the islands.\nIn those circumstances, the reason that the civil servants advised the minister to make a MPA was highly relevant.\nIt is therefore not only legitimate for, it is required of, a court examining the reasons for making the MPA to address the question whether the minister has been properly appraised of all material factors.\nIf it was wholly unnecessary to keep uninhabited the islands other than Diego Garcia, the motives of the civil servants in recommending that course were directly relevant to the question of why they had advocated the establishment of the MPA.\nWas it to frustrate any further campaign to allow the Chagos Islanders to return to their homeland? To dismiss and treat as irrelevant this consideration simply because it did not feature in the appellants argument cannot be right.\nIt has been pointed out that, in the original exchange of notes between the United States and United Kingdom in 1966 it was stipulated that all of the BIOT be set aside for defence purposes and that any significant change of the BIOTs status that could impact the BIOTs strategic use would require US consent.\nBut what of that? Here we are examining the motivation for the recommendation of the establishment of an MPA.\nWas it for the purpose of protecting marine life? Or was it in order to ensure that the Chagossians campaign could go no further and that the Americans desire to have all the BIOT preserved for their use (assuming that that desire had persisted since 1966) would be fulfilled? It is no answer to the charge of improper motive as to the reasons for advocating the establishment of the MPA, that this chimed with the wishes of the USA.\nAt para 7 of the cable, Mr Roberts is recorded as saying that a way had to be found to get through the various Chagossian lobbies.\nHe is said to have admitted that the British government was under pressure from the Chagos Islanders to permit resettlement of the outer islands.\nFurther, Mr Roberts is recorded as having observed that, according to the British governments current thinking, there would be no human footprints and no Man Fridays on BIOTs uninhabited islands.\nIn the words of the cable, Mr Roberts asserted that establishing a marine park would, in effect, put paid to resettlement claims of the archipelagos former residents.\nWhen it was suggested by the Americans present at the meeting that the advocates of Chagossian resettlement continued vigorously to press their case, Mr Roberts replied that the UKs environmental lobby was far more powerful than the Chagossians.\nComment by the author of the cable is littered with observations about the possible resettlement of the Chagos Islands.\nReference is made to the possible appeal by the Chagossians to the European Court of Human Rights (ECtHR) and the British governments assurance that this would be firmly resisted.\nThis is the pervasive theme of the meeting.\nAnd the cable also stated that after the meeting had ended, Ms Yeadon urged US embassy officials to affirm that the US government required the entire BIOT for defence purposes.\nShe is recorded as having said that making this point would be the best rejoinder to the Chagossians assertion that partial settlement of the outer islands would have no impact on the use of Diego Garcia.\nThis is important.\nThere is no evidence that America did need the entire BIOT.\nWhy, if she did, did Ms Yeadon urge the US government to make this claim, if not in order to thwart the Chagos Islanders aspiration to return to at least part of their homeland?\nThe final two paragraphs of the cable contain significant observations in relation to the importance placed on the possibility of resettlement.\nThese are the relevant passages from those paragraphs: Regardless of the outcome of the ECtHR case, however, the Chagossians and their advocates, including the All Party Parliamentary Group on Chagos Islands (APPG), will continue to press their case in the court of public opinion.\nTheir strategy is to publicise what they characterise as the plight of the so called Chagossian diaspora, thereby galvanising public opinion and, in their best case scenario, causing the government to change course and allow a right of return.\nThey would point to the governments recent retreat on the issue of Gurkha veterans right to settle in the UK as a model We do not doubt the current governments resolve to prevent the resettlement of the islands former inhabitants, although as FCO Parliamentary Under Secretary Gillian Merron noted in an April parliamentary debate, FCO will continue to organise and fund visits to the territory by the Chagossians.\nWe are not as sanguine as the FCOs Yeadon, however, that the Conservatives would oppose a right of return.\nIndeed, MP Keith Simpson, the Conservatives Shadow Minister, Foreign Affairs, stated in the same April parliamentary debate in which Merron spoke, that HMG should take into account what I suspect is the all party view that the rights of the Chagossian people should be recognised, and that there should at the very least be a timetable for the return of those people at least to the outer islands, if not the inner islands.\nEstablishing a marine reserve might, indeed, as the FCOs Roberts stated, be the most effective long term way to prevent any of the Chagos Islanders former inhabitants or their descendants from resettling in the BIOT.\nIt is plain, as I have said, that a dominant theme of the meeting was that the establishment of the MPA would prevent any resettlement of the islands.\nIt certainly preoccupied the Americans and it was a recurring refrain in the assurances that Mr Roberts and Ms Yeadon are said to have given.\nViewed in isolation, the cable certainly creates a suspicion that this was a motivating factor in the decision to declare an MPA.\nThe Divisional Court concluded that the cable was not admissible in evidence.\nIt nevertheless permitted Mr Pleming to cross examine Mr Roberts and Ms Yeadon about its contents on the basis that its authenticity was assumed but not established.\nThe Court of Appeal considered that the cable was admissible but held that, even if it had been admitted, it would have made no difference to the conclusion of the Divisional Court that improper motive had not been established.\nThe arguments about admissibility have been fully canvassed in the judgments of Lord Mance and Lord Sumption and need not be repeated here.\nI agree with Lord Mance that it has not been established that the cable remained part of the archive of the London mission and, on that account, that the status of inviolability can no longer be claimed.\nI also agree with Lord Sumption that it cannot be a violation of the US embassys archives to use in litigation a document which has entered the public domain.\nOne must keep in mind that the exclusion of the cable had two distinct effects.\nFirst, it restricted the cross examination of Mr Roberts and Ms Yeadon.\nIt was not possible to challenge them on the basis that the document was genuine and was to be taken as having recorded their statements at the meeting and, in Ms Yeadons case, subsequently.\nBeing able to confront a witness with statements that she or he previously made which are inconsistent with their testimony is one of the most important forensic tools in the cross examiners armoury.\nTechnically, Mr Pleming was bound by the answers given by the witnesses to questions based on the cables contents.\nThis would not have been the case if the cable had been admitted in evidence.\nIt has been suggested that the evidence given by Mr Roberts about the meeting on 12 May and Ms Yeadons own evidence give a picture which is generally and substantially consistent with that presented by the cable.\nMuch of the evidence that they gave coincides with the contents of the cable, it is true.\nBut in crucial areas it is incontestably inconsistent.\nIt is not in the least surprising that much of the evidence from the civil servants and the contents of the cable were found to coincide.\nIndeed, it was part of Mr Plemings admitted strategy to point to that coincidence in order to establish the cables authenticity.\nBut to imply that there were not highly significant differences, differences which, moreover, touched on the very issue at stake in this case, is unrealistic.\nMr Roberts denied using the expression, Man Fridays.\nMs Yeadon denied that Mr Roberts had said that establishing an MPA would in effect put paid to resettlement claims.\nThis is directly contrary to the contents of the cable.\nIndeed, it is directly contrary to the evidence of Mr Roberts himself, for he is recorded as having accepted that he did say to the US officials that the establishment of an MPA would in effect put paid to the resettlement claims.\nThe opportunity to exploit these differences if the cable had been admitted in evidence, as it should have been, cannot be airily dismissed.\nThe entire cursus of the cross examination (and consequently the conclusions that might have been reached on the critical issue) could have been radically different.\nThe second consequence of excluding the cable from evidence was that it did not rank as independent material with the potential to act as a significant counterweight to the FCO witnesses testimony.\nIf the Divisional Court had admitted the cable in evidence, it would have to be pitted as an item of evidence which was in many respects directly contrary to the testimony of Mr Roberts and Ms Yeadon.\nThe court would have been required to assess the veracity and reliability of their claims against the contemporaneous evidence provided by the cable.\nAs it was, the Divisional Court merely theorised about whether Mr Plemings cross examination would have been more effective if the cable had been admitted in evidence.\nIt did not consider the cables contents for their capacity to discredit the testimony of the two FCO witnesses.\n(ii) The curtailing of cross examination\nDealing with the impact of the exclusion of the cable from evidence, the Court of Appeal said at para 88: [Our] outline of the cross examination of both witnesses does not capture its full flavour.\nIt was extensive and searching.\nIn our judgment, Mr Pleming was not disadvantaged by not being able to put questions on the basis that the cable was authentic and a true record of what was said at the meeting of 12 May 2009.\nHe tested the evidence of Mr Roberts and Ms Yeadon on the basis of the cable.\nIt is true that he was not able to put questions like: have you any explanation for the fact that you are recorded as having said X when you deny having said it? But it is unrealistic to suppose that, if Mr Pleming had been able to put such questions, this would have materially affected the thrust or course of the cross examination or of the answers that were given.\nThe Divisional Court was right to say that the dividing line between questions which its ruling permitted and those which it did not permit was fine.\nIn our judgment, the inhibition on Mr Plemings questions can have had no material effect on the course or the outcome of the cross examination.\nMr Pleming was able to, and did in fact, explore the accuracy of the contents of the cable with both witnesses.\nIn particular, he probed the purpose of the MPA and whether what was purportedly recorded in the cable as having been said had in fact been said.\nIt is true that there was extensive cross examination of Mr Roberts and Ms Yeadon based on the contents of the cable.\nThe difference between probing witnesses accounts and confronting them with admissible evidence which flatly contradicts their accounts should not be underestimated, however.\nAs the Court of Appeal observed (in para 80 of its judgment), Mr Roberts refused to answer questions as to whether the contents of the cable were accurate.\nThis was in reliance on the governments policy of neither confirm nor deny (NCND) policy.\nIt appears to have been accepted without demur by the Divisional Court and the Court of Appeal that NCND justified this stance.\nFor my part, I would not be disposed to accept that this policy could be resorted to in order to avoid answering a relevant question with which the court was required to deal.\nGiven that the Divisional Court had decided that the authenticity of the cable should be assumed, it appears to me that Mr Roberts should have been required to answer as to whether what was recorded in the cable faithfully recorded what had taken place.\nAs it happens, of course, Mr Roberts did address the question whether some parts of the cable were accurate see para 81 of the Court of Appeals judgment.\nWhat is clear, in my view, is that Mr Roberts could not have relied on NCND if the cable had been admitted in evidence.\nNor could he have refused to deal with what the Court of Appeal described in para 82 of its judgment as the ultimate question: whether he had an explanation for the fact that he was recorded as having made certain statements which he denied having uttered.\nIn deciding whether being required to answer such a question could have made a difference to the outcome of the Divisional Court case, one must consider the range of possible responses that might have been given. (In this context, Lord Mance has accepted for the purposes of the appeal that the appropriate question is whether the admission of the cable could have made a difference see para 23 of his judgment.\nFor reasons that I will give later in this judgment, I consider that this is indubitably the correct test in this instance.)\nIf one imagines that Mr Roberts answer to the ultimate question was that he had no explanation, or even, when pressed, that the cable was indeed accurate and that he recanted his initial disavowal of what he was recorded as having said, it is not difficult to conclude that this could have made a significant difference to the courts assessment of him as a reliable witness.\nThe Court of Appeal did not consider the range of possible responses that Mr Roberts might have given to this question.\nIn my opinion, it should have done.\nAnd if it had done, it could not have reached the conclusion that it did.\n(iii) The capacity of the cable to counter the FCO evidence\nThe Court of Appeal dealt cryptically with the second issue, namely, the status of the cable as independent material with the potential to act as a counterweight to the FCO witnesses testimony.\nAt para 89, the court said, [w]e do not accept that there is a realistic possibility that the courts assessment of the evidence of Mr Roberts and Ms Yeadon would have been affected if the cable had been formally admitted in evidence as an authentic document.\nCase law emphasises the importance of documentary evidence in assessing the credibility of oral witnesses.\nIn Onassis v Vergottis [1968] 2 Lloyds Rep 403 Lord Pearce, having reviewed the various reasons that a witnesss oral testimony might not be credible, stated, all these problems compendiously are entailed when a judge assesses the credibility of a witness; they are all part of one judicial process.\nAnd in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.\nIn Armagas Ltd v Mundogas SA (The Ocean Frost) [1985] 1 Lloyds Rep 1, 57 Robert Goff LJ made this observation: It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence reference to the objective facts and documents, to the witnesses motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth.\nThat approach was approved by the Privy Council in Grace Shipping Inc v CF Sharp & Co (Malaya) Pte Ltd [1987] 1 Lloyds Rep 207 and applied in a number of subsequent cases.\nFor example, in Goodman v Faber Prest Steel [2013] EWCA Civ 153, the Court of Appeal held that the trial judge had erred in accepting a personal injury claimants evidence of pain without dealing with contradictory documentary evidence and explaining why the claimants evidence was to be preferred.\nMoore Bick LJ applied the approach of Robert Goff LJ and stated that memory often plays tricks and even a confident witness who honestly believes in the accuracy of his recollection may be mistaken.\nThat is why in such cases the court looks to other evidence to see to what extent it supports or undermines what the witness says and for that purpose contemporary documents often provide a valuable guide to the truth.\nHe concluded that: [O]ne is left with the clear impression that [the judge] was swayed by Mr Goodmans performance in the witness box into disregarding the important documentary evidence bearing on what had become the central question in the case.\nIt may have been open to her to prefer what he had said in the witness box, but if she was minded to do so it was incumbent on her to deal with the documentary evidence and explain why Mr Goodmans oral evidence was to be preferred.\nIt is not to be suggested that the Divisional Court ignored or disregarded the important documentary evidence which the cable constituted.\nBut if it had admitted the cable in evidence, as should have happened, the contrast between some of its contents and the evidence of Mr Roberts and Ms Yeadon would have been starker.\nThe need to confront the discrepancy between the two could not have been avoided.\nAlthough said in relation to commercial litigation, I consider that the observations of Leggatt J in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), paras 15 22 have much to commend them.\nIn particular, his statement at para 22 appears to me to be especially apt: the best approach for a judge to adopt is, in my view, to place little if any reliance at all on witnesses recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.\nThis does not mean that oral testimony serves no useful purpose though its utility is often disproportionate to its length.\nBut its value lies largely, as I see it, in the opportunity which cross examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events.\nAbove all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.\nThe intellectual exercise on which the Divisional Court was engaged in evaluating the evidence of Mr Roberts and Ms Yeadon, having refused to admit the cable in evidence, was quite different from that on which it would have had to embark if the evidence had been received.\nBy refusing to admit the evidence, the court effectively had confined its role to an assessment of how well the witnesses had withstood cross examination.\nIf the cable had been admitted, the discrepancies between the contents of the cable and their testimony would have had to be considered objectively, while keeping in mind all the adjurations as to the likelihood of contemporaneous documentary evidence being intrinsically more reliable.\nIf the Divisional Court had admitted the cable in evidence, what were the possible consequences? If it had concluded, as well it might, that it was inherently unlikely that the cable would have recorded Mr Roberts as having said there would be no human footprints and no Man Fridays on BIOTs uninhabited islands, unless he had actually used those words, what impact would that have had on his believability? These were striking expressions.\nIndeed, Ms Yeadon said that, if they had been used, she would have been shocked.\nCould they have been fabricated by the author of the cable? Why should they have been? If the cable had been admitted and was therefore a freestanding item of evidence, it is at least possible that the Divisional Court would have decided that it was unlikely that the person who composed the cable would have fabricated those phrases and attributed them directly to Mr Roberts.\nAnd, if it was concluded that this was unlikely, what effect would that have on Mr Roberts credibility in light of his denial of having used them?\nWhen the Court of Appeal came to consider what difference the admission in evidence of the cable might have made, the question for them should have been whether a different outcome was possible, not whether that would have happened or even whether it was likely. (I will explain presently why I consider that the possibility of a different result was the correct test.) The Court of Appeal, however, seems to have considered various possible formulations at different points of its judgment.\nAt para 89 it twice stated that it was unrealistic to suggest that the court would have reached a different conclusion, had the evidence been admitted.\nLater in the same paragraph the court said that it had borne in mind that a legally correct approach would have made no difference to the outcome: see, for example, R v Chief Constable of the Thames Valley Police, Ex p Cotton [1990] IRLR 344, per Bingham LJ at para 60.\nThese statements suggest that the appeal court considered that, unless the admission of the cable would have made a difference, as opposed to whether it could have done so, a review of the Divisional Courts decision would not be appropriate.\nI do not consider that this is the correct test and I turn now to that issue.\n(iv) The correct test\nIn Malloch v Aberdeen Corpn [1971] 1 WLR 1578, the appellant had been dismissed from his employment as a teacher by a motion passed by an education committee.\nHe claimed that he had not been given a fair hearing and that, if he had been permitted to make representations, it was possible that some members of the committee would not have voted in favour of his dismissal. (The motion required to be carried by a two thirds majority).\nThe House of Lords held that teachers in Scotland had in general a right to be heard before they were dismissed and, since, in view of the ambiguity of the regulations by reason of which the appellant had been dismissed, he might have had an arguable case before the committee and might have influenced sufficient members to vote against his dismissal.\nThe committee was in breach of duty in denying him a hearing and the resolution and dismissal were accordingly unlawful.\nAt 1582H Lord Reid dealt with an argument that affording the appellant a hearing would have made no difference.\nHe said: it was argued that to have afforded a hearing to the appellant before dismissing him would have been a useless formality because whatever he might have said could have made no difference.\nIf that could be clearly demonstrated it might be a good answer.\nBut I need not decide that because there was here, I think, a substantial possibility that a sufficient number of the committee might have been persuaded not to vote for the appellants dismissal.\nThe substantial possibility that the Divisional Court would have reached a different conclusion if Mr Roberts evidence had taken a different turn as a consequence of his having to address and answer the ultimate question cannot be dismissed, in my opinion.\nMoreover, if the court had been required to confront the obvious conflict between Mr Roberts and Ms Yeadons evidence and that contained in the cable, again there was a distinct possibility that it would have been concluded that the frustration of the campaign by the Chagossians to resettle the outlying islands was, at least, a collateral purpose in the civil servants recommendation to the minister that the MPA be established.\nLord Mance has said that the test to be applied in deciding whether a different outcome could or would have eventuated must depend on the context, including, in particular, how well placed the court is to judge the effect of any unfairness para 23. Perhaps.\nI would observe, however, that if the court cannot with confidence judge the measure of unfairness to the affected individual, this should surely impel the adoption of the could rather than the would test.\nUnless one could be confident that unfairness would not accrue, I find it difficult to see how it could be otherwise.\nAs noted at para 106 above, the Court of Appeal suggested that the proper manner of dealing with the question was to ask whether a legally correct approach would have made no difference to the outcome.\nIn relation to this case, that means that one should ask the question, if the Divisional Court had admitted the cable in evidence and if it had permitted cross examination on the basis that it was in evidence, would this not have affected the outcome.\nOn one view, this partakes of the application of a could test, and, in effect, this is how Lord Mance considers that the Court of Appeal dealt with the issue.\nFor the reasons given earlier, I do not agree.\nEven if that had been the Court of Appeals approach, however, I could not agree with the conclusion that it reached.\nWhat might have happened, as opposed to what would have happened involves consideration of a different range of imponderables.\nDeciding what would have happened involves the decision maker in imposing, to some extent at least, his or her own view as to what ought to have happened.\nBy contrast, deciding what might have happened requires the decision maker to envisage a range of possibilities and to decide whether any one of those might have been chosen by the original decider, if the position before him or her had been as it has now been found to obtain.\nThe Court of Appeal did not review the range of possible outcomes that might have accrued if the cable had been admitted in evidence or if Mr Pleming had been permitted to press on with this cross examination to demand an explanation as to why the civil servants evidence differed from its contents.\nIn my opinion, that was central to a proper examination of the issue.\n(v) The genesis and development of the MPA\nIt is true, as Lord Mance points out in para 25 of his judgment, that the whole idea of an MPA and a no take zone came from Pew, an American environmental group.\nIt is also true, again as stated by Lord Mance, that David Miliband, the then Secretary of State for Foreign and Commonwealth Affairs, was the relevant decision maker as to whether the MPA should be established.\nThe circumstance that it was the minister, and not the civil servants who were advising him, who would ultimately decide whether the MPA would be made does not, of itself, dispose of the question whether there was a collateral motive in the advocacy of the scheme by Mr Roberts and Ms Yeadon.\nIn his note of 5 May 2009 to Mr Miliband, Mr Roberts referred to the Chagos Islanders plans for resettlement.\nHe was bound to do so because this was an obvious aspect to be taken into account, in the event that an MPA was declared.\nThe note contains a significant passage on this question (quoted by Lord Mance at para 27): Assuming we win in Strasbourg, we should be aiming to calm down the resettlement debate.\nCreating a reserve will not achieve this, but it could create a context for a raft of measures designed to weaken the movement.\nThis statement is to be contrasted with what Mr Roberts is quoted in para 7 of the cable as having said during the meeting with American officials some seven days later.\nAt that meeting he is recorded as having claimed that British government thinking was that there would be no human footprints and no Man Fridays on BIOTs uninhabited islands.\nHe is also recorded as having asserted that establishing a marine park would, in effect, put paid to resettlement claims of the archipelagos former residents.\nSo, although he told the minister that the MPA would not calm down the resettlement debate, he was telling the Americans that the resettlement claims would be effectively extinguished.\nAnd, of course, in further contrast to what the minister was being led to believe would be the effect of the MPA on the Chagossians hopes of resettlement, Ms Yeadon was recorded in the cable as encouraging US embassy officials to affirm that the US government required the entire BIOT for defence purposes so as to nullify the Chagossians assertion that partial settlement of the outer islands would have no impact on the use of Diego Garcia.\nThe circumstance that the decision to make the MPA rested with the minister does not immunise the process by which that decision was made from the possible taint of improper motive.\nIf those who advised the minister were actuated by such a motive but tailored their advice to the minister so as to conceal it, the fact that the minister took the decision does not render the underlying collateral purpose of no consequence.\nThe contrast between the advice given to the minister and the contents of the cable incidentally reinforces the need for an unrestrained cross examination of the witnesses, particularly because, as Lord Mance observed in para 40, the Divisional Court did not address the contradiction in the evidence of Mr Roberts and that of Ms Yeadon as to whether the former did in fact say that an MPA would put paid to resettlement.\nLord Mance has suggested (in paras 41 43) that even if Mr Roberts and\/or Ms Yeadon had an improper motive, there is no conceivable reason to conclude that this affected the ultimate decision maker.\nI am afraid that I cannot agree.\nTrue it is, as the Court of Appeal observed in para 91 of its judgment, that the decision was personal to the Foreign Secretary.\nTrue it may also be, as the Court of Appeal found, that the Foreign Secretary believed that the declaration of an MPA would redound to the credit of the government and, perhaps, to his own credit, although I am not at all clear as to the evidence on which the court drew to support that conclusion.\nBut, if the minister had been aware that the civil servants were recommending the establishment of an MPA with the covert purpose of ensuring that the Chagos Islanders ambition to return to their homeland would never be fulfilled, can it be said that his decision would be immune from challenge? Surely not.\nIt is not a question of reconfiguring the principle in Carltona Ltd v Commissioners of Works [1943] 2 All ER 560 so as to fix the Secretary of State with the knowledge, motives and considerations of civil servants.\nRather it is whether a decision of the Secretary of State, taken in ignorance of a concealed reason for the recommendation on which he acted, can be regarded as lawful.\nIn my judgment, a decision taken on a recommendation made to him without knowledge of the true reasons that it was made, cannot be upheld on the basis that it was a decision made without regard to material factors.\nOn the premise that the advice to the Foreign Secretary was fashioned so as to withhold from him the true motivation for it, his decision is impeachable because he was deprived of the opportunity to consider all relevant circumstances and, on that account, it could not stand.\nAgain, it is suggested that this was not argued on behalf of the appellant before this court.\nFor the reasons given earlier, I do not accept that this is a basis on which the point may be ignored, if it has validity.\nLord Mance has stated, however, that the withholding of such information, if it were deemed sufficient to undermine a ministerial decision, would lead logically to the conclusion that any irrelevant misconception possessed by any civil servant at any level in the civil service hierarchy in relation to any proposal ultimately reaching Cabinet level could undermine a Cabinet decision. para 48.\nWith much regret, I must register my profound disagreement with this statement.\nIn the first place, if the appellants case is made good, the purpose of Mr Roberts and Ms Yeadon was not the product of a misconception.\nIt was the outworking of a strategy to promote the establishment of the MPA for an ulterior motive.\nA minister whose imprimatur was required to endorse the advice given would surely need to be aware of the true motive for recommending the course that he had been advised to follow, in order that his decision be immune from challenge.\nThere is no logical connection between the withholding of vital, relevant information from a decision maker and his failure to be aware of a misconception on the part of those advising him.\nThe fact that the Foreign Secretary rejected the proposal that he should consult on the proposal is nothing to the point, in my opinion.\nHe decided to proceed with the MPA on the basis of advice that it would not, of itself, eliminate the chances of resettlement of the Chagos Islands.\nIf, contrary to that advice, it was the view of the civil servants that the MPA would achieve precisely that aim, the minister should have been aware of it.\nNot being informed of it meant that he was not in a position to take all material considerations into account.\nI consider, therefore, that the Court of Appeal should have recognised that there was a substantial possibility that, not only would the Divisional Court have taken a different view of the evidence of Mr Roberts and Ms Yeadon, if they had admitted the cable and the case had proceeded to its conventional conclusion, but that there was an equally substantial possibility that it would have concluded that the Foreign Secretarys decision could be impugned because it was taken on a misapprehension of the true facts and circumstances.\nFor these reasons, I would have allowed the appeal and ordered that the matter be remitted for hearing before a Divisional Court with the direction that it be reconsidered on the basis that the cable was admissible in evidence.\nFishing rights\nI agree with Lord Mance on the issue of fishing rights.\nLADY HALE:\nThis case is of huge importance to the Chagossians in their campaign to be permitted to re settle in their islands and to fish in the waters surrounding them.\nOn the substance of the appeal, I agree with Lord Kerr that we cannot be confident that the findings of the Divisional Court would have been the same had the Wikileaks cable been admitted into evidence and counsel been permitted to cross examine the FCO officials upon it.\nThe crucial legal issue in the case is therefore the admissibility of the cable, which is a matter of considerable importance both nationally and internationally.\nI agree with both Lord Mance and Lord Sumption that inviolable in articles 24 and 27(2) of the Vienna Convention on Diplomatic Relations in general means, among other things, that the archives and documents (article 24) and the official correspondence (article 27(2)) of the mission cannot generally be admitted in evidence, at least in the courts of the receiving state, because to do so would interfere in the privacy of the communications of the mission, both internally and with its sending government.\nThe question, therefore, is when such inviolability is lost.\nIn Lord Mances view, the cable did not remain part of the archive of the London mission once it had been remitted to the State Department or some other location for information and use there (para 20).\nIt is indeed very probable that the leak did not take place from the mission but from elsewhere in the United States government.\nNevertheless, as the main purpose of the inviolability rule is to allow the mission to communicate in confidence with the sending government, documents emanating from a mission must retain their confidentiality and consequent inviolability in some circumstances.\nLord Sumption agrees with Lord Mance but bases this on the principle of control.\nDocuments, he says, are inviolable if they are under the control of the missions personnel, as opposed to other agents of the sending state (para 68).\nI can agree with this only if it is understood that control includes the restrictions placed by the sending mission (and for that matter the sending state communicating with the mission) on the further transmission and use of the document.\nIt is my understanding of civil service practice in this country that the initiator of a document decides upon the appropriate level of confidentiality and marks the document accordingly.\nOther persons within government who receive the document are bound to respect that marking. (Cabinet Office, Government Security Classifications, April 2014, eg para 28.) It is reasonable to assume that other countries have similar practices in their intra governmental communications.\nIt cannot be the case that a diplomatic communication loses its inviolability once it has left the mission.\nThe concept of control must include the restrictions placed by the sending mission on the dissemination of the communication, subject to the directions of their superiors in the sending state.\nIn both versions of the Wikileaks cable which we have one published in the Guardian and one in the Daily Telegraph it was classified Confidential by Political Counsellor Richard Mills for reasons 1.4b and d (whatever they may be).\nThat indicates a rather low level of control exercised over the document, which obviously found its way into many hands before it was acquired and put into the public domain by Wikileaks.\nWhatever may be the position in relation to other documents passing between a mission and their sending department, it seems clear in this case that whatever control there had initially been exercised over this document, it was lost even before it was put into the public domain.\nI therefore agree that it was no longer inviolable and should have been admitted in evidence in this case.\nAs Lord Kerr has explained, its contents were such that they could have made a difference to the result.\nI would therefore have allowed this appeal.\n","output":"The Appellant is the chair of the Chagos Refugees Group.\nHe represents residents of the Chagos Archipelago in the British Indian Ocean Territory (BIOT) who were removed and resettled elsewhere by the British Government between 1971 and 1973 and were prevented from returning.\nFollowing earlier proceedings, it remains prohibited under the BIOT Constitution and Immigration Orders 2004, for Chagossians to return to BIOT.\nIn these proceedings the Appellant challenged the decision of the Respondent to establish a marine protected area (MPA) in which there would also be no fishing in April 2010 in BIOT.\nThis led to an end of commercial fishing carried on by Chagossians in the waters surrounding BIOT.\nThe Appellants challenge before the Supreme Court had two limbs: (i) the Respondents decision was motivated by the improper ulterior motive of making future resettlement by the Chagossians impracticable, and (ii) the consultation which preceded the decision was flawed by a failure to disclose the arguable existence, on the part of Mauritius, of inshore fishing rights (i.e. within a 12 mile limit from the BIOT shore).\nA sub issue within limb (i) concerned the admissibility of a document which formed the core of the Appellants case.\nThe document, which was published by The Guardian on 2 December 2010 and The Telegraph on 4 February 2011, purported to be a communication cable sent on 15 May 2009 by the US Embassy in London to departments of the US Federal Government in Washington DC, to elements in the US military command structure and to the US Embassy in Mauritius.\nThe cable is recorded as having been sent to the newspapers by Wikileaks.\nIt claims to be a record of conversations between employees (Mr Roberts and Ms Yeadon) of the Foreign and Commonwealth Office (FCO) and US officials.\nIn the Administrative Court, permission was initially given to cross examine Mr Roberts on the cable.\nThis was to be on the assumption that the cable was what it purported to be and that it would be open to the Appellant, at the end of the hearing, to submit that it was an accurate record of the meeting and that the Court should rely on it evidentially.\nVarious questions were put to Mr Roberts on that basis.\nFollowing further submissions from the Respondent concerning the inviolability of the US missions diplomatic archive under the Vienna Convention on Diplomatic Relations 1961 (VCDR) and the Diplomatic Privileges Act 1964, the Administrative Court reversed its position.\nThe Appellant was no longer able to invite the Court to treat the cable as genuine.\nFurther cross examination of Mr Roberts and Ms Yeadon was to proceed on that basis.\nThe Court of Appeal considered that the cable should have been admissible but that its exclusion before the Administrative Court would not or could not have made any difference to that courts conclusions on improper purpose.\nThe Supreme Court unanimously holds that the cable should have been admitted into evidence before the Administrative Court.\nLord Mance and Lord Sumption (with whom Lord Neuberger, Lord Kerr,\nLord Clarke, and Lord Reed agree) and Lady Hale write concurring judgments on the issue of the admissibility of the cable.\nA majority of the Court led by Lord Mance with whom Lord Neuberger, Lord Clarke, Lord Sumption and Lord Reed agree, dismisses the appeal on limb (i).\nThe exclusion of the cable by the Administrative Court could have had no material effect on the outcome regarding improper motive.\nLord Kerr and Lady Hale dissent on limb (i) of the appeal.\nThe Court unanimously dismisses the appeal on limb (ii).\nAdmissibility of the Cable In his judgment Lord Mance holds that the cable had lost its inviolability, for all purposes, including its use in cross examination or evidence in the present proceedings [21 and 90].\nThe inviolability of documents which are part of a mission archive under arts 24 and 27(2) of the VCDR makes it impermissible to use such documents (or copies) in a domestic court of the host country, absent extraordinary circumstances such as state security, or express waiver from the mission state [17 and 20].\nThis principle is subject to two qualifications: (a) the document must constitute and remain part of the mission archive, and (b) its contents must not have become so widely disseminated in the public domain so as to destroy any confidentiality or inviolability that could sensibly attach to it.\nRegarding (a), in the present case, once the cable reached the State Department or any other addressee, the copy in their hands became a document in the custody of the US Federal Government and not part of the London Embassy archive.\nAs a matter of probability, the cable was extracted from the State Department or one of the foreign locations to which it had been transmitted.\nOn that basis the cable is admissible [20].\nRegarding (b), it is in principle possible for a document to lose inviolability where it comes into the public domain, even in circumstances where the document has been wrongly extracted from the mission.\nThe cable has been put into the public domain by the Wikileaks publication and the newspaper articles which followed, in circumstances for which the Appellant has no responsibility.\nOn that ground, the cable would also be admissible [21].\nIn his judgment, Lord Sumption concludes that a document is part of the archives of a diplomatic mission when it is under the control of the missions personnel, as opposed to other agents of the sending state, whether directly or by virtue of the terms on which the mission transmitted the document to another governmental entity.\nThe documents origin and contents are irrelevant to that issue [68].\nThe confidentiality and inviolability of such documents depends not on their subject matter or contents but on their status as part of the archives or documents of a diplomatic mission, protected by art 24 of VCDR [69].\nIt is the obligation of the receiving state to give effect to that status, which includes preventing its infringement by other parties.\nThus, a court as an organ of the state would violate art 24 if it received and used material from the archives of a mission which came into the hands of a third party without authority [70 71].\nThis is subject to a reservation.\nDocuments obtained from the archives of a mission without authority but which have entered the public domain and are freely available have already had their confidentiality destroyed.\nA court would not be an instrument of the destruction of its confidentiality by using it in that circumstance [74 75].\nThe Respondents cross appeal on this issue faces two distinct difficulties (a) the cable did not emanate from the US mission in London and (b) the document has entered the public domain [76].\nLady Hale agrees with both Lord Mance and Lord Sumption that the inviolability of the archives, documents and official correspondence of a mission means that they cannot generally be admitted in evidence under arts 24 and 27(2) of VCDR [124].\nHowever, Lady Hale introduces the qualification to the judgments given by Lord Mance and Lord Sumption that documents emanating from a mission must retain their confidentiality and consequent inviolability in some circumstances, the main purpose of the inviolability rule being to allow the mission to communicate in confidence with the sending government [125]; and that control must include restrictions placed by the sending mission on the further transmission and use of the document, such as markings of confidentiality [126 127].\nHowever, in this case, whatever control was initially exercised over the document, it had found its way into many hands and was lost even before it was put into the public domain by Wikileaks.\nAs such, it was no longer inviolable and should have been admitted in evidence: [127 128].\nImproper Motive Lord Mance (with whom Lord Neuberger, Lord Clarke, Lord Sumption and Lord Reed agree) concludes that the Court of Appeal was correct to conclude that the Administrative Courts ruling that the cable was inadmissible had no material effect on the outcome of proceedings and was not a ground for allowing the appeal or for concluding that the motivation for creating the MPA was improper [49].\nThe appropriate test is whether the admission of the cable for use in cross examination and to weigh against other evidence could have made a difference (however, the precise test must depend on the context, including how well placed the court is to judge the effect of any unfairness) [23 24].\nThis is in substance how the Court of Appeal approached the issue [24].\nThe Administrative Court undertook a full and careful review of the genesis and development of, and decision to announce, the MPA and no take zone [24].\nNeither further cross examination on the cable, nor the cable itself admitted as evidence, would have led to any different outcome before the Administrative Court [42].\nThe Administrative Court heard cross examination of Mr Roberts and Ms Yeadon on important passages of the cable [37].\nBoth gave evidence that was generally and substantially consistent with the cable [39].\nThe cable is at the very lowest ambiguous as to whether references to resettlement were uttered in circumstances indicating that they had a role in motivating the proposal for an MPA.\nIt seems very unlikely that a British civil servant would have disclosed an improper motivation of this nature, rather than outlining the practical consequences of an MPA which is what would have concerned the Americans [40].\nFurthermore, even if Mr Roberts and\/or Ms Yeadon did have and voice illegitimate motives for the proposal for an MPA, this was not apparent and there is no conceivable basis for thinking that this affected the ultimate decision to create the MPA, which was taken personally by the Respondent after presentation to him on a basis to which no objection is taken [43 49].\nLord Kerr (with whom Lady Hale agrees) dissents on the issue of improper motive.\nThey would have allowed the appeal and remitted the case on limb (i).\nThey consider that the Court of Appeal should have recognised that there was a substantial possibility that the Administrative Court would have taken a different view of the evidence of Mr Roberts and Ms Yeadon if they had admitted the cable and the case had proceeded to its conventional conclusion [121 and 128].\nThe correct test to be applied by the Court of Appeal is what might have happened if the cable was admitted in evidence not what would have happened [106 112].\nThe exclusion of the cable restricted the cross examination of Mr Roberts and Ms Yeadon because it was not possible to challenge their testimony where it was inconsistent, on the basis that the document was genuine [91].\nExcluding the cable from evidence also meant that it did not rank as independent material and as a significant counterweight to the FCO witnesses testimony [93].\nFurther, there was an equally substantial possibility that the Court of Appeal would have concluded that the Respondents decision could be impugned because it was taken on a misapprehension of the true facts and circumstances [121].\nFishing Rights Lord Mance (with whom all of the other Justices agree) considers that permission to appeal should be given on this issue, but the appeal dismissed [50 and 63].\nThe absence of any mention of Mauritian fishing rights, whether by reference to an undertaking given by the UK Government and preferential treatment of Mauritian registered or owned vessels or evidence about such rights, does not undermine the Governments consultation so as to justify setting it aside.\nThe creation of a no fishing MPA would obviously affect inshore fishing and threaten the livelihood of vessels which had previously been licensed to fish in territorial waters.\nIt was open to Mauritius to raise this objection in response to the consultation, but it did not.\nIt would be inappropriate to treat the consultation process as invalid when the party to whom the rights allegedly belonged had full opportunity to assert them.\nThere is also no reason to believe that the ultimate decision would or could have been any different if the consultation had specifically drawn attention to the possible existence of Mauritian fishing rights [62 and 122].\nThe UN Convention on the Law of the Sea arbitral tribunals finding that such fishing rights do actually exist and their effect in domestic law, as regards the MPA or no take zone, was not relied on or capable of being relied on before the Supreme Court or relevant to the issues arising [50 57, 63].\n","id":27}
{"input":"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.\nAs the Court of Appeal observed, such covenants are common and so the issue is an important one.\nThis particular dispute concerns the leases of the flats in 11 13 Randolph Crescent in Maida Vale.\nThe 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.\nThey 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.\nIt is accepted that such clauses are commonly found in the leases of flats located in apartment blocks.\nThe 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.\nThe leases\n11 13 Randolph Crescent comprises what were originally two mid terrace houses, but it is now a single block separated into nine flats.\nIt formed part of the Church Commissioners Maida Vale estate.\nIn the 1980s the Church Commissioners granted long leases to purchasers of the flats.\nThe term of each of the leases was 125 years from 24 June 1981.\nTwo of the leases (those of flats 11G and 11H) are now held by the respondent, Dr Julia Duval.\nA third lease (that of flat 13RC) is held by Mrs Martha Winfield.\nBy a transfer dated 17 June 1986 the freehold of the building was transferred to the appellant landlord.\nThe landlord is also the management company.\nAll of the shares in the landlord are owned by the leaseholders of the flats, as the leases themselves require.\nThe 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.\nBut 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.\nThe lessees obligations are set out in clause 2.\nThey 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).\nClause 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.\nThis is therefore a covenant which is qualified by reference to the landlords consent.\nHowever, by operation of section 19(2) of the Landlord and Tenant Act 1927, such consent is not to be unreasonably withheld.\nClause 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.\nIn contrast to clause 2.6, this is an absolute covenant.\nThere are two further aspects of it that I must mention at this stage.\nFirst, 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.\nFor 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.\nThe common approach of the parties was that clause 2.7 therefore sets boundaries to the activities that fall within clause 2.6.\nIn other words, any activity which falls within the scope of clause 2.7 is necessarily outside the scope of clause 2.6.\nThat is of course one possible interpretation of the relationship between them.\nBut it is not the only one and for reasons to which I will come, it is not one which I favour.\nSecondly, 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.\nBut, 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.\nHere, 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.\nClause 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.\nThe fifth schedule to each lease contains various rules and regulations about the use of the property with which the lessee must comply.\nThese 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.\nThe landlords covenants are set out in clause 3.\nThey 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).\nClause 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.\nThe dispute and the judgments below\nIn the spring of 2015, Mrs Winfield approached the landlords managing agents for a licence to carry out proposed works to flat 13RC.\nThese works would involve, among other things, removing a substantial part of a load bearing wall at basement level.\nIt 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.\nProgress 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.\nHowever, 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.\nIn December 2015 and then again in February 2016, Dr Duval asked the\nlandlord 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.\nOn both occasions, Dr Duval said that the landlord would be indemnified if legal action became necessary.\nOn 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.\nThe 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.\nAn appeal by the landlord was allowed by Judge Parfitt, sitting in the Central London County Court, by order dated 27 July 2017.\nIn 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.\nA 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).\nLewison LJ, with whom Newey LJ and Sir Stephen Richards agreed, explained that the landlord had made two promises in clause 3.19.\nThe 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.\nThe second was a promise to enforce the covenants at the request and expense of a lessee.\nThis was a contingent obligation, the relevant contingency being the lessees request and the provision of security.\nIf the contingency arose then the landlords obligation was triggered.\nLewison LJ proceeded on the assumption that the contingency had not arisen on the facts in the present case and we must do the same.\nLewison LJ then answered the question of principle set out at para 1 above in the negative.\nHe 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.\nThis 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.\nThe 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.\nThis appeal\nOn this further appeal the landlord contends that, although the Court of Appeal identified the right question, it failed to answer it correctly.\nIn 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.\nDr Duval responds that the Court of Appeal arrived at the right conclusion.\nHer 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.\nHer 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.\nShe 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.\nBy 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.\nThe parties therefore disagree fundamentally about the proper interpretation of the terms in the leases which Dr Duval and Mrs Winfield hold.\nAccordingly, 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.\nOnce the process of construing the express words is complete, the issue of an implied term falls to be considered.\nThe 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.\nThe background\nThere are in my view certain aspects of the background which are highly relevant to the exercise of interpretation which must be carried out.\nThe 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.\nThe 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.\nThey 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.\nSecondly 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.\nThose 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.\nThey 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.\nThirdly, 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.\nFourthly, 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.\nClauses 2.6 and 2.7 interpretation\nAgainst this background I come to clauses 2.6 and 2.7.\nAs 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.\nTo take an example, a routine rewiring of one room in a flat would necessarily involve cutting a wire and a wall.\nOn 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.\nIndeed, 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.\nIt 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.\nIt 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.\nOn that approach it becomes clear that the two clauses are directed at different kinds of activity.\nClause 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.\nBy 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.\nIt 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.\nIn 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.\nSupport for this view may be found in F W Woolworth and Co Ltd v Lambert [1937] Ch 37.\nThere 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.\nThe court construed the absolute covenant in such a way as not to conflict with the qualified covenant.\nAs 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.\nIt must also be remembered that the landlord is subject to other restrictions\non 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.\nFirst, 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.\nThis protects the right of all of the lessees to use their flats in ordinary and lawful ways.\nSo, 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.\nSecondly, the landlord must not derogate from its grant.\nAs 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.\nIn 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.\nHere 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).\nWere 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.\nThirdly, 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.\nThe 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.\nFinally, the landlord has covenanted with the lessee in the terms of clause 3 of the lease.\nI have referred to this clause earlier in this judgment.\nOf 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).\nClause 3.19 interpretation\nAs the Court of Appeal observed, clause 3.19 has two parts.\nThe 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.\nThe 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.\nThe 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.\nThe 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.\nThe 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.\nThis, 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.\nTurning to the second part of clause 3.19, the landlord emphasises that this is conditional.\nThe objecting lessee must make a request and agree to pay the costs of the landlord on an indemnity basis and provide appropriate security.\nWhat 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.\nHowever, 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.\nThe 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.\nThe 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.\nIf, 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.\nAt that stage the landlord is made subject to the control of the objecting lessee, who has accepted the risk of proceedings.\nDr 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.\nThis, 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.\nFurther, 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.\nDr 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.\nPut 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.\nShe argues that, were it otherwise, clause 3.19 would be ineffective.\nIn 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.\nIn 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.\nAs 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.\nThose 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.\nThat 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.\nI 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.\nImplied term\nIt is well established that a party who undertakes a contingent or conditional\nobligation 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.\nThe 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.\nThe principle is well illustrated by cases involving breaches of contracts to marry.\nIn Short v Stone (1846) 8 QB 358 the defendant agreed to marry the claimant within a reasonable time after request.\nHe 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.\nIn 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.\ncharacterised 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.\nIf 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.\nFounding 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.\nIn 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.\nThus, 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.\nAs we have seen, in Southern Foundries v Shirlaw, Lord Atkin characterised this principle as a rule of law.\nBut Viscount Maugham (at pp 712 713) adopted an implied term approach.\nHe 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.\nSo too Lord Romer (at pp 730 731), Lord Wright (at p 723) and Lord Porter (at pp 741 742) preferred an implied term analysis.\nSimilarly, 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.\nThe 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.\nIn 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.\nThe 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.\nIt 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.\nA 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.\nIn 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.\nI 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.\nThe 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.\nEach 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.\nEach lessee would also have known that, under clause 3.19, the landlord would, upon satisfaction of the necessary conditions, enforce those obligations.\nClause 3.19 would therefore have been understood by every lessee to perform an important protective function.\nWhat 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.\nIf 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.\nIn my view it necessarily follows that the landlord will not put it out of its\npower 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.\nThe 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.\nAs 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.\nAs 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.\nIt 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.\nIt 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.\nThe parties cannot have contemplated that the landlord would be obliged to take action against another lessee who would have a complete defence.\nI cannot accept these submissions.\nI 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.\nBut that does not mean to say that the landlord has not acted in breach of its obligation under clause 3.19 to another lessee.\nIn 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.\nThe 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.\nThe 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.\nThose 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.\nThe 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.\nYet, 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.\nIt 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.\nFurther 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.\nMoreover, 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.\nThe 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.\nI do not accept that clause 2.7 extends to the kind of routine repairs, renovations and alterations which the landlord describes.\nThose alterations fall within the scope of clause 2.6 and so the landlord can give its permission for them to be carried out.\nBy 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.\nThese 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.\nThe present case provides a good example.\nThe 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.\nIn 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.\nConclusion\nFor all of these reasons, I would dismiss this appeal.\n","output":"11 13 Randolph Crescent is a block of nine flats in Maida Vale, London.\nTwo of the leases are held by the respondent, Dr Julia Duval, and a third lease is held by Mrs Martha Winfield.\nThe term of each lease is 125 years from 24 June 1981.\nThe appellant landlord owns the freehold of the building and is also the management company.\nAll of the shares in the landlord company are owned by the leaseholders of the flats.\nThe leases are, in all relevant respects, in substantially the same form.\nEach 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.\nBy the operation of a statutory provision, that consent cannot be unreasonably withheld.\nEach lease also contains an absolute covenant, clause 2.7, which prevents the lessee from cutting into any roofs, walls, ceilings or service media.\nIn 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.\nIn 2015, Mrs Winfield sought a licence from the landlord to carry out works to her flat.\nThe proposed works involved removing a substantial part of a load bearing wall at basement level.\nThe licence was refused after the proposal came to the attention of Dr Duval and her husband.\nHowever, 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.\nDr 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.\nDeputy 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.\nAn appeal by the landlord was allowed by the Central London County Court.\nDr Duval then appealed, successfully, to the Court of Appeal.\nThe landlord now appeals to the Supreme Court.\nThe Supreme Court unanimously dismisses the appeal.\nLord Kitchin gives the sole judgment, with which Lady Hale, Lord Carnwath, Lady Black and Lord Sales agree.\nThe starting point is to construe the terms of the leases in context [25].\nThere are certain aspects of the background which are highly relevant.\nFirst, each lease is a long term contract and was acquired for a substantial premium [27].\nSecondly 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].\nThirdly, 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\nwould be entirely sensible for the landlord to be in a position to permit such works from time to time [29].\nFourthly, 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.\nSimilarly, 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].\nClauses 2.6 and 2.7 are directed at different kinds of activity.\nClause 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.\nBy 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.\nThis 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.\nIn 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.\nThis interpretation is supported by F W Woolworth and Co Ltd v Lambert [1937] 1 Ch 37 [32].\nIt must also be remembered that the landlord is subject to other restrictions on its ability to license alterations to a lessees flat.\nFirst, each lessee enjoys the benefit of a covenant for quiet enjoyment [33].\nSecondly, the landlord must not derogate from its grant [34].\nThirdly, each of the lessees is entitled to be protected against nuisance [35].\nFinally, 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].\nThe 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.\nClause 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].\nIt 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].\nThe principle is well illustrated by cases involving breaches of contracts to marry, and implied terms can arise from it [45 50].\nThere 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].\nThat 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.\nClause 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.\nIt 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].\nFurther, 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.\nThe 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].\nClause 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.\nIt 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].\n","id":28}
{"input":"By its judgment in this appeal dated 24 March 2010 the Supreme Court referred to the Court of Justice five questions regarding the nature and assessment of the concept of paid annual leave in articles 7 of Council Directives 93\/104\/EC and 2003\/88\/EC and clause 3 of the European Agreement annexed to and intended to be implemented under Council Directive 2000\/79\/EC (the Aviation Directive).\nThe Court of Justice by its judgment dated 15 September 2011 gave its response: British Airways plc v Williams (Case C 155\/10) [2012] ICR 847.\nThe parties are now at odds as to its consequences for the dispute between them.\nClause 3 of the European Agreement reads: (1) Mobile staff in civil aviation are entitled to paid annual leave of at least four weeks, in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and\/or practice. (2) The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.\"\nIn the United Kingdom, The Civil Aviation (Working Time) Regulations 2004 (SI 2004\/756) (the Aviation Regulations) were introduced to comply with this countrys obligations to give effect to Directive 2000\/79\/EC.\nThe Aviation Regulations provide:\n(1) A crew member is entitled to paid annual leave of at least four weeks, or a proportion of four weeks in respect of a period of employment of less than one year. (2) Leave to which a crew member is entitled under this regulation (a) may be taken in instalments; (b) may not be replaced by a payment in lieu, except where the crew member's employment is terminated. 4.\nAs the Supreme Court explained in its judgment dated 24 March 2010 the Aviation Regulations are part of a wider complex of legislation requiring paid annual leave, starting with a general requirement introduced by Directive 93\/104\/EC (the Working Time Directive).\nThe Working Time Directive excluded various sectors, including air transport.\nFurther, when the Working Time Directive was implemented by the Working Time Regulations 1998 (SI 1998\/1833) (the Working Time Regulations), these made specific reference to sections 221 to 224 (and by implication sections 234 to 235) of the Employment Rights Act 1996, which contain a detailed scheme (originally introduced in the context of redundancy pay) for ascertaining a weeks pay in the cases of employments with and without normal working hours.\nIn contrast, the Aviation Regulations neither contain nor refer to any such scheme.\nThey leave the concept of paid annual leave undefined.\nHence, the issues arising in this appeal.\nThe appellants are British Airways pilots.\nTheir terms of employment, negotiated by their union, British Air Line Pilots Association (BALPA), are found in a Memorandum of Agreement (MOA) which requires them to take 30 days annual leave and entitles them to take a further two weeks leave, save in the case of pilots with a Gatwick base, who are obliged to take 35 days holiday and are entitled to a further seven days of leave.\nThe MOA provides for pilots to receive (a) a fixed annual sum, plus two supplementary payments varying according to the time spent flying, consisting of (b) the Flying Pay Supplement (FPS) paid at 10 per flying hour and (c) the Time Away from Base allowance (TAFB) paid at 2.73 per hour.\nBritish Airways explains that TAFB was introduced to replace meal allowances, sundries and the Gatwick Duty Allowance and to be increased in accordance with the UK Retail Prices Index for Catering Restaurant Meals.\nHer Majestys Revenue and Customs attitude is that the TAFB is over generous and that 18% of it is taxable, in effect as pure remuneration.\nThe history of the case to date\nWhen the appeal first came before the Supreme Court, British Airways primary submission was that the United Kingdom legislator, by omitting to introduce any detailed scheme for the calculation of paid annual leave like that provided under the Working Time Regulations, must be taken to have left this to be determined by collective or individual agreement between the parties, whatever might be the effect of the Aviation Directive.\nThe Supreme Court was not at that time persuaded by this submission, and thought it likely to be possible to construe the Aviation Regulations to reflect what meaning the Aviation Directive might have.\nHence, the reference made to the Court of Justice.\nBritish Airways second submission was that the Aviation Directive was to like effect, leaving the calculation of paid annual leave to collective or individual agreement between the parties.\nIts third submission, if this was wrong, was that the only constraint imposed by the Directive was that pay during annual leave must not be so low as to prevent or inhibit the taking of leave.\nFinally, it submitted that the fixed annual sum (a) above constituted the pilots normal pay and was sufficiently comparable to remuneration received while working to satisfy the requirement for paid annual leave.\nThe questions referred to the Court of Justice by the Supreme Court were in these circumstances: (1) Under (a) articles 7 of Council Directives 93\/104\/EC and 2003\/88\/EC and (b) clause 3 of the European Agreement annexed to the Council Directive 2000\/79\/EC: (i) to what, if any, extent does European law define or lay down any requirements as to the nature and\/or level of the payments required to be made in respect of periods of paid annual leave; and (ii) to what, if any, extent may member states determine how such payments are to be calculated? (2) In particular, is it sufficient that, under national law and\/or practice and\/or under the collective agreements and\/or contractual arrangements negotiated between employers and workers, the payment made enables and encourages the worker to take and to enjoy, in the fullest sense of these words, his or her annual leave; and does not involve any sensible risk that the worker will not do so? (3) Or is it required that the pay should either (a) correspond precisely with or (b) be broadly comparable to the worker's \"normal\" pay? Further, in the event of an affirmative answer to question (3)(a) or (b): (4) Is the relevant measure or comparison: (a) pay that the worker would have earned during the particular leave period if he or she had been working, instead of on leave, or (b) pay which he or she was earning during some other, and if so what, period when he or she was working? (5) How should \"normal\" or \"comparable\" pay be assessed in circumstances where: (a) a worker's remuneration while working is supplemented if and to the extent that he or she engages in a particular activity; (b) where there is an annual or other limit on the extent to which, or time during which, the worker may engage in that activity, and that limit has been already exceeded or almost exceeded at the time(s) when annual leave is taken, so that the worker would not in fact have been permitted to engage in that activity had he been working, instead of on leave?\nThe Court of Justice gave a compendious answer.\nIt ruled (para 31) that article 7 of Directive 2003\/88\/EC and clause 3 of the European Agreement: must be interpreted as meaning that an airline pilot is entitled, during his annual leave, not only to the maintenance of his basic salary, but also, first, to all the components intrinsically linked to the performance of the tasks which he is required to carry out under his contract of employment and in respect of which a monetary amount, included in the calculation of his total remuneration, is provided and, second, to all the elements relating to his personal and professional status as an airline pilot.\nIt is for the national court to assess whether the various components comprising that worker's total remuneration meet those criteria.\nThe Court of Justices reasoning makes clear that it was ruling against British Airways on questions (2), (3) and (5)(a): 20 The purpose of the requirement of payment for that leave is to put the worker, during such leave, in a position which is, as regards remuneration, comparable to periods of work 21 remuneration paid in respect of annual leave must, in principle, be determined in such a way as to correspond to the normal remuneration received by the worker.\nIt also follows that an allowance, the amount of which is just sufficient to ensure that there is no serious risk that the worker will not take his leave, will not satisfy the requirements of European Union law.\nThe court went on, in further answer, to say that where, as here, pay was structured to involve several components, a specific analysis was required (para 22), because (para 23): that structure cannot affect the worker's right to enjoy, during his period of rest and relaxation, economic conditions which are comparable to those relating to the exercise of his employment and 24 Accordingly, any inconvenient aspect [sic] which is linked intrinsically to the performance of the tasks which the worker is required to carry out under his contract of employment and in respect of which a monetary amount is provided which is included in the calculation of the worker's total remuneration, such as, in the case of airline pilots, the time spent flying, must necessarily be taken into account for the purposes of the amount to which the worker is entitled during his annual leave. 25 By contrast, the components of the worker's total remuneration which are intended exclusively to cover occasional or ancillary costs arising at the time of performance of the tasks which the worker is required to carry out under his contract of employment, such as costs connected with the time that pilots have to spend away from base, need not be taken into account in the calculation of the payment to be made during annual leave. 26 In that regard, it is for the national court to assess the intrinsic link between the various components which make up the total remuneration of the worker and the performance of the tasks which he is required to carry out under his contract of employment.\nThat assessment must be carried out on the basis of an average over a reference period which is judged to be representative and in the light of the principle established by the case law , according to which Directive 2003\/88 treats entitlement to annual leave and to a payment on that account as being two aspects of a single right. 27 That stated, it must also be pointed out that the court has already held that an employee, working as a purser for an airline company and transferred, by reason of her pregnancy, temporarily to ground work, was entitled, during her temporary transfer, not only to maintenance of her basic salary but also to pay components or supplementary allowances relating to her professional status as an employee.\nAccordingly, allowances relating to her seniority, her length of service and her professional qualifications had to be maintained: see, to that effect, Parviainen v Finnair Oyj (Case C 471\/08) [2011] ICR 99; [2010] ECR I 6529, para 73.\nThat case law also applies to a pregnant worker who has been granted leave from work: see Gassmayr v Bundesminister fr Wissenschaft und Forschung (Case C 194\/08) [2010] ECR I 6281, para 65. 28 It follows that, in addition to the components of the total remuneration set out in para 24 of the present judgment, all those which relate to the personal and professional status of an airline pilot must be maintained during that worker's paid annual leave.\nThe court ended its reasoning by repeating that It is for the national court to assess whether the various components comprising that worker's total remuneration meet those criteria (para 31).\nThe court therefore drew a distinction relevant to TAFB between, on the one hand, remuneration, including remuneration based on personal or professional status, for all activities whether basic or inconvenient undertaken during employment (para 24) and, on the other hand, payments intended exclusively to cover occasional or ancillary costs (para 25) costs which would not of course be incurred during holiday periods.\nThe court made clear in para 26 that it is for the national court to assess into which of the two categories identified in paras 24 and 25 any payment fell.\nWhen it went on in para 26 to state that That assessment must be carried out on the basis of an average over a reference period which is judged to be representative, the most natural reading of the statement is that the court understood that this assessment was also something that the national court could and would judge for itself.\nThe courts reasoning in para 26 further indicates that it contemplated an average over a reference period judged to be representative of normal working and remuneration, rather, therefore, than a calculation based on what the employee might have earned during the holiday period, had she or he then been working.\nThe concept of a reference period judged to be representative recognises the exercise of judgment inherent in words like representative and normal.\nThe Court of Justice was not prescriptive as to what might or might not constitute a representative period.\nThe court did not expressly address the question how far a member state or national court might adopt a standard period, applicable to a range of employees, like that required under sections 221 to 226 of the Employment Rights Act 1996.\nDifferent British Airways pilots may earn different supplementary amounts of FPS (or TAFB) according to their different flying patterns during different periods.\nThis could no doubt be one factor to bear in mind in arriving at any reference period, whether for pilots generally or for a particular pilot.\nFurther, the court did not specifically answer question (5)(b), which is potentially relevant since Regulation 9 of the Aviation regulations provides: in any month (a) no person shall act as a crew member during the course of his working time, if during the period of 12 months expiring at the end of month before the month in question the aggregate block flying time of that person exceeds 900 hours; and (b) no crew member employed by him shall have a total annual working time of more than 2,000 hours during the period of 12 months expiring at the end of the month before the month in question\".\nIf a reference period of the previous 10 or 11 months at work were taken, a pilot might in that period have exhausted his or her permitted 900 hours.\nIf an average is in such circumstances to be calculated including all 900 hours, the pilot would (as he or she arguably should) receive paid holiday pay higher than that receivable by a pilot who had only flown 800 hours in the same 10 or 11 months.\nThe current issues\nIn the light of the Court of Justices judgment, the appellants submit that (i) each of their claims can and should now be remitted to the Employment Tribunal for assessment by that tribunal of a representative period and of the relevant remuneration earned during that period, and that (ii) such remuneration should include not merely basic pay and FPS, but also 18% of TAFB.\nBritish Airways, on the other hand, submits that (i) the Aviation Regulations are too unspecific to give effect to the Aviation Directive, in the absence of any relevant legislative scheme, and (ii) that the whole of the TAFB should be excluded from remuneration for the purposes of any calculation.\nIt is common ground that clause 3 of the European Agreement annexed to the Aviation Directive does not have direct effect against British Airways.\nIn Dominguez v Centre Informatique du Centre Ouest Atlantique (Case C 282\/19) [2012] ICR D23, the Court of Justice treated the equivalently worded article 7 of the Working Time Directive as directly effective against the State.\nBut British Airways is not an emanation of the State.\nClause 3 of the European Agreement can only therefore be invoked against British Airways if it has been effectively implemented at domestic level.\nIn support of its first, general submission, British Airways thus argues that this has not occurred; that the concept of an average over a reference period which is judged to be representative is open ended and so open to differing assessments that implementation of the Aviation Directive in national law requires legislation; and that the mere echoing in regulation 4(1) of the phrase paid annual leave which appears in clause 3 is insufficient for effective implementation of the Directive.\nAt the European legal level, British Airways invokes the principle of legal certainty; at the domestic level, it submits that no possibility exists of interpreting the Aviation Regulations as implementing the Aviation Directive effectively, pursuant to the well established duty to interpret domestic legislation so far as possible in a manner conforming with any obligations imposed by a Directive: see, inter alia, Marleasing SA v La Comercial Internacional de Alimentacin SA (Case C 106\/89)[1990] ECR I 4135 and Pfeiffer v Deutsches Rotes Kreuz, Kreisverband Waldshut eV (Joined Cases C 397 403\/01) [2005] ICR 1307, paras 109 120.\nThe impossibility of a conforming interpretation is reinforced, British Airways submits, by the consideration that the Merchant Shipping (Hours of Work) Regulations 2002 (SI 2002\/2125), although not directly in issue, provide (in regulation 12) for the same entitlement to paid annual leave, but go on to provide not for civil liability, but for criminal liability in the event of any contravention of regulation 12.\nBritish Airways argue that the need for legal certainty and the obstacles to any form of interpretive solution are all the greater when the concept of paid annual leave has, albeit in the context of other Regulations, penal implications.\nBritish Airways invokes in this connection the principle that the interpretive obligation recognised in cases such as Marleasing should not be used with the effect of determining or aggravating domestic criminal liability: Criminal Proceedings against Kolpinghuis Nijmegen BV (Case 80\/86) [1987] ECR 3969, para 14 and Criminal Proceedings against Arcaro (Case C 168\/95) [1997] All ER (EC) 82, para 42.\nBritish Airways notes that the present situation has only arisen because pilots have been successful in the Court of Justice in challenging the parties collective agreement in the MOA, according to which basic pay was to be taken as the measure of paid annual leave and increments in basic pay were from time to time negotiated.\nHad the Court of Justice restricted the payment required during annual leave to basic pay or allowed the parties to do so, there would have been no problem in knowing what the Directive required or in giving effect to it at national level.\nAs it is, however, British Airways submits, the requirements of the Directive, as explained by the court, require a detailed legislative scheme, which is not found in the Aviation Regulations and could not be supplied by an employment tribunal.\nFinally, British Airways seeks to gain support for its case from the absence in regulation 18 of the Aviation Regulations of any explicit power in the employment tribunal to assess or award compensation for paid annual leave.\nThat, British Airways submits, is precisely because no one conceived that paid annual leave could, under the Aviation Regulations, mean anything other than basic pay, as had been collectively agreed by the MOA.\nNow that it is clear that it means more, the absence of any such power confirms the absence of any legislative scheme regarding paid annual leave sufficient to implement the Aviation Directive or to have any domestic effect.\nAnalysis on issue of uncertainty and domestic effect\nI do not accept British Airways submissions.\nTheir foundation is the open endedness of the exercise of judgment inherent in the concept of an average over a reference period which is judged to be representative.\nThe domestic legislator may well have assumed, as British Airways submits, that the assessment of paid annual leave would be a simple matter, with any problems being resolved by collective agreement.\nThe more sophisticated assessment now revealed to be necessary and the absence of any collective agreement leave scope for differences of view about the period to be taken.\nOn the other hand, a general legislative scheme of the sort that British Airways maintains to be required could itself have risked being over prescriptive.\nBe that as it may, the legislator chose in the Aviation Regulations simply to repeat the relevant language of the Aviation Directive.\nThe Court of Justice having explained the principles behind article 7 of the Working Time Directive and clause 3 of the European Agreement, the same principles must be taken to have been intended to govern the same wording where it appears in regulation 4 of the Aviation Regulations.\nThe solution, in my opinion, is that, in these circumstances and in the absence of any other means of ascertaining a representative reference period, the choice of a reference period is in the first instance for British Airways to make.\nThis is a choice to be made by British Airways within the parameters of what can (reasonably) be judged to be representative.\nFailing such a choice, British Airways cannot complain if a court or tribunal takes its own view of what best represents a representative period in the case of an individual employee who brings a case to it.\nThis in my opinion matches the Court of Justices own expectations: see para 13 above.\nIt would be surprising if domestic courts or tribunals were to conclude that they could not give effect to a domestic article using identical language to the Aviation Directive in the way in which the Court of Justice contemplated that the language of the Directive envisages.\nThis is reinforced by the Court of Justices conclusion that, in a context where the employer is the State, article 7 is directly effective (and so, by necessary implication, sufficiently certain for that purpose).\nI am unimpressed by the submission that, on the basis that the same approach is to be transposed to the same language in the Merchant Shipping (Hours of Work) Regulations 2002, the result would be to expose employers to criminal liability for failing to make an appropriate choice within uncertain parameters.\nSo long as an employers choice is within those parameters, no problem arises, and, if a bona fide choice were to fall outside such parameters, the likelihood of a criminal prosecution would appear remote.\nIf the problem were to prove a real one, then the difference between the present regulations and those imposing criminal liability might itself also require a different approach to the issue of enforceability if it arose in the latter context.\nI am also unimpressed by the submission that regulation 18 militates against or prevents a conclusion that, in the absence of a choice by British Airways, the employment tribunal can make its own assessment of an average over a reference period which is judged to be representative.\nRegulation 18 provides: Remedies 18.(1) A crew member may present a complaint to an employment tribunal that his employer has refused to permit him to exercise any right he has under regulation 4, 5(1), (4), 7(1) or 7(2)(b). (2) An employment tribunal shall not consider a complaint under this regulation unless it is presented (a) before the end of the period of three months beginning with the date on which it is alleged (i) that the exercise of the right should have been permitted (or in the case of a rest period or annual leave extending over more than one day, the date on which it should have been permitted to begin), or (ii) the payment under regulation 4(2)(b) should have been made; as the case may be; 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. (3) Where an employment tribunal finds a complaint under regulation 4, 5(1), (4), 7(1) or 7(2)(b) well founded, the tribunal (a) shall make a declaration to that effect; and (b) may make an award of compensation to be paid by the employer to the crew member. (4) The amount of the compensation shall be such as the tribunal considers just and equitable in all the circumstances having regard to (a) the employer's default in refusing to permit the crew member to exercise his right; and (b) any loss sustained by the crew member which is attributable to the matters complained of.\nBritish Airways submission is that regulation 18(1) only contemplates complaints based on a refusal to permit an employee to take paid annual leave, not complaints about the level of payment for such leave.\nThe only reference to a complaint based on failure to make a payment is in regulation 18(2)(a)(ii).\nThere it is linked to a failure on termination of employment to make a payment in lieu of leave under regulation 4(2)(b), and that is a payment which is based necessarily on an assessment of what the employee would have earned during a defined period.\nBritish Airways contrasts this position with that under certain other regulations, such as the Working Time Regulations 1998.\nRegulation 16 of the Working Time Regulations entitles a worker to be paid at the rate of a weeks pay in respect of each week of the annual leave required under regulation 13 and regulation 30 (Remedies) goes on specifically to deal in regulation 30(1)(a)(i) with refusal to permit a worker to exercise any right he has under regulation 13, and in regulation 30(1)(b) with failure to pay him the whole or any part of any amount due to him under regulation . 16(1), while regulation 30(5) provides that, where an employment tribunal finds such a failure, it shall order the employer to pay to the worker the amount which it finds to be due to him.\nIt is true that the Aviation Regulations, unlike the Working Time Regulations, do not explicitly address complaints relating to the payments for annual leave.\nBut it is our duty to read the domestic Regulations so far as possible to give effect to the Aviation Directive, as interpreted by the Court of Justice.\nRegulation 18(1) contemplates complaints where an employer has refused to permit the exercise of any right that an employee has under regulation 4.\nRegulation 18(4) enables an employment tribunal to award such compensation as it considers just and equitable in all the circumstances having regard to the employers default in refusing to permit the crew member to exercise his right.\nThe concept of refusal to permit the exercise of a right can extend to cover refusal to permit the crew member an appropriate payment as part of the right to paid annual leave.\nThe employment tribunal can on the like basis make such award as it considers just and equitable to compensate for such refusal.\nThe implication of British Airways present submissions is that any complaint that a pilot might have can and would lie not against British Airways, but at most against the United Kingdom, for failure to implement the Aviation Directive effectively at the domestic level.\nI note that this would itself involve the pilot invoking a forum, presumably a court, which would then have to determine as against the State the appropriate parameters of a period judged to be representative of the pilots normal pay the very exercise that British Airways submits is so uncertain that it cannot be undertaken by the employment tribunal.\nFor the reasons I have given, I do not accept British Airways submissions, and conclude accordingly that the claims should be remitted to the Employment Tribunal for further consideration of the appropriate payments to be made to the pilots in respect of the periods of paid annual leave in issue.\nThe appellants submit that the Supreme Court can and should without more conclude that the pilots remuneration includes 18% of the sums paid by way of TAFB.\nBut the 18% is no more than the percentage which Her Majestys Revenue and Customs regards as taxable.\nThe Revenues attitude for tax purposes is presently irrelevant.\nIt amounts at best to a third partys view on an issue to be determined independently by the employment tribunal.\nEven if the Revenues attitude for tax purposes were relevant, it is not in any event clear on what basis the Revenue arrived at its attitude, or by reference to what considerations.\nIn contrast, British Airways relies upon the test stated by the Court of Justice in its para 25, which excludes from remuneration relevant to the calculation of holiday pay, components of pay which are intended exclusively to cover costs.\nBritish Airways stresses the word intended.\nWithin such components, the Court of Justice expressly included costs connected with the time that pilots have to spend away from base.\nThe question arising is therefore whether the payments by way of TAFB were intended exclusively to cover costs.\nAlthough British Airways submits that the Supreme Court can or should itself determine the answer to this question, we do not have the material to do so in the agreed statement of facts or elsewhere.\nEven the history of TAFB given by British Airways as summarised in para 5 above is no more than its statement of the position.\nIt must be for the employment tribunal to consider and determine upon what basis TAFB was agreed and paid during any relevant period.\nAs to the precise test, the concept intended exclusively to cover costs requires attention to be focused on the real basis on which the TAFB payments were made.\nIf they were payments that were made genuinely and exclusively to cover costs, that would, at least prima facie, be the end of the matter.\nThe appellants case appears to be that, although they were designated as being for the exclusive purpose of covering costs, they were in fact more than some or all pilots might actually need for or spend on costs, and that the Revenue has, in effect, seen through the description to a reality which the Supreme Court, or an employment tribunal, should also recognise.\nAs Mr Jeans QC for British Airways accepted, there could no doubt come a point at which it was obvious that payments nominally made to cover costs were not required, or were not going to be required, in their entirety, to match actual costs.\nAn employer who in such circumstances continued to make such payments in their full amount could then no longer maintain that they were genuinely and exclusively intended to cover costs.\nBut, in using the phrase intended exclusively to cover costs, it does not appear that the Court of Justice contemplated any detailed evaluation of the precise need for or reasonableness of payments which were so intended.\nWhat matters is whether there was a genuine intention in agreeing and making such payments that they should go exclusively to cover costs.\nIt is on that the employment tribunal should in my opinion focus.\nHilary Term [2010] UKSC 16 On appeal from: [2009] EWCA Civ 281 JUDGMENT British Airways plc (Respondents) v Williams (Appellant) and others before Lord Walker Lady Hale Lord Brown Lord Mance Lord Clarke JUDGMENT GIVEN ON 24 March 2010 Heard on 24 and 25 February 2010 Appellant Jane McNeill QC Michael Ford (Instructed by Thompsons Solicitors) Respondent Christopher Jeans QC Andrew Short (Instructed by Baker and Mackenzie LLP) LORD MANCE (delivering the judgment of the court) The relevant law 1.\nThis appeal concerns the concept of paid annual leave for crew members employed in civil aviation appearing in regulation 4 of The Civil Aviation (Working Time) Regulations 2004 (SI 2004 no. 756) (the Aviation Regulations).\nThese Regulations were introduced under s.2(2) of the European Communities Act 1972 to comply with the United Kingdoms obligations under Council Directive 2000\/79\/EC of 27 November 2000 (the Aviation Directive), the purpose of which was in turn to implement the European Agreement on the organisation of working time of mobile staff in civil aviation dated 22 March 2000 (the European Agreement) annexed to the Directive. 2.\nClause 3 of the European Agreement reads: 1.\nMobile staff in civil aviation are entitled to paid annual leave of at least four weeks, in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and\/or practice. 2.\nThe minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated. 3.\nThe Aviation Regulations provide: 4. (1) A crew member is entitled to paid annual leave of at least four weeks, or a proportion of four weeks in respect of a period of employment of less than one year. (2) Leave to which a crew member is entitled under this regulation (a) may be taken in instalments; (b) may not be replaced by a payment in lieu, except where the crew members employment is terminated. 4.\nThe Aviation Regulations and Directive are part of a wider complex of legislation requiring paid annual leave.\nCouncil Directive 93\/104\/EC of 23 November 1993 (the Working Time Directive) introduced a general requirement that Member States take measures to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and\/or practice (article 7(1)).\nBut it excepted various mobile sectors of activity, viz air, rail, road, sea, inland waterway and lake transport, sea fishing, other work at sea and the activities of doctors in training (article 1(3)), and further stated that its provisions should not apply where other Community instruments contain more specific requirements concerning certain occupations or occupational activities (article 14). 5.\nThe Working Time Directive was implemented domestically, with exceptions matching those of the Directive, by the Working Time Regulations 1998 (SI 1998 no. 1833) (the Working Time Regulations).\nThese Regulations (as amended by the Working Time (Amendment) Regulations 2001 (SI 2001 no. 3256)) provide that a worker is entitled to four weeks annual leave in each leave year (regulation 13) and entitled to be paid in respect of any period of annual leave to which he is entitled under regulation 13 at the rate of a weeks pay in respect of each week of leave (regulation 16(1)).\nRegulations 16(2) and (3) make ss.221 to 224 (and by implication also, it has been held, ss.234 235) of the Employment Rights Act 1996 applicable to the determination of the amount of a weeks pay for the purposes of regulation 16.\nSs.221 to 224 contain a detailed scheme (originally introduced in the context of redundancy pay) for ascertaining a weeks pay in the cases of employments with and without normal working hours.\nThe scheme includes provisions governing the differing situations of remuneration varying (s.221(3)) and not varying (s.221(2)) with the amount of work done and of remuneration varying according to the times of day or days of the week in which work is required to be done (s.222); as well as provisions governing employments with no normal working hours (s.224).\nWhere the remuneration varies according to the amount, time or hours of work, the computation of weekly pay falls to be derived from an examination of an average position over a defined period of twelve weeks preceding the relevant calculation date, itself defined (ss.221(3), 222 and 224).\nUnder s.234, in the case of an employee who is entitled to overtime pay when employed for more than a fixed number of hours in a week, the employees normal working hours are the number of hours so fixed unless the contract also fixes a number of hours of overtime which the employer is bound to provide and the worker bound to work, in which case, the employees normal working hours consist in the total number of fixed hours (so excluding any voluntary overtime): Tarmac Roadstone Holdings Ltd. v Peacock [1973] ICR 273 (CA); the same interpretation of s.234 has been applied to a claim under Regulation 16 of the Working Time Regulations: Bamsey v Albon Engineering and Manufacturing plc [2004] EWCA Civ 359; [2004] ICR 1083 (CA). 6.\nThe exceptions from the Working Time Directive were in due course addressed.\nCouncil Directive 1999\/63\/EC of 21 June 1999 gave effect to a European Agreement dated 30 September 1998 entitling non fishing seafarers to paid annual leave on the same basis as was in 2000 provided for mobile staff in civil aviation (paragraph 2 above).\nThis was in turn given domestic effect by The Merchant Shipping (Hours of Work) Regulations 2002 (SI 2002 no. 2125) (the non fishing Seafarers Regulations), in language identical as regards paid annual leave to that of the Aviation Regulations (paragraph 3 above), with the substitution of the word seafarer for crew member (regulation 12 ). 7.\nDirective 2000\/34\/EC of 22 June 2000 extended the application of the Working Time Directive to all sectors of activity, excluding seafarers as defined in Council Directive 1999\/63\/EC, and gave Member States until 1 August 2003 to achieve this.\nHowever, it also replaced article 14 of the Working Time Directive with a provision that that Directive should not apply where other Community instruments contain more specific requirements relating to the organisation of working time for certain occupations or occupational activities.\nWith effect from 2 August 2004, the Working Time Directive as extended and amended has been replaced by a consolidated Working Time Directive 2003\/88\/EC of 4 November 2003, but article 7 remains in identical terms to article 7 of the original Working Time Directive of 1993. 8.\nThe Aviation Directive of 27 November 2000 was a specific Community instrument within article 14 of the Working Time Directive and was, as stated, implemented domestically in 2004 by the Aviation Regulations.\nThe extension of the Working Time Directive in its original and consolidated form to other mobile workers was further implemented domestically by inter alia The Merchant Shipping (Working Time: Inland Waterways) Regulations 2003 (SI 2003 no. 3049) made 23 December 2003 and The Fishing Vessels (Working Time: Sea fishermen) Regulations 2004 (SI 2004 no. 1713) made 16 August 2004.\nIn these two sets of Regulations, governing inland waterway workers and sea fishermen, regulation 11(1) entitles such workers to (or, in the case of the latter, to at least) four weeks annual leave and to be paid in respect of any such leave at the rate of a weeks pay in respect of each week of leave.\nThey go on to apply ss.221 to 224 for the purpose of determining the amount of a weeks pay for the purposes of the right to four weeks paid annual leave, and to define the relevant calculation date for the purposes of the twelve week period as the first day of the period of leave in question.\nThey also provide specifically for a worker to be able to complain of failure to pay any amount due under regulation 11(1). 9.\nIn contrast, neither the non fishing Seafarers Regulations of 2002 nor the Aviation Regulations made 13 April 2004 contain any detailed provisions which either define the nature or amount of the payment to be made during annual leave or apply ss.221 to 224 of the 1996 Act for that purpose.\nNor do they provide specifically for the consequences of failure to pay for annual leave (though the Aviation Regulations entitle a worker to complain of a refusal to permit him to exercise any right to paid annual leave, while the non fishing Seafarers Regulations make contravention by an employer of regulation 12, entitling seafarers to paid annual leave of at least four weeks, a criminal offence).\nThese domestic distinctions can only have been deliberate.\nIt is common ground now that ss.221 to 224 cannot apply to aviation crew members.\nThis appeal therefore turns on the meaning of the phrase paid annual leave, which is all that the United Kingdom legislator has relevantly enacted.\nThe phrase cannot of course be construed in a vacuum.\nThe Aviation Directive is not directly applicable, certainly not against British Airways which is not an emanation of the state.\nBut it is our duty, as far as possible, to construe the phrase in the domestic Regulations consistently with any requirement inherent in the identical phrase used in clause 3(1) of the European Agreement to which Member States are required to give effect by the Aviation Directive: see e.g. Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C 106\/89) [1990] ECR I 4135, paragraph 8; Pfeiffer v Deutsches Rotes Kreuz, Kreisverband Waldshut eV (Cases C 397 404\/01) [2004] ECR I 8835, paragraphs 111 113 and, most recently, Seda Kckdeveci v Swedex GmbH & Co. KG, (Case C 555\/07) (judgment of 19 January 2010) paragraphs 44 48. 10.\nStrictly, the European Agreement is an agreement between private associations representing airlines on the one hand and aviation workers on the other.\nAs such, its meaning might be capable of being influenced by the circumstances in which it was negotiated, any travaux prparatoires and even statements made during its negotiation.\nBut no evidence of that nature was put before the Employment Tribunal which considered the present case, and all that the Tribunal records (paragraph 37) is that the issue of holiday pay was not high on the agenda of those representing the interests of aviation workers when the Agreement was reached.\nThe reality is that clause 3 of the European Agreement adopted identical wording to article 7 of the Working Time Directive.\nThe natural inference is that it was intended to have the same effect in law and there is nothing to suggest the contrary.\nThe facts 11.\nThe factual context in which the phrase paid annual leave has presently to be understood and applied is as follows.\nThe appellants are pilots employed by British Airways plc.\nIn practice the terms of their employment were and are negotiated with British Airways by the pilots union, British Air Line Pilots Association (BALPA).\nThese terms are currently found in a Memorandum of Agreement (MOA) dated 1 April 2005.\nThe Court understands that, for present purposes, the terms of this MOA mirror those applicable under previous similar agreements going back to before 2000.\nUnder the MOA (and consistently with the Aviation Directive and Regulations) British Airways pilots are required to take 30 days annual leave and are entitled to take a further two weeks leave, save for pilots with a Gatwick base who are obliged to take 35 days holiday and are entitled to a further seven days of leave. 12.\nUnder the MOA, read with collectively agreed bidline rules, pilots remuneration includes three components relevant to this case.\nThe first consists of a fixed annual sum.\nThe second and third consist of supplementary payments varying according to time spent flying (the Flying Pay Supplement or FPS, paid at 10.00 per planned flying hour) and time spent away from base (the Time Away from Base Allowance or TAFB, paid at 2.73 per hour).\nThe whole of the FPS is remuneration and taxable. 82% at the relevant time of the TAFB is treated as having been paid on account of expenses, so that only 18% is treated as remuneration and taxable. 13.\nThere are limits to the FPS and TAFB which a pilot or other crew member can earn.\nRegulation 9 of the Aviation Regulations requires every employer to ensure that: in any month (a) no person employed by him shall act as a crew member during the course of his working time, if during the period of 12 months expiring at the end of month before the month in question the aggregate block flying time of that person exceeds 900 hours; and (b) no crew member employed by him shall have a total annual working time of more than 2,000 hours during the period of 12 months expiring at the end of the month before the month in question. 14.\nThe amount of time a pilot spends flying will depend upon his or her route and roster.\nIt could typically be about 15 days a month.\nThe Court has been given a schedule of payments made to the first appellant, Ms Williams.\nThis indicates that, in the calendar year 2006, she took 25 working days leave in periods of between one and eight days in five different months, and received total fixed pay of 96,452.36, total FPS of 8,510 and total taxable TAFB of 1,038.49.\nTotal FPS of 8,510 is indicative (at 10 an hour) of 851 flying hours.\nIf that is so, then, had Ms Williams continued to fly at this rate during leave periods, it appears that she would or might have exceeded the maximum permitted annual number of 900 flying hours.\nTotal taxable TAFB of 1,038.49 gives total TAFB of 5,769.39 (1,038.49 x 100 18: see paragraph 12 above), indicative of 2,113 hours away from base.\nAgain, had Ms Williams continued to fly during leave periods, it appears that she would or might have exceeded the maximum total annual working time of 2,000 hours.\nHowever, whether this be so or not in her case in relation to FPS or TAFB, a crew member could clearly be in this position in practice, i.e. in a position where during the 12 month period prior to taking any particular leave, he or she had already completed all or almost all of his or her permitted annual flying or working time.\nThe issue and submissions 15.\nIt is common ground that, upon a true construction of the MOA and so as a matter of contract, the payment to be made in respect of annual leave is based on the first component of remuneration only, that is the fixed annual sum.\nThe question is whether this was and is permissible under the Aviation Regulations, interpreted in the light of the Aviation Directive.\nThis question was first raised in 2005 following the introduction of the Aviation Regulations on 13 April 2004.\nThe Court understands that it has been raised not merely by British Airways pilots, but also by other airlines pilots and other aviation crew under contractual arrangements not before the Court.\nBefore the Employment Tribunal and Employment Appeal Tribunal, the appellants argued, successfully, that they were entitled under European and domestic law to payment at a weekly rate based on all three components of remuneration (which both Tribunals said should be calculated by analogy with ss.221 4, despite the inapplicability of these sections).\nThe Court of Appeal accepted British Airways contrary case under both European and domestic law. 16.\nBritish Airways case operates at various levels: (i) British Airways first submission is that (a) the United Kingdom legislator must be taken (when deciding not to enact any detailed provisions to define the nature or amount of the payment to be made during annual leave or to apply ss.221 to 224 of the 1996 Act: see paragraph 9 above) to have intended that the amount of any payment to be made to aviation workers (and non fishing seafarers) in respect of their annual leave should be determined by collective or individual contractual agreement between the relevant parties; and (b) the domestic legislative intention being in this respect clear, it must prevail, whatever the effect may be of the Aviation Directive. (ii) Second, however, if and to the extent that, contrary to the first submission, the meaning of the Aviation Regulations can be derived from the Aviation Directive, British Airways submits that the Aviation Directive is to the same effect. (iii) (a) Third, British Airways qualifies its first two submissions only to the extent that it accepts that the payment for annual leave could not, under domestic or European law, be so low as to prevent or inhibit the taking of leave.\nPay during weeks of annual leave at the rate of 96,452 per annum or 1,854.85 per week could hardly be said to fall within this qualification.\nAccordingly, British Airways contends that the contractual arrangements between them and their pilots are legitimate. (b) The appellants contrary submission of law is that the Aviation Directive requires the payment in respect of annual leave of normal remuneration in order to ensure that the worker is on leave in a position which is comparable to that when he or she is at work. (c) There is however disagreement about what this would mean in circumstances such as the present.\nIn particular, on that basis of what periods is normality or any comparison to be established? And on the basis of what hypotheses? The latter question is relevant where, as may well be the case here, the worker was subject to annual limits which would have precluded him or her from undertaking particular work and receiving particular payments additional to his or her basic salary. (iv) Fourth, British Airways submits (in response to this submission by the appellants) that, if the phrase paid annual leave involves payment of normal or comparable remuneration, then, in the present case, payment in respect of annual leave based on the fixed annual remuneration to which pilots are entitled satisfies this requirement. 17.\nThe Court is not presently persuaded by British Airways first submission.\nOf course, whether domestic legislation is capable of being interpreted consistently with the meaning of the Directive will or may depend upon what that meaning is.\nBut, bearing in mind the possible meanings which appear, the Courts present view is that it is likely to be possible to construe the Regulations so as to comply with whatever meaning the Directive may have, even if the domestic position would otherwise be that for which British Airways contends by its submission at (i)(a) above.\nThis is so, even though the determination of the relevant weekly rate will pose difficulties for the employment tribunals who will have to engage with this exercise, in circumstances where there is no detailed scheme and ss.221 to 224 of the 1996 Act do not apply. 18.\nBritish Airways second and third submissions raise questions regarding (a) the meaning of the phrase paid annual leave in the Aviation Directive and (b) the extent of the freedom for national legislation and\/or practice to lay down conditions for entitlement to, and granting of, such leave [i.e. paid annual leave].\nThe determination of these questions is in the Supreme Courts view necessary for the resolution of this appeal.\nThere are statements in the Court of Justices recent case law (discussed below) which, on their face, are adverse to British Airways second and third submissions (paragraph 16(ii) and (iii)(a) above) and favour the appellants case that the Aviation Directive requires payment of normal or comparable remuneration (paragraph 16(iii)(b) above).\nBut these statements were made in very different contexts to the present, and, further, do not specifically address the point identified in paragraph 16(iii)(c) above.\nThe position in a case such as the present is not in the Supreme Courts view acte clair and the Supreme Court therefore makes this reference.\nAnalysis 19.\nIn case it may assist the Court of Justice, the Supreme Court adds these observations.\nBritish Airways submits that the concept of paid annual leave is to be understood in the context in which the Working Time and Aviation Directives were enacted, namely the promotion of the health and safety of workers.\nThat context appears from United Kingdom v Council of the European Union (Case C 84\/94) [1996] ECR I 5755; [1997] ICR 443.\nThe Court of Justice there upheld (save in one presently immaterial respect relating to Sunday working) the validity of the adoption of the Working Time Directive under article 118a of the European Community Treaty.\nArticle 118a entitled the Council, by qualified majority voting, to adopt by means of Directives, minimum requirements for gradual implementation to encourage improvements, especially in the working environment, as regards the health and safety of workers. (Subsequent to the Treaty of Nice, the relevant article became article 137, entitling the Community to support and complement the activities of Member States in the fields of, inter alia, improvement in particular of the working environment to protect workers health and safety.\nIt is, since the Treaty of Lisbon, article 153 in similar terms.) In R(BECTU) v Secretary of State for Trade and Industry (Case C 173\/99) [2001] ECR I 4881; [2001] ICR 1152, the Court of Justice again stressed the importance of the general principles of protection of the health and safety of workers and the aim of ensuring effective protection of health and safety (paragraphs 40 and 44), when holding impermissible a provision of the then Working Time Regulations, according to which no entitlement to paid annual leave arose until an employee had been continuously employed for 13 weeks.\nThe entitlement to paid annual leave was a particularly important principle of Community social law from which there can be no derogations (paragraph 43) and the Directive did not allow Member States either to make subject to any preconditions or to exclude the very existence of a right granted to all workers (paragraphs 53 and 55).\nRecital (11) to the Aviation Directive of 27 November 2000 confirms (unsurprisingly) that its objectives are precisely the same as those of the Working Time Directive, viz. to protect workers health and safety. 20.\nBritish Airways submits that paid annual leave therefore requires payment at a level which ensures that annual leave can be taken and enjoyed, that is payment which does not frustrate or undermine the purpose of the relevant Working Time or Aviation Directive.\nThe Supreme Court would agree that the present arrangements with pilots employed by British Airways could not be regarded as posing any such risk to their health or safety.\nThere is no suggestion that they do or could prevent or deter pilots or crew members from taking annual leave (even to the limited extent that they are free not to do so).\nOn the contrary, the Employment Tribunal referred (paragraph 38) to a consensus that British Airways pilots not based at Gatwick do in practice take the extra two weeks voluntary leave to which they are entitled. 21.\nBritish Airways also points out that, in United Kingdom v Council, the Court of Justice referred to Member States freedom to lay down detailed implementing provisions in general terms, when it said in paragraph 47 that: Once the Council has found that it is necessary to improve the existing level of protection as regards the health and safety of workers and to harmonize the conditions in this area while maintaining the improvements made, achievement of that objective through the imposition of minimum requirements necessarily presupposes Community wide action, which otherwise, as in this case, leaves the enactment of the detailed implementing provisions required largely to the Member States. 22.\nRecital (12) to the Aviation Directive also indicates that Member States are to be free to define any terms used in the annexed European Agreement in accordance with national law and practice, providing that the definitions are consistent with the Agreement.\nIn British Airways submission, the freedom to enact detailed implementing provisions and the freedom to leave matters to national practice allow Member States either to introduce detailed provisions along the lines of ss.221 to 224 of the 1996 Act or to leave it to contracting parties to agree on terms as regards pay, so long as these do not frustrate or undermine the taking and enjoyment of annual leave. 23.\nThe appellants, in relation to this latter point, rely upon further statements in BECTU as indicating a narrow view of Member States discretion under clause 3 of the Aviation Directive.\nIn his opinion in that case, Advocate General Tizzano said at paragraph 34: It is not of course my intention to deny that the expression in question means that reference must be made to national legislation and therefore that the Member States enjoy some latitude in defining the arrangements for enjoyment of the right to leave.\nIn particular, as the Commission also points out, the reference is intended to allow the Member States to provide a legislative framework governing the organisational and procedural aspects of the taking of leave, such as planning holiday periods, the possibility that a worker may have to give advance notice to the employer of the period in which he intends to take leave, the requirement of a minimum period of employment before leave can be taken, the criteria for proportional calculation of annual leave entitlement where the employment relationship is of less than one year, and so forth.\nBut these are precisely measures intended to determine the 'conditions for entitlement to, and granting of, leave and as such are allowed by the Directive.\nWhat, on the other hand, does not seem to be allowed by the Directive is for national legislation and\/or practice to operate with absolutely (or almost) no restrictions and to go so far as to prevent that right from even arising in certain cases.\nThe Court of Justice referred to this passage in its judgment (paragraph 24. 53): The expression 'in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and\/or practice must therefore be construed as referring only to the arrangements for paid annual leave adopted in the various Member States.\nAs the Advocate General observed in paragraph 34 of his Opinion, although they are free to lay down, in their domestic legislation, conditions for the exercise and implementation of the right to paid annual leave, by prescribing the specific circumstances in which workers may exercise that right, which is theirs in respect of all the periods of work completed, Member States are not entitled to make the existence of that right, which derives directly from Directive 93\/104, subject to any preconditions whatsoever. 25.\nBritish Airways point out that both these passages were specifically directed to explaining why the Directive did not permit Member States to remove entirely any right to paid annual leave in particular circumstances.\nThey were not concerned with the permissibility of defining paid annual leave or of leaving it to parties to define, in a way which does not undermine its taking or its enjoyment. 26.\nThe appellants submit, however, that the Court of Justices later case law contains statements establishing that paid annual leave must now be regarded as having achieved a closely defined autonomous European meaning: any payment in respect of annual leave must correspond with the employees normal remuneration in order to ensure that the worker is, when on leave, in a position which is comparable to that when he or she is at work.\nThey rely on statements to this effect in the Court of Justices judgments in Robinson Steele v RD Retail Services Ltd. (Cases C 131 and 257\/04) [2006] ECR I 2531; [2006] ICR 932, paragraphs 50 and 57 to 59 and in Stringer v Revenue and Customs Commissioner (Case C 520\/06) [R (D) v Secretary of State for the Home Department [2005] EWHC 728 (Admin) 2009] ECR I 179; [2009] ICR 932, paragraphs 57 to 62.\nIn Robinson Steele, the Court of Justice repeated that Member States must ensure that the detailed national implementing rules take account of the limits flowing from the Directive itself (paragraph 57) and went on: 58 The Directive treats entitlement to annual leave and to a payment on that account as being two aspects of a single right.\nThe purpose of the requirement of payment for that leave is to put the worker, during such leave, in a position which is, as regards remuneration, comparable to periods of work. 59 Accordingly, without prejudice to more favourable provisions under article 15 of the Directive, the point at which the payment for annual leave is made must be fixed in such a way that, during that leave, the worker is, as regards remuneration, put in a position comparable to periods of work. 27.\nThis was, however, again said in a very different context from the present.\nPart payments, ostensibly for holiday pay, were staggered over the corresponding annual period of work and paid together with remuneration for work done, leaving nothing specifically payable in respect of the weeks of leave.\nFurther, the Court allowed such staggered payments, where transparently and comprehensibly attributable to annual leave, to be set off against the claim for holiday pay.\nAn earlier statement (in paragraph 50) that workers must receive their normal remuneration for that period of rest was also said in a very different context.\nThere had been agreement to attribute to holiday pay part of a sum which had previously been being paid as remuneration for work; the remuneration paid for work done was in other words being effectively reduced, by an amount attributed to the (staggered) holiday pay. 28.\nIn Stringer, paragraphs 57 to 62, the Court of Justice cited Robinson Steele as authority that the expression paid annual leave means that, for the duration of annual leave , remuneration must be maintained and that, in other words, workers must receive their normal remuneration for that period of rest (paragraphs 58 and 61), and explained this on the basis that the purpose was to put the worker, during such leave, in a position which is, as regards remuneration, comparable to periods of work (paragraph 60).\nTwo points however arise.\nFirst, once again, the context was quite different from the present.\nThe issue in Stringer was whether employees absent on sick leave throughout an entire leave year were entitled to take their leave after the end of that year or, (since their employment had in fact terminated) to receive payment in lieu.\nIn that context, the Court repeated the statements in BECTU (paragraphs 53 and 55: see paragraph 19 above) that Member States are not entitled to exclude, or make subject to any preconditions, the very existence of a right deriving from the Directive. 29.\nSecond, the Court of Justices use of the word comparable in Stringer is itself to be compared with the Advocate Generals suggestion (in paragraphs 90 91 of her opinion) that a worker should receive an allowance in lieu equivalent to that of his normal pay.\nThe choice of the wording comparable to periods of work to explain the concept of normal remuneration was no doubt deliberate.\nOn one view, it indicates that the Court of Justice had in mind a relationship between pay while working and pay in respect of annual leave which was or could be more general and looser than the equivalence which the Advocate General would have favoured.\nIn a sense, of course, even very different things are usually capable of a comparison, which will highlight the differences.\nThe Court of Justice cannot have meant comparison in this sense.\nNonetheless, it may have meant comparable in the sense of roughly similar (although this still leaves for consideration whether the right comparison was with pay which the worker could have earned if he or she had been working instead of on leave, or was earning during some other and. if so what, period) or it may, perhaps, have meant sufficiently similar to achieve the aim of the Directive, that is ensuring that employees could and would take and enjoy a restful or at all events restorative annual leave.\nThe questions referred 30. these questions: In these circumstances, the Supreme Court refers to the Court of Justice (ii) (i) Under (a) articles 7 of Council Directives 93\/104\/EC and 2003\/88\/EC and (b) clause 3 of the European Agreement annexed to the Council Directive 2000\/79\/EC: (1) to what, if any, extent does European law define or lay down any requirements as to the nature and\/or level of the payments required to be made in respect of periods of paid annual leave; and (2) to what, if any, extent may Member States determine how such payments are to be calculated? In particular, is it sufficient that, under national law and\/or practice and\/or under the collective agreements and\/or contractual arrangements negotiated between employers and workers, the payment made enables and encourages the worker to take and to enjoy, in the fullest sense of these words, his or her annual leave; and does not involve any sensible risk that the worker will not do so? (iii) Or is it required that the pay should either (a) correspond precisely with or (b) be broadly comparable to the workers normal pay? Further, in the event of an affirmative answer to question (iii)(a) or (b): (iv) Is the relevant measure or comparison (a) pay that the worker would have earned during the particular leave period if he or she had been working, instead of on leave, or (b) pay which he or she was earning during some other, and if so what, period when he or she was working? (v) How should normal or comparable pay be assessed in circumstances where (a) a workers remuneration while working is supplemented if and to the extent that he or she engages in a particular activity; (b) where there is an annual or other limit on the extent to which, or time during which, the worker may engage in that activity, and that limit has been already exceeded or almost exceeded at the time(s) when annual leave is taken, so that the worker would not in fact have been permitted to engage in that activity had he been working, instead of on leave? On this basis, I would also remit the issues relating to TAFB to the employment tribunal, together with those relating to paid annual leave to which para 27 above refers.\n","output":"The appeal concerns the nature and assessment of paid annual leave required by the Civil Aviation (Working Time) Regulations 2004 (the Regulations).\nThe appellants are pilots employed by the respondent (British Airways).\nTheir terms of employment are found in a Memorandum of Agreement (MOA).\nThe MOA provides for pilots to receive a fixed annual sum plus two supplementary payments varying according to the time spent flying, namely the Flying Pay Supplement (FPS) of 10 per flying hour and the Time Away From Base allowance (TAFB) paid at 2.73 per hour.\nTAFB was introduced in place of meal allowances and to cover other costs.\nPilots are taxed on 18% of TAFB as the tax authorities regard it as providing more than needed purely for costs.\nThe two supplementary payments are subject to limits because pilots are limited to a number of permissible hours flying or on duty each year.\nThe MOA requires pilots to take a certain period of annual leave and entitles them to take periods of additional leave.\nWhen on leave, pilots are paid the basic fixed pay.\nPilots are required to receive paid annual leave under the Regulations, which implemented the provisions of Council Directive 2000\/79\/EC (the Aviation Directive).\nThe appellants brought claims against British Airways arguing that pursuant to the Regulations, they were entitled to both the supplementary payments as well as the fixed annual sum as part of their paid annual leave.\nThey succeeded in the Employment Tribunal and the Employment Appeal Tribunal, but the Court of Appeal allowed British Airways appeal.\nIn 2010 the Supreme Court heard the appellants appeal against that judgment, and decided it was under a duty to refer five questions concerning the interpretation of the relevant European law on the meaning of paid annual leave to the Court of Justice of the European Union (CJEU) (British Airways plc v Williams [2010] UKSC 16).\nThe CJEU gave its response in a judgment dated 15 September 2011 (British Airways v Williams (Case C 155\/10) [2012] ICR 847).\nThe matter thereafter returned to the Supreme Court to rule on its consequences for the dispute between the parties.\nThe Supreme Court, in the light of the judgment of the CJEU, unanimously remits the appellants claims to the Employment Tribunal for further consideration of the appropriate payments to be made to them in respect of periods of paid annual leave.\nThe judgment is given by Lord Mance.\nThe CJEU had ruled that the purpose of the requirement for paid annual leave in the Aviation Directive was to put the worker in a position which was, as regards remuneration, comparable to periods of work.\nA specific analysis of the various components of a workers pay was required.\nAny aspect which is linked intrinsically to the performance of the tasks which the worker is required to carry out under his contract of employment .such as, in the case of airline pilots, the time spent flying was to be taken into account.\nBy contrast, components intended exclusively to cover occasional or ancillary costs arising at the time of performance need not be.\nIt was for the national court to assess whether the various components comprising the workers total remuneration met those criteria, such assessment to be carried out on the basis of an average over a reference period which was judged to be representative [9 14].\nThe appellants argued that their claims should now be remitted to the Employment Tribunal for assessment, and that their remuneration on leave should include basic pay, FPS and 18% of TAFB.\nBritish Airways, however, submitted that the Regulations were too unspecific to give effect to the Aviation Directive and the requirement for an average over a reference period which is judged to be representative required a detailed legislative scheme which could not by supplied by an employment tribunal [15 19].\nThe wording of regulation 4 of the Regulations was taken from article 7 of the Aviation Directive.\nThe same principles must govern the wording of both.\nIf British Airways choice of a representative reference period was not acceptable to an individual pilot, a court or tribunal could take its own view.\nEven though the Regulations did not expressly address complaints relating to the payment of annual leave, complaint to a court was in fact permitted by Regulation 18(1) in respect of a refusal by an employer to permit the exercise of any right enjoyed by the employee under Regulation 4 and compensation could be awarded under Regulation 18(4) [20 27].\nAs for the proportion (if any) of TAFB to be included in paid annual leave, the test stated by the CJEU excluded sums intended exclusively to cover costs.\nThe Supreme Court did not have the material before it to determine the real basis for the payment of TAFB and British Airways genuine intention would need to be considered by the employment tribunal.\nThe attitude of the tax authorities was irrelevant [28 32].\n","id":29}
{"input":"The issue on this appeal is whether the appellant, Airtours Holidays Transport Ltd (formerly MyTravel Group plc), is entitled to recover, by way of input tax, Value Added Tax (VAT) charged by PricewaterhouseCoopers LLP in respect of services provided by PwC and paid for by Airtours.\nThe factual and procedural background\nIn October 2002, Airtours, which had borrowed money from around 80 financial institutions, and had further liabilities, was in serious financial difficulties, and sought refinancing from the Institutions to enable it to restructure.\nIt was suggested to Airtours that it should commission an accountants report to satisfy the Banks that its restructuring proposals were viable.\nThe Institutions were agreeable to this, and two firms were approached, and, pursuant to a decision in which both the Institutions and Airtours were involved, PwC were appointed to produce a report (the Report).\nThe original terms under which PwC were appointed were contained in a letter dated 5 November 2002 (the Letter), which was addressed To the Engaging Institutions, and headed Silver Group plc [a code name for Airtours] and its subsidiaries .\nThe Letter contained a number of provisions, including the following: Para 1, which confirmed that PwC had been retained by the Institutions as defined in para [4] to provide the Services, which were set out in an Appendix to the Letter, and as I shall refer to them.\nThey included items such as Current trading position, historic cash utilisation, Review of accounting policies and issues, and Budget for year to 30 September 2003.\nPara 4, which stated that the Report was for the sole use of the Institutions who have expressly agreed to this letter by countersigning below, and that the information and advice given by PwC could be passed to the Institutions, to whom PwC were prepared to assume a duty of care if they countersigned the letter.\nPara 6, which recorded a request you had made that PwC assist in providing information to the institutions providing facilities to [Airtours].\nPara 7, which referred to the work being carried out in phases, and referred to Airtours likely requests for facility extensions Para 8, which stated that Information and advice produced from this engagement is to be addressed to the Engaging Institutions with a copy to the directors of [Airtours], with the exception of any part of the report prepared exclusively or confidentially for the Engaging Institutions.\nParas 9, under which PwC accepted that they had a duty of care to the Engaging Institutions.\nPara 10, under which [y]ou accept that the aggregate limit referred to in paragraph 9 of our Terms and Conditions applies to our liability to [Airtours] and the Engaging Institutions.\nPara 12, which provided that [y]ou have requested us to undertake a review of [Airtours] as set out below.\nOur work is required by the Institutions in considering the level of facilities granted to [Airtours].\nParas 13 18, which described the scope of these Services, including the phasing, the limitations, and the extent of the work to be done.\nPara 19, which provided that a draft of our findings will be available for discussion with management by a specified date, and on a subsequent date with the Engaging Institutions.\nPara 22, which stated that [Airtours] will be responsible for our fees, expenses and disbursements incurred in carrying out our work .\nPara 25, which provided that [o]ur terms are that a retainer of 200,000 be payable on the commencement of our work and that weekly invoices will be rendered to [Airtours and] are payable on submission.\nPara 26, which stated that [t]he attached terms and conditions (the Terms and Conditions) set out the duties of each party in respect of the Services.\nThe Terms and Conditions provide that among other matters: i) [Airtours] will indemnify us against claims brought by any third party.\nFor the avoidance of doubt, the reference to you in clause 10 of the Terms and Conditions (and only in that clause) refers to [Airtours] and not the Engaging Institutions ii) our aggregate liability to [Airtours], the Engaging Institutions and any other third party will be limited in accordance with clause 9.4 of the Terms and Conditions iii) the Engaging Institutions and [Airtours] both agree to all the terms contained in the Contract.\nThe Letter included countersigning pages for the Engaging Institutions, which, inter alia, confirmed (i) that the foregoing properly sets out the arrangements agreed between us, and we agree to the terms contained in this Letter and the attached Terms and Conditions and (ii) that [Airtours] has authorised the Engaging Institutions to disclose to you all relevant matters concerning [its] affairs and its bank accounts.\nThe Letter also contained a countersigning page for Airtours which, inter alia, contained a confirmation in the same form as (i), and also confirmed that PwC would have full access to its books, and that PwC could disclose all aspects of [Airtours] affairs to the Engaging Institutions.\nThe Terms and Conditions (the Terms) referred to in the Letter were in a standard form.\nThe Terms started by providing that they applied to the Services, and together with the Letter constituted the Contract, and I shall adopt that definition.\nThe Terms then stated that [f]or the avoidance of doubt we and our refers to [PwC], and you and your refers to the entity or entities on whose behalf the [Letter] was acknowledged and accepted.\nThe Terms then included the following provisions: Clause 2, which required you to ensure that all information provided is accurate, that any reports will be based on information provided by you, and states that we will not be required to direct your affairs.\nClause 3, under which you agree to pay our fees promptly .\nClause 9.4, which limited PwCs liability for loss or damage suffered by you, and 9.5, where the Letter is signed by more than one party, this limit will be allocated between them.\nClause 10, which provided that [y]ou agree to indemnify us to the fullest extent permitted by law against all liabilities, losses, claims, demands and expenses arising out of or in connection with your breach of any of the terms of the Contract .\nClause 12, subclause 1 of which provided that either of us may terminate the Contract upon the expiry of 30 days notice; the clause contained other provisions for determination, including in subclause 5 a right for PwC to terminate if we do not receive payment from you of any invoice within 30 days of the due date.\nPwC carried out work pursuant to the Contract, ie they provided the Services pursuant to the Letter and the Terms, and carried out further, similar, work pursuant to similarly worded contracts, which for present purposes can conveniently be treated as part of the Contract.\nThat work was, according to the First tier Tribunal wide ranging and highly technical and involved liaising with and making representations to various parties, and carrying out a strategic review of [Airtours] business and creating what was termed an entity priority model [2009] UKFTT 256 (TC), para 2.\nIn due course, PwC produced a Report, which satisfied the Institutions.\nIn accordance with para 25 of the Letter, Airtours paid PwC a retainer of 200,000 when the work began, and thereafter PwC invoiced Airtours for their fees, which Airtours then paid.\nIn addition, Airtours paid PwC VAT in the form of output tax on these sums.\nAirtours then sought to deduct that VAT as input tax in its VAT returns for the relevant periods.\nThe respondents, the Commissioners of HM Revenue and Customs, challenged Airtours right to do so.\nWhile they accepted that the Contract was of commercial benefit to Airtours, they contended that PwCs services under the Contract were not supplied to Airtours, and, as a result, Airtours was not entitled to deduct the VAT on PwCs fees as input tax.\nThe First tier Tribunal found for Airtours, in very summary terms on the basis that all that was required to establish its case was that it had obtained anything at all that was used for the purpose of his business and a supply of a service may consist of a right to have the service supplied to a third party [2009] UKFTT 256 (TC), para 26.\nThe Upper Tribunal allowed the Commissioners appeal, holding that the Contract was one in which the Engaging Institutions contracted with PwC to supply services which they needed for the purposes of their own businesses, and Airtours contracted with PwC to pay its fees, rather than one in which Airtours received something of value from PwC to be used for the purpose of its business in return for its payment [2010] UKUT 404 (TCC), para 24.\nBy a majority, the Court of Appeal dismissed Airtours appeal [2015] STC 61.\nAll members of the Court of Appeal agreed that the issue turned on the interpretation of the Contract.\nIn agreement with the Upper Tribunal, Moore Bick and Vos LJJ held that the effect of the Contract was that PwCs services thereunder were provided to the Engaging Institutions, and not to Airtours.\nDissenting, Gloster LJ concluded at para 46 that as a matter of construction of the Contract, and on analysis of the economic realities of the surrounding commercial arrangements, the appellant had a contractual right to require that the Services as described in the [Letter] were provided.\nThe statutory provisions\nThe law relating to payment and recovery of VAT in the United Kingdom is contained in the Value Added Tax Act 1994, which was intended to reflect the provisions of certain EC Directives, most notably EC Council Directive 67\/227 (on the harmonisation of legislation of member states concerning turnover taxes) (the First Directive) and EC Council Directive 77\/388 (on the harmonisation of the laws of the member states relating to turnover taxes Common system of value added tax: uniform basis of assessment) (the Sixth Directive).\nThe current EU provisions relating to VAT and the recovery of input tax are contained in Council Directive 2006\/112\/EC (the Principal VAT Directive).\nArticle 1(2) of the Principal VAT Directive (originally as article 2 of the First Directive) describes the basic system of VAT: 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.\nOn 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.\nThe common system of VAT shall be applied up to and including the retail trade stage.\nVAT is charged on supplies of goods and services for consideration see article 2(1) of the Principal VAT Directive (formerly article 2 of the Sixth Directive).\nAnd, as article 63 of the Principal VAT Directive states, VAT becomes chargeable when a supply takes place.\nArticles 14(1) and 24 of the Principal VAT Directive (formerly articles 5 and 6 of the Sixth Directive), reflected in section 5 of, and Schedule 4 to, the 1994 Act, define the concepts of supply of goods and supply of services respectively, in the following terms; Supply of goods shall mean the transfer of the right to dispose of tangible property as owner.\nSupply of services shall mean any transaction which does not constitute a supply of goods.\nArticle 73 of the Principal VAT Directive (formerly article 11 of the Sixth Directive), reflected in section 19 of the 1994 Act, defines, so far as relevant, the taxable amount as: in respect of the supply of goods or services everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party,\nArticle 168 of the Principal VAT Directive (formerly article 17(2) of the Sixth Directive), reflected in sections 24(1), 24(2), 26(1) and 26(2) of the 1994 Act, allows a taxable person the right, [i]n so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, to deduct 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.\nSo far as the provisions of the 1994 Act are concerned, they must, of course, be interpreted as far as possible so as to comply with the current Directive, and it is accepted that, at least for present purposes, they do so.\nWhether it is right to decide this appeal by reference to the Principal VAT Directive or the 1994 Act is therefore a wholly academic point.\nHowever, the strictly correct approach must be to decide it by reference to the 1994 Act, but only on the basis that that Act cannot be interpreted without reference to the Principal VAT Directive, and must, if at all possible, be interpreted so as to be consistent with that Directive.\nThe centrally relevant provisions of the 1994 Act are in sections 24 to 26.\nSection 24(1) defines input tax as, inter alia, VAT on the supply to [a taxable person] of any goods or services which are used or to be used for a business carried on by him.\nSection 25(2) entitles a taxable person to deduct so much of his input tax as is allowable under section 26 from any output tax that is due from him.\nSection 26(1) and (2) provides that the amount of allowable input tax is that which is attributable to supplies made or to be made by the taxable person in the course or furtherance of his business [including] taxable supplies.\nThe issues on this appeal in summary\nIn order for the VAT charged by PWC and paid by Airtours to be reclaimable as input tax, it must be VAT on the supply to [Airtours] of any goods or services.\nThere is no doubt that there was in this case a supply of services (and no supply of goods), namely the provision by PwC of the Services as defined in the Letter.\nThe issue is whether the supply of such services was to Airtours.\nThe concept of a supply is not only fundamental to the VAT system; it is an autonomous concept of the EU wide VAT system.\nIn the present appeal, the issue whether there has been a supply of services by PwC to Airtours gives rise to two principal questions.\nThe first question is whether, under the terms of the Contract, PwC agreed with Airtours that it would supply services, and in particular to provide the Report.\nIf the answer to that question is yes, then the Commissioners accept that there has been a supply of services to Airtours, and that this appeal must be allowed, subject to a question of apportionment.\nOn the other hand, if the answer to that first question is no, then the Commissioners contend that this appeal must be dismissed, but Airtours contends that its appeal should still succeed, subject, again to a question of apportionment.\nIn effect, on this second point, Airtours argues that, in order to show that it received a supply of services from PwC for the purposes of VAT, it does not have to show that it had a contractual right to require the Services to be provided to the Institutions by PwC.\nThe first question: was there a contractual obligation to supply?\nThe first question, then, is whether, on the true construction of the Contract, PwC contracted to supply services to Airtours.\nThere is no doubt that the Contract imposes an obligation on PwC to supply services to the Institutions.\nThe issue is whether PwC agreed, in addition, with Airtours that they would supply those services.\nThus, it is enough for Airtours purposes if it can establish that PwC were under a contractual obligation to Airtours to supply services, such as providing the Report, to the Institutions.\nAirtours does not have to show that PwC were under a contractual obligation to supply any services directly to Airtours.\nNot least because the Terms are in a standard form, which has been poorly adapted, and whose provisions are inconsistently drafted, the issue whether PwC had a contractual obligation to Airtours to provide the Services to the Institutions is not entirely easy.\nNonetheless, I have reached the clear conclusion that PwCs commitment to provide the services as described in the Contract was a contractual commitment to the Engaging Institutions, and not to Airtours.\nFirst, the Letter is addressed To the Engaging Institutions, and not to Airtours.\nSecondly, para 1 states in terms that it is those Institutions who have retained PwC: there is no suggestion that Airtours had done so, or that there was some residual contractual duty to Airtours.\nThirdly, para 4 provides that any reports are for the sole use of [those] institutions which had countersigned, and again there is nothing about Airtours.\nFourthly, para 7, with its reference to [Airtours] likely requests for facility extensions is also more consistent with the Commissioners case.\nThe reference also highlights the risk of conflict if PwC were contracting with Airtours as well as the Banks, but this point is weakened by the evidence before the FTT to the effect that the current practice of PwC would be to contract with both borrower and lender.\nFifthly, para 8 of the Letter states that the Report is to be provided to the Institutions, and not only is Airtours merely to be provided with a copy, but that copy can be redacted.\nWhile none of that is logically inconsistent with PwCs contract being with Airtours, its thrust is more consistent with the opposite.\nThe obligation to provide a copy of any Report to the directors of Airtours is perfectly consistent with PwCs contractual obligations being to the Institutions alone, as they would want to discuss any Report with Airtours, and would therefore not want Airtours to be excluded from seeing the Report pursuant to the terms of para 4.\nSixthly, paras 9 and 10 of the Letter recognise a duty of care on the part of PwC to the Institutions, but does not acknowledge one to Airtours, but it is fair to say that the weight to be given to this point is weakened by the terms of para 26(ii).\nSeventhly, para 11 reinforces this point as it excludes any duty of care or liability to any other party.\nIf that excludes any duty of care to Airtours, it lies uneasily with the notion that PwC has a contractual obligation to Airtours; if it does not exclude any duty of care to Airtours, then it reinforces the point made in respect of paras 9 and 10.\nEighthly, para 12 refers to PwCs work being required by the Institutions, and no suggestion that it was required by Airtours; while that is not inconsistent with the notion that there is also a contractual obligation to Airtours, it is rather an odd provision if there was.\nIt is true that in para 19 of the Letter PwC agreed to discuss any draft report with Airtours management, but that is quite consistent with the Contract being with the Institutions alone: a discussion with Airtours before a discussion with the Institutions would obviously be desirable from the Institutions perspective.\nPara 22 records the fact that Airtours would pay for PwCs work, but, in so far as such a provision is included in the Letter, it was needed to protect the Institutions as much as PwC, and the same applies to para 26(i) which records that Airtours would indemnify PwC against third party claims.\nPara 26(ii) referred to PwCs liability to Airtours, but there could clearly be tortious liability.\nPara 26(iii) was plainly not concerned with imposing any liability on PwC beyond what was in the preceding provisions.\nAs for the fact that Airtours countersigned the Letter in the terms that it did, it appears to me that Airtours had to sign in order to be bound by paras 22 (payment of PwCs fees) and 26 (indemnity and limitation of liability), as well as clauses 2, 3, 9 and 10 of the Terms.\nIn any event, I find it hard to accept the suggestion that the fact that Airtours countersigned, and was required by PwC to countersign, the Letter in the terms that it did had the effect of imposing on PwC obligations to Airtours which would not otherwise have arisen from the provisions of the Letter.\nTurning to the Terms, they were on a standard printed form, and it is therefore unsurprising that they are not always easy to apply to the provisions contained in the Letter.\nThe statement in the opening part of the Terms that you refers to the entity or entities on whose behalf the Letter was acknowledged and accepted is neutral, because, as just explained, by countersigning the Letter, Airtours had agreed to pay PwCs fees and to give PwC an indemnity, and it had also agreed to a cap on any potential liability to it which PwC might have, as set out in the Letter.\nThe provisions of clause 2 of the Terms are such that the reference to you more naturally refers to Airtours probably as well as the Institutions.\nIn the light of the provisions of paras 22, 25 and 26(i) of the Letter, there can be no doubt but that the references to you in clauses 3 and 10 of the Terms (concerned with the payment of PwCs fees and with an indemnity to PwC) are reference to Airtours alone.\nThe you in clause 9 appears to apply to the Institutions and Airtours.\nClause 12 of the Terms, which applies to determination and refers to either of us being able to determine, appears to envisage two parties to the Contract, and, if that is right, they must be the Institutions and PwC, although payment from you in clause 12.5 must mean payment from Airtours.\nConfining myself for the moment to the express words of the Contract, it appears to me that the Commissioners are correct, and there is no obligation on PwC, as a matter of contract, to Airtours to provide the Services whether to the Institutions or to Airtours.\nThe position appears pretty clear if one confines oneself to the Letter: PwCs obligation to provide the Services set out in the Appendix is owed solely to the Institutions, and Airtours is only a party for the purpose of agreeing to pay PwCs fees, to provide PwC with an indemnity, and to acknowledge the cap on any damages for which PwC may be liable.\nThe Terms are, without doubt, less clear, but there is nothing in them which supports the notion that they were intended to widen PwCs duties beyond what was in the Letter.\nIn any event, the notion that the Terms can give the meaning of you in the Letter any different meaning from that which it naturally has on the face of the Letter is fatally undermined by the fact that the Terms are contained in a standard form, and, even more, by the fact that you in the Terms clearly has different meanings in different places.\nLooking at the matter more broadly, Airtours argues that when one considers the commercial background, it should be accepted that PwC had a contractual duty to Airtours to provide the Institutions with the Services (and in particular the Report).\nIn that connection, Airtours points to the facts that (i) it was plainly in Airtours interest that the Services were provided, (ii) Airtours was to pay for the Services, (iii) Airtours initiated the idea of having the Report and were involved in the selection of PwC, (iv) Airtours was a party to the Letter through countersigning it, and (v) Airtours took on liabilities to PwC in the Letter.\nThis argument has obvious attraction, but I cannot accept it.\nI do not consider that these five factors can be successfully invoked either in order to interpret the Contract so as to impose a contractual duty on PwC to Airtours to supply the information to the Institutions, or in order to imply such a duty on PwC.\nFactors (iv), and (v) are plain from the face of the Letter, and I do not see that they can carry things further, once one has analysed the provisions of the Letter and the Terms.\nFactor (iii) takes matters little further at least on its own, although it could fairly be said to be supportive of Airtours case in a general sort of way.\nBy contrast, factor (ii), the fact that Airtours, rather than the Institutions, was to pay PwC for the services, can fairly be said to raise a prima facie expectation in a reader of the Letter that PwC would owe a duty to Airtours to provide those services.\nHowever, it is not, at least of itself, a particularly powerful point.\nSo long as the Institutions wanted the services, PwC would have been obliged to them to provide them.\nAnd, if the Institutions no longer wanted the services, there is no reason to think that Airtours would still have wanted them, especially as it would have had to pay for them.\nAnd it is not as if Airtours was agreeing to pay for work which would not be done: payment was to be in arrears except for the 200,000 retainer.\nLord Carnwath, whose judgment I have seen in draft form, relies in particular on the retainer of 200,000 which Airtours agreed to pay under para 25 of the Letter.\nWhile I see how the liability to pay this retainer can be said to be the high point of Airtours case, it does not cause me to change my view.\nThe liability to pay the initial 200,000 does not seem to me to be different in principle for present purposes from any other payment which Airtours agreed to pay under para 25.\nApart from that, the parties would have appreciated that it was very unlikely that PwC would not carry out 200,000s worth of work before any possibility of their ceasing work arose.\nThe Report was being prepared under considerable time pressure, as is clear from the background facts and from para 19, under which the interim report had to be available for the engaging institutions six days after signature, and indeed the Letter was signed three days after it had taken effect.\nIn addition, the termination provisions in clause 12 of the Terms limited the circumstances in which PwC could cease their work.\nAs for factor (i), Airtours interest in having a Report produced for the Institutions, I accept that it means that one would not be at all surprised if PwCs contractual obligation to supply the Services to the Institutions extended to Airtours, but it does not in any way compel such a conclusion as a matter of commercial sense, logic or law.\nLike factor (ii), it does no more than raise a prima facie expectation in the reader of the Contract.\nIn these circumstances, I do not consider that the five factors mentioned in para 32 above assist Airtours.\nSo far as interpretation of the Contract is concerned, there is the initial difficulty that it is hard to see how the wording of the Letter and the Terms can give rise to an express contractual duty on the part of PwC to Airtours in the light of the analysis in paras 24 to 31 above.\nAs to the possibility of implying such a duty, I cannot see how the proposed implied term can fairly be said to satisfy either of the two tests recently affirmed in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] 3 WLR 1843, paras 18 and 21, namely that it is necessary for business efficacy or that it is so obvious that it went without saying.\nApart from the factors mentioned in para 32 above, it does not seem to me that there is much else which assists on the interpretation of the Contract for present purposes.\nIt is true that the evidence before the FTT supported the notion that, at any rate at the time of the hearing in the FTT, one would have expected an agreement such as the Contract to involve PwC agreeing to provide the Services to Airtours, as well as to the Institutions.\nHowever, I do not think that that can be of any, or at any rate of much, weight.\nFirst, we are concerned with a contract made in 2002, and the FTT hearing was several years later.\nSecondly, the evidence did not support a universal practice, or general understanding, let alone a professional duty, for an accountant to contract with the borrower as well as the lender in a case such as this.\nSo, at best from Airtours point of view, one is left with the possibility that PwC and Airtours may have believed that the Contract was being made with Airtours as well as the Institutions (although it is fair to emphasise that I do not think that the evidence went nearly as far as that).\nHowever, it is very well established that the understandings of the parties themselves at the time they entered into a written contract is wholly inadmissible when the issue is one of interpretation, as opposed to rectification, of the document.\nFurther, I do not consider that this is an appeal where it would be right to give particular weight to the findings of a Tribunal.\nIn the end, we are concerned with the interpretation of a document, and it is well established that that is a matter of law, not fact, in the courts of all parts of the United Kingdom.\nOf course, when there are relevant findings of primary fact (or even, at least in some cases, of secondary fact) relevant to interpretation, a Tribunals finding will deserve particular respect, but that does not arise in this case.\nFurthermore, in any event, my conclusion as to the meaning of the Contract is consistent with the view of the specialist UT, which formed its own view, because it concluded that the FTT (also a specialist tribunal) had erred in law.\nAccordingly, in agreement with the UT and the majority of the Court of Appeal, I consider that Airtours is wrong on the first question, and, as the Commissioners contend, PwC had no contractual obligation to Airtours to supply the Services to it or to the Institutions.\nThat means that it is necessary to address the second question.\nThe second question: was there nonetheless a supply?\nEven if Airtours were not contractually entitled to require PwC to provide the Services to the Institutions, it remains the fact that it was plainly in Airtours commercial interest that those services be provided.\nThat, it may be said, is evident not merely from the background (namely that the provision of the Services was intended to facilitate the restructuring of Airtours borrowing) and from the face of the Letter (given that Airtours undertook to pay PwC for providing those services).\nIndeed, I do not think that Mr Scorey QC exaggerated Airtours case when he described PwCs work pursuant to the Contract as important to Airtours very survival.\nIn those circumstances, it is argued on behalf of Airtours that, even if it was not contractually entitled to have the Services provided to the Institutions, the facts that (i) it had a substantial commercial interest in those services being provided by PwC to the Institutions, and (ii) it not merely countersigned the Contract pursuant to which they were provided, but thereby agreed to pay PwC for the Services, lead to the conclusion that the Services were supplied to Airtours (as well as to the Institutions).\nSome support for that proposition may arguably be found in the speech of Lord Millett in Customs and Excise Comrs v Redrow Group Plc [1999] 1 WLR 408, 418G, where he said [o]nce the taxpayer has identified the payment the question to be asked is: did he obtain anything anything at all used or to be used for the purposes of his business in return for that payment?.\nIf one takes that question at face value, then it can be said with some force that Airtours obtained a substantial benefit from paying PwCs invoices, namely the potential (and, as it turned out, the eventual actual) financial support of the Institutions for its restructuring.\nHowever, Lord Milletts observation cannot be taken at face value.\nAs Lord Reed explained in Revenue and Customs Comrs v Loyalty Management UK Ltd [2013] STC 784, paras 66 67: 66. [T]he speeches in Redrow should not be interpreted in a manner which would conflict with the principle, stated by the Court of Justice in the present case, that consideration of economic realities is a fundamental criterion for the application of VAT. [T]he judgments in Redrow cannot have been intended to suggest otherwise.\nOn the contrary, the emphasis placed upon the fact that the estate agents were instructed and paid by Redrow, and had no authority to go beyond Redrows instructions, and upon the fact that the object of the scheme was to promote Redrows sales, indicates that the House had the economic reality of the scheme clearly in mind.\nWhen, therefore, Lord Millett asked, Did he obtain anything anything at all used or to be used for the purposes of his business in return for that payment?, [that question] should be understood as being concerned with a realistic appreciation of the transactions in question. 67.\nReflecting the point just made, it is also necessary to bear in mind that consideration paid in respect of the provision of a supply of goods or services to a third party may sometimes constitute third party consideration for that supply, either in whole or in part.\nThe speeches in Redrow should not be understood as excluding that possibility.\nEconomic reality being what it is, commercial businesses do not usually pay suppliers unless they themselves are the recipient of the supply for which they are paying (even if it may involve the provision of goods or services to a third party), but that possibility cannot be excluded a priori.\nA business may, for example, meet the cost of a supply of which it cannot realistically be regarded as the recipient in order to discharge an obligation owed to the recipient or to a third party.\nIn such a situation, the correct analysis is likely to be that the payment constitutes third party consideration for the supply.\nLord Hope made the same point in para 110 in remarks which are perhaps particularly germane for present purposes: I think that Lord Millett went too far [at p 418G] when he said that the question to be asked is whether the taxpayer obtained anything anything at all used or to be used for the purposes of his business in return for that payment.\nPayment for the mere discharge of an obligation owed to a third party will not, as he may be taken to have suggested, give rise to the right to claim a deduction.\nA case where the taxpayer pays for a service which consists of the supply of goods or services to a third party requires a more careful and sensitive analysis, having regard to the economic realities of the transaction when looked at as a whole.\nThis approach appears to me to reflect the approach of the Supreme Court in the subsequent case of WHA Ltd v Revenue and Customs Comrs [2013] UKSC 24; [2013] STC 943 where at para 27, Lord Reed said that [t]he contractual position is not conclusive of the taxable supplies being made as between the various participants in these arrangements, but it is the most useful starting point.\nHe then went on in paras 30 to 38 to analyse the series of transactions, and in para 39, he explained that the tribunal had concluded that the reality is quite different from that which the contractual documentation suggested.\nEffectively, Lord Reed agreed with this, and assessed the VAT consequences by reference to the reality.\nIn other words, as I said in Secret Hotels2 Ltd v Revenue and Customs Comrs [2014] STC 937, para 35, when assessing the VAT consequences of a particular contractual arrangement, the court should, at least normally, characterise the relationships by reference to the contracts and then consider whether that characterisation is vitiated by [any relevant] facts.\nThe same approach was adopted by the Court of Justice in Revenue and Customs Comrs v Loyalty Management UK Ltd and Baxi Group Ltd (Joined Cases C 53\/09 and C 55\/09) [2010] STC 265, paras 39 and 40, where they stated, citing previous judgments, that consideration of economic realities is a fundamental criterion for the application of the common system of VAT, and added that that issue involved consideration of the nature of the transactions carried out in the particular case.\nTo much the same effect, in Tolsma v Inspecteur der Omzetbelasting Leeuwarden (Case C 16\/93) [1994] STC 509, para 14, the Court of Justice said that a supply of services is effected for consideration only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, which it explained as meaning the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient.\nIn the context of the supply of goods, the Court made the same point in Primback Ltd v Customs and Excise Comrs (Case C 34\/99) [2001] 1 WLR 1693, para 25, where it described the determining factor as the existence of an agreement between the parties for reciprocal performance, the payment received by the one, being the real and effective counter value for the goods furnished to the other.\nIn Revenue and Customs Comrs v Newey (Case C 653\/11) [2013] STC 2432, para 40, the Court of Justice again emphasised that that a supply of services is effected for consideration, within the meaning of article 2(1) of [the Sixth] directive, and hence is taxable, only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient.\nIn para 41, the court went on to explain that the supply of services is therefore objective in nature and applies without regard to the purpose or results of the transactions concerned and without its being necessary for the tax authorities to carry out inquiries to determine the intention of the taxable person.\nThe court then observed in paras 42 43 that consideration of economic and commercial realities is a fundamental criterion for the application of the common system of VAT and that the contractual position normally reflects the economic and commercial reality of the transactions.\nAn exception to the normal rule that the contractual relationship is central was then identified by the court as being where those contractual terms constitute a purely artificial arrangement which does not correspond with the economic and commercial reality of the transactions (para 45).\nFrom these domestic and Court of Justice judgments, it appears clear that, where the person who pays the supplier is not entitled under the contractual documentation to receive any services from the supplier, then, unless the documentation does not reflect the economic reality, the payer has no right to reclaim by way of input tax the VAT in respect of the payment to the supplier.\nOn this analysis, it appears to me that, subject to considering a further way in which Airtours case is put, it also fails on the second question.\nThe Contract, consisting of the Letter and the Terms, did reflect the economic reality, and was not in any way an artificial arrangement.\nIt is true that Airtours benefitted from the Contract, but the benefit which it was getting was not so much the Services from PwC, but the enhanced possibility of funding from the Institutions for its restructuring (a possibility which eventuated into reality thanks, to a substantial extent, to the Report).\nAnd it was to improve the prospects of such refinancing that Airtours was prepared to pay for the provision of the Report.\nOn behalf of Airtours, it is suggested that this conclusion is inconsistent with the notion of fiscal neutrality, as the consequence of Airtours appeal in this case failing is that VAT paid as output tax is not reclaimable as input tax.\nHowever, as Advocate General Sharpston observed in Finanzamt Frankfurt am Main V Hchst v Deutsche Bank AG (Case C 44\/11) [2012] STC 1951, para 60 in connection with exemptions, fiscal neutrality is not a fundamental principle or a rule of primary law which can condition the validity of an exemption but a principle of interpretation, to be applied concurrently with and as a limitation on the principle of strict interpretation of exemptions.\nIn any event, as Mr Thomas says on behalf of the Commissioners, I would not accept the argument is well founded.\nIt assumes that all output tax should, in principle, be reclaimable as input tax, no matter who was invoiced and who paid it, whereas article 168 (set out in para 17 above) clearly limits such a right to output tax paid in respect of supplies to him of services : therefore, where the services in respect of which he paid VAT were not supplied to the person who paid the VAT, no right to reclaim that output tax can arise.\nTo put the point another way, fiscal neutrality cannot be invoked to invent a supply where there is none.\nConsistently with this, although the VAT Directives contemplate that the consideration itself may be paid by either the recipient of or a third party to the supply or a combination of the two (see para 15 above and HMRC v Loyalty Management UK Ltd, para 67, per Lord Reed), they also contemplate that VAT on a supply will be the subject of an invoice directed to the recipient of the supply (see the Principal VAT Directive, articles 220(1) and 226(5)) and will be potentially deductible by him once paid as input tax (article 168) although it appears that, in this case, the Institutions, being largely exempt, would not have been able to deduct any input tax which had been invoiced to and paid by them.\nIn this context, Mr Scorey also raised a somewhat wider point, namely that, if contrary to his submission, PwC had contracted to, and did, provide services only to the Institutions, there could be no supply at all by PwC for VAT purposes because there was no reciprocal performance by the Institutions for those services.\nHe contrasted the circumstance in which A contracts with and undertakes to pay B to supply a service to C, where there is reciprocity of obligation between A and B, with a contractual arrangement in which C, while undertaking no obligation to pay B, receives a service from B and procures that A will pay for it.\nIn short, he contended that because the Institutions were under no obligation to pay PwC for the services, there had been no relevant supply.\nI do not accept this argument, which amounts to an assertion that the reference to third party consideration in article 73 of the Principal VAT Directive is limited to consideration such as a guarantee which exists alongside the liability of the recipient of the goods or services.\nThe Court of Justice has spoken of reciprocal performance as a critical component of the concept of supply, but it has never confined the consideration to that provided by the recipient of the supply.\nThus in Tolsma at para 14, the court stated: a supply of services is effected for consideration and hence is taxable, only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient.\nvan Financin\nThis formulation demonstrates the need for a direct link between the service provided and the consideration received which the court had previously articulated in Staatssecretaris v Association Coperatieve Aardappelenbewaarplaats GA (Case C 154\/80) [1981] ECR 445, para 12, Apple and Pear Development Council v Customs and Excise Comrs (Case C 02\/86) [1988] STC 221, paras 11 and 12, and Staatssecretaris van Financin v Hong Kong Trade Development Council (Case C 89\/91) [1982] ECR 1277, para 10.\nThe Court of Justices later statements of the test have followed Tolsma in not requiring the recipient of the services under the arrangement itself to be the provider of the consideration or to have legal responsibility for its provision see Primback Ltd, para 25 and Newey, para 40, and see also Dixons Retail plc v Revenue and Customs Comrs (Case C 492\/12) [2014] Ch 326, paras 31 and 32.\nWhen the Court of Justice speaks of reciprocal performance it is looking at the matter from perspective of the supplier of the services and it requires that under the legal arrangement the supplier receives remuneration for the service which it has performed.\nIt is not necessary that the recipient of the service is legally responsible to the supplier for payment of the remuneration; it suffices that the arrangement is for a third party to provide the consideration.\nWere it otherwise, taxpayers could structure their transactions so as to escape liability to pay VAT, so long as they could meet the economic reality test.\nWhen this court has discussed third party consideration in what is now article 73 of the Principal VAT Directive it has similarly not restricted it to consideration provided alongside, or in performance of, a legal obligation of the recipient see WHA Ltd, para 56 per Lord Reed, in which the garage provided a service to the insured car driver but the insurer alone was responsible for remunerating the garage, and Loyalty Management UK Ltd, para 67 per Lord Reed.\nFinally, it is also said that the fact that PwC did not contract with Airtours to provide the Services to the Institutions is a very small point on which the present decision should turn.\nThe answer to that was provided by Lord Reed in WHA Ltd, para 26, where he said that decisions about the application of the VAT system are highly dependent upon the factual situations involved.\nA small modification of the facts can render the legal solution in one case inapplicable to another.\nConclusion\nFor these reasons, I would dismiss Airtours appeal.\nLORD CLARKE: (dissenting) (with whom Lord Carnwath agrees)\nI agree with Lord Carnwath that this appeal should be allowed, both for the reasons he gives and, in particular, for the reasons given by Gloster LJ in her dissenting judgment in the Court of Appeal.\nThe principal reason why I have reached a different conclusion from that of Lord Neuberger is that it seems to me that his approach is too narrow in that, while it focuses on the relationship between PwC and the Banks, it gives too little attention to the legal relationship between PwC and Airtours and to the economic realities of that relationship.\nThe same is in my opinion true of the approach of the majority of the Court of Appeal.\nGloster LJ set out the relevant principles, in my opinion correctly, in her para 37.\nIt is convenient to set out here the basic principles without repeating the extensive citations of recent authority, including in particular in the Supreme Court.\nUsing Gloster LJs sub paragraphs, those principles are these: i) Consideration of economic realities is a fundamental criterion for the application of the common system of VAT as regards the identification of the person to whom services are supplied. ii) Decisions about the application of the VAT system are highly dependent upon the factual situations involved.\nThus a small modification of the facts can render the legal solution in one case inapplicable to another. iii) The case law of the CJEU indicates that, when determining the relevant supply in which a taxable person engages, regard must be had to all the circumstances in which the transaction or combination of transactions takes place.\nIn cases where a scheme operates through a construct of contractual relationships, it is necessary to look at the matter as a whole in order to determine its economic reality.\nThus the relevant contracts have to be understood in the wider context of the totality of the arrangements between the various participants. iv) The terms of any contract between the parties, whilst an important factor to be taken into account in deciding whether a supply of services has been made, are not necessarily determinative of whether as a matter of economic reality taxable supplies are being made as between any particular participants in the arrangements.\nThat may be particularly so where certain contractual terms do not wholly reflect the economic and commercial reality of the transactions.\nHowever, the contractual position is generally the most useful starting point for the VAT analysis. v) There may, as a matter of analysis, be two or more distinct supplies within the same transaction.\nMoreover, a single course of conduct by one party may constitute two or more supplies to different persons.\nOnce the taxpayer has identified the payment the question to be asked is: did he obtain anything anything at all used or to be used for the purposes of his business in return for that payment? This will normally consist of the supply of goods or services to the taxpayer.\nBut it may equally well consist of the right to have goods delivered or services rendered to a third party.\nThe grant of such a right is itself a supply of services.\nIn one case (Redrow) the taxpayer did not merely derive a benefit from the services which the agents supplied to the householders and for which it paid.\nIt chose the agents and instructed them.\nIn return for the payment of their fees it obtained a contractual right to have the householders homes valued and marketed, to monitor the agents performance and maintain pressure for a quick sale, and to override any alteration in the agents instructions which the householders might be minded to give.\nEverything which the agents did was done at the taxpayers request and in accordance with its instructions and, in the events which happened, at its expense.\nThe doing of those acts constituted a supply of services to the taxpayer.\nThe services obtained by the taxpayer were different.\nThey consisted of the right to have the householders home valued and marketed in accordance with the taxpayer's instructions.\nUnless the householder sold his home and completed the purchase of a Redrow home, however, the taxpayer was not liable for the agent's fees and paid no input tax, so there was nothing in respect of which a claim to deduction could be made.\nWhat must await events was not the identity of the party to whom the services were rendered, for different services were rendered to each; but which of the parties was liable to pay for the services rendered to him and so bear the burden of the tax in respect of which a claim to deduction might arise. vi) However, the mere fact that the taxpayer has paid for the service does not necessarily mean that it has been supplied to him.\nConsideration of economic realities is a fundamental criterion for the application of VAT.\nThus substance and reality remain critical.\nWhat is required is a realistic appreciation of the transactions in question.\nConsideration paid in respect of the provision of a supply of goods or services to a third party may sometimes constitute third party consideration for that supply, either in whole or in part.\nEconomic reality being what it is, commercial businesses do not usually pay suppliers unless they themselves are the recipient of the supply for which they are paying (even if it may involve the provision of goods or services to a third party), but that possibility cannot be excluded a priori.\nA business may, for example, meet the cost of a supply of which it cannot realistically be regarded as the recipient in order to discharge an obligation owed to the recipient or to a third party.\nIn such a situation, the correct analysis is likely to be that the payment constitutes third party consideration for the supply.\nA case where the taxpayer pays for a service which consists of the supply of goods or services to a third party requires a more careful and sensitive analysis, having regard to the economic realities of the transaction when looked at as a whole.\nIt may lead to the conclusion that it was solely third party consideration, or it may not.\nHaving set out those principles (and the references which support them) Gloster LJ, in my opinion correctly, described the real issue as being whether, on the primary facts found by the FTT, which were in essence not in dispute, the arrangements between the Banks, PwC and Airtours as a matter of law, involved the supply of services to Airtours or merely third party consideration provided by Airtours for services rendered to the Banks alone.\nIn para 41 Gloster LJ expressed the view that this case, like Customs and Excise Comrs v Redrow Group plc [1999] 1 WLR 408 (Redrow), is a case where two distinct supplies of services were being provided by PwC within the same overall transaction.\nShe noted the caveats articulated by Lord Reed and Lord Hope in Revenue and Customs Comrs v Loyalty Management UK Ltd [2013] UKSC 15; [2013] STC 784 (LMUK (SC)) and recognized, both that every case has to be approached on its own particular facts, and that it may be dangerous to draw analogies between the facts of two different cases which may appear superficially similar.\nHowever, she concluded that, although there are obvious differences between the facts of Redrow and those of the present case, the principles identified in Redrow, and confirmed in LMUK (SC), support the analysis that in the present case PwC was making two distinct supplies in both directions (see per Lord Hope in LMUK (SC) at para 89), that is both to the Banks and to Airtours.\nI agree.\nI also agree with her description of the two distinct supplies in para 42: i) The supply by PwC to [Airtours] of the service of having PwC, after appropriate liaison with the [Airtours] directors and senior management, review, monitor, and validate (if appropriate) its financial statements, budgets, financial performance, EPM, arrangements with the CAA etc and report on such matters to the [Banks].\nThat supply of the service of liaison, review etc, and reporting to the [Banks] was provided to [Airtours] pursuant to the Contract which conferred a contractual right on [Airtours] to have such work carried out for the purposes of PwC reporting to the [Banks].\nAs Lord Millett pointed out in Redrow at 418G, the grant of such a right (ie the right to have services rendered to a third party) is itself a supply of services.\nThe supply of that service, pursuant to the Contract, was for a consideration payable by the appellant. ii) The supply by PwC to the [Banks] of the service of reporting on, monitoring and advising in relation to [Airtours] financial statements, budgets, financial performance, EPM, arrangements with the CAA etc in other words the provision to them of the Services as defined in the Engagement Letters in order to enable the [Banks] to decide whether to continue their credit facilities to [Airtours].\nThis supply was also made pursuant to the Contract but it was made in circumstances in which the [Banks] incurred no liability or contractual obligation to PwC to pay for the supply.\nGloster LJ went on to analyse first the Contract and then the economic realities and concluded that both led to the same conclusion, namely that to treat the Banks as the only entities supplied with the services of PwC was much too narrow a view.\nI agree.\nAirtours was at least as much a beneficiary of the services provided by PwC as were the Banks.\nThe particular factors (all included in Gloster LJs analysis of the Contract in paras 44 53 and of the wider economic realities in paras 54 55) which have persuaded me that her analysis is correct are these.\nWhile I am not sure that I would go so far as saying that the words you and your as used in the Contract always include Airtours (although it is certainly arguable that they do), that is not to my mind critical.\nI agree with Gloster LJ (in her para 46) that, as a matter of construction of the Contract, and on analysis of the economic realities of the surrounding commercial arrangements, the appellant had a contractual right to require [her emphasis] that the Services, which were described in the various Engagement Letters and which both the [Banks] and [Airtours] had agreed, were indeed provided by PwC to the [Banks].\nI further agree with Gloster LJ in her para 47 that it is wrong to say that there was no provision in the Contract to support Airtours assertion that it had a right to require PwC to provide services to the Banks and that Airtours under the tripartite arrangement was simply to make payment to PwC for the provision of services to the Engaging Institutions.\nAs Gloster LJ put it, that approach disregards the reciprocal obligations entered into on the part of each of Airtours and PwC under the Contract and the commercial reality of the arrangements.\nAgain as she put it, the absence of an express term specifically stating that Airtours had a right to insist on PwC providing the Services to the Banks is irrelevant.\nThe clear and necessary implication from the express terms of the Contract is that Airtours had such a right.\nI agree with these conclusions in Gloster LJs para 48: Although it may have been the case that PwC was originally approached by the [Banks] it is clear from the facts as found by the FTT that [Airtours] not only had positively to consent to the appointment of PwC but also that it had an input into the decision to choose PwC rather than another firm. [Airtours] also had to agree that PwC would have unrestricted access to its books and records and that [Airtours] directors and senior management would positively co operate with PwC in the provision of information; see for example the appellants confirmation of the November 2002 Letter of Engagement and paragraph 2 of the Terms and Conditions.\nAs reflected in both para 6 and para 12 of the November 2002 Letter of Engagement, the commercial reality was that one of the contracting parties requesting PwC to carry out the work was indeed [Airtours] itself.\nIf [Airtours] had not joined in the request and agreed to PwCs appointment, and the scope of its work, the assignment would have taken a very different form since PwC would have had no contractual right to access to [Airtours] books and records or to cooperation from its directors and senior management.\nIt is also relevant in this context that the evidence showed that at each stage the scope of the work to be carried out by PwC was agreed by all three parties, namely [Airtours], the [Banks] and PwC. Thus although a distinction can be drawn with the factual scenario in Redrow where the taxpayer itself selected and gave instructions to the estate agents, which could not be countermanded by the house owners those factors are not sufficient in my judgment to prevent their being two distinctive services in the present case.\nAs Gloster LJ put it in her para 49, while of course the Banks required the provision of the Services (as defined) for the purposes of their business in order to inform their decision as to whether to continue financial facilities to Airtours, Airtours itself also clearly required PwC to provide the Services (as defined) to the Banks for the purposes of Airtours own business in order to persuade the Banks and other financial institutions to continue the loan facilities to Airtours and to ensure that its bonding arrangements with the CAA were maintained.\nUnless the Services were provided to the Banks, Airtours had little hope of obtaining any extension of its facilities.\nA good report by PwC was critical to Airtours future relationship with the Banks and thus to its future more generally.\nIt is true that PwCs report might have been damaging to Airtours interests but, as Gloster LJ put it at the end of her para 49, it necessarily had to take that risk.\nIn truth the value of PwCs services was as great to Airtours as it was to the Banks.\nHence the part played by Airtours in the selection of PwC and a number of important aspects of the letter of engagement and terms and conditions, which are set out in some detail by Lord Neuberger and Gloster LJ.\nIt is common ground that the Contract was a tripartite agreement.\nIt is true that para 4 of the letter of engagement provided that PwCs report and letters were for the sole use of the Banks and that it expressly provided that PwC would assume a duty of care to the Banks provided that they individually agreed to it.\nParagraph 8 provided that information and advice would be information and advice would be addressed to the Banks with a copy to the directors of the Group, with the exception of any part of the report prepared exclusively or confidentially for the Banks.\nMoreover, it is also true that para 9 expressly provided the PwC had a duty of care to the Banks relating to the contents of the Phase 1 report.\nI do not however read any of those provisions as negativing a duty of care owed to Airtours.\nOn the contrary, para 4 seems to me to cater only for the Banks and the purpose of making information and advice, other than that prepared exclusively or confidentially for the Banks, available to Airtours can surely only have been to allow Airtours to rely upon it.\nAs I see it, the only purpose of the clause was to exclude specific confidential matter.\nParagraph 10 expressly contemplated the possibility of PwCs liability to Airtours because it expressly provided for a limitation of it.\nThere would have been no need for a provision limiting liability if no duty of care was owed to Airtours.\nParagraphs 12 to 16 set out the scope of PwCs services, which identified the extensive basis of the contribution to be made by Airtours.\nIndeed, paras 15 and 16 included express provisions requiring Airtours management to provide information and to be responsible in specific respect.\nAirtours was also of course responsible for PwCs fees.\nFurther, there were these important provisions in paragraph 26 under the heading Terms and Conditions: 26.\nThe attached terms and conditions (the Terms and Conditions have been agreed between the parties and set out the duties of each party in respect of the Services.\nThe Terms and Conditions provide among other matters: i) ii) the Group will indemnify us against claims brought by any third party.\nFor the avoidance of doubt, the reference to you in clause 10 of the Terms and Conditions (and only in that clause) refers to the Group and not the [Banks]; and our aggregate liability to the Group, the [Banks] and any other third party to whom we later agree to assume a duty of care taken together, whether in contract, negligence or any other tort, will be limited in accordance with clause 9.4 of the Terms and Conditions.\nFor this purpose, our liability in respect of Phase 1 of the Services will in no circumstances exceed 10m.\nIn the event that you request and we agree to provide services beyond Phase 1, the financial limit of our aggregate liability will increase to 25m in respect of the Services and any additional services we provide to you. iii) The Letter of Engagement and the Terms and Conditions are together referred to as the Contract, and evidence the entire agreement between the parties.\nFor the avoidance of doubt, the [Banks] and the Group both agree to all the terms contained in the Contract.\nThose provisions strongly support the conclusion that it was agreed that PwC owed a duty of care both to the Banks and to Airtours, as one would expect in the light of the substantive obligations of PwC in a Contract which was for the benefit of both Airtours and the Banks.\nThese conclusions are essentially the same as those set out by Gloster LJ in her paras 50 to 53.\nSee in particular the first sentence of para 50 and also the last sentence of para 51, where she said that it seemed to her to be inconceivable that Airtours did not have an implied correlative contractual right to insist upon due and proper performance by PwC of its obligations under the contract.\nI also agree with her conclusion to similar effect in para 52.\nIf this conclusion is correct, as I believe it to be, it follows from HMRCs concession referred to in para 22 of Lord Neubergers judgment, that there has been a supply of services to by PwC to Airtours as well as to the Banks.\nHaving correctly considered first the contractual position, Gloster LJ turned to the wider economic realities of the situation.\nFor the reasons I have already given, I agree with her that, as she put it in her para 55, as part of the exercise of looking at the economic reality as to whether a supply was made to a taxpayer, it is relevant to see what, if any, value the taxpayer obtained from the alleged supply.\nI also agree with her that there is no doubt that, on the evidence as accepted by the FTT, PwCs review, monitoring and (in the event) endorsement of the appellants financial statements, projections and financial position, PwCs liaison with the appellants directors and senior management and its assistance in securing the consequential continuing financial support of the Engaging Institutions, was intended to play, and did indeed play, a critical role in the maintenance of the appellants licence with the CAA and therefore the survival of its business.\nAs she says, put another way, Airtours right to have PwC carry out this work provided real additional value to Airtours in its struggle for financial survival.\nThe presentation to the Banks of Airtours own figures, without review or validation by an independent third party such as PwC, would have been highly unlikely in the circumstances to have satisfied the Banks and other financial institutions, which were considering the possible continuation of credit facilities.\nFinally, I agree with Gloster LJ that the arrangements between the parties, affording as they did the undoubted consequential benefits to Airtours, clearly involved the supply of economically valuable services to the appellant by PwC as well as the provision of distinct services to the Banks.\nFor these reasons I would allow the appeal.\nLORD CARNWATH: (dissenting) (with whom Lord Clarke agrees)\nI gratefully adopt Lord Neubergers exposition of the facts and law.\nI regret that I am unable to agree with his conclusion.\nSince I understand that I am in a minority, I will state my reasons briefly, particularly as, like Lord Clarke, I am in general agreement with the much fuller reasoning of Gloster LJ in the Court of Appeal.\nThe issue in short is whether the payments made by Airtours were simply third party consideration for services provided by PwC exclusively to the Banks, or whether they were at the same time consideration for services provided to Airtours itself.\nAs the extracts cited by Lord Neuberger (paras 44 46) make clear, the contractual position is a useful starting point, but not necessarily conclusive; in the words of Lord Hope in Revenue and Customs Comrs v Loyalty Management UK Ltd [2013] STC 784, para 110, such a case requires a more careful and sensitive analysis, having regard to the economic realities of the transaction when looked at as a whole.\nTo rest on a narrow legalistic approach to the construction of the contract seems particularly inappropriate in a case where the distinction between services to Airtours and services to the Banks is unlikely to have been seen as of any practical significance to the parties, and probably for that reason was not addressed in detail in that contract.\nNor was it ever put to the test.\nOnce PwC had been engaged, there was never any question of its not completing its task, with the co operation of both Airtours and the Banks, and for the benefit of both.\nA hypothetical analysis of how the contract might have been given effect in circumstances which were never contemplated and never happened, seems a sterile exercise.\nAs Lord Reed points out in the Loyalty Management case at para 67, the normal expectation is that a commercial business paying a supplier is paying for a right to something, even if that something is a supply to another party.\nIn the present case, that expectation is reinforced by a number of considerations: i) In October 2002 Airtours was in serious financial difficulties and needed something done quickly to ensure its own commercial survival.\nPWCs involvement was essential to the achievement of that objective, and Airtours was willing to pay for it.\nIt was entitled to expect a correlative commitment from PwC, and, had the issue arisen, it is hard to see any reason why it would have been resisted. ii) The letter of engagement seems to me to acknowledge (as was the fact) that Airtours were party to the request to PwC to provide the services.\nI agree with the First tier Tribunal and Gloster LJ that you in para 6 (request for assistance) and 12 (request to undertake a review) includes Airtours.\nThis is apparent from para 26(i) which limits you to the Group in respect of clause 10 of the terms (indemnity), thereby implying that elsewhere it refers to both the Group and the Engaging institutions. iii) Although the terms of the contract are in some respects equivocal, it is not in dispute that Airtours was a fully contracting party.\nIt is possible, but in my view artificial, to read that as limited to its obligations to pay and indemnify.\nThe terms of its confirmation letter (taken with para 30 of the principal engagement letter), make clear that it was accepting the terms of [PwCs] engagement as set out in that letter.\nThis implies that PwC was engaged to Airtours, no less than to the Banks.\nThe strongest pointer in this direction, in my view, lies in the provisions for the timetable (clause 19).\nIt is clear that timing for the initial work was critical and very tight.\nThe first agreement was signed on 5 November 2002, but the commencement of the work was fixed for 2 November, three days earlier.\nThe first draft of findings was to be available for discussion with Airtours management on 15 November, and with the Banks on the 18 November.\nTiming for later phases were to be agreed before each phase commences. (That must in my view imply agreement with both Airtours and the Bank, since the co operation of both would be essential to the fulfilment of any agreed timetable; and I see no reason why any such agreed timetable should not be envisaged as open to enforcement by either party.)\nThe first payment by Airtours, a retainer of 200,000, had to be made on commencement.\nIt is legitimate to ask what would have happened if, having paid its 200,000 on 2 November in the expectation of receiving a draft PwC report 13 days later, Airtours had been faced with a failure by PwC to do anything.\nOn Lord Neubergers interpretation of the contract it would have had no enforceable right of any kind.\nI find that impossible to accept, either as a matter of ordinary contractual construction, or still less of economic reality.\nThe timetable in clause 19 was part of the obligations undertaken by PwC under the contract.\nThere is nothing in the contract to suggest that the obligation was not enforceable by Airtours as a party to the contract.\nCommercial sense clearly dictates that it should be so.\nFor these reasons, in addition to those given by Lord Clarke, I would have allowed the appeal.\n","output":"In October 2002, Airtours Holidays Transport Ltd (Airtours) was in serious financial difficulties.\nIt was suggested to Airtours that it should commission an accountants report to satisfy the 80 or so banks and other financial institutions (the Institutions) from which it had borrowed money that its proposed restructuring and refinancing proposals were viable.\nThe Institutions were agreeable to this.\nSubsequently, pursuant to a decision in which both the Institutions and Airtours were involved, PwC were appointed to produce a report (the Report).\nThe original terms of PwCs appointment were set out in a letter dated 5 November 2002 addressed to the Engaging Institutions (the Letter) and attached terms and conditions (together, the Contract).\nThe Contract provided that Airtours was to pay PwCs fees for producing the Report and related work, and Airtours duly did so in due course.\nAirtours also paid PwC VAT in the form of output tax on those payments.\nAirtours then sought to deduct that VAT as input tax in its VAT returns for the relevant periods.\nHMRC challenged Airtours ability to do so.\nWhile HMRC accepted that the Contract was of commercial benefit to Airtours, they contended that Airtours was not entitled to deduct the VAT on PwCs fees as input tax because PwCs services under the Contract were not supplied to Airtours.\nAirtours appealed to the First tier Tribunal, who found for Airtours.\nThe Upper Tribunal allowed HMRCs appeal.\nThe Court of Appeal dismissed Airtours appeal.\nAirtours now appeals to the Supreme Court.\nThe Supreme Court dismisses Airtours appeal by a majority of 3 to 2.\nLord Neuberger gives the leading judgment, with which Lord Mance and Lord Hodge agree.\nLord Carnwath and Lord Clarke both give dissenting judgments.\nIn order for the VAT charged by PwC and paid by Airtours to be reclaimable as input tax, it must be VAT on the supply to [Airtours] of any goods or services [19].\nThe issue of whether there has been a supply of services by PwC to Airtours gives rise to two principal questions [20].\nThe first is whether PwC agreed, under the terms of the Contract, to supply services, and in particular to provide the Report [21].\nHMRC accept that, if the answer to that question is yes, the appeal must be allowed.\nPwCs commitment to provide the services described in the Contract was a contractual commitment to the Engaging Institutions, and not to Airtours [23], for the following reasons: (i) the Letter is addressed To the Engaging Institutions, and not to Airtours [24]; (ii) paragraph 1 of the Letter provides that the Institutions had retained PwC; there is no suggestion that Airtours had done so [24]; (iii) paragraph 4 of the Letter provides that any reports are for the sole use of [those] institutions [24]; (iv) paragraph 8 of the Letter states that the Report is to be provided to the Institutions and Airtours is only to be provided with a copy, which can be redacted [25]; (v) paragraphs 9 and 10 of the Letter recognise a duty of care on the part of PwC to the Institutions, but does not acknowledge one to Airtours; further, paragraph 11 excludes any duty of care or liability to any other party [26].\nWhile Airtours did countersign the Letter, it had to do so in order to be bound by certain provisions, such as those relating to the payment of PwCs fees [28].\nThe fact that Airtours, rather than the Institutions, was to pay PwC for the services, can be fairly said to raise a prima facie expectation that PwC would owe a duty to Airtours to provide those services.\nHowever, the Institutions wanted the services; there is no indication Airtours would have still paid for those services had that not been the case [35].\nThe same can be said of Airtours argument that its interest in having a report produced for the Institutions indicates there was a supply of services to it [37].\nThe second question arises from Airtours argument that, in any event, in order to succeed on this appeal, it does not have to show that it had a contractual right to require the services under the Contract to be provided to the Institutions by PwC to succeed.\nRather, Airtours argues that the facts that (i) it had a substantial commercial interest in the services being provided by PwC and (ii) it not merely countersigned the Contract but thereby agreed to pay PwC for the services, justify the conclusion that the services were supplied to Airtours, as well as the Institutions [43].\nAirtours relies on Lord Milletts statement in Commissioners of Customs and Excise v Redrow Group Plc [1999] 1 WLR 408 that the question to be asked is whether the taxpayer obtained anything anything at all used or to be used for the purposes of his business, but this has to be read in the light of later cases [44 45].\nAs subsequent authority has clarified, that statement should be interpreted consistently with the established approach of focusing on economic realities as the fundamental criterion for the application of VAT [45].\nIt is clear from domestic and European Court of Justice judgments that, where the person who pays the supplier is not entitled under the contractual document to receive any services from the supplier, then, unless the documentation does not reflect the economic reality, the payer has no right to reclaim by way of input tax the VAT in respect of the payment to the supplier [50].\nLord Clarke and Lord Carnwath each give judgments dissenting on the analysis of both the Contract and the commercial reality of the relationship between Airtours and PwC. Lord Clarke concludes that, in this case, PwC was making two distinct supplies, one to Airtours, and another to the Institutions [64 5].\nLord Carnwath considers that it is inappropriate to resolve the appeal on a narrow legalistic approach to construction of the Contract, particularly where the distinction between services to Airtours and services to the Institutions is unlikely to have been seen as of any practical significance to the parties [81].\nHe further considers that the argument that Airtours, having paid a 200,000 retainer to PwC, did not have an enforceable right, is an impossible one to accept, either as a matter of contractual construction or as a matter of economic reality [84].\n","id":30}
{"input":"These appeals are concerned with applications made by foreign nationals, residing unlawfully in the UK, for leave to remain here as the partners of British citizens with whom they have formed relationships during the period of their unlawful residence.\nThe appellants rely primarily on the duty imposed on the Secretary of State by the Human Rights Act 1998 to act compatibly with the right to respect for family life guaranteed by article 8 of the ECHR.\nIn each case, the Secretary of State concluded that the appellant did not qualify for leave to remain under the applicable provisions of Appendix FM to the Immigration Rules (the Rules), and that, applying the Immigration Directorate Instructions, Family Members Under the Immigration Rules, Section FM 1.0, Partner & ECHR Article 8 Guidance (the Instructions), there were no exceptional circumstances warranting the grant of leave to remain outside the Rules.\nThe appeals focus primarily on (1) paragraph EX.1(b) of Appendix FM, which imposes on applicants for leave to remain as a partner, where the applicant is in the UK in breach of immigration laws, a requirement that there are insurmountable obstacles to family life with that partner continuing outside the UK; and (2) a requirement in the Instructions that there must be exceptional circumstances for leave to remain to be granted in such cases outside the Rules.\nThey also raise an issue under EU law, relating to the effect of the judgment of the Court of Justice in Ruiz Zambrano v Office national de lemploi (Case C-34\/09) [2012] QB 265, as well as some other issues under domestic law.\nRules and Instructions\nIt may be helpful to begin by explaining the nature and status of the Rules and the Instructions.\nDecision-making in relation to immigration, as in relation to other areas of government, is not exhaustively regulated by legislation.\nIt involves the exercise of discretion and the making of evaluative judgments.\nIn such a situation, it is usual, and legitimate, for the Secretary of State to adopt administrative policies in order to guide decision-making, and to issue instructions to officials.\nUnusually, in the context of immigration Parliament has enacted legislation under which it exercises oversight of these aspects of administrative decision-making.\nSection 3(2) of the Immigration Act 1971 requires the Secretary of State to lay before Parliament statements of the rules, or any changes in the rules, laid down by him as to the practice to be followed in the administration of this Act for regulating the entry into and stay in the United Kingdom of persons required by this Act to have leave to enter.\nThe Rules are subject to Parliamentary approval, and are published as House of Commons papers.\nTheir legal significance was reflected, at the time of the proceedings with which these appeals are concerned, in the fact that an appeal could be brought against an immigration decision on the ground that it was not in accordance with the Rules: Nationality, Immigration and Asylum Act 2002, section 84(1)(a).\nSection 86(3) of the 2002 Act also included the Rules in the law to which the tribunal must have regard when determining an appeal.\nThe Secretary of State also has a discretionary power under the 1971 Act to grant leave to enter or remain in the UK even where leave would not be given under the Rules: R (Munir) v Secretary of State for the Home Department [2012] UKSC 32; [2012] 1 WLR 2192, para 44.\nThe manner in which that discretion is exercised may be the subject of a policy, which may be expressed in guidance to the Secretary of States officials.\nThe discretion may also be converted into an obligation where the duty of the Secretary of State to act compatibility with Convention rights is applicable.\nGiving effect to Convention rights\nIn the exercise of her functions under the 1971 Act, including the making of rules and the giving of instructions, the Secretary of State has always been under a duty to comply with requirements imposed by the common law: notably, to act consistently with the intentions of Parliament, and to exercise her powers in accordance with the law and in a rational manner.\nThe Human Rights Act additionally imposed on the Secretary of State a statutory duty not to act incompatibly with Convention rights, including the right guaranteed by article 8.\nThe same duty is also imposed on tribunals and courts considering an appeal against the decision of the Secretary of State, but their role does not absolve the Secretary of State of her own duty to act compatibly with Convention rights.\nUnlike the ECHR itself, which imposes a duty under international law on the United Kingdom as a contracting party, and is therefore not concerned with failures to comply with Convention rights by one organ of the state which are fully corrected by another, the Act imposes a duty on every public authority, subject to specified exceptions.\nThe fact that an act of a public authority may be subject to review by the courts, and therefore does not in itself inevitably result in a breach of the Convention, does not mean that the act cannot be incompatible with Convention rights.\nSuch a reading of the Act would deprive it of most of its content, since virtually all acts of public authorities are susceptible to appeal or review before the courts.\nIt would therefore be inconsistent with the intention of Parliament.\nHow the Secretary of State ensures that her acts in the exercise of her functions under the 1971 Act are compatible with Convention rights is, in principle, a matter for her.\nThe Secretary of States initial response to the entry into force of the material provisions of the Human Rights Act in October 2000 was to insert into the Rules a direction to officials to carry out their duties in compliance with the provisions of that Act (rule 2).\nAs the Home Office noted in 2012, however, there was no change to the family life part of the Rules to reflect any consideration of proportionality under article 8, and there has been no attempt since to align the rules with developing article 8 case law (Statement of Intent: Family Migration, Home Office, June 2012).\nThe Rules frequently offered no more than broad guidance as to how discretion was to be exercised in different typical situations.\nIn that situation, it was primarily through the exercise of her residual discretion to deal with cases outside the Rules that the Secretary of State sought to comply with article 8.\nThat is no longer true.\nOver time, increasing emphasis has been placed on certainty rather than discretion, on predictability rather than flexibility, on detail rather than broad guidance, and on ease and economy of administration.\nThe increased numbers of applications, the increasing complexity of the system, and the increasing use of modern technology for its administration, have necessitated increasingly detailed Rules and instructions.\nIn some areas, the apparent aim is for the decision-making process to involve as little discretion or judgment as can be achieved consistently with the duty to respect Convention rights.\nThe present context appears to be an example, as explained below.\nThe position was different at the time when the House of Lords decided the leading case of Huang v Secretary of State for the Home Department [2007] UKHL 11; [2007] 2 AC 167.\nAt that time, the Rules did not reflect an assessment of the proportionality of decision-making in relation to article 8.\nIn that context, Lord Bingham of Cornhill said at para 6 that the rule under which the appellant failed to qualify for leave to remain was unobjectionable, but that her failure to qualify under the Rules was the point at which to begin, not end, consideration of her claim under article 8.\nThe Rules with which this appeal is concerned form part of the Secretary of States response to Huang.\nThey were included in the Statement of Changes in Immigration Rules published in June 2012 (HC 194), and laid before Parliament pursuant to section 3(2) of the 1971 Act.\nThe new rules set out in that Statement were the subject of debates in both Houses of Parliament, as well as being examined by the Secondary Legislation Scrutiny Committee of the House of Lords.\nThey came into force on 9 July 2012.\nTheir rationale was explained in the Home Office documents which accompanied the Statement of Changes, comprising the Statement of Intent: Family Migration, and the Statement by the Home Office, Grounds of Compatibility with Article 8 of the European Convention on Human Rights.\nThe Statement of Intent announced that the changes to the Rules would comprehensively reform the approach taken towards ECHR article 8 in immigration cases (para 10).\nThey would achieve this by themselves reflecting an assessment of all the factors relevant to the application of article 8: The new rules will reflect fully the factors which can weigh for or against an article 8 claim.\nThey will set proportionate requirements that reflect, as a matter of public policy, the Governments and Parliaments view of how individual rights to respect for private or family life should be qualified in the public interest to safeguard the economic well-being of the UK by controlling immigration and to protect the public from foreign criminals.\nThis will mean that failure to meet the requirements of the rules will normally mean failure to establish an article 8 claim to enter or remain in the UK, and no grant of leave on that basis.\n(para 7) In consequence, if an applicant failed to meet the requirements of the new Rules, it should only be in genuinely exceptional circumstances that refusing them leave and removing them from the UK would breach article 8 (para 11).\nOne particular respect in which the new rules were to reflect an article 8 assessment concerned family life established when the parties knew one or both of them lacked a valid basis of stay in the UK.\nThe fact that family life established in those circumstances carries less weight under Strasbourg case law ... is reflected in the new Immigration Rules (para 32).\nThe Statement of Intent also explained that the new rules were intended to result in a change of approach on the part of the courts.\nIn the past, it was said, the lack of a clear public policy framework had effectively left the courts to develop public policy (para 30).\nThey could not give due weight to the Governments and Parliaments view, because they did not know what it was (para 37).\nThe new Rules were intended to fill this public policy vacuum by setting out the Secretary of States position on proportionality and to meet the democratic deficit by seeking Parliaments agreement to her policy (para 38).\nThe Statement on Grounds of Compatibility with Article 8 of the European Convention on Human Rights was intended to address issues arising under article 8 in relation to the new rules.\nIt explained that the current rules did not provide a comprehensive framework for considering family life, and that currently family life applications are first considered under the Rules and, if the application does not meet the requirements of the Rules, the decision-maker then considers whether the decision is compatible with A8 [and, if not,] ... leave is granted outside the Rules (para 3).\nIt acknowledged that this two-stage approach had one advantageous consequence: A policy of keeping proportionality decisions outside of the Rules can be helpful in forming the basis of an argument that the Rules can never be incompatible with the ECHR.\n(para 16) The Statement also noted, however, the serious disadvantages which had flowed from that approach.\nThe approach adopted in Huang, in requiring the compatibility of individual decisions with article 8 to be considered on a case-by-case basis, rather than assessing the compatibility of the Rules themselves with article 8, has led to unpredictability and inconsistency which are anathema to good administration (para 11).\nThe conclusion drawn was that it would be better if proportionality were determined according to provisions in the Rules (para 18).\nThe thinking behind the new rules, therefore, was that if the Rules are proportionate, a decision taken in accordance with the Rules will, other than in exceptional cases, be compatible with A8 (para 20).\nAs a result, the role of the courts should shift from reviewing the proportionality of individual administrative decisions to reviewing the proportionality of the Rules (para 22).\nAppendix FM\nAppendix FM, Family Members, begins with a general statement which explains that it sets out the requirements to be met by those seeking to enter or remain in the UK on the basis of their family life with a person who is a British citizen, is settled in the UK, or is in the UK with limited leave as a refugee or person granted humanitarian protection (para GEN.1.1).\nIt is said to reflect how, under article 8, the balance will be struck between the right to respect for private and family life and the legitimate aims listed in article 8(2).\nThe Appendix nevertheless contemplates that the Rules will not cover all the circumstances in which a person may have a valid claim to enter or remain in the UK as a result of his or her article 8 rights.\nParagraphs GEN.1.10 and GEN.1.11 both make provision for situations where an applicant does not meet the requirements of this Appendix as a partner or parent but the decision-maker grants entry clearance or leave to enter or remain outside the Rules on article 8 grounds.\nSection R-LTRP sets out the requirements for limited leave to remain as a partner.\nCertain requirements apply in all cases: for example, that the applicant meets suitability requirements relating to such matters as his or her criminal record.\nOther requirements depend on the applicants circumstances.\nIn particular, under paragraph R-LTRP.1.1(d), the applicant must not be in the UK on temporary admission or temporary release, or in breach of immigration laws (disregarding an overstay of 28 days or less), unless paragraph EX.1 applies.\nThat paragraph applies if either of two conditions is satisfied.\nThe first applies to persons applying for leave to remain as parents, and is not relevant to the present appeals.\nThe second applies to persons, such as the appellants, who apply for leave to remain as partners: (b) the applicant has a genuine and subsisting relationship with a partner who is in the UK and is a British citizen, settled in the UK or in the UK with refugee leave or humanitarian protection, and there are insurmountable obstacles to family life with that partner continuing outside the UK.\nAt the time when the present cases were considered, the Rules did not define the expression insurmountable obstacles.\nA definition was however introduced with effect from 28 July 2014, when paragraph EX.2 was inserted into Appendix FM by the Statement of Changes in Immigration Rules (HC 532, 2014): For the purposes of paragraph EX.1(b) insurmountable obstacles means the very significant difficulties which would be faced by the applicant or their partner in continuing their family life together outside the UK and which could not be overcome or would entail very serious hardship for the applicant or their partner.\nParagraph EX.2 applies only to applications decided on or after 28 July 2014.\nThe Instructions\nThe Instructions, in the version effective from 9 July 2012 which was in force when these cases were before the Secretary of State and the courts below, state that failure to meet the requirements of the Rules will normally mean failure to establish an article 8 claim (para 1.1).\nThere is a statement, in relation to applications for leave to enter or remain as a partner on the basis of family life, that if the applicant does not meet the requirements of the Rules, the application should be refused (para 3).\nThat statement is, however, implicitly qualified by later provisions.\nIn relation to the eligibility requirements relating to immigration status, the Instructions state that, for leave to remain, the applicant must not have overstayed by more than 28 days, unless paragraph EX.1 applies (para 3.2.4).\nProvision is made for exceptional circumstances which prevented the applicant from applying within the first 28 days of overstaying.\nIn relation to assessing whether there are insurmountable obstacles, as required by paragraph EX.1(b), the Instructions direct the decision maker to consider the seriousness of the difficulties which the applicant and his or her partner would face in continuing their family life outside the UK, and whether they entail something that could not (or could not reasonably be expected to) be overcome, even with a degree of hardship for one or more of the individuals concerned (para 3.2.7c).\nRelevant factors are said to include the ability of the parties to enter and stay lawfully in the country concerned; cultural and religious barriers; and the impact of a mental or physical disability.\nIn relation to the second of these, the Instructions reiterate that the barrier must be one which either cannot be overcome or which it is unreasonable to expect a person to overcome.\nThe Instructions state that although refusal of an application will normally be appropriate where the applicant does not meet the requirements of the Rules, leave can be granted outside the Rules where exceptional circumstances apply.\nIn that regard, the Instructions state: Exceptional does not mean unusual or unique.\nWhilst all cases are to some extent unique, those unique factors do not generally render them exceptional.\nFor example, a case is not exceptional just because the criteria set out in EX.1.\nof Appendix FM have been missed by a small margin.\nInstead, exceptional means circumstances in which refusal would result in unjustifiably harsh consequences for the individual such that refusal of the application would not be proportionate.\nThat is likely to be the case only very rarely.\n(para 3.2.7d) In determining whether there are exceptional circumstances, the decision maker is instructed to consider all relevant factors.\nSome examples are given: The circumstances around the applicants entry to the UK and the proportion of the time they have been in the UK legally as opposed to illegally.\nDid they form their relationship with their partner at a time when they had no immigration status or this was precarious? Family life which involves the applicant putting down roots in the UK in the full knowledge that their stay here is unlawful or precarious, should be given less weight, when balanced against the factors weighing in favour of removal, than family life formed by a person lawfully present in the UK.\nIt is also pointed out that cumulative factors should be considered.\nIn particular, although under the Rules family life and private life are considered separately, when considering whether there are exceptional circumstances both private and family life can be taken into account.\nThe facts: Agyarko\nMs Agyarko is a national of Ghana.\nShe entered the UK as a visitor in 2003, when she was aged 40.\nHer leave to enter expired later that year.\nShe has nevertheless remained in the UK ever since.\nFollowing the expiry of her leave to enter she began a relationship with Mr Benette, a naturalised British citizen of Liberian origin who has lived in the UK for almost all his life and is in full time employment.\nThey married by proxy under Ghanaian customary law in 2012.\nThey live together.\nThey have no children together.\nMs Agyarko has three children living in Ghana, but has not visited them since 2003.\nIn September 2012 Ms Agyarko applied for leave to remain in the UK.\nHer application conceded that her case fell outside the Rules, and submitted that it was an appropriate case for the grant of discretionary leave, consistently with article 8.\nIt was said that she was settled in the UK and had developed strong social ties there, that her family ties in Ghana had been weakened by her long absence and that most of her friends there had moved abroad.\nThe application disclosed that she had a mother, three children by a former husband, and two siblings living in Ghana.\nThe effect of removal to Ghana upon her family life was addressed in the following terms: Our client and her husband would be seriously disadvantaged in the sense that she may be separated from him and therefore the family life that they have established in the United Kingdom would be interrupted.\nMost disturbingly our client is likely to face an inordinate delay in obtaining an entry clearance to the UK if she were asked to do so and there is also a risk that her application would be refused due to the fact that she is a previous overstayer.\nThe application was refused by a notice of decision dated 7 October 2013.\nThe decision considered separately whether Ms Agyarko qualified for leave to remain under the partner route provisions of Appendix FM (ie Section R-LTRP) or under the private life provisions of the Rules (which are not in issue in these appeals), and whether her application gave rise to any exceptional circumstances which might warrant consideration of a grant of leave outside the Rules pursuant to article 8.\nfulfil paragraph EX.1(b): In relation to Appendix FM, the decision stated that Ms Agyarko failed to You have a genuine and subsisting relationship with your British partner.\nWhilst it is acknowledged that your partner has lived in the UK all his life and is in employment here, this does not mean that you are unable to live together in Ghana.\nAlthough relocating there together may cause a degree of hardship for your British partner, the Secretary of State has not seen any evidence to suggest that there are any insurmountable obstacles preventing you from continuing your relationship in Ghana.\nThe application under the partner route was therefore refused.\nMs Agyarko was also found to fail to qualify for leave to remain on the basis of her private life.\nFinally, the decision stated that it had been considered whether the application raised any exceptional circumstances which, consistently with article 8, might warrant consideration of a grant of leave to remain outside the requirements of the Rules.\nIt had been decided that it did not.\nThe refusal of Ms Agyarkos application was not appealable.\nShe sought permission to apply for judicial review of the Secretary of States decision, but that was refused by the Upper Tribunal.\nShe was granted permission to appeal to the Court of Appeal against that refusal, but her appeal was dismissed.\nThe judgment of the court is considered below.\nThe facts: Ikuga\nMs Ikuga is a national of Nigeria.\nShe lived there until she entered the UK as a visitor in 2008, when she was aged 33.\nHer leave to enter expired in 2009.\nShe has nevertheless remained in the UK ever since.\nAt some point following the expiry of her leave to enter, she began a relationship with Mr Ijiekhuamhen, a British citizen.\nThey have never married, and have no children together.\nIt should be recorded that, in the course of this appeal, Ms Ikuga claimed that she was granted an extension of her leave to enter in 2010.\nThat has not been verified.\nIn September 2012 Ms Ikuga applied for leave to remain in the UK on the basis that her removal to Nigeria would be in breach of article 8.\nIt was said by the solicitors acting on her behalf that she cohabited with her partner, Mr Ijiekhuamhen, and that they had been trying to conceive a child, but that due to her medical issues this had been very difficult.\nThe letter also said that their relationship could not be maintained and enjoyed in Nigeria as she is trying to conceive, and that Mr Ijiekhuamhen had been responsible for her medical bills while she was receiving private medical treatment.\nThe letter also referred to her close relationship with her sister and her children, who lived in the UK, and with Mr Ijiekhuamhens daughter, who lived with her mother but visited her father.\nIt was said that Ms Ikuga had no family ties in Nigeria, and that most of her friends were now settled in the UK.\nIt was also said that Ms Ikuga had been a regular visitor to the UK without breaching its immigration rules until she was taken seriously ill and admitted to hospital in September 2009.\nA supporting letter from Mr Ijiekhuamhen gave a different address from that given by Ms Ikuga.\nHe stated that they had lived together at his address for two years, that she was still not well, and that she relied on him for assistance with her daily needs.\nHe did all the washing, cooking and shopping, and above all he maintained her financially and was her major carer.\nHe had a full time job in the UK and could not leave the UK for Nigeria.\nHe also stated that no-one else could provide the care Ms Ikuga needed, and that there was no medical care for her needs in Nigeria.\nMedical documentation submitted with included correspondence from Lewisham Hospital and Kings College Hospital, dating from 2010 and 2011, indicating that Ms Ikuga had a prolonged admission in 2009, during which she was treated in the intensive care unit, and that she underwent further investigations and treatment as a private patient during 2010 and 2011.\nThere was also a letter from a consultant haematologist dated 19 January 2010, giving a provisional diagnosis that Ms Ikuga suffered from Adult Stills disease, and stating that she had been referred to a consultant rheumatologist, and a letter from a consultant rheumatologist dated 2 December 2010, stating that Ms Ikuga had musculo-skeletal pains and intermittent muscle weakness, with a likely diagnosis of an auto-immune organising pneumonia as part of an anti-synthetase syndrome, or alternatively of Adult Stills disease.\nIn response to the application, the Secretary of State requested documentary evidence that Ms Ikuga had been living with her partner, and letters from a GP or consultant detailing her current medical condition, her current medication or treatment, and her ability to travel.\nShe was informed that, if she failed to provide the additional information requested, her application would be decided on the basis of the information currently available.\nthe application\nIn their response, dated 24 October 2013, Ms Ikugas solicitors submitted a household bill addressed to both herself and Mr Ijiekhuamhen at the address which he had given, and a print-out dated 24 October 2013 of Ms Ikugas GP records, which recorded the hospital admission in 2009, investigations during 2009 and 2010, and consultations during 2012 in respect of tonsillitis and fertility problems.\nThe most recent entry was dated 3 August 2012, and related to a skin rash.\nThe application was refused by a notice of decision dated 29 October 2013.\nThe decision addressed the issues in the same order as that in Ms Agyarkos case.\nIn relation to the partner route, it stated that Ms Ikuga had provided no evidence to show that she had been living at the same address as Mr Ijiekhuamhen.\nShe did not therefore have a partner as defined in Appendix FM.\nMs Ikuga was also found to fail to qualify for leave to remain on the basis of her private life.\nFinally, the decision stated that it had been considered whether the application raised any exceptional circumstances which, consistently with article 8, might warrant consideration of a grant of leave to remain outside the requirements of the Rules.\nIt had been decided that it did not.\nAlthough she claimed to be suffering from medical conditions, she had been unable to provide any documentary evidence to show any recent conditions or treatment.\nHer claimed conditions had therefore been deemed not to be life threatening, or compelling and compassionate enough to grant leave outside the Rules.\nMs Ikuga was refused permission to apply for judicial review of the Secretary of States decision.\nAlthough the Upper Tribunal judge accepted that there had been a failure to give proper consideration to the question whether Ms Ikuga and Mr Ijiekhuamhen lived together, he considered that her application for leave to remain was bound to fail in any event.\nUnder the Rules, she would have to establish insurmountable obstacles within the meaning of paragraph EX.1(b), but the matters put forward on her behalf could not possibly persuade any decision-maker that there were insurmountable obstacles to family life continuing in Nigeria.\nIn that regard, the judge observed that the fact that Ms Ikugas partner would have to change jobs was not an insurmountable obstacle; nor was Ms Ikugas wish to continue fertility treatment in the UK.\nAn application outside the Rules was also bound to fail: the matters put forward did not come close to establishing that it would be unjustifiably harsh to require her to return.\nAn argument founded on Chikwamba v Secretary of State for the Home Department [2008] UKHL 40; [2008] 1 WLR 1420 was not capable of succeeding on the facts of the case.\nMs Ikuga was granted permission to appeal to the Court of Appeal, where her appeal was heard together with that of Ms Agyarko, and was likewise dismissed.\nThe judgment of the Court of Appeal\nThe Court of Appeal dismissed the appeals for reasons given in the judgment of Sales LJ, with which Longmore and Gloster LJJ agreed.\nSales LJ considered first an argument based on the phrase insurmountable obstacles, used in paragraph EX.1(b) of Appendix FM.\nSales LJ accepted that the phrase was intended to have the same meaning as in the jurisprudence of the European Court of Human Rights, where it originated.\nIt imposed a stringent test, illustrated by Jeunesse v The Netherlands (2015) 60 EHRR 17, para 117, where the court found that there were no insurmountable obstacles to the applicants family settling in Suriname, although they would experience a degree of hardship if forced to do so.\nIt was to be interpreted, both in the European case law and in the Rules, in a sensible and practical rather than a purely literal way.\nOn the facts of Ms Agyarkos case, the Secretary of States conclusion that there were no insurmountable obstacles to relocation, and that paragraph EX.1(b) was therefore not met, was not irrational: The statement made in Mrs Agyarkos letter of application of 26 September 2012 that she may be separated from her husband was very weak, and was not supported by any evidence which might lead to the conclusion that insurmountable obstacles existed to them pursuing their family life together overseas.\nThere was no witness statement from Mrs Agyarko or Mr Benette to explain what obstacles might exist.\nThe mere facts that Mr Benette is a British citizen, has lived all his life in the United Kingdom and has a job here - and hence might find it difficult and might be reluctant to relocate to Ghana to continue their family life there - could not constitute insurmountable obstacles to his doing so.\n(para 25) On the facts of Ms Ikugas case, Sales LJ agreed with the Upper Tribunal judges assessment that the factors relied upon by Mrs Ikuga could not possibly persuade any decision-maker that there were insurmountable obstacles to family life continuing in Nigeria, within the meaning of [paragraph EX.1(b)] (para 50).\nThe alternative argument in each case was that the refusal to grant leave to remain outside the Rules was in breach of article 8.\nIt was argued that it was disproportionate to remove each of the appellants in circumstances where her husband or partner would have to follow her overseas if they wished to continue their family life together, especially when he was a British citizen; or, alternatively, because an out-of-country application for leave to enter would inevitably be granted, so that her removal served no good purpose.\nIn relation to the latter argument, reliance was placed on the case of Chikwamba.\nThese arguments were rejected.\nIn the case of Ms Agyarko, Sales LJ stated that, since her family life was established in the knowledge that she had no right to be in the UK and was therefore precarious in the sense in which that term had been used in the European and domestic case law, it was only if her case was exceptional for some reason that she would be able to establish a violation of article 8.\nOn the facts of Ms Agyarkos case, Sales LJ considered that there were no exceptional circumstances.\nThe fact that Ms Agyarkos spouse was a British citizen did not make the case exceptional: several of the European cases in which applications were rejected had involved a partner or spouse who was a national of the state from which the applicant was to be removed.\nSo far as Chikwamba was concerned, the House of Lords had found that there would be a violation of article 8 if the applicant for leave to remain in that case were removed from the UK and forced to make an out-of-country application for leave to enter which would clearly be successful, in circumstances where the interference with her family life could not be said to serve any good purpose.\nIn Sales LJs view, Ms Agyarkos case was very far from a Chikwamba type of case.\nShe had not asked the Secretary of State to consider whether leave to remain should be granted on the basis of Chikwamba.\nThis was not an argument of such obviousness that the Secretary of State had been obliged to consider it regardless of whether it was mentioned.\nAccordingly, the Secretary of State could not be said to have erred in law in failing to grant leave to remain on that basis.\nIn any event, the materials submitted by Ms Agyarko did not demonstrate that an out-of-country application for leave to enter would succeed.\nOn the contrary, the information provided about her and Mr Benettes financial circumstances, for example, indicated that she had no income and that he earned less than the minimum income requirement specified in Appendix FM.\nSales LJ considered that the Secretary of States decision letter in the case of Ms Agyarko left something to be desired regarding the clarity of the reasoning, but had addressed the substance of her case under the Rules.\nThere was no arguable case for leave to be granted outside the Rules which required to be addressed separately.\nIn relation to Ms Ikugas appeal in respect of refusal of leave to remain outside the Rules on the basis of article 8, Sales LJ again considered that the Upper Tribunal judges assessment could not be faulted.\nMs Ikugas case involved precarious family life, with no children.\nNo compelling medical circumstances had been shown to exist.\nThe claim for leave to remain had not been put to the Secretary of State on the basis of Chikwamba, and in any event no materials were submitted which might show that leave to enter would have to be granted under Appendix FM if applied for.\nAlthough the Secretary of State had not considered the issue on the correct factual basis as regards Ms Ikugas relationship with her partner, this was very far from being a case in which exceptional circumstances could be found to exist, even on a correct understanding of the facts.\nEven if Ms Ikugas application were remitted to be reconsidered by the Secretary of State on the footing that Ms Ikuga and Mr Ijiekhuamhen cohabited and had a genuine subsisting relationship, there was no prospect whatever that the outcome would be a grant of leave to remain.\nThe present appeals\nThe issues raised in the appeals can be summarised as follows: (1) What is the correct approach to the application of article 8 to the removal of a non-settled migrant? (2) How is the insurmountable obstacles requirement in paragraph EX.1(b) of Appendix FM to be interpreted, prior to the 2014 changes to the Rules? Is it in accordance with article 8? (3) How should precariousness be interpreted, and what role does it play in the article 8 assessment? (4) Is the question whether there are exceptional circumstances one which the Secretary of State can properly ask when considering whether to grant leave to remain outside the Rules to a non-settled migrant with a precarious family life? (5) Is Appendix FM unlawful under EU law, or under section 1(1) of the 1971 Act, insofar as it is based on the expectation that a British citizen with a non-national partner can relocate to the partners country of origin unless there are insurmountable obstacles to their doing so? (6) Were the Secretary of States decisions lawful on the facts?\nThe correct approach to the removal of non-settled migrants\nThe European Court of Human Rights has considered in a number of judgments the application of article 8 to the removal of non-settled migrants (that is, those without a right of residence) who have developed a family life with a partner while residing unlawfully in the host state.\nIn Jeunesse v Netherlands, the Grand Chamber analysed the situation of such a person, consistently with earlier judgments of the court, as raising the question whether the authorities of the host country were under a duty, pursuant to article 8, to grant the person the necessary permission to enable her to exercise her right to family life on their territory.\nThe situation was thus analysed not as one in which the host country was interfering with the persons right to respect for her private and family life, raising the question whether the interference was justified under article 8(2).\nInstead, the situation was analysed as one in which the person was effectively asserting that her right to respect for her private and family life, under article 8(1), imposed on the host country an obligation to permit her to continue to reside there, and the question was whether such an obligation was indeed imposed.\nIn the light of this approach, counsel for the Secretary of State submitted that the refusal of leave to remain in the UK to persons unlawfully resident here should similarly be analysed as raising the question whether the state is under a positive obligation to permit the applicant to remain in the UK rather than whether the refusal of the application can be justified under article 8(2).\nAs the European court has noted, the boundary between cases best analysed in terms of positive obligations, and those best analysed in terms of negative obligations, can be difficult to draw.\nAs this court explained in its judgment in Hesham Ali (Iraq) v Secretary of State for the Home Department [2016] UKSC 60; [2016] 1 WLR 4799, para 32, the mode of analysis is unlikely to be of substantial importance in the present context.\nUltimately, whether the case is considered to concern a positive or a negative obligation, the question for the European court is whether a fair balance has been struck.\nAs was explained in Hesham Ali at paras 47- 49, that question is determined under our domestic law by applying the structured approach to proportionality which has been followed since Huang.\nInsurmountable obstacles\nIn Jeunesse, the Grand Chamber identified, consistently with earlier judgments of the court, a number of factors to be taken into account in assessing the proportionality under article 8 of the removal of non-settled migrants from a contracting state in which they have family members.\nRelevant factors were said to include the extent to which family life would effectively be ruptured, the extent of the ties in the contracting state, whether there were insurmountable obstacles in the way of the family living in the country of origin of the non-national concerned, and whether there were factors of immigration control (for example, a history of breaches of immigration law) or considerations of public order weighing in favour of exclusion (para 107).\nIt appears that the European court intends the words insurmountable obstacles to be understood in a practical and realistic sense, rather than as referring solely to obstacles which make it literally impossible for the family to live together in the country of origin of the non-national concerned.\nIn some cases, the court has used other expressions which make that clearer: for example, referring to un obstacle majeur (Sen v The Netherlands (2003) 36 EHRR 7, para 40), or to major impediments (Tuquabo-Tekle v The Netherlands [2006] 1 FLR 798, para 48), or to the test of insurmountable obstacles or major impediments (IAA v United Kingdom (2016) 62 EHRR SE 19, paras 40 and 44), or asking itself whether the family could realistically be expected to move (Sezen v The Netherlands (2006) 43 EHRR 30, para 47).\nInsurmountable obstacles is, however, the expression employed by the Grand Chamber; and the courts application of it indicates that it is a stringent test.\nIn Jeunesse, for example, there were said to be no insurmountable obstacles to the relocation of the family to Suriname, although the children, the eldest of whom was at secondary school, were Dutch nationals who had lived there all their lives, had never visited Suriname, and would experience a degree of hardship if forced to move, and the applicants partner was in full-time employment in the Netherlands: see paras 117 and 119.\nDomestically, the expression insurmountable obstacles appears in paragraph EX.1(b) of Appendix FM to the Rules.\nAs explained in para 15 above, that paragraph applies in cases where an applicant for leave to remain under the partner route is in the UK in breach of immigration laws, and requires that there should be insurmountable obstacles to family life with that partner continuing outside the UK.\nThe expression insurmountable obstacles is now defined by paragraph EX.2 as meaning very significant difficulties which would be faced by the applicant or their partner in continuing their family life together outside the UK and which could not be overcome or would entail very serious hardship for the applicant or their partner.\nThat definition appears to me to be consistent with the meaning which can be derived from the Strasbourg case law.\nAs explained in para 16 above, paragraph EX.2 was not introduced until after the dates of the decisions in the present cases.\nPrior to the insertion of that definition, it would nevertheless be reasonable to infer, consistently with the Secretary of States statutory duty to act compatibly with Convention rights, that the expression was intended to bear the same meaning in the Rules as in the Strasbourg case law from which it was derived.\nI would therefore interpret it as bearing the same meaning as is now set out in paragraph EX.2.\nBy virtue of paragraph EX.1(b), insurmountable obstacles are treated as a requirement for the grant of leave under the Rules in cases to which that paragraph applies.\nAccordingly, interpreting the expression in the same sense as in the Strasbourg case law, leave to remain would not normally be granted in cases where an applicant for leave to remain under the partner route was in the UK in breach of immigration laws, unless the applicant or their partner would face very serious difficulties in continuing their family life together outside the UK, which could not be overcome or would entail very serious hardship.\nEven in a case where such difficulties do not exist, however, leave to remain can nevertheless be granted outside the Rules in exceptional circumstances, in accordance with the Instructions: that is to say, in circumstances in which refusal would result in unjustifiably harsh consequences for the individual such that refusal of the application would not be proportionate.\nIs that situation compatible with article 8?\nIn considering that question, it is important to appreciate that the Rules are not simply the product of a legal analysis: they are not intended to be a summary of the Strasbourg case law on article 8.\nAs was explained at para 10 above, they are statements of the practice to be followed, which are approved by Parliament, and are based on the Secretary of States policy as to how individual rights under article 8 should be balanced against the competing public interests.\nThey are designed to operate on the basis that decisions taken in accordance with them are compatible with article 8 in all but exceptional cases.\nThe Secretary of State is in principle entitled to have a policy of the kind which underpins the Rules.\nWhile the European court has provided guidance as to factors which should be taken into account, it has acknowledged that the weight to be attached to the competing considerations, in striking a fair balance, falls within the margin of appreciation of the national authorities, subject to supervision at the European level.\nThe margin of appreciation of national authorities is not unlimited, but it is nevertheless real and important.\nImmigration control is an intensely political issue, on which differing views are held within the contracting states, and as between those states.\nThe ECHR has therefore to be applied in a manner which is capable of accommodating different approaches, within limits.\nUnder the constitutional arrangements existing within the UK, the courts can review the compatibility of decision-making in relation to immigration with the Convention rights, but the authorities responsible for determining policy in relation to immigration, within the limits of the national margin of appreciation, are the Secretary of State and Parliament.\nThe Rules therefore reflect the responsible Ministers assessment, at a general level, of the relative weight of the competing factors when striking a fair balance under article 8.\nThe courts can review that general assessment in the event that the decision-making process is challenged as being incompatible with Convention rights or based on an erroneous understanding of the law, but they have to bear in mind the Secretary of States constitutional responsibility for policy in this area, and the endorsement of the Rules by Parliament.\nIt is also the function of the courts to consider individual cases which come before them on appeal or by way of judicial review, and that will require them to consider how the balance is struck in individual cases.\nIn doing so, they have to take the Secretary of States policy into account and to attach considerable weight to it at a general level, as well as considering all the factors which are relevant to the particular case.\nThis was explained in Hesham Ali at paras 44-46, 50 and 53.\nThe Secretary of States view that the public interest in the removal of persons who are in the UK in breach of immigration laws is, in all but exceptional circumstances, sufficiently compelling to outweigh the individuals interest in family life with a partner in the UK, unless there are insurmountable obstacles to family life with that partner continuing outside the UK, is challenged in these proceedings as being too stringent to be compatible with article 8.\nIt is argued that the Secretary of State has treated insurmountable obstacles as a test applicable to persons in the UK in breach of immigration laws, whereas the European court treats it as a relevant factor in relation to non-settled migrants.\nThat is true, but it does not mean that the Secretary of States test is incompatible with article 8.\nAs has been explained, the Rules are not a summary of the European courts case law, but a statement of the Secretary of States policy.\nThat policy is qualified by the scope allowed for leave to remain to be granted outside the Rules.\nIf the applicant or his or her partner would face very significant difficulties in continuing their family life together outside the UK, which could not be overcome or would entail very serious hardship, then the insurmountable obstacles test will be met, and leave will be granted under the Rules.\nIf that test is not met, but the refusal of the application would result in unjustifiably harsh consequences, such that refusal would not be proportionate, then leave will be granted outside the Rules on the basis that there are exceptional circumstances.\nIn the absence of either insurmountable obstacles or exceptional circumstances as defined, however, it is not apparent why it should be incompatible with article 8 for leave to be refused.\nThe Rules and Instructions are therefore compatible with article 8.\nThat is not, of course, to say that decisions applying the Rules and Instructions in individual cases will necessarily be compatible with article 8: that is a question which, if a decision is challenged, must be determined independently by the court or tribunal in the light of the particular circumstances of each case.\nPrecariousness\nIn Jeunesse, the Grand Chamber said, consistently with earlier judgments of the court, that an important consideration when assessing the proportionality under article 8 of the removal of non-settled migrants from a contracting state in which they have family members, is whether family life was created at a time when the persons involved were aware that the immigration status of one of them was such that the persistence of that family life within the host state would from the outset be precarious.\nWhere this is the case, the court said, it is likely only to be in exceptional circumstances that the removal of the non-national family member will constitute a violation of article 8 (para 108).\nDomestically, officials who are determining whether there are exceptional circumstances as defined in the Instructions, and whether leave to remain should therefore be granted outside the Rules, are directed by the Instructions to consider all relevant factors, including whether the applicant [formed] their relationship with their partner at a time when they had no immigration status or this was precarious.\nThey are instructed: Family life which involves the applicant putting down roots in the UK in the full knowledge that their stay here is unlawful or precarious, should be given less weight, when balanced against the factors weighing in favour of removal, than family life formed by a person lawfully present in the UK.\nThat instruction is consistent with the case law of the European court, such as its judgment in Jeunesse.\nAs the instruction makes clear, precariousness is not a preliminary hurdle to be overcome.\nRather, the fact that family life has been established by an applicant in the full knowledge that his stay in the UK was unlawful or precarious affects the weight to be attached to it in the balancing exercise.\nWhether the applicant is in the UK unlawfully, or is entitled to remain in the UK only temporarily, however, the significance of this consideration depends on what the outcome of immigration control might otherwise be.\nFor example, if an applicant would otherwise be automatically deported as a foreign criminal, then the weight of the public interest in his or her removal will generally be very considerable.\nIf, on the other hand, an applicant - even if residing in the UK unlawfully - was otherwise certain to be granted leave to enter, at least if an application were made from outside the UK, then there might be no public interest in his or her removal.\nThe point is illustrated by the decision in Chikwamba v Secretary of State for the Home Department.\nIt is also necessary to bear in mind that the cogency of the public interest in the removal of a person living in the UK unlawfully is liable to diminish - or, looking at the matter from the opposite perspective, the weight to be given to precarious family life is liable to increase - if there is a protracted delay in the enforcement of immigration control.\nThis point was made by Lord Bingham and Lord Brown of Eaton-under-Heywood in EB (Kosovo) v Secretary of State for the Home Department [2008] UKHL 41; [2009] AC 1159, paras 15 and 37.\nIt is also illustrated by the judgment of the European court in Jeunesse.\nFinally, in relation to this matter, the reference in the instruction to full knowledge that their stay here is unlawful or precarious is also consistent with the case law of the European court, which refers to the persons concerned being aware that the persistence of family life in the host state would be precarious from the outset (as in Jeunesse, para 108).\nOne can, for example, envisage circumstances in which people might be under a reasonable misapprehension as to their ability to maintain a family life in the UK, and in which a less stringent approach might therefore be appropriate.\nExceptional circumstances\nAs explained in para 49 above, the European court has said that, in cases concerned with precarious family life, it is likely only to be in exceptional circumstances that the removal of the non-national family member will constitute a violation of article 8.\nThat reflects the weight attached to the contracting states right to control their borders, as an attribute of their sovereignty, and the limited weight which is generally attached to family life established in the full knowledge that its continuation in the contracting state is unlawful or precarious.\nThe court has repeatedly acknowledged that a state is entitled, as a matter of well-established international law, and subject to its treaty obligations, to control the entry of non- nationals into its territory and their residence there (Jeunesse, para 100).\nAs the court has made clear, the Convention is not intended to undermine that right by enabling non-nationals to evade immigration control by establishing a family life while present in the host state unlawfully or temporarily, and then presenting it with a fait accompli.\nOn the contrary, where confronted with a fait accompli the removal of the non-national family member by the authorities would be incompatible with article 8 only in exceptional circumstances (Jeunesse, para 114).\nThat statement reflects the strength of the claim which will normally be required, if the contracting states interest in immigration control is to be outweighed.\nIn the Jeunesse case, for example, the Dutch authorities tolerance of the applicants unlawful presence in that country for a very prolonged period, during which she developed strong family and social ties there, led the court to conclude that the circumstances were exceptional and that a fair balance had not been struck (paras 121-122).\nAs the court put it, in view of the particular circumstances of the case, it was questionable whether general immigration considerations could be regarded as sufficient justification for refusing the applicant residence in the host state (para 121).\nThe European courts use of the phrase exceptional circumstances in this context was considered by the Court of Appeal in MF (Nigeria) v Secretary of State for the Home Department [2013] EWCA Civ 1192; [2014] 1 WLR 544.\nLord Dyson MR, giving the judgment of the court, said: In our view, that is not to say that a test of exceptionality is being applied.\nRather it is that, in approaching the question of whether removal is a proportionate interference with an individuals article 8 rights, the scales are heavily weighted in favour of deportation and something very compelling (which will be exceptional) is required to outweigh the public interest in removal.\n(para 42) Cases are not, therefore, to be approached by searching for a unique or unusual feature, and in its absence rejecting the application without further examination.\nRather, as the Master of the Rolls made clear, the test is one of proportionality.\nThe reference to exceptional circumstances in the European case law means that, in cases involving precarious family life, something very compelling ... is required to outweigh the public interest, applying a proportionality test.\nThe Court of Appeal went on to apply that approach to the interpretation of the Rules concerning the deportation of foreign criminals, where the same phrase appears; and their approach was approved by this court, in that context, in Hesham Ali.\nThat approach is also appropriate when a court or tribunal is considering whether a refusal of leave to remain is compatible with article 8 in the context of precarious family life.\nUltimately, it has to decide whether the refusal is proportionate in the particular case before it, balancing the strength of the public interest in the removal of the person in question against the impact on private and family life.\nIn doing so, it should give appropriate weight to the Secretary of States policy, expressed in the Rules and the Instructions, that the public interest in immigration control can be outweighed, when considering an application for leave to remain brought by a person in the UK in breach of immigration laws, only where there are insurmountable obstacles or exceptional circumstances as defined.\nIt must also consider all factors relevant to the specific case in question, including, where relevant, the matters discussed in paras 51-52 above.\nThe critical issue will generally be whether, giving due weight to the strength of the public interest in the removal of the person in the case before it, the article 8 claim is sufficiently strong to outweigh it.\nIn general, in cases concerned with precarious family life, a very strong or compelling claim is required to outweigh the public interest in immigration control.\nThe expression exceptional circumstances appears in a number of places in the Rules and the Instructions.\nIts use in the part of the Rules concerned with the deportation of foreign offenders was considered in Hesham Ali.\nIn the present context, as has been explained, it appears in the Instructions dealing with the grant of leave to remain in the UK outside the Rules.\nIts use is challenged on the basis that the Secretary of State cannot lawfully impose a requirement that there should be exceptional circumstances, having regard to the opinion of the Appellate Committee of the House of Lords in Huang.\nAs was explained in para 8 above, the case of Huang was decided at a time when the Rules had not been revised to reflect the requirements of article 8.\nInstead, the Secretary of State operated arrangements under which effect was given to article 8 outside the Rules.\nLord Bingham, giving the opinion of the Committee, observed that the ultimate question for the appellate immigration authority was whether the refusal of leave to enter or remain, in circumstances where the life of the family could not reasonably be expected to be enjoyed elsewhere, taking full account of all considerations weighing in favour of the refusal, prejudiced the family life of the applicant in a manner sufficiently serious to amount to a breach of article 8.\nIf the answer to that question was affirmative, then the refusal was unlawful.\nHe added: It is not necessary that the appellate immigration authority, directing itself along the lines indicated in this opinion, need ask in addition whether the case meets a test of exceptionality.\nThe suggestion that it should is based on an observation of Lord Bingham in Razgar [R (Razgar) v Secretary of State for the Home Department [2004] UKHL 27; [2004] 2 AC 368], para 20.\nHe was there expressing an expectation, shared with the Immigration Appeal Tribunal, that the number of claimants not covered by the rules and supplementary directions but entitled to succeed under article 8 would be a very small minority.\nThat is still his expectation.\nBut he was not purporting to lay down a legal test.\n(para 20)\nIt remains the position that the ultimate question is how a fair balance should be struck between the competing public and individual interests involved, applying a proportionality test.\nThe Rules and Instructions in issue in the present case do not depart from that position.\nThe Secretary of State has not imposed a test of exceptionality, in the sense which Lord Bingham had in mind: that is to say, a requirement that the case should exhibit some highly unusual feature, over and above the application of the test of proportionality.\nOn the contrary, she has defined the word exceptional, as already explained, as meaning circumstances in which refusal would result in unjustifiably harsh consequences for the individual such that the refusal of the application would not be proportionate.\nSo understood, the provision in the Instructions that leave can be granted outside the Rules where exceptional circumstances apply involves the application of the test of proportionality to the circumstances of the individual case, and cannot be regarded as incompatible with article 8.\nThat conclusion is fortified by the express statement in the Instructions that exceptional does not mean unusual or unique: see para 19 above.\nEU and British citizenship\nIt was submitted on behalf of the appellants that it was unlawful under EU law for the Secretary of State to adopt Rules and Instructions which took as their premise that the British partner of a non-national could relocate to the non-nationals country of origin, in the absence of insurmountable obstacles or exceptional circumstances.\nThe practical result, it was submitted, was to place pressure on an EU citizen to reside outside the EU, contrary to the judgment of the Court of Justice in Ruiz Zambrano.\nAlthough this submission was not advanced before the Court of Appeal, this court will nevertheless address it.\nThe appellants British partners enjoy, under article 20 TFEU, the status of Union citizen, and may therefore rely on the rights pertaining to that status, including the 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 its implementation.\nArticle 20 precludes national measures which have the effect of depriving Union citizens of the genuine enjoyment of the substance of the rights conferred by virtue of their status as Union citizens.\nOn the other hand, the Treaty provisions on citizenship of the Union do not confer any autonomous right on third- country nationals.\nAny rights conferred on third-country nationals are derived from those enjoyed by the Union citizen.\nThe purpose and justification of those derived rights are based on the fact that a refusal to allow them would interfere with the Union citizens freedom of movement: Secretary of State for the Home Department v CS (Case C-304\/14), judgment of 13 September 2016, paras 24-28.\nIn that connection, the Court of Justice has held: that there are very specific situations in which, despite the fact that the secondary law on the right of residence of third-country nationals does not apply and the Union citizen concerned has not made use of his freedom of movement, a right of residence must nevertheless be granted to a third-country national who is a family member of his since the effectiveness of citizenship of the Union would otherwise be undermined, if, as a consequence of refusal of such a right, that citizen would be obliged in practice to leave the territory of the European Union as a whole, thus denying him the genuine enjoyment of the substance of the rights conferred by virtue of his status.\n(Secretary of State for the Home Department v CS, para 29)\nThe Courts case law indicates the specificity of the situations in question.\nThe case of Ruiz Zambrano concerned the refusal of a right of residence and a work permit in a member state to the third-country parents of dependent minor children who were citizens of that state, with the inevitable consequence that the parents would have to leave the EU and the children would have to accompany their parents.\nThe principle established in that case has been applied and developed in other cases concerned with third-country parents of minor dependent children, such as Alokpa and Moudoulou v Ministre du Travail, de lEmploi et de lImmigration (Case C- 86\/12), judgment of 10 October 2013, and Secretary of State for the Home Department v CS.\nThose judgments can be distinguished from others in which the same relationship of complete dependence between the EU citizen and the third-country national was not present.\nThe case of Dereci v Bundesministerium fr Inneres (Case C-256\/11) [2011] ECR I-11315, concerned the refusal of a residence permit to a third-country national who had entered Austria unlawfully, married an Austrian citizen, and had three minor children who were Austrian citizens.\nHis challenge to the refusal of the residence permit on the basis of Ruiz Zambrano was rejected by the Grand Chamber.\nIt derived from Ruiz Zambrano that the criterion relating to the denial of the genuine enjoyment of the substance of the rights conferred by virtue of EU citizen status refers to situations in which the Union citizen has, in fact, to leave not only the territory of the member state of which he is a national but also the territory of the Union as a whole (para 66).\nThat criterion was not satisfied on the facts of Dereci, since the refusal of the residence permit to the third-country national would not necessitate the rest of the family leaving the EU: the children and their mother could remain in Austria without him.\nThe Grand Chamber stated: 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.\n(para 68) As the court made clear, that finding was distinct from the consideration of the case under article 8 of the ECHR or, if applicable, the corresponding provision (article 7) of the Charter of Fundamental Rights.\nThat approach was also applied in Iida v Stadt Ulm (Case C-40\/11), judgment of 8 November 2012, and Ymeraga v Ministre du Travail, de lEmploi et de lImmigration (Case C-87\/12), judgment of 8 May 2013.\nThe first of these cases concerned, like Dereci, a third-country national who had married an EU citizen and had a minor child who was likewise an EU citizen.\nThe second case was concerned with family reunification: it was brought by a naturalised citizen of Luxembourg whose complaint was that his Kosovan parents and brothers were unable to join him there.\nIn both cases, arguments based on article 20 TFEU were rejected.\nIn the light of these cases, this ground of challenge to the Rules and Instructions cannot be upheld.\nIn the event that a situation were to arise in which the refusal of a third-country nationals application for leave to remain in the UK would force his or her British partner to leave the EU, in breach of article 20 TFEU, such a situation could be addressed under the Rules as one where there were insurmountable obstacles, or in any event under the Instructions as one where there were exceptional circumstances.\nTypically, however, as in the present cases, the British citizen would not be forced to leave the EU, any more than in the case of Dereci, and the third-country national would not, therefore, derive any rights from article 20.\nCounsel also referred to the right of a British citizen, under section 1(1) of the 1971 Act, to live in ... the United Kingdom without let or hindrance except such as may be required under and in accordance with this Act to enable their right to be established or as may be otherwise lawfully imposed on any person.\nThis does not advance the argument.\nThe entitlement conferred by section 1(1) is an important right, but it does not entitle a British citizen to insist that his or her non-national partner should also be entitled to live in the UK, when that partner may lawfully be refused leave to enter or remain.\nThe Secretary of States decisions on the facts\nHaving concluded that the Rules and Instructions applied in these cases were consistent with the proper application of article 8, and having rejected the ground of challenge based on EU law, it remains to consider whether the Secretary of States decisions on the facts were otherwise lawful.\nConsidering first whether the decision in the case of Ms Agyarko was compatible with article 8, the court has to bear in mind that this was a case of precarious family life, and that therefore, having regard to the Strasbourg case law, a very strong or compelling claim was required to outweigh the public interest in immigration control.\nThe court has also to give due weight to the Secretary of States policy, expressed in the Rules and the Instructions, that the public interest in immigration control can be outweighed, when considering an application for leave to remain under the partner route brought by a person in the UK in breach of immigration laws, only where there are insurmountable obstacles or exceptional circumstances as defined.\nThere was no evidence placed before the Secretary of State on which a conclusion that there were insurmountable obstacles to relocation in Ghana could reasonably have been reached.\nThere was nothing to suggest that there were exceptional circumstances as defined in the Instructions, that is to say, circumstances in which refusal would result in unjustifiably harsh consequences for the individual such that the refusal of the application would not be proportionate.\nConsidering all relevant factors, Ms Agyarkos claim could not be regarded as very strong or compelling.\nNor was there anything to indicate that Ms Agyarko might come within the scope of Chikwamba.\nCounsel pointed out that some parts of Ms Agyarkos notice of decision were in similar terms to Ms Ikugas, with only factual details differing from one to the other.\nThe use of standard forms of words was criticised as formulaic, and as being inconsistent with anxious scrutiny.\nIt was also pointed out that the decision in relation to the issue of exceptional circumstances contained no reference to any specific aspects of Ms Agyarkos application.\nIt is true that the decision was briefly expressed and, in relation to the issue of exceptional circumstances, did not discuss the matters raised in the application.\nThe notice of decision nevertheless addressed the relevant issues in Ms Agyarkos case, demonstrated that the most important points put forward on her behalf (her length of residence in the UK, her weakened family ties to Ghana, her relationship with her husband, his British citizenship, his full-time employment in the UK, and the difficulties which he might encounter in relocating to Ghana) had been considered, and explained why, notwithstanding those points, her application was refused.\nThe use of standardised reasons is characteristic of modern decision-making practices in fields of public administration where large numbers of applications can be processed more efficiently by employing information technology, using decision templates, drop-down menus and other software.\nIt is also often designed to facilitate internal auditing and management processes.\nThe potential implications of this development for the law relating to the giving of reasons have not been considered in these appeals; nor has the manner in which the decision notices in question were produced.\nFor present purposes, it is sufficient to say that the use of standard phrases is not in itself legally objectionable, provided the reasons given continue to explain adequately why the decision has been taken.\nMs Ikugas application under the partner route was refused on the ground that she had provided no evidence to show that she had been living at the same address as Mr Ijiekhuamhen.\nIt is accepted that that decision was erroneous: Ms Ikuga had in fact provided evidence that she and Mr Ijiekhuamhen lived at the same address.\nIt follows that the Secretary of State has not yet considered Ms Ikugas case on a correct understanding of all the material facts.\nIn those circumstances, it would usually follow that the Secretary of States decision should be quashed, and the application re-considered.\nThe courts jurisdiction to quash being discretionary, however, it is open to it to decline to quash if satisfied that the decision, if re-taken, would inevitably be the same.\nIt was on that basis that the Upper Tribunal and the Court of Appeal declined to grant permission to apply for judicial review.\nIn relation to this matter, this court has no basis for interfering with the decision of the specialist judge of the Upper Tribunal, affirmed by the Court of Appeal.\nSo far as the application under the Rules was concerned, the judge correctly identified that Ms Ikuga would have to satisfy the insurmountable obstacles test in paragraph EX.1(b), and explained convincingly why she could not do so on the basis of the information which she had placed before the Secretary of State: see the summary of his reasoning at para 32 above, and the summary of the material which Ms Ikuga had provided, at paras 26-28 and 30 above.\nNothing in the discussion of that test in this judgment places in question his conclusion, with which the Court of Appeal agreed, that the test could not possibly be met on the basis put forward on Ms Ikugas behalf: in summary, that her partner was in full-time employment in the UK, and she was undergoing fertility treatment.\nSo far as leave to remain was sought outside the Rules, there is similarly nothing in this judgment which undermines his conclusion, with which the Court of Appeal agreed, that Ms Ikuga had not put forward anything which might constitute exceptional circumstances as defined in the Instructions, that is to say, unjustifiably harsh consequences for the individual such that the refusal of the application would not be proportionate.\nConclusion\nFor these reasons, I would dismiss the appeals.\n","output":"These proceedings relate to applications made by two foreign nationals, Ms Agyarko and Ms Ikuga, residing unlawfully in the UK, for leave to remain in the UK as partners of British citizens with whom they have formed relationships during the period of their unlawful residence.\nThe Secretary of States decision in each case was that the applicant did not qualify for leave to remain under Immigration Rules (the Rules).\nParagraph EX.1(b) of Appendix FM of the Rules required applicants to have a genuine subsisting relationship with a partner who is in the UK and is a British citizen, and for there to be insurmountable obstacles to family life with that partner continuing outside the UK.\nThe Secretary of State found that no evidence had been provided of insurmountable obstacles in either case, and that in the case of Ms Ikuga she had not provided evidence of a shared address in order to show she that had a partner within the meaning of the Rules.\nThe Immigration Directorate Instructions (the Instructions) state that where an applicant does not meet the requirement of the Rules, leave can be granted outside the Rules where exceptional circumstances apply, in order to ensure compatibility with the applicants rights under article 8 of the European Convention on Human Rights.\nThe Secretary of State found that there were no exceptional circumstances in the case of either applicant to warrant consideration of a grant of leave outside the Rules.\nBoth Ms Agyarko and Ms Ikuga sought permission to apply for judicial review of the Secretary of States decisions.\nIn each case permission was refused by the Upper Tribunal, and the Court of Appeal upheld that refusal.\nThe Supreme Court unanimously dismisses the appeals.\nLord Reed gives the judgment, with which the rest of the Court agrees.\nThe Secretary of States decisions on the facts were lawful.\nThe ultimate question in article 8 cases is whether a fair balance has been struck between the competing public and individual interests involved, applying a proportionality test.\nThe Rules and Instructions do not depart from that position, and are compatible with article 8.\nIt is within the margin of appreciation for the Secretary of State to adopt policies which set out the weight to be attached to the competing considerations in striking a fair balance, including that family life established while the applicants stay in the UK is known to be unlawful or precarious should be given less weight, when balanced against the factors weighing in favour of removal, than family life formed by a person lawfully present in the UK [46 53].\nAlthough the requirement of insurmountable obstacles to a continuing relationship is a stringent test to be met, rather than one relevant factor to be taken in account, this does not make it incompatible with article 8.\nThe phrase insurmountable obstacles was not defined by the Rules when the present cases were considered, but it is reasonable to infer that it was intended to have the same meaning as in the jurisprudence of the European Court of Human Rights.\nIt imposed a stringent test and was to be interpreted in a sensible and practical way rather than as referring solely to obstacles which make it literally impossible for the family to live together in the applicants country of origin.\nThis is consistent with the guidance on assessing insurmountable obstacles contained in the Instructions, and the definition of that phrase introduced subsequently in the Rules, effective from 28 July 2014 [42 48].\nThe exceptional circumstances question is also one that the Secretary of State may legitimately ask.\nAppendix FM is said to reflect how the balance will be struck under article 8 between the right to respect for private and family life, and the legitimate aims listed in article 8(2), so that if an applicant fails to meet the requirements of the Rules it should only be in genuinely exceptional circumstances that refusing them leave and removing them from the UK would breach article 8.\nThe Instructions state that exceptional does not mean unusual or unique, but means circumstances in which refusal would result in unjustifiably harsh consequences for the individual such that refusal of the application would not be proportionate.\nThis is an application of a test of proportionality, consistent with the references to exceptional circumstances in European case law and cannot be regarded as incompatible with article 8 [54 60].\nOn the facts of each case, there was no basis to challenge the conclusions of the Upper Tribunal judge, that no evidence was placed before the Secretary of State from which the conclusion could be reached that there were insurmountable obstacles to each applicants relationship continuing in their countries of origin.\nAlthough in the case of Ms Ikuga the case was considered on an erroneous basis of fact that she was not in a genuine relationship, the insurmountable obstacles test was bound to fail in any event.\nFurther, neither applicant had put forward anything which might constitute exceptional circumstances as defined in the Instructions.\nThere was also an argument, advanced for the first time on appeal, that refusal of leave to remain served no good purpose because the applicants were otherwise certain to be granted leave to enter if the application was made from outside the UK.\nThere was nothing to suggest that this would be the case for either appellant. [69 74].\nThe effect of refusal of leave in the applicants cases was not a breach of EU law.\nThe Secretary of States decisions in these cases did not compel an EU citizen to reside outside the EU.\nThese cases fell outside the situations of dependency to which the Zambrano principle of EU law applies [61 68].\n","id":31}
{"input":"The appellant (Onur), a Turkish corporation, appeals against orders made by Patten LJ in the Court of Appeal on 21 January 2016.\nAn understanding of the nature of his orders requires reference to the following summary of the background.\n(a) On 22 May 2014 Rose J, [2015] 1 BCLC 89, gave judgment against Onur in favour of the respondent (Goldtrail), a UK company in liquidation, in the sum of 3.64m plus interest.\n(b) On 15 December 2014 Floyd LJ granted permission to Onur to appeal to the Court of Appeal against the order of Rose J on the basis that the appeal had a real prospect of success.\n(c) On 11 June 2015 Floyd LJ, by way of variation of an earlier order for the imposition of conditions upon the continuation of Onurs appeal, made it conditional, among other things, upon Onurs payment into court (or provision of other security for it) of 3.64m by 9 July 2015.\n(d) On 29 October 2015, in the absence of any payment into court (or provision of other security), Goldtrail applied for an order dismissing Onurs appeal and on 7 December 2015 Onur cross-applied for an order that the condition for payment into court be discharged on the ground that it could not comply with it and that the effect of dismissing the appeal by reference to it would be to stifle the appeal.\n(e) At the hearing before Patten LJ on 14 January 2016 of the application and cross-application referred to at (d), Goldtrail, in disputing that the condition for payment was such as to stifle Onurs appeal, relied in particular on the financial relationship between Onur and its wealthy owner, Mr Bagana.\nAs explained by Patten LJ in his reserved judgment dated 21 January 2016, his orders were first to dismiss Onurs cross-application and thereupon to grant Goldtrails application for an order that, by reason of Onurs failure to comply with the condition imposed on 11 June 2015, its appeal should be dismissed.\nIn the above circumstances this court is asked to address the principles by reference to which the Court of Appeal should determine an application by a respondent\/claimant that, as a condition of any appeal to it, the appellant\/defendant should pay into court (or otherwise secure payment of) part or all of the judgment sum awarded against it in the court below; and in particular to identify the principles by reference to which it should appraise a respondents contention that an appellants financial relationship with a wealthy third party is such as to defeat its complaint that such a condition would stifle its appeal.\nIn the event there has been little dispute between the parties as to the principles which the Court of Appeal should apply.\nThe more lively issue has been whether Patten LJ can be seen to have applied those principles in reaching his conclusions first that Onurs relationship with Mr Bagana was such as to defeat its complaint that the condition for payment would stifle the appeal; second that the condition should therefore remain in being; and third that, in the absence of compliance (or proposed compliance) with it, Onurs appeal should therefore be dismissed.\nTHE SUBSTANTIVE DISPUTE\nPrior to its liquidation, Goldtrail was a holiday tour company which had been wholly owned by Mr Aydin.\nOnur is a Turkish airline, largely owned by Mr Bagana.\nIn the proceedings before Rose J Goldtrail, by its liquidator, sued Onur in relation to two agreements and, irrelevantly for present purposes, sued other defendants in relation to other agreements.\nThe claim against Onur arose out of the latters aspiration to cause Goldtrail to buy seats for its tourists on Onurs flights between the UK and Turkey.\nSuch was the context of agreements that Mr Bagana would buy 50% of Mr Aydins shares in Goldtrail for 1m (which he paid) and that Onur would pay 3.64m (which it paid) to another company owned by Mr Aydin for its purported brokerage of an agreement by Goldtrail with Onur to buy a specified number of seats on its flights.\nRose J found that, properly analysed, the payment of 3.64m represented consideration for Goldtrails agreement to buy the seats; that, in breach of his fiduciary duty to Goldtrail, Mr Aydin had diverted receipt of Onurs payment away from Goldtrail to his other company; that Onur had dishonestly assisted Mr Aydin in thus defrauding Goldtrail; and that it should pay damages to it in that sum.\nONURS APPEAL\nIn January 2015, following the grant on paper of permission to Onur to appeal against the order of Rose J, Goldtrail applied for the imposition of conditions.\nIt was too late for it to apply under Rule 52.3(7)(b) (now Rule 52.6(2)(b)) of the Civil Procedure Rules for the actual permission to be made subject to conditions.\nIt therefore applied under Rule 52.9(1)(c) (now Rule 52.18(1)(c)) for the court to exercise its discretion to impose conditions upon which an appeal may be brought.\nParagraph (2) of Rule 52.9 (now Rule 52.18(2)) provided that the court should exercise its powers under para (1) only where there was a compelling reason for doing so.\nBy its application, Goldtrail requested conditions that Onur should pay or secure 600k under interim orders for costs made by Rose J; should provide security for Goldtrails costs of the appeal in the sum of 150k; and in particular should pay into court the sum of 3.64m which Rose J had awarded to it by way of damages.\nIn response Onur entered no substantive challenge to the request for the first two conditions.\nThe dispute related to the requested payment into court of the judgment sum.\nGoldtrail relied on the agreed fact that in October 2014, after 22 years of flying its aircraft to the UK, Onur had ceased to do so; and Goldtrail submitted that, since Onur was likely to have no other assets even temporarily in England and Wales, there was a compelling reason for the judgment sum to be secured.\nOnurs response was that its decision to cease flights to the UK had been taken for operational reasons and that there was no evidence that it had taken steps or would take steps to obstruct enforcement of the judgment in the event of the dismissal of its appeal.\nWhat at that time Onur did not allege was that the disputed condition would stifle its appeal.\nBy an order on paper dated 7 April 2015 Floyd LJ imposed the disputed condition.\nOnur exercised its right to cause him to reconsider his decision at the hearing which took place on 11 June 2015.\nAlthough in his judgment Floyd LJ expressed a willingness to assume that there was a respectable commercial explanation for the cessation of Onurs flights to the UK, he maintained his earlier conclusion that there was a compelling reason for imposing the condition.\nUpon Onurs continuation of the appeal, he therefore imposed the condition that it should pay into court (or otherwise secure payment of) 3.64m by 9 July 2015.\nOn 14 July 2015, by then in breach of the condition, Onur applied for variation of it so as to permit it to make the payment into court by seven monthly instalments.\nOn 27 July 2015 Floyd LJ on paper refused the application but shortly before 21 October 2015, when pursuant to Onurs request he was due to reconsider it at a hearing, Onur changed its stance.\nIts new contention was that the condition for payment of the judgment sum into court was a breach of its rights under the European Convention on Human Rights and was unlawful and that therefore the payment would not be made.\nSo Floyd LJ dismissed the application for variation and directed that Goldtrails oral request for the consequential dismissal of Onurs appeal be made by formal application.\nThus it was that on 14 January 2016 Patten LJ heard not only the anticipated application by Goldtrail for dismissal of the appeal but also a cross-application by Onur dated 7 December 2015 for discharge of the condition for payment into court of the judgment sum on the ground - asserted for the first time - that its continuation in force would stifle the appeal.\nThe relevant findings, observations and conclusions of Patten LJ in his judgment dated 21 January 2016 were as follows: In 2013 he lent US $28m to Onur.\n(a) Mr Bagana was extremely wealthy and had, for example, given evidence to Rose J that 5m was not a significant outlay for himself personally.\n(b) He directly held 3.67% of the shares in Onur and held 81.19% of the shares in a company which held a further 92% of the shares in Onur.\n(c) Between 2008 and 2011 Onur had paid substantial dividends to him, which he had lent back to it, secured against its assets.\n(d) (e) By 2014 his loan account with Onur had increased to $68m.\n(f) For some reason Onur had guaranteed debts owed to him by another shareholder.\n(g) As Onurs largest secured creditor, Mr Bagana was in a position to decide which of Onurs unsecured debts should be paid and at what time.\n(h) He had a more than usually close relationship with Onur and effectively controlled its financial affairs.\n(i) According to Onurs Chief Financial Officer, Mr Bagana had said that he would contemplate making further loans to Onur only in exceptional circumstances to enable it to make commercial payments necessary to keep it in business.\n(j) With Mr Baganas support Onur was able to continue to trade.\n(k) Even had it been difficult for Onur to make the payment into court out of cash generated from its trading activities, it could have done so with his support.\n(l) Mr Bagana had decided not to fund the payment by Onur.\n(m) Were the court able to take his financial position into account in assessing Onurs ability to make the payment into court, its application to discharge the condition could not succeed.\n(n) In exceptional circumstances the ability of a company to have access to funds from a third party could be taken into account in assessing the likelihood that it could make a payment into court.\n(o) To take it into account would not be the same as to oblige that third party to comply with a condition imposed on a company.\n(p) exceptional.\n(q) Onur had failed to establish that the condition for payment into court would stifle its appeal.\n(r) So Onurs cross-application failed and, in that it had resolved not to satisfy the condition, its appeal should be dismissed.\nIn the light of all the above features the circumstances were\nPRINCIPLES\nTo stifle an appeal is to prevent an appellant from bringing it or continuing it.\nIf an appellant has permission to bring an appeal, it is wrong to impose a condition which has the effect of preventing him from bringing it or continuing it.\nIt is as if, on an application of summary judgment, the court were to grant leave to the defendant to defend the claim and then to attach a condition for payment which he could not satisfy.\nIn the words of Lord Diplock in M V Yorke Motors v Edwards [1982] 1 WLR 444 at 449B: that would be a wrongful exercise of discretion, because it would be tantamount to giving judgment for the plaintiff notwithstanding the courts opinion that there was an issue or question in dispute which ought to be tried.\nApplication of article 6 of the European Convention on Human Rights (being an article which confers its rights on companies as well as on human beings) yields the same conclusion.\nThe article does not require a member state to institute a court of appeal but, if it does so, it must ensure that litigants in that court enjoy its fundamental guarantees: Delcourt v Belgium (1970) 1 EHRR 355.\nThere will seldom be a fair hearing within article 6 if a court which has permitted a litigant to bring an appeal then, by indirect means, does not permit him to bring it.\nThere is a variety of situations in which a party submits that the effect of granting or refusing an application would be to stifle his continued participation in the proceedings.\nHe may do so, for example, as a claimant of a specified character, in response to an application by (a) a defendant for him to provide security for costs; or (b) as a defendant, in response to an application by the claimant for summary judgment in which the latter contends, as a fall-back, that, were leave to be given to defend the claim, it should be subject to a condition that the sum claimed be paid into court; or (c) as a party who has without good reason failed to comply with an order, in response to an application by the other for an order for him to make a payment into court; or (d) as an appellant, in response to an application by the respondent (as in the present case) that, as a condition of the appeal, he should provide security for the costs of it; or (e) as a former defendant now an appellant, in support of his application (as in the present case) that orders against him for payment of the judgment debt or costs be stayed pending his appeal; or (f) as a former defendant now an appellant, in response to an application by the respondent (as in the present case) that he should, as a condition of the appeal, pay the judgment debt into court.\nThere is a qualitative difference between imposing a condition which requires a defendant\/appellant to provide security for the future costs of the claimant\/respondent and one which requires him to pay into court the sum awarded against him.\nThe effect of the former is that, were his appeal to be dismissed, the burden of expenditure to be incurred by the claimant\/respondent in resisting the appeal would not be borne by him.\nThe effect of the latter is, by contrast, even more beneficial for the claimant\/respondent.\nIt is that, in the event (again) of the dismissal of the defendants appeal, the judgment sum would be there, as it were upon a tray, for the claimant to sweep into his pocket without his needing to undertake any attempt to enforce the courts order for payment of it.\nNo doubt a court asked to impose a condition for the payment into court of the sum awarded will have well in mind that extra advantage for the claimant and corresponding disadvantage for the defendant.\nBut a partys participation in proceedings can be as much stifled by an order for security for costs as by an order for payment into court of the sum claimed or awarded.\nSo it is without further reference to that distinction that one may proceed to address the circumstances in which an order can be said to stifle the continuation by an appellant of an appeal.\nThere is no doubt - indeed it is agreed - that, if the proposed condition is otherwise appropriate, the objection that it would stifle the continuation of the appeal represents a contention which needs to be established by the appellant and indeed, although it is hypothetical, to be established on the balance of probabilities: for the respondent to the appeal can hardly be expected to establish matters relating to the reality of the appellants financial situation of which he probably knows little.\nBut, for all practical purposes, courts can proceed on the basis that, were it to be established that it would probably stifle the appeal, the condition should not be imposed.\nIt is clear that, even when the appellant appears to have no realisable assets of its own with which to satisfy it, a condition for payment will not stifle its appeal if it can raise the required sum.\nAs Brandon LJ said in the Court of Appeal in the Yorke Motors case, cited with approval by Lord Diplock at 449H: The fact that the man has no capital of his own does not mean that he cannot raise any capital; he may have friends, he may have business associates, he may have relatives, all of whom can help him in his hour of need.\nIt seems that, in particular and as exemplified by the present case, difficult issues have surrounded the ability of a corporate appellant, without apparent assets of its own, to raise money from its controlling shareholder (or some other person closely associated with it); and this is the context of what follows.\nWhen, in response to the claim of a corporate appellant that a condition would stifle its appeal, the respondent suggests that the appellant can raise money from its controlling shareholder, the court needs to be cautious.\nThe shareholders distinct legal personality (which has always to be respected save where he has sought to abuse the distinction: Prest v Prest [2013] UKSC 34, [2013] 2 AC 415, 487, para 34) must remain in the forefront of its analysis.\nThe question should never be: can the shareholder raise the money? The question should always be: can the company raise the money?\nSo one turns to the leading authority of the Court of Appeal in this area, namely Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, [2002] CP Rep 21, which Onur contends to be, in part, erroneous in principle.\nIn the Hammond Suddard case the respondent solicitors sued the appellant company for unpaid fees and it counterclaimed for damages for negligence.\nThe claim succeeded and in effect the counterclaim failed.\nThe appellant obtained permission to appeal.\nIt unsuccessfully sought a stay of execution of the orders made by the judge on the basis that, were they to be enforced, its appeal would be stifled.\nThe respondents sought the imposition of conditions upon the permission to appeal.\nThey sought a condition for provision of security for the costs of the appeal, which the appellant conceded to be appropriate.\nBut they also sought a condition of payment into court of the judgment debt and of the sums awarded under interim orders for costs, to which, analogously, the appellant objected that its consequence would be to stifle its appeal.\nThe appellant had been incorporated in the British Virgin Islands and was owned by trustees on discretionary trusts for an unidentified but apparently wealthy family.\nThe appellant had, so it said, no assets.\nBut could it raise from its beneficial owners a sum equal to the judgment debt and costs in order to enable it to make the payment into court? If so, there was a compelling reason within the meaning of Rule 52.9(2) for imposing the condition sought by the respondents.\nIn the Hammond Suddard case the judgment of the court was delivered by my Lord, Lord Clarke (Clarke LJ, as he then was), on behalf of himself and Wall J (as he then was).\nHaving observed, at (1) of para 41, that it would be difficult for the respondents to exercise the normal mechanisms of enforcement against the appellant and, at (2), that the appellant had had access to resources which had enabled it to secure representation of the highest quality in the proceedings to date, the court concluded, at (3): There is no convincing evidence that the appellant does not either have the resources or have access to resources which would enable it to pay the judgment debt and costs as ordered.\nNo criticism has been directed at the above conclusion.\nIt was an impeccable summary of the courts reason for acceding to the respondents application.\nThe court proceeded, at para 41(4), to find that the appellants disclosure of its financial affairs had been inadequate.\nBut then, at the end of the subparagraph, it added an observation in relation to the appellant: It has wealthy owners and there is no evidence that, if they were minded to do so, they could not pay the judgment debt including the outstanding orders for costs.\nIndeed, in para 43, the court added a second observation to the same effect: Thus we see nothing unjust in providing the trust which owns the appellant with a choice.\nIf it is in the interests of the appellant for the appeal to continue, the trust must procure payment of the current orders.\nI am driven to the view that Onur is right to criticise the phraseology of the courts two additional observations.\nTheir intended meaning may well have been, as Goldtrail suggests, that the appellant had failed to establish that funds with which the company could make the payment into court would not be made available to it by its beneficial owners.\nBut, strictly speaking, it was wrong for the court to express its reasoning in terms of whether they could themselves make that payment.\nIn Socit Gnrale SA v Saad Trading, Contracting and Financial Services Co [2012] EWCA Civ 695 the Court of Appeal was required to determine applications by Socit Gnrale SA (the bank), which was the respondent to appeals which the two appellants had been permitted to bring against orders made against each of them for payment to the bank of US$49m.\nThe first appellant (Saad) was a limited Saudi Arabian partnership and the second appellant (Mr Al- Sanea) was a general partner of Saad and owned 90% of its share capital.\nOne of the banks applications was for a condition to be imposed upon the continuation of each of the appeals that the appellants should pay the award of US$49m into court; to which the appellants each responded that any order for payment into court would stifle their appeals.\nThe courts conclusion, explained in the judgment of Aikens LJ with which Rimer LJ agreed, was that a condition, which it proceeded to impose, for their joint and several payment into court of (only) $5m would not stifle their appeals.\nIn reaching this conclusion Aikens LJ punctiliously addressed the factors identified by the court as relevant in the Hammond Suddard case.\nNothing turns on his analysis of why Mr Al-Sanea had failed to make good his contention that his appeal would be stifled.\nIn relation, however, to the analogous contention of Saad, Aikens LJ addressed the additional observation which that court had made in para 41(4).\nAt paras 54 and 55 of his judgment Aikens LJ said that it was difficult to judge the legitimacy of imposing upon a company a the question was whether Saad had a wealthy owner who could not, if i) minded to do so, make the payment into court on its behalf; ii) condition which would effectively require an owner to fund it; iii) but the courts additional observation in the Hammond Suddard case had been clear; iv) exceptional circumstances; and v) the answer had to be that such a condition should be imposed only in the circumstances of the present case were exceptional.\nPossibly ham-strung by the doctrine of precedent, the court in the Socit Gnrale case evidently considered it best to treat the first additional observation in the Hammond Suddard case by consigning it to that over-used store-room in the mansion of the law which is designated as exceptional circumstances.\nSuch a criterion is on any view dangerous because it is not, on the face of it, linked to its context: see Norris v Government of United States of America (No 2) [2010] UKSC 9, [2010] 2 AC 487, para 56.\nIt sets a snare for it may lead to the wrongful downgrading of the significance of circumstances just because they happen not to be exceptional or to their wrongful upgrading just because they happen to be exceptional: H (H) v Deputy Prosecutor of the Italian Republic, Genoa (Official Solicitor intervening) [2012] UKSC 25, [2013] 1 AC 338, para 161.\nHaving, however, an unconstrained ability to reject the phraseology of the additional observations, we in this court have no need to approve the superimposition upon the relevant criterion of a test of exceptional circumstances which neither party before the court seeks to defend.\nIn this context the criterion is: Has the appellant company established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition?\nThe criterion is simple.\nIts application is likely to be far from simple.\nThe considerable forensic disadvantage suffered by an appellant which is required, as a condition of the appeal, to pay the judgment sum (or even just part of it) into court is likely to lead the company to dispute its imposition tooth and nail.\nThe company may even have resolved that, were the condition to be imposed, it would, even if able to satisfy it, prefer to breach it and to suffer the dismissal of the appeal than to satisfy it and to continue the appeal.\nIn cases, therefore, in which the respondent to the appeal suggests that the necessary funds would be made available to the company by, say, its owner, the court can expect to receive an emphatic refutation of the suggestion both by the company and, perhaps in particular, by the owner.\nThe court should therefore not take the refutation at face value.\nIt should judge the probable availability of the funds by reference to the underlying realities of the companys financial position; and by reference to all aspects of its relationship with its owner, including, obviously, the extent to which he is directing (and has directed) its affairs and is supporting (and has supported) it in financial terms.\nAPPLICATION TO THE PRESENT CASE\nThere has been lively argument before the court as to whether, in making the orders under appeal, Patten LJ must be taken to have concluded, in accordance with the correct criterion, that Onur had failed to establish that Mr Bagana would not make 3.64m available to it in order to enable it to comply with any order for its payment into court.\nThere are grounds for thinking that such a conclusion might have been open to him.\nMr Bagana signed a statement admitted by Rose J into evidence, in which, so Onur tells this court, he admitted that he was responsible for its overall operation and made the ultimate decisions referable to it; and Patten LJ made findings accordingly.\nMoreover Mr Baganas massive recent loans to Onur to enable it to continue to trade were on any view of substantial relevance to the probability of a further, modest advance.\nOddly no statement was filed on behalf of Onur by Mr Bagana himself but the Chief Financial Officers evidence was that he would contemplate making further advances only to enable Onur to make commercial payments necessary in order to keep itself in business.\nThis second- hand assertion called for careful scrutiny.\nBut, in circumstances in which Patten LJ concluded that it seems clear to me that Mr Bagana has decided not to fund the payment by the company, I am driven to the view that this court cannot proceed on the basis that Onurs application for discharge of the condition was refused by reference to the correct criterion.\nGoldtrail submits with force that Patten LJ meant to conclude only that, up until that point, Mr Bagana had declined to fund the payment and that the evidence in support of any wider conclusion was far too thin.\nIt further submits that for Patten LJ to have found that Mr Bagana had made a final decision never to fund it would be inconsistent with his refusal of Onurs application.\nUnfortunately, however, I cannot accept the further submission.\nThe key to the proper construction of his judgment is that, following a lengthy quotation from the judgment of Aikens LJ in the Socit Gnrale case, Patten LJ concluded that the circumstances of the present case were exceptional.\nIn other words he was proceeding by reference to the Court of Appeals misconception, born of the additional observations in the Hammond Suddard case and developed in the Socit Gnrale case, that in exceptional circumstances an order for a party, without apparent assets of its own, to make a payment into court could be justified by whether another person probably could advance the necessary funds to it irrespective of whether he probably would do so.\nSo I would allow Onurs appeal and remit both applications to Patten LJ for him to determine Onurs application for discharge of the condition by reference to the correct criterion.\nI should record that Goldtrail put forward to him an alternative argument against discharge; of course he had no need to address it but he may now need to do so.\nI have reached a different conclusion from that arrived at by Lord Wilson.\nI am not persuaded that Patten LJ materially misstated the relevant principles or arrived at the wrong conclusion.\nIt is important to put his decision in context.\nThe issue throughout has been whether there was a compelling reason for imposing a condition upon which an appeal may be brought under what were then CPR 52.9(1)(c) and (2).\nBefore the case came before Patten LJ it had a long history, largely before Floyd LJ.\nAs Lord Wilson explains, at no stage when the issues were before Floyd LJ did Onur contend that payment of the judgment sum of 3.4m (or the provision of security in lieu) would or might stifle the appeal.\nInstead it advanced a whole series of mutually inconsistent explanations, in response to which Floyd LJ made a series of orders and gave a number of judgments, notably on 11 June, 27 July and 21 October 2015.\nOnurs applications included an application for permission to pay the judgment sum in monthly instalments of 500,000.\nFloyd LJ rejected that application on the papers, giving clear reasons, on 27 July 2015.\nHis reasons included this passage, quoted in para 14 of his judgment given on 21 October 2015: There is no explanation of how these sums will be funded.\nIf [the appellants] are now contending that the imposition of the order would stifle the appeal, the evidence falls far short of showing that to be the case.\nIt is well settled that a party who wishes so to contend must show that he has explored all means of providing the necessary security.\nFloyd LJ added that the appellants had a right to renew the application orally and that he would consider any further evidence that became available.\nFloyd LJ added in para 15 of his judgment on 21 October that he had hoped to make it clear by that set of reasons that the appellants appeared to be what he called shuffling around to a position where they were saying that the payment of the sums of money placed unacceptable strains on their ability to conduct business, so much so that it was an interference with their right to appeal that the order should be enforced in its full amount.\nThey did not however take that step.\nIn para 17 Floyd LJ said that on 19 October, which was two days earlier, the appellants did not deal with the previous history but served a witness statement with only one paragraph as follows: Board of Onur Air is of the opinion that this decision, [which Floyd LJ assumed was a reference to his order that the judgment sum be paid into court] is unlawful and against the principles laid down by the European Court of Human Rights.\nTherefore, the foresaid sum will not be paid.\nThe striking feature of that statement is that Onur was not even then saying that payment of 3.4m (or the provision of security in lieu) would or might stifle the appeal.\nReliance upon Onurs human rights was a wholly new point on the part of Onur.\nFor various reasons which are not material to this appeal Floyd LJ said in para 20 that the whole history of the appeal was very unsatisfactory but that he was very reluctant to strike out an appeal for which permission has been given without giving the appellants one final chance of explaining the position.\nHe added: If it is now their position that they are so inhibited by the order for payment of the judgment sum that it is stifling their ability to appeal, then they should say so.\nI appreciate that is not something which they have so far said.\nThey have had ample opportunity, it might be said, to put forward every argument, but stifling of the appeal is one matter which they have thus far declined to put forward.\nIt may be that they are embarrassed by what was apparently said to Rose J about the fact, as Mr Gurbuz said in evidence, that the company was of such a size that 5m was not a large sum of money.\nWhatever the reason for their silence, it seems to me that they ought to come forward with their evidence now.\nIn order to give Onur one last chance Floyd LJ directed that any application for a final order on the appeal should be made on notice to the appellants and that appropriate opportunity should be given to both sides to file evidence in relation to it.\nHe added that it may be that not much further evidence was required from the respondents but that he was very anxious that the appeal should not be disposed of without a proper application on notice for the precise order which Goldtrail now sought.\nThe matter then came before Patten LJ, who gave judgment on 21 January 2016.\nThere were before Patten LJ an application on the part of Goldtrail for an order dismissing the appeal and for orders for payment of the judgment sum and interest.\nThat would of course involve a removal of the stay.\nOnur opposed those applications and issued a new application under CPR 3.1(7) for the variation of the 11 June order by removal of the condition requiring payment into court of the judgment sum.\nIt did so, as Patten LJ put it in para 15, for the first time on the ground that the payment of that sum was now beyond the means of the company and its payment would stifle the appeal.\nPatten LJ considered first the application under CPR 3.1(7).\nI will do the same.\nPatten LJ considered the position in some detail between paras 16 et seq and concludes in para 21 that Onurs Chief Financial Officer said in a statement dated 8 January 2016 that there had been a net increase in current liabilities of US$10m and that the net forecast for 2015 was between US$15 and US$16.5 m, that Onurs shortfall remained serious and that this was being managed by postponing current debt.\nPatten LJ summarised the position thus in para 22: Ms Erguven says that Onur has been unable to negotiate extended finance from banks and that existing lenders have either frozen or closed existing facilities.\nIn these circumstances, the company has no means to pay the judgment debt.\nOne would expect that, in these circumstances, Onur would have been forced to cease trading but this is obviously not the case and the evidence indicates that the airline continues to operate in Europe and has entered into new contracts, for example, with Bulgarian Air.\nAn analysis of the financial information carried out by the liquidators of Goldtrail and set out in the witness statement of Mr Oakley-Smith recognises the difficulties faced by Onurs business in the present climate but identifies a continuing source of funding from Mr Hamit Cankut Bagana who is the Chairman of Onur and its controlling shareholder.\nAccording to Ms Erguvens most recent witness statement, Mr Bagana has a direct shareholding of 3.67% of Onur but owns 81.19% of a company called Ten Tour Turizm Endustri ve Ticaret Anonim Sirket which in turn owns 92% of the shares in Onur.\nPatten LJ continued as follows: 23.\nThe analysis carried out by Mr Oakley-Smith of the 2013 and 2014 accounts suggests that Mr Bagana is the primary source of funding for the company.\nHis evidence at the trial before Rose J was that he paid 1m to Mr Aydin as part of the agreement with Onur.\nHe lent the company $28m in 2013.\nIn the 2014 accounts this is shown as having increased to $68m.\nAs part of these arrangements, it appears that Onur has given guarantees to Mr Bagana in respect of debts due to him from one of the other shareholders although the reasons for this are not explained.\nOf more significance is that in the period from 2008 to 2011 substantial dividends were paid by Onur to Mr Bagana and then loaned back to the company and secured against its assets in subsequent years.\nMr Bagana therefore appears to have removed equity from the company and to have used the money to establish himself as a secured creditor.\nHis position as the companys largest single (and secured) creditor has put him into the position where he can effectively decide which of the unsecured debts should be paid and when.\nThis is confirmed by Ms Erguven in her second witness statement where she says that: I can confirm that Mr Bagana is fully aware of the position that Onur Air finds itself in in relation to the payment of the Judgment Sum into court as a condition of the continuation of the Appeal.\nHe has made it clear that he would only contemplate considering the possibility of advancing further amounts to Onur Air in the most exceptional circumstances if they were commercial payments strictly and immediately necessary in order to keep Onur Air in business due to the already significant indebtedness of the company to him and the deteriorating financial condition of the company.\nMr Bagana has made it clear to the management of Onur Air that he believes that if the court were to strike out the appeal on the grounds that he, as a shareholder, had failed to lend money to Onur Air to enable it to pay the Judgment Sum into court, that would be a breach of his and Onur Airs rights under the European Convention of Human Rights.\n24.\nThe liquidators evidence is that Mr Bagana is an extremely wealthy man who said to Rose J in his evidence that he did not regard 5m as a significant outlay for himself personally.\nMs Erguvens response to this is that she is unable to comment on his alleged wealth and business activities.\n25.\nSome of the argument has centred on whether the financial information produced by Onur justifies its alleged belief that it is unable to pay the 3.64m and that, to be made to do so, would lead to the stifling of the appeal.\nMr Gibbon cautioned me against attempting to second guess the assessment of the financial state and prospects of the company made by its own directors and officers and I am obviously alive to those difficulties.\nBut even taking Ms Erguvens assessment at face value, it is apparent that a decision has been taken that Onur is able to continue to trade with the support of Mr Bagana and that it could, with that financial support, have made the 3.64m payment even if it would have been in difficulties in generating sufficient cash for that purpose from its trading activities.\nIt seems clear to me that Mr Bagana has decided not to fund the payment by the company and if I can take his financial position into account in assessing Onurs ability to satisfy the condition either prior to 9 July 2015 or thereafter then the CPR 3.1 (7) application to vary cannot succeed.\nThere is no evidential basis for concluding that the condition could not have been complied with or that, if complied with, it would stifle the appeal.\n26.\nMr Gibbon submitted that it could only be in exceptional circumstances that the court would take into account on this kind of application the financial position of a third party such as Mr Bagana.\nTo do so risks blurring the distinction between a company and its shareholders or other funders which the law habitually respects.\nBut it is clear as a matter of authority that the ability of third parties to fund the company may be relevant in appropriate cases and that there is no jurisdictional bar to the court taking their position into account in determining whether an allegation of stifling has been made out.\nThere is, I think, an obvious distinction between whether such a third party can be said to be under any sort of obligation as a result of an order made against the company and whether, in considering the likelihood of the company being able to make a potential payment, its access to third party funding should be taken into account.\nPatten LJ then referred to Socit Gnrale SA v Saad Trading, Contracting and Financial Services Co [2011] EWCA Civ 695 and to a decision of the Court of Appeal in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065; [2002] CP Rep 21, where I gave the judgment of the court, which comprised myself and Wall J.\nIn the light of the submissions in this case, I recognise that my formulation of the principles is not entirely accurate.\nThe basic principle is that stated by Brandon LJ with the approval of Lord Diplock in M V Yorke Motors v Edwards [1982] 1 WLR 444 at 449H (as quoted by Lord Wilson): The fact that the man has no capital of his own does not mean that he cannot raise any capital; he may have friends, he may have business associates, he may have relatives, all of whom can help him in his hour of need.\nThe cases show that in a case such as this the burden is on the person (or entity concerned) to show that he cannot find relevant capital to support him.\nWilson in his para 21: In Hammond Suddard I tried to make that clear in para 41(3) quoted by Lord There is no convincing evidence that the appellant does not either have the resources or have access to resources which would enable it to pay the judgment debt and costs as ordered.\nI adhere to that principle.\nSo the question here is whether Onur either has the resources or access to resources to pay the sum of 3.64m.\nThe statements of principle which I recognise went too far are those referred to in my paras 41(4) and 43 as identified by Lord Wilson in his para 22 above.\nIn para 41(4) I added, of the appellant: It has wealthy owners and there is no evidence that, if they were minded to do so, they could not pay the judgment debt, including the outstanding orders for costs.\nIn similar vein I said this in para 43: Thus we see nothing unjust in providing the trust which owns the appellant with a choice.\nIf it is in the interests of the appellant for the appeal to continue, the trust must procure the payment of the current orders.\nI am also of the view that, in so far as the Court of Appeal went further in Socit Gnrale SA v Saad Trading, Contracting and Financial Services Co [2012] EWCA Civ 695, it went too far.\nIn short, where the relevant company does not have appropriate resources of its own and the question is whether it has access to the resources of others, the question is whether the company would (not could) have had access to the resources.\nThe onus that it would not is on the company concerned.\nOn the facts of this case, the question is whether Onur has shown on the balance of probabilities that it did not have access to the relevant resources.\nOn the basis that the only resources available to Onur were through Mr Bagana, the question is whether, on the balance of probabilities he would have provided the funds.\nAs I see it, the strength of Goldtrails case is this.\nOnur at no stage focused on this precise point.\nAs Lord Carnwath puts it in para 48, there was no direct evidence from Mr Bagana on the point.\nIn short, he does not address the question whether he would have declined to provide funds to Onur.\nAgain, as Lord Carnwath puts it, the only relevant evidence on the point was that of Onurs Chief Financial Officer that Mr Bagana would contemplate making further loans to Onur but only in exceptional circumstances [to enable it to make] commercial payments necessary to keep [it] in business.\nI agree with Lord Carnwath that the evidence falls far short of establishing that the condition would in fact stifle the appeal.\nI would only add that there has been no suggestion until very recently that the condition would stifle the appeal and that the new aspect of Onurs case is not so I would dismiss the appeal.\nmuch that the appeal would be stifled as reliance on its human rights, which is not explained and is far-fetched in the extreme.\nI gratefully adopt Lord Wilsons exposition of the facts and of the law, which was in effect common ground by the end of the hearing.\nAlthough Patten LJ (faithfully applying the authorities binding on him) may have misstated the law in some respects, I agree with Lord Clarke that these were not ultimately material to his determination.\nIn any event, where an error such as this may have occurred, particularly one resulting from previous case law binding on the lower courts, the interests of justice require us in my view to avoid adding unnecessarily to the delay and expense borne by the parties.\nOur rules do not require us to remit the case to the lower court if we are in as good a position to decide it ourselves.\nThis in my view is such a case.\nAll the evidence is before us.\nI strongly agree with Lord Wilson that the court should not take even an emphatic refutation by the company or the owner at face value.\nAs he says: it should judge the probable availability of the funds by reference to the underlying realities of the companys financial position; and by reference to all aspects of its relationship with its owner.\nApplying that approach to the present case, particularly against the background described by Lord Clarke, I have no doubt that Patten LJ would have arrived at the same conclusion, and I would do the same.\nThere was no direct evidence from Mr Bagana himself.\nAlthough Patten LJ accepted that he had decided not to fund the payment by Onur, I take that to be no more than his inference from its opposition to the order.\nThere is no direct evidence of such a decision.\nThe only relevant evidence was that of Onurs Chief Financial Officer that Mr Bagana would contemplate making further loans to Onur, but only in exceptional circumstances [to enable it to make] commercial payments necessary to keep [it] in business, and that he regarded the courts requirement of such support as infringing his human rights.\nThe latter suggestion is of course nonsense, since there is no doubt as to his ability to fund the company if he wishes.\nAs to why he does not regard the present case as sufficiently exceptional, there is no explanation.\nThis in my view falls far short of proving, on the balance of probabilities, that the condition would in fact stifle the appeal.\nLord Wilson does not suggest otherwise.\nIn these circumstances, no other reason having been given for remitting the case, I would uphold Patten LJs order and dismiss the appeal.\n","output":"The appellant is a Turkish airline, largely owned by Mr Bagana.\nPrior to its liquidation, the respondent was a holiday tour company which had been wholly owned by Mr Aydin.\nThe respondent, by its liquidator, sued the appellant in relation to two agreements between the parties.\nRose J held that the appellant had dishonestly assisted Mr Aydin in defrauding the respondent and that it should pay damages to it in the sum of 3.64 million.\nThe appellant was granted permission to appeal to the Court of Appeal against the order of Rose J.\nBy an application made under then Rule 52.9(1)(c) of the Civil Procedure Rules, the respondent requested that the court should impose on the appellant a number of conditions for the continuation of its appeal.\nOne requested condition was that the appellant should pay into court the sum of 3.64 million which Rose J had awarded to the respondent, on the basis that the appellant was likely to have no other assets even temporarily in England and Wales.\nThe appellant disputed the imposition of this condition, but it did not allege that the disputed condition would stifle its appeal.\nBy order dated 11 June 2015, Floyd LJ concluded that there was a compelling reason for imposing a condition and required that the appellant, as a condition for the continuation of its appeal, pay into the court (or otherwise secure payment of) 3.64 million by 9 July 2015.\nThe appellant did not pay the sum into court.\nOn 14 January 2016 Patten LJ heard the anticipated application by the respondent for dismissal of the appeal, together with a cross application by the appellant for discharge of the condition on the ground that payment of that sum was now beyond its means and its continuation would stifle the appellants appeal.\nPatten LJ held that the appellants appeal should be dismissed on the grounds that in exceptional circumstances the ability of a third party to provide funds, in this case Mr Bagana, could be taken into account in assessing the likelihood that a company could make a payment into court.\nPatten LJ stated that Mr Bagana has decided not to fund the payment by the company and concluded that the appellant had not established that the condition for payment would stifle its appeal.\nThe appellant alleges that Patten LJ erred in his application of the relevant principles and in concluding that its relationship with Mr Bagana was such as to defeat its complaint that the condition for payment would stifle the appeal.\nThe Supreme Court by a majority of 3 to 2 allows Onur Air Taimacilik As appeal.\nIt remits both applications to Patten LJ to determine the appellants application for discharge of the condition by reference to the correct criterion [26].\nLord Wilson gives the lead majority judgment, with which Lord Neuberger and Lord Hodge agree.\nLord Clarke and Lord Carnwath give dissenting judgments.\nPrinciples To stifle an appeal is to impose a condition which prevents an appellant from bringing it or continuing it.\nIf an appellant has permission to bring an appeal, it is wrong to impose a condition which has the effect of preventing him from bringing it or continuing it.\nFor the purposes of Article 6 of the European Convention on Human Rights, there will seldom be a fair hearing if a court which has permitted a litigant to bring an appeal then, by indirect means, does not permit him to bring it [12].\nThe appellant must establish on the balance of probabilities that a proposed condition would stifle the continuation of its appeal [15].\nThe courts can proceed on the basis that, were it to be established that the condition would probably stifle the appeal, the condition should not be imposed [16].\nEven if an appellant appears to have no realisable assets, a condition for payment will not stifle its appeal if it can raise the sum [17].\nHowever, the court must be cautious in respect of a suggestion that a corporate appellant can raise money from its controlling shareholder.\nThe shareholders distinct legal personality must remain in the forefront of its analysis.\nThe question should always be whether the company can raise the money and never whether the shareholder can raise the money [18].\nThe criterion which should be applied is as follows: Has the appellant company established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition? [23].\nWhere a company and\/or its owner denies that the necessary funds would be made available to the company, the court should not take that assertion at face value.\nIt should judge the probable availability of the funds by reference to the underlying realities of the companys financial position and to its relationship with its owner, including the extent to which he is directing its affairs and is supporting it in financial terms [24].\nApplication of principles to the present case The appellants application for discharge of the condition was refused by reference to the incorrect criterion.\nPatten LJ proceeded by reference to the Court of Appeals misconception in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2011] EWCA Civ 2065 and Societe Generale SA v Saad Trading, Contracting and Financial Services Co and Al Sanea [2012] EWCA Civ 695, that in exceptional circumstances an order for a party, without apparent assets of its own, to make a payment into court could be justified by whether another person probably could advance the necessary funds to it irrespective of whether he probably would do so [25].\nDissenting Judgments Lord Clarke and Lord Carnwath would have dismissed the appeal.\nPatten LJ did not materially misstate the relevant principles or arrive at the wrong conclusion [27, 46].\nWhere a company does not have resources of its own and the issue is whether it has access to the resources of others, the question is whether the company would (not could) have had access to the resources [42].\nThere was no direct evidence from Mr Bagana on the question of whether he would have declined to provide funds.\nThe evidence falls far short of establishing that the condition would stifle the appeal [44, 48].\n","id":32}
{"input":"This is the judgment of the court.\nThis case is about the proper approach to deciding who has been responsible for harming a child in proceedings taken to protect that child, and others in the family, from harm.\nIt raises profound issues: on the one hand, children need to be protected from harm; but on the other hand, both they and their families need to be protected from the injustice and potential damage to their whole futures done by removing children from a parent who is not, in fact, responsible for causing them any harm at all.\nThe facts of this case present us with that dilemma in an unusually stark form.\nThe facts\nBecause we have decided to allow this appeal and send the case back to be decided afresh, we should say only enough about the facts to explain how the dilemma arises.\nWe shall use pseudonyms for the two children concerned, one who has been harmed and one who has not.\nJason was born on 19 May 2007.\nOn 15 June 2007, when he was just four weeks old, he was found to have bruising on his arms and face, which the doctors immediately thought was caused non accidentally and not, as the mother suggested, by the baby pinching himself or sleeping on his dummy.\nJason has not lived with his family since then, although he has had frequent and good quality contact with his mother.\nJason was living with his mother and father at the time and described by the doctors as thriving.\nBoth parents said that it was the father who had got up to attend to the baby when he woke up on the morning when the bruises were noticed.\nThe mother took the baby to the clinic that morning and pointed them out to the health visitor.\nIt was not possible to give precise timing for the bruises but it was not suggested that they were old or of different ages.\nThey could have been inflicted by both parents, but the judge found it more likely that only one of them had inflicted them.\nThe bruises had not been there for so long, nor would they have caused the baby such pain and distress, that the other parent must have known that he was being harmed.\nThis was not, therefore, a case where one parent had failed to protect the child from harm caused by the other.\nIt was, colloquially, a pure whodunit.\nThe other child is William, born on 12 July 2008, while the proceedings to protect Jason were in train.\nBy then the parents had separated, although they were still in touch with one another.\nThe father had stopped visiting Jason, had withdrawn from co operation with the social workers and with his solicitors, and played no further part in the proceedings.\nHe has parental responsibility for Jason but not for William.\nWilliam was removed from his mother shortly after birth and placed with the same foster carer as his brother.\nHe has never been harmed.\nThe case for removing him from his mother rests on the likelihood of his being harmed in the future if he is returned to her.\nThe law\nIn this country we take the removal of children from their families extremely seriously.\nThe Children Act 1989 was passed almost a decade before the Human Rights Act 1998, but its provisions were informed by the United Kingdoms obligations under article 8 and article 6 of the European Convention on Human Rights.\nThese affect both the test and the process for intervening in the family lives of children and their parents.\nAs to the test, it is not enough that the social workers, the experts or the court think that a child would be better off living with another family.\nThat would be social engineering of a kind which is not permitted in a democratic society.\nThe jurisprudence of the European Court of Human Rights requires that there be a pressing social need for intervention and that the intervention be proportionate to that need.\nBefore the court can consider what would be best for the child, therefore, section 31(2) of the 1989 Act requires that it be satisfied of the so called threshold conditions: (a) that the child concerned is suffering, or is likely to 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; or (ii) the childs being beyond parental control.\nThe leading case on the interpretation of these conditions is the decision of the House of Lords in Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563.\nThree propositions were established which have not been questioned since.\nFirst, it is not enough that the court suspects that a child may have suffered significant harm or that there was a real possibility that he did.\nIf the case is based on actual harm, the court must be satisfied on the balance of probabilities that the child was actually harmed.\nSecond, if the case is based on the likelihood of future harm, the court must be satisfied on the balance of probabilities that the facts upon which that prediction was based did actually happen.\nIt is not enough that they may have done so or that there was a real possibility that they did.\nThird, however, if the case is based on the likelihood of future harm, the court does not have to be satisfied that such harm is more likely than not to happen.\nIt is enough that there is a real possibility, a possibility that cannot sensibly be ignored having regard to the nature and gravity of the feared harm in the particular case (per Lord Nicholls of Birkenhead, at p 585F).\nThus the law has drawn a clear distinction between probability as it applies to past facts and probability as it applies to future predictions.\nPast facts must be proved to have happened on the balance of probabilities, that is, that it is more likely than not that they did happen.\nPredictions about future facts need only be based upon a degree of likelihood that they will happen which is sufficient to justify preventive action.\nThis will depend upon the nature and gravity of the harm: a lesser degree of likelihood that the child will be killed will justify immediate preventive action than the degree of likelihood that the child will not be sent to school.\nThe House of Lords was invited to revisit the standard of proof of past facts in Re B (Children) (Care Proceedings: Standard of Proof) [2008] UKHL 35, [2009] AC 11, where the judge had been unable to decide whether the alleged abuse had taken place.\nThe suggestion that it would be sufficient if there were a real possibility that the child had been abused was unanimously rejected.\nThe House also reaffirmed that the standard of proof of past facts was the simple balance of probabilities, no more and no less.\nThe problem had arisen, as Lord Hoffmann explained, because of dicta which suggested that the standard of proof might vary with the gravity of the misconduct alleged or even the seriousness of the consequences for the person concerned (para 5).\nHe pointed out that the cases in which such statements were made fell into three categories.\nIn the first were cases which the law classed as civil but in which the criminal standard was appropriate.\nInto this category came sex offender orders and anti social behaviour orders: see B v Chief Constable of Avon and Somerset Constabulary [2001] 1 WLR 340 and R (McCann) v Crown Court at Manchester [2002] UKHL 39, [2003] 1 AC 787.\nIn the second were cases which were not about the standard of proof at all, but about the quality of evidence.\nIf an event is inherently improbable, it may take better evidence to persuade the judge that it has happened than would be required if the event were a commonplace.\nThis was what Lord Nicholls was discussing in Re H (Minors), above, at p 586.\nYet, despite the care that Lord Nicholls had taken to explain that having regard to the inherent probabilities did not mean that the standard of proof was higher, others had referred to a heightened standard of proof where the allegations were serious.\nIn the third category, therefore, were cases in which the judges were simply confused about whether they were talking about the standard of proof or the role of inherent probabilities in deciding whether it had been discharged.\nApart from cases in the first category, therefore, the time has come to say, once and for all, that there is only one civil standard of proof and that is proof that that the fact in issue more probably occurred than not (para 13).\nThis did, of course, leave a role for inherent probabilities in considering whether it was more likely than not that an event had taken place.\nBut, as Lord Hoffmann went on to point out at para 15, there was no necessary connection between seriousness and inherent probability: It would be absurd to suggest that the tribunal must in all cases assume that serious conduct is unlikely to have occurred.\nIn many cases, the other evidence will show that it was all too likely.\nIf, for example, it is clear that a child was assaulted by one or other of two people, it would make no sense to start ones reasoning by saying that assaulting children is a serious matter and therefore neither of them is likely to have done so.\nThe fact is that one of them did and the question for the tribunal is simply whether it is more probable that one rather than the other was the perpetrator.\nLady Hale made the same point, at para 73: It may be unlikely that any person looking after a baby would take him by the wrist and swing him against the wall, causing multiple fractures and other injuries.\nBut once the evidence is clear that that is indeed what has happened to the child, it ceases to be improbable.\nSomeone looking after the child at the relevant time must have done it.\nThe inherent improbability of the event has no relevance to deciding who that was.\nThe simple balance of probabilities test should be applied.\nNone of the parties in this case has invited the Supreme Court to depart from those observations, nor have they supported the comment made in the Court of Appeal that Re B was a sweeping departure from the earlier authorities in the House of Lords in relation to child abuse, most obviously the case of Re H ([2009] EWCA Civ 1048, para 14).\nAll are agreed that Re B reaffirmed the principles adopted in Re H while rejecting the nostrum, the more serious the allegation, the more cogent the evidence needed to prove it, which had become a commonplace but was a misinterpretation of what Lord Nicholls had in fact said.\nRe B was not a new departure in any context.\nLord Hoffmann was merely repeating with emphasis what he had said in Secretary of State for the Home Department v Rehman [2001] UKHL 47, [2003] 1 AC 153, at para 55.\nA differently constituted House of Lords applied the same approach in Re D (Secretary of State for Northern Ireland intervening) [2008] UKHL 33, [2008] 1 WLR 1499.\nIn Re B, the House also declined an invitation to overrule the decision of the Court of Appeal in Re M and R (Minors) (Sexual Abuse: Expert Evidence) [1996] 4 All ER 239.\nThis was concerned with the stage after the court is satisfied that the threshold has been crossed.\nThe court has then to decide what order, if any, to make.\nThe welfare of the child is the paramount consideration: 1989 Act, s 1(1).\nIn deciding whether or not to make a care or supervision order, the court must have regard in particular to the so called checklist of factors: 1989 Act, s 1(3), (4).\nThese include (e) any harm which he has suffered or is at risk of suffering.\nIn Re M and R, the Court of Appeal determined that section 1(3)(e) should be interpreted in the same way as section 31(2)(a).\nThe court must reach a decision based on facts, not on suspicion or doubts.\nButler Sloss LJ said this: [Counsels] point was that if there is a real possibility of harm in the past, then it must follow (if nothing is done) that there is a risk of harm in the future.\nTo our minds, however, this proposition contains a non sequitur.\nThe fact that there might have been harm in the past does not establish the risk of harm in the future.\nThe very highest it can be put is that what might possibly have happened in the past means that there may possibly be a risk of the same thing happening in the future.\nSection 1(3)(e), however, does not deal with what might possibly have happened or what future risk there may possibly be.\nIt speaks in terms of what has happened or what is at risk of happening.\nThus, what the court must do (when the matter is in issue) is to decide whether the evidence establishes harm or the risk of harm.\nIn agreeing with this approach in Re B, at para 56, Lady Hale commented that in such a case, as indicated by Butler Sloss LJ , the risk is not an actual risk to the child but a risk that the judge has got it wrong.\nWe are all fallible human beings, very capable of getting things wrong.\nBut until it has been shown that we have, it has not been shown that the child is in fact at any risk at all.\nRe M and R was also approved by Lord Nicholls in Re O and another (Minors) (Care: Preliminary Hearing) [2003] UKHL 18, [2004] 1 AC 523, a case to which we shall return.\nThe House in Re B also recognised that courts and local authorities have different roles to play in protecting children from harm.\nIt is worth re emphasising this, given the understandable concerns in the wake of the Baby P case that social workers and other professionals were not being sufficiently active in their protective role, and the resulting increase in the numbers of care proceedings.\nSocial workers are the detectives.\nThey amass a great deal of information about a child and his family.\nThey assess risk factors.\nThey devise plans.\nThey put the evidence which they have assembled before a court and ask for an order.\nArticle 6 of the European Convention on Human Rights requires that In the determination of his civil rights and obligations, . everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.\nThe 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.\nWe 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.\nThe standard of proof may be different, but the roles of the social workers and the prosecutors are similar.\nThey bring to court those cases where there is a good case to answer.\nIt is for the court to decide whether the case is made out.\nIf every child protection case were to result in an order, it would mean either that local authorities were not bringing enough cases to court or that the courts were not subjecting those cases to a sufficiently rigorous scrutiny.\nThe whodunit problem\nSo far the position is plain.\nBut the threshold criteria do not in terms require that the person whose parental responsibility for the child is to be interfered with or even taken away by the order be responsible for the harm which the child has suffered or is likely to suffer in the future.\nIt requires simply that the harm, or likelihood of harm, is attributable to 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.\nClearly, the object is to limit intervention to certain kinds of harm harm which should not happen if a child is being looked after properly.\nBut is it also intended to limit intervention to cases where the person whose rights are to be interfered with bears some responsibility for the harm?\nIt cannot have been intended that a parent whose child has been harmed as a result of a lack of proper care in a hospital or at school should be at risk of losing her child.\nThe problem could be approached through the welfare test, because removal from home would not be in the best interests of such a child.\nHowever, because of the risk of social engineering, the threshold criteria were meant to screen out those cases where the family should not be put at any risk of intervention.\nHence attention has focussed on the attributability criterion.\nIn the case confusingly reported in the Law Reports as Lancashire County Council v B [2000] 2 AC 147, but in the All England Law Reports as Lancashire County Council v A [2000] 2 All ER 97, the House of Lords considered what is meant by the care given to the child.\nDoes it mean only the care given by the parents or primary carers or does it mean the care given by anyone who plays a part in the childs care? Lord Nicholls, with whom Lord Slynn, Lord Nolan and Lord Hoffmann agreed, found that it referred primarily to the former.\nBut if, as in that case, the care of the child was shared between two households and the judge could not decide which was responsible for the harm suffered by the child, the phrase is apt to embrace not merely the care given by the parents or other primary carers; it is apt to embrace the care given by any of the carers (p 166).\nThus the criteria were satisfied in respect of a child, A, who had been injured, even though this might have been attributable to the care she had received from her childminder rather than from her parents.\nLord Clyde put the test in this helpful way, at p 169C, with the same result: That the harm must be attributable to the care given to the child requires that the harm must be attributable to the acts or omissions of someone who has the care of the child and the acts or omissions must occur in the course of the exercise of that care.\nTo have the care of a child comprises more than being in a position where a duty of care towards the child may exist.\nIt involves the undertaking of the task of looking after the child.\nHowever, it is worth noting that the Court of Appeal had confirmed that the criteria were not satisfied in respect of the childminders child, B, because he had not been harmed at all.\nThe only basis for suggesting that there was any likelihood of harm to him was the possibility that his mother had harmed the other child and that had not been proved: Re H applied.\nThe local authority did not appeal against this.\nRe O and another (Minors)(Care: Preliminary Hearing) [2003] UKHL 18, [2004] 1 AC 523 was concerned with the more common problem, where the child has been harmed at the hands of one of his parents but the court cannot decide which.\nThe attributability condition was satisfied.\nFurthermore, when considering the welfare test, the court had to proceed on the basis that the child was at risk.\nLord Nicholls, with whom all other members of the Committee agreed, said this, at para 27: Quite simply, it would be grotesque if such a case had to proceed at the welfare stage on the footing that, because neither parent, considered individually, has been proved to be the perpetrator, therefore the child is not at risk from either of them.\nThis would be grotesque because it would mean the court would proceed on the footing that neither parent represents a risk even though one or other of them was the perpetrator of the harm in question.\nLord Nicholls went on, at para 32, to give the following guidance, on the assumption that the hearing would be split into a fact finding and a disposal stage and that each might be heard by a different judge: the . the judge at the disposal hearing will take into account any views expressed by the judge at the preliminary hearing on the likelihood that one carer was or was not the perpetrator, or a perpetrator, of injuries.\nDepending on the inflicted circumstances, these views may be of considerable value in deciding the outcome of the application: for instance, whether the child should be rehabilitated with his mother.\nIn Re B, Lady Hale commented as follows at para 61: The decisions in In re H, Lancashire County Council v B [2000] 2 AC 147, and In re O [2004] 1 AC 523 fit together as a coherent whole.\nThe court must first be satisfied that the harm or likelihood of harm exists.\nOnce that is established, . ,the court has to decide what outcome will be best for the child.\nIt is very much easier to decide upon a solution if the relative responsibility of the childs carers for the harm which she or another child has suffered can also be established.\nBut the court cannot shut its eyes to the undoubted harm which has been suffered simply because it does not know who was responsible.\nThe real answers to the dilemma posed by those\ncases lie elsewhere first, in a proper approach to the standard of\nproof, and second, in ensuring that the same judge hears the whole case.\nSplit hearings are one thing; split judging is quite another.\nWe are told that practice has now changed and that, barring accidents, the same judge does conduct both parts of a split hearing.\nNevertheless, the main object of splitting the hearing is to enable facts to be found.\nIf the threshold is not crossed, the case can be dismissed at that stage.\nIf it is crossed, the professionals can base both their assessments and their further work with the family upon the facts found.\nIt is not at all uncommon for parents to become much more open with the professionals when faced with the judges clear findings based upon what the evidence shows.\nHence there should always be a judgment to explain his findings at that stage.\nThese proceedings\nIt was necessary to give the above account of the development of the law in order to understand what happened in these proceedings.\nThe case was originally identified as suitable for a split hearing; then it was decided to hold a composite hearing; but for regrettable practical reasons, the hearing was split once more.\nBy that stage, the father was playing no part, but for some unknown reason the local authority decided not to issue a witness summons to require his attendance.\nThat is regrettable because the judge might well have found it easier to make clear findings had he given evidence.\nThe mother played a full part in the proceedings and in the assessments, but only accepted that the bruises were non accidentally caused after the possibility of a blood disorder had effectively been ruled out.\nThe judge heard evidence over three days in January 2008 and three further days in March.\nShe handed down a detailed judgment in note form on 3 April.\nThis was before the House of Lords decision in Re B.\nAt the outset, under the heading Test, she directed herself as follows: The test I have applied in relation to these findings is that set out in the House of Lords case of [Re H] of 1996.\nThe standard of proof I apply is on the balance of probability.\nThe allegations in this case are very serious indeed and in many respects are also very unusual.\nWhen I apply the appropriate standard of proof, it has to be based on evidence of reliability and cogency equivalent to the gravity of the allegations.\nShe then listed five questions, three of which are relevant to the issue before this Court: first, whether the child had suffered non accidental injury; second whether the perpetrator could be identified; and third even if the perpetrator cannot be identified, can either of the parents be excluded as a perpetrator? However, having concluded that the injuries were non accidental, she did not in terms ask herself whether she could identify the perpetrator.\nShe simply listed the various factors which she took into account in relation to each parent.\nShe indicated at the outset of her list relating to the father that there is a high index of suspicion in relation to the father and concluded that he could not be ruled out.\nThere was no such index in relation to the mother but for a variety of reasons the judge also concluded that the mother could not be ruled out.\nThe final hearing was listed for 5 June but could not proceed.\nAs suggested in Re O, the judge was invited to give an indication of the relative likelihood of father or mother being responsible for the injuries, in order to assist with the assessment process.\nIn oral exchanges she indicated that it was more likely that the father was the perpetrator than the mother.\nIn a written Adjunct to Judgment she explained that Invidious though it is to be too specific, but to help further assessments, I am prepared to say that I feel it 60% likely that the father injured the child and 40% likely that it was the mother.\nThe final hearing eventually took place before the same judge in December 2008 with judgment in January 2009.\nPart of the reason for the delay was that the mother had been unwell following the birth of her second child, William, in July.\nAt the final hearing, the judge was invited to revisit her findings in the light of Re B, in which judgment was given on 11 June 2008.\nShe declined to say that her finding meant that the father was the perpetrator of the injuries.\nShe observed that: When one is deciding these issues, a judge frequently reluctantly comes to the conclusion that he cannot decide who is to blame between two parents or among more than two people who have had care of the child over the relevant period.\nHowever, although unable to form a definitive decision to the requisite standard, a judge can still have an impression, falling short of a finding, that the propensity of the parties and the surrounding circumstances make it more likely that it was one party than another.\nHence the mother was not absolved as a really possible or likely perpetrator.\nThis meant that the threshold was crossed, not only in relation to the child who had suffered harm, but also in relation to the child who had not.\nThe fact that there was a real possibility that she had caused the injuries to Jason meant that there was a real possibility that she would injure William.\nAfter considering the welfare factors she concluded that the mothers vulnerable personality was such that she would need therapy in order to make the necessary changes so that she could provide a safe and stable upbringing for the children.\nTheir lives could not be put on hold in the meantime.\nHence the judge approved the care plan to place them both for adoption and made care and placement orders in respect of both children.\nShe did, however, give the mother permission to appeal but this was not included in the original order drawn up by the court.\nLord Justice Wall also gave permission to appeal, observing that the case provides a useful opportunity for the Court of Appeal to resolve a point which has arisen following the decision of the House of Lords in Re B, namely (1) if only parents are in the frame for having injured a child but (2) the judge cannot as between parents identify the perpetrator of the injuries, can that judge (3) apportion likely responsibility between them? Before the Court of Appeal, however, this was not the main issue.\nIt was argued that, following Re B, the test for identifying the perpetrator was the balance of probabilities and that the effect of the Adjunct to judgment was that this judge had in fact identified the father.\nThe appeal was dismissed: [2009] EWCA Civ 1048.\nIdentifying the perpetrator: the standard of proof\nThe first question listed in the statement of facts and issues is whether it is now settled law that the test to be applied to the identification of perpetrators is the balance of probabilities.\nThe parties are agreed that it is and they are right.\nIt is correct, as the Court of Appeal observed, that Re B was not directly concerned with the identification of perpetrators but with whether the child had been harmed.\nHowever, the observations of Lord Hoffmann and Lady Hale, quoted at paragraph 12 above, make it clear that the same approach is to be applied to the identification of perpetrators as to any other factual issue in the case.\nThis issue shows quite clearly that there is no necessary connection between the seriousness of an allegation and the improbability that it has taken place.\nThe test is the balance of probabilities, nothing more and nothing less.\nOf course, it may be difficult for the judge to decide, even on the balance of probabilities, who has caused the harm to the child.\nThere is no obligation to do so.\nAs we have already seen, unlike a finding of harm, it is not a necessary ingredient of the threshold criteria.\nAs Lord Justice Wall put it in Re D (Care Proceedings: Preliminary Hearings) [2009] EWCA Civ 472, [2009] 2 FLR 668, at para 12, judges should not strain to identify the perpetrator as a result of the decision in Re B: If an individual perpetrator can be properly identified on the balance of probabilities, then . it is the judges duty to identify him or her.\nBut the judge should not start from the premise that it will only be in an exceptional case that it will not be possible to make such an identification.\nThere are particular benefits in making such a finding in this context, especially where there is a split hearing.\nMiss Frances Judd QC, on behalf of the childrens guardian in this case, has stressed that the guardian would rather have a finding on the balance of probabilities than no finding at all.\nThere are many reasons for this.\nThe main reason is that it will promote clarity in identifying the future risks to the child and the strategies necessary to protect him from them.\nFor example, a different care plan may be indicated if there is a risk that the parent in question will ill treat or abuse the child from the plan that may be indicated if there is a risk that she will be vulnerable to relationships with men who may ill treat or abuse the child.\nAnother important reason is that it will enable the professionals to work with the parent and other members of the family on the basis of the judges findings.\nAs the Court of Appeal said in Re K (Non Accidental Injuries: Perpetrator: New Evidence) [2004] EWCA Civ 1181, [2005] 1 FLR 285, at para 55: It is paradigmatic of such cases that the perpetrator denies responsibility and that those close to or emotionally engaged with the perpetrator likewise deny any knowledge of how the injuries occurred.\nAny process, which encourages or facilitates frankness, is, accordingly, in our view, to be welcomed in principle.\nOften, it is not only the parents, but the grandparents and other members of the family, who may be the best resource to protect the child in the future but who are understandably reluctant to accept that someone close to them could be responsible for injuring a child.\nOnce that fact is brought home to them by a clear finding based upon the evidence, they may be able to work with the professionals to keep the child within the family.\nRe K also suggested, at para 56, that there would be long term benefits for the child, whatever the outcome of the proceedings: . we are also of the view that it is in the public interest that children have the right, as they grow into adulthood, to know the truth about who injured them when they were children, and why.\nChildren who are removed from their parents as a result of non accidental injuries have in due course to come to terms with the fact that one or both of their parents injured them.\nThis is a heavy burden for any child to bear.\nIn principle, children need to know the truth if the truth can be ascertained.\nIf the judge cannot identify a perpetrator?\nThe second and third questions in the statement of facts and issues ask whether judges should refrain from seeking to identify perpetrators at all if they are unable to do so on the civil standard and whether they should now be discouraged from expressing a view on the comparative likelihood as between possible perpetrators.\nThese appear to be linked but they are distinct.\nAs to the second, if the judge cannot identify a perpetrator or perpetrators, it is still important to identify the pool of possible perpetrators.\nSometimes this will be necessary in order to fulfil the attributability criterion.\nIf the harm has been caused by someone outside the home or family, for example at school or in hospital or by a stranger, then it is not attributable to the parental care unless it would have been reasonable to expect a parent to have prevented it.\nSometimes it will desirable for the same reasons as those given above.\nIt will help to identify the real risks to the child and the steps needed to protect him.\nIt will help the professionals in working with the family.\nAnd it will be of value to the child in the long run.\nIn North Yorkshire County Council v SA [2003] EWCA Civ 839, [2003] 2 FLR 849, the child had suffered non accidental injury on two occasions.\nFour people had looked after the child during the relevant time for the more recent injury and a large number of people might have been responsible for the older injury.\nThe Court of Appeal held that the judge had been wrong to apply a no possibility test when identifying the pool of possible perpetrators.\nThis was far too wide.\nDame Elizabeth Butler Sloss P, at para 26, preferred a test of a likelihood or real possibility.\nMiss Susan Grocott QC, for the local authority, has suggested that this is where confusion has crept in, because in Re H this test was adopted in relation to the prediction of the likelihood of future harm for the purpose of the threshold criteria.\nIt was not intended as a test for identification of possible perpetrators.\nThat may be so, but there are real advantages in adopting this approach.\nThe cases are littered with references to a finding of exculpation or to ruling out a particular person as responsible for the harm suffered.\nThis is, as the President indicated, to set the bar far too high.\nIt suggests that parents and other carers are expected to prove their innocence beyond reasonable doubt.\nIf the evidence is not such as to establish responsibility on the balance of probabilities it should nevertheless be such as to establish whether there is a real possibility that a particular person was involved.\nWhen looking at how best to protect the child and provide for his future, the judge will have to consider the strength of that possibility as part of the overall circumstances of the case.\nAs to the third question, times have changed since Re O.\nBarring unforeseen accidents, the same judge will preside over both parts of the hearing.\nWhile it is helpful to have a finding as to who caused the injuries if such a finding can be made, the guardians view is that it is positively unhelpful to have the sort of indication of percentages that the judge was invited to give in this case.\nLord Justice Thorpe suggested, [2009] EWCA Civ 1048, para 17, that judges should be cautious about amplifying a judgment in which they have been unable to identify a perpetrator: better to leave it thus.\nWe agree.\nThe unasked question\nIf the judge can identify a perpetrator on the balance of probabilities, what is to be done about the risk that he may be wrong and that some one else was in fact responsible? We are indeed all fallible human beings.\nWe can make mistakes, however hard we try to pay careful attention to the quality of the evidence before us and reach findings which are rationally based upon it.\nHowever, once the court has identified a perpetrator, the risk is not a proven risk to the child but a risk that the judge has got it wrong.\nLogically and sensibly, although the judge cannot discount that risk while continuing to hear the case, he cannot use it to conclude that there is a proven risk to the child.\nBut all the evidence (if accepted by the judge) relating to all the risk factors that the judge has identified remains relevant in deciding what will be best for the child.\nAnd he must remain alive to the possibility of mistake and be prepared to think again if evidence emerges which casts new light on the evidence which led to the earlier findings.\nIt is now well settled that a judge in care proceedings is entitled to revisit an earlier identification of the perpetrator if fresh evidence warrants this (and this Court saw an example of this in the recent case of Re I (A Child) [2009] UKSC 10).\nThe guardian also submits that the professionals will find it easier to work with this approach.\nIt is important not to exaggerate the extent of the problem.\nIt only really arises in split hearings, which were not originally envisaged when the Children Act was passed.\nIn a single hearing the judge will know what findings of fact have to be made to support his conclusions both as to the threshold and as to the future welfare of the child.\nMoreover, cases rarely come as neatly packaged as this one does.\nIn most cases, the injuries are such that, even if one parent was not responsible for causing them, she was undoubtedly responsible for failing to protect the child from the person who did cause them.\nIn many cases, there are other risks to the child besides the risk of physical injury.\nThe evidence which is relevant to identifying the perpetrator will also be relevant to identifying the other risks to the child and to assessing what will be best for him in the future.\nBut clearly the steps needed to protect against some risks will be different from the steps needed to protect against others.\nAnd the overall calculus of what will be best for the child in the future will be affected by the nature and extent of the identified risks.\nThere are many, many factors bearing upon the childs best interests and the identification of risks is only one of them.\nThe conclusion in this case\nWe have every sympathy for the judge, who was only repeating the mantra which many other judges at every level had repeated in the past.\nBut it is clear that she did misdirect herself on the standard of proof at the fact finding hearing.\nBecause she later said that she had simply been unable to decide, we do not think that we can accept the invitation of Mr Anthony Hayden QC, on behalf of the mother, to treat her Adjunct to judgment as a finding that the father was the perpetrator.\nThat was not what she thought she was doing.\nHowever, that was an ex post facto rationalisation on her part.\nWe cannot know what finding she would have made had she directed herself correctly in the first place.\nIt is only right, for the sake of these children and their mother, that they should have the whole case put before a different judge who can decide the matter on the right basis.\nThere is a further reason to remit the case.\nThe judge found the threshold crossed in relation to William on the basis that there was a real possibility that the mother had injured Jason.\nThat, as already explained, is not a permissible approach to a finding of likelihood of future harm.\nIt was established in Re H and confirmed in Re O, that a prediction of future harm has to be based upon findings of actual fact made on the balance of probabilities.\nIt is only once those facts have been found that the degree of likelihood of future events becomes the real possibility test adopted in Re H. It might have been open to the judge to find the threshold crossed in relation to William on a different basis, but she did not do so.\nThe case may look very different now that the mothers life has moved on and in the mean time, thankfully, the children have been well protected from harm.\nThe appeal is therefore allowed and the case remitted for a complete rehearing before a different judge.\n","output":"The case concerns the proper approach to deciding who has been responsible for harming a child in proceedings taken to protect that child, and others in the family, from harm and the consequences of such a decision.\nAt a fact finding hearing, the judge decided that either the mother or the father had injured their baby boy.\nHe had therefore suffered significant harm attributable to a lack of reasonable parental care, as required by section 31(2) of the Children Act 1989.\nThe judge did not ask herself which parent was responsible, although she expressed the view that it was 60% likely that the father had injured the child and 40% likely that the mother had.\nThe mother and father were separated and the father played no part in the proceedings.\nAt the later welfare hearing, the judge approved the placement of the child for adoption, together with his younger brother, who had been born during the proceedings and placed with foster parents soon after birth.\nThe mother, who had maintained contact and developed a good relationship with the children, appealed.\nThe Supreme Court unanimously allows the appeal and remits the case for a complete rehearing before a different judge.\nThe judgment of the Court was given by Lady Hale. [48] [50]\nIt is now settled law that the standard of proof in care proceedings is the balance of probabilities, as set out in Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 and confirmed in Re B (Children) (Care Proceedings: Standard of Proof) [2008] UKHL 35, [2009] AC 11. [8] [13] It is clear from the observations of Lord Hoffman and Lady Hale in Re B that the same approach is to be applied to the identification of perpetrators as to any other factual issue in the case.\nIt was incorrect to apply a heightened standard consistent with the gravity of the allegations. [34] There is no obligation for a judge to decide who has caused the harm to the child, as long as that harm is attributable to someone having care of the child, although he should do so if the evidence warrants this.\nIn a split hearing, there may be particular benefits of making such a finding, mainly because it will promote clarity in identifying the future risks to the child and the strategies necessary to protect him from them. [35] [38] Where a specific perpetrator cannot be identified, a judge should still, where possible, identify a pool of possible perpetrators.\nThe test for doing so is the likelihood or real possibility that a particular person was involved.\nA person does not have to prove their innocence to be left out of account[40] [43] Where a judge has been unable to identify a perpetrator, it is positively unhelpful to have the sort of indication of percentages that the judge gave in this case. [44] If the judge is able to identify a perpetrator on the balance of probabilities, all the evidence accepted by the judge which is relevant to identifying the risks to the child remains relevant to deciding where his\nbest interests will lie.\nThe court must also be alive to the possibility that the finding who the perpetrator was is wrong and be prepared to revise it in the light of later evidence. [46] [47] In the circumstances of this case the judge had misdirected herself on the standard of proof in the fact finding hearing.\nIn those circumstances the case ought to be remitted in whole to a different judge who can decide the matter on the right basis. [48] The decision to remove the second child, who had never been harmed, must also be remitted for rehearing.\nThe judge had held that there was a risk of future harm to him because there was a real possibility that the mother had injured the older child.\nIt was held in Re H that this is not the correct approach: predictions of future harm must be based on proven findings of fact. [49]\n","id":33}
{"input":"This appeal concerns the proper interpretation and effect of section 4(1) of the Explosive Substances Act 1883 (section 4(1) and the 1883 Act, respectively).\nThis provides in material part as follows: Any person who makes or knowingly has in his possession or under his control any explosive substance, under such circumstances as to give rise to a reasonable suspicion that he is not making it or does not have it in his possession or under his control for a lawful object, shall, unless he can show that he made it or had it in his possession or under his control for a\nlawful object, be guilty of an offence\nAs originally enacted, section 4(1) provided that a person convicted of this offence was liable to penal servitude for a term not exceeding 14 years, or to imprisonment for a term not exceeding two years with or without hard labour.\nCurrently, the maximum sentence is imprisonment for life.\nThe Court of Appeal certified the following point of law of general public importance: for the purposes of section 4(1) can personal experimentation or own private education, absent some ulterior unlawful purpose, be regarded as a lawful object?\nFactual background and the proceedings below\nThe appellant is aged 22 and has no convictions.\nHe was diagnosed with Autism Spectrum Disorder as a child.\nIn April 2018 he was living in a terraced house in Coventry with his mother.\nThe appellant had been purchasing quantities of chemicals online.\nHis explanation for this is that he had from a young age developed an obsessive interest in things military.\nHe became interested in bomb disposal after watching the film The Hurt Locker about a US bomb disposal unit in Iraq and wanted to understand how explosives worked and to experiment with them.\nOn 24 April 2018 a search warrant was executed at the house.\nThe chemicals the appellant had purchased were found in a garden shed which he used as a laboratory.\nThe appellant had managed to make a small quantity, of the order of about 10 grams or less, of Hexamethylene Triperoxide Diamine (HMTD) from Hydrogen Peroxide, Hexamine and Citric Acid.\nHMTD is a sensitive primary high explosive that can easily be detonated.\nAccording to the Statement of Facts and Issues for the appeal, such a small amount of HMTD potentially carries a risk of insubstantial injury or damage.\nIt should also be noted that the appellant might only have used part of this quantity at any one time when experimenting with it.\nThe HMTD was found in the form of a powdery substance in a petri dish in the shed and in another in the appellants bedroom.\nMaterial found in the appellants bedroom and on his computer included manuals for making explosives, notes on the making of HMTD and a video downloaded to his mobile telephone of a demonstration of the making of HMTD.\nOver the previous months the appellant had made explosive substances with other chemicals on about six or seven occasions.\nBy means of homemade initiators made from fairy lights filled with firework powder or by means of a mobile telephone signal, he had detonated or attempted to detonate these substances in his back garden and had made a video record of this on his mobile telephone.\nAccording to his explanation, his plan was to conduct similar experiments with the HMTD he had made.\nThe appellant was interviewed by the police over many days.\nHe admitted his actions and gave the explanations referred to above.\nHe was charged with a number of offences, including six counts of having possession of information likely to be useful for an act of terrorism contrary to section 58 of the Terrorism Act 2000.\nThe two relevant charges on the indictment for present purposes are in identical terms, as counts 1 and 2, as follows: STATEMENT OF OFFENCE MAKING OR POSSESSION OF EXPLOSIVE UNDER SUSPICIOUS CIRCUMSTANCES, contrary to section 4(1) of the Explosive Substances Act 1883 PARTICULARS OF OFFENCE CHEZ COPELAND on 24 day of April 2018 knowingly had in his possession or under his control a certain explosive substance, namely [HMTD], in such circumstances as to give rise to a reasonable suspicion that he had not made it for a lawful object.\nAs this court pointed out at the hearing, and as counsel on both sides agreed, this charge is in defective form.\nIt elides the two limbs of section 4(1), ie (1) making any explosive substance under circumstances giving rise to a reasonable suspicion that the defendant is not making it for a lawful object and (2) knowingly having in his possession or control any explosive substance under circumstances giving rise to a reasonable suspicion that he does not have it in his possession or control for a lawful object.\nMr Louis Mably QC, for the Crown, gave an undertaking to amend the charge so as to replace the words after reasonable suspicion with the phrase that he did not have it in his possession or under his control for a lawful object.\nMr Paul Bogan QC, for the appellant, accepted that this amendment would not cause any prejudice to the appellant and said it would not be resisted.\nOn the particular facts of this case, the alteration makes no material difference, since the appellants defence would be the same whether he was charged under limb (1) or limb (2), namely that he had both made the HMTD and had it in his possession with a view to experimentation and self education regarding its manufacture and properties, by conducting detonations with it in the garden of his home.\nThe appeal therefore proceeded on the basis that the indictment could be taken to refer to limb (2) of the offence.\nThe appellants defence statement in relation to counts 1 and 2 on the indictment was as follows: It is the defence case that: 1.\nThe circumstances do not give rise to the reasonable suspicion that the defendant had not made [the HMTD] for a lawful object; and 2.\nThe defendant made it for a lawful object.\nThe defendant has a longstanding obsession with the armed forces and has collected military paraphernalia over many years.\nMore recently, and inspired by the film The Hurt Locker, he has been interested in explosives.\nIn pursuit of this interest he has researched manuals and recipes on the internet.\nHe sought to understand how explosives could be made and acquired certain chemicals to do so.\nHe experimented with the chemicals and caused small explosions to be made in the back garden of his home.\nHis own ambition to join the armed forces has been thwarted by a diagnosis of Autism Spectrum Disorder when aged around 14 years.\nHe had regularly engaged in role play, dressing and purporting to behave as a member of the armed forces.\nThe condition of Autism Spectrum Disorder has manifested itself in interests and hobbies becoming obsessional and, in the context of explosives, an obsessional need to understand how explosives work.\nBy way of an addendum, in the appellants written submissions at first instance it was asserted that, For the avoidance of doubt the defendants object or objects encompass interest, education and experimentation.\nOn 23 October 2018 a preparatory hearing took place before His Honour Judge Wall QC in the Crown Court at Birmingham, at which it was agreed that he should determine, among other things, whether the potential defence to counts 1 and 2 on the indictment could amount to a defence in law.\nThe judge ruled that the appellants proposed defence that he made the HMTD and had it in his possession for a lawful object, being experimentation and self education, was not good in law, holding that he was bound to reach that conclusion by the decision of the Court of Appeal in R v Riding [2009] EWCA Crim 892.\nThis ruling meant that the judge proposed that he would direct the jury accordingly and would exclude evidence and prevent submissions directed to trying to support that part of the defence case.\nThe appellant appealed to the Court of Appeal, Criminal Division (Sir Brian Leveson P, Elisabeth Laing and Whipple JJ).\nThe appeal was dismissed: [2019] EWCA 36 (Crim).\nLike Judge Wall QC, the Court of Appeal considered that it was bound by R v Riding to reach the conclusion that the appellants proposed defence under section 4(1) was bad in law.\nThe court certified the point of law set out above at para 3.\nThe statutory context\nThe Offences Against the Person Act 1861 (the 1861 Act) consolidated various enactments in England and Ireland relating to offences against the person, including the offences of destroying or damaging a building with gunpowder or other explosive substance, with intent to murder (section 12, now repealed), unlawfully and maliciously causing bodily injury by gunpowder or other explosive substance (section 28), unlawfully and maliciously causing gunpowder or other explosive substance to explode etc, with intent to do grievous bodily harm to some person (section 29), placing gunpowder or other explosive substance near a building etc, with intent to do bodily injury to any person (section 30) and making or having possession of gunpowder or any explosive substance etc, with intent by means thereof to commit any of the felonies set out in the Act (section 64).\nIn parallel with these primary provisions of the criminal law, the Explosive Substances Act 1875 (the 1875 Act) amended the previous regulatory regime in relation to such substances.\nAlthough the Act uses the term gunpowder in its operative provisions, by virtue of section 3 this term also covers other explosive substances.\nSection 4 provided that gunpowder should not be manufactured except at a lawfully existing factory or one licensed under the Act, [p]rovided that nothing in this section shall apply to the making of a small quantity of gunpowder for the purpose of chemical experiment and not for practical use or sale.\nSection 5 provided that gunpowder should only be kept at certain approved places including places licensed under the Act, subject to a proviso that it should not apply to (among others) a person keeping for his private use and not for sale gunpowder to an amount not exceeding on the same premises 30 pounds.\nThus, the 1875 Act recognised that possession of small quantities (or, in the case of section 5, a comparatively large quantity) of explosive substances for private use for experimentation or otherwise could be legitimate and would not require regulation.\nIn fact, there is a long and well established tradition of individuals pursuing self education via private experimentation in a range of fields, including with chemicals and explosives.\nThe 1875 Act acknowledged and made allowance for such practices.\nThe penalties for breach of the regulatory provisions in the 1875 Act were at a much lower level than the penalties in respect of the primary criminal provisions in the 1861 Act and the 1883 Act, underlining the distinction between those primary criminal provisions and the regulatory offences.\nThe 1883 Act was a measure passed by Parliament at great speed as a reaction to fears of Irish nationalist terrorism, and in light of a concern that the offences in the 1861 Act did not provide sufficient protection for the public.\nThe 1883 Act created the new offences of unlawfully and maliciously causing an explosion likely to endanger life (section 2); acting unlawfully and maliciously with intent to cause an explosion likely to endanger life or cause serious injury to property (section 3(a)); unlawfully and maliciously making any explosive substance or having it in possession or under control with intent to endanger life or cause serious injury to property (section 3(b)); and the offence in section 4(1).\nThe 1883 Act applies to Scotland: section 9.\nSection 9(1) provides a very wide definition of explosive substance: The expression explosive substance shall be deemed to include any materials for making any explosive substance; also any apparatus, machine, implement, or materials used, or intended to be used, or adapted for causing, or aiding in causing, any explosion in or with any explosive substance; also any part of any such apparatus, machine or implement.\nIn relation to the offence in section 4(1), section 4(2) provided that the\naccused and their spouse should be competent to give evidence for the defence (this at a time when according to the ordinary law the accused and their spouse could not give evidence).\nParliament considered that, for the accused to have a fair and effective opportunity of availing himself of the defence in section 4(1) of showing that he had made the explosive substance or had in in his possession or under his control for a lawful object, he and his spouse should have the opportunity of giving evidence about that at trial.\nThe regulatory regime in relation to explosives is now contained primarily in the Explosives Regulations 2014 (the Regulations).\nThe Explanatory Memorandum published with the Regulations and Guidance in relation to the Regulations issued by the Health and Safety Executive in 2014 make it clear that it continues to be expected that private individuals may manufacture explosives and have them in their possession for their own private use.\nThe Explanatory Memorandum referred at para 7.1 to the explosives sector being fragmented and diverse, ranging from the storage and manufacture of large amounts of highly energetic and flammable material to individual hobbyists.\nSee also the section of the Explosive Regulations 2014 Safety Provisions Guidance at para 9: Duty holders such as employers, private individuals and other people manufacturing explosives, storing larger quantities of explosives or storing explosives that present higher hazards or greater risks of initiation should use the relevant subsector guidance to supplement the guidance in this document.\nAnd para 13: Explosives for work, personal and recreational use [The Regulations apply] to explosives operations 13. whether they are for work or non work purposes.\nThey therefore apply to anyone storing explosives for personal recreational use, or to voluntary clubs or societies storing explosives (examples include storage for firework displays, bonfire processions or re enactment events).\nAuthorities\nIn R v Fegan (1984) 78 Cr App R 189, a decision of 1971, the Court of Criminal Appeal in Northern Ireland considered the meaning and effect of section 4(1).\nLord MacDermott CJ, delivering the judgment of the court, explained that section 4(1) illustrates a means of meeting a legislative problem, of how to curb a grave evil which postulates a guilty mind or mental element on the part of offenders, when proof of that guilty mind or mental element is likely to be a matter of inherent difficulty (p 191).\nIn other words, section 4(1) was enacted because Parliament was not satisfied that the existing offences in the 1861 Act and the other offences created by the 1883 Act, involving as they did the need to prove a specific mental element, were sufficient fully to meet the risk posed by the making or possession of explosives.\nAs Lord MacDermott CJ explained (p 191): Section 4(1) of the Act of 1883 may be said to proceed by way of compromise.\nIt does not make it an offence to possess explosive substances for an unlawful purpose, nor does it create an absolute offence by prohibiting the mere possession of explosive substances.\nInstead, its two limbs provide for a dual enquiry (1) Was the person charged knowingly in possession under such circumstances as to give rise to a reasonable suspicion that his possession was not for a lawful object? and (2) if the answer to (1) is in the affirmative, has the person charged shown that his possession was for a lawful object? If the answer to (1) is in the affirmative and the answer to (2) in the negative a conviction follows; otherwise there must be an acquittal.\nThe first limb allows for a conviction on reasonable suspicion.\nThe second allows what may be very much a subjective defence, with the accused and his or her spouse permitted by section 4(2) (as an exception to the then existing law) to give evidence on oath as ordinary witnesses. (Emphasis in original)\nThe appellant in Fegan was a young Roman Catholic man married to a Protestant woman, who by reason of his religion was subjected to threats of serious violence in the Protestant area in which he lived and told to move out of the district.\nThe appellant acquired a pistol and live ammunition, maintaining that he did so to protect himself and his family.\nHe was charged with a number of offences and was convicted at trial on three counts: possession of the pistol without holding a firearm certificate; possession of the ammunition without holding a firearm certificate; and possession of explosive substances (the pistol and the ammunition) under such circumstances as to give rise to a reasonable suspicion that he did not have them in his possession for a lawful object, contrary to section 4(1).\nHe appealed against his conviction on the section 4(1) count.\nHis appeal was allowed.\nThe Court of Appeal found that the jury had clearly been entitled to find that limb (1) of the offence had been made out by the prosecution, but there had been a misdirection because the trial judge had not properly directed them regarding the possibility of a defence under limb (2), in relation to which there was evidence on which the jury could have found for the appellant.\nThe court made it clear that a person may have a lawful object for the purposes of section 4(1) even though his possession of the explosive substances in question is in breach of regulatory offences (p 194): A, for example, borrows a shot gun to shoot birds despoiling his orchard.\nHe has no certificate or other authority for possessing the gun and his possession is unlawful.\nTo say that his object cannot be lawful is to confuse possession and purpose A firearm in lawful possession may undoubtedly be possessed for an unlawful object and there seems to be no good reason why the converse should not be true.\nThe court also explained that the words possession for a lawful object in limb (2) should be construed as meaning possession for a lawful object and no other: The defence cannot have been meant to exonerate the possessor of a firearm for a lawful object if his possession was also for an unlawful object.\nAgain, as a matter of construction, a defence under the second limb of section 4(1) cannot be made by the possessor proving that he had no unlawful object.\nThe onus resting on him is specific and positive.\nHe has to show possession for a lawful object. (p 194) Finally, the court gave guidance regarding the limits of the concept of lawful object in a case where self defence is relied upon as the relevant object: Possession of a firearm for the purpose of protecting the possessor or his wife or family from acts of violence may be possession for a lawful object.\nBut the lawfulness of such a purpose cannot be founded on a mere fancy, or on some aggressive motive.\nThe threatened danger must be reasonably and genuinely anticipated, must appear reasonably imminent, and must be of a nature which could not reasonably be met by more pacific means.\nA lawful object in this particular field therefore falls within a strictly limited category and cannot be such as to justify going beyond what the law may allow in meeting the situation of danger which the possessor of the firearm reasonably and genuinely apprehends.\nOne does not, for example, possess a firearm for a lawful object if the true purpose is merely to stop threats or insults or the like. (p 194)\nAccordingly, possession with the general object of using the items for self defence should the need arise was capable of being possession for a lawful object for the purposes of limb (2) of section 4(1).\nThis was so, even though the availability of a defence of self defence, should the pistol ever be used by the appellant, would depend upon the particular circumstances in which it was so used, including consideration whether use of it was a proportionate reaction to the specific threat experienced at the time and whether there were other means of avoiding that threat.\nNo one could know in advance whether those conditions would be satisfied or not.\nThere was no challenge to the correctness of any part of this reasoning.\nFegan was followed by the Criminal Division of the Court of Appeal of England and Wales (Lord Lane CJ, McCowan and Leggatt JJ) in Attorney Generals Reference (No 2 of 1983) [1984] QB 456.\nThe accused, whose property had been attacked and damaged by rioters, and fearing that it would be attacked again, made some petrol bombs, which he intended to use purely to repulse raiders from his property.\nA prosecution submission that self defence could not constitute a defence to an offence under section 4(1) was dismissed by the trial judge, and the jury acquitted the accused.\nThe Attorney General referred for the courts opinion the question whether self defence could be a defence to an offence under that provision.\nThe court endorsed the reasoning in Fegans case and held that self defence could constitute a lawful object for the purposes of section 4(1).\nIt noted that, as was common ground, the accused had committed offences contrary to provisions of the 1875 Act by making and possessing explosive substances.\nHowever, the court held that a person in danger may arm himself for his own protection, if the exigency arises, although in so doing he may commit other offences (p 471).\nThe court said, In our judgment, approaching a priori the words lawful object it might well seem open to a defendant to say, My lawful object is self defence.\nThe fact that in manufacturing and storing the petrol bombs the respondent committed offences under the Act of 1875 did not necessarily involve that when he made them his object in doing so was not lawful The object or purpose or end for which the petrol bombs were made was not itself rendered unlawful by the fact that it could not be fulfilled except by unlawful means.\nThe fact that the commission of other offences was unavoidable did not result in any of them becoming one of the respondents objects. (p 470)\nThe court answered the point of law referred to it by saying that the defence under limb (2) of section 4(1) is available if the accused can satisfy the jury on the balance of probabilities that his object was to protect himself or his family or his property against imminent apprehended attack and to do so by means which he believed were no more than reasonably necessary to meet the force used by the attackers (p 471).\nThe court so concluded, even though the question whether the defence of self defence would eventually be available if the accused happened to make use of the petrol bombs would depend upon the particular circumstances in which they were used.\nThus, as in Fegans case, the courts ruling was based on the idea of self defence as a general object of the accused, even though a defence of self defence might not in fact be made out if the accused ever came to be charged with offences arising from actual use of the petrol bombs.\nIn R v Riding [2009] EWCA Crim 892; 2009 WL 1096 171, the Criminal Division of the Court of Appeal of England and Wales (Hughes LJ, King J and Judge Radford) again considered section 4(1).\nThe appellant made a pipe bomb and kept it at his home.\nHe was convicted of the offence of making an explosive substance, contrary to section 4(1).\nHe appealed against his conviction on grounds which included that the trial judge was wrong to hold that it could not be a lawful object to make the pipe bomb that he did out of no more than curiosity to see whether he could do it.\nThe contention of the appellant was that for the purposes of section 4(1) a lawful object is the absence of any object which is criminal (para 8).\nThe Court of Appeal rejected that submission.\nIt rightly held that section 4(1) provides that if a person is found in possession of or has made an explosive substance in circumstances in which there is a reasonable suspicion that there is no lawful object, it is an offence unless there was in fact some affirmative object which was lawful (para 10); lawful object in limb (2) of section 4(1) does not mean the absence of criminal purpose, but rather requires the accused to identify a positive object which is lawful (para 12).\nThe court followed what Lord MacDermott CJ said about this in Fegans case: the onus resting on the accused is specific but positive.\nHe has to show possession for a lawful object (para 12, quoting from the passage set out above).\nDiscussion\nIn my view, the structure of section 4(1) is clear.\nIf, under limb (1), the\nprosecution proves circumstances as to give rise to reasonable suspicion that the making or possession\/control of an explosive substance which is in issue is not for a lawful object, that gives rise to a specific onus on the accused under limb (2) to identify the specific object or purpose for which he made the substance or had it in his possession\/control.\nThe burden of proof at the limb (2) stage is on the accused, and the standard of proof is the balance of probabilities.\nThe object or purpose so identified by the accused under limb (2) has to be lawful in the place in which it is to be carried into effect: see R v Berry [1985] AC 246.\nIn the present case, that was in England and lawful has the usual sense of that term in English law, namely that the object in question is not an object or purpose which is made unlawful by the common law or statute.\nAs it was put by Sir Robert Megarry V C in Malone v Metropolitan Police Comr [1979] Ch 344, 357: England is not a country where everything is forbidden except what is expressly permitted: it is a country where everything is permitted except what is expressly forbidden.\nThere is no other sensible criterion of lawfulness to be applied.\nNothing said in any of the authorities referred to above suggests otherwise.\nMoreover, the general requirement that the criminal law should be clear and give fair notice to an individual of the boundaries of what he may do without attracting criminal liability supports this interpretation: a person should not be penalised except under clear law, sometimes called the principle against doubtful penalisation: see Bennion on Statutory Interpretation, 7th ed (2019) (D Bailey and L Norbury, eds), section 27.1.\nAs explained in Fegans case and Attorney Generals Reference (No 2 of 1983), the fact that the making or possession of the substance may involve the commission of regulatory offences does not prevent an accused who seeks to make out a defence under limb (2) of section 4(1) from relying on an object at a more general level which is lawful.\nIf an accused does identify a specific object for which he made the substance or had it in his possession\/control, which is lawful in the requisite sense, issue will be joined on that at trial.\nThe prosecution may seek to show that this was not in fact his object, or that it was not his sole object and that his object, as correctly understood, included an unlawful element.\nFor example, as indicated in Fegans case, if the accused had not been put in fear of a reasonably imminent risk of serious physical harm such as might be capable of providing a justification for use of the pistol, there would not be a sufficient connection between his possession of the pistol and any use of it in his reasonable contemplation which could be lawful.\nIn my view, it would also be open to the prosecution to meet the defence under limb (2) by seeking to show that pursuit of the object specified by the accused, although the object might be lawful in a general sense, would involve such obvious risk to other people or their property from use of the explosive substance that the inference should be drawn that the object of the accused was mixed, and not wholly lawful in the sense indicated in Fegans case.\nIf the accused knew that his proposed use of the explosive substance in his possession would injure others or cause damage to their property or was reckless regarding the risk of this, the ostensibly lawful object identified by him would be tainted by the unlawfulness inherent in his pursuit of that object.\nTypically, these would be matters to be explored at trial.\nIn Ridings case at para 12 the Court of Appeal, having approved and adopted what had been said by Lord MacDermott CJ, continued by saying Mere curiosity simply could not be a lawful object in the making of a lethal pipe bomb and observed that the appellant did not have a lawful object for making the bomb.\nThe court therefore dismissed the appellants appeal against conviction in relation to the section 4(1) offence.\nThis conclusion was correct on the facts of the case.\nThe trial judge and the Court of Appeal explained that there was no need for the appellant to use an explosive substance to satisfy his curiosity whether he could successfully construct a pipe bomb: instead of filling it with gunpowder, he could have used an inert substance such as sand, which would equally have demonstrated whether or not he was capable of constructing it (para 3).\nHe had constructed the pipe bomb in the spring of 2006, a considerable time before it was found in his possession, and had not attempted to detonate it (para 3).\nIt was not part of his case that he had made the pipe bomb in order to see if he could make it explode.\nThe courts statement that [m]ere curiosity simply could not be a lawful object in the making of a lethal pipe bomb has to be read in this context.\nUnfortunately, however, that statement was taken as having wider significance by Judge Wall QC and the Court of Appeal in the judgments below in the present case.\nThe critical part of the reasoning of the Court of Appeal is at paras 42 and 43: 42.\nIn summary, we conclude that Riding was not decided per incuriam the various cases relied on by the applicant.\nThe outcome in Riding would have been the same, even if the court had been shown those cases.\nIn any event, we agree with Riding.\nWe accept that a person in possession of explosives must show, on balance of probabilities, that he or she has an affirmative or positive object for possessing those explosives.\nWe reject the proposition that an absence of unlawful purpose is the same thing as a lawful purpose.\nWe conclude that on a proper interpretation, section 4 requires that the defence is only made out when the person in possession of the explosives can show that the way in which those explosives will be used is itself lawful.\nThat means, the person must be able to show both, first, the use to which the explosives will be put and second, that such a use is lawful. 43.\nWe come then to the applicants case that he possessed these explosives out of curiosity, or because he wished to experiment with them.\nConsistent with Riding, we reject the proposition that curiosity or experimentation is a lawful object.\nThe fact that a person is curious or wishes to experiment may be an explanation for why that person has accumulated the explosives; but it says nothing about his continued possession of them and the use to which they will be put.\nIndeed, it would be perfectly possible, if unattractive, to argue that explosives were detonated, with potential loss to life and limb, out of mere curiosity or in order to experiment.\nThese are not objects in and of themselves; they are not uses to which explosives may be put; they are just explanations for past actions.\nWith respect, I consider that the court fell into error in its reasoning in the latter part of para 42 and in para 43.\nExperimentation and self education, including to satisfy ones curiosity in relation to the subject of investigation, are lawful objects.\nAs a matter of ordinary language, they are objects every bit as much as self defence is an object.\nThat is true as a general proposition.\nIt is particularly true in relation to section 4(1), enacted against the background of the 1875 Act, which in sections 4 and 5 recognised the lawfulness and legitimacy of individuals making or possessing quantities of explosives for the purposes of private experimentation and other private use.\nIn the first part of para 42, the Court of Appeal rehearsed the analysis correctly set out in Ridings case.\nBut in the latter part of para 42, the court set the bar to be cleared by an accused under limb (2) of section 4(1) rather too high, when it said that he must show that the way in which [the explosives in his possession] will be used is itself lawful.\nIn my judgment, the accused does not have to identify precisely how the explosives will be used in future and that this will be lawful.\nTo require that would be inconsistent with Fegans case and Attorney Generals Reference (No 2 of 1983), in which it was held that the accused only had to identify a relatively general object for which the explosive substances were to be used, which object was lawful (ie self defence), and that it was in the reasonable contemplation of the accused that the explosive substances might be required for that purpose and could lawfully be used for that purpose.\nAs noted above, the defendants in those cases could not demonstrate precisely how the substances might come to be used; nor could it be guaranteed that if and when they were used, such use would necessarily be lawful.\nIn my view, in para 43 the Court of Appeal erred by treating the statement in Ridings case that [m]ere curiosity simply could not be a lawful object in the making of a lethal pipe bomb as, in effect, a proposition of law rather than a statement regarding the position on the facts in that case; and in rejecting the idea that experimentation or self education can be objects for the purposes of section 4(1).\nIn my judgment, they clearly can be objects for the purposes of that provision, as a matter of the ordinary use of language.\nThe word object is synonymous with purpose, and similarly has a relatively general meaning.\nThe object or purpose for which something is done is distinct from the precise conditions under which it might be done.\nMoreover, Parliament must have contemplated that that is how an accused or their spouse, speaking naturally when giving evidence pursuant to section 4(2) of the 1883 Act, would be likely to express themselves when giving an explanation in the witness box of the kind which it considered they should have the opportunity to present by way of defence under limb (2) of section 4(1).\nIn line with the approach in Attorney Generals Reference (No 2 of 1983), the word object is to be given its natural meaning as a matter of ordinary language.\nIn Berrys case, Lord Roskill, in giving the only substantive speech in the appellate committee, emphasised that the term object as used in section 4(1) is an ordinary English word, and accordingly was to be given its ordinary meaning so that unlawful object is synonymous with an unlawful purpose or an unlawful intent ([1985] AC 246, 254).\nThere is nothing unlawful about experimentation and self education as objects, in themselves, so they are capable of being lawful objects within the meaning of section 4(1).\nFurther examples can be given to illustrate the intended meaning of lawful object in section 4(1): see para 40 below.\nIn the penultimate sentence of para 43 of its judgment the Court of Appeal called attention to a case of mixed objects.\nIn my view, contrary to that of the Court of Appeal, the example given does not show that experimentation cannot be an object for the purposes of section 4(1).\nRather it provides an illustration that, as contemplated in Fegans case, in a case of mixed objects where one of the objects is unlawful or in a case where unlawfulness taints the potentially lawful object on which the accused seeks to rely in his defence, the defence under limb (2) will fail.\nWhether that is so in a particular case will usually be a matter to be determined on the evidence at trial.\nMr Mably sought to supplement the reasoning of the Court of Appeal.\nHe submitted that Judge Wall QC was right at the preparatory hearing to disallow presentation by the appellant at trial of his proposed defence under limb (2) of section 4(1) by reference to the objects of experimentation and self education, because in his defence statement he had not given a detailed account of how he proposed to use the HMTD such as would demonstrate that his detonation of it in his back garden would not cause harm to other people or damage to their property.\nI do not accept that submission.\nSection 4(1) has general application.\nIt can apply in the case of a teacher in the chemistry department of a school or university, or a person in a commercial research laboratory, who makes explosive substances or has them in his possession.\nIf a charge were brought against such a person under section 4(1) and the prosecution was able to surmount the relatively low hurdle in limb (1) of the provision, the accused would be entitled to defend himself under limb (2) by proving that his object in making or keeping the substances was experimentation, education or research.\nIt is apt to describe each of those as an object, as a matter of ordinary use of language.\nIt might be the case that the accused had no developed and precise plan in mind as to how he proposed using the substance for those purposes, but that would not disable him from presenting a defence under limb (2).\nThe absence of a precise plan as to how the substance was to be used in the course of pursuing those purposes might be a relevant matter to be taken into account at trial.\nBut it would be for the jury to assess, on the evidence at trial, whether the defence was made out despite the absence of precise details as to proposed use.\nThat view is supported by the approach taken to the lawful object of self defence in Fegans case and Attorney Generals Reference (No 2 of 1983), as explained above.\nFor his defence under limb (2), the appellant only had to establish that he proposed using the HMTD in his possession for the lawful objects of experimentation and self education.\nThe term lawful object in limb (2) does not require specification of the precise way in which the substance in question will be used by the accused.\nThe appellants proposed defence was that he intended to use the HMTD in small amounts to produce insignificant detonations of the order to be expected from a simple domestic firework, ie at a level which was lawful.\nIt was possible that he could have achieved this, or that he genuinely believed that he could, as he had done using other explosive substances on previous occasions.\nTherefore his defence under limb (2) should have been allowed to be presented at trial, rather than being ruled out at the preliminary hearing.\nIn parts of his submissions, Mr Mably appeared to be taking what amounted\nto a pleading point.\nHe said that the appellants defence statement did not give sufficient details of how he proposed using the HMTD in his experiments.\nAs I understood the submission, this point was made by Mr Mably in support of his general argument regarding the meaning of lawful object in section 4(1), which I have addressed above.\nHowever, to the extent that he was seeking to make a different point, as a distinct complaint about a want of particularity in the defence statement, that is not within the scope of the issues which arise on this appeal.\nIn any event, in my view the defence statement gave fair notice to the prosecution of the defence which the appellant proposed to present at trial, in accordance with the requirements of section 6A of the Criminal Procedure and Investigations Act 1996.\nConclusion\nFor the reasons given above, I would allow the appeal.\nI would answer the question certified by the Court of Appeal in the affirmative.\nLORD LLOYD JONES AND LORD HAMBLEN: (dissenting)\nWe regret that we are unable to agree with the decision of the majority.\nCounts 1 and 2 of the indictment charge the appellant with the offence of making or possession of an explosive under suspicious circumstances contrary to section 4(1) of the Explosive Substances Act 1883.\nDuring the course of argument before this court, a defect in the drafting of the particulars of offence having been identified, the parties agreed that we should approach this appeal on the basis that the particulars of the offence on each count allege that the appellant knowingly had in his possession or under his control an explosive substance in such circumstances as to give rise to a reasonable suspicion that it was not in his possession for a lawful object.\nMr Mably QC for the respondent told us that an application will be made to the Crown Court to amend the particulars of offence in each count accordingly.\nMr Bogan QC for the appellant was also content that we should proceed on the basis of the defence statement as presently drafted because it would still reflect the substance of the defence.\nWe will do so and we will limit our discussion to the offence committed in cases of possession.\nThe scheme of the offence created by section 4(1) is that the prosecution is required to prove that the defendant was in possession of an explosive in circumstances giving rise to a reasonable suspicion that the defendant did not have the explosive in his possession for a lawful object.\nIf that is established, it is for the defendant to prove that he had it in his possession for an object which was lawful.\nIn the present case the Court of Appeal noted (at para 37) that a reasonable suspicion is enough for the offence to be made out and continued: This accords with common sense, because possessing or controlling explosives is dangerous (see Riding at para 10) and so it is understandable that the criminal law should be engaged in cases of reasonable suspicion, it not necessarily being possible for the prosecution to establish the precise object.\nThe obvious purpose of the statute is to protect human life and property from harm by explosions.\nIn the present case, each count alleges the possession by the appellant of HMTD, a sensitive primary high explosive that can easily be detonated from a spark, friction or impact and which has no commercial applications.\nThe respondent contends that the circumstances give rise to a reasonable suspicion that he did not possess it for a lawful object.\nThe appellant contends that he can rely on the statutory defence under section 4(1) as he can show that he had it in his possession for a lawful object.\nIn particular, he maintains that, he was in possession as a result of an obsessional interest in the armed forces and a need to understand how explosives work and that his object or objects encompassed interest, education and experimentation.\nThis is summarised in the certified question which asks: For the purposes of section 4(1) of the Explosive Substances Act 1883 can personal experimentation or own private education, absent some ulterior unlawful purpose, be regarded as a lawful object?\nWhether the appellants possession of HMTD may have been, quite independently of section 4(1), unlawful, for example under the Explosives Regulations 2014, is irrelevant for present purposes.\nA person in possession of an explosive in suspicious circumstances does not commit an offence contrary to section 4(1) if he can show on the balance of probabilities that he was in possession for a lawful object.\nThe defence may be available even if the possession is otherwise unlawful.\nIn R v Fegan (1971) 78 Cr App R 189, Court of Appeal of Northern Ireland, Lord MacDermott CJ accepted as correct a concession that a firearm held without certificate, permit or other authority might be possessed for a lawful object for the purposes of section 4(1).\nThe Lord Chief Justice observed (at p 194): A firearm in lawful possession may undoubtedly be possessed for an unlawful object and there seems no good reason why the converse should not be equally true.\nThe defence turns on the defendants object in having the explosive in his possession.\nIt would be insufficient, in order to make out a defence under section 4(1),\nfor a defendant to establish that he was not in possession of an explosive for a purpose which was unlawful.\nHe must show that he was in possession for a lawful purpose.\nThat is the natural meaning of the words in the statute and it was the interpretation adopted by the Court of Appeal of Northern Ireland in Fegan where Lord MacDermott observed, at p 194: as a matter of construction, a defence under the second limb of section 4(1) cannot be made by the possessor proving that he had no unlawful object.\nThe onus resting on him is specific but positive.\nHe has to show possession for a lawful object.\nSimilarly, in R v Riding [2009] EWCA Crim 892 the Court of Appeal Criminal Division held that lawful object does not mean the absence of a criminal purpose.\nIt is necessary to identify a positive object which is lawful.\nHughes LJ referred in this regard to Attorney Generals Reference (No 2 of 1983) [1984] QB 456, where the defendant had made petrol bombs.\nThe Court of Appeal in that case had been prepared to accept that self defence against rioters was capable of amounting to a lawful object, at least if the defendant could demonstrate that that was his sole object and that the means adopted were no more than he believed to be reasonably necessary.\nHowever, as Hughes LJ observed in Riding (at para 12), It is plain that the court took the view that the defendant could only be within the defence if the necessary immediacy of danger and reasonableness of the response was present.\nThere was no question of the possession of the petrol bombs being lawful unless some criminal purpose for them existed.\nIn the present case it has been made clear on behalf of the appellant, both in the defence statement and in the appellants written case, that it was never his case that the mere absence of an unlawful object could suffice to establish the statutory defence.\nIndeed, Mr Bogan on behalf of the appellant has accepted that a generic and unspecified plea or a passive plea of having no unlawful object could not succeed as it would rob the tribunal of the ability to make findings as to what was the true object and whether it was lawful or unlawful.\nAgainst this background, the central issue in this appeal is whether the explanation provided in the defence statement ie that the appellant had explosives in his possession for the purpose of personal experimentation or private education, is capable of being a sufficient lawful object within section 4(1).\nThe trial judge and the Court of Appeal held that it was not.\nWe agree with them.\nThe statutory defence requires proof, on the balance of probabilities, of both (1) the object of the possession of the explosive substance and (2) that that object is lawful.\nThe natural meaning of the word object is a reason for doing something, or the result you wish to achieve by doing it (Cambridge English Dictionary).\nIt involves identification of what you wish to do and why.\nWe agree with the Court of Appeal (at para 42) that in the present context that means showing the use to which the explosives will be put.\nIt also necessarily involves identifying that use with sufficient particularity to show that the use may be lawful.\nIn our view, to say that something is done for ones own private education is not a sufficient object for the purposes of the section 4(1) defence, as it does not identify the use to which the explosives will be put in order to provide such education.\nSimilarly, personal experimentation is not a sufficient object for this purpose as, although it identifies in very general terms what is to be done with the explosives, it does not identify any purpose for so doing.\nThis accords with the decision of the Court of Appeal in Riding.\nThere, the defendant had made a pipe bomb which he kept in his home.\nHe was convicted of making an explosive substance contrary to section 4(1).\nHe appealed on the ground that the trial judge had been wrong to hold that it could not be a lawful object that, as he claimed, he made the pipe bomb out of no more than curiosity to see whether he could do it.\nDismissing the appeal, Hughes LJ observed (at para 12): Mere curiosity simply could not be a lawful object in the making of a lethal pipe bomb.\nIt would indeed be very remarkable indeed if it could. [Counsel for the appellant] was frank enough to accept that if the statute had used the words good reason instead of lawful object the defendant could not have established that he had good reason for making the bomb.\nWe are entirely satisfied that he did not have a lawful object for it either.\nFurthermore, as the Court of Appeal pointed out in the present case (at para 42), the defence is only made out when the person in possession of the explosives can show that the way in which those explosives was intended to be used is itself lawful.\nIt is not enough to show that it may be lawful.\nEven if it were accepted that personal experimentation for the purpose of ones own private education may be an object, this does not describe with any particularity how the experimentation is to be carried out in a manner which is lawful.\nAt the defence statement stage, it is necessary to identify a use which could be found to be lawful.\nThis requires, at the very least, some details to be provided of the nature of the proposed experimentation or use.\nIn this case, for example, it was apparently envisaged that experimentation would take the form of detonations of the explosives in the appellants back garden. (It is the prosecution case that over the months prior to his arrest the appellant had made explosive substances with other chemicals on approximately six or seven occasions, had detonated or had attempted to detonate those explosive substances in his back garden by means either of homemade initiators made from fairy lights filled with firework powder or by means of a mobile telephone, and had made video recordings of these detonations or attempted detonations on his mobile telephone.) Such detonations involve an obvious risk of causing injury and damage to property and causing a public nuisance.\nFor such experimentation to be capable of being lawful it would be necessary to particularise how it was to be carried out so as to avoid any such risk or how it would otherwise be lawful.\nDefence statements are meant to set out particulars of the matters of fact intended to be relied upon for the purposes of a defence (section 6A of the Criminal Procedure and Investigations Act 1996).\nWe consider that the vague and generalised statements referring to personal experimentation and private education, whether considered individually or taken together, fail to provide sufficient particularity of how these claimed objects were to be carried out lawfully.\nThe self defence cases, Fegan and Attorney Generals Reference (No 2 of 1983), referred to above are distinguishable.\nIn those cases what was accepted as capable of constituting a lawful object was use for purposes of self defence in circumstances where the necessary immediacy of danger and reasonableness of the response were present (see Riding per Hughes LJ at para 12, cited above).\nIn Fegan and in Attorney Generals Reference (No 2 of 1983) the claimed object was intended use to meet a future contingency which use could be sufficiently defined by reference to the limits of lawful self defence.\nThat necessarily involved the assertion that the explosive substances would only be used in circumstances where the defendant believed that it was necessary to use force and that the amount of force used was reasonable.\nIn the present case, by contrast, no lawful use of the explosives within the statutory provision is identified.\nReliance on personal experimentation and own private education gives no sufficient indication of the use to which it was intended the explosives should be put, nor does it permit any assessment of its lawfulness.\nFor these reasons we consider that the judge was correct in his conclusion that the explanation set out in the defence statement was not capable of amounting to a lawful object within section 4(1).\nWe would answer the certified point of law as follows: For the purposes of section 4(1) of the Explosive Substances Act 1883, personal experimentation or own private education, absent some ulterior unlawful purpose, cannot be regarded as a lawful object.\nWe would accordingly dismiss the appeal.\n","output":"The appellant is 22 years old and, prior to these proceedings, had no convictions.\nHe was diagnosed with Autism Spectrum Disorder as a child and, in 2018, he was living with his mother.\nHe began purchasing quantities of chemicals online.\nAccording to his account, this was because he had an obsessive interest in military matters, including bomb disposal.\nHe claimed that he had acquired the chemicals because he wished to understand how explosives worked and to experiment with them.\nA search warrant was executed at the appellants home on 24 April 2018, where it was found that he had managed to make a small quantity (about 10 grams or less) of a sensitive primary explosive, Hexamethylene Triperoxide Diamine (HMTD).\nHe also possessed manuals for making explosives, notes on making HMTD and a video on his mobile phone demonstrating the making of HMTD.\nWhen interviewed by the police, the appellant admitted his actions in acquiring chemicals and making explosives, and gave the explanation above.\nHe was subsequently charged with certain offences, including two counts under section 4(1) of the Explosive Substances Act 1883 (1883 Act).\nAs clarified in the course of the appeal, these counts are that the appellant knowingly had HMTD in his possession or under his control, in such circumstances as to give rise to a reasonable suspicion that he did not possess or control it for a lawful object.\nThere is a defence if the accused can show that in fact he had the explosive substance in his possession or control for a lawful object which he identifies.\nIn his defence statement, the appellant maintained that he had made the HMTD for a lawful object, namely interest, education and experimentation.\nThe appellant said that he had made other explosives and used them to create small explosions in the garden of his house without causing harm, and he intended to do the same with the HMTD.\nAt a preparatory hearing in the Crown Court at Birmingham, HH Judge Wall QC held that he was bound by Court of Appeal authority, R v Riding [2009] EWCA Crim 892, to find that experimentation and self education did not amount to a lawful object for the purpose of section 4(1).\nAccordingly, the judge ruled in advance of trial that the appellants proposed defence was bad in law.\nThe appellant appealed unsuccessfully to the Court of Appeal, who considered themselves similarly bound.\nThe court certified the following point of law of general public importance: for the purposes of section 4(1) of the 1883 Act, can personal experimentation or own private education, absent some ulterior unlawful purpose, be regarded as a lawful object?\nBy a majority, the Supreme Court allows the appeal.\nLord Sales gives the majority judgment, with which Lord Reed and Lord Carnwath agree.\nLord Lloyd Jones and Lord Hamblen deliver a joint dissenting judgment.\nThe majority examines the 1883 Act in light of other amendments to the criminal law around the same time, namely the Offences Against the Person Act 1861 (1861 Act) and the regulatory Explosive Substances Act 1875 (the 1875 Act) [14 15].\nThe 1883 Act was passed by Parliament with great speed due to fears around Irish nationalism and a perception that the 1861 Act, in particular, did not provide sufficiently for protection of the public [16].\nThe current regulatory regime is now primarily contained in the Explosives Regulations 2014, which like the 1875 Act before them, make clear that it is expected that private individuals, including hobbyists, may manufacture and keep explosives for their own private use [18].\nIn R v Fegan (1984) 78 Cr App R 189, the Court of Criminal Appeal in Northern Ireland explained that section 4(1) had been passed to address perceived deficiencies in other offences.\nThese required proof of a specific mental element, and so were inadequate to guard against the risk of making or possessing explosives.\nThe appellant, Fegan, acquired a firearm and ammunition (which qualified as explosive substances for the purpose of the 1883 Act) to protect himself and his family from threats against their safety and was convicted of an offence under section 4(1) of the 1883 Act.\nHis appeal was successful, on the basis that although he had no licence for the possession of the firearm and ammunition, nonetheless he possessed them for a lawful purpose, i.e. to defend himself and his family [19 22].\nFegan was followed on similar facts in Attorney Generals Riding, the Criminal Division of the Court of Appeal of England and Wales held that in the particular circumstances of that case, curiosity did not qualify as a lawful object for the possession of a home made pipe bomb [26].\nUnder section 4(1), it is for a defendant to prove on the balance of probabilities that he had possession or control of an explosive substance for a lawful object.\nIn English law, a purpose is lawful unless it is made unlawful by statute or the common law.\nA lawful object may, however, be tainted by an ulterior, unlawful purpose, including by knowledge or recklessness of a risk of injury or damage; but these would be matters to be explored on the evidence at trial [27 29].\nThe decision in Riding was correct on its facts, because the defence of the accused in that case was that he acted out of curiosity to see if he could construct a pipe bomb but he did not need to use real explosives for that; and it was no part of his defence that he had wanted to experiment by making it explode.\nThe decision does not provide an answer in the different circumstances of the present case and was misinterpreted in the courts below.\nExperimentation and self education are objects within the ordinary meaning of that term and are capable of being lawful objects for the purposes of section 4(1).\nThis view is reinforced by the background against which section 4(1) was enacted, including the 1875 Act, under which possession of explosive substances for private experimentation and use was regarded as lawful and legitimate [30 33], [35].\nThe Court of Appeal was wrong to conclude that the appellant was obliged to specify more precisely than he had done how the explosives would be used and that this would be lawful.\nThe Court of Appeals reasoning was inconsistent with the Fegan and Attorney Generals was lawful [34].\nAs there is nothing unlawful about experimentation and self education as objects in themselves, they are capable of being lawful objects [37].\nThere is no requirement in law that a defence statement in relation to a charge under section 4(1) has to give a more detailed account of the proposed use of the explosive substance than that provided by the appellant [39].\nThe appellant ought to have been permitted to present his defence at trial [41], [43].\nLord Lloyd Jones and Lord Hamblen dissent from the majoritys reasoning and would dismiss the appeal.\nThey take the view, in common with the courts below, that personal experimentation and private education cannot in law amount to lawful objects within the meaning of section 4(1) [51].\nThe word object refers to the reason for doing something, or the result you wish to achieve by doing it.\nAs such, the Court of Appeal was correct to hold that, to make out the defence, a defendant is required to show the use to which the explosive substance is to be put, and to do so with sufficient particularity to demonstrate that that use is lawful [52]. education and personal experimentation is not enough, as the Court of Appeal previously held in Riding [54].\nThe defence is only made out if it is shown that the way in which the explosives were intended to be used is lawful.\nIt is not enough to show that it may be lawful.\nA defence statement in response to a charge under section 4(1) should elaborate upon this and provide some details of the intended use.\nIn the present case the\nappellant envisaged that experimentation would take the form of detonations of the explosives in his back garden, carrying an obvious risk of causing injury, damage to property, and a public nuisance.\nIt was necessary to particularise how this would be carried out so as to avoid any such risk or would otherwise be lawful.\nVague and general statements referring to personal experimentation or private education were insufficient and did not show how that was to be carried out lawfully [55].\nFinally, Fegan and Attorney Generals was plausibly raised in each.\nIn contrast, in the present case no lawful use is identified, and the claimed objects neither give sufficient indication of the use to which the explosives are to be put, nor do they permit assessment of the lawfulness of any such use [56].\n","id":34}
{"input":"The issue in this case is whether the Secretary of State for Work and Pensions can continue to recoup Social Fund loans and benefit overpayments by deduction from current benefit payments during the moratorium period after the making of a Debt Relief Order (DRO) under Part 7A of the Insolvency Act 1986.\nThe present state of the law is untidy, to say the least.\nCranston J in the High Court and a majority of the Court of Appeal (Smith and Toulson LJJ) have held in this case that the Secretary of State cannot continue to make these deductions: [2010] EWHC 2162 (Admin), [2010] BPIR 1389 and [2010] EWCA Civ 1431, [2011] 1 WLR 1723.\nBut Keene J in the High Court has held that such deductions can continue to be made between the making of a bankruptcy order and the bankrupts discharge from bankruptcy: R v Secretary of State for Social Security, Ex p Taylor and Chapman [1997] BPIR 505.\nThe House of Lords has reached the same conclusion in the context of the rather different Scottish bankruptcy law: Mulvey v Secretary of State for Social Security 1997 SC (HL) 105.\nOnce a bankrupt is discharged, however, the Court of Appeal has held that the liability to repay the Secretary of State is also discharged: R (Balding) v Secretary of State for Work and Pensions [2007] EWCA Civ 1327, [2008] 1 WLR 564.\nThe Secretary of State would like to introduce coherence into the scheme in two ways: firstly by assimilating the position during the moratorium after a DRO with the position after a bankruptcy order; and secondly by reversing Balding, so that the debt can continue to be recouped after a bankrupts discharge.\nIdeally, the same would apply at the end of the DRO moratorium period.\nThe claimants, on the other hand, would ideally introduce coherence by holding that the Secretary of States deduction power does not survive the making either of a DRO or of a bankruptcy order.\nBalding was correctly decided and the same principle applies at the end of the moratorium period.\nThe facts\nThe facts of the two test cases before us are typical of many.\nMrs Payne was made a Social Fund loan of 843 in September 2007 in order to replace her washing machine and cooker.\nThe Secretary of State did not start to recover this by deduction from her benefits at that stage.\nBut in August 2009, she obtained a DRO listing the loan among her qualifying debts.\nWhen she informed the Secretary of State of this, he began deducting 23.59 per week from her income support, although this was reduced in December to 11.64 per week.\nThese proceedings for judicial review of the legality of the deductions were begun in March 2010.\nIn August 2010, the one year moratorium period came to an end and the debt was discharged.\nMs Cooper is in receipt of incapacity benefit and disability living allowance.\nIn August 2009, the Secretary of State determined that she had been overpaid incapacity benefit in the sum of 1,195.07 and in December 2009 he began recovering this from her by deducting 128.44 from her benefits every four weeks.\nIn January 2010, Ms Cooper obtained a DRO which listed the overpayment as one of her qualifying debts.\nIn March 2010, she too began proceedings to challenge the continued deductions from her benefits.\nIn January 2011, the one year moratorium ended and the debt was discharged.\nThe power to deduct\nThe Secretary of State is entitled to recover benefits which have been overpaid because of misrepresentation or non disclosure: Social Security Administration Act 1992 (SSAA), section 71(1).\nBefore he can do so, the erroneous award of benefit must have been reversed or varied on appeal, or revised or superseded by a fresh award under section 9 or 10 of the Social Security Act 1998: SSAA, section 71(5A).\nAmounts recoverable under section 71(1) may, without prejudice to any other method of recovery, be recovered by deduction from prescribed benefits: SSAA, section 71(8).\nAll kinds of benefits, whether contributory or non contributory, income related or payable irrespective of means, are prescribed: see Social Security (Payments on account, Overpayments and Recovery) Regulations 1988, SI 1988\/664, reg 15.\nHowever, not only is this without prejudice to any other method of recovery, but it is also expressly provided that overpayments can be recovered by execution issued from the county court as if they were payable under an order of that court (and equivalent provision is made for Scotland): SSAA, section 71(10).\nSection 71 is also applied with modifications to overpayments from the Social Fund: SSAA, section 71ZA.\nIn the same way, if a Social Fund award is recoverable that is, a loan then Without prejudice to any other method of recovery, the Secretary of State may recover an award by deduction from prescribed benefits: SSAA, section 78(2).\nEquivalent provision is made for the recovery of any amount of housing benefit paid in excess of entitlement: SSAA, section 75(4).\nHer Majestys Revenue and Customs (HMRC) also have equivalent powers to recover overpayments of working tax credit and child tax credit by deduction from payments of any tax credit: Tax Credits Act 2002, section 29(4).\nWe are told that considerable sums of money owed to HMRC, the Secretary of State and other public bodies are listed in DROs.\nThe figures quoted to us were respectively nearly 9m to HMRC, nearly 8m to the Secretary of State, of which over 6m was in respect of Social Fund loans, and 20.7m to other public bodies.\nWhether these include other debts as well as loans, overpaid benefits and tax credits was not clear.\nNor were we told how much has currently to be written off at the end of the moratorium period.\nDebt Relief Orders\nTo put it shortly, debt relief orders (DROs) are a new and simplified way of wiping the slate clean for debtors who are too poor to go bankrupt.\nAs Toulson LJ explained in the Court of Appeal, they were the product of two consultation papers: the first was issued by the Department for Constitutional Affairs in 2004, entitled A Choice of Paths Better options to manage over indebtedness and multiple debt.\nThis proposed a new scheme for people with no income, no assets who were unable to pay their debts.\nThe second was issued by the Insolvency Service in 2005, entitled Relief for the Indebted An Alternative to Bankruptcy, and suggested criteria for such a scheme and how it was intended to operate.\nThe new scheme was introduced into the Insolvency Act by the Tribunals, Courts and Enforcement Act 2007 and came into force in February 2009.\nApplication is made, not to a court, but to the official receiver through a qualified intermediary (such as a specialist debt adviser): Insolvency Act (IA) 1986, section 251B.\nThe debtor must fulfil certain prescribed conditions: IA 1986, section 251C(5), Schedule 4ZA, Insolvency Rules (SI 1986\/1925), Part 5A, and Insolvency Proceedings (Monetary Limits) Order 1986 (SI 1986\/1996), as amended.\nFor example, her monthly surplus income must not exceed the prescribed amount, currently 50; the total value of her property (leaving out such things as clothes, furniture and household equipment, tools of the trade and a modest domestic motor vehicle) must not exceed the prescribed amount, currently 300; and her overall indebtedness must not exceed the prescribed amount (currently 15,000).\nTo avoid people repeatedly running up debts and having them wiped out by an order, it is not possible to get another DRO within six years.\nThe DRO is made in respect of qualifying debts.\nA debt qualifies if it is for a liquidated sum payable either immediately or at some certain future time and is not excluded: IA 1986, section 251A(2).\nIt does not qualify to the extent that it is secured: IA 1986, section 251A(3).\nExcluded debts are those which are prescribed in the Insolvency Rules 1986, rule 5A.2.\nThese include student loans but do not include Social Fund loans or overpaid benefits.\nIt is not suggested that the liability to repay these is not a debt for the purpose of section 251A.\nThe application has to list the debts to which the debtor is subject at the date of the application: section 251B(2)(a).\nThe official receiver can ask for further information from the debtor but does not at this stage give notice to the creditors.\nWhen the order is made, it must list the debts which the official receiver is satisfied were qualifying debts at the application date: section 251E(3).\nWhen the order is made, a moratorium commences on the effective date for a debt relief order in relation to each qualifying debt specified in the order: IA section 251G(1).\nWhat does the moratorium mean? This is governed by section 251G(2): During the moratorium, the creditor to whom a specified qualifying debt is owed (a) has no remedy in respect of the debt, and (b) may not (i) commence a creditors petition in respect of the debt, or (ii) otherwise commence any action or other legal proceedings against the debtor for the debt, except with the permission of the court and on such terms as the court may impose.\nDuring the moratorium period, the creditors may object to the making of the order, or the inclusion of a debt in the order, or the details of the debt specified in the order: IA 1986, section 251K.\nThe official receiver has power to revoke or amend the order: IA 1986, section 251L.\nIf the order continues throughout the moratorium period of one year (which may be extended in certain circumstances), the debtor is discharged from all the qualifying debts specified in the order: IA 1986, section 251I(1).\nThis does not apply to debts incurred as a result of fraud or if a court later revokes the DRO: IA 1986, section 251I(3), (5).\nOtherwise the slate is wiped clean.\nOn the face of it, then, as Social Fund loans and benefit overpayments have not been excluded from the qualifying debts, the creditor has no remedy in respect of them during the moratorium period and they are discharged after it has run its course.\nThe issue, therefore, is whether recovery by deduction from benefits (or tax credits) is a remedy in respect of the debt for this purpose.\nTo understand the argument that it is not, it is necessary to turn to the authorities under the bankruptcy regime.\nThe authorities\nThey begin with Bradley Hole v Cusen [1953] 1 QB 300.\nThe creditor was a tenant of rent controlled premises who had been charged too much rent by his landlord.\nSection 14(1) of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 provided that the overpaid rent was recoverable by the tenant and may, without prejudice to any other method of recovery, be deducted by the tenant . from any rent . payable by him to the landlord .\nThe landlord went bankrupt and the trustee in bankruptcy claimed to be entitled to the full amount of the recoverable rent since the bankruptcy from the tenant.\nThe trustee argued that the claim in respect of overpaid rent had been converted into a right to prove the debt in the bankruptcy any other method of recovery was barred by the predecessor to what is now section 285(3) of the Insolvency Act 1986: After the making of a bankruptcy order no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall (a) have any remedy against the property or person of the bankrupt in respect of that debt, or (b) before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the court and on such terms as the court may impose.\nThe Court of Appeal rejected that argument.\nThe property passed to the trustee in the same plight and condition in which it was in the bankrupts hands and that included the right of the tenant to live there rent free until the overpaid rent had been recouped.\nThe tenants rights included the right to be considered as having paid rent in advance up to the amount of the excess.\nThe argument was repeated in R v Secretary of State for Social Security, Ex p Taylor and Chapman [1997] BPIR 505.\nLike the respondents in this case, the applicants were respectively the recipient of a Social Fund loan and a claimant who had been overpaid benefit.\nBoth were declared bankrupt.\nAfter that, the Secretary of State began to recover the loan and overpayment by deduction from their current benefits.\nThey argued that he was unable to do so because of section 285(3) of the Insolvency Act: the right of deduction was a remedy against the property or person of the bankrupt in respect of that debt.\nKeene J took the view that Bradley Hole applied.\nThe tenant was not exercising a remedy against the property of the landlord but simply refraining from making a payment to which the pre existing debt would be a defence if he were sued.\nEven if that were not so, the Secretary of State was not seeking to go against the property of the bankrupt.\nTheir entitlement was only to the net amount of benefit after deduction of the loan or overpayment and not to the full amount.\nTaylor and Chapman was decided after the decision of the Inner House in the Scottish case of Mulvey v Secretary of State for Social Security 1996 SC 8 and before the decision of the House of Lords in that case 1997 SC(HL) 105.\nKeene J saw considerable force in the approach of Lord Clyde, to the effect that the right to recover by deduction was but one element in the calculation of the benefit to which the claimant was entitled.\nThis approach has been characterised by the Secretary of State in this case as the net entitlement principle.\nMulvey was a case about loans from the Social Fund which were being repaid by deduction from the claimants income support when her estate was sequestrated under the Scottish bankruptcy laws.\nThe claimant argued that continuing to make the deductions amounted to an attempt to set off a pre sequestration debt against a post sequestration obligation, which was impermissible at common law.\nSo their Lordships were not concerned with the interpretation of a statutory provision such as section 285(3) of the IA 1986.\nThere appears to be no exact equivalent in the Bankruptcy (Scotland) Act 1985 and certainly none was discussed in either the Inner House or the House of Lords.\nSection 37 of the 1985 Act limits the rights of creditors shortly before and after the sequestration, but not in the same sort of terms as sections 251G and 285(3) of the IA 1986.\nSection 32(5) prohibits diligence against the debtor against the after sequestration income, which is preserved for her under section 32(1), in respect of debts from which she will be released when discharged from the bankruptcy.\nIn the House of Lords, Lord Jauncey remarked that By no stretch of the imagination could the respondents exercise of his statutory right be described as diligence for the purpose of the law of Scotland (1997 SC (HL) 105, at 109F).\nNor would it be right to apply the common law rule: The deductions made by the respondent were not, as in the normal case of compensation in bankruptcy, a result of the bankruptcy, but were made in pursuance of a statutory scheme which was already in operation at the time of sequestration and with which the permanent trustee can have no concern.\nPrior to sequestration, the appellant had no right to receive by way of income support benefit more than her gross entitlement under deduction of such sum as had been notified to her by the respondent prior to payment of the award by the respondent.\nThis was the result of the statutory scheme and she could not have demanded more.\nMr Sheldon QC, for the Secretary of State, understandably places some weight on the net entitlement principle there enunciated by Lord Jauncey.\nFor completeness, although it is concerned with what happens at the end of the process, we should consider R (Balding) v Secretary of State for Work and Pensions [2007] EWHC 759 (Admin), [2007] 1 WLR 1805, [2008] EWCA Civ 1327, [2008] 1 WLR 564, decided in the Divisional Court after the House of Lords decision in Mulvey.\nSection 281 of the IA 1986 provides that (with qualifications which have no bearing on the case) . where a bankrupt is discharged, the discharge releases him from all the bankruptcy debts, .\nThe question, therefore, was whether the claimants liability to repay overpaid benefit was a bankruptcy debt.\nSection 382(1)(a) defines this, inter alia, as any debt or liability to which he is subject at the commencement of the bankruptcy.\nSection 382(3) gives a very wide meaning to debt or liability, it being immaterial whether it is present or future, certain or contingent, liquidated or unliquidated, or capable of being ascertained by fixed rules or as a matter of opinion (compare the definition of a qualifying debt for the purpose of the DRO scheme, at para 9 above).\nSection 382(4), except in so far as the context otherwise requires, defines liability to mean a liability to pay money or moneys worth, including any liability under an enactment .\nNot surprisingly, both the Divisional Court and the Court of Appeal held that the liability to repay was a bankruptcy debt.\nIn doing so, Davis J had this to say of the net entitlement argument (para 46): [Counsels] approach in any event seems to assume that the individual is only ever entitled to the net benefit after deduction.\nBut in my view that is not right.\nThat will no doubt be so if the Secretary of State has actually elected as he did in this case to recoup the overpaid benefit by deduction at source from subsequent prescribed benefits.\nBut the Secretary of State may in other cases decide to effect recovery by other means.\nAs I see it, the liability to repay cannot be said to be not a bankruptcy debt (as defined) if one form of recovery . is adopted but can be a bankruptcy debt if another form of recovery is adopted.\nThe liability arising under section 71 of the 1992 Act, upon determination made prior to bankruptcy, either is or is not on a subsequent bankruptcy a bankruptcy debt, as defined.\nIn my view, it is.\nThe Court of Appeal agreed for the same reasons.\nIt followed that the debt was wiped out when the bankrupt was discharged.\nThe argument\nFor the Secretary of State, Mr Sheldon does not argue that the liability to repay under SSAA section 71(1) and its equivalents is not a qualifying debt (that point would in any event have been better taken by challenging its inclusion in the list before the official receiver and then the court).\nHe argues that the right of recovery under SSAA section 71(8) is not a remedy in respect of the debt for the purpose of the moratorium in section 251G(2).\nHe argues for a coherent and harmonious approach to the construction of the bankruptcy and DRO schemes, which are to be found within the same legislation.\nHe points to a long list of similarities between the two regimes.\nThe statutory power of deduction is not a remedy but an adjustment to the level of benefit which the claimant is entitled to receive.\nShe is only ever entitled to the net sum.\nThe overpayment is to be regarded as payment in advance of future benefit.\nBradley Hole and Taylor and Chapman were rightly decided and Mulvey reaches the same result.\nHe also argues that Balding was wrongly decided.\nWhere the Secretary of State elects to recover by deduction, it is not a debt or liability to pay but an adjustment to the amount of benefit to which she is entitled because of the net entitlement principle.\nLord Jauncey left the point open in Mulvey at p 109E.\nThe broad definition of a liability in section 382(4) can be qualified because the policy imperatives mean that the context otherwise requires.\nMr Drabble QC, for the respondent claimants, challenges the so called net entitlement principle as a heresy.\nOnly if the overpayment is being recouped from current payment of the same benefit is it even possible to regard it as an advance payment of the current benefit.\nBut loans and overpayments can be recouped from a wide range of wholly unrelated benefits, which may have come into payment long after the liability was incurred, of which the loan or overpayment cannot possibly be regarded as a payment in advance.\nThe natural meaning of remedy clearly encompasses the power to deduct.\nIf need be, bankruptcy can be distinguished.\nFirstly the wording of section 285(3) is different it refers to any remedy against the property or person of the bankrupt in respect of that debt.\nSecondly, the purpose of the moratorium in the DRO scheme is different from the purpose of the period between order and discharge in bankruptcy.\nIn bankruptcy, the purpose is for the trustee to gather in all the assets of the bankrupt and distribute the proceeds equitably among the creditors.\nIn the DRO, there is no trustee, there are no assets to be distributed, and there is no potential dividend for the creditors.\nThe moratorium is simply there because the creditors have not had an opportunity to dispute the amount or the inclusion of their debt before the order is made and also because there may be other inquiries and challenges to the order.\nIt was these distinctions which persuaded the majority of the Court of Appeal to uphold the decision of Cranston J to distinguish the two.\nFinally, Balding is clearly rightly decided.\nThe same liability cannot either be a debt or not be a debt according to the method of recovery chosen by the creditor from time to time.\nWhether or not there is a prescribed benefit from which to deduct the liability, whether or not the Secretary of State chooses to make those deductions, the Secretary of State is always free to enforce the liability by other means.\nIf he does so, it is plainly a bankruptcy debt and will be wiped out when the bankruptcy is discharged.\nThe liability is also a qualifying debt for the DRO scheme and also wiped out when the moratorium has run its course.\nDiscussion\nThis Court is in the fortunate position of being able to adopt a coherent approach which it would have been difficult for the courts below to achieve.\nIn my view, there is no such thing as the so called net entitlement principle.\nThe claimant to any kind of social security benefit has a statutory entitlement to the amount of benefit which she is awarded by the Secretary of State or a tribunal.\nThe members of this Court are, for example, statutorily entitled to the state retirement pension should they choose to claim it.\nSome claimants may have a prior liability to repay previously overpaid benefits, whether of the same or an entirely different kind, or they may have taken out a Social Fund loan which they are liable to repay.\nBy no stretch of the imagination does a Social Fund loan to buy a cooker amount to an advance payment of retirement pension to which the claimant later becomes entitled.\nIt could more plausibly be regarded as an advance payment of future income support.\nBut at the point when the loan is made and the liability to repay arises it cannot be known whether the claimant will continue to be reliant on income support.\nShe may get a job, marry a rich man, or win the lottery.\nThe liability to repay arises independently of her entitlement to any benefit from which the Secretary of State may later decide to recoup it.\nIn any ordinary use of language, the power to recover the debt by deduction from benefit is a remedy in respect of the debt.\nMoreover, if self help remedies such as this were not included in the concept of a remedy, it is difficult to see why both section 251G(2)(b) and section 285(3)(b) specifically prohibit the use of court proceedings to enforce the debt.\nThey would be otiose if the only remedies contemplated by the prohibition of any remedy were court proceedings.\nThere is no sense in a scheme which prohibits recovery of the liability by one method but allows it by another.\nFurthermore, I do not see any reason to distinguish between the DRO scheme and bankruptcy in this respect.\nThere is a minor difference between the language of section 251G(2) and section 285(3) but this is readily explicable by the antiquity of the latter provision.\nIt can be traced back to the time when remedies against the person of the debtor were universally applicable (and not restricted to certain statutory creditors as they are today).\nThere is, as the majority of the Court of Appeal pointed out, a major difference between the purpose of the waiting periods in each scheme.\nBut this does not affect the analysis of the nature of the liability to repay and of the Secretary of States power to recoup.\nIt is just as much a remedy against the property of the bankrupt as it is a remedy in respect of a debt listed in a DRO.\nFor my part, therefore, I would hold that Taylor and Chapman was wrongly decided.\nThe Secretary of State loses the power to recoup overpayments and Social Fund loans on the making of a bankruptcy order just as he does on the making of a DRO.\nThis result is inconsistent with the result reached in Mulvey.\nBut Mulvey depended on the Scottish common law of bankruptcy together with the Bankruptcy (Scotland) Act 1985, which has no exact equivalent of the English provisions with which we are concerned.\nIn those circumstances, it cannot be for this Court in an English case to over turn the decision of the House of Lords in a Scottish case.\nWe can merely place a question mark against that element in the reasoning which has been referred to as the net entitlement principle.\nNor is it necessary for us to question the decision of the Court of Appeal in Bradley Hole.\nIn that context, it makes some sense to regard the overpayment as giving the tenant the right to live rent free in the property until the overpayment is exhausted, a right to which the landlords and thus the trustees right to the reversion is subject.\nThe analogy was drawn with the deserted wifes personal right to continue to live in the former matrimonial home (a right recognised by the Court of Appeal in Bendall v McWhirter [1952] 2 QB 466 which survived the denial of her so called equity against third parties in National Provincial Bank Ltd v Ainsworth [1965] AC 1175).\nFinally, it is clear that Balding was rightly decided and that the principle applies equally to the DRO scheme.\nIt is worth noting, therefore, that the impact of this decision is not as great as might have been thought.\nAll those liabilities to repay overpaid benefits, tax credits and Social Fund loans listed in DROs (see para 6 above) will in any event be wiped out at the end of the moratorium period.\nWe are talking about the power to continue to deduct during that period.\nThe sums involved, though not insignificant, will be much less than the total of the liabilities involved.\nIt would, of course, be open to the Government to promote delegated legislation to exclude these liabilities from the definition of qualifying debts in the DRO scheme altogether (and, indeed, to seek corresponding amendment to section 382 with regard to bankruptcy debt), but that would raise policy issues which are not for this Court.\nI would therefore dismiss the appeal.\nLORD BROWN\nI am in full agreement with Lady Hales judgment.\nIts logic appears irresistible and its conclusion inevitable.\nOne might have preferred to arrive at the contrary view: as Lord Mance points out (para 44), larger social security benefits will now be payable to those made bankrupt or subject to a DRO scheme than they would otherwise have received and, indeed, the Social Fund (a fund of limited resource designed to be replenished by repayment and thereby enabled to provide financial assistance to others in particular need) will be diminished.\nBut a contrary view could only be reached by torturing the statutory language and by creating or reinforcing absurd and anomalous distinctions both between the DRO and bankruptcy regimes and between the debtors situation respectively before and after the end of the moratorium period\/discharge from bankruptcy.\nAs both Lady Hale (para 26) and Lord Mance (para 44) observe, it must now be for Government to consider whether or not to achieve a different result by amending legislation.\nIt will hardly be surprising if they do.\nLORD MANCE\nIt is with some misgivings that I concur in the dismissal of this appeal.\nViewing the statutory provisions in the abstract, I would find no difficulty in doing this.\nAgainst the background of relevant prior authority, I do, however, doubt whether the legislator can have contemplated the result at which the Supreme Court now finds itself obliged to arrive.\nThe result will create apparent anomalies as between different recipients of social security benefit and may cost the Exchequer, or potential beneficiaries of the limited Social Fund, quite dearly.\nIt may necessitate legislative reconsideration for the future.\nThe relevant prior authority relates primarily to the context of bankruptcy.\nThere is, as Lady Hale says at para 23, no real reason to distinguish between the provisions applicable in that context and in the present context of a debt relief order (DRO).\nFor bankruptcy purposes, it is clear that a liability to refund an overpayment of social security benefits or to refund a Social Fund loan constitutes a bankruptcy debt within the extended meaning of section 382 of the Insolvency Act 1986.\nUnder section 382(4) that meaning includes both debt and liabilities and in particular any liability under an enactment, and so, on the face of it, covers a liability to repay overpaid social security benefits or a Social Fund loan.\nThe DRO scheme, introduced as section 251A et seq of the same Act by the Tribunals, Courts and Enforcement Act 2007, applies to a more limited class of qualifying debts, defined as meaning a debt which is for a liquidated sum payable either immediately or at some certain future time and which is not an excluded debt.\nHowever, as Lady Hale notes at paras 9 and 19, the Secretary of State has not suggested that a liability to repay an overpayment of social security benefits or to refund a Social Fund loan is not a qualifying debt within that definition.\nOn that basis, essentially the same question arises in respect of both bankruptcy and a DRO.\nWhere the Secretary of State is recovering an overpayment or loan by deductions up to the permitted limits from future prescribed benefits as and when these become payable, is the Secretary of State able to continue to do so after the onset of bankruptcy or the making of a DRO? The argument against any such ability is that the making of any such deduction would involve the exercise of a remedy in respect of the debt, contrary in the case of bankruptcy to section 285(3) or in the case of a DRO to section 251G(2) of the 1986 Act.\nAs a matter of language and logic, the argument is difficult to resist.\nIn law, the making of deductions is no more than one way in which the Secretary of State may recoup such an overpayment or loan.\nThe payment of future social security benefits depends on the circumstances from time to time, as does the making of deductions.\nThe commencement of bankruptcy or the making of a DRO does not exclude all possibility that some other means of recoupment might become available.\nEach deduction is separate from any prior deduction, even if the Secretary of State has given prior notice of an intention to make continuing deductions from future payments of social security benefits.\nFor this reason, viewing the statutory wording by itself, I agree that its natural effect is, as explained by Lady Hale, that in making each and any deduction the Secretary of State is exercising a remedy in respect of the debt constituted by the overpayment or loan.\nHowever, the 1986 Act and the DRO scheme introduced in 2007 should be seen against the background of any relevant prior authority.\nIn Bradley Hole v Cusen [1953] 1 QB 300 the Court of Appeal was concerned with a tenants right to recover overpaid rent.\nSection 14(1) of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 made such overpaid rent recoverable without prejudice to any other method of recovery by deduction from any rent payable by him to the landlord.\nThe rent recoverable was clearly a debt.\nBut the landlord went bankrupt, and the predecessor of section 285(3) of the 1986 Act precluded the tenant from having any remedy in respect of that debt after the making of the bankruptcy order.\nCould the tenant continue to deduct the overpaid rent from the rent otherwise due after the making of the bankruptcy order? The Court held that he could, suggesting that the overpayment could be regarded as the payment of rent in advance.\nAs Lady Hale recounts in paras 14 15, in R v Secretary of State for Social Security, Ex p Taylor and Chapman [1997] BPIR 505, Keene J applied parallel reasoning under section 285(3) of the 1986 Act in relation to deductions from social security benefits in respect of prior overpayments of benefit and an unpaid Social Fund loan.\nMoreover, this was after Lord Clyde in the Inner House had in Mulvey v Secretary of State for Social Security referred to the right to recover by deduction as but one element in the calculation of benefit which the claimant was to receive: 1996 SC 8 (Ct of Sess), 15G 16A; and Lord Clydes approach appears to me to have received full endorsement in the House of Lords at 1997 SC(HL) 105, 109F H in the passage from Lord Jaunceys speech quoted by Lady Hale in para 16.\nIt is of interest to note that Lord Jauncey went on expressly to invoke in support of his analysis the case of Bradley Hole v Cusen: p 110A B. Further, Lord Jauncey found it unnecessary in deciding the position during the bankruptcy to determine what the position might be when the bankrupt came to be discharged (p 109E).\nIn the light of these authorities, there is a considerable case for saying that Parliament, when it enacted the DRO scheme in 2007, must have had in mind that, during bankruptcy and by parity of reasoning during the running of a DRO scheme, deductions in respect of any prior overpayment or un repaid Social Fund loan could continue to be made, as before, without infringing the rule that no remedy may be exercised in respect of any outstanding debt.\nIn reality, the Court of Appeal in Bradley Hole was adopting a beneficent fiction, when it spoke of the overpayment there as a payment of rent in advance.\nThe fiction had in that case the particular attraction that the overpayment was of rent, and it was being deducted from future rent.\nBut in law the overpayment was a debt, which the tenant was free to recover in any way he could and which he could have recovered as a debt, even if for some reason it proved not to be covered by or capable of deduction from future rent.\nNevertheless, the tenants choice to make deductions on a continuing basis was sufficient to persuade the Court of Appeal to treat the overpayment as a payment of rent in advance.\nSo here also, it would be possible to say that the Secretary of States choice to make deductions on a continuing basis entitles the court to treat the outstanding debts, arising from prior overpayments and unpaid Social Fund loan amounts, as payments on account of future social security benefits.\nHowever, I do not think it either sensible or possible to focus solely on what might be a possible solution in relation to the position during the currency of a bankruptcy or a DRO.\nIt seems to me necessary also to consider the position which would exist on discharge from bankruptcy and at the end of the moratorium period.\nIn each case, that normally occurs after one year: see sections 279(1) and 251H(1) respectively.\nThe statutory language is in this context framed in terms of release or discharge from debts.\nIn particular, on discharge of a bankrupt the bankrupt is released from all bankruptcy debts under section 281(1), and as at the end of the moratorium period a person subject to a DRO scheme is discharged from all outstanding DRO debts under section 251I(1).\nAccordingly, unless it can be said that no such debt exists in either case, the position remains incoherent if the analysis set out in para 39 above is accepted.\nThe debtor would remain subject to deductions during the currency of the bankruptcy or DRO scheme, but would be released or discharged from the outstanding balance after one year when it ended.\nI do not think that we can overlook the potential incongruity, even though the House appears to have been prepared to do so in Mulvey.\nIn R (Balding) v Secretary of State for Work and Pensions [2007] EWHC 759 (Admin), [2007] 1 WLR 1805, [2008] EWCA Civ 1327, [2008] 1 WLR 564, the Divisional Court and the Court of Appeal concluded that the existence of a bankruptcy debt could not depend upon whether or not the creditor was choosing to recover it by deduction from social security benefits.\nFurther, in the present case, the Secretary of State has accepted that there is an outstanding debt within the scope of the DRO.\nWe would have to overrule Balding and to hold that the Secretary of States concession was wrong, before we could conclude that the right to deduct survived the discharge from bankruptcy or the end of the moratorium period under a DRO.\nI see no real basis on which we would do this.\nThe beneficent fiction of a payment in advance cannot be stretched to the point of a conclusion that no debt at all exists.\nNor can a debt exist for some purposes (recovery other than by way of deduction), but not exist in so far as it is recovered by deductions.\nA position whereby deductions can continue to be made during the currency of a bankruptcy or moratorium period, but the remainder of the outstanding debt is extinguished at its conclusion has little to commend it.\nI am forced to the conclusion that the natural meaning of the statutes must be given effect.\nI reach this conclusion with misgivings, as I said at the outset.\nIt will mean that those who have received overpayments or failed to repay Social Fund loans, but have become bankrupt or subject to a DRO scheme, will now receive larger social security benefit payments larger than they did prior to the bankruptcy or DRO and larger also than the social security benefits received by persons subject to such deductions who have avoided bankruptcy or a DRO scheme; it will also diminish the amount available in the limited Social Fund for the benefit of all potential claimants on that Fund.\nIt must be questionable whether any of this is sensible or desirable, but that is a matter for the legislature to consider, if it wishes.\nLORD WILSON\nI agree that the appeal should be dismissed for the reasons given by Lady Hale but I wish also to associate myself with the remarks made by Lord Brown and Lord Mance in their concurring judgments.\n","output":"The issue in the case is whether the Secretary of State can continue to recoup Social Fund loans and overpayment of benefits by deduction from current benefit payments during the moratorium period after the making of a Debt Relief Order (DRO) under Part 7A of the Insolvency Act 1986 (the IA).\nMrs Payne obtained a Social Fund budgeting loan in September 2007.\nIn August 2009, she obtained a DRO listing the loan among her qualifying debts.\nWhen she notified the Secretary of State, he began making deductions from her income support.\nIn August 2010, the moratorium period came to an end and the debt was discharged.\nMs Cooper incurred an overpayment of benefit.\nIn December 2009 the Secretary of State began making deductions from her incapacity benefit in order to recover the overpayment.\nIn January 2010, Ms Cooper obtained a DRO which listed the overpayment as one of her qualifying debts.\nSection 251G(2)(a) of the IA provides that during the moratorium the creditor to whom a specified qualifying debt is owed has no remedy in respect of the debt.\nMrs Payne and Ms Cooper brought judicial review proceedings challenging the lawfulness of the deductions made after the making of the DROs; their cases were consolidated.\nCranston J at first instance found in their favour, holding that the power to make deductions from current benefits ceased to be available when Mrs Payne and Ms Cooper obtained the DROs.\nA majority of the Court of Appeal (Smith and Toulson LJJ) confirmed the High Courts decision.\nThe Secretary of State appealed.\nIn the context of bankruptcy, the High Court has held that such deductions can continue to be made between the making of the bankruptcy order and the bankrupts discharge from bankruptcy: R v Secretary of State for Social Security, Ex p Taylor and Chapman [1997] BPIR 505.\nThe House of Lords reached the same conclusion in the context of Scottish bankruptcy law: Mulvey v Secretary of State for Social Security 1997 SC (HL) 105.\nOnce a bankrupt is discharged, however, the Court of Appeal has held that the liability to repay the Secretary of State is also discharged: R (Balding) v Secretary of State for Work and Pensions [2007] EWCA Civ 1327.\nThe Supreme Court unanimously dismisses the appeal.\nThe leading judgment was given by Lady Hale, with whom the other justices agreed (Lord Brown and Lord Mance adding short concurring judgments).\nThe Court holds that there is no such thing as the net entitlement principle.\nThe claimant has a statutory entitlement to the amount of benefit which she is awarded.\nThe liability to repay arises independently of her entitlement to any benefit from which the Secretary may later decide to recoup it [21].\nThe power to recover the debt by deduction from benefit is a remedy in respect of a debt which may not be exercised during the moratorium, according to section 251G(2) of the IA [22], [34].\nThe Court sees no reason to distinguish between the DRO scheme and bankruptcy in this respect.\nThe Court considers that Taylor and Chapman was wrongly decided.\nThe Secretary of State loses the power to recoup overpayments and Social Fund loans on the making of a bankruptcy order just as he does on the making of a DRO [23].\nThe Court affirms Balding and finds that the principle equally applies to the DRO scheme.\nAll the liabilities to repay overpaid benefits, tax credits and Social Fund loans listed in DROs will in any event be wiped out at the end of the moratorium period [26].\nThe Court comments that it would be open to the Government to promote delegated legislation to exclude these liabilities from the definition of qualifying debts in the DRO scheme and to seek equivalent legislative amendment of the the bankruptcy scheme.\n","id":35}
{"input":"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.\nThe 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.\nThe facts\nProfessor Shanks was employed by CRL from May 1982 to October 1986 and was assigned to its Colworth research laboratories in Bedfordshire.\nHe initially received a salary of 18,000 per annum and a Volvo car.\nHis brief was to develop biosensors for use in process control and process engineering.\nIn 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.\nAs 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.\nIt was at about this time that Professor Shanks conceived his invention.\nHe 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.\nHe 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.\nIn 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.\nIt has since become known as the Electrochemical Capillary Fill Device or ECFD.\nHe also developed a similar system which uses fluorescence rather than conductivity and this has become known as the Fluorescent Capillary Fill Device or FCFD.\nCRL at that time employed all of the Unilever groups UK-based research staff.\nIt was not a trading company and was a wholly owned subsidiary of Unilever plc.\nUnilever 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.\nSave where from the context otherwise appears, I will refer to the Unilever group as Unilever.\nIt 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.\nCRL assigned all these rights to Unilever plc for 100.\nUnilever 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.\nUnilever NV later assigned the rights for the USA to a company which later became Unilever Patent Holdings BV.\nOn 13 June 1984 Unilever plc filed UK patent application 8415018 (the priority application).\nIt was entitled Devices for Use in Chemical Test Procedures and was directed to both the ECFD and the FCFD technologies.\nProfessor Shanks was named as inventor.\nOn 12 June 1985 European patent application 0170375 was filed claiming priority from the priority application.\nIt related only to the ECFD technology and was filed by Unilever plc for the UK and by Unilever NV for various other contracting states.\nCorresponding patent applications were filed in Australia, Canada, Japan and the USA.\nIt 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.\nUnilever 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.\nConsequently, relatively little was done to develop the ECFD technology after the end of 1984.\nIndeed, it was regarded by Unilever as far from a key technology.\nInstead, until 1986, Unilever and Professor Shanks focused on the FCFD technology which had potential application in areas of relevance to Unilevers existing businesses.\nProfessor 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.\nIn 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.\nNevertheless, 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).\nIt also maintained the Shanks patents.\nThe glucose testing market expanded considerably in the late 1990s and 2000s, however; and biosensors incorporating the ECFD technology played an important role in this.\nIndeed, the ECFD technology eventually appeared in most glucose testing products.\nIt 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.\nUnilever never considered licensing of patent rights to be a key part of its business.\nIts main purpose in having patents was to use them to protect its existing commercial activities.\nCross-licensing of unexploited patents was of secondary importance and out-licensing was of even less interest.\nConsequently, 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.\nHowever, 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.\nIn the end seven licences (or sets of licences) of the Shanks patents were granted by Unilever for a total consideration of about 20.3m.\nThe 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.\nIn 1994 management responsibility for the Shanks and Birch patents (and various other patents) was transferred to Unipath, another Unilever company.\nIn addition, Unipath took on the bulk of Unilevers medical diagnostics business, including its commercially successful products in the fields of pregnancy and fertility testing.\nIn 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).\nThe hearing officer found that, of the price paid by IMI, about 5m was attributable to the Shanks patents.\nUnilevers total earnings from the Shanks patents therefore amounted to around 24.55m.\nThe hearing officer estimated that Unilever had incurred costs in prosecuting, maintaining and licensing the patents of about 250,000.\nIt followed that Unilevers net benefit from the patents was about 24.3m which the hearing officer rounded down to 24m.\nThe history of the proceedings\nProfessor Shanks made his application for compensation on 9 June 2006.\nIt came on for hearing before Mr Julyan Elbro, the hearing officer acting for the Comptroller General of Patents (the Comptroller), in March 2012.\nThe hearing lasted for nine days between March and May of that year.\nOn 21 June 2013 the hearing officer issued his decision: BL O\/259\/13.\nHe found that, having regard to the size and nature of Unilevers business, the benefit provided by the Shanks patents fell short of being outstanding.\nThe hearing officer went on to consider what a fair share of the benefit would have been had he considered it to be outstanding.\nHe 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.\nHe declined to increase this figure to take into account the time value of money.\nProfessor Shanks appealed to the High Court against the hearing officers decision.\nThe appeal was heard by Arnold J and he gave judgment on 23 May 2014: [2014] EWHC 1647 (Pat); [2014] RPC 29.\nHe 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.\nHowever, 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%.\nHe 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.\nAn 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.\nThe 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.\nHowever, 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.\nThe issues\nThis 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?\nI 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.\nThe legal framework\nEmployees inventions are addressed in sections 39 to 43 of the 1977 Act.\nThese provisions have been amended by the Patents Act 2004 but only in relation to patents applied for after 1 January 2005.\nWe are therefore concerned in this appeal with these sections in their form prior to their amendment by the Patents Act 2004.\nSection 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.\n(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.\nThere 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.\nAs 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.\nHe was, as the hearing officer held, employed to invent.\nSection 40 then makes provision for the payment of compensation to an employee in particular circumstances.\nIn 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.\n(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.\nSection 40 therefore deals with two different cases.\nIn the first, the invention belongs to the employer from the outset.\nIn 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.\nIn this appeal we are concerned with the first and so section 40(1).\nIn such a case the employee may be awarded compensation if the invention is of outstanding benefit to the employer.\nOf 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.\nThe key amendment introduced by the Patents Act 2004 makes compensation payable when the invention (and not just the patent) has been of outstanding benefit.\nThe amount of compensation is to be determined in accordance with section 41.\nIn 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.\n(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.\n(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.\nSection 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.\nEntitlement to compensation\nAn 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.\nWho is the employer?\nThe starting point for the assessment of whether an employee is entitled to compensation is therefore the identification of the employer.\nThere can be no doubt that, at least in the ordinary case, Parliament intended the term employer to mean the inventors actual employer.\nSection 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.\nIn all three cases the employer is the inventors actual employer.\nWhat is the benefit?\nThe next task is to identify the benefit in the hands of the employer.\nThis 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.\nBut 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.\nSection 41(1) is complemented by section 41(2) which deals further with a disposal to a connected person.\nThis 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.\nThe 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.\nThere is also one curious feature of section 41(2) which it is convenient to mention at this point.\nIt says it has effect for the purposes of section 41(1) but makes no mention of section 40.\nNevertheless, 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.\nAs 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.\nIs the benefit outstanding?\nI now turn to the meaning of the word outstanding in the expression outstanding benefit.\nIn 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.\nThe 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.\nIn British Steel PLCs Patent [1992] RPC 117, 122, Dr Ferdinando, for the Comptroller, thought the word outstanding implied a superlative.\nThe 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.\nThe 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.\nIn 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.\nThe 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.\nSales 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.\nSo, once again, the claim failed.\nIn 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.\nThe benefit must be something more than one would normally expect to arise from the duties for which the employee is paid.\nThe 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.\nThe 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.\nThe 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.\nIn my view these cases are all helpful to a point as illustrations of circumstances which were found to fall each side of the line.\nBut at the end of the day they provide no substitute for the statutory test which requires the benefit to be outstanding.\nThis 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.\nIt 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.\nPut 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?\nHere the 1977 Act provides some guidance.\nIt says that the court must have regard among other things to the size and nature of the employers undertaking.\nBut this gives rise to two further questions which were the subject of a good deal of argument before us.\nWhat is the employers undertaking for this purpose? And what is the relevance of that undertakings size and nature?\nThe employers undertaking\nIn 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.\nIn many cases the identification of that undertaking will be comparatively straightforward.\nIt will be the whole or, if it is divided into economic units, the relevant unit of the employers business.\nSo, 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.\nWe are concerned in this appeal with a different and more difficult case, however.\nIt 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.\nThis 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.\nThe hearing officer rejected the submission made on behalf of Professor Shanks that the employers undertaking was CRL.\nHe 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.\nIndeed, it is notable that the whole benefit from the Shanks patents was generated by licensing activity operated out of the central Unilever companies.\nHaving 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.\nArnold J and the Court of Appeal agreed with the hearing officer.\nPatten 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.\nHe 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.\nSecondly, 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.\nHe 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.\nUpon 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.\nMr Daniel Alexander QC, for Unilever, commends the hearing officers reasoning.\nHe 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.\nNeither of these interpretations is without difficulty.\nThe 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.\nAs Mr Alexander fairly says, the real benefits have been received by other Unilever companies.\nA 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.\nTrue 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.\nThis 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.\nMr 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.\nBut that, so it seems to me, is not comparing like with like.\nIt would artificially and unfairly elevate the benefit to CRL from the Shanks patents in relation to any benefit it derived in other ways.\nThe 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).\nThis, 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.\nBut the problem with this interpretation is that it strips the phrase from its context.\nThe 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.\nConsideration of the size and nature of the employers undertaking is therefore tethered to this assessment.\nIt 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.\nIn 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.\nIt 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.\nWhere, 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.\nThis gives practical and commercial effect to the language of section 41 and involves a comparison of like with like.\nFurthermore, 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.\nThe relevance of size and nature of the employers undertaking\nBefore 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.\nAs 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.\nIt 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.\nThis 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.\nMr Green characterised this submission before the courts below and in this court as too big to pay.\nHe 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.\nThis found favour with the Court of Appeal to a point.\nAs 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.\nBut 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.\nIn my judgement there is no single answer to this question.\nMany different aspects of the size and nature of the employers business may be relevant to the enquiry.\nFor 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.\nIn 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.\nIn 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.\nIn 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.\nThe 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.\nIn short, the patents transformed its business.\nSimilarly, 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.\nI also recognise that a large undertaking may be able to exert greater leverage than a smaller undertaking when negotiating licence fees.\nThis was a matter to which the hearing officer referred in para 207 of his judgment.\nThere 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.\nMuch the same might apply to sales of a patented product.\nA large undertaking might be able to harness its goodwill and sales force in a way that a smaller undertaking could not do.\nThese would be appropriate matters to take into account.\nOn 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.\nThose 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.\nIndeed, 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.\nTax and the assessment of benefit\nArnold 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.\nThere 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.\nThe 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.\nThis 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.\nIn 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.\nMr 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.\nI 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.\nIn 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.\nThe employee must account for any tax due on that share and the employer must account for any tax due on the balance.\nThe 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.\nIn my judgement the former approach is both fairer and consonant with the legislative purpose of these provisions.\nIt 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.\nAssessment 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.\nThe time value of money\nUnilever 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.\nProfessor Shanks made his application for compensation on 9 June 2006.\nProfessor 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.\nAs 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.\nIn my judgement he was right to take that course.\nThe mere passage of time cannot turn a patent which was not an outstanding benefit into one which was.\nHowever, 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.\nThat remains the position on this appeal and it is convenient to address it now.\nThe hearing officer rejected Professor Shanks argument on the basis that there was not enough evidence before him to justify an increase.\nThe evidence was in his view too speculative.\nOn 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).\nHe 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.\nOn 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.\nHowever, Briggs LJ, with whom Sales LJ agreed on this issue, came to the contrary conclusion.\nHe 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.\nMr 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.\nIn 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.\nTo the contrary, it seems to me to be the approach which accords with justice and common sense.\nProfessor 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.\nNor, with great respect, am I persuaded by the reasoning of Arnold J or that of Patten LJ on appeal.\nThat 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.\nI disagree.\nI see no reason why the time value of money cannot be a benefit derived from a patent within the meaning of section 41(1).\nUnilever has had the benefit of the licence fees and other moneys derived from the Shanks patents ever since they were paid.\nAnother legitimate approach, which amounts to the same thing, is that of the majority in the Court of Appeal.\nOn 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.\nTurning 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.\nIn other cases, in assessing benefit, it may be necessary to look forward.\nBut 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.\nI also reject the suggestion that the approach Professor Shanks contends for would cut across the statutory scheme.\nIt is true that the Comptroller has no power to award interest.\nBut 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.\nAs 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.\nIn 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.\nIn 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.\nWas the benefit outstanding?\nThe 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.\nHe 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.\nIn the course of this analysis the hearing officer made a series of findings and observations which are to my mind rather striking.\nHe 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.\nHe 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.\nHe 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.\nIn 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.\nIn 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.\nHow 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.\nLooking 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.\nHe 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.\nUltimately, he continued, it was a matter of considering the benefit in the overall context and making an assessment as to whether it was outstanding.\nTurning 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.\nInstead 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.\nThis was followed by a consideration of the benefit to Unilever of the Shanks patents in the context of its licensing activities.\nHere 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.\nHow the benefit was obtained was, in his view, irrelevant.\nWhat mattered was whether the benefit was outstanding in the context of the undertaking as a whole.\nThe hearing officer then considered the benefit to Unilever of the Shanks patents in light of Unilevers broader patent activities.\nHere he referred to the evidence of Dr Mulder who held the position of Vice President Patents at Unilever.\nSome 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.\nHe was therefore unable to identify any other patent which was more beneficial to Unilever than the Shanks patents.\nFinally, 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.\nHe 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.\nThe hearing officer expressed his conclusions in these terms: 222.\nConsidering the totality of the evidence, I was left with a clear impression.\nThe 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.\nBut 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.\nFurther, 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.\nThere was no suggestion from either party that the Shanks patents were crucial to Unilevers success.\n223.\nIn my view, taking account of the size and nature of Unilevers business, the benefit provided by the Shanks patents falls short of being outstanding.\nDid the hearing officer make an error of principle in assessing the benefit?\nIt 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.\nThe 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.\nThis 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.\nThere are in my view a number of problems with these aspects of the hearing officers analysis.\nFirst, he adopted the wrong starting point.\nProfessor Shanks was employed by CRL, and CRL operated a research facility for the Unilever group.\nCRLs 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.\nIt 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.\nInstead the hearing officer took CRLs undertaking to be the whole of the Unilever group and this pervaded the whole of his evaluation.\nIn my judgement that was wrong in principle.\nSecondly 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.\nThe success of these products could no doubt be attributed to a range of factors including quality, branding and pricing.\nIt 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.\nBut, 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.\nIndeed, the hearing officer recognised that, in terms of the benefit which Unilevers patents had generated, the Shanks patents stood out.\nThirdly, 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.\nThat benefit was generated by licensing or selling its patent rights, not by harnessing its manufacturing capacity, its sales and distribution facilities or its goodwill.\nThe licence fees, which constituted the main part of the benefit, were paid by licensees who, with one exception, approached Unilever.\nIt 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.\nThese were matters he failed properly to take into account.\nFourthly, 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.\nBut he also indicated these matters might be relevant if, for example, an undertakings size enabled it to exert greater leverage.\nYet, having apparently rejected such an approach, he then adopted it.\nThere 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.\nI 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.\nThat is particularly so where the decision is that of a specialist tribunal.\nWhat 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.\nAs 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.\nA legal error might involve asking the wrong question, failing to take into account relevant matters or taking into account irrelevant matters.\nIn 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.\nI 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.\nFurther, having regard to the fundamental nature of these errors, the decision of the hearing officer must be set aside.\nI 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.\nI 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.\nIn 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.\nHe built the first prototype of his invention in October 1982, some five months after he had joined CRL.\nThis 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.\nIt was regarded as far from a key technology and it was one into which Unilever made only a modest investment.\nIt 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.\nBut 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.\nWhat 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.\nIn short, the benefit Unilever enjoyed from the Shanks patents was outstanding within the meaning of section 40 of the 1977 Act.\nFair share\nSection 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.\nSection 41(4) then specifies that various matters must be taken into account.\nIn 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).\nIn 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.\nThe hearing officer also had regard to the evidence before him about the percentage award rates in company and university employee compensation schemes.\nHaving 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.\nOn 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.\nIn 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.\nOn further appeal, the Court of Appeal did not need to address this issue and did not do so.\nProfessor 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.\nHe argues that between 10% and 20% of the benefit would represent a fair share.\nIn my judgement Arnold J was wrong to find that 3% represented a fair share of the benefit Unilever enjoyed from the Shanks patents.\nThe 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.\nThe absence of such a finding is not at all surprising.\nUnilever had no manufacturing business it needed to protect and, with one exception, the discussions were initiated by the prospective licensees.\nIn substance, these were negotiations between willing licensors and willing licensees.\nArnold J therefore had no basis for reducing the percentage from 5% to 3%.\nI am not persuaded by Professor Shanks other arguments, however.\nThe 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.\nMoreover, as the hearing officer also found, Professor Shanks was employed to invent and, in making the invention, did what he was employed to do.\nI accept that the patent generated a new stream of income for Unilever, but it did not do so without its input.\nTo the contrary, it was brought to fruition by Unilevers negotiation of the licences, and that is something in which Professor Shanks played no part.\nFinally, 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%.\nI 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.\nIt only remains to apply to the 5% share of the 24m an uplift to reflect the impact of time on the value of money.\nProfessor 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.\nI did not detect any substantive objection from Unilever to this methodology and I think it is a reasonable and fair way to proceed.\nThis produces a figure of about 2m at an average inflation rate of 2.8%.\nIn my judgement the fair share of that benefit to which Professor Shanks is entitled is therefore 2m.\nConclusion\nFor these reasons I would allow Professor Shanks appeal.\nIn 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.\n","output":"From 1982 to 1986, Professor Shanks (the appellant) was employed by Unilever UK Central Resources Ltd (CRL).\nCRL employed the UK based research staff of the Unilever group of companies (Unilever).\nIt was not a trading company and was a wholly owned subsidiary of Unilever plc.\nWhile 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).\nCRL assigned those rights to Unilever plc for 100.\nUnilever was later granted various patents relating to the invention (the Shanks patents).\nOver time, Unilever derived a net benefit from the Shanks patents of approximately 24.3 million.\nOn 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.\nOn 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.\nProfessor Shanks appealed to the High Court and Mr Justice Arnold dismissed the appeal.\nProfessor Shanks then appealed to the Court of Appeal.\nThat appeal succeeded in part, but the Court of Appeal found that Professor Shanks was not entitled to compensation.\nProfessor Shanks now appeals to the Supreme Court.\nThe Supreme Court allows the appeal.\nLord Kitchin gives the sole judgment, with which the other Justices agree.\nAn 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].\nAt least in the ordinary case, Parliament intended the term employer to mean the inventors actual employer [31].\nThe 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].\nIn 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].\nPrevious 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.\nThat 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.\nIt is, however, both a relative and qualitative term and the context must be considered [39].\nAn 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].\nThe correct approach in identifying the relevant undertaking is to look at the commercial reality of the situation.\nWhere 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].\nA 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].\nThe 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].\nHowever, 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].\nAs 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.\nThis 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].\nSeparately, 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].\nThe 1977 Act does not bar the Comptroller from having regard to the impact of inflation.\nThis approach is not unduly complex and should not encourage delay [67].\nThe hearing officers assessment of the benefit of the Shanks patents was flawed.\nFirst, he adopted the wrong starting point.\nCRLs 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].\nSecondly, the hearing officers particular focus upon the overall turnover and profits generated by Unilever was misdirected [80].\nThirdly, 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].\nFourthly, 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].\nThe hearing officers decision must be set aside [84].\nThe benefit Unilever enjoyed from the Shanks patents was outstanding within the meaning of section 40 [85].\nMr Justice Arnold was wrong to find that 3% would have represented a fair share of the benefit Unilever enjoyed from the Shanks patents [90].\nIt would not be appropriate to interfere with the hearing officers conclusion that 5% would have been a fair share [91].\nThe fair share to which Professor Shanks is entitled is 2m and the appeal is allowed [92 93].\n","id":36}
{"input":"Information is the key to sound decision making, to accountability and development; it underpins democracy and assists in combatting poverty, oppression, corruption, prejudice and inefficiency.\nAdministrators, judges, arbitrators, and persons conducting inquiries and investigations depend upon it; likewise the press, NGOs and individuals concerned to report on issues of public interest.\nUnwillingness to disclose information may arise through habits of secrecy or reasons of self protection.\nBut information can be genuinely private, confidential or sensitive, and these interests merit respect in their own right and, in the case of those who depend on information to fulfil their functions, because this may not otherwise be forthcoming.\nThese competing considerations, and the balance between them, lie behind the issues on this appeal.\nThis appeal concerns the relationship between the Charity Commission, a public authority responsible for inquiries in relation to which it requires information from third parties, and the press, concerned to understand and report on the Charity Commissions performance of its role.\nIt also concerns the relationship between the Freedom of Information Act 2000 (the FOIA) and the statutory and common law position regarding the disclosure of information outside the scope of the FOIA.\nThe FOIA provides a framework within which there are rights to be informed, on request, about the existence of, and to have communicated, information held by any public authority.\nBut the framework is not all embracing.\nFirst, these rights do not apply at all in cases which are described as absolute exemptions (see sections 2(1)(a) and 2(1)(b)) and are subject to a large number of other carefully developed qualifications.\nSecond, as the other side of this coin, section 78 of the FOIA specifies that nothing in it is to be taken to limit the powers of a public authority to disclose information held by it.\nIn the present case, Mr Kennedy, an experienced journalist with The Times, has been long concerned to investigate and understand more about three inquiries conducted under the Charities Act 1993 by the Charity Commission in relation to an appeal (The Mariam Appeal) founded by Mr George Galloway MP in 1998 and operated until 2003.\nHe views the two brief reports by the Charity Commission on these inquiries as leaving significantly unclear the basis upon which the Commission conducted the inquiries, the information on which it acted, its communications with other public authorities and its conclusions.\nOn 8 June 2007 he made corresponding requests for disclosure of documentation by the Charity Commission under the FOIA.\nIn response, the Charity Commission points to an absolute exemption contained in section 32(2) of the FOIA.\nThis exempts the Charity Commission from any duty to disclose any document placed in its custody or created by it for the purposes of an inquiry which it has in the public interest conducted in the exercise of its functions.\nThe Charity Commission submits that this exemption lasts until the document is destroyed or, if the document is one that ought to be publicly preserved, that it lasts for up to 30 (or in future 20) years under the Public Records Act 1958, section 3 as amended for the future by the Constitutional Reform and Governance Act 2010, section 45(1).\nSection 32 is a section dealing with information held by courts and persons conducting an inquiry or arbitration.\nIts intention was not that such information should not be disclosed.\nIts intention was to take such information outside the FOIA.\nAny question as to its disclosure was to be addressed under the different and more specific schemes and mechanisms which govern the operations of and disclosure by courts, arbitrators or persons conducting inquiries.\nWith regard to the Charity Commission the relevant scheme and mechanism is found in the Charities Act 1993, as amended by the Charities Act 2006 (since replaced by the Charities Act 2011), the construction of which is informed by a background of general common law principles.\nIn the present case, the focus has, however, been on the FOIA as if it were an exhaustive scheme.\nThe argument has been, in effect, that, unless a prima facie right to disclosure can be found in the FOIA, United Kingdom law must be defective, and in breach of what is said to be the true interpretation of article 10 of the European Convention on Human Rights.\nBut that misreads the statutory scheme, and omits to take into account the statutory and common law position to which, in the light of sections 32 and 78 in particular, attention must be addressed.\nThe Court of Appeal thus correctly held in R (Guardian News and Media Ltd) v City of Westminster Magistrates Court (Article 19 intervening) [2012] EWCA Civ 420, [2013] QB 618 that it was quite wrong to infer from the exclusion by section 32 of court documents from the FOIA that Parliament intended to preclude the court from permitting a non party to have access to such documents if the court considered such access to be appropriate under the open justice principle (para 74).\nThat was a case concerning court documents, but the same general point applies to inquiry documents: section 32 is no answer to any power which the holder of an inquiry may have to disclose, or which the court may have to order disclosure in respect of, inquiry documents outside section 32.\nIn the present case, Mr Kennedys claim to disclosure by the Charity Commission has only ever been pursued by reference to the FOIA.\nAt the outset, before it referred to section 32, the Charity Commission did on 4 July 2007 explain in a little detail the factors which it saw as relevant to any issue of disclosure.\nIt said: There is a strong public interest in the Commission being able to carry out its functions which is expressly recognised by the [FOIA] in section 31(2)(f) (h).\nSection 31 exempts from disclosure information which, if released, would prejudice the Commissions functions in protecting charities against misconduct or mismanagement (whether by trustees or other persons) in their administration, protecting the property of charities from loss or misapplication and recovering the property of charities.\nThe Commission relies very much on the co operation of and liaison with a variety of third parties in undertaking these functions and routine disclosure of regulatory communication between the Commission and these parties would adversely affect the Commission in its work.\nThe competing public interest is for transparency of the decisions and reasons for them so as to promote public confidence in charities.\nThis is tempered by the need for confidentiality in the exchange of information.\nIn my view, at this time, balance of the public interest weighs more strongly with securing the Commissions ability to carry out its functions efficiently and therefore lies in withholding the information.\nOutside the FOIA, and in particular if this had been the response given to a claim for disclosure under the Commissions Charities Act powers and duties, the response could have been tested by judicial review on ordinary public law principles.\nInstead, Mr Kennedys claim was and has only ever been put on the basis that the FOIA must be construed or remodelled so as to give him a claim under that Act.\nIn these circumstances, the issues directly arising on this appeal are limited.\nThe first is whether section 32(2) contains, as a matter of ordinary construction, an absolute exemption which continues after the end of an inquiry.\nMr Philip Coppel QC representing Mr Kennedy submits that it does not.\nThat failing, he relies, second, on what he describes as a current direction of travel of Strasbourg case law for a proposition that article 10 of the Convention imposes a positive duty of disclosure on public authorities, at least towards public watchdogs like the press, in respect of material of genuine public interest, subject to the exemptions permitted by article 10(2).\nOn that basis, and in the light of the duty in section 3 of the Human Rights Act 1998 to interpret primary legislation so far as it is possible to do so . in a way which is compatible with the Convention rights, he submits that section 32 should be read down so that the absolute exemption ceases with the end of the relevant inquiry.\nAlternatively, taking up a point put by the Court, he submits that the absolute exemption should from that moment be read as a qualified exemption (requiring a general balancing of the competing public interests), along the lines provided by section 2(2)(b) of the FOIA.\nThirdly, all those submissions failing, he submits that the Court should make a declaration of incompatibility in respect of section 32(2).\nFourthly, however, despite the limitations in the way in which the case has been presented, it will, for reasons already indicated, be appropriate and necessary to consider the statutory and common law position outside the scope of the FOIA.\nAs I have stated, the effect of section 32 is not to close those off, but rather to require attention to be directed to them.\nIn a judgment dated 20 March 2012 differing from the First tier Tribunal, the Court of Appeal accepted that section 32 applied and dismissed Mr Kennedys claim accordingly.\nThe present appeal is brought against that dismissal.\nFor reasons contained in paras 24 to 42, Mr Kennedys appeal falls in my opinion to be dismissed, even if Mr Kennedys case on the scope of article 10 is to be accepted at its highest.\nBut, for completeness, I consider article 10 in paras 43 to 100, while para 101 states my overall conclusions on the issues argued.\nThe background in more detail\nThe bulk of the information which Mr Kennedy seeks is to be found in documents prepared by other public authorities or private persons or bodies for the purposes of the Charity Commission inquiry.\nThe information requested also includes some pre existing documents and communications between the Charity Commission, other public authorities, other entities and Mr Galloway himself.\nThe information is all of potential public interest.\nThe First tier Tribunal accepted this in a report dated 18 November 2011 made at the Court of Appeals request in this case.\nThe First tier Tribunal was not however concerned with the question, which it left entirely open, whether the information should in the public interest be disclosed it decided that section 32 should be read down so as to cease to apply after the end of the inquiry, because the rights and interests of the Charity Commission and others co operating with it in the inquiry would be fully protected by the suite of other exemptions in Part II of FOIA.\nThe information also concerns a high profile and, to use Mr Kennedys word, controversial MP.\nIt concerns a public appeal on behalf of an organisation which the Commission (confirming Mr Kennedys prior suspicions) found to be a charity which should have been, but was not, registered and operated under the Charities Act 1993 as amended.\nInvestigations by Mr Kennedy himself led to the first Charity Commission inquiry in June 2003.\nThis was in turn followed by a second inquiry in November 2003 and (in the light of reports published by the UN Independent Inquiry Committee and US Senate Committee on Homeland Security and Governmental Affairs Permanent Sub committee on Investigations in October 2005) a third inquiry in December 2005.\nThe report on the first and second inquiries confirmed Mr Kennedys belief that appeal monies had been used by Mr Galloway on travel and political campaigning to end the sanctions against Iraq and found that other monies had been received by other trustees as unauthorised benefits in the form of salary payments.\nMr Kennedy maintains that these uses of funds were contrary to Mr Galloways original stated aim that appeal funds would be used first to treat Miss Mariam Hamza and thereafter to treat other Iraqi children also suffering from leukaemia, and that the inquiries, when holding that such use fell within or advanced the charitys purposes, failed properly to address this aspect.\nHe also maintains that, in closing the inquiries without taking or proposing further action, the Charity Commission showed a lack of interest in investigating what had become of the appeal funds.\nThe report on the third inquiry found that the source of some of the appeal funds consisted in monies paid in connection with contracts which breached the UN sanctions against Iraq.\nThis occurred in circumstances where one trustee (Mr Zureikat) knew and Mr Galloway may also have known of the connection, a statement which Mr Kennedy understandably wishes to probe.\nMr Galloway denounced this report, as containing sloppy, misleading and partial passages which could have been cleared up, if the Commission had bothered to interview me during the course of its inquiry.\nBut a Commission spokesman subsequently informed Mr Kennedy that Mr Galloway, although giving written answers to questions posed, had failed to take up an offer of a meeting.\nMr Kennedy wishes to follow up this discrepancy.\nMore generally, Mr Kennedy says that the very brief and unspecific nature of the two Commission reports and the conclusions reached, basically to leave matters as they were, raise questions about the manner in which the Charity Commission performed one of its central functions.\nThe Charity Commission, supported by the Secretary of State for Justice as well as by the Information Commissioner as interveners, maintains that Mr Kennedys requests relate to information which enjoys absolute exemption from disclosure under section 32 read with section 2(3) of the FOIA.\nOther possible heads (such as sections 27, 31, 40, 41 and 42: see paras 17 to 21 below), upon which the Charity Commission would, if necessary, have resisted disclosure of some or all of the material sought under the FOIA, have not therefore been adjudicated upon.\nAs noted in para 11 above, the First tier Tribunal was not instructed to, and did not, address the question whether the information should be disclosed on a balancing of the relevant public and private interests under such heads.\nMr Kennedy has in fact refined his requests so as expressly to disclaim any wish to see information received from or given to a foreign state or international organisation as well as any information in respect of which the House of Commons claims exemption under section 34.\nThe statute law\nSection 1 of the FOIA provides a general right to request, be informed of the existence of and have communicated information held by a public authority, but the right has effect subject to sections 2, 12 and 14.\nSection 2 provides: 2.\nIn respect of any information which is exempt information by virtue of any provision of Part II, section 1(1)(b) does not apply if or to the extent that (a) the information is exempt information by virtue of a provision conferring absolute exemption, or (b) in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.\nSection 12 enables limits to be set to the costs which public authorities are bound to incur in complying with any request for information, and different amounts may be set in relation to different cases.\nSection 19 requires every public authority to adopt, maintain, review and publish information about its scheme for the publication of information.\nPart II (sections 21 to 44) lists a series of classes of exempt information, some absolute, some not.\nSection 2(3) lists the sections in Part II which are to be regarded as conferring absolute exemption.\nAmong these is section 32: 32. (l) Information held by a public authority is exempt information if it is held only by virtue of being contained in (a) any document filed with, or otherwise placed in the custody of, a court for the purposes of proceedings in a particular cause or matter, (b) any document served upon, or by, a public authority for the purposes of proceedings in a particular cause or matter, or (c) any document created by (i) a court, or (ii) a member of the administrative staff of a court, for the purposes of proceedings in a particular cause or matter. (2) Information held by a public authority is exempt information if it is held only by virtue of being contained in (a) any document placed in the custody of a person conducting an inquiry or arbitration, for the purposes of the inquiry or arbitration, or (b) any document created by a person conducting an inquiry or arbitration, for the purposes of the inquiry or arbitration.\nOther classes of absolutely exempt information include: under section 21, information reasonably accessible to the applicant otherwise than under the Act; under section 23, information directly or indirectly supplied by or relating to the Security and Secret Intelligence Services, the Government Communications Headquarters, the special forces and a list of tribunals and other authorities associated with security matters; under section 34, information where necessary to avoid an infringement of the privileges of either House of Parliament; and, under section 41, information obtained by the public authority from any other person (including another public authority), where the disclosure of the information to the public would constitute a breach of confidence actionable by that or any other person.\nPart II makes further provision for exempt (but not absolutely exempt) information, viz: under sections 24 to 26, information required for safeguarding national security and potentially prejudicial to the British Islands or any colonys defence; under sections 27 and 28, information potentially prejudicial to the United Kingdoms international relations, and relations between the devolved administrations; under section 29, for information potentially prejudicial to the United Kingdoms and any such administrations economic interests, and under section 35, information relating to the formulation of government policy and the effective conduct of public affairs.\nSection 31 concerns information, not absolutely exempt, described as relating to law enforcement: 31. (1) Information which is not exempt information by virtue of section 30 is exempt information if its disclosure under this Act would, or would be likely to, prejudice (a) the prevention or detection of crime, (b) the apprehension or prosecution of offenders, (c) the administration of justice, (d) the assessment or collection of any tax or duty or of any imposition of a similar nature, (e) the operation of the immigration controls, (f) the maintenance of security and good order in prisons or in other institutions where persons are lawfully detained, (g) the exercise by any public authority of its functions for any of the purposes specified in subsection (2), (h) any civil proceedings which are brought by or on behalf of a public authority and arise out of an investigation conducted, for any of the purposes specified in subsection (2), by or on behalf of the authority by virtue of Her Majesty's prerogative or by virtue of powers conferred by or under an enactment, or (i) any inquiry held under the Fatal Accidents and Sudden Deaths Inquiries (Scotland) Act 1976 to the extent that the inquiry arises out of an investigation conducted, for any of the purposes specified in subsection (2), by or on behalf of the authority by virtue of Her Majesty's prerogative or by virtue of powers conferred by or under an enactment. (2) The purposes referred to in subsection (1)(g) to (i) are (a) the purpose of ascertaining whether any person has failed to comply with the law, (b) the purpose of ascertaining whether any person is responsible for any conduct which is improper, (c) the purpose of ascertaining whether circumstances which would justify regulatory action in pursuance of any enactment exist or may arise, (d) the purpose of ascertaining a person's fitness or competence in relation to the management of bodies corporate or in relation to any profession or other activity which he is, or seeks to become, authorised to carry on, (e) the purpose of ascertaining the cause of an accident, (f) the purpose of protecting charities against misconduct or mismanagement (whether by trustees or other persons) in their administration, (g) the purpose of protecting the property of charities from loss or misapplication, (h) the purpose of recovering the property of charities, (i) the purpose of securing the health, safety and welfare of persons at work, and (j) the purpose of protecting persons other than persons at work against risk to health or safety arising out of or in connection with the actions of persons at work.\nSections 40 (a part absolute exemption under section 2(3)(f)) and 42 (a non absolute exemption) provide: 40 (1) Any information to which a request for information relates is exempt information if it constitutes personal data of which the applicant is the data subject. (2) Any information to which a request for information relates is also exempt information if (a) it constitutes personal data which do not fall within subsection (l), and (b) either the first or the second condition below is satisfied. 42. (l) Information in respect of which a claim to legal professional privilege or, in Scotland, to confidentiality of communications could be maintained in legal proceedings is exempt information.\nThe Charity Commission was at the material times subject to the Charities Act 1993 (since replaced by the Charities Act 2011).\nThe 1993 Act, as amended, provided: 1B (1) The Commission has the objectives set out in subsection (2). (2) The objectives are 1 The public confidence objective. 2 The public benefit objective. 3 The compliance objective. 4 The charitable resources objective. 5 The accountability objective. (3) Those objectives are defined as follows 1 The public confidence objective is to increase public trust and confidence in charities. 2 The public benefit objective is to promote awareness and understanding of the operation of the public benefit requirement. 3 The compliance objective is to promote compliance by charity trustees with their legal obligations in exercising control and management of the administration of their charities. 4 The charitable resources objective is to promote the effective use of charitable resources. 5 The accountability objective is to enhance the accountability of charities to donors, beneficiaries and the general public. 1C (1) The Commission has the general functions set out in subsection (2). (2) The general functions are 1 Determining whether institutions are or are not charities. 2 Encouraging and facilitating the better administration of charities. 3 Identifying and investigating apparent misconduct or mismanagement in the administration of charities and taking remedial or protective action in connection with misconduct or mismanagement therein. 4 Determining whether public collections certificates should be issued, and remain in force, in respect of public charitable collections. 5 Obtaining, evaluating and disseminating information in connection with the performance of any of the Commission's functions or meeting any of its objectives. 6 Giving information or advice, or making proposals, to any Minister of the Crown on matters relating to any of the Commission's functions or meeting any of its objectives. 1D (1) The Commission has the general duties set out in subsection (2). (2) . 4 In performing its functions the Commission must, so far as relevant, have regard to the principles of best regulatory practice (including the principles under which regulatory activities should be proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed). 1E (1) The Commission has power to do anything which is calculated to facilitate, or is conducive or incidental to, the performance of any of its functions or general duties. 8 (1) The Commission may from time to time institute inquiries with regard to charities or a particular charity or class of charities, either generally or for particular purposes, but no such inquiry shall extend to any exempt charity except where this has been requested by its principal regulator. (2) The Commission may either conduct such an inquiry itself or appoint a person to conduct it and make a report to the Commission. (6) Where an inquiry has been held under this section, [the Commission] may either (a) cause the report of the person conducting the inquiry, or such other statement of the results of the inquiry as the Commission thinks fit, to be printed and published, or (b) publish any such report or statement in some other way which is calculated in the Commission's opinion to bring it to the attention of persons who may wish to make representations to the Commission about the action to be taken. 10A (1) Subject to subsections (2) and (3) below, the Commission may disclose to any relevant public authority any information received by the Commission in connection with any of the Commission's functions (a) if the disclosure is made for the purpose of enabling or assisting the relevant public authority to discharge any of its functions, or (b) if the information so disclosed is otherwise relevant to the discharge of any of the functions of the relevant public authority. (2) In the case of information disclosed to the Commission under section 10(1) above, the Commission's power to disclose the information under subsection (1) above is exercisable subject to any express restriction subject to which the information was disclosed to the Commission. (3) Subsection (2) above does not apply in relation to Revenue and Customs information disclosed to the Commission under section 10(1) above; but any such information may not be further disclosed (whether under subsection (1) above or otherwise) except with the consent of the Commissioners for Her Majesty's Revenue and Customs. (4) Any responsible person who discloses information in contravention of subsection (3) above is guilty of an offence . (5) lt is a defence for a responsible person charged with an offence under subsection (4) above of disclosing information to prove that he reasonably believed (a) that the disclosure was lawful, or (b) that the information had already and lawfully been made available to the public. (7) ln this section responsible person means a person who is or was (a) a member of the Commission, (b) a member of the staff of the Commission, (c) a person acting on behalf of the Commission or a member of the staff of the Commission, or (d) a member of a committee established by the Commission.\nArticle 10 (Freedom of expression) of the Human Rights Convention scheduled to the Human Rights Act 1998 reads: 1.\nEveryone has the right to freedom of expression.\nThis right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.\nThis article shall not prevent states from requiring the licensing of broadcasting, television or cinema enterprises. 2.\nThe exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.\nThe construction of section 32 of the FOIA\nThe first issue identified in para 9 above turns on whether the phrase in section 32(1) FOIA for the purposes of proceedings in a particular cause or matter and in section 32(2) for the purposes of the inquiry or arbitration represents a current or an historical condition for absolute exemption.\nMore fully, do the relevant purposes relate to the time at which the request for disclosure is made and the document is held by the court or by the inquiry or arbitrator(s), as the case may be? Or do they relate to the earlier time at which the document was (in the case of a court) filed with or otherwise placed in its custody or served upon or by the relevant public authority or created by a member of the courts administrative staff or (in the case of an inquiry or arbitration) placed in the custody of, or created by, the person conducting the inquiry or arbitration? The Court of Appeal held the latter: the absolute exemption exists by reference to historical, rather than current, purposes.\nMr Coppel accepts that there can be no distinction in this respect between section 32(1) and section 32(2).\nThe concession was in my opinion plainly correct.\nThe phrases relating to the relevant purposes are similarly placed and must on the face of it have been intended to attach to the same point in time.\nThe practical impact of the phrases is, of course, somewhat different in each case.\nIn the case of a court, the rules of court and (in the case of superior courts) the exercise of the courts inherent jurisdiction mean that the court can at any time during or after the conclusion of proceedings hear and adjudicate upon applications for the release or disclosure of documents held in court or by court staff.\nThe court will undertake a broad exercise, balancing the factors for and against public disclosure of court documents.\nIn the case of an arbitration, there is a strong contractual presumption in favour of confidentiality and against non disclosure.\nBut this may be overridden by a court where necessary to protect a partys rights against a third party or in other exceptional circumstances where justice requires: see e g Ali Shipping Corpn v Shipyard Trogir [1997] EWCA Civ 3054, [1999] 1 WLR 314; Department of Economic Policy and Development of the City of Moscow v Bankers Trust Co [2004] EWCA Civ 314, [2005] QB 207.\nIn contrast, in the case of an inquiry by a public authority like the Charity Commission, the position depends upon the type of inquiry and the relevant statutory provisions under which it is held.\nA public authority which has held an inquiry may not of course continue to function or exist; the inquiry documents may then be held by a relevant Ministry within whose sphere the inquiry took place, and the relevant ministerial powers would then arise for consideration.\nBut it is unnecessary to consider this situation in this case.\nHere the Charity Commission continues to exist, and was at the relevant time subject to the Charities Act 1993 as amended (since replaced by the Charities Act 2011).\nI shall consider the implications of this below.\nFor present purposes, however, what is important is that section 32 treats all such inquiries in similar fashion to court and arbitration proceedings; all are subject to the same absolute exemption from disclosure under the FOIA.\nComing therefore directly to the interpretation under ordinary principles of section 32, the critical phrase (for the purposes of .) is repeated in relation to and placed at the end of each head of documents identified.\nIt follows and, read naturally, qualifies each such head: that is, in the case of a court, any document filed or otherwise placed or served or created and, in the case of an inquiry or arbitration, any document placed or created.\nTo read the phrase as referring back to the initial words of each subsection Information held is, literally, far fetched.\nHad that been meant, the draftsman could and would surely have simplified each subsection, by inserting the phrase once only in each subsection, immediately after the words Information held . or, less neatly, after the words if it is held .\nThe comma which appears in each of subsections (2)(a) and (b) is explained by the interposition in those subsections of the words conducting an inquiry or arbitration between placed in the custody of a person and the phrase for the purposes of the inquiry or arbitration.\nIt makes clear that the last phrase qualifies placed or created and not conducting.\nIn the absence of any equivalent words to conducting an inquiry or arbitration in subsection (1), no such comma was necessary or appropriate.\nAs to the more general merits of the rival constructions, a conclusion that, immediately after the end of any court proceedings, arbitration or inquiry a previously absolute exemption ceases to have effect would, for the reason set out in para 6 above, run contrary to the general scheme of section 32, particularly obviously so in relation to court and arbitration proceedings, but also in relation to inquiries.\nIt would furthermore create an evident internal anomaly within the FOIA.\nThe information would cease to enjoy any form of exemption under section 32 as soon as the court proceedings, inquiry or arbitration ended.\nFrom that moment, the information would not even enjoy the benefit of a balancing of the public interest in disclosure against other interests provided by section 2(2)(b).\nFurther, no ordinary principle of construction could lead to a reading whereby the continuing absolute exemption provided by section 32 was converted into an ordinary exemption within section 2(2)(b) with effect from the close of the relevant court proceedings, arbitration or inquiry.\nOther sections, notably section 31 (law enforcement), section 40 (personal information) and section 41 (information provided in confidence), would afford only limited grounds for refusing disclosure (in contrast to the general position otherwise applicable to, at least, court and arbitration documents: see para 26 above).\nSome assistance, marginal rather than decisive, as to Parliaments likely understanding when it enacted section 32 is to be found in Part VI of the FOIA.\nUnder section 62(1), a record becomes a historical record at the end of 30 years (or now by amendment 20 years) beginning with the year of its creation.\nUnder section 63(1): Information contained in a historical record cannot be exempt information by virtue of section 28, 30(1), 32, 33, 35, 36, 37(1)(a), 42 or 43.\nThe natural inference is that it was contemplated that information falling within section 32 would continue to be exempt for 30 years.\nIt is unlikely that the reference to section 32 was included simply to cover the possible existence of documents from court, arbitration or inquiry proceedings rivalling in length those in Jarndyce v Jarndyce or cases where a court, arbitration or inquiry considers documents themselves over 30 years old.\nAttention was drawn to the Inquiries Act 2005, which has since 2005 modified the application of section 32 in relation to some inquiries, though not those of the type undertaken by the Charity Commission.\nIt enables Ministers to set up formal, independent inquiries relating to particular events which have caused or have potential to cause public concern, or where there is public concern that particular events may have occurred.\nNot all inquiries fall into this category and there is no statutory requirement on a Minister to use the 2005 Act even if they do.\nWhere it is used, section 41(1)(b) provides for rules dealing with the return or keeping, after the end of an inquiry, of documents given to or created by the inquiry, while section 18(3) provides that section 32(2) of the FOIA does not apply in relation to information contained in documents passed to and held by a public authority pursuant to rules made under section 41(1)(b) of the 2005 Act.\nOn this formulation section 32(2) would still apply to documents created by the person conducting the 2005 Act inquiry: see section 32(2)(b).\nBut documents placed in the inquirys custody for inquiry purposes would potentially be disclosable under the FOIA.\nSection 19(1) and (3) of the 2005 Act contain the Acts own regime enabling restrictions to be imposed by the relevant Minister or the chairman of the inquiry on disclosure or publication of evidence or documents given, produced or provided to an inquiry, where conducive to the inquiry fulfilling its terms of reference or necessary in the public interest.\nSection 19(4) specifies particular matters which are to be taken into account when considering whether any and what restrictions should be imposed.\nThey reflect potentially competing interests naturally relevant to any such decision: on the one hand, the allaying of public concern and, on the other, any risk of harm or damage, by disclosure or publication; confidentiality; impairment of the efficiency or effectiveness of the inquiry; and cost.\nRestrictions so imposed may continue in force indefinitely: section 20(5), but this is subject to a provision that, after the end of the inquiry, disclosure restrictions do not apply to a public authority in relation to information held by the authority otherwise than as a result of the breach of any such restrictions: section 20(6).\nThe scheme of the Inquiries Act 2005 was therefore deliberately different from that which, as a matter of straightforward construction, applies under the FOIA in respect of a Charity Commission inquiry.\nAs a matter of law, the position under the 2005 Act cannot affect the proper construction of the earlier FOIA in relation to Charity Commission inquiries.\nNor, pace Lord Wilsons views in para 193, can Parliaments passing in 2005 of the Inquiries Act throw any light on what section 32 of the FOIA was intended to achieve regarding inquiries in 2000 when the 2005 Act was never conceived, let alone enacted.\nBut, even if this were not so, the contrast would reinforce, rather than undermine, the conclusion reached regarding Charity Commission inquiries.\nFurther, the contrast does not of itself mean that the position in relation to Charity Commission inquiries is unsatisfactory.\nIt is, I repeat, necessary to look at the entire picture, which means not looking only at section 32 of the FOIA, but looking also at the statutory and common law position in respect of Charity Commission inquiries apart from section 32.\nIn summary, as a matter of ordinary common law construction, the construction is clear: section 32 was intended to provide an absolute exemption which would not cease abruptly at the end of the court, arbitration or inquiry proceedings, but would continue until the relevant documents became historical records; that however does not mean that the information held by the Charity Commission as a result of its inquiries may not be required to be disclosed outside section 32 under other statutory and\/or common law powers preserved by section 78 of the FOIA.\nIs article 10 of the Convention relevant when construing section 32?\nIt is at this point that Mr Coppel, on behalf of Mr Kennedy, submits that, if the position on ordinary principles of construction is as stated in the previous paragraph, then section 32(2) must be read down to comply with article 10; in particular, that on that basis section 3 of the 1998 Act requires the exemption provided by section 32 to be read as ending at the same moment as the court, arbitration or inquiry proceedings, so that it only covers documentation held currently for the purposes of such proceedings.\nA possible variant of this submission (though not one which Mr Coppel actually explored) might be that the exemption should end at that moment only in the case of inquiry proceedings, while continuing thereafter in the case of court and arbitration proceedings.\nFurther, if such reading down is not possible, Mr Coppel submits that a declaration of incompatibility is called for.\nI cannot accept any of these submissions.\nFirst, to move directly to article 10 is, as I have already indicated, mistaken.\nSection 32 leaves open the statutory and common law position regarding disclosure outside the FOIA, and that directs attention to the Charities Act.\nIf the Charities Act entitles Mr Kennedy to disclosure or puts him in a position no less favourable regarding disclosure than that which should, in Mr Coppels submission, be provided under article 10, then there can be no basis for submissions that section 32 requires reading down in the light of or is inconsistent with article 10.\nSecond, even if the Charities Act, read by itself, appeared on its face not fully to satisfy any rights to information which Mr Kennedy may enjoy under article 10, it does not follow that the fault lies in section 32, or that section 32 can or should be remoulded by the courts to provide such rights.\nOn the contrary, in view of the clarity of the absolute exemption in section 32, the focus would be on the Charities Act and it would be necessary to read it as catering for the relevant article 10 rights.\nAs will appear from what I say later (in paras 43 56 below) about the language of the Charities Act, there would be no difficulty about doing this.\nLord Wilson doubts whether such a scheme would even comply with the Convention, going so far as to suggest that it would not be prescribed by law (para 199).\nI cannot accept this, and it would I believe have some remarkable (and far reaching) consequences.\nOne obvious problem about Lord Wilsons approach is that his treatment of the Charities Act scheme is inconsistent with his treatment of court documents.\nIn his paras 175 and 192, Lord Wilson holds up the position regarding court documents as a model.\nOn his own analysis of the Charities Act position, the scheme regarding disclosure of court documents ought to be regarded as even less compliant with the principle that any such scheme must be in accordance with law.\nThe courts discretion regarding documents not on the court file is not channelled by any published objectives, functions and duties comparable to those present in the Charities Act.\nThe court is simply guided by the general principle of open justice and must act in accordance with any applicable Convention rights.\nThis inconsistency leads into another more basic objection to Lord Wilsons approach, one of general importance to the role of the Convention rights in the United Kingdom.\nThe development of common law discretions, to meet Convention requirements and subject to control by judicial review, has become a fruitful feature of United Kingdom jurisprudence.\nIt is illustrated at the highest level by cases like Doherty v Birmingham City Council [2008] UKHL 57, [2009] AC 367, paras 55, 70, 84 84 and 133 135 welcomed by the European Court of Human Rights in Kay v United Kingdom [2011] HLR 13, para 73 and by Manchester City Council v Pinnock [2010] UKSC 45, [2011] 2 AC 104, para 73.\nIn those cases the House of Lords and Supreme Court modelled a common law discretion to meet the needs of article 8.\nNo distinction can be drawn in the present context between the general nature of articles 8 and 10, each specifying prima facie rights in substantially over lapping terms in their respective paragraphs 1 subject to qualifications identified in their paragraphs 2.\nOn Lord Wilsons approach this development of common law discretions to meet Convention requirements would be vulnerable to the reproach that there was no specific scheme nothing which could count as prescribed by law.\nThere are, of course, situations in which, for reasons of consistency or accountability, the manner in which a discretion will be exercised needs to be spelled out in some form.\nBut that is not so in the present context, as Lord Wilsons own endorsement of the position regarding court and arbitration documents indicates.\nThird, Mr Coppel seeks to meet the points made in paras 35 and 36 above by a submission that the FOIA must be regarded as the means by which the United Kingdom gives effect to any article 10 right which Mr Kennedy has; that it covers the field and confers a general entitlement to access to recorded information held by public authorities, while preserving limited other statutory rights under sections 21, 39 and 40 through which access is also routed; and that, if the FOIA fails in this way to give effect to any article 10 right or does so inappropriately, it interferes with the right and must be read down.\nBut there is no basis for this submission there is no reason why any article 10 rights which Mr Kennedy may have need to be protected by any particular statute or route.\nFar from the FOIA being the route by which the United Kingdom has chosen to give effect to any rights to receive information which Mr Kennedy may have, it is clear that the United Kingdom Parliament has determined that any such rights should be located and enforced elsewhere.\nThat is the intended effect of section 32, read with section 78.\nTo recapitulate: in view of the clarity of the absolute exemption in section 32 and the provisions of section 78, the focus must be on the Charities Act; and if (contrary to conclusion in paras 57 100 below) Mr Kennedy has prima facie rights which are engaged under article 10(1), then it would be necessary to read the Charities Act compatibly with and as giving effect to such rights; and, further, there would be no difficulty about doing this.\nAs I read his judgment (paras 225 to 233, especially para 229), Lord Carnwath does not disagree with any of these points.\nThe difficulty he identifies is not that for which Mr Coppel argued (as set out in para 227 of Lord Carnwaths judgment) and not that the Charities Act cannot be read to give effect to any article 10 rights.\nIt is that this appears to him a less advantageous approach than one which re writes the FOIA, section 32 in particular (see his paras 231 to 233).\nHowever, it is not a courts role to discard the scheme established by Parliament, simply because it may (in Lord Carnwaths view) involve a more cumbersome means of enforcing Convention rights than Parliament has established elsewhere.\nFourth, I do not consider that article 10 would prove to add anything or anything significant to such rights to disclosure as could be enforced under the Charities Act without reference to article 10.\nI explain why below (in paras 43 56).\nI also note in this connection (para 49) that Lord Carnwath himself is influenced in his interpretation of the scope of article 10 by the view that it accords with recognised principles of domestic law (his para 218).\nFifth, and for good measure, even if all these points are put on one side, I would not have accepted Mr Coppels submission that section 32 could or should in some way be read down in the light of article 10.\nReading down section 32(2) so that it ceased to apply at the end of any inquiry would mean that the public interest test applicable under section 2(2)(b) of the FOIA would not apply.\nSection 2(2) as a whole only applies to information which is exempt.\nIf article 10 were to mean that section 32(2) should be read down so as to cease to apply after an inquiry closes, then section 2(2) would at that point also cease to apply to the relevant information.\nA belated submission was made (after a post hearing question from the Court raised the point) that both sections 2(2) and 32(2) might be manipulated, so that after the close of an inquiry the previous absolute exemption provided by section 32 would become a qualified exemption within section 2(2)(b).\nThat too would depart from the statutory scheme, and run contrary to the grain of the legislation.\nIt follows that, even if it were to be held (contrary to my conclusions) that Mr Kennedy has article 10 rights which are not catered for in any way, the most that could be contemplated would be a general declaration of incompatibility.\nConclusion\nIt follows from the above that Mr Kennedys claim, which has been made and argued on the basis that section 32 of the FOIA can and should be read down to have a meaning contrary to that which Parliament clearly intended, must fail.\nIt also follows from the above that no basis exists for any declaration of incompatibility with article 10 of the Convention.\nIn the succeeding paragraphs I will however consider, obiter though it may be, the position regarding Mr Kennedys actual remedies with regard to first the Charities Act and then article 10.\nThe Charities Act 1993\nThe provisions of the Charities Act 1993, set out in para 22 above, identify the Charity Commissions objectives, functions and duties in terms which make clear the importance of the public interest in the operations of both the Commission and the charities which it regulates.\nThe first (public confidence) objective given to the Commission is to increase public trust and confidence in charities, while the fifth and last is to enhance the accountability of charities to, inter alia, the general public.\nThe Commissions general functions include obtaining, evaluating and disseminating information in connection with the performance of any of its functions or meeting any of its objectives.\nAs its first general duty, the Commission must, in performing its functions, act in a way (a) which is compatible with its objectives, and (b) which it considers most appropriate for the purpose of meeting those objectives; and, as its fourth such duty, in performing its functions, [it] must, so far as relevant, have regard to the principles of best regulatory practice (including the principles under which regulatory activities should be . accountable, . [and] transparent .).\nThe significance of these objectives, functions and duties is not affected by the specific provision in section 8(6), whereby the Commission has a choice in which of two ways it publishes the report of the person conducting an inquiry or a statement of the results of the inquiry.\nThe choice must be made in the light of the Commissions objectives, functions and duties.\nSimilarly, the significance of those objectives, functions and duties is not affected by the power given in section 10A(1) to disclose to any other public authority information received in connection with the Commissions performance of its functions.\nSection 10A addresses situations in which disclosure is made for purposes not in the performance of the Commissions own functions.\nIt does not touch the breadth of the Commissions own objectives, functions and duties.\nThe Charity Commissions objectives of increasing public trust and confidence in charities and enhancing the accountability of charities to the general public link directly into its function of disseminating information in connection with the performance of its functions and its duty to have regard to the principle that regulatory activities should be proportionate, accountable, consistent and transparent.\nIts objectives, functions and duties are in their scope and practical application in my view comparable to any that might arise under article 10, taking Mr Coppels most expansive interpretation of the scope of that article.\nMr Coppel recognises that, if article 10 is engaged and imposes on public authorities, at least towards public watchdogs, a duty of disclosure in respect of information over which such public authorities have an information monopoly, the duty involved is no more than a prima facie duty, subject to qualifications as envisaged by article 10(2).\nIn fulfilling its objectives, functions and duties under the 1993 Act, including by conducting and publicising the outcome of any inquiry it holds, the Commission must in my opinion direct itself along lines which are no less favourable to someone in Mr Kennedys position seeking information in order to scrutinise and report on the Commissions performance.\nOn either basis, the real issue will be whether the public interests in disclosure are outweighed by public or private interests mirroring those identified in article 10(2).\nThis is reinforced by the importance attaching to openness of proceedings and reasoning under general common law principles in the present area, which constitutes background to the correct interpretation and application of the Charities Act.\nSince the passing of the Human Rights Act 1998, there has too often been a tendency to see the law in areas touched on by the Convention solely in terms of the Convention rights.\nBut the Convention rights represent a threshold protection; and, especially in view of the contribution which common lawyers made to the Conventions inception, they may be expected, at least generally even if not always, to reflect and to find their homologue in the common or domestic statute law.\nNot surprisingly, therefore, Lord Goff of Chieveley in Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, 282 284 and the House in Derbyshire County Council v The Times Newspapers Ltd [1993] AC 534, 551E both expressed the view that in the field of freedom of speech there was no difference in principle between English law and article 10.\nIn some areas, the common law may go further than the Convention, and in some contexts it may also be inspired by the Convention rights and jurisprudence (the protection of privacy being a notable example).\nAnd in time, of course, a synthesis may emerge.\nBut the natural starting point in any dispute is to start with domestic law, and it is certainly not to focus exclusively on the Convention rights, without surveying the wider common law scene.\nAs Toulson LJ also said in the Guardian News and Media case, para 88: The development of the common law did not come to an end on the passing of the Human Rights Act 1998.\nIt is in vigorous health and flourishing in many parts of the world which share a common legal tradition.\nGreater focus in domestic litigation on the domestic legal position might also have the incidental benefit that less time was taken in domestic courts seeking to interpret and reconcile different judgments (often only given by individual sections of the European Court of Human Rights) in a way which that Court itself, not being bound by any doctrine of precedent, would not itself undertake.\nIn the present case, the meaning and significance which I attach to the provisions of the Charities Act is in my view underpinned by a common law presumption in favour of openness in a context such as the present.\nIn this respect, court proceedings and inquiries have more in common with each other than they do with arbitration proceedings between parties who have contracted to resolve issues between them on the well understood assumption that their proceedings will be private and confidential.\nStarting with court proceedings, common law principles of open justice have been held to require the disclosure to a newspaper for serious journalistic purposes of documents placed before a judge and referred to in open court, absent good reasons to the contrary: see R (Guardian News and Media Ltd) v City of Westminster Magistrates Court [2013] EWCA Civ 420, [2013] QB 618.\nThe proceedings in issue there were for extradition to the United States of two British citizens on corruption charges, the documents were affidavits, witness statements and correspondence, and the newspaper wanted to see them in order to understand the full course of the proceedings, and to report on them in order to stimulate informed debate about the way in which the justice system deals with suspected international corruption and the system for extradition of British subjects to the USA (para 76).\nThe Court of Appeal held that the principle of open justice applicable to court proceedings required disclosure of the documents sought, unless outweighed by strong countervailing arguments, which, in the event, it also held was not the case.\nThe present appeal concerns not proceedings before a court, but an inquiry conducted by the Charity Commission in relation to a charity, and the inquiry proceedings were not conducted in public.\nWe are not being asked to say that that was wrong, or that court and inquiry proceedings are subject to the same principles of open justice.\nI agree with Lord Carnwath (paras 243 and 244) that court and inquiry proceedings cannot automatically be assimilated in this connection.\nHad the issue been whether the inquiry proceedings should be conducted in public, we would have had to look at cases such as Crampton v Secretary of State for Health (9 July 1993) (Court of Appeal (Civil Division) Transcript No 824 of 1993), R (Wagstaff) v Secretary of State for Health [2001] 1 WLR 292 and R (Persey) v Secretary of State for the Environment, Food and Rural Affairs [2003] QB 794; [2002] EWHC 371 (Admin), which suggest that it is always very much a matter of context.\nAt one end of the spectrum are inquiries aimed at establishing the truth and maintaining or restoring public confidence on matters of great public importance, factors militating in favour of a public inquiry.\nBut many inquiries lie elsewhere on the spectrum.\nThe present appeal concerns a different issue: to what extent should the Commission disclose further information concerning inquiries on which it has already published reports under section 8(6) of the Charities Act, and in relation to which Mr Kennedy has raised significant unanswered questions of real public interest? We are concerned with a situation where both the Charities Act and the Charity Commission in publishing its report under the Act recognise that the public has a legitimate interest in being informed about the relevant inquiries.\nThat must mean properly informed.\nThe Charity Commission recognised that this was a case for public reports, and such reports must account properly to the public for the conduct and outcome of the inquiries.\nHere, Mr Kennedy has shown that important questions arise from the inquiries and reports relating not only to the subject matter and outcome of the inquiries, but also to the Charity Commissions conduct of the inquiries.\nThe proper functioning and regulation of charities is a matter of great public importance and legitimate interest.\nThe public interest in openness in relation to these questions is demonstrated positively by the objectives, the functions and, importantly, the duties given to and imposed on the Charity Commission under the Charities Act.\nThe present request for further disclosure is made by a journalist in the light of the powerful public interest in the subject matter to enable there to be appropriate public scrutiny and awareness of the adequacy of the functioning and regulation of a particular charity.\nIt is in these circumstances a request to which the Charity Commission should in my opinion accede in the public interest, except so far as the public interest in disclosure is demonstrably outweighed by any countervailing arguments that may be advanced.\nI do not read Lord Carnwaths and my judgments as differing in any essential respect on these points.\nAlthough (for reasons given in the next section of this judgment: paras 57 96 below) I cannot share his conclusion that the direction of travel of Strasbourg case law has now reached its destination, I do however note his view that no reason has been put forward for regarding that approach as involving any fundamental departure from domestic law principles (para 219).\nThe countervailing arguments that can be envisaged against disclosure of particular information will of course differ in nature and weight, according to whether one is considering court or inquiry documents, and in the latter case according to the nature of the inquiry.\nA Charity Commission inquiry is likely to depend upon information being provided by third parties.\nThe Commission has powers to require the provision of accounts, statements, copies of documents and the attendance of persons to give evidence or produce such documents: section 8(3) of the Charities Act.\nBut it may depend upon co operation and liaison with third parties and the gathering of confidential information.\nIn the present case, some of the information sought may also be sensitive information bearing on matters of national security or international affairs, although Mr Kennedy has restricted his request in this respect (para 15 above).\nAll such considerations can and would need to be taken into account, as the Charity Commission in its letter dated 4 July 2007 (para 8 above) identified, but they are no reason why the balancing exercise should not be undertaken.\nAgain, if one makes an assumption that disclosure could in principle be required under article 10, there is no reason to think that it would be on any basis or be likely to lead to any outcome more favourable from Mr Kennedys viewpoint.\nThe same considerations would fall to be taken into account, the same balancing exercise performed and there is no basis for thinking that the outcome should or would differ.\nI do not therefore agree with Jacob LJs comment in the Court of Appeal (para 48) that Parliament must simply [have] overlooked that a court has machinery for the release of documents subsequent to (or indeed during) legal proceedings whereas an inquiry or arbitration does not and that that may well have been a blunder which needs looking at.\nThat overlooks the statutory scheme of the FOIA and the Charities Act.\nIt also fails to give due weight to the courts power to ensure disclosure by the Charity Commission in accordance with its duties of openness and transparency.\nAgain, I find it difficult to think that there would be any significant difference in the nature or outcome of a courts scrutiny of any decision by the Commission to withhold disclosure of information needed in order properly to understand a report issued after a Charities Act inquiry, whether such scrutiny be based solely on the Charity Commissions objectives, functions and duties under the Charities Act or whether it can also be based on article 10, read in the width that Mr Coppel invites.\nThe common law no longer insists on the uniform application of the rigid test of irrationality once thought applicable under the so called Wednesbury principle.\nThe nature of judicial review in every case depends upon the context.\nThe change in this respect was heralded by Lord Bridge of Harwich said in R v Secretary of State for the Home Department, Ex p Bugdaycay [1987] AC 514, 531 where he indicated that, subject to the weight to be given to a primary decision makers findings of fact and exercise of discretion, the court must be entitled to subject an administrative decision to the more rigorous examination, to ensure that it is in no way flawed, according to the gravity of the issue which the decision determines.\nThis was taken up by Court of Appeal in R v Ministry of Defence, Ex p Smith [1996] QB 517, 554, a pre Human Rights Act case, where Sir Thomas Bingham MR accepted counsels proposition that The more substantial the interference with human rights, the more the court will require by way of justification before it is satisfied that the decision is reasonable in the sense outlined above (viz, within the range of responses open to a reasonable decision maker).\nThe European Court of Human Rights still concluded that the courts had in that case set the level of scrutiny too low on the particular facts: Smith and Grady v United Kingdom (2000) 31 EHRR 620.\nThe common law has however continued to evolve.\nAs Lord Phillips of Worth Matravers MR said in R (Q) v Secretary of State for the Home Department [2003] EWCA Civ 364, [2004] QB 36, para 112:The common law of judicial review in England and Wales has not stood still in recent years.\nStarting from the received checklist of justiciable errors set out by Lord Diplock in the CCSU case [1985] AC 374, the courts (as Lord Diplock himself anticipated they would) have developed an issue sensitive scale of intervention to enable them to perform their constitutional function in an increasingly complex polity.\nThey continue to abstain from merits review in effect, retaking the decision on the facts but in appropriate classes of case they will today look very closely at the process by which facts have been ascertained and at the logic of the inferences drawn from them.\nIn IBA Health Ltd v Office of Fair Trading [2004] EWCA Civ 142, [2004] ICR 1364, in a judgment with which I agreed, Carnwath LJ said (at paras 90 92): 90. the CAT [Competition Appeal Tribunal] was right to observe that their approach should reflect the specific context in which they had been created as a specialised tribunal (paras 220); but they were wrong to suggest that this permitted them to discard established case law relating to reasonableness in administrative law, in favour of the ordinary and natural meaning of that word (para 225).\nTheir instinctive wish for a more flexible approach than Wednesbury would have found more solid support in the textbook discussions of the subject, which emphasise the flexibility of the legal concept of reasonableness dependent on the statutory context (see de Smith para 13 055ff The intensity of review; cf Wade and Forsyth, p 364ff The standard of reasonableness, and the comments of Lord Lowry in R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, 765ff). 91.Thus, at one end of the spectrum, a low intensity of review is applied to cases involving issues depending essentially on political judgment (de Smith para 13 056 7).\nExamples are R v Secretary of State, Ex p Nottinghamshire County Council [1986] AC 240, and R v Secretary of State, Ex p Hammersmith and Fulham London Borough Council [1991] 1 AC 521, where the decisions related to a matter of national economic policy, and the court would not intervene outside of the extremes of bad faith, improper motive or manifest absurdity ([1991] 1 AC, per Lord Bridge of Harwich, at pp 596 597).\nAt the other end of the spectrum are decisions infringing fundamental rights where unreasonableness is not equated with absurdity or perversity, and a lower threshold of unreasonableness is used: \"Review is stricter and the courts ask the question posed by the majority in Brind, namely, whether a reasonable Secretary of State, on the material before him, could conclude that the interference with freedom of expression was justifiable. (de Smith para 13 060, citing Ex p Brind [1991] 1 AC 696, 751, per Lord Ackner).\" 92.A further factor relevant to the intensity of review is whether the issue before the Tribunal is one properly within the province of the court.\nAs has often been said, judges are not equipped by training or experience or furnished with the requisite knowledge or advice to decide issues depending on administrative or political judgment: see Ex p Brind [1991] 1 AC at 767, per Lord Lowry.\nOn the other hand where the question is the fairness of a procedure adopted by a decision maker, the court has been more willing to intervene: such questions are to be answered not by reference to Wednesbury unreasonableness, but in accordance with the principles of fair procedure which have been developed over the years and of which the courts are the author and sole judge (R v Panel on Take overs and Mergers, Ex p Guinness plc [1990] 1 QB 146, 184, per Lloyd LJ).\nMore recently, the same process was carried further by emphasising that the remedy of judicial review is in appropriate cases apt to cover issues of fact as well as law see the cases referred to in para 38 above.\nAs Professor Paul Craig has shown (see e.g.\nThe Nature of Reasonableness (2013) 66 CLP 131), both reasonableness review and proportionality involve considerations of weight and balance, with the intensity of the scrutiny and the weight to be given to any primary decision makers view depending on the context.\nThe advantage of the terminology of proportionality is that it introduces an element of structure into the exercise, by directing attention to factors such as suitability or appropriateness, necessity and the balance or imbalance of benefits and disadvantages.\nThere seems no reason why such factors should not be relevant in judicial review even outside the scope of Convention and EU law.\nWhatever the context, the court deploying them must be aware that they overlap potentially and that the intensity with which they are applied is heavily dependent on the context.\nIn the context of fundamental rights, it is a truism that the scrutiny is likely to be more intense than where other interests are involved.\nBut that proportionality itself is not always equated with intense scrutiny was clearly identified by Lord Bingham of Cornhill CJ in R v Secretary of State for Health, Ex p Eastside Cheese Co [1999] 3 CMLR 123, paras 41 49, which Laws and Arden LJJ and Lord Neuberger MR cited and discussed at paras 21, 133 and 196 200 in R (Sinclair Collis Ltd) v Secretary of State for Health [2011] EWCA Civ 437, [2012] QB 394, a case in which the general considerations governing proportionality were treated as relevantly identical under EU and Convention law (paras 54, 147 and 192 194).\nAs Lord Bingham explained, at para 47, proportionality review may itself be limited in context to examining whether the exercise of a power involved some manifest error or a clear excess of the bounds of discretion a point taken up and amplified in the Sinclair Collis case, at paras 126 134 and 203 by Arden LJ and by Lord Neuberger; see also Edward and Lane on European Union Law (2013), para 2.32.\nSpeaking generally, it may be true (as Laws J said in a passage also quoted by Lord Bingham from R v Ministry of Agriculture, Fisheries and Food, Ex p First City Trading [1997] 1 CMLR 250, 278 279) that Wednesbury and European review are two different models one looser, one tighter of the same juridical concept, which is the imposition of compulsory standards on decision makers so as to secure the repudiation of arbitrary power.\nBut the right approach is now surely to recognise, as de Smiths Judicial Review,7th ed (2013), para 11 028 suggests, that it is inappropriate to treat all cases of judicial review together under a general but vague principle of reasonableness, and preferable to look for the underlying tenet or principle which indicates the basis on which the court should approach any administrative law challenge in a particular situation.\nAmong the categories of situation identified in de Smith are those where a common law right or constitutional principle is in issue.\nIn the present case, the issue concerns the principles of accountability and transparency, which are contained in the Charities Act and reinforced by common law considerations and which have particular relevance in relation to a report by which the Charity Commission makes to explain to the public its conduct and the outcome of an inquiry undertaken in the public interest.\nThe Charity Commissions response to a request for disclosure of information is in the light of the above circumscribed by its statutory objectives, functions and duties.\nIf, as here, the information is of genuine public interest and is requested for important journalistic purposes, the Charity Commission must show some persuasive countervailing considerations to outweigh the strong prima facie case that the information should be disclosed.\nIn any proceedings for judicial review of a refusal by the Charity Commission to give effect to such a request, it would be necessary for the court to place itself so far as possible in the same position as the Charity Commission, including perhaps by inspecting the material sought.\nOnly in that way could it undertake any review to ascertain whether the relevant interests had been properly balanced.\nThe interests involved and the balancing exercise would be of a nature with which the court is familiar and accustomed to evaluate and undertake.\nThe Charity Commissions own evaluation would have weight, as it would under article 10.\nBut the Charity Commissions objectives, functions and duties under the Charities Act and the nature and importance of the interests involved limit the scope of the response open to the Charity Commission in respect of any particular request.\nI therefore doubt whether there could or would be any real difference in the outcome of any judicial review of a Charity Commission refusal to disclose information, whether this was conducted under article 10, as Mr Coppel submits that it should be, or not.\nArticle 10 in detail\nIn the light of the conclusions which I have already expressed, the answer to the question whether or not Mr Kennedys claim to disclosure by the Charity Commission engages article 10 cannot affect the outcome of this appeal.\nBut I shall consider this question (I fear at some length) for completeness and in deference to the detailed citation of authority and submissions we have heard upon it.\nOn its face, article 10 is concerned with the receipt, holding, expression or imparting of thoughts, opinions, information, ideas, beliefs.\nIt is concerned with freedom to receive information, freedom of thought and freedom of expression.\nIt does not impose on anyone an obligation to express him or itself or to impart information.\nThe Charity Commission submits that this represents the correct analysis.\nMr Kennedy submits that the Strasbourg case law has taken a direction of travel, towards a destination which should now be regarded as reached.\nMr Kennedys case is that article 10(1) confers a positive right to receive information from public authorities, and, it follows, a correlative obligation on public authorities to impart information, unless the withholding of the information can be and is justified under article 10(2).\nIf this right and obligation is not general, then (he submits) it is at least a right and obligation which arises or exists in any sphere which a state has chosen to regulate by a Freedom of Information Act.\nThe Strasbourg jurisprudence is neither clear nor easy to reconcile.\nIn Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28, [2010] 2 AC 269 Lord Rodger said famously: Argentoratum locutum: iudicium finitum Strasbourg has spoken, the case is closed.\nIn the present case, Strasbourg has spoken on a number of occasions to apparently different effects.\nFurther, a number of these occasions are Grand Chamber decisions, which do contain apparently clear cut statements of principle.\nBut they are surrounded by individual section decisions, which appear to suggest that at least some members of the Court disagree with and wish to move on from the Grand Chamber statements of principle.\nIf that is a correct reading, then it may be unfortunate that the relevant sections did not prefer to release the matter before them to a Grand Chamber.\nIt is not helpful for national courts seeking to take into account the jurisprudence of the European Court of Human Rights to have different section decisions pointing in directions inconsistent with Grand Chamber authority without clear explanation.\nWhatever the reason for the present state of authority in Strasbourg, we have, without over concentrating on individual decisions, to do our best to understand the underlying principles, as we have done in previous cases: see, for instance, in relation to the meaning of jurisdiction under article 1: R (Al Skeini) v Secretary of State for Defence [2007] UKHL 26, [2008] AC 153, R (Smith) v Oxfordshire Assistant Deputy Coroner (Equality and Human Rights Commission intervening) [2010] UKSC 29, [2011] 1 AC 1 and Smith v Ministry of Defence (JUSTICE intervening) [2013] UKSC 41, [2014] 1 AC 52; to the scope of the operational duty to safeguard life under article 2: Rabone v Pennine Care NHS Trust (INQUEST intervening) [2012] UKSC 2, [2012] 2 AC 72; and to the circumstances in which and basis on which damages should be awarded to prisoners the need for whose further detention was not promptly reviewed following the expiry of their tariff period: R (Sturnham) v Parole Board [2013] UKSC 23, [2013] 2 AC 254.\nThe early Strasbourg case law\nThe present appeal in fact represents the second time in two years that this Court has had to consider Strasbourg jurisprudence in this area.\nThe first was in British Broadcasting Corpn v Sugar (decd) (No 2) [2012] UKSC 4, [2012] 1 WLR 439 decided on 15 February 2012.\nHowever Mr Coppel submits that Strasbourg case law has further developed, even since then.\nSugar was a case where it could be said that Mr Sugars claim to access BBC information was potentially in conflict with the BBCs own freedom of journalistic expression.\nBut that is not material when considering whether Mr Sugars claim even engaged article 10.\nLord Brown gave his reason for a negative answer on that point in some detail in paras 86 to 102, with which I expressly agreed in para 113. (Lord Wilson, while not disagreeing, was less categorical on the point in para 58, so that the reasoning on it cannot be regarded as part of the ratio.)\nLord Brown identified four Strasbourg cases as establishing that, in the circumstances before the Strasbourg Court in each of such cases, article 10 involved no positive right of access to information, nor any obligation on the State to impart such information.\nThe four cases were Leander v Sweden (1987) 9 EHRR 433, Gaskin v United Kingdom (1989) 12 EHRR 36, Guerra v Italy (1998) 26 EHRR 357 and Roche v United Kingdom (2005) 42 EHRR 599.\nIn Leander Mr Leander sought information about national security concerns about him which had led to him being refused a permanent position in a naval museum.\nThe claim was addressed primarily to article 8 (right to personal life), under which the withholding of information was held justified.\nUnder article 10 the Court said simply: 74.\nThe Court observes that the right to freedom to receive information basically prohibits a Government from restricting a person from receiving information that others wish or may be willing to impart to him.\nArticle 10 does not, in circumstances such as those of the present case, confer on the individual a right of access to a register containing information on his personal position, nor does it embody an obligation on the Government to impart such information to the individual.\nI do not subscribe to the view taken by Lord Wilson (para 178) that this was the answer to a narrow, ostensibly a pedantic, question of the sort against which the court in Strasbourg often sets its face.\nThe Grand Chamber did not see the matter in such terms.\nIt was giving a serious answer to an important question, which defines the role of the Convention in this area.\nThe Convention establishes fundamental standards, but there are limits to the ideal systems upon which it insists, and the Grand Chamber was making clear that article 10 does not go so far as to impose a positive duty of disclosure on Member States at the European level.\nIn Gaskin the Court held a refusal of access to personal information about a persons childhood as a foster child unjustified under article 8, and rejected any claim under article 10 in the circumstances of the [present] case for essentially the same reason as it had in Leander, which it followed.\nIn Guerra the Grand Chamber consisting of 20 judges (including the present President) held that it was a breach of article 8 to fail to supply the applicants with environmental information (even though this had not been requested) relating to their exposure to chemical emissions from a nearby factory.\nBut it said of article 10: The Court reiterates that freedom to receive information, referred to in para 2 of article l0 of the Convention, basically prohibits a government from restricting a person from receiving information that others wish or may be willing to impart to him (see the Leander v Sweden judgment . ) That freedom cannot be construed as imposing on a state, in circumstances such as those of the present case, positive obligations to collect and disseminate information of its own motion.\nOnly a minority of 7 of the 20 judges added as a coda that there might under some different circumstances prove to be a positive obligation on a state to make available information to the public.\nIn Roche the claimant sought disclosure of records of gas tests at Porton Down in which he had participated 20 years before and to which he now attributed certain medical conditions.\nThe Grand Chamber held that article 8 gave him a positive right to such information, but said of article 10: 172.\nThe Court reiterates its conclusion in Leander v Sweden para 74 and in Gaskin para 52 and, more recently, confirmed in Guerra para 53, that the freedom to receive information prohibits a government from restricting a person from receiving information that others wish or may be willing to impart to him and that that freedom cannot be construed as imposing on a state, in circumstances such as those of the present case, positive obligations to . disseminate information of its own motion.\nIt sees no reason not to apply this established jurisprudence.\nThus far, the Strasbourg case law supports the Charity Commissions submission that article 10 does not give positive rights to require, or positive obligations to make, disclosure of information.\nThree of the cases (Leander, Gaskin and Roche) concerned private information, in respect of which the Court held that such a right could arise under article 8.\nIn all these cases, the Court did not go on to leave open the position under article 10 or to say that it raised no separate question.\nRather, it made clear that no right arose in the circumstances under article 10.\nA claim for disclosure by a defendant of private information held regarding the claimant starts from a strong basis.\nIf such a claim can only be put under article 8, there is no obvious reason to suppose that a claim for other non private information is generally possible under article 10.\nAs to the fourth case, Guerra, the emissions were toxic in a manner breaching article 8, the information about them was not itself private or personal, and the complaint about non disclosure was initially only made under article 10.\nThe case is therefore direct authority as to the continuing application of the principle stated in Leander to non personal information under that article.\nThe applicants successful claim under article 8 was added before the Court (paras 41 and 46), and was not made on the basis that the environmental information in question was private or personal, but on the basis that withholding it from the applicants prevented them from assessing the risks they ran by continuing to live where they did (para 60)\nIt is also of particular interest to note that in summarising the legal position under article 10 in Roche, quoted in para 66 above, the Grand Chamber deliberately omitted the word collect which was present in the original of the passage which it cited from its prior decision in Guerra.\nThe Grand Chamber was thus making clear that, even where the information was readily available for disclosure, there was no general duty to disclose.\nMr Kennedy relies however on a number of subsequent cases as establishing, first, a different direction of travel, and, now, he submits, a different end point.\nThe first three, Matky v Czech Republic (Application No 19101\/03) (unreported) given 10 July 2006, Trsasg a Szabadsagjogokert v Hungary (2009) 53 EHRR 130, Kenedi v Hungary (2009) 27 BHRC 335, were considered by Lord Brown in Sugar and I can do no better than quote his analysis of them, with which I agreed in that case, at para 113.\nHe said: 90.\nI come then to the first of the trilogy of cases on which the appellant so strongly relies: the Matky case.\nThe complainant there was seeking, against the background of a general right to information under the Czech legal system, access to documentation concerning the construction of a new nuclear power station and in particular was challenging a requirement of the domestic legislation (article 133 of the Building Act ) that a request for information had to be justified.\nThe Court accepted that the rejection of his request constituted an interference with the complainants right to receive information.\nBut it held that the decision could not be considered arbitrary, recognised that Contracting States enjoy a certain margin of appreciation in this area and unanimously rejected the complaint as manifestly ill founded. 91.The Matky case seems accordingly an unpromising foundation upon which to build any significant departure from what may be called the Roche approach to the freedom to receive information protected by article 10. 92.\nNevertheless, in Trsasg (the second in the appellants trilogy of cases) it was to the Matky case that the Second Section of the Court referred as (the sole) authority for the proposition that, the Leander line of authority notwithstanding, the Court has recently advanced towards a broader interpretation of the notion of freedom to receive information and thereby towards the recognition of a right of access to information.\nIn Trsasg the court upheld a complaint by the Hungarian Civil Liberties Union that a refusal by the Constitutional Court to grant them access to an MPs pending complaint as to the constitutionality of certain proposed amendments to the Criminal Code breached its article 10 right to receive information.\nThe Government having accepted that there had been an interference with the applicants article 10 rights, Mr Eicke relies in particular upon the following passage in the Courts judgment: [The Court] considers that the present case essentially concerns an interference by virtue of the censorial power of an information monopoly with the exercise of the functions of a social watchdog, like the press, rather than a denial of a general right of access to official documents .\nMoreover, the states obligations in matters of freedom of the press include the elimination of barriers to the exercise of press functions where, in issues of public interest, such barriers exist solely because of an information monopoly held by the authorities (para 36). 93.\nKenedi, the third in the trilogy of cases, was decided just four months after Trsasg, also by the Second Section of the Court (including six of the same seven judges who had decided Trsasg).\nThe applicant there was a historian specialising in the functioning of the secret services of dictatorships.\nAlthough a succession of domestic court judgments had held him to be entitled to access to various documents for research purposes, the Ministry had refused to disclose them.\nOnce again, hardly surprisingly in this case, the government conceded that there had been an interference with the applicants article 10 rights.\nThe Court 27 BHRC 335, para 45, had no difficulty in finding in the result a violation of article 10: the Court cannot but conclude that the obstinate reluctance of the respondent states authorities to comply with the execution orders was in defiance of domestic law and tantamount to arbitrariness.\nThe conclusion in BBC v Sugar\nLord Browns conclusion in relation to the impact of the trio of cases relied upon by the claimant in Sugar was that: 94.\nIn my judgment these three cases fall far short of establishing that an individuals article 10(1) freedom to receive information is interfered with whenever, as in the present case, a public authority, acting consistently with the domestic legislation governing the nature and extent of its obligations to disclose information, refuses access to documents.\nOf course, every public authority has in one sense the censorial power of an information monopoly in respect of its own internal documents.\nBut that consideration alone cannot give rise to a prima facie interference with article 10 rights whenever the disclosure of such documents is refused.\nSuch a view would conflict squarely with the Roche approach.\nThe applicants difficulty here is not that Mr Sugar was not exercising the functions of a social watchdog, like the press. (Perhaps he was.) The Jewish Chronicle would be in no different or better position.\nThe applicants difficulty to my mind is rather that article 10 creates no general right to freedom of information and where, as here, the legislation expressly limits such right to information held otherwise than for the purposes of journalism, it is not interfered with when access is refused to documents which are held for journalistic purposes.\nSome points are worth underlining in relation to Trsasg.\nFirst, the Second Sections reference to the Court having recently advanced towards a broader interpretation of the notion of freedom to receive information was, firstly, weakly based: see Lord Browns analysis at para 91, secondly, clearly aspirational and tentative and, thirdly, not part of the essential reasoning for the Courts decision this is evident from the fact that the Court began its next para 36 with the words In any event, .\nSecond, in point of fact, the Hungarian Government accepted in Trsasg that article 10 was engaged (para 18), and it was on that basis that the Court went straight to the question whether there has been an interference and in that connection said that even measures which merely make access to information more cumbersome may amount to interference (para 26).\nThird, in introducing its decision on the question which thus arose whether the interference with this admitted right was justified, the Second Section used the dramatic metaphor of the censorial power of an information monopoly (para 36).\nThe context helps understand why such dramatic language was appropriate.\nDisclosure of the information requested had been refused by the domestic courts on the ground that this was essential to protect personal data.\nBut, as the Court noted, the claimant had expressly restricted his application to information . without the personal data of its author (para 37).\nIn addition, the Court found, it was quite implausible that any reference to the private life of the MP, hence to a protected private sphere, could be discerned from his constitutional complaint.\nIn short, the domestic courts had arrived at a decision to refuse disclosure which was not sustainable under domestic law.\nThe breach of article 10 followed this.\nKenedi was also a case where there had been a breach of a domestic law duty of disclosure, in that case by the executive failing to give effect to court orders.\nAgain, the breach of article 10 followed.\nFurther Strasbourg case law\nSince the Supreme Courts decision in Sugar, there have been four further Strasbourg decisions upon which Mr Kennedy relies as requiring a different analysis to that adopted in Lord Browns judgment.\nThey are Gillberg v Sweden (2012) 34 BHRC 247, Shapovalov v Ukraine (Application No 45835\/05) (unreported) given 31 July 2012, Youth Initiative for Human Rights v Serbia (Application No 48135\/06) (unreported) given 25 June 2013 and, finally, sterreichische Vereinigung zur Erhaltung, Strkung und Schaffung v Austria (Application No 39534\/07) (unreported) given 28 November 2013.\nThe last (for economy, the sterreichische case) was decided after the oral hearing of the present appeal and the Court received written submissions upon it.\nAll four cases were concerned with information which was not personal.\nGillberg was an unusual case.\nUnder the Swedish equivalent of the FOIA, Professor Gillberg was ordered by the Administrative Court of Appeal to allow the claimants (K, a sociologist, and E, a paediatrician) to have access for research purposes to a file belonging to Gothenburg University but held by Professor Gillberg.\nHe refused such access, the file was instead destroyed by three of his colleagues, and he was prosecuted.\nHe claimed that the Administrative Court and criminal proceedings breached his rights under articles 8 and 10.\nThe Grand Chamber repeated that: 83.\nThe right to receive and impart information explicitly forms part of the right to freedom of expression under article 10.\nThat right basically prohibits a Government from restricting a person from receiving information that others wish or may be willing to impart to him (see, for example, Leander v Sweden ., para 74, and Gaskin v United Kingdom .para 52) 84.\nIn the present case the applicant was not prevented from receiving and imparting information or in any other way prevented from exercising his positive right to freedom of expression.\nHe argued that he had a negative right within the meaning of article l0 to refuse to make the disputed research material available, and that consequently his conviction was in violation of article l0 of the Convention.\nAs to this suggested negative right, the Court expressed no view, saying merely: 86.\nThe Court does not rule out that a negative right to freedom of expression is protected under article 10 of the Convention, but finds that this issue should be properly addressed in the circumstances of a given case.\nTurning on this basis to the actual issue and circumstances, the Court said: 92. the Court considers that the crucial question can be narrowed down to whether the applicant, as a public employee, had an independent negative right within the meaning of article l0 of the Convention not to make the research material available, although the material did not belong to him but to his public employer, the University of Gothenburg, and despite the fact that his public employer the university actually intended to comply with the final judgments of the Administrative Court of Appeal granting K and E access to its research material on various conditions, but was prevented from so doing because the applicant refused to make it available. 93.\nIn the Court's view, finding that the applicant had such a right under article l0 of the Convention would run counter to the property rights of the University of Gothenburg.\nIt would also impinge on K's and E's rights under article 10, as granted by the Administrative Court of Appeal, to receive information in the form of access to the public documents concerned, and on their rights under article 6 to have the final judgments of the Administrative Court of Appeal implemented.\nGillberg is therefore a case in which the Court reiterated with approval the general principle identified in Leander.\nAt the same time, however, it suggested in the second sentence of para 93 that domestic rights to receive information could give rise to an entitlement under article 10.\nShapovalov is to like effect.\nA Ukrainian journalist claimed that he had (contrary to the Ukranian Information Act 1992) been refused access by administrative authorities during the 2004 elections to certain information and meetings.\nHe relied on article 6 because the Ukrainian courts had wrongly failed on procedural grounds to consider the merits of his complaints.\nThe Court upheld that complaint.\nHe also relied on article 10 because of the administrative authorities interference with his access.\nThe Government made no submissions on the merits of this complaint, but the Court rejected it on the ground that there was no evidence of interference with his performance of his journalistic activity.\nAgain, the case was one where there was a domestic right to information.\nIn Youth Initiative the complaint concerned a refusal by the Serbian intelligence agency to provide the complainant with information as to how many people had been the subject of electronic surveillance by the agency.\nThe Serbian Information Commissioner whose role was to ensure the observance of the Serbian Freedom of Information Act 2004: para 25 had decided that this should be disclosed.\nThe Serbian Government objected that article 10 did not guarantee a general right of access to information and the applicant did not anyway need the information.\nThe Second Section rejected these objections with references to Trsasg, recalling that the notion of freedom of information embraces a right of access to information (para 20), and stating that the applicant NGO was exercising a role as a public watchdog of similar importance to that of the press and warranted similar Convention protection to that afforded to the press (para 20).\nOn the merits, after referring to the Serbian Information Commissioners order, the Second Section held that there had been an interference, analogous to that in Trsasg (para 24).\nIn para 25 the Court noted that the Information Commissioner had decided that the information should be provided and found the intelligence agencys assertion that it did not hold the information unpersuasive in view of the nature of that information (the number of people subjected to electronic surveillance by that agency in 2005) and the agencys initial response (viz, to rely on a public interest exception in the Serbian Act of 2004, which the Information Commissioner had not accepted as justifying non disclosure).\nThe Youth Initiative case is, therefore, another in a line of cases where the European Court of Human Rights has recognised a complaint under article 10 of the Convention following from a failure to give effect to a domestic right to disclosure of information.\nIn the context of EU law, we were also referred to a comparable complaint in Thesing, Bloomberg Finance Ltd v European Central Bank (ECB) (Case T 590\/10) (unreported) 29 November 2012.\nThere the General Court was concerned with the right to access ECB documents provided by article 1 of Decision 2004\/258\/EC.\nThe applicant sought to rely on article 11 of the Charter of Fundamental Rights (mirroring in this respect article 10 of the Convention) and on the Strasbourg case law, including Trsasg, Kenedi and Gillberg.\nThey failed because the General Court held that the ECB had been entitled to invoke an exception contained in article 4 of Decision 2004\/258\/EC.\nThe decision therefore adds nothing of present relevance.\nFinally, in the sterreichische case, all agricultural and forest land transactions in Austria required approval by local and regional authorities (in the Tyrol, the Tyrol Real Property Transactions Commission), the aim being to preserve land for agriculture and forestry and avoid the proliferation of second homes.\nThe application association was formed to promote sound agricultural and forest property ownership and sought from the Tyrol Commission (in anonymised form and against reimbursement of costs) all decisions it had issued since 1 January 2000.\nIt relied upon the Tyrol Access to Information Act and submitted that the Commissions decisions concerned civil rights within article 6 of the Convention, and should therefore be made public (para 8).\nThe Commission based its refusal on submissions that the decisions were not information within the Act, but decisions on the basis of legal arguments, comparable to giving legal advice, as well as on an exemption in the Act for situations where excessive resources would be required to provide the information sought.\nThe Austrian Constitutional Court rejected the associations complaint.\nIt held first that neither under article 10 nor under Austrian law was there any positive duty of states to collect and disseminate information of their own motion.\nSecondly, it accepted the Commissions case that the compilation, anonymisation and disclosure of paper copies of decisions over a period of some years fell outside any duty to disclose information under the Act and would excessively impinge on the Commissions performance of its duties.\nThirdly, it added that, in so far as the applicant might implicitly be relying on article 6, the Strasbourg case law did not guarantee the right to obtain anonymised decisions over a lengthy period, and Austrian law only required access to the judgments delivered by the highest courts which dealt with important legal issues.\nBefore the European Court of Human Rights, First Section, the application was addressed under the heading of article 10.\nBut the applicants case was that decisions of judicial bodies such as the Commission should be publicly accessible (para 28) and that interests in the rule of law and due process argued in favour of making decisions by judicial authorities available to the public (para 29).\nThe Austrian Governments case was, first, that article 10 imposes no positive obligation on a state to collect and disseminate information itself, second, that a refusal to provide anonymised copies of all decisions over a lengthy period did not in any event constitute an interference with rights under article 10, and, third, that a right to be provided with such decisions could not be inferred from article 6 (para 31).\nFinally, it also argued that, if article 10 was engaged, the refusal was justified, as serving legitimate aims (protection of confidential information and preservation of the Commissions proper functioning).\nThe First Sections judgment is surprising in the nature and brevity of its treatment of the issue whether there was an interference under article 10(1).\nEssentially, the First Section did no more than cite previous jurisprudence (including Trsasg) establishing the social watchdog role of the press and other non governmental organisations like the applicant gathering information, and then added: Consequently, there has been an interference with the applicant associations right to receive and to impart information as enshrined in article 10(1) of the Convention (see Trsasg ., para 28; see also Kenedi ., para 43).\nThis reasoning fails to address any of the statements of general principle found in Leander, Guerra, Roche and Gillberg.\nIt does not indicate why the First Section thought those statements inapplicable, whether it was suggesting some alternative general principle applicable to social watchdogs, or whether (perhaps) it was acting on the basis that, despite the Austrian Constitutional Courts contrary view, there was a domestic right to the information which it was entitled to recognise, even though the Austrian Constitutional Court had wrongly failed to do so (see e.g. the Grand Chambers apparent reasoning in Gillberg: paras 75 76 above).\nThe First Sections silence when considering article 10(1) is the more surprising when one comes to its reasoning under article 10(2).\nHere (in para 41) the First Section does refer expressly to the principle in Leander that In the specific context of access to information, the Court has held that the right to receive information basically prohibits a Government from preventing a person from receiving information that others wished or were willing to impart, as well as to the principle in Guerra that the right to receive information cannot be construed as imposing on a state positive obligations to collect and disseminate information of its own motion.\nBut those were decisions under article 10(1).\nYet the First Section deals with them only under article 10(2), and goes on to say that in Trsasg the Court noted that it had recently advanced towards a broader interpretation of the notion of the freedom to receive information and thereby towards the recognition of a right of access to information.\nQuite apart from the fact that advances do not always achieve their goal, the First Section did not address the weakness of the basis and reasoning of the statement in Trsasg (para 69 above), or the fact that it was no more than a Section decision to be compared with a considerable number of weighty Grand Chamber decisions, or any way in which the general Grand Chamber statements might be reconciled with Trsasg.\nLater in its reasoning on justification, the First Section (in para 46) said that Given that the Commission is a public authority deciding disputes over civil rights within the meaning of article 6 of the Convention . which are, moreover, of considerable public interest, the Court finds it striking that none of the Commissions decisions was published, whether in an electronic database or in any other form, and that consequently much of the Commissions anticipated difficulty in providing copies of numerous decisions over a lengthy period was generated by its own choice.\nOn that basis, it concluded that the Commissions complete refusal to give [the applicant] access to any of its decisions was disproportionate (para 47), and held that there had been a violation of article 10.\nSo one explanation of the sterreichische case may be that the implicit finding of violation of article 6 was critical.\nAnalysis of position under article 10\nWhat to make of the Strasbourg case law in the light of the above is not easy.\nOne possible view is the various Section decisions open a way around the Grand Chamber statements of principle in circumstances where domestic law recognises or the European Court of Human Rights concludes that it should, if properly applied, have recognised, a domestic duty on the public authority to disclose the information.\nThe sterreichische case might perhaps be suggested to fit into this pattern, though it does not appear to have represented any part of the First Sections thinking.\nAlternatively, the sterreichische case may be regarded as a special case, influenced by what were, on the First Sections reasoning, the Commissions clear breaches of article 6.\nThat said, the logic is not very apparent of a principle according to which the engagement of article 10(1) depends upon whether domestic law happens to recognise a duty on the relevant public authority to provide the information.\nTo deal at this point with an argument raised by Mr Clayton, it is in procedural law entirely understandable that, even though the Convention confers no right to have a domestic appeal, where a domestic right of appeal is in law provided, then it must comply with article 6.\nBut that is because the existence of the domestic right of appeal necessarily means that there are further proceedings to which article 6 applies.\nHere, if article 10 involves no duty on a public authority to disclose information, no reason appears why the existence of a domestic duty should mean any more than that the domestic legislator has chosen to go further than the Convention.\nNo reason appears why the additional duty which the domestic legislator chose to introduce should necessarily become or engage an article 10(1) duty of disclosure.\nHowever, putting aside the point made in para 90, if the explanation of the Section decisions is that they turn on the existence of a domestic duty to disclose, then I think it unlikely that they could affect the outcome of any request addressed by Mr Kennedy to the Charity Commission under the Charities Act.\nEither there is no domestic duty of this nature, in which case article 10(1) does not, on the basis of the Grand Chamber decisions, give rise to one.\nOr there is a domestic duty of this nature, in which case article 10(1) seems to me unlikely to add anything to it in the present case since I have already concluded that the Charity Commissions domestic statutory duties should offer a path to disclosure no less favourable to a journalist such as Mr Kennedy than any available under article 10.\nIf, alternatively, the explanation of the sterreichische case is that it turned on the existence of breaches of article 6, no such breaches have been relied on in this case, but, for reasons already indicated, I do attach significance to the importance of the principles of accountability and transparency as they apply to reports of inquiries under the Charities Act, and I consider that the Act, read in the light of these principles, is likely to go at least as far as any reliance which could have been placed by Mr Kennedy on article 6, or article 10 as informed by article 6, could have taken him.\nMr Coppel argues for a more radical analysis than I have discussed in paras 88 to 90.\nHe argues that the Section decisions show that a right to receive information can arise under article 10, without any domestic right to the information.\nIf necessary, he accepts a restriction of the right to a member of the press like Mr Kennedy or any other social watchdog.\nIt is true that, in Trsasg and Youth Initiative, where the complainants were interested NGOs, the Court used language stressing the vital role of such social watchdogs, likening them to the press.\nBut, as Lord Brown noted in Sugar at para 94, the occupation of such a role cannot sensibly represent any sort of formal pre condition, before breach of a domestic duty of disclosure engages article 10(1).\nMany organisations and individuals, including those seeking information for research or historical or personal or family purposes, may have legitimate and understandable interests in enforcing a domestic right to information.\nIn reality, therefore, Mr Coppels more radical argument resolves itself into a submission that a general duty to disclose is engaged under article 10(1) by any claim based on public interest.\nOn that basis, however, the statements of principle in the Grand Chamber decisions are history.\nHad it been decisive for the outcome of this appeal, I would have considered that, in the present unsatisfactory state of the Strasbourg case law, the Grand Chamber statements on article 10 should continue to be regarded as reflecting a valid general principle, applicable at least in cases where the relevant public authority is under no domestic duty of disclosure.\nThe Grand Chamber statements are underpinned not only by the way in which article 10(1) is worded, but by the consideration that the contrary view that article 10(1) contains a prima facie duty of disclosure of all matters of public interest leads to a proposition that no national regulation of such disclosure is required at all, before such a duty arises.\nArticle 10 would itself become a European wide Freedom of Information law.\nBut it would be a law lacking the specific provisions and qualifications which are in practice debated and fashioned by national legislatures according to national conditions and are set out in national Freedom of Information statutes.\nMr Coppel recognised that the logic of his case is that article 10 must involve a general duty of disclosure such as mentioned in paras 93 94, irrespective of the existence of any freedom of information legislation.\nBut he contends that, where such legislation exists, it should be the vehicle for any rights contained in article 10.\nThe Media Legal Defence Initiative and the Campaign for Freedom of Information, interveners before the Supreme Court, suggest a more nuanced analysis, according to which article 10 should only be treated as engaged once a state has enacted a domestic freedom of information statute providing a general right of access to information and so occupied the field.\nThen and only then could article 10 be deployed to check and control whether the right of access corresponded with that which, they submit, is required by article 10.\nI see no basis for either Mr Coppels or the interveners half way approach.\nI start from the position that there is no reason why any article 10 rights must be found and satisfied in and only in the FOIA.\nThey may be satisfied by a scheme which operates in some situations under the FOIA and in others under the principles which govern the conduct of courts, arbitration tribunals and those holding inquiries outside the FOIA.\nSecondly, and for similar reasons, references to a general right of access and to occupying the field are unhelpful metaphors in relation to areas which the FOIA deliberately exempts.\nThe only relevant sense in which the exemptions provided by the FOIA are touched by that Act is that they are exempted from its operation.\nIt would be no different if the Act had been framed to cover specific situations which did not cover the present.\nI would add that, on either approach, it would seem that article 10 would operate as a general control on the appropriateness of exemptions in the FOIA.\nThis becomes even more striking once one realises that it would also extend to other absolute exemptions provided by the FOIA.\nThese include information directly or indirectly supplied by or relating to the Security and Secret Intelligence Services, the Government Communications Headquarters, the special forces and a list of tribunals and other authorities associated with security matters: see para 18 above.\nGeneral international legal principles\nMr Coppel also submitted that general international legal principles and other instruments supported an interpretation of article 10 as introducing a positive right to receive and a correlative duty to impart information.\nHe referred, inter alia, to: i) article 19 of the Universal Declaration of Human Rights, 1948, providing: Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers; ii) article 19 of the International Covenant on Civil and Political Rights (ICCPR), adopted 1966 and in force in 1976, providing: 1.\nEveryone shall have the right to hold opinions without interference. 2.\nEveryone shall have the right to freedom of expression; this right shall include freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of his choice; iii) article 13(1) of the Inter American Convention on Human Rights (IACHR), adopted 1969 and in force 1978, providing: Everyone has the right of freedom of thought and expression.\nThis right includes freedom to seek, receive, and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing, in print, in the form of art, or through any other medium of one's choice.\nThe Inter American Court of Human Rights has in its jurisprudence interpreted article 13(1) as conferring a positive right to receive and a positive duty to impart information: Reyes v Chile (2006) IACHR, 19 September 2006, followed in Lund v Brazil (2010) IACHR, 24 November 2010.\nThere is a particularly full examination of this aspect in paras 75 to 107 of Reyes v Chile.\nAt para 77, the Court found that by expressly stipulating the right to seek and receive information, article 13 of the Convention protects the right of all individuals to request access to state held information, with the exceptions permitted by the restrictions established in the Convention.\nThe word seek is one which appears in all three international instruments cited in the preceding paragraph, and not in article 10 of the European Convention on Human Rights agreed in 1950.\nAs Clayton and Tomlinson note in their work The Law of Human Rights, 2nd ed (2009), para 15.03, article 10 defines the right in language which is weaker than that of article 19 of the ICCPR.\nVarious academic commentators have suggested that the difference should not be regarded as material.\nBut it is worth noting that the original draft of article 10 prepared by the Committee of Experts provided a right to seek, receive and impart information ideas, and that, in the light of its presence in the prior Universal Declaration of Human Rights, some significance must attach to the subsequent omission of the word from article 10.\nThe IACHR in Reyes v Chile, para 81, also referred to prior recommendations of the Council of Europes Parliamentary Assembly and Committee dating back to 1970, 1982 and 1998, advocating, for example, a duty on public authorities to make available information on matters of public interest within reasonable limits and expressing the goal of the pursuit of an open information policy.\nBut the present issue is not whether these are appropriate general aspirations, but whether article 10 contains a concrete decision to give general effect to them at an international level enforceable without any more specific measure and without any controlling qualifications and limitations at that level.\nThe European Court of Human Rights case law, analysed above, does not to my mind support this.\nUllah no more, but certainly no less\nAgainst the possibility of the Supreme Court concluding that the Strasbourg case law does not clearly or sufficiently lead in the direction invited by Mr Kennedys case, Mr Richard Clayton QC for The Media Legal Defence Initiative and The Campaign for Freedom of Information invited us to strike out alone.\nHe submitted that the case could be a suitable one in which to revisit the approach associated with the words no more, but certainly no less used by Lord Bingham in R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323, para 20 in relation to national courts duty to keep pace with Strasbourg case law.\nI would decline that invitation.\nI see no basis for differing domestically from the Grand Chamber statements about the scope of article 10 and no need to expand the domestic article 10 rights, having regard to the domestic scheme of the Charities Act.\nOverall Conclusions\nThe only claim that Mr Kennedy has made is for disclosure under section 32.\nHe has pursued this claim as a matter of common law interpretation and, in the alternative, on the basis that section 32 must be read down in the light of article 10 of the Convention.\nAlternatively, he has claimed a declaration that section 32 is incompatible with article 10.\nMy conclusions are in summary that: i) Mr Kennedys case is not entitled to succeed on the claims he has pursued by reference to section 32 of the FOIA: see in particular paras 34, 35 41 and 42 above. ii) But that is not because of any conclusion that he has no right to the disclosure sought: see paras 35 41. iii) He fails in the claims he had up to this point made because a) the scheme of section 32 read in this case with the Charities Act 1993 is clear (paras 34 and 35 40), and b) the route by which he may, after an appropriate balancing exercise, be entitled to disclosure, is not under or by virtue of some process of remodelling of section 32, but is under the Charities Act construed in the light of common law principles (paras 40 and 43 52) and\/or in the light of article 10 of the Human Rights Convention (paras 36 39), if and so far as that article may be engaged (as to which see paras 55 98). iv) Construed without reference to article 10, the Charities Act should be read as putting Mr Kennedy in no less favourable position regarding the obtaining of such disclosure than he would be in on his case that article 10 by itself imposes on public authorities a general duty of disclosure of information (paras 40 and 43 52). v) I do not consider that article 10 does contain so general a duty (paras 97 98), but, in the circumstances, that conclusion is academic.\nLORD TOULSON (with whom Lord Neuberger and Lord Clarke agree)\nThe first issue concerns the construction of section 32(2) of FOIA, leaving aside the Human Rights Act 1998 and the European Convention.\nThe section has been set out by Lord Mance at para 17.\nThe issue was succinctly summarised by Mr Philip Coppel QC in his written case as being whether the phrase for the purposes of the inquiry or arbitration in section 32(2)(a) is to be interpreted as linked to the immediately preceding words placed in the custody of a person conducting an inquiry or arbitration or as linked to the opening words of the subsection information held by a public authority.\nWhichever construction is right, the same must apply to section 32(1) and to section 32(2)(b).\nI agree with Lord Mance and the courts below that the first interpretation is right.\nAs Lord Mance says, it is the more natural reading.\nIf the alternative construction were right, most of the language of paragraphs (a) and (b) would be otiose.\nThe drafter could have stated much more simply that information held by a public authority is exempt information if it is held only for the purposes of an inquiry or arbitration.\nI agree also that this conclusion is reinforced by the provision in section 63(1), set out by Lord Mance at para 30, that information contained in a historical record cannot be exempt information by virtue of section 32.\nA document does not become a historical record until 20 years (originally 30 years) have passed from the year of its creation; section 62(1).\nIt is unreal to suppose that this provision was aimed at the remote possibility of an inquiry continuing for more than 30 years or involving documents more than 30 years old.\nThe strong inference is that a document provided to or created by a person conducting an inquiry or arbitration is to remain within the section 32 exemption until the end of the specified period.\nIf his argument on the first issue failed, Mr Coppel submitted that section 32(2) should be read down so as to cease to apply on the conclusion of the inquiry or arbitration, pursuant to the requirements of the Human Rights Act and article 10 of the European Convention.\nThis is a more difficult issue.\nThe difficulty arises in part because the argument for Mr Kennedy began on a wrong footing by Mr Coppel submitting that without FOIA the Charity Commission would have no power to provide Mr Kennedy with information of the kind which he seeks.\nThe Charity Commission and the Secretary of State disagree and draw attention to the statement in section 78 that nothing in the Act is to be taken to limit the powers of a public authority to disclose information held by it.\nI am clear that they are right on this point.\nEvery public body exists for the service of the public, notwithstanding that it may owe particular duties to individual members of the public which may limit what it can properly make public.\nThe duties of a hospital trust to a patient are an obvious example.\nThere may also be other reasons, apart from duties of confidentiality, why it would not be in the public interest or would be unduly burdensome for a public body to disclose matters to the public, but the idea that, as a general proposition, a public body needs particular authority to provide information about its activities to the public is misconceived.\nIn this case there is an important additional dimension.\nWe are concerned with a public body carrying out a statutory inquiry into matters of legitimate public concern.\nOver several decades it has become increasingly common for public bodies or sometimes individuals to be given statutory responsibility for conducting such inquiries.\nThey are part of the constitutional landscape.\nSubject to any relevant statutory provisions, a judicial body has an inherent jurisdiction to determine its own procedures (Attorney General v Leveller Magazine Ltd [1979] AC 440).\nThe same applies to a public body carrying out a statutory inquiry.\nIt has long been recognised that judicial processes should be open to public scrutiny unless and to the extent that there are valid countervailing reasons.\nThis is the open justice principle.\nThe reasons for it have been stated on many occasions.\nLetting in the light is the best way of keeping those responsible for exercising the judicial power of the state up to the mark and for maintaining public confidence: Scott v Scott [1913] AC 417; R (Guardian News and Media Ltd) v City of Westminster Magistrates Court (Article 19 intervening)[2012] EWCA Civ 420; [2013] QB 618.\nBefore discussing the question whether and to what extent the same principle is applicable in relation to statutory inquiries, it is relevant to understand the reasoning in Guardian News (about which Lord Carnwath has made some observations in para 235 of his judgment), particularly since one of the arguments concerned section 32 of FOIA.\nThe case concerned documents which were provided to a district judge before the hearing of extradition proceedings, but which were not read out in court although some of them were referred to by counsel.\nThe Divisional Court held that the judge had no power to allow the press to have access to the documents: [2010] EWHC 3376 (Admin), [2011] 1 WLR 1173.\nPart of its reasoning (at paras 53 54) was that FOIA had put in place a regime for obtaining access to documents held by public authorities and that it would be strange if a request for information which was specifically exempted under the Act could be made at common law or under article 10.\nThe Court of Appeal took a different approach.\nIt started with the proposition that open justice is a principle at the heart of our system of justice and vital to the rule of law.\nIt explained why it is a necessary accompaniment of the rule of law (at para 1).\nSociety depends on the judges to act as guardians of the rule of law, but who is to guard the guardians and how can the public have confidence in them? In a democracy, where power depends on the consent of the people governed, the answer must lie in the transparency of the legal process.\nOpen justice lets in the light and allows the public to scrutinise the workings of the law, for better or for worse.\nFor that proposition the court cited Scott v Scott and other authority.\nThe principle has never been absolute because it may be outweighed by countervailing factors.\nThere is no standard formula for determining how strong the countervailing factor or factors must be.\nThe court has to carry out a balancing exercise which will be fact specific.\nCentral 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. (See Guardian News at para 85.)\nThere may be many reasons why public access to certain information about the court proceedings should be denied, limited or postponed.\nThe information may be confidential; it may relate to a person with a particular vulnerability; its disclosure might impede the judicial process; it may concern allegations against other persons which have not been explored and could be potentially damaging to them; it may be of such peripheral, if any, relevance to the judicial process that it would be disproportionate to require its disclosure; and these are only a few examples.\nThe court held in Guardian News that the open justice principle applies, broadly speaking, to all tribunals exercising the judicial power of the State. (The same expression is used in section 32(4)(a) of FOIA, which defines a court as including any tribunal or body exercising the judicial power of the State.) The fundamental reasons for the open justice principle are of general application to any such body, although its practical operation may vary according to the nature of the work of a particular judicial body.\nIn contrast with the view expressed by the Divisional Court about the exemption of court documents from the provisions of FOIA, the Court of Appeal considered that the exclusion was both unsurprising and irrelevant.\nUnder the Act the Information Commissioner is made responsible for taking decisions about whether a public body should be ordered to produce a document to a party requesting it.\nThe Information Commissioners decision is subject to appeal to a tribunal, whose decision is then subject to the possibility of further appeals to the Upper Tribunal and on to the Court of Appeal.\nIt would be odd if the question whether a court should allow access to a document lodged with the court should be determined in such a roundabout way.\nHowever, there was a more fundamental objection to the Divisional Courts approach, which is relevant also in the present case.\nAs the Court of Appeal said (at paras 73 74), although the sovereignty of Parliament means that the responsibility of the courts for determining the scope of the open justice principle may be affected by an Act of Parliament, Parliament should not be taken to have legislated so as to limit or control the way in which the court decides such a question unless the language of the statute makes it plain beyond possible doubt that this was Parliaments intention.\nIt would therefore be quite wrong to infer from the exclusion of court documents from FOIA that Parliament intended to preclude the court from permitting a non party to have access to such documents, if the court considered such access to be proper under the open justice principle.\nThe Administrative Courts observation that no good reason had been shown why the checks and balances contained in the Act should be overridden by the common law was to approach the matter from the wrong direction.\nThe question, rather, was whether the Act demonstrated unequivocally an intention to preclude the courts from determining in a particular case how the open justice principle should be applied.\nIn the present case we have been referred to Hansard, which shows that the Government positively intended not to interfere with the courts exercise of the power to determine what information should be made available to the public about judicial proceedings, and that it viewed statutory inquiries in the same way as judicial proceedings.\nI do not consider this to be relevant or admissible for the purposes of construing section 32, which is unambiguous; but it is relevant background material when considering whether questions of disclosure of information about statutory inquiries are properly a matter for the courts, applying the common law.\nDuring the Committee stage in the House of Commons, amendments were moved which would have converted the blanket exemptions in section 32(1) and (2) into qualified exemptions (applicable if disclosure under the Act would be likely to cause prejudice to the judicial proceedings, inquiry or arbitration), but they were withdrawn after the Minister, Mr David Lock MP, explained the Governments objection to them (Hansard, (HC Debs Standing Committee B), 25 January 2000, cols 281 282): Essentially this is an issue of separation of powers.\nThe courts control the documents that are before them and it is right that our judges should decide what should be disclosed.\nAlthough the courts are not covered by the Bill, according to it court records may be held on a courts behalf by public authorities Statutory inquiries have a status similar to courts, and their records are usually held by the Department that established the inquiry.\nThe clause therefore ensures that the courts can continue to determine what information is to be disclosed, and that such matters are decided by the courts and fall within their jurisdiction, rather than the jurisdiction of this legislation.\nOf course, it is not to be assumed that such information will not be disclosed merely because the Bill will not require it to be disclosed.\nSuch information is controlled by the courts, which constitute a separate regime.\nThe courts have their own rules, and they will decide if and when court records are to be disclosed.\nThe Government do not believe that the Freedom of Information Bill should circumvent the power of the courts to determine their disclosure policy.\nThe issue is the separation of powers, and the jurisdiction to determine the information the court should provide will be left to the courts themselves.\nIn a court case, it is for judges and courts to determine when it is appropriate for court records to be disclosed.\nShould the principle of openness as a general matter be held to apply to statutory inquiries? This involves two linked considerations: whether it is right that judicial proceedings and statutory inquiries should be regarded as analogous for this purpose or, to put it another way, whether the reasons for the judicial process to be open to public scrutiny apply similarly to statutory inquiries; and whether the court in answering that question would be crossing onto territory which should be left to Parliament.\nAn inquiry is defined for the purposes of section 32 by subsection (4)(c) as meaning any inquiry or hearing held under any provision contained in, or made under, an enactment.\nAlthough such inquiries and hearings may vary considerably in nature and scope, it is fair to describe the conduct of them as a quasi judicial function.\nThat doubtless explains why Parliament considered their status to be similar, as the Minister stated in the passage cited above, and the treatment of the records of judicial proceedings and records of statutory inquiries in section 32(1) and (2) is materially identical.\nJust as Parliament by excluding courts and court records from the provisions of the Act did not intend that such records should be shrouded in secrecy, but left it to the courts to rule on what should be disclosed, so in the case of a statutory inquiry Parliament decided to leave it to the public body to rule on what should be disclosed, balancing the public interest in its decision being open to proper public scrutiny against any countervailing factors, but the exercise of such power must be amenable to review by the court.\nThe considerations which underlie the open justice principle in relation to judicial proceedings apply also to those charged by Parliament with responsibility for conducting quasi judicial inquiries and hearings.\nHow is an unenlightened public to have confidence that the responsibilities for conducting quasi judicial inquiries are properly discharged?\nThe application of the open justice principle may vary considerably according to the nature and subject matter of the inquiry.\nA statutory inquiry may not necessarily involve a hearing.\nIt may, for example, be conducted through interviews or on paper or both.\nIt may involve information or evidence being given in confidence.\nThe subject matter may be of much greater public interest or importance in some cases than in others.\nThese are all valid considerations but, as I say, they go to the application and not the existence of the principle.\nIn each case it is necessary to have close regard to the purpose and provisions of the relevant statute.\nLord Mance is therefore right to place the emphasis which he has on the provisions of the Charities Act, particularly in paras 43 to 45 of his judgment.\nNo useful purpose would be served by my repeating or paraphrasing his analysis of those provisions.\nAs he says at the end of para 45 and the beginning of para 47, the meaning and significance which he attaches to those provisions (and with which I agree) are consistent with and indeed underpinned by common law principles.\nLord Carnwath has drawn attention to the absence of direct authority for applying common law principles to a body like the Charity Commission which is the creature of a modern statute, by which its functions and powers are precisely defined; but the supervision of inquiries by the courts is a product of the common law, except insofar as there is a relevant statutory provision.\nSuch enactments may go into greater or less detail about how an inquiry is to be conducted.\nThe Inquiries Act 2005 contains detailed provisions about the conduct of an inquiry under that Act.\nOther Acts which provide for inquiries may be less detailed.\nTo the extent that an enactment contains provisions about the disclosure of documents or information, such provisions have the force of law.\nBut to the extent that Parliament has not done so, it must be for the statutory body to decide questions of disclosure, subject to the supervision of the court.\nI do not see the absence of a prior statement by the courts that in general the principle of openness should apply, subject to any statutory provisions and subject to any countervailing reasons, as a convincing reason for not saying so now.\nPrinciples of natural justice have been developed by the courts as a matter of common law and do not depend on being contained in a statutory code.\nAs with natural justice, so with open justice.\nThe power of disclosure of information about a statutory inquiry by the responsible public authority must be exercised in the public interest.\nIt is not therefore necessary to look for a particular statutory requirement of disclosure.\nRather, the question in any particular case is whether there is good reason for not allowing public access to information which would provide enlightenment about the process of the inquiry and reasons for the outcome of the inquiry.\nI do not understand there to be any disagreement between the members of the court about the desirability that information about statutory inquiries should be available to the public, unless there are reasons to the contrary.\nThe disagreement is about the proper means of achieving that result.\nLord Carnwath would achieve it by reference to article 10 and by reading section 32(2) in a manner contrary to Parliaments intention.\nFor my part, I see no reason why the courts should not regard inquiry documents as having similar status to court documents, as Parliament intended, and applying similar principles.\nThat approach is not undemocratic and does not usurp the function of Parliament.\nLord Wilson considers that Parliament cannot have thought about what it was doing in enacting section 32(2) and that the subsection needs to be read down in order for the UK to be in compliance with article 10.\nIt sometimes happens that the only sensible inference to be drawn regarding a legislative provision is that there was an oversight in the drafting process, but that is not the case here (as Hansard confirms).\nParliament could, if it chose, have dealt with the question of access to inquiry documents in a different way, but in my judgment we should respect the fact that it chose to deal with them in the same way as court documents.\nThe result is entirely workable; the common law is fully capable of protecting sufficiently whatever rights under article 10 Mr Kennedy may have.\nGiven that a decision by a public authority about disclosure of information or documents regarding a statutory inquiry is capable of judicial review, what should be the standard of review? The normal standard applied by a court reviewing a decision of a statutory body is whether it was unreasonable in the Wednesbury sense (ie beyond rational justification), but we are not here concerned with a decision as to the outcome of the inquiry.\nWe are concerned with its transparency.\nIf there is a challenge to the High Court against a refusal of disclosure by a lower court or tribunal, the High Court would decide for itself the question whether the open justice principle required disclosure.\nGuardian News provides an example.\nI do not see a good reason for adopting a different approach in the case of a statutory inquiry, but the court should give due weight to the decision and, more particularly, the reasons given by the public authority (in the same way that it would to the decision and reasons of a lower court or tribunal).\nThe reason for the High Court deciding itself whether the open justice principle requires disclosure of the relevant information is linked to the reason for the principle.\nIt is in the interests of public confidence that the higher court should exercise its own judgment in the matter and that information which it considers ought to be disclosed is disclosed.\nThe analysis set out above is based on common law principles and not on article 10, which in my view adds nothing to the common law in the present context.\nThis is not surprising.\nWhat we now term human rights law and public law has developed through our common law over a long period of time.\nThe process has quickened since the end of World War II in response to the growth of bureaucratic powers on the part of the state and the creation of multitudinous administrative agencies affecting many aspects of the citizens daily life.\nThe growth of the state has presented the courts with new challenges to which they have responded by a process of gradual adaption and development of the common law to meet current needs.\nThis has always been the way of the common law and it has not ceased on the enactment of the Human Rights Act 1998, although since then there has sometimes been a baleful and unnecessary tendency to overlook the common law.\nIt needs to be emphasised that it was not the purpose of the Human Rights Act that the common law should become an ossuary.\nIn the present case the inquiries which the Charity Commission conducted, under section 8 of the Charities Act 1993, into the operations of a charity formed by Mr George Galloway MP were of significant public interest.\nAt the end of the inquiries the Commission published its conclusions, but the information provided as to its reasons for the findings which it made and, more particularly, did not make, was sparse.\nAs a journalist, Mr Kennedy had good cause to want to probe further.\nIt is possible that the Charity Commission may have had reasons for not wishing to divulge any further information, but such is the course which the proceedings have taken that it is impossible to tell at this stage.\nI regard it as unfortunate that Mr Kennedys request for further information was based solely on FOIA.\nI have considerable disquiet that Mr Kennedy has been unable to learn more about the Charity Commissions inquiries and reasons for its conclusions, and I should like, if possible, for there to be a proper exploration whether the Charity Commission should provide more.\nI am clear that this could be done through the common law, but it cannot be done through FOIA unless section 32(2) can properly be circumvented.\nI agree with Lord Mance that if article 10 applies in the present case, it is fulfilled by the domestic law. (It should generally not be difficult to tell whether the information sought is within section 32(2) because the statutory definition of an inquiry is clear.\nHowever, if for any reason the applicant was in doubt, he could ask the public authority to say whether it contended that the information was within section 32(2) and to explain its reason for saying so.\nIf so, the public authority could not then complain about the applicant following the route of judicial review.)\nLord Carnwath considers that article 10 would afford the advantage to Mr Kennedy that article 32(2) could be read down and Mr Kennedy would then have a simpler and cheaper mechanism for trying to obtain the information which he seeks.\nThat supposes that judicial review is not an adequate remedy.\nIn my view it is.\nIt was the remedy used in Guardian News and would be the remedy in any case where there is a challenge to a refusal of disclosure of information by a court below the level of the High Court or by a tribunal.\nI do not see it as inappropriate for the same remedy to be available in relation to a statutory inquiry.\nThere are other reasons why I consider that it would be wrong to read down section 32(2) in the way for which Mr Kennedy contends.\nFirst, it would go against the grain of FOIA to override section 32(2) in circumstances which Parliament considered the matter should be for the courts and where there is a remedy through the courts.\nSecondly, to read down section 32(2) in the manner proposed would have other undesirable consequences.\nMr James Eadie QC rightly pointed out that under the construction proposed section 32(2) would not be reduced from an absolute exemption to a qualified exception, subject to a general public interest test (such as would be applied by a court), but would cease to have effect altogether at the end of the inquiry.\nSection 2 brings in a public interest test where there is a relevant exemption, but it is not a ground of exemption in itself.\nThe only exemptions which would apply would be other specific exemptions in the Act but they do not cover all the ground which would be covered by a public interest test.\nFor example, inquiry records or court records may include material detrimental to a persons reputation which the court or inquiry did not investigate on grounds of relevance.\nA court would have an obvious discretion not to order the disclosure of such material.\nIn Guardian News the court referred in paras 65 to 66 to a decision of the Court of Appeals for the Second Circuit (Winter, Calabresi and Cabranes CJJ) in United States v Amodeo (1995) 71 F 3d 1044 in which this point was discussed.\nThe approach of the US court was summarised by the Court of Appeal at para 66: The court commented that many statements and documents generated in federal litigation actually have little or no bearing on the exercise of judicial power because the temptation to leave no stone unturned in the search for evidence material to a judicial proceeding turns up a vast amount of not only irrelevant but also unreliable material.\nUnlimited access to every item turned up in the course of litigation could cause serious harm to innocent people.\nThe court conclude that the weight to be given to the presumption of access must be governed by the role of the material at issue in the exercise of judicial power and the resultant value of such information to those monitoring the federal courts.\nAn English court would be expected to perform a similar exercise, but I cannot see how the Information Commissioner would be able to do so if section 32(2) were read down in the way for which Mr Coppel contends.\nThat is because the specific exemptions in FOIA do not give the Information Commissioner such a broad power.\nIn short, the common law approach, which I consider to be sound in principle, runs with the grain of FOIA; it does not involve countermanding Parliaments decision to exclude inquiry documents from the scope of the Act; and it is consistent with the judgment of Parliament that in this context statutory inquiries should be viewed in the same way as judicial proceedings.\nIt also produces a more just result, because a court is able to exercise a broad judgment about where the public interest lies in infinitely variable circumstances whereas the Information Commissioner would not have such a power.\nOn a point of detail, the parallel which Mr Coppel drew with inquiries under the Inquiries Act 2005 does not assist him.\nHe pointed out that under section 18(3) of the Inquiries Act, the exemption from FOIA under section 32(2) ceases to apply when the chairman at the end of the inquiry passes the inquiry documents to the relevant public department under the Inquiry Rules 2006, rule 18(1)(b).\nMr Coppel argued that it was an unjustifiable anomaly that section 32(2) of FOIA should remain in force after the conclusion of other public inquiries.\nThis argument seemed attractive at first, but it fails to take account of other relevant provisions of the Inquiries Act.\nUnder section 19 the chairman may impose a restriction order on the disclosure or publication of any evidence or documents given to an inquiry.\nThe section sets out the matters to which the chairman must have regard in deciding whether to make such an order, including any risk of harm or damage which may be avoided or reduced by the order.\nUnder section 20, such a restriction continues in force indefinitely, subject to provisions of that section which include a power given to the relevant minister to revoke or vary the order after the end of the inquiry.\nIn short, full provision is made for public interest considerations.\nIn view of the approach which I have taken, I can deal shortly with the Strasbourg decisions on which Mr Coppel has relied.\nThey have been comprehensively analysed by Lord Mance.\nSince this court reviewed the Strasbourg jurisprudence on article 10 in British Broadcasting Corpn v Sugar (No 2) [2012] UKSC 4; [2012] 1 WLR 439, there have been four further Strasbourg decisions on which Mr Coppel relies: Gillberg v Sweden (2012) 34 BHRC 247, Shapovalov v Ukraine (Application No 45835\/05) (unreported) given 31 July 2012, Youth Initiative for Human Rights v Serbia (Application No 48135\/06) (unreported), given 25 June 2013 and sterreichische Vereinigung zur Erhaltung, Strkung und Schaffung v Austria (Application No 39534\/07) (unreported) given 28 November 2013.\nIn the last of those cases, the First Section (at paragraph 41) highlighted among the courts earlier decisions the case of Trsasg v Hungary (2009) 53 EHRR 130, observing that the court had advanced from cases like Leander v Sweden (1987) 9 EHRR 433 towards a broader interpretation of the notion of the freedom to receive information and thereby towards a recognition of a right of access to information.\nIt drew a parallel in this context with the case law on the freedom of the press and the need for the most careful scrutinywhen authorities enjoying an information monopoly interfered with the exercise of the function of a social watchdog.\nWhat is so far lacking from the more recent Strasbourg decisions, with respect, is a consistent and clearly reasoned analysis of the right to receive and impart information within the meaning of article 10, particularly in the light of the earlier Grand Chamber decisions.\nMr Coppel submits that the courts direction of travel is clear, but the metaphor suggests that the route and destination are undetermined.\nIf article 10 is to be understood as founding a right of access to information held by a public body, which the public body is neither required to provide under its domestic law nor is willing to provide, there is a clear need to determine the principle or principles by reference to which a court is to decide whether such a right exists in a particular case and what are its limits.\nTo take the latest case, Osterreichische Vereinigung concerned information about decisions of a commission described as a judicial body (at para 28).\nIn considering whether there had been an interference with the applicants rights under article 10, the court said that the applicant association had a watchdog role similar to that of the press, that it was involved in the legitimate gathering of information of public interest and that there had consequently been an interference with its right to receive and impart information under article 10 (paras 34 to 36).\nIn considering whether the interference was justified, the court considered it striking that the commission was a public authority deciding disputes over civil rights but that none of its decisions was published in any form.\nThe court concluded that its complete refusal to give access to any of its decisions was disproportionate (paras 46 to 47).\nOn one interpretation the scope of the decision is extremely broad.\nMost information held by a public authority will be of some public interest, and article 10 would apply to any of it if a journalist, researcher or public interest group wanted access in order to generate a public debate, unless the authority could justify withholding it under the imprecise language of article 10.2.\nAlternatively, the case could be seen more narrowly as essentially a case about open justice.\nLike Lord Mance (at para 88) I cannot see the logic of using the existence of a duty of disclosure in domestic law as a platform on which to erect a duty under article 10, as distinct from article 6.\nAs to the more radical suggestion that article 10 gives rise to a prima facie duty of disclosure of any information held by a public body which the applicant seeks in order to promote a public debate, this is flatly contradictory to the Grand Chamber decision in Leander.\nAs Lord Mance has commented, it would amount to a European freedom of information law established on an undefined basis without the normal checks and balances to be expected in the case of freedom of information legislation introduced by a State after public consultation and debate.\nIf the Leander principle is to be abrogated, or modified, in favour of an interpretation of article 10 which makes disclosure of information by a public body in some circumstances obligatory, it seems to me with respect that what the new interpretation would require is a clear, high level exegesis of the salient principle and its essential components.\nIt is, however, unnecessary to say more in this case, because I see nothing in the Strasbourg jurisprudence which is inconsistent with what I have said regarding English domestic law.\nI agree with the conclusions of Lord Mance and I would dismiss this appeal for the same reasons.\nLike him, I emphasise that this conclusion does not mean that English courts lack the power to order a public body which has carried out a statutory inquiry into matters of public interest to provide such access to a journalist as may be proper for the exercise of their watchdog function, taking into account the relevant circumstances.\nIt would be open to Mr Kennedy now to make a fresh request to the Charity Commission on the basis of this judgment.\nIt would then be for the Administrative Court to consider any objection by the Charity Commission based on delay, but in considering such objection the court would need to take into account all the circumstances.\nMention was briefly made in argument about the three month time limit imposed under CPR 54.5(1), but that is after the grounds for the application have arisen, which would be after any refusal of Mr Kennedys request.\nThere could of course be argument that he should have made his first request on a different basis (as I would hold).\nWhether that should bar the claim from proceeding would be a matter for the court considering the application, but on the facts as they presently appear it would seem harsh that the claim should be barred not because of any delay on Mr Kennedys part in seeking the information but because of legal uncertainty about the correct route.\nLORD SUMPTION (with whom Lord Neuberger and Lord Clarke agree)\nI agree that this appeal should be dismissed, for the reasons given by Lord Mance and Lord Toulson.\nThe Freedom of Information Act 2000 was a landmark enactment of great constitutional significance for the United Kingdom.\nIt introduced a new regime governing the disclosure of information held by public authorities.\nIt created a prima facie right to the disclosure of all such information, save insofar as that right was qualified by the terms of the Act or the information in question was exempt.\nThe qualifications and exemptions embody a careful balance between the public interest considerations militating for and against disclosure.\nThe Act contains an administrative framework for striking that balance in cases where it is not determined by the Act itself.\nThe whole scheme operates under judicial supervision, through a system of statutory appeals.\nThe right to receive information under article 10 of the Human Rights Convention has generated a number of decisions of the European Court of Human Rights, which take a variety of inconsistent positions for reasons that are not always apparent from the judgments.\nThe more authoritative of these decisions, and the ones more consonant with the scheme and language of the Convention, are authority for the proposition that article 10 recognises a right in the citizen not to be impeded by the state in the exercise of such right of access to information as he may already have under domestic law.\nIt does not itself create such a right of access.\nOther decisions, while ostensibly acknowledging the authority of the principle set out in these cases, appear to point towards a different and inconsistent view, namely that there may be a positive obligation on the part of the state to impart information under article 10, and a corresponding right in the citizen to receive it.\nHowever if (contrary to my view) there is a Convention right to receive information from public authorities which would not otherwise be available, no decision of the European Court of Human Rights suggests that it can be absolute or exercisable irrespective of the public interest.\nAccordingly, since disclosure under the Freedom of Information Act depends upon an assessment of the public interest, it is difficult to discern any basis on which the scheme as such can be regarded incompatible with the Convention, whichever of the two approaches is correct.\nOf course, the Strasbourg court may decide that the statutory scheme is compatible, but that particular decisions under it are not.\nBut this case is concerned with the compatibility of the scheme, not the particular decision.\nThe basis on which it is suggested that the scheme may not be compatible is that section 32, if it is to be construed as applying beyond the duration of the inquiry, is an absolute exemption more extensive than anything required to avoid disrupting the actual conduct of the inquiry.\nIf this criticism is to carry any weight, what the critics have to say is that the application of section 32 forecloses any examination of the public interest in disclosure.\nBut such a criticism would plainly be misconceived.\nThe exemptions in the Act are of two kinds.\nThere are, first of all, exemptions which reflect Parliaments judgment that the public interest requires information in some categories never to be disclosable under the Act.\nExemptions of this kind include those under section 23 (information supplied by or relating to bodies dealing with national security), section 34 (information whose disclosure would infringe Parliamentary privilege) and section 41 (information received by a public authority under a legally enforceable confidence).\nThe second category of exemption in the Act comprises cases where the Act does not need to provide for access to the information because there are other means of obtaining it on appropriate conditions for the protection of the public interest.\nSuch exemptions include those in section 21 (information available by other means) and the section with which we are presently concerned, section 32, dealing with information held by a court or by virtue of having been supplied to an inquiry or arbitration,\nThe point about section 32 is that it deals with a category of information which did not need to be covered by the Act, because it was already the law that information in this category was information for which there was an entitlement if the public interest required it.\nLeaving aside the rather special (and for present purposes irrelevant) case of documents held by virtue of having been supplied to an arbitration, the relevant principles of law are to be found in rules of court and in the powers and duties of public authorities holding documents supplied to an inquiry, as those powers and duties have been interpreted by the Courts and applied in accordance with general principles of public law.\nIt cannot plausibly be suggested that this corpus of law fails to meet the requirements of article 10 of the Convention that any restrictions on the right recognised in article 10(1) should be prescribed by law.\nIts continued operation side by side with the statutory scheme under the Freedom of Information Act is expressly preserved by section 78 of that Act.\nThis section overtly recognises that the Act is not a complete code but applies in conjunction with other rules of English law dealing with disclosure.\nMuch of the forensic force of the Appellants argument arises from the implicit (and occasionally explicit) assumption that there could be no proper reason in the public interest for denying Mr Kennedy the information that he seeks.\nTherefore, it is suggested, the law is not giving proper effect to the public interest because it is putting unnecessary legal or procedural obstacles in Mr Kennedys way.\nI reject this suggestion.\nIt is true that there is a legitimate public interest in the disclosure of information relevant to the performance of the Charity Commissions inquiry functions, and to this inquiry in particular.\nBut the Charity Commission has never been asked to disclose the information under its general powers.\nIt has only been asked to disclose it under a particular statute from which the information in question is absolutely exempt.\nThis is not just a procedural nicety.\nIf the Commission had been asked to disclose under its general powers, it would have had to consider the public interest considerations for and against disclosure which were relevant to the performance of its statutory functions under the Charities Act.\nIts assessment of these matters would in principle have been reviewable by the court.\nIn fact, it has never been called upon to carry out this assessment, because Mr Kennedy chose to call for the information under an enactment which did not apply to the information which he wanted.\nWe cannot know what the decision of the Charity Commission would have been if they had been required to exercise their powers under the Charities Act.\nWe know nothing about the contents or the source of the information in the documents held by the Commission, or the basis on which it was obtained, apart from the limited facts which can be inferred from its report, the schedule of documents and the evidence in these proceedings.\nBecause this appeal is concerned only with the effect of section 32, and the Convention so far as it bears on section 32, none of this material has been relevant and we have not seen it.\nIt cannot necessarily be assumed that if Mr Kennedy had asked for disclosure under the Charity Commissions general powers, the resulting decision would have been favourable to him.\nIt might or might not have been.\nNo one has disputed that section 32 applies in this case if the exemption for which it provides extends beyond the duration of the inquiry.\nWe are therefore presumably concerned with information which the Commission holds only by virtue of its having been given to the Charity Commission for the purposes of the inquiry.\nThat information presumably emanates from persons or bodies who are not themselves public authorities.\nOtherwise it would have been disclosable by those authorities under other provisions of the Freedom of Information Act.\nWhile other statutory qualifications or exemptions might have in that event been relevant, section 32 would not have been.\nThe information is therefore likely to have been supplied to the Commission by private entities or possibly by foreign public authorities, and supplied only for the inquiry, not for any other purpose.\nThe inference from the Commissions report is that a significant part of it came from foreign entities, and therefore could not have been obtained under the Commissions power to requisition information under section 9 of the Charities Act.\nIn its letter of 4 July 2007, the Commission showed that it was well aware of the public interest for transparency of the decisions and reasons for them, so as to promote public confidence in charities.\nBut it considered at that time that its dependence on the co operation of third parties in carrying out its inquiry meant that that particular public interest was outweighed by the competing public interest in its being able to discover the relevant facts.\nThe importance of encouraging voluntary co operation with an inquiry by those possessing relevant information is a recognised public interest which may be highly relevant to the question whether it should be further disclosed: see Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627, 637 638 (Lord Diplock).\nThe statements made in the Commissions letter may or may not prove to be its final position.\nBut the point made there cannot be brushed aside.\nLORD WILSON\nIn April 2003, shortly before he became its Investigations Editor, Mr Kennedy wrote an article for The Times about the Mariam Appeal (the appeal) which had been founded in 1998 by Mr George Galloway and which had recently closed down.\nIn 2003 Mr Galloway was a high profile Member of Parliament, as he is again today.\nHe had for many years been an outspoken critic of the economic sanctions imposed by the United Nations upon the regime of Saddam Hussein in Iraq.\nHe had contended that one of their consequences had been to deprive Iraqi citizens of necessary medical treatment.\nThe objects of the appeal, as stated in its constitution, had been to provide medical assistance to the Iraqi people, to highlight the causes of an epidemic of cancer in Iraq and to arrange for the medical treatment outside Iraq of certain Iraqi children.\nThe appeal had been named after Mariam Hamza, a young Iraqi girl who was suffering from leukaemia.\nIn his article in April 2003 Mr Kennedy alleged that money donated by the public to the appeal had been improperly used to fund visits by Mr Galloway to Iraq and elsewhere and to support political campaigns against the UN sanctions and against Israel.\nA reader of the article seems to have referred it to the Attorney General, who, as an officer of the Crown, has a long standing role as the protector of charities.\nThe Attorney referred it on to the Charity Commission (the Commission).\nIn 2003 the Commission was governed by the Charities Act 1993 (the 1993 Act), which was later amended by the Charities Act 2006 and which has now been replaced by the Charities Act 2011.\nThe Commission has five objectives, of which the first is to increase public trust and confidence in charities, the third is to promote compliance by charity trustees with their legal obligations of control and management and the fifth is to enhance the accountability of charities to donors, beneficiaries and the general public (section 1B(2) of the 1993 Act, as amended).\nThe Commission has five general functions, of which the third includes the investigation of apparent misconduct in the administration of charities and the fifth includes the dissemination of information in connection with the performance of its other functions and the pursuit of its objectives (section 1C(2)).\nThe Commission has six general duties, of which the fourth is that, in performing its functions, it should have regard to the principles of best regulatory practice, including those of accountability and transparency (section 1D(2)).\nThe Commission also has power to institute an inquiry with regard to a particular charity: section 8 of the 1993 Act.\nIn June 2003 it instituted an inquiry into the application of the money raised by the appeal between March 1998 and April 1999.\nIn November 2003 it instituted a second inquiry into the application of the money raised by the appeal throughout its years of operation.\nThe two inquiries were combined.\nIn June 2004, pursuant to its power under section 8(6)(a) of the 1993 Act, the Commission published its statement of the results of the two inquiries.\nIn the statement, which was very short, it expressed the following conclusions: (a) that the objects of the appeal had been charitable and that, in the light of the size of its income, it should have been registered with the Commission as a charity but that the founders of the appeal had acted on legal advice to the contrary and so were unaware that they had created a charity; (b) (c) (d) (e) (f) (g) (h) (i) that, apart from members of the public, the major donors to the appeal had been the United Arab Emirates, someone in Saudi Arabia and a Jordanian citizen, namely Mr Zureikat; that Mr Galloway had confirmed that the appeal did not produce profit and loss accounts or balance sheets; that the Commission had been unable to obtain all the financial records of the appeal; that Mr Galloway had explained that, when in 2001 the chairmanship of the appeal had been transferred from himself to Mr Zureikat, he had sent the records to him in Jordan and Iraq and was unable to retrieve them; that Mr Galloway had assured it that all monies received by him out of the funds of the appeal had related to expenses incurred by him when he had been chairman of it; that two of the trustees had received salaries out of appeal funds in breach of trust but that their work had been of value to the appeal and no one had acted in bad faith in that regard, with the result that the Commission would not be taking steps to recover the salaries; that funds had been used to further political activities, in particular the campaign against the sanctions, but that the activities had been ancillary to the purposes of the appeal in that the trustees might reasonably have considered that they might secure treatment for sick children; and that, not only because the appeal had closed down but also because the political activities had been ancillary to its purposes and its records had been difficult to obtain, it was not proportionate for the Commission to pursue its inquiries further.\nMr Kennedy did not immediately seek information about the statement published in June 2004.\nLater, however, he sought information designed to elucidate issues, raised by the statement, in relation to the way in which the funds of the appeal had been deployed (with particular reference to para 5(d), (e), (g) and (h) above) and to the way in which the Commission had conducted its inquiries (with particular reference to para 5(h) and (i) above).\nThe UN Oil for Food Programme, which ran from 1996 to 2003, enabled the Iraqi state to sell oil in return for payments made into an account controlled by the UN from which Iraq was entitled to draw only for the purchase of food and other humanitarian related goods.\nIn 2005 reports by the UN and by the US Senate concluded that the programme had attracted improper payments of commissions to, or at the direction of, members of the Iraqi government by Iraqi companies keen to be allowed to participate in sales either of the oil or of the humanitarian related goods; and that the appeal had received donations which represented some of these improper payments.\nThus in December 2005 the Commission instituted a third inquiry into the appeal under section 8 of the 1993 Act.\nIn June 2007 it published a statement of the results of this inquiry under section 8(6).\nIn the statement, which was even shorter than the first, the Commission said that it had examined a large body of sensitive evidence obtained from international sources.\nIt added that it had directed the five known members of the executive committee of the appeal, whom it took to be its trustees, to answer questions and that, while the three members resident in the UK (including Mr Galloway) had done so, the two resident abroad (including Mr Zureikat) had not done so.\nThe Commission then proceeded to express the following conclusions: (a) (b) (c) (d) (e) that the funds known to have been paid into the appeal totalled 1,468,000, of which Mr Zureikat had donated over 448,000; that, of the funds donated by Mr Zureikat, about 300,000 represented his improper receipt of commissions referable to the Oil for Food programme; that Mr Galloway and the other trustees resident in the UK denied all knowledge of the source of Mr Zureikats donations; that, although unaware that they had created a charity, the trustees should have been aware that they had created a trust, which required them to be vigilant in accepting large donations, particularly from overseas; that, in breach of their duty of care, the trustees had failed to make sufficient inquiries into the source of Mr Zureikats donations; (f) (g) that Mr Galloway himself, however, may have known of the connection between the appeal and the programme (by which the Commission appears to have meant that, despite his denial, he may have known the source of Mr Zureikats donations); and that the Commission had liaised with other agencies in relation to possible illegality surrounding Mr Zureikats donations but, in the light of the closure of the appeal in 2003 and the distribution of all its funds, it proposed to take no further action.\nOn the date of publication of this second statement Mr Kennedy made his request for information to the Commission under the Freedom of Information Act 2000 (the FOIA).\nHe considered that the statement was surprisingly short and extremely unsatisfactory.\nHe took the view that Mr Galloways possible misconduct in relation to the appeal was a matter of considerable public importance and that the material said to justify the serious allegations made against him had not been identified.\nMr Galloway, for his part, was equally critical of the statement.\nHe announced that its conclusion that the appeal had received improper funds was palpably false and that parts of it were sloppy, misleading and partial and would have been corrected if the Commission had bothered to interview him.\nThe Commission later responded that Mr Galloway had declined its invitation to interview him.\nAt an early stage of the protracted litigation to which it has given rise, Mr Kennedy confined his request for information to the following four classes of documents: (a) (b) (c) (d) those which explained the Commissions conclusion that Mr Galloway may have known that Iraqi bodies were funding the appeal; those by which it had invited Mr Galloway to explain his position and by which he had responded; those which had passed between it and other public authorities; and those which cast light on the reason for the institution and continuation of each of the three inquiries.\nAll members of this court agree that, in principle, the Commissions two statements raise questions of considerable public importance and that Mr Kennedys confined request would assist in answering them.\nWhat was the extent of the breach of duty on the part of Mr Galloway, a public figure and a Member of Parliament, in relation to the well publicised appeal? Could the doubt about his knowledge of the source of Mr Zureikats donations reasonably have been resolved in one way or the other? What was the reason for the Commissions apparent failure to interview Mr Galloway? Did the Commission conduct the inquiries with sufficient rigour? Were other parts of the statements, for example their treatment of his expenses and of the funding of political activities, unduly indulgent towards Mr Galloway? To the extent that they were unduly indulgent, why so?\nIn making his confined request Mr Kennedy was careful to acknowledge, first, that parts of the information sought might attract absolute exemption under the FOIA (for example to the extent that it was covered by Parliamentary privilege under section 34 or represented either personal information under parts of section 40 or information provided in confidence under section 41); and, second, that other parts of it might fall within some of the qualified exemptions set out in the FOIA and, if so, would require the weighing of the rival public interests pursuant to section 2(2).\nIndeed, when the Commission came to prepare a schedule of the documents held in connection with the inquiries (which it said were held in 25 lever arch files, as well, in part, as electronically), it indicated, in relation to each document, the exemption or exemptions prescribed by the FOIA on which it proposed, if necessary, to rely.\nAmong the indicated exemptions was one which it ascribed to every document, namely that provided by section 31 of the FOIA.\nThe effect of section 31(1)(g), read together with section 31(2)(b), (c) and (f), is to raise a qualified exemption in relation to information of which disclosure would be likely to prejudice the Commissions exercise of its functions for the purpose of ascertaining whether anyone has been guilty of improper conduct in relation to a charity or whether the circumstances justify regulatory action or for the purpose of protecting the administration of charities from mismanagement.\nSo it is an important exemption reflective of the public interest that the Commission should function effectively.\nIn its evidence the Commission argued that substantial disclosure to Mr Kennedy would forfeit the confidence of those who had cooperated, or might otherwise cooperate, with its inquiries and so would prejudice the future exercise of its functions for the specified purposes.\nOne might have anticipated lively argument on behalf of the Commission in that respect, as in others, had it to date been necessary to proceed to consider the qualified exemptions.\nBut the argument which finds favour with the majority of the members of this court is that section 32(2) of the FOIA provides an absolute exemption from disclosure at any rate under the FOIA of any of the information in any of the documents held in the lever arch files, apart from that contained in about seven documents which the Commission received or created following the end of the third inquiry and which have therefore already been disclosed.\nThe four steps in the argument are (1) that all the other information is contained in documents placed in the Commissions custody, or created by it, for the purposes of the three inquiries; (2) that the Commission holds the information only by virtue of its being so contained; (3) that, on the application to section 32(2) of conventional canons of construction, facts (1) and (2) satisfy its requirements; and (4) that the rights of Mr Kennedy under article 10 of the European Convention on Human Rights (the ECHR) are not such as, under section 3(1) of the Human Rights Act 1998 (the 1998 Act), to require that, so far as possible, section 32(2) be construed differently so as to be compatible with them.\nIn my view the closest scrutiny needs to be given to the only debateable step in the argument, which is step (4).\nWere that step valid, the result would be that, instead of a document by document inquiry into the applicability of other absolute exemptions, or of qualified exemptions followed (if applicable) by the weighing of public interests under section 2(2), a blanket exemption from disclosure under the FOIA is thrown over the entire information.\nEvery part of it would be exempt from disclosure under the FOIA irrespective of its nature; of the degree of legitimate public interest which its disclosure might generate or help to satisfy; and of the degree of harm (if any) which its disclosure might precipitate.\nThe Commission stresses that the information would not be exempt from disclosure under the FOIA for ever.\nFollowing 30 years (reduced to 20 years but not in respect of a record created prior to 2013) from the year in which it was created, a record becomes a historical record, information in which is not exempt under section 32 of the FOIA: see sections 62(1) and 63(1).\nBut, in this regard, one must also have an eye to the Public Records Act 1958.\nThe effect of section 3(4) of the 1958 Act is that, by the end of that period of 30 years, such documents relating to the inquiries as still exist will have been transferred by the Commission to The National Archives.\nBut not all the documents currently in the 25 lever arch files will then still exist: for, pursuant to section 3(1) of the 1958 Act, the Commission will have arranged for the selection of the documents which in its view merit permanent preservation in The National Archives and, pursuant to section 3(6), it will have caused the remainder to be destroyed.\nIt is unreal to suggest that, subject to any continuing exemptions, likely access to some of the information after 30 years would satisfactorily meet the public interest, which Mr Kennedy aspires to satisfy, in the conduct of a public figure in relation to a charity and in the quality of the Commissions supervision of it.\nThe suggested exemption from disclosure at any rate under the FOIA of the information in the Commissions documents for a generation is even more startling when attention is paid to the laws treatment of disclosure of two other classes of documents addressed by section 32.\nFirst, court records.\nA court is not a public authority for the purposes of the Act.\nBut, particularly if it is or has been a party to court proceedings, a public authority is likely to hold copies of documents filed with the court, or created by the court, for the purposes of such proceedings.\nInformation thus held by a public authority enjoys absolute exemption from disclosure: section 32(1).\nBut the court itself will also hold copies of those documents.\nThus, by way of counter balance to the exemption from disclosure of such information if held by a public authority, there is the right of the citizen to obtain copies of specified documents from the court file (rule 5.4C(1), Civil Procedure Rules 1998) and the power of the court to permit him to obtain copies of, in effect, all other documents on the file (rule 5.4C(2)).\nThe citizens right and the courts power are each exercisable at any stage, whether while the proceedings are pending or following their conclusion.\nSecond, records of inquiries held under the Inquiries Act 2005 (the 2005 Act).\nSection 32(2) of the FOIA applies to information contained in documents placed in the custody of, or created by, a person conducting an inquiry held under any statutory provision: section 32(4)(c).\nBy contrast with the Commissions inquiries, held under section 8 of the 1993 Act, inquiries are sometimes held at the direction of a minister, within terms of reference set out by him, under the 2005 Act.\nAt the end of such an inquiry, its chairman must cause documents given to, or created by, the inquiry to be passed to, and held by, the minister: see rule 18(1)(b), Inquiry Rules 2006 (SI 2006\/1838).\nSection 18(3) of the 2005 Act provides that section 32(2) of the FOIA does not apply in relation to information contained in documents thus passed to, and held by, the minister (being a public authority).\nIt is true that, under section 19 of the 2005 Act, the minister and the chairman may each, prior to the end of the inquiry, impose restrictions on the disclosure of material provided to it if they consider them conducive to the fulfilment of the inquirys terms of reference or necessary in the public interest: subsections (1), (2) and 3(b).\nImportantly, however, the restrictions do not, subject to an irrelevant exception, apply to disclosure by the minister himself (or by any other public authority holding any of the material) following the end of the inquiry: section 20(6).\nParliament has therefore seen fit to remove the absolute exemption under section 32(2) of the FOIA from material created or produced for an inquiry held under the 2005 Act once it has come to an end and to allow disclosure of it thereafter to be governed by the suite of qualified exemptions and of the other absolute exemptions set out in the FOIA.\nIn opposing Mr Kennedys appeal, the Commission has been unable to explain why the disclosure of material referable to statutory inquiries held otherwise than under the 2005 Act should apparently be governed so differently.\nIn my view the difficult question is whether Mr Kennedy has human rights apt enough and strong enough to repel the apparent obstruction of him, and therefore of his readers, by section 32(2) of the FOIA from addressing the concerns which I have identified through disclosure under that Act.\nThe right under article 10 of the ECHR is to freedom of expression, including freedom to hold opinions and to receive and impart information and ideas without interference by public authority.\nSo the receipt of information is expressly included within the right.\nThe right has to be without interference by public authority.\nThese words have given rise to a narrow, ostensibly a pedantic, question of the sort against which the court in Strasbourg often sets its face: is the public authority basically restrained from interfering only with a persons receipt of information from another private person willing to impart it (the Leander approach) or does the restraint extend to interference with, in other words to obstruction of, a persons receipt of information from the public authority itself (the wider approach)? A purely textual answer, with particular concentration on the word freedom, might favour the narrow approach.\nThat answer would also respect the negative phraseology of the public authoritys obligation, whereas the opposite answer would give rise to a positive obligation of what, subject to whatever interpretation may be placed upon paragraph 2 of the article, might prove to be of substantial proportions.\nNevertheless a brief reflection on the nature of freedom of expression suggests difficulties with the narrow approach.\nWithout freedom to receive certain information, there is no freedom to proceed to express it; and a persons freedom to express the information is likely to carry much greater value for the public if the person holding the information is unwilling to impart it to him.\nIn his illuminating and appropriately cautious discussion of these tensions in Freedom of Speech, 2nd ed (2005), Professor Barendt states, at p 110, that the link between freedom of expression and freedom of information is undeniable.\nIndeed, if efficacy is to be given to the right to freedom of expression, there is no reason to consider that information held by a public authority (whether relevant to itself or to a private person or, as in the present case, to both) is of lesser significance to it than information held by a private person.\nOn the contrary.\nIt is with these difficulties that the European Court of Human Rights (the ECtHR) has recently been required to wrestle.\nLord Mance has charted the iteration by the ECtHR in 1987 of what it described as the basic scope of the right to receive information under article 10 in the Leander case and of its reiteration in the Gaskin, Guerra and Roche cases (all cited by him in para 63 above).\nThe trouble is that, apart from that of Guerra, the cases were all in some quarters controversially subjected to principal analysis under article 8 instead of under article 10, with the result that the treatment of article 10 was extremely short.\nEven in the Guerra case it was article 8 which won the day for those living under the polluted Italian skies who had complained that their right to receive information about the attendant risks had been violated.\nThey had however cast their claim primarily under article 10 and so in their case there was fuller treatment of article 10 than in the other cases.\nIt is within that fuller treatment that the first straws in the wind can be discerned.\nFirst, a majority of the Commission of the ECtHR had considered that a positive obligation on the state under article 10 to ensure a right to receive information could not be excluded in principle and, in the light of the environmental dangers, had arisen in the present case (paras 42 and 47 of the Commissions opinion, set out in para 36 of the ECtHRs judgment).\nIndeed that majority had gone further by suggesting that the states obligation under article 10 was to collect relevant information as well as to impart what it already held (para 49 of its opinion).\nAs a preface to its rejection of that opinion the ECtHR, by a majority, recognised but of course distinguished cases in which the general public had a right to receive information as a corollary of the specific journalistic function of imparting information on matters of public interest; then, prior to turning to article 8, it explained its disagreement with the Commission but specifically with regard to the suggested obligation to collect and disseminate information (para 53).\nIn separate opinions one judge of the ECtHR agreed with the Commissions analysis of the scope of article 10 and six others explained that their disagreement with it applied only to the authoritys suggested obligation to collect information rather than to impart what it already held.\nAll this was being said back in 1998.\nFrom these early straws it is necessary to chart the ECtHRs incremental development of the wider approach in no less than six decisions over the last five years.\nFirst, the Trsasg case, cited by Lord Mance in para 71 above.\nI agree with him at para 74 that its significance is lessened by Hungarys concession that article 10 was engaged.\nI cannot accept however that the ECtHR was setting itself up as some further Hungarian appellate court and holding only that the court of appeal there had misapplied its Data Act.\nThe ECtHR, at paras 35 to 38: (a) cited the Leander case; (b) asserted, albeit without much basis, that the court had recently advanced towards a broader interpretation of article 10; (c) distinguished the Guerra case on the basis that there the request had been for the state to collect information rather than to disclose what it already held; (d) held that, in requesting the constitutional court to disclose the MPs complaint, the civil liberties union was acting, like the media, as a social watchdog seeking to generate informed public debate; and concluded that, in refusing the request, the constitutional court, which had a monopoly over the information, had unnecessarily obstructed that debate. (e)\nSecond, the Kenedi case, also cited in para 71 above.\nThe historians complaint under Article 10 was upheld on the basis that Hungarys protracted obstruction of his request for information about the functioning of its security service in the 1960s had not been prescribed by law.\nFor present purposes the significance of the case lies in the ECtHRs statement, at para 43, that access to original documentary sources for legitimate historical research was an essential element of the right to freedom of expression, for which it cited the Trsasg case.\nThird, the Gillberg case, cited in para 76 above.\nThe applicant complained that his criminal conviction for misuse of public office, namely for disobeying court orders that the material collected by his university in its study of a mental disorder should be disclosed to K and E, somehow violated his rights under article 10.\nThe complaint was so bizarre that, in rejecting it, the Grand Chamber had no need to attend to the recent widening of the ambit of the article in aid of the generation of important debate by social watchdogs.\nAt para 83 it set out the Leander approach but more significantly noted at para 93 that K and E had rights to receive the material under article 10 upon which the applicants suggested right would impinge.\nFourth, the Shapovalov case, also cited in para 76 above.\nThe journalist complained that his rights under article 10 had been violated by Ukraines refusal to disclose the arrangements made by its electoral commission for the controversial elections in 2004.\nThe ECtHR rejected his complaint on the basis that, in one way and another, he had already been given access to information about the arrangements.\nThe significance of the decision, made by a different section of the court (over which, as it happens, the current president of the entire court was then presiding), lies in its citation (at para 68) of the Trsasg case for the proposition that the nondisclosure of information of public interest might disable public watchdogs from playing their vital role.\nFifth, the Youth Initiative case, also cited in para 76 above.\nThe complaint under article 10 was upheld on the basis that, in defying a domestic order to inform the applicant of the number of people subjected to electronic surveillance in 2005, Serbias interference with its rights had not been in accordance with law.\nThe residual significance of the ECtHRs decision lies in the attention which, underlined in a concurring opinion, it gave at para 13 to a statement in 2011, entitled General Comment No 34, of the UN Human Rights Committee that a parallel article (article 19 of the International Covenant on Civil and Political Rights) included a right of access by the media to information of public interest held by public bodies; and in the approval which, at para 20, the court gave to the assertion in the Trsasg case of that same principle in favour of public watchdogs for the purposes of article 10.\nAnd sixth, and most importantly, the sterreichische case, also cited in para 76 above.\nThere, four months ago, the ECtHR reminded itself of the Leander approach; noted however the recognition in the Trsasg case of the courts recent advancement towards the broader approach; observed that information could not be imparted unless it had been gathered; accepted that the purpose behind transfers of land in the Tyrol was a subject of general interest; described the applicant as a social watchdog in that regard; held that the applicant had rights under article 10 with which the refusal of the Regional Tyrol Commission to disclose its decisions on appeal from the local commissions had interfered; and concluded that, although it was prescribed by Austrian law, the interference was unnecessary in that it was a blanket refusal to disclose any of the regional commissions decisions.\nI cannot subscribe to the view that the development of article 10 which was in effect initiated in the Trsasg case has somehow been irregular.\nThe wider approach is not in conflict with the basic Leander approach: it is a dynamic extension of it.\nThe judgment in the Trsasg case is not some arguably rogue decision which, unless and until squarely validated by the Grand Chamber, should be put to one side.\nIts importance was quickly and generally recognised.\nWithin a year of its delivery the European Commission For Democracy Through Law (the Venice Commission) had hailed it as a landmark decision on the relation between freedom to information and the Convention (Opinion No 548\/2009, 14 December 2009); and, in giving the judgment of the Court of Appeal in Independent News and Media Ltd v A [2010] EWCA Civ 343, [2010] 1 WLR 2262, Lord Judge CJ had, at para 42, specifically endorsed that description of it.\nIn his judgment in the Sugar case, cited by Lord Mance at para 61 above, Lord Brown of Eaton under Heywood, with whom Lord Mance had agreed at para 113, had rejected at para 94 the proposition that, in the light in particular of the Trsasg case, Mr Sugar had had any right under article 10 to disclosure by the BBC of a report held by it for journalistic purposes.\nBut, as Lord Brown had proceeded to demonstrate at paras 98 to 102, interference by the BBC with any possible right of Mr Sugar under article 10 had clearly been justified; and that was the basis on which, at para 58, I had associated myself with the rejection of Mr Sugars invocation of article 10.\nIn the light of the judgments of the ECtHR delivered following this courts decision in the Sugar case, in particular in the sterreichische case, this court should now in my view confidently conclude that a right to require an unwilling public authority to disclose information can arise under article 10.\nIn no sense does this betoken some indiscriminate exposure of sensitive information held by public authorities to general scrutiny.\nThe jurisprudence of the ECtHR, of which this court must always take account and which in my view it should in this instance adopt, is no more than that in some circumstances article 10 requires disclosure.\nIn what circumstances? These will fall to be more clearly identified in the time honoured way as, in both courts, the contours of the right are tested within particular proceedings.\nThe evolution of the right out of freedom of expression clearly justifies the stress laid by the ECtHR on the need for the subject matter of the request to be of public importance.\nNo doubt it also explains the importance attached by that court to the status of the applicant as a social watchdog; whether that status should be a pre requisite of the engagement of the right or whether it should fall to be weighed in assessing the proportionality of any restriction of it remains to be seen.\nEqually references in the ECtHR to the monopoly of the public authority over the information may need to find their logical place within the analysis: thus, in the absence of a monopoly, an authoritys non disclosure may not amount to an interference.\nWhere the article is engaged and where interference is established, the inquiry will turn to justification under para 2.\nIf refusal of disclosure has been made in accordance with an elaborate statutory scheme, such as the FOIA, the public authority will have no difficulty in establishing that the restriction has been prescribed by law; and the live argument will surround its necessity in a democratic society, in relation to which the line drawn by Parliament, if susceptible of coherent explanation, will command a substantial margin of appreciation in the ECtHR and considerable respect in the domestic courts.\nIrrespective of its precise contours, the right to require a public authority to disclose information under article 10 applies to Mr Kennedys claim against the Commission.\nMr Kennedy can tick all the boxes to which I have referred.\nI will spend no time before concluding that a blanket prohibition on his receipt of any of the information for 30 years would be disproportionate to any legitimate aim; and, but for the argument to which I must now turn, this court should proceed to consider whether, pursuant to section 3 of the 1998 Act, it is possible to read section 32(2) of the FOIA so as to escape any such blanket prohibition.\nI confess to some surprise at the solution to this appeal which the majority of the members of this court now devise.\nAs Lord Mance explains in para 6 above, their solution lies in interpreting the intention of Parliament in including the 30 year prohibition within section 32 of the FOIA as being not that the documents should necessarily be exempt from disclosure for 30 years but that their disclosure should be regulated, otherwise than under the FOIA, by the different and more specific schemes and mechanisms which govern the operations of, and disclosure by, courts, arbitrators and persons conducting inquiries.\nIn relation to documents filed in, or created by, courts, or served in connection with proceedings in courts, there is no difficulty in subscribing to Lord Mances interpretation.\nIn that, as I have explained in para 175 above, courts are not subject to the FOIA and naturally have their own system for regulating disclosure of documents on their files, it is clearly undesirable that those seeking court documents of which copies happen to have come into the possession of public authorities should be entitled to require the latter to make disclosure under a different regime, namely the FOIA, which might prove less restrictive, or for that matter more restrictive, than it would be if made pursuant to a determination of the court.\nHence subsection (1) of section 32 of the FOIA.\nBut what was the Parliamentary intention behind subsection (2)? How much thought can have gone into its conclusion that, in the words of the Minister quoted by Lord Toulson at para 120 above, statutory inquiries have a status similar to courts and therefore that information in inquiry documents should, by subsection (2), be swept into the exemption aptly made in subsection (1) in respect of information in court documents?\nIn searching for what are said to be the more specific schemes and mechanisms which govern disclosure by persons conducting inquiries (for in the present case we can ignore arbitrators), let me first address inquiries under the 2005 Act.\nIn relation to them, there is no scheme, apart from the FOIA, which governs disclosure following the end of an inquiry.\nWhat governs their disclosure is the FOIA.\nIn providing in section 18(3) of the 2005 Act that, when, following the end of an inquiry, the chairman passes the documents to the minister who established it, the 30 year prohibition ceases to apply, Parliament was not recognising that the FOIA did not apply to disclosure of them.\nOn the contrary, it was recognising that the FOIA did apply to them in every respect until that point and that, save in respect of the 30 year prohibition which beyond that point could not be justified, it should continue to apply to them.\nThe analogous provision in section 20(6) of the 2005 Act, namely that restrictions on disclosure imposed by the minister or the chairman prior to the end of the inquiry should not thereafter have effect, reflects the same thinking: namely that, in the absence of justification for non disclosure under the specific provisions of the FOIA, the documents then fell to be disclosed thereunder.\nSo the regime for disclosure in respect of inquiries conducted under the 2005 Act entirely undermines the conclusion that disclosure referable to inquiries is not to be governed by the FOIA; and of course the regime is precisely that for which Mr Kennedy contends in relation to inquiries conducted otherwise than under the 2005 Act.\nIn para 33 above Lord Mance responds that Parliaments perception in 2005 of a need to disapply the 30 year prohibition in relation to disclosure of documents following the end of inquiries conducted under the new Act sheds no light on its perception in 2000.\nBut his observation raises two linked questions.\nIf Parliament had addressed the point in 2000, on what basis might its perception have been different? And, if in 2005 some other adequate scheme for disclosure was available, why did it perceive a need to disapply the prohibition and to cause disclosure to be governed by the other, specific provisions of the FOIA?\nWhat, then, is suggested to be the more specific scheme and mechanism which governs disclosure by persons, such as the Commission, who conduct inquiries otherwise than under the 2005 Act? In respect of the Commission the scheme is said to lie within the 1993 Act, augmented by the common law.\nIf so, one might expect to find it in section 8 of the 1993 Act, which defines the powers of the Commission in its conduct of inquiries and which does, at subsection (6), address a degree of publication in that regard.\nBut it is only a report, or another statement of the results, of the inquiry which the subsection permits or possibly obliges the Commission to publish.\nThe subsection does not address the disclosure of documents held by the Commission for the purpose of the inquiry.\nSection 10A provides for disclosure of a broader category of information by the Commission, which would no doubt include information obtained for the purposes of an inquiry; but that section provides for disclosure only to public authorities.\nThe result is that there is no specific scheme for disclosure of such information to private citizens at all.\nThe scheme is instead said to lie in the overall definitions of the Commissions objectives, functions and duties in sections 1B, 1C and 1D of the 1993 Act: in particular in its objective of increasing public confidence in charities (section 1B(3)1); in its general function of disseminating information in connection with the performance of its functions (section 1C(2)5); and in its duty to have regard to the need for transparency of regulatory activities in the performance of its functions (section 1D (2) (4)).\nIt has never been suggested to Mr Kennedy, whether by the Commission itself in its initial responses to his request for information under the FOIA in 2007 or later through solicitors, that his request should be made otherwise than under the FOIA.\nOn the contrary the stance of the Commission has been that the FOIA indeed governed his request and that its terms precluded accession to it.\nThere did come a time, apparently in the Court of Appeal, when counsel for the Commission began to argue, as they have continued to argue in this court, that, when read with section 78 of the FOIA, sections IC and ID of the 1993 Act conferred a residual power on the Commission to disclose documents.\nBut counsel have never accepted that the Commission was under any duty in this regard or that the circumstances of Mr Kennedys request might be such as to attract exercise of the suggested power in his favour.\nThe majority of my colleagues in this court proceed to introduce the suggestion that the scheme for disclosure which they discern in sections 1C and 1D of the 1993 Act is underpinned by the common law principle of open justice which, in an eloquent judgment delivered when he was a member of the Court of Appeal, Lord Toulson invoked in explaining why journalists were entitled to disclosure by a magistrates court of witness statements and correspondence to which reference had been made at a hearing of applications for extradition orders: see R (Guardian News and Media Ltd) v City of Westminster Magistrates Court cited in para 47 above.\nThe result, according to the majority, is that, confronted with a request such as that of Mr Kennedy for disclosure of the material in the exercise of its functions and in the performance of its duties under sections 1C and 1D of the 1993 Act, the Commission has a duty to accede to it in the absence of persuasive countervailing considerations (Lord Mance, at paras 49 and 56); and that a refusal to disclose could be the subject of challenge in the form of judicial review by a High Court judge, who should adjust the level of his scrutiny so as to accord with the principles of accountability and transparency contained in the 1993 Act (Lord Mance, at para 55).\nIn my view the scheme identified by the majority for disclosure by the commission outside the FOIA is profoundly unsatisfactory.\nWith respect, it can scarcely be described as a scheme at all and there is certainly no example of its prior operation or other recognition of its existence.\nCompare it with the scheme under the FOIA which, apart from the apparent prohibition for 30 years, identifies an elaborate raft of prescribed situations in which the Commission is entitled, or subject to the weighing of rival interests may be entitled, to refuse disclosure; and under which a refusal can be countered by application to an expert, namely the Information Commissioner, who takes the decision for himself (section 50(1)) and whose decision can be challenged on points of law or even of fact by an expert tribunal (section 58(1)) and in effect without risk as to costs.\nAlthough the majority of my colleagues reject Mr Kennedys assertion that he has rights under article 10 which are engaged by his request for disclosure by the Commission, they proceed to suggest that his entitlement to disclosure otherwise than under the FOIA would be likely to be as extensive as any entitlement under article 10 (Lord Mance, paras 45, 50, 56, 92 and 101(iv)).\nThe suggested scheme otherwise than under the FOIA is so vague and generalised that I regard the determination thereunder of any request for disclosure as impossible to predict.\nIt may be that, in practice, the Commission and, on judicial review, the High Court judge would reach for the helpful prescriptions in the FOIA and, in effect, work in its shadow.\nBut if, as I consider, Mr Kennedys rights under article 10 are engaged by his request, I even have doubts whether any refusal to disclose a document otherwise than under the FOIA could be justified under para 2 of the article.\nFor restrictions on the exercise of his rights under article 10 must be prescribed by law, which in the words of the ECtHR, must be adequately accessible and foreseeable, that is, formulated with sufficient precision to enable the individual if need be with appropriate advice to regulate his conduct (Gillan and Quinton v United Kingdom (2010) 50 EHRR 1105).\nIt is possible that the so called scheme for disclosure otherwise than under the FOIA might fail that test.\nLord Mance suggests at para 37 that, if that scheme failed the test, so would the scheme for disclosure of court documents at the direction of a judge: but the adequacy of a broadly discretionary power may be very different when exercised by a judge with no axe to grind rather than, albeit subject at any rate in theory to judicial review, by an executive authority requested to disclose documents which may justify criticism of it.\nAlthough on the majoritys analysis of the reach of article 10 this problem does not arise, on my analysis it does arise.\nMy doubts in this regard fortify my firm conclusion that, including in the interests of the Commission, it is important that, if possible, requests for disclosure of information obtained for the purposes of an inquiry should be determined under the FOIA, subject of course to the overarching requirement in para 2 of the article that any refusal should be necessary in a democratic society.\nThe problem is, of course, the absolute exemption from disclosure apparently cast over such information by section 32(2) until, at the expiry of 30 years, it becomes a historical record.\nI agree with Lord Mance, for the reasons which he gives at para 28 above, that the natural construction of the subsection is to that effect.\nThe alternative construction is that the subsection governs only information held for the purposes of the inquiry with the result that, once the inquiry has been concluded, the subsection no longer governs it.\nThe alternative construction is wrong.\nBut it is arguable.\nThe Court of Appeal considered that, as a matter of grammar, the subsection was at least ambiguous and the alternative construction of it might even be preferable (Ward LJ, para 21, [2011] EWCA Civ 367, [2012] 1 WLR 3524).\nIn granting permission for the alternative construction to be argued in the present appeal, this court provisionally endorsed its arguability.\nIn paras 223 to 233 below Lord Carnwath stresses the muscularity of the power given to courts under section 3 of the 1998 Act to read primary legislation in a way which is compatible with rights under the ECHR.\nFor the reasons which he there gives, I would read the subsection in accordance with the unnatural, alternative, construction with the result that, following the end of the Commissions inquiries, it had no effect and that, at long last, Mr Kennedys request should begin to be appraised by reference to the application to the Commissions documents of the other, elaborate, provisions set out by Parliament in the FOIA.\nSo I would have allowed the appeal.\nLORD CARNWATH\nSummary\nIn agreement with Lord Wilson, I would allow the appeal.\nI would uphold the view of the Information Tribunal, supported by recent Strasbourg cases, that section 32(2) as interpreted by the Charity Commission involved a disproportionate interference with Mr Kennedys rights under article 10; but that the section can and should be read down under section 3 of the Human Rights Act 1998 (HRA) to avoid that effect.\nI shall comment also on the alternative common law or open justice approach, which, though now adopted by the majority, was unsupported by any of the parties before us, in my view for good reasons.\nThe course of the case\nThe case has had a tortuous history.\nIt began with Mr Kennedys request to the Charity Commission as long ago as 8 June 2007.\nIt has arrived at the Supreme Court more than six years later, after detailed consideration by the Information Commissioner, the Information Tribunal (twice), the High Court, and the Court of Appeal (twice).\nDuring that time the parties have had to adapt their arguments to a frequently changing legal landscape.\nImportant court decisions here and in Strasbourg have opened up new directions of thought or closed off others.\nThese changes have continued up to and beyond the hearing in this court.\nAfter the close of the hearing, a new decision of the Strasbourg court (the Austrian case) has led to the need for further submissions to add to the voluminous bundles already before the court.\nAgainst that difficult background, it is particularly important for us not to lose sight of what the case is about in terms of merits.\nThe public interest of the information sought by Mr Kennedy, and the legitimacy of his reasons as a journalist for seeking it, are not in dispute.\nNor in my view has any convincing policy reason been put forward for a blanket exemption, as contended for by the Charity Commission.\nIn the first Court of Appeal judgment (12 May 2011) [2012] 1 WLR 3524, para 47, Jacob LJ spoke of his reluctance to adopt the Commissions construction which allows all information deployed in the inquiry to be kept secret for 30 years after the end of the inquiry, regardless of the contents of the information, the harmlessness of disclosure or even the positive public interest in disclosure.\nAlthough like his colleagues he felt constrained by what he called the identity of section 32(1) and section 32(2), he commented: Clearly and obviously Parliament was treating documents deployed in legal proceedings before a court in exactly the same way as those deployed in an inquiry.\nIt simply overlooked that a court has machinery for the release of documents subsequent to (or indeed during) legal proceedings whereas an inquiry or arbitration does not.\nThat may well have been a blunder which needs looking at (para 48).\nAt that stage the judgment had been restricted to interpretation of FOIA itself, and the arguments that had been advanced under article 10 of the Convention the Court considered could not be decided on the material before it.\nThe court took the very unusual step of remitting the case to the tribunal to report on the article 10 issue, more particularly whether section 32(2) should be read down under HRA section 3 so that the exemption that it provides from disclosure of information ends upon the termination of the relevant statutory inquiry.\nThe court accepted that the failure to take the point at the previous tribunal had been understandable, given that the judgments of the Strasbourg Court upon which Mr Coppel now relied (Trsasg a Szabadsagjogokert v Hungary (2009) 53 EHRR 130 and Kenedi v Hungary (2009) 27 BHRC 335) had been delivered only at or about the time of the tribunal hearing and not reported until later.\nFurther, the point was one of general public interest and the present case was an ideal one for it to be tested (per Ward LJ para 45).\nBy that time strong encouragement had been given in the Court of Appeal for the view that Trsasg represented a significant change of direction in the Strasbourg jurisprudence.\nIn Independent News and Media Ltd v A [2010] EWCA Civ 343, [2010] 1 WLR 2262, Lord Judge CJ noted that the decision appeared to point the way to a wider scope for article 10, at least where the media are involved and genuine public interest is raised (para 41).\nIn British Broadcasting Corpn v Sugar (No 2) Moses LJ described the case as a landmark decision on freedom to information (his emphasis), showing that article 10 may be invoked not only by those who seek to give information but also by those who seek to receive it (para 76).\nThat view of the recent Strasbourg case law was followed after full argument by the very experienced tribunal in its report to the Court of Appeal (fairly described by Etherton LJ as an excellent, clear and comprehensive analysis).\nIt followed a two day hearing in October 2011, including both evidence and legal submissions.\nEchoing Jacob LJ they concluded that a construction of section 32(2), which in effect allowed the state to prevent the disclosure of information for 30 years or more regardless of the nature of the information or the public interest in disclosure, amounted in the circumstances to an interference with Mr Kennedy's right to freedom of expression.\nThat conclusion was reinforced by a detailed consideration of the classes of documents which were in issue, and the evidence they had heard on them (paras 47 54).\nThey also held that such interference could not be justified under article 10(2).\nThey accepted Mr Coppels arguments that the Charity Commissions construction of section 32 produced a paradigm of a disproportionate measure, which failed adequately to balance the interests of society with those of individuals and groups; that the interests of those affected were adequately protected by the suite of exemptions in Part II of FOIA; and that the public interest in disclosure of such information clearly outweighs any interest in it being withheld (paras 56 64), and that it was possible without strained construction to read the words of section 32(2) so that the exemption ends upon the termination of the statutory inquiry (paras 71 72).\nBy the time that report had reached the Court of Appeal, it had been overtaken by the decision of this court in BBC v Sugar, handed down only a few days before the restored hearing.\nThe Court of Appeal held that they were bound by that decision to conclude that article 10 had no application.\nIt followed that the Convention issues on which the tribunal had been asked to report were no longer open to Mr Kennedy.\nIt was unnecessary therefore for the Court of Appeal to consider the tribunals conclusions on the merits of the case, assuming article 10 had applied.\nIt is against that background that the appeal has come before this court on the issues of principle under FOIA and article 10, one issue being whether we should revisit the reasoning in BBC v Sugar in the light of later developments.\nNotwithstanding the position forced on the Court of Appeal by the Supreme Court decision, the conclusions of the tribunal remain in my view of considerable importance to the present appeal.\nIf we were to hold that the tribunal had been right in its conclusion that article 10 applied, its view that section 32(2) involved a disproportionate interference with that right under article 10(2) should carry great weight.\nIn principle that was a matter of factual judgment for the expert tribunal, from which appeal to the courts lies only on grounds of illegality or irrationality.\nSubject to the legal issues now before us, we have heard no argument that the tribunals conclusions on article 10(2) were not soundly based on the material before them.\nAt the lowest they establish a strong prima facie case that, for the purposes of the Human Rights Act, the Charity Commissions approach involved a breach of Mr Kennedys Convention rights.\nThe Human Rights Act 1998\nThe arguments about the scope of article 10 must be seen in their correct legal context.\nIt is not our task to determine that issue authoritatively as a matter of Convention law.\nThat is for the Strasbourg court.\nOur role is one of domestic law, as defined by the Human Rights Act.\nUnder the Act Convention rights, as defined by reference to articles of the Convention (section 1(1)), are to be given effect for certain specific purposes.\nThey include: i) ii) Interpretation (section 3(1)) Legislation must so far as it is possible to do so be read and given effect in a way compatible with Convention rights.\nIncompatibility (section 4) If a court is satisfied that a provision of primary legislation is incompatible with a Convention right it may make a declaration to that effect.\nFurther action is then a matter for Ministers and Parliament (section 10). iii) Acts of public authorities (section 6(1)) It is unlawful for a public authority to act in a way which is incompatible with a Convention right.\nIf the court finds that a public authority has so acted, it has wide powers to provide an appropriate remedy (section 8).\nThe relevance of the Strasbourg cases\nIn deciding the scope of Convention rights for these purposes we are not bound by Strasbourg decisions.\nOur duty is simply to take (them) into account (section 2(1)).\nThe same duty applies to decisions of the former Commission and of the Committee of Ministers.\nThe Act does not distinguish for this purpose between decisions at different levels of the hierarchy.\nIt is left to the domestic court to determine the weight to be given to any particular decision.\nHow to do so, as Lord Mance explains in para 60, has been discussed in a number of recent judgments of this court, most recently in R (Sturnham) v Parole Board [2013] UKSC 23, [2013] 2 AC 254).\nGrand Chamber decisions, of course, generally carry greater weight, but so may a consistent sequence of decisions at section level, or decisions which show a clear direction of travel.\nThere is a continuing debate as to what taking account means in practical terms.\nUnder the so called Ullah principle (in the words of Lord Bingham: R (Ullah) v Special Adjudicator [2004] UKHL 26; [2004] 2 AC 323, para 20): The duty of national courts is to keep pace with the Strasbourg jurisprudence as it evolves over time: no more, but certainly no less.\nThat formulation does not purport to offer any guidance as to how to determine the position under the Strasbourg jurisprudence, where the particular issue before the domestic courts has not been the subject of direct decision.\nUllah itself was such a case.\nIt concerned the courts approach to a so called foreign case, that is one where it was claimed that the conduct of the state in removing a person from its territory (whether by expulsion or extradition) to another territory (would) lead to a violation of the person's Convention rights in that other territory (per Lord Bingham, para 9).\nIn Ullah the right in question was article 9 (right to religion), which had not in that context been the subject of a decision of the Strasbourg court.\nBut the House felt able to determine that question by reference to principles derived from decisions relating to other Convention rights. (see E Bjorge, The Courts and the ECHR: A Principled Approach to the Strasbourg Jurisprudence (2013) 72(2) CLJ 289, for a useful discussion of Lord Binghams formulation in the context of the findings in the case, and of later statements by Lord Bingham, judicial and extra judicial.)\nIn R (Gentle) v Prime Minister [2008] UKHL 20, [2008] 1 AC 1356, paras 56 57, Lady Hale was guided by what she could reasonably foresee would be decided by the Strasbourg court.\nSimilarly, in Ambrose v Harris [2011] UKSC 43, [2011] 1 WLR 2435, para 88, Lord Dyson looked for a sufficiently clear indication in [the] Strasbourg jurisprudence of how the European court would resolve the question.\nThere can, however, be no single working rule, since the nature of cases and the state of the relevant jurisprudence may vary greatly.\nIn any event, the flexibility implied by the taking into account formula absolves the domestic court of the need to arrive at a definitive view of how the matter would be decided in Europe, where the current state of the jurisprudence makes that unrealistic.\nOther policy factors may also come into play.\nIn the present case we are faced with a novel state of affairs.\nUntil the decision in Trsasg (2009) there was an apparently settled position, confirmed by a series of Grand Chamber decision including Leander v Sweden (1987) 9 EHRR 433 and culminating in Roche v United Kingdom (2005) 42 EHRR 600, that article 10 imposed no positive obligation on the state to disclose information not otherwise available.\nThat was hardly surprising.\nAs Lord Mance pointed out (para 98), article 10 is on its face drafted in narrower terms than the corresponding article 19 of the Universal Declaration, and other comparable provisions, which include a specific right to seek rather than merely impart and receive information.\nAgainst that background Trsasg at first sight represents an unexpected departure.\nIt begins with a powerful affirmation of the importance of the rights of the press, but which is said to be based on the courts consistent practice: 26.\nThe Court has consistently recognised that the public has a right to receive information of general interest.\nIts case law in this field has been developed in relation to press freedom which serves to impart information and ideas on such matters In this connection, the most careful scrutiny on the part of the Court is called for when the measures taken by the national authority are capable of discouraging the participation of the press, one of society's watchdogs, in the public debate on matters of legitimate public concern, even measures which merely make access to information more cumbersome. 27 .\nIn view of the interest protected by article 10, the law cannot allow arbitrary restrictions which may become a form of indirect censorship should the authorities create obstacles to the gathering of information.\nFor example, the latter activity is an essential preparatory step in journalism and is an inherent, protected part of press freedom (emphasis added, citations omitted).\nHaving referred to the restrictive view of article 10 taken in earlier case such as Leander v Sweden, it continued: Nevertheless, the Court has recently advanced towards a broader interpretation of the notion of freedom to receive information and thereby towards the recognition of a right of access to information (para 35).\nDepending on ones point of view, Trsasg could have been seen as a landmark decision, or as an aberration by a single section of the court.\nIn any event, it is difficult to see how on its own it could have led a domestic court, applying any of the tests outlined above, to adopt a different approach from that apparently established by the Grand Chamber decisions.\nBy the time of this courts consideration of Sugar, notwithstanding a further decision to like effect of the same section (Kenedi), the position in the view of the majority had not changed.\nHowever, as explained by Lord Mance, matters have now moved on.\nTrsasg has been treated as authoritative in three further decisions, culminating in the very recent Austrian case.\nAdmittedly they remain decisions at section level, which have not yet been reviewed by the Grand Chamber.\nBut Mr Coppel can rely on them as indicating a general direction of travel away from a strict application of article 10, at least in cases involving journalists or other watchdogs seeking information of genuine public interest.\nHe can also point to the fact that this line of approach has now been adopted by three sections (First, Second and Fifth) involving more than 20 judges, including (in Shapovalov) the current President (Judge Spielmann).\nHeadcounts can be misleading.\nBut they appear to imply a substantial body of opinion within the court prepared to depart from the narrow principle apparently established by the Grand Chamber cases.\nI do not dissent from Lord Mances criticisms of some of the reasoning in these cases, but the general direction of travel, pending a contrary decision of the Grand Chamber, in my view is clear.\nIn these circumstances the domestic court has two options.\nIt can either stand by the earlier Grand Chamber jurisprudence pending reconsideration at that level, or it can decide to follow the new approach indicated by the section decisions.\nIn choosing between them it will bear in mind that the latter course will deprive the government itself of the chance of seeking to have the issue tested before the Grand Chamber, since the government has no separate right of petition in Strasbourg.\nIn some cases this will be a good reason for taking the more conservative approach.\nHowever, it is not the only factor in play.\nAccount must also be taken of the unfairness to the claimant and the interests he represents of denying or delaying an immediate domestic remedy to which he is apparently entitled under the most recent Strasbourg case law.\nIn my view, the court may also take account of how far the new approach accords with recognised principles of domestic law.\nThe governments wish to challenge a new direction of travel in the Grand Chamber carries less weight if that direction is one which has already been taken by domestic law.\nIn the present case, the balance in my view strongly favours the claimant.\nI respectfully agree with Lord Wilsons analysis of the Strasbourg cases and the confident conclusions he draws from them.\nBut even if I were not able to go so far, we can in my view reasonably foresee (in Lady Hales words) how the case would be decided in Strasbourg at least at section level.\nIt is enough for this purpose that the direction of travel of the recent cases gives clear support to the general approach of the First tier Tribunal, and certainly that there is nothing in them to indicate that Strasbourg would adopt a narrower view.\nFurther, no reason has been put forward for regarding that approach as involving any fundamental departure from domestic law principles.\nIndeed, on the majoritys view of the open justice principle, it is not a matter of keeping pace with Strasbourg; rather the reverse.\nFinally, given the importance of the case to Mr Kennedy and the public interest which he represents, it would be wrong to delay yet further the resolution of this issue to enable the case to move through the Strasbourg system, with no certainty as to whether or when it might find its way to the Grand Chamber.\nI therefore approach the other issues in the case on the basis that the decision of the First tier Tribunal is in accordance with the relevant Strasbourg jurisprudence; and that there is therefore at least a strong prima facie case that, for the purposes of the Human Rights Act, the Charity Commissions decision was in breach of Mr Kennedys Convention rights.\nConstruction of section 32\nCan section 32 be construed so as to give effect to Mr Kennedys article 10 rights, either (i) on ordinary principles of statutory construction or (ii) by reading down under HRA section 3? On (i) I have nothing to add to what Lord Mance has said (paras 24 34).\nI agree with him, and with the Court of Appeal, that this ground of appeal must fail.\nOn ordinary principles, having regard to the structure and context of section 32, subsections (1) and (2) must be read consistently with each other.\nOnce section 3 is brought into play, Mr Coppels case is more persuasive.\nHe is right, in my view, to say that it is possible to read the exemption in section 32(2) itself as limited to the period of the inquiry, as indeed the tribunal held.\nIndeed, if one takes subsection (2) on its own, that is arguably the more natural reading.\nThe use of the present tense appears to direct attention at the holding of documents in the custody of, or created by, the person conducting the inquiry, for that limited purpose, rather than for longer term retention once the purposes of the inquiry have ceased.\nThat reading involves no undue violence to the wording of that subsection taken on its own.\nIt is only when the subsection is read in the context of the section as a whole, and of its place in the legislative scheme, that conventional principles require a different view to be taken.\nBut possibility is all that section 3 requires.\nOne suggested reason for rejecting Mr Coppels submission is because of its effect on the relationship of section 32 with section 2.\nThat section provides a general public interest exception to the rights of disclosure under section 1, save in the case of absolute exemptions, in relation to which section 1 rights are excluded altogether.\nIf section 32(2) is read down in the way proposed, it would remain a provision conferring an absolute exemption, albeit severely limited in time, and therefore the public interest defence would have no application even after the exemption had ceased to apply.\nI am not convinced that this by itself is a sufficient answer under section 3.\nWhat is required is a possible construction.\nI accept that it must be reasonably possible, so that the scheme of the legislation remains workable.\nBut that does not necessarily require a construction which would achieve the most coherent legislative scheme, or indeed the one which the legislature intended.\nAs the tribunal noted, section 3 is far reaching (see the valuable summary of the principles proposed by counsel in Vodafone 2 v Revenue and Customs [2010] Ch 77, paras 37 38).\nFurthermore there is no reason to think that the absence of a public interest defence under section 2 would upset the balance of the statute.\nThe tribunal was evidently satisfied that even apart from section 2 there were sufficient safeguards under the other more specific exemptions.\nThe result would in my view be consistent with the fundamental features, or the grain of the legislative scheme: see Ghaidan v Godin Mendoza [2004] UKHL 30, [2004] 2 AC 557, 572, per Lord Nicholls.\nAs I said in Thomas v Bridgend County Borough Council [2011] EWCA Civ 862, [2012] QB 512, in relation to the operation of section 3 in the context of the Land Compensation Act 1973: The precise form of wording required to give effect to the claimants' rights is not critical: Ghaidan v Godin Mendoza para 35, per Lord Nicholls,).\nThe court is not required to redraft the statute with the precision of a parliamentary draftsman, nor to solve all the problems which it may create in other factual situations (para 68)\nThe respondents have a more fundamental response to Mr Coppels argument.\nSection 3 does not come into play unless the legislation requires adjustment to make it compatible with Convention rights.\nThey rely on the words of Lord Woolf CJ in Poplar Housing and Regeneration Community Association Ltd v Donoghue [2001] EWCA Civ 595, [2002] QB 48, para 75: Unless the legislation would otherwise be in breach of the Convention section 3 can be ignored (so courts should always first ascertain whether, absent section 3, there would be any breach of the Convention).\nIn principle with respect that seems to me correct.\nThere is no need to read down a single provision, if the legislation as a whole can be read and applied in a compatible way.\nIn the present statutory context, they argue, there is no need to depart from the ordinary construction of section 32.\nIt provides an absolute exemption only to the duty to disclose under FOIA, but it does not constrain any right to information under article 10.\nAssuming such a right is established, it gives rise to an independent duty enforceable under HRA section 6.\nFOIA section 78 in terms provides that nothing in the Act is to be taken as limiting the powers of a public authority to disclose information held by it.\nThus, in the absence of anything in the Charity Commissions own legislation which limits their power to comply with article 10, section 6 requires them to do so.\nThey point to the Commissions general functions which include disseminating information in connection with the performance of any of [their] functions (1993 Act section 1C); their regulatory activities must be accountable and transparent (section 1D), and they have a general power to do anything calculated to facilitate or conducive or incidental to the performance of their functions (section 1E).\nThese general provisions, it is said, are amply sufficient to provide a legislative basis for compliance with any disclosure obligations imposed on them under the HRA.\nMr Coppels answer, as I understand it, is that general statutory powers of this kind cannot be relied on to supplant the detailed and restrictive legislative scheme of information powers conferred by Part II of the Act.\nThis (by section 8) implicitly limits their power of disclosure in relation to inquiries to the making of reports under that section.\nHe points by analogy to cases such as Hazell v Hammersmith and Fulham London Borough Council [1992] 2 AC 1, where it was held that the incidental powers conferred by section 111 of the Local Government Act 1972 could not be used to override a specific set of statutory provisions dealing with the same subject matter.\nMr Clayton, for the first interveners, submits that the respondents approach is highly artificial, since there had never been any suggestion that an application under other powers would have been treated differently, and such an argument if accepted would severely limit the scope of HRA section 3.\nHe makes the further point that, according to Trsasg (see above), interference with article 10 may be established by measures which merely make access to information more cumbersome.\nA solution which depends on enforcement through the ordinary courts is clearly more cumbersome than the simple, cost free right to recourse to the Information Commissioner.\nI have found this a difficult issue to resolve.\nSection 32(2) exempts the Charity Commission from duties of disclosure under FOIA, but does not exclude any obligations they may have had under other legislation.\nTo the extent that refusal of information resulted in a breach of article 10, Mr Kennedy had his remedy by action under HRA section 6.\nThis would not have been restricted to ordinary judicial review principles.\nThe court would have had power to investigate the facts, to the same extent as the tribunal, and would have been able to adapt its ordinary procedures for that purpose: see Manchester City Council v Pinnock [2010] UKSC 45, [2011] 2 AC 104, para 28.\nOn one view, there is no need to adapt section 32(2) when a comparable remedy was and is available to Mr Kennedy under other legislation.\nI have come to the conclusion, however, that this is too narrow a view.\nIt seems to me clear that the scheme established by FOIA was intended to be a comprehensive, albeit not necessarily exhaustive, legislative code governing duties of disclosure by the public authorities to which it applied.\nIt is entitled: An Act to make provision for the disclosure of information held by public authorities The preceding White Paper (Your Right to Know: The Government's Proposals for a Freedom of Information Act (Cm 3818)(1997)) stated that its purpose was to create a general statutory right of access to official records and information (para 1.2) and that it should have very wide application applying across the public sector as a whole, at national, regional and local level (para 2.1).\nFurther it was designed to create rights for the public, enforceable by a simple, specialist and generally cost free procedure, rather than simply discretionary powers enforceable by the ordinary courts only on conventional public law principles.\nIn considering whether the legislation is compatible with the Convention rights for the purpose of section 3, we should direct attention to the legislative code as so established by the Act, rather than to powers or remedies which may be available from other legal sources.\nFurthermore, I agree with Mr Clayton that recourse to the courts, even given the flexibility allowed by the developing principles to which Lord Mance refers, remains more cumbersome (and more costly) than the specialised procedures provided by the Act.\nIn so far as it is permissible to take policy considerations into account, I see advantage in an interpretation which allows such cases to be dealt with through the specialist bodies established by the Act, rather than the ordinary courts.\nI am impressed also by the lack of any apparent policy reason for extending the full exemption under section 32 to public inquiries of this kind.\nLord Toulson (para 120) has quoted the statement made to Parliament by David Lock MP, Parliamentary Secretary, (Hansard, (HC Debs) Standing Committee B 25, January 2000, cols 281 282).\nTo my mind this provides no support for the majoritys approach.\nThe passage provides a readily understandable explanation of the exemption provided for court records, based on the separation of powers, and the acknowledged jurisdiction of the courts to determine what documents should be disclosed.\nBut not so for statutory inquiries.\nThe only explanation given is that they have a status similar to courts, and their records are usually held by the Department that established the inquiry.\nThe first part of that sentence begs the relevant question and the second involves a non sequitur.\nIt certainly gives no indication of what powers it was thought the courts would have to direct disclosure, or indeed how separation of powers comes into it.\nThe Ministers statement seems to me if anything to confirm Jacob LJs view, at [2012] 1 WLR 3524, 3541, that no account had been taken of the lack of any formal machinery for the release of inquiry documents comparable to that of the courts.\nAccordingly, I would decide this issue in favour of the claimant, and uphold the decision of the tribunal.\nIt follows that, on the issues which have been argued before us, the appeal should succeed.\nThe common law alternative\nOn the basis of my conclusion on the points raised by the parties, the alternative approach becomes redundant.\nI approach it with caution, conscious that, because it is not before us for decision and was not supported by any of the parties, we have not had the advantage of full argument.\nThe foundation of this approach (and the stimulus for its introduction into the arguments before this court) lay in the judgments of the Court of Appeal in R (Guardian News and Media Ltd) v City of Westminster Magistrates Court (Article 19 intervening) [2012] EWCA Civ 420, [2013] QB 618, in which the exemption for court documents under FOIA section 32 was held not to preclude the court from permitting a non party to have access to such documents if the court considered access appropriate under the open justice principle (para 74).\nI have no reason to doubt the authority of the Guardian News case itself as applied to the ordinary courts, with which it was concerned, although I would not wish to pre judge any counter arguments which may be raised in a future case in this court. (The Court of Appeal reversed the decision of a strong Divisional Court).\nThe cases to which Toulson LJ referred were about courts.\nAlthough he treated the same principle as applying broadly speaking to all tribunals exercising the judicial power of the state (para 70), he gave no authority for that extension.\nEven assuming that wider proposition is correct, the Charity Commission cannot in my view be said to be exercising the judicial functions of the state.\nIndeed as Lord Toulson points out, FOIA itself draws a distinction between tribunals or bodies exercising judicial power of the State and statutory inquiries (section 32(4)(a)(c)) Although he categorises the latter as involving a quasi judicial function, he gives no further authority or explanation for the use of that somewhat imprecise and outmoded expression: see Wade and Forsyth, Administrative Law, 10th ed (2009), pp 35, 407; R v Commission for Racial Equality, Ex p Hillingdon London Borough Council [1982] AC 779, 787 F G, per Lord Diplock.\nThe Charity Commission is the creation of a modern statute, by which its functions and powers are precisely defined.\nAs the heading to the relevant group of sections indicates, section 8 is part of the Charity Commissions information powers, the primary purpose of which is to enable it to carry out its responsibilities for the supervision of charities.\nIts role is administrative, rather than judicial, albeit subject to ordinary public law principles of fairness and due process.\nFurthermore, such authority as there is points against any general presumption that open justice principles applicable to the courts apply also to the various forms of statutory or non statutory inquiry.\nThe issues in an analogous context were discussed in detail by the Divisional Court in R (Persey) v Secretary of State for the Environment, Food and Rural Affairs [2002] EWHC 371 (Admin), [2003] QB 794.\nThe court upheld the Secretary of States decision that the inquiries into the 2001 outbreaks of foot and mouth disease should be held in private.\nApplying the approach of Sir Thomas Bingham MR in Crampton v Secretary of State (unreported) 9 July 1993, CAT no 824 of 1993, and distinguishing R (Wagstaff) v Secretary of State for Health [2001] 1 WLR 292, the court held that there was no legal presumption that such an inquiry should be held in public (see also de Smiths Judicial Review, 7th ed (2013), para 1 104).\nAs Simon Brown LJ said: Inquiries come in all shapes and sizes and it would be wrong to suppose that a single model a full scale public inquiry should be seen as the invariable panacea for all ills (para 42).\nThe Charity Commissions powers similarly allow for inquiries in all shapes and sizes; they may be inquiries with regard to charities or a particular charity or class of charities, either generally or for particular purposes (1993 Act section 8(1)).\nThe Act lays down no relevant requirements as to the form of the inquiries, or as to the involvement of the public.\nIt has not been suggested that open justice principles require the inquiries themselves to be held in public, as would be the normal rule for courts.\nIndeed this comparison, with respect, discloses a basic fallacy in the alternative approach.\nThe foundation of the Guardian News decision lies in the strong constitutional principle that courts sit in public.\nIt is no surprise that the starting point of Toulson LJs judgment is a quotation from the great case of Scott v Scott [1913] AC 417, in which that principle was set in stone.\nIt is not a large step from that principle to hold that papers supplied to the judge for the purpose of an open hearing should in principle be made available to the public, absent good reasons to the contrary.\nFor statutory inquiries, such as those conducted by the Charity Commission, there is no such underlying principle that they should sit in public.\nThe essential foundation that is needed for application of the Guardian News approach is wholly absent.\nThis is not to say that the courts might not in due course develop a more general principle of openness, applicable also to different forms of statutory inquiry.\nBut that would involve a significant extension to the existing law arguably a bolder leap into the unknown than the modest step we are being asked to take (after full argument) in relation to article 10.\nIn my view there is nothing in the Guardian News case, or any other existing authority to support the view that common law principles relating to disclosure of documents in the courts can be transferred directly to inquiries.\nIt must depend on the statutory or other legal framework within which the particular inquiry is established.\nIn the context of the Charities Act, the particular form of publicity envisaged by the Act is the publication of a report under section 8, but the Commission is given a discretion as to its form.\nAs has been seen, I agree that the functions conferred by 1993 Act, sections 1B 1E, not only give the Charity Commission powers to provide information of the kind sought by Mr Kennedy, but also give effect to a general principle of transparency.\nHowever, principles of transparency need to be balanced against other policy issues peculiarly within the competence of the Commission, rather than the courts.\nFor example, the Commission was clearly entitled in my view (in their letter of 4 July 2007) to give weight to the need to protect its relations with third parties on whose co operation it relies.\nI find it difficult to accept the proposition that these general powers are comparable to Mr Coppels most expansive interpretation of article 10.\nI see no fair comparison between the broad set of powers conferred by those sections, and the specific and enforceable rights conferred by FOIA or article 10.\nFinally, I turn to Lord Mances discussion (para 51ff) of the principles which a judicial review court would apply to an application for disclosure of inquiry documents.\nIt appears to be an important part of his reasoning that these could give a claimant in the position of Mr Kennedy remedies at least comparable to those available, on Mr Coppels argument, under FOIA.\nOn this topic, anything we say must be provisional, pending an appropriate application for judicial review coming before the courts.\nThe limits of the courts powers in such circumstances are best determined in the context of an actual case where the issue arises for decision after full argument.\nHowever, it is appropriate that I should make some comment.\nFirst, it is important to be clear as to the nature of the alternative procedures which are under comparison.\nOn the view I take of article 10 and HRA section 3, the applicant would have a right under FOIA to a two stage process of independent, cost free, specialist review of the Charity Commissions decision, on fact and law, first by the Information Commissioner, and then by the First tier Tribunal (FOIA sections 50, 58).\nIf on the other hand I am wrong about the ability of the court to read down section 32, so that remedies under FOIA are excluded, Mr Kennedys article 10 rights could be asserted in court by an application for judicial review under the HRA.\nUnder the HRA, as I have said, the claimant would have a right to full merits review by the court, again on fact and law.\nThe courts function in such a case is to decide for itself whether the decision was in accordance with Convention rights; it is not a purely reviewing function (see Huang v Secretary of State for Home Department [2007] UKHL 11; [2007] 2 AC 167, para 11, per Lord Bingham).\nSuch proceedings for judicial review would incidentally provide an opportunity to test the scope of any related common law rights.\nBy contrast, under the alternative common law approach, which eschews reliance on article 10, the applicant would be entitled only to judicial review on conventional administrative law principles, subject to the ordinary incidents as respects fees and costs.\nAs Lord Mance points out, there is authority for a closer or more intense form of review (or anxious scrutiny) in some contexts, particularly where fundamental human rights (such as the right to life) or constitutional principles are at stake.\nHowever, even in cases to which it applies, as appears from the words of Lord Phillips MR, (R (Q) v Secretary of State for the Home Department [2003] EWCA Civ 364, [2004] QB 26, para 112) cited by Lord Mance (para 52), the role of the courts is often more about process than merits.\nLord Mance also quotes my own discussion of the developing principles as I saw them in 2004, in IBA Health Ltd v Office of Fair Trading [2004] EWCA Civ 142 [2004] ICR 1364, para 88ff.\nTen years on that statement holds good in my view, but the jurisprudential basis for the more flexible approach, and its practical consequences in different legal and factual contexts, remain uncertain and open to debate (see de Smith op cit paras 11 086ff and the many authorities and academic texts there cited).\nIn particular, it is at best uncertain to what extent the proportionality test, which is an essential feature of article 10(2) as interpreted by the Strasbourg court, has become part of domestic public law (see de Smith paras 11 073ff).\nFor the moment, and pending more detailed argument in a case where the issue arises directly for decision, I remain unpersuaded that domestic judicial review, even adopting the most flexible view of the developing jurisprudence, can achieve the same practical effect in a case such as the present as full merits review under FOIA or the HRA.\nIn conclusion, for the reasons stated above, and in respectful disagreement with the majority, I would have allowed the appeal.\n","output":"The appellant, Mr Kennedy, is a journalist with The Times.\nOn 8 June 2007 he made a request to the Charity Commission under the Freedom of Information Act 2000 (the FOIA) for disclosure of information concerning three inquiries conducted by the Charity Commission between 2003 and 2005 into the Mariam Appeal, which was launched by Mr George Galloway in connection with the sanctions imposed on Iraq following the first Gulf War.\nThe Charity Commission refused Mr Kennedys request on the ground that the information was subject to an absolute exemption from disclosure contained in section 32(2) of the FOIA.\nThe Court of Appeal, overturning the decision of the Information Tribunal, held that the absolute exemption applied and dismissed Mr Kennedys request.\nThe issues before the Supreme Court on Mr Kennedys appeal are: (a) whether section 32(2) of the FOIA contains, as a matter of ordinary statutory construction, an absolute exemption which continues after the end of an inquiry; and (b) if it does contain such an absolute exemption, whether that is compatible with Mr Kennedys rights under article 10 of the European Convention on Human Rights (the Convention).\nIf section 32(2) were not so compatible, the following further issues would arise: (c) in the light of the duty in section 3 of the Human Rights Act 1998 to interpret primary legislation so far as it is possible to do so in a way which is compatible with the Convention rights, should section 32 be read down so that either: (i) the absolute exemption ceases with the end of the relevant inquiry; or (ii) it contains only a qualified exemption (requiring a general balancing of the competing public interests) rather than an absolute exemption; and (d) if it is not possible to interpret section 32(2) in a manner that is compatible with the Convention, whether the Supreme Court should make a declaration of incompatibility. [9]\nLord Mance and Lord Toulson give the leading judgments with which a majority of the court agrees.\nLord Sumption gives a concurring judgment.\nLord Wilson and Lord Carnwath give dissenting judgments.\nAs a matter of ordinary statutory construction, section 32(2) of the FOIA imposes an absolute exemption from disclosure that lasts until the relevant information is destroyed or for up to 30 (or in future 20) years under the Public Records Act 1958 (Lord Mance at [24 34], Lord Toulson at [102 104]).\nMr Kennedy is not assisted by his reliance on the Convention as, in respect of his ability to obtain information, the Charities Act 1993 and the common law put Mr Kennedy in no less favourable position than he would be in if article 10 of the Convention were engaged (Lord Mance at [35 41], Lord Toulson at [105 132]).\nIn any event, article 10 does not impose a freestanding positive duty of disclosure on public authorities (Lord Mance at [57 100]).\nOrdinary statutory construction The more natural interpretation of section 32(2) is that the absolute exemption continues after the end of the relevant inquiry.\nThe words for the purposes of the inquiry or arbitration qualify the immediately preceding words in 32(2)(a) and (32)(2)(b) and refer to the original purpose for which the relevant documents were placed in the custody of, or were created by, a person conducting an inquiry.\nThey do not refer to the purpose for\nwhich a public authority holds the documents at the time of a request for information. (Lord Mance at [24 28], Lord Toulson at [102 103]) The more natural interpretation is also a better fit with the scheme of the FOIA.\nUnder section 62(1), a record becomes a historical record at the end of 30 years.\nUnder section 63(1), information contained in a historical record cannot be exempt information by virtue of section 32.\nThe natural inference is that information falling within section 32 would continue to be exempt for 30 years rather than cease to be exempt at the conclusion of an inquiry. (Lord Mance at [29 30], Lord Toulson at [104]) The relevance of Article 10 of the Convention The effect of section 32 is to take information falling within the absolute exemption outside the scope of the FOIA disclosure regime.\nThe FOIA was never intended to determine whether or not such information should be disclosed.\nInstead, any question as to its disclosure will be governed by other rules of statute and common law.\nIf the law otherwise entitles Mr Kennedy to disclosure or puts him in a position no less favourable regarding disclosure than that which could be provided under article 10, then there can be no basis for reading down section 32 or concluding it is inconsistent with article 10. (Lord Mance at [6 8, 35 42], Lord Toulson at [106]) Disclosure outside the FOIA In Lord Mances opinion, the Charity Commission has the power to disclose information to the public concerning inquiries on which it has published reports, both in pursuit of its statutory objective under the Charities Act 1993 (since replaced with the Charities Act 2011) of increasing public trust in, and the accountability of, charities, and under general common law duties of openness and transparency on public authorities.\nThe exercise of that power will be subject to judicial review.\nGiven the importance of the principles of openness and transparency, courts will apply a very high standard of review to any decision not to disclose information in answer to questions of real public interest raised by a journalist in relation to inquiries on which the Charity Commission has published reports, and would take into account similar factors and provide a no less favourable standard of protection for a person seeking information, as any review under article 10 of the Convention. [43 56] In Lord Toulsons opinion, open justice is a fundamental principle of common law.\nJudicial processes should be open to public scrutiny, unless and to the extent, that there are good reasons for secrecy.\nLetting in the light, is the best way of keeping those exercising the judicial power of the state, up to the mark and for maintaining public confidence.\nThese underlying considerations apply also to any quasi judicial inquiries and hearings, such as an inquiry conducted by the Charity Commission, though the application of such principles will vary according to context.\nIn conducting any judicial review of a decision not to disclose information, the High Court should exercise its own judgment on whether the open justice principle requires disclosure. [109 132] The scope of the right to receive information under article 10 Had it been necessary for the resolution of the appeal, the Supreme Court would have concluded that article 10 did not contain a freestanding right to receive information from public authorities.\nThe recent developments in the case law of the European Court of Human Rights relied on by Mr Kennedy were not sufficient to justify a departure from the principle clearly established in a series of Grand Chamber decisions on article 10. (Lord Mance at [57 100]) Dissenting judgments Lord Wilson [160 201] and Lord Carnwath [202 248] would have allowed the appeal on the basis that Mr Kennedy had a right to receive the requested information under article 10 of the Convention.\nLord Wilson and Lord Carnwath would read down s 32(2) such that the absolute exemption expired at the end of the relevant inquiry.\nThis would preserve the FOIA as the mechanism for obtaining information, which they considered would offer a number of advantages to a person seeking information compared with a judicial review procedure.\n","id":37}
{"input":"This is the judgment of the court.\nThe appellant, Mr Zoumbas, challenges a decision by the Secretary of State for the Home Department dated 4 October 2011 that he did not qualify for asylum or humanitarian protection and that his further representations were not a fresh human rights claim under paragraph 353 of the Immigration Rules.\nHe challenged the Secretary of States decision for the manner in which she dealt with the best interests of his children in the light of the decision of this court in ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166.\nHe was unsuccessful in his judicial review application before both the Lord Ordinary, Lady Clark of Calton, and an Extra Division of the Inner House of the Court of Session.\nThe judicial review application and this appeal are concerned only with the fifth of the questions which Lord Bingham of Cornhill set out in para 17 of his speech in R (Razgar) v Secretary of State for the Home Department [2004] 2 AC 368.\nThat is, in this case, whether the interference with the family life of Mr Zoumbas family unit by his removal to the Republic of Congo was proportionate to the legitimate public end which the Secretary of State sought to achieve.\nBefore this court Mr Zoumbas made his challenge in three parts.\nFirst, he submitted that the Secretary of State had erred by failing to have regard to the interests of his children as a primary consideration in the proportionality assessment under article 8 of the European Convention on Human Rights (ECHR).\nThis entailed, he submitted, a breach of the Secretary of States duty under section 55 of the Borders, Citizenship and Immigration Act 2009 (the 2009 Act), which required her to make arrangements for ensuring that her functions in relation to immigration were discharged having regard to the need to safeguard and promote the welfare of children who are in the United Kingdom.\nHe suggested that this amounted to punishing the children for their parents poor immigration history.\nSecondly, he criticised the Secretary of States findings in relation to the best interests of the children.\nHe asserted that (i) she had failed to make clear findings, (ii) it was irrational to conclude that the childrens best interests would be served by their removal to the Republic of Congo, (iii) she had failed to carry out a careful examination of their best interests, and (iv) the findings assumed that he and his wife would be returned to the Congo.\nThirdly, in a submission which depended on the success of either or both of the first and second submissions, he argued that the Secretary of State had erred in concluding under paragraph 353 of the Immigration Rules that further representations made by him did not have a realistic prospect of success before an immigration judge.\nThe facts\nMr Zoumbas and his wife have an unedifying immigration history.\nThey are citizens of the Republic of Congo.\nHe entered the United Kingdom illegally on 27 May 2001 using a French passport that did not belong to him.\nHe claimed asylum and was granted temporary admission.\nThe woman who became his wife entered the United Kingdom on 30 July 2002 using a forged French passport.\nShe also claimed asylum.\nTheir claims for asylum were refused and her appeal was dismissed.\nOn 7 November 2003 they married.\nMrs Zoumbas initiated an appeal under article 8 ECHR, which was refused.\nMr Zoumbas appeal against the refusal of his asylum claim was also refused.\nTheir eldest child, Angemarcel Massengo Fleury, was born on 27 April 2004.\nOn 8 April 2005 Mr Zoumbas was considered for the family indefinite leave to remain exercise but was found not to be eligible.\nIn October 2005 Mrs Zoumbas and Angemarcel were detained and removed to the Republic of Congo.\nThat same month, Mr Zoumbas failed to report to the immigration authorities and was treated as an absconder.\nFor several months the authorities did not know his whereabouts.\nOn 31 March 2006 Mrs Zoumbas and Angemarcel returned to the United Kingdom illegally using passports and a residence permit that did not belong to them.\nMrs Zoumbas claimed asylum again and named her husband and Angemarcel as dependents in her claim.\nIn about August 2006 Mr Zoumbas started to report to the immigration authorities again.\nOn 25 May 2006 the Secretary of State refused Mrs Zoumbas asylum claim.\nShe appealed but her appeal was dismissed on 24 July 2006.\nShe was granted a statutory review of her appeal but on 3 July 2007 the First tier Tribunal refused her appeal after a reconsideration hearing.\nOn 3 February 2007 Mrs Zoumbas gave birth to a daughter, Rosangel Shekma Massengo Fleury, and on 14 April 2011 she gave birth to another daughter, Shaun Keziah Massengo Fleury.\nMr and Mrs Zoumbas did not have permission to work.\nThey received state benefits because Mr Zoumbas claimed that he was destitute.\nBut between September 2008 and April 2010 credits of 27,693.75 from unidentified sources were paid into bank accounts of Mrs Zoumbas and of the older two children.\nOn 22 June 2010 Mr Zoumbas submitted further representations in which he asserted that there had been a change of circumstances because he, his wife and his children had been in the United Kingdom for several years and had established a family and private life which should be respected under article 8 ECHR.\nDocuments which accompanied his representations showed that the eldest child, Angemarcel, was at primary school, that Mrs Zoumbas was attending college, and that they were members of a church, all in Glasgow.\nBy letter dated 4 October 2011 the Secretary of State intimated to Mr Zoumbas her decision that his representations did not qualify him for asylum or humanitarian protection and that he did not merit a grant of limited leave to enter or remain in the United Kingdom.\nShe also held that his submissions would not amount to a fresh claim under paragraph 353 of the Immigration Rules because they did not create a realistic prospect of success before an immigration judge.\nMr Zoumbas has challenged that decision in his application for judicial review.\nThe legal framework\nIn their written case counsel for Mr Zoumbas set out legal principles which were relevant in this case and which they derived from three decisions of this court, namely ZH (Tanzania) (above), H v Lord Advocate 2012 SC (UKSC) 308 and H(H) v Deputy Prosecutor of the Italian Republic [2013] 1 AC 338.\nThose principles are not in doubt and Ms Drummond on behalf of the Secretary of State did not challenge them.\nWe paraphrase them as follows: (1) The best interests of a child are an integral part of the proportionality assessment under article 8 ECHR; In making that assessment, the best interests of a child must be a (2) primary consideration, although not always the only primary consideration; and the childs best interests do not of themselves have the status of the paramount consideration; (3) Although the best interests of a child can be outweighed by the cumulative effect of other considerations, no other consideration can be treated as inherently more significant; (4) While different judges might approach the question of the best interests of a child in different ways, it is important to ask oneself the right questions in an orderly manner in order to avoid the risk that the best interests of a child might be undervalued when other important considerations were in play; (5) It is important to have a clear idea of a childs circumstances and of what is in a childs best interests before one asks oneself whether those interests are outweighed by the force of other considerations; (6) To that end there is no substitute for a careful examination of all relevant factors when the interests of a child are involved in an article 8 assessment; and (7) A child must not be blamed for matters for which he or she is not responsible, such as the conduct of a parent.\nThese principles arise from the United Kingdoms international obligations under the United Nations Convention on the Rights of the Child, and in particular article 3.1 which provides: In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration.\nThat general principle of international law has influenced the way in which the Strasbourg court has interpreted the ECHR: Neulinger v Switzerland (2010) 28 BHRC 706, para 131.\nMr Lindsay for Mr Zoumbas also founded on a statement in the judgment of Lord Kerr of Tonaghmore in ZH (Tanzania) at para 46 in support of the proposition that what is determined to be in a childs best interests should customarily dictate the outcome of cases and that it will require considerations of substantial moment to permit a different result.\nIn our view, it is important to note that Lord Kerrs formulation spoke of dictating the outcome of cases such as the present and that in ZH (Tanzania) the court was dealing with children who were British citizens.\nIn that case the children by virtue of their nationality had significant benefits, including a right of abode and rights to future education and healthcare in this country, which the children in this case, as citizens of the Republic of Congo, do not.\nThe benefits of British citizenship are an important factor in assessing whether it is reasonable to expect a child with such citizenship to live in another country.\nMoreover in H(H) Lord Kerr explained (at para 145) that what he was seeking to say was that no factor should be given greater weight than the interests of a child.\nSee the third principle above.\nWe would seek to add to the seven principles the following comments.\nFirst, the decision maker is required to assess the proportionality of the interference with private and family life in the particular circumstances in which the decision is made.\nThe evaluative exercise in assessing the proportionality of a measure under article 8 ECHR excludes any hard edged or bright line rule to be applied to the generality of cases: EB (Kosovo) v Secretary of State for the Home Department [2009] AC 1159, per Lord Bingham at para 12.\nSecondly, as Lord Mance pointed out in H(H) (at para 98) the decision maker must evaluate the childs best interests and in some cases they may point only marginally in one, rather than another, direction.\nThirdly, as the case of H(H) shows in the context of extradition, there may be circumstances in which the weight of another primary consideration can tip the balance and make the interference proportionate even where it has very severe consequences for children.\nIn that case an Italian prosecutor issued a European arrest warrant seeking the surrender of a person who had earlier broken his bail conditions by leaving Italy and ultimately seeking safe haven in the United Kingdom and had been convicted of very serious crimes.\nThis court held that the treaty obligations of the United Kingdom to extradite him prevailed over his childrens best interests.\nThe third principle in para 10 above is subject to the first and second qualifications and may, depending on the circumstances, be subject to the third.\nBut in our view, it is not likely that a court would reach in the context of an immigration decision what Lord Wilson described in H(H) (at para 172) as the firm if bleak conclusion in that case, which separated young children from their parents.\nThe decision letter\nIn the letter of 4 October 2011, Ms G Dickin, the official acting on behalf of\nthe Secretary of State, summarised Mr Zoumbas submissions and listed the documents which he had produced in its support.\nShe considered the first four questions which Lord Bingham set out in R (Razgar) at para 17.\nShe held that Mr Zoumbas had established a private life and a family life in the United Kingdom and that his removal would interfere with his private and family life.\nIt was implicit in her discussion that article 8 ECHR was engaged.\nShe then concluded that the interference would be in accordance with the law and in pursuit of the legitimate aim of maintaining effective immigration control.\nShe introduced the consideration of the proportionality of the interference with the words: Below is a consideration of why any interference is proportionate to the permissible aim.\nShe then referred to the familys unlawful residence and the fact that Mr Zoumbas and his wife had established their family life in the full knowledge that they both had no legal right to reside in the United Kingdom and could be removed at any time.\nShe summarised the appalling immigration history of Mr and Mrs Zoumbas and the familys receipt of state benefits while receiving the unidentified credits which I have mentioned.\nShe considered in turn the proportionality of the interference with Mr Zoumbas private and family life before discussing the article 8 rights of any family members who were not party to the proceedings in accordance with the guidance which the House of Lords gave in Beoku Betts v Secretary of State for the Home Department [2009] AC 115.\nShe concluded that there was no evidence of family ties in the United Kingdom other than Mr Zoumbas wife and children who would be removed to the Congo with him, thus preserving his family life.\nShe then addressed the Secretary of States obligation under section 55 of the 2009 Act to carry out her functions in a way which has regard to the need to safeguard and promote the welfare of children in the United Kingdom.\nShe made it clear that the interests of the three children had been taken into account in the assessment of the proportionality of the interference with private and family life.\nShe stated: Full consideration has been given to the best interests of your three children, which is a primary consideration in the evaluation of the proportionality of a decision to remove a family.\nIt is noted that you have not provided any information which pertains specifically to the best interests of your three children.\nA new immigration judge would conclude that although health care and education in Congo may not be of the same standard as in the United Kingdom, the childrens best interests will be to remain with their parents and raised in their own culture.\nFurthermore, if you return together there is no reason to believe that relocation to Congo would have a particularly detrimental effect on your children.\nShe concluded that the balance of the competing interests was in favour of the familys removal (a) because of the need to maintain effective immigration control, (b) because they had built up a family life in the United Kingdom when their residence was precarious, and (c) because the immigration history involved findings of fabricated asylum claims, deception, fraud and absconding.\nDiscussion of the challenges\nWe are satisfied that there is no substance in the first of Mr Zoumbas challenges which we have summarised in para 3 above.\nIt rests on a mistaken construction of the Secretary of States letter.\nThere has been no failure to consider the best interests of Mr and Mrs Zoumbas children in the article 8 proportionality exercise.\nMr Lindsay accepted that the status of the well being of the children as a primary consideration did not require the Secretary of State in every case to consider the childrens best interests first and then to address other considerations which might outweigh those interests.\nThere is nothing to bar the official who acts for the Secretary of State from considering the various issues, including the proportionality exercise under article 8 ECHR before drafting the decision letter.\nThe official set out the Secretary of States conclusion before explaining the reasons for that conclusion.\nIt is important to read the decision letter as a whole and to analyse the substance of the decision.\nIt is a misreading of the letter to assert, as Mr Lindsay did, that the Secretary of State had made a decision on proportionality before addressing the well being of the children.\nThe consideration of the childrens best interests was, as the letter stated (para 17 above), a primary consideration in the proportionality exercise.\nMr Lindsay submitted in his written case that this appeal raised an issue of general public importance because the structure of the decision letter was one which the Secretary of State frequently used.\nMs Drummond understandably submitted in her written case that there was no issue of general public importance.\nBe that as it may, the appeal demonstrates a misunderstanding of the effect of the decision in ZH (Tanzania) which can usefully be corrected.\nIf officials in the Home Department who draft such decision letters are\nusing a template to give structure to the articulation of their decisions, we see nothing wrong with a template that provides for the statement of the Secretary of States conclusion to be followed by her reasoning.\nWhat is important, as Lord Mance said in H(H) at para 98, is that the interests of the children must be at the forefront of the decision makers mind.\nIn this context the fourth, fifth and sixth principles which we have listed in para 10 above are relevant.\nThat leads us to consider the second of Mr Lindsays challenges.\nWe are not persuaded that there is any lack of clarity in the Secretary of States findings on the childrens best interests or any indication that there had not been a careful examination of those interests.\nThe decision letter sets out the Secretary of States conclusions briefly.\nBut that does not give rise in this case to any inference that there has not been careful consideration.\nThe substance of Mr Lindsays complaint was that the Secretary of State either had not considered or had failed to record her findings on matters which were disclosed in the documents lodged in support of Mr Zoumbas claim.\nThose matters were (a) that the children were born in the United Kingdom, (b) that they were English speakers and saw themselves as British, (c) that they had integrated well into the community in Glasgow, (d) that the eldest child was doing well at school, and (e) that two of the three children had never been to the Congo.\nIn our view, the Secretary of State does not have to record and deal with every piece of evidence in her decision letter.\nThe decision maker was clearly aware that the children were born in the United Kingdom as it is recorded on the fourth page of the decision letter.\nThe letter also recorded that the children were aged seven years, four years, and five months respectively and referred to the evidence that the eldest child was at primary school.\nThe decision maker would also have been aware from the narrative of the familys immigration history that two of the children had not been to the Republic of Congo.\nThere is no irrationality in the conclusion that it was in the childrens best interests to go with their parents to the Republic of Congo.\nNo doubt it would have been possible to have stated that, other things being equal, it was in the best interests of the children that they and their parents stayed in the United Kingdom so that they could obtain such benefits as health care and education which the decision maker recognised might be of a higher standard than would be available in the Congo.\nBut other things were not equal.\nThey were not British citizens.\nThey had no right to future education and health care in this country.\nThey were part of a close knit family with highly educated parents and were of an age when their emotional needs could only be fully met within the immediate family unit.\nSuch integration as had occurred into United Kingdom society would have been predominantly in the context of that family unit.\nMost significantly, the decision maker concluded that they could be removed to the Republic of Congo in the care of their parents without serious detriment to their well being.\nWe agree with Lady Dorrians succinct summary of the position in para 18 of the Inner Houses opinion.\nFinally, we see no substance in the criticism that the assessment of the childrens best interests was flawed because it assumed that their parents would be removed to the Republic of Congo.\nIt must be recalled that the decision maker began by stating the conclusion and then set out the reasoning.\nIt was legitimate for the decision maker to ask herself first whether it would have been proportionate to remove the parents if they had no children and then, in considering the best interests of the children in the proportionality exercise, ask whether their well being altered that provisional balance.\nWhen one has regard to the age of the children, the nature and extent of their integration into United Kingdom society, the close family unit in which they lived and their Congolese citizenship, the matters on which Mr Lindsay relied did not create such a strong case for the children that their interest in remaining in the United Kingdom could have outweighed the considerations on which the decision maker relied in striking the balance in the proportionality exercise (paras 17 and 18 above).\nThe assessment of the childrens best interests must be read in the context of the decision letter as a whole.\nAs we have not upheld either of the first or second challenges, the third challenge cannot succeed.\nWe therefore dismiss the appeal.\nthe content of any template for decision letters.\nBut we venture the view that challenges, such as this one, would be less likely if her advisers were to express the test in the way in which it was expressed in ZH (Tanzania) and to expand the explanation of the separate consideration that was given to the interests of the children.\nIt is of course the task of the Secretary of State and not this court to decide\n","output":"Delivering the Courts judgment, Lord Hodge sets out seven principles relevant in the case [10], which counsel for Mr Zoumbas had enumerated.\nHe notes that Lord Kerrs formulation spoke of dictating the outcome of cases such as ZH, and in that case the Court was dealing with British citizens, unlike the children in this case.\nThe benefits of British citizenship are an important factor in assessing whether it is reasonable to expect a child with such citizenship to live in another country.\nMoreover, Lord Kerr had explained that what he was seeking to say was that no factor should be given greater weight than the interests of a child [12].\nFurther, the decision maker is required to assess the proportionality of the interference in the particular circumstances in which the decision is made an evaluative exercise that excludes any hard edged or bright line general rule [13].\nIn this case, the Secretary of State accepted that Mr Zoumbas had established a private life and a family life in the UK.\nShe then concluded that the interference would be in accordance with the law and in pursuit of the legitimate aim of maintaining effective immigration control [14], having referred to the familys unlawful residence, the fact that family life had been established in the full knowledge that they had no right to reside in the UK and could be removed at any time, and the couples appalling immigration history and the unidentified bank credits [15].\nFamily life would be preserved as the whole family would be removed with Mr Zoumbas [16].\nThe first part of Mr Zoumbas challenge rests on a mistaken construction of the decision letter.\nIt had been accepted that the status of the well being the children as a primary consideration did not mean that it had in every case to be considered first with other possible countervailing issues considered thereafter.\nIt is important to read the letter as a whole and to analyse the substance of the decision [19].\nThere is nothing wrong with the Secretary of States use of a template letter in which her conclusion is followed by her reasoning what is important is that the best interests of the children are at the forefront of the decision makers mind [21].\nThat the conclusions on best interests are set out briefly does not mean they were not considered carefully, and the Secretary of State does not need to record and deal with every piece of evidence in her letter [22 23].\nThe Court suggests that challenges such as the present would be less likely if her advisers were to express the test in the way it was expressed in ZH (Tanzania), and to expand the explanation of the separate consideration given to the interests of the children [28].\nAs for the second part of the challenge, it would be possible to conclude, other things being equal, that it would be in the childrens best interests to stay in the UK.\nBut other things are not equal, including that the children are not British citizens [24].\nThe Court rejected the criticism that the assessment of best interests was flawed because it assumed that the parents would be removed.\nIt was legitimate for the decision maker to ask herself first whether it would have been proportionate to remove the parents if they had no children and then, in considering the best interests of the children in the proportionality exercise, ask whether their well being altered that provisional balance [25].\nThe third part of the challenge cannot succeed, the first two parts having failed [26].\n","id":38}
{"input":"For some years The Times and other media organisations have taken a close interest in investigating and reporting on allegations that the police and child protection authorities have failed adequately to confront a pattern of crime involving the sexual exploitation of vulnerable young teenage girls by older men.\nIt need hardly be said that this is a subject of serious public concern.\nIt has given rise to a number of government ordered national inquiries, a review of standards of protection in childrens homes, and substantial changes in the procedures of the police and prosecuting authorities for handling such cases.\nThere have also been a number of prosecutions.\nThis appeal arises out of the trial of nine men on exceptionally serious charges involving organised child sex grooming and child prostitution in the Oxford area over a period of eight years.\nThe men were arrested in March 2012 by Thames Valley Police after a long running investigation known as Operation Bullfinch.\nThey were tried before His Honour Judge Rook QC at the Central Criminal Court between 7 January and 14 May 2013 on an indictment charging rape and conspiracy to rape children, trafficking and child prostitution.\nOn 14 May 2013, seven of them were convicted.\nThe trial attracted considerable publicity in the national and local press and in the broadcast media.\nPublic interest in it was accentuated and prolonged by the perception that the victims of the men convicted had not originally been taken seriously by the police or Oxfordshire social services, and had not received the protection to which they were entitled.\nThe appellant, who has been referred to in these proceedings as PNM, is a prominent figure in the Oxford area.\nHe was arrested at about the same time as the nine and was released on bail on terms (among others) that he surrender his passport.\nThe reason for his arrest was that one of the complainants had told the police that she had been abused by a man with the same, very common, first name.\nHowever, she failed to pick him out at an identity parade.\nHe was later told by the police that he would be released from arrest without charge but that the case would be kept under review.\nThat remains the position.\nPolice investigations are continuing, but PNM has never been charged with any offence, and there is no present reason to believe that he ever will be.\nThe question at issue on this appeal is whether an injunction should issue to prevent The Times and the Oxford Mail from publishing information identifying PNM as someone who had been arrested, bailed, his passport impounded and then de arrested in connection with Operation Bullfinch, or as someone suspected by the police of being involved in sexual offences against children.\nThe position of the two newspapers is that they wish to publish this information, identifying PNM, but that what they publish about these matters will be confined to material derived from the proceedings at the trial.\nAn injunction was originally granted under section 4(2) of the Contempt of Court Act 1981, at a preliminary hearing before the magistrates shortly after PNMs arrest.\nSection 4(2) empowers the court in any legal proceedings held in public where it appears to be necessary for avoiding a substantial risk of prejudice to the administration of justice in those proceedings, or in any other proceedings pending or imminent, order that the publication of any report of the proceedings, or any part of the proceedings, be postponed for such period as the court thinks necessary for that purpose.\nThe magistrates order prohibited the disclosure of any information which might identify PNM as the subject of pending criminal proceedings until such time as he was charged with an offence.\nAt the trial, evidence was given of the exploitation of six girls who at the relevant time were aged between 11 and 15.\nOne of the girls was the complainant whose statements to the police had led to PNMs arrest.\nOn 25 January 2013, immediately before she was due to give her evidence, PNM applied for a further order under section 4(2).\nAt that time, he was still on bail.\nHis application was heard in open court, and in the course of it the fact of PNMs arrest and the serious offences of which he was suspected were discussed.\nThe prosecution agreed that it was inevitable that the complainant would refer to PNM in the course of her evidence.\nThe judge made an order postponing publication of any information which might identify him as the person referred to by that complainant, on the ground that there was a significant risk that his right to a fair trial might be prejudiced.\nOn 4 February 2013, after the complainant had finished giving her evidence, Judge Rook varied the order of 25 January so as to prohibit the publication of any report which referred to evidence which might identify or tend to identify PNM until a decision had been made whether or not to charge him.\nA significant part of the relevant complainants evidence related to her abuse by a man, whom I shall call X, with the same first name as PNM.\nIn her evidence in chief, she said that when she was 13 years old she had been taken on a number of occasions over a period of about six months by one or other of the defendants to a flat, where she had had sex with X. She only ever referred to him by his first name and does not appear to have known his surname.\nShe gave a detailed description of him.\nShe referred to the identity parade but said that she did not recognise X and did not think that he was there.\nThese matters also arose several times in the course of her cross examination by counsel for the various defendants.\nSubsequently, PNM was referred to on a number of occasions.\nA police officer gave evidence that PNM had participated in an identity parade but had not been identified.\nThere was also evidence referring to PNMs involvement by at least one of the defendants.\nIn their closing speeches, both prosecuting and defence counsel referred to the alleged involvement of X on the footing that the complainant had been referring to PNM, identifying him by his full name.\nIn In re Guardian News and Media Ltd [2010] 2 AC 697, para 66, Lord Rodger of Earlsferry, speaking of the publication of the names of defendants in advance of criminal trials, observed: In allowing this, the law proceeds on the basis that most members of the public understand that, even when charged with an offence, you are innocent unless and until proved guilty in a court of law.\nThat understanding can be expected to apply, a fortiori, if you are someone whom the prosecuting authorities are not even in a position to charge with an offence and bring to court.\nThe law must of course take the presumption of innocence as its starting point, and experience suggests that as a general rule the public understand that there is a difference between allegation and proof.\nBut Lord Rodgers observation cannot be treated as a legal presumption, let alone a conclusive one.\nThe conclusions that the public may draw from evidence and submissions at a criminal trial in open court will differ from case to case, depending on, among other things, the gravity of the allegations, the character of the evidence and the extent of the publicity surrounding the trial.\nIt would be foolish for any court to ignore the extreme sensitivity of public opinion in current circumstances to allegations of the sexual abuse of children and the concerns about the safety of children generally to which those allegations give rise.\nI have summarised in general terms in para 7 above the way in which the involvement of X and PNM were treated at the trial at the Central Criminal Court.\nIn my opinion, the present appeal must be approached on the footing that there is a real risk that a person knowing of these matters would conclude that PNM had sexually abused the complainant notwithstanding that he had never been charged with any offence.\nThere were three applications to Judge Rook to lift the section 4(2) order.\nThe first two were made by The Times on 8 and 15 May 2013, towards the end of the trial.\nOn 16 May 2013, the judge declined to lift the order.\nSome of the matters relating to X which had been raised at the trial were referred to in open court during these applications.\nThe judges ruling, which was itself subject to his section 4(2) order, also referred to them.\nThe situation changed on 25 July 2013, when the police notified PNM that he would be released from arrest without charge, but that the case would be kept under review.\nIn the light of the polices letter, on 25 September 2013, The Times and the Oxford Mail applied again to Judge Rook on the ground that there were now no pending or imminent proceedings against PNM which could be prejudiced by publication.\nOn 14 October 2013 the Judge circulated a draft ruling stating that he proposed to lift the order.\nBut he never formally did so, presumably because the matter moved to the High Court.\nOn 15 October 2013, immediately after receiving Judge Rooks draft ruling, PNM applied to Tugendhat J in the High Court for an interim injunction restraining publication of any information liable to identify PNM as (i) a person arrested, released on bail or released without charge in connection with the investigation of offences against children, (ii) the subject of the section 4(2) orders made by Judge Rook, or (iii) the claimant in the High Court proceedings.\nThe basis of the application was that the order was necessary to protect PNM against the misuse of private information and the infringement of his right to private and family life protected by article 8 of the European Convention on Human Rights.\nA draft claim form was put before Tugendhat J, and issued a week later on 22 October 2013.\nThe Judge dismissed the application in a reserved judgment delivered on 22 October ([2013] EWHC 3177 QBD).\nThe Court of Appeal (Lord Dyson MR, Sharp and Vos LJJ) dismissed an appeal ([2014] EWCA Civ 1132).\nMeanwhile the status quo is being preserved by the continuation of Judge Rooks section 4(2) order.\nThe law\nWith limited exceptions, the English courts administer judgment in public, at hearings which anyone may attend within the limits of the courts capacity and which the press may report.\nIn the leading case, Scott v Scott [1913] AC 417, public hearings were described by Lord Loreburn (p 445) as the inveterate rule and the historical record bears this out.\nIn the common law courts the practice can be dated back to the origins of the court system.\nAs Lord Atkinson observed in the same case at p 463, this may produce inconvenience and even injustice to individuals: The hearing of a case in public may be, and often is, no doubt, painful, humiliating, or deterrent both to parties and witnesses, and in many cases, especially those of a criminal nature, the details may be so indecent as to tend to injure public morals, but all this is tolerated and endured, because it is felt that in public trial is to found, on the whole, the best security for the pure, impartial, and efficient administration of justice, the best means for winning for it public confidence and respect.\nThe justification for the principle of open justice was given by Lord Atkinson in this passage, and has been repeated by many judges since, namely the value of public scrutiny as a guarantor of the quality of justice.\nThis is also the rationale of the right to a public hearing protected by the European Convention on Human Rights.\nIt is a means whereby confidence in the courts can be maintained: B and P v United Kingdom, (2001) 34 EHRR 19, at para 36.\nIts significance has if anything increased in an age which attaches growing importance to the public accountability of public officers and institutions and to the availability of information about the performance of their functions.\nThe principle of open justice has, however, never been absolute.\nThere have been highly specific historic exceptions, such as the matrimonial jurisdiction inherited from the ecclesiastical courts, the old jurisdiction in lunacy and wardship and interlocutory hearings in chambers, where private hearings had become traditional.\nSome of these exceptions persist.\nOthers have been superseded by statute, notably in cases involving children.\nMore generally, the courts have an inherent power to sit in private where it is necessary for the proper administration of justice: Scott v Scott, supra, at p 446 (Lord Loreburn); Attorney General v Leveller Magazine Ltd [1979] AC 440, 457 (Viscount Dilhorne).\nTraditionally, the power was exercised mainly in cases where open justice would have been no justice at all, for example because the dispute related to trade secrets or some other subject matter which would have been destroyed by a public hearing, or where the physical or other risks to a party or a witness might make it impossible for the proceedings to be held at all.\nThe inherent power of the courts extends to making orders for the conduct of the proceedings in a way which will prevent the disclosure in open court of the names of parties or witnesses or of other matters, and it is well established that this may be a preferable alternative to the more drastic course of sitting in private: see R v Socialist Worker Printers and Publishers Ltd, Ex p Attorney General [1975] QB 637, 652; Attorney General v Leveller Magazine Ltd [1979] AC 440, 451 452 (Lord Diplock), 458 (Viscount Dilhorne), 464 (Lord Edmund Davies).\nOrders controlling the conduct of proceedings in court in this way remain available in civil proceedings whenever the court considers non disclosure necessary in order to protect the interests of that party or witness: CPR rule 39.2(4).\nIn criminal proceedings, the common law power to withhold the identity of witnesses from a defendant was abolished by section 1(2) of the Criminal Evidence (Witness Anonymity) Act 2008, and replaced by rules now contained in sections 86 90 of the Coroners and Justice Act 2009.\nBut the court retains the power which it has always possessed to allow evidence to be given in such a way that the identity of a witness or other matters is not more widely disclosed in open court, if the interests of justice require it.\nWhere a court directs that proceedings before it are to be conducted in such a way as to withhold any matter, section 11 of the Contempt of Court Act 1981 allows it to make ancillary orders preventing their disclosure out of court.\nMeasures of this kind have consistently been treated by the European Court of Human Rights as consistent with article 6 of the Convention if they are necessary to protect the interests of the proper administration of justice: Doorson v The Netherlands (1996) 22 EHRR 330, para 71; V v United Kingdom (1999) 30 EHRR 121, para 87; cf A v British Broadcasting Corpn [2015] AC 588, paras 44 45 (Lord Reed).\nBut necessity remains the touchstone of this jurisdiction.\nIn R v Legal Aid Board, Ex p Kaim Todner [1999] QB 966, 977, Lord Woolf MR, delivering the judgment of the Court of Appeal, warned against the natural tendency for the general principle to be eroded and for exceptions to grow by accretion as exceptions are applied by analogy to existing cases.\nLord Woolfs warning was endorsed by the House of Lords in In re S (Identification: Restrictions on Publication) [2005] 1 AC 593, para 29 (Lord Steyn).\nMore recently, two factors have combined to broaden the scope of the exceptions to the open justice rule and the frequency of their application.\nOne is the growing volume of civil and criminal litigation raising issues of national security.\nThis calls for no comment on the present appeal.\nThe other is the recognition of a number of rights derived from the European Convention on Human Rights, which the courts as public authorities are bound by section 6 of the Human Rights Act 1998 to respect.\nThe Convention right most often engaged in such cases is the right under article 8 to respect for private and family life.\nArticle 8 rights are heavily qualified by the Convention itself, and even when they are made good they must be balanced in a publication case against the right to freedom of expression protected by article 10.\nBut other Convention rights may occasionally be engaged which are practically unqualified, such as the right to life under article 2 and to protection against serious ill treatment under article 3: A v British Broadcasting Corpn [2015] AC 588.\nThese countervailing interests have become significant, not just because they have come to be recognised as legal rights, but because the resonance of what used to be reported only in the press and the broadcasting media has been greatly magnified in the age of the internet and social media.\nAs Lord Diplock pointed out in Attorney General v Leveller Magazine Ltd [1979] AC 440, 449 450, the principle of open justice has two aspects: As respects proceedings in the court itself it requires that they should be held in open court to which the press and public are admitted and that, in criminal cases at any rate, all evidence communicated to the court is communicated publicly.\nAs respects the publication to a wider public of fair and accurate reports of proceedings that have taken place in court the principle requires that nothing should be done to discourage this.\nThe distinction between these two aspects is not always recognised in the case law, but it is of some importance in the present case.\nThere is no issue on this appeal about the way in which the criminal trial and the applications under section 4(2) of the Contempt of Court Act were conducted.\nJudge Rook sat in public throughout.\nAll of the relevant matters were disclosed in open court.\nNo measures were taken to prevent parties or witnesses or those referred to at the trial from being identifiable to those members of the public who exercised their right to be present in court.\nThis appeal is concerned with the question whether matters exposed at a public criminal trial may be reported in the media.\nIt has been recognised for many years that press reporting of legal proceedings is an extension of the concept of open justice, and is inseparable from it.\nIn reporting what has been said and done at a public trial, the media serve as the eyes and ears of a wider public which would be absolutely entitled to attend but for purely practical reasons cannot do so.\nIn Edmonton Journal v Alberta (Attorney General) [1989] 2 SCR 1326 Cory J, delivering the leading judgment in the Supreme Court of Canada, observed that Listeners and readers, members of the public have a right to information pertaining to public institutions and particularly the courts.\nHere the press plays a fundamentally important role.\nIt is exceedingly difficult for many, if not most, people to attend a court trial Those who cannot attend rely in large measure upon the press to inform them about court proceedings the nature of the evidence that was called, the arguments presented, the comments made by the trial judge It is only through the press that most individuals can really learn of what is transpiring in the courts.\nThey as listeners or readers have a right to receive this information.\nOnly then can they make an assessment of the institution.\nDiscussion of court cases and constructive criticism of court proceedings is dependent upon the receipt by the public of information as to what transpired in court.\nPractically speaking, this information can only be obtained from the newspapers or other media.\nFor this reason, restrictions on the reporting of what has happened in open court give rise to additional considerations over and above those which arise when it is sought to receive material in private or to conceal it behind initials or pseudonyms in the course of an open trial.\nArrangements for the conduct of the hearing itself fall within the courts general power to control its own proceedings.\nThey may result in some information not being available to be reported.\nBut in Convention terms they are more likely to engage article 6 than article 10.\nReporting restrictions are different.\nThe material is there to be seen and heard, but may not be reported.\nThis is direct press censorship.\nThe limits on permissible reporting of public legal proceedings are set by the law of contempt, the law of defamation and the law protecting the Convention rights.\nThe present appeal turns on the last category, but it is I think instructive to refer first to the law of contempt and defamation.\nBoth of them are contexts in which the law has longer experience and a more defined policy about the use of the courts peremptory powers to restrain in advance the publication of proceedings in open court.\nThe inherent power of the court at common law to sit in private or anonymise material deployed in open court has never extended to imposing reporting restrictions on what happens in open court.\nAny power to do that must be found in legislation: Independent Publishing Co Ltd v Attorney General of Trinidad and Tobago [2005] 1 AC 190.\nThere is a substantial number of statutory restrictions on the reporting of court proceedings.\nWith very limited exceptions, all of them are concerned either (i) to protect the administration of justice itself by preventing the reporting of matters likely to prejudice the fairness of proceedings or to deter parties, witnesses or victims of crime from participating in them; or (ii) protecting children and young persons or other particularly vulnerable groups.\nCategory (i) includes the automatic statutory restriction on the publication of material identifying the victims of sexual offences; pre trial and preparatory hearings in criminal proceedings; and allocation or sending proceedings in Magistrates Courts.\nHowever, much the most significant enactment in category (i) is the Contempt of Court Act 1981.\nThe Act makes it a contempt of court to publish anything which creates a substantial risk that the course of justice will be seriously impeded or prejudiced, but is subject to an important exception for fair, accurate and contemporaneous reports of legal proceedings held in public: see sections 1, 2 and 4(1).\nSpecific reporting restrictions may be imposed by the court under section 4(2) of the Act if it is satisfied that there is a substantial risk of prejudice to the administration of justice either in the proceedings in which the order is made or in other proceedings which are pending or imminent.\nHowever, the power is limited to postponing publication for such period as the court thinks necessary for that purpose, generally until the conclusion of the relevant proceedings.\nThe most significant enactments in category (ii) are the automatic restriction in section 49 of the Children and Young Persons Act 1933 (as amended) and the discretionary restriction in section 45 of the Youth Justice and Criminal Evidence Act 1999, on the reporting of material likely to identify children and young persons concerned in criminal proceedings.\nIn both Acts the protection is limited to a child or young person who is a defendant, witness or victim.\nThere are corresponding discretionary restrictions in section 39 of the Children and Young Persons Act (as amended) on identifying children and young persons the subject of family proceedings.\nHowever, except in the case of under 18 defendants in criminal proceedings, there are no statutory restrictions on the reporting of material deployed in open court which may identify a person alleged to have committed offences.\nSignificantly, the few statutory restrictions on the reporting of allegations and investigations of alleged criminal offences automatically lapse upon the commencement of proceedings: see section 141F of the Education Act 2002 (allegations of criminal offences by teachers against pupils) and, once it comes into force, section 44 of the Youth and Criminal Evidence Act 1999 (children and young persons the subject of criminal investigations).\nThe dependence of this area of law on statute and the extent of statutory intervention mean that it is fair to speak of a statutory scheme occupying the ground to the exclusion of discretions arising from the common law or the courts inherent powers.\nLord Steyn made this point with the concurrence of the rest of the Appellate Committee in In re S, at p 604: Given the number of statutory exceptions, it needs to be said clearly and unambiguously that the court has no power to create by a process of analogy, except in the most compelling circumstances, further exceptions to the general principle of open justice.\nTurning to the law of defamation, section 14 of the Defamation Act 1996 provides that a fair, accurate and contemporaneous report of court proceedings held in public is absolutely privileged, and that a report published as soon as practicable after any relevant reporting restrictions have been lifted is to be treated as contemporaneous.\nThe privilege does not cover the whole ground, because disputes may arise as to whether a report is fair and accurate, and the media may have a legitimate interest in publishing reports of material derived from court proceedings but not contemporaneously.\nHowever, the invariable rule since the decision in Bonnard v Perryman [1891] 2 Ch 269 has been that even where absolute privilege is not available or its availability is in dispute, the court will not grant an interlocutory injunction in advance of publication if the defendant asserts that he will plead justification, unless, exceptionally, the court is satisfied that the defence is bound to fail.\nThe rule originated in the division between the functions of judge and jury, the question of libel or no libel being exclusively for the jury.\nBut in its modern form, its function is to balance the freedom of the press and the right of the claimant to protect his reputation, by confining the plaintiff to the post publication remedies to which he may prove himself entitled at a trial.\nThe media are at liberty to publish if they are willing to take the risk of liability in damages.\nArticles 8 and 10 of the European Convention on Human Rights Convention provide: ARTICLE 8 Right to respect for private and family life 1.\nEveryone has the right to respect for his private and family life, his home and his correspondence. 2.\nThere shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic wellbeing of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.\nARTICLE 10 Freedom of expression 1.\nEveryone has the right to freedom of expression.\nThis right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.\nThis article shall not prevent states from requiring the licensing of broadcasting, television or cinema enterprises. 2.\nThe exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.\nIn Campbell v MGN Ltd [2004] 2 AC 457, the House of Lords expanded the scope of the equitable action for breach of confidence by absorbing into it the values underlying articles 8 and 10 of the European Convention on Human Rights, thus effectively recognising a qualified common law right of privacy.\nThe Appellate Committee was divided on the availability of the right in the circumstances of that case, but was agreed that the right was in principle engaged if in respect of the disclosed facts the person in question had a reasonable expectation of privacy.\nThe test was whether a reasonable person of ordinary sensibilities, if placed in the same situation as the subject of the disclosure, rather than the recipient, would find the disclosure offensive.\nThe protection of reputation is the primary function of the law of defamation.\nBut although the ambit of the right of privacy is wider, it provides an alternative means of protecting reputation which is available even when the matters published are true.\nIn its current form, the cause of action for invasion of a claimants right to private and family life is relatively new to English law.\nIt originates in the incorporation into our law of the Human Rights Convention.\nBut once the court is satisfied that that right is engaged, it must be balanced against a public interest in freedom of the press.\nThat interest is not new.\nAlthough now protected by article 10 of the Convention, it corresponds to a common law right which has been recognised since the 18th century.\nIn Campbell v MGN, supra, at para 55, Lord Hoffmann described the balance between these competing values in language that has frequently been adopted since that case was decided: Both reflect important civilised values, but, as often happens, neither can be given effect in full measure without restricting the other.\nHow are they to be reconciled in a particular case? There is in my view no question of automatic priority.\nNor is there a presumption in favour of one rather than the other.\nThe question is rather the extent to which it is necessary to qualify the one right in order to protect the underlying value which is protected by the other.\nAnd the extent of the qualification must be proportionate to the need Campbell did not involve a pre emptive injunction against the press, nor did it involve the reporting of court proceedings.\nBut in In re S, supra, which involved both of these things, Lord Steyn adopted Lord Hoffmanns approach, and summarised the principles in four points at para 17: First, neither article has as such precedence over the other.\nSecondly, where the values under the two articles are in conflict, an intense focus on the comparative importance of the specific rights being claimed in the individual case is necessary.\nThirdly, the justifications for interfering with or restricting each right must be taken into account.\nFinally, the proportionality test must be applied to each.\nFor convenience I will call this the ultimate balancing test.\nThese two decisions are the principal English authorities for an approach to the balancing exercise which is fact specific rather than being dependent on any a priori hierarchy of rights.\nOn some facts, the claimants article 8 rights may be entitled to very little weight.\nOn some facts, the public interest in the publication in the media may be slight or non existent.\nNonetheless, in deciding what weight to give to the right of the press to publish proceedings in open court, the courts cannot, simply because the issues arise under the heading private and family life, part company with principles governing the pre emptive restraint of media publication which have been accepted by the common law for many years in the cognate areas of contempt of court and defamation, and are reflected in a substantial and consistent body of statute law as well as in the jurisprudence on article 10 of the Human Rights Convention.\nNor, in practice, have they sought to do so.\nThe point may be illustrated by the decision in In re S itself.\nS was a child aged five whose mother had been indicted for the murder of his brother.\nSs guardian brought proceedings in the Family Division in support of a claim for an order preventing (i) the publication of material likely to identify S, and (ii) the publication in any report of the mothers trial of her name or that of the deceased brother or of material (such as photographs) likely to identify them.\nThe issue was whether an order in terms of (ii) should be qualified by a proviso that it was not to prevent the publication of a report of any part of the murder trial which was held in public.\nThe application was based on the childs right to private and family life.\nIt was a strong case on the facts, for there was psychiatric evidence that persistent publicity surrounding the trial would be significantly harmful to section Nonetheless, the courts below held that the proviso must be included, and the House of Lords affirmed their decision.\nLord Steyn delivered the only reasoned speech.\nHis reasoning on the main issue can be summarised in four points.\nFirst, he drew attention, in a passage from which I have quoted at para 18 above, to the significance of open justice both at common law and in the jurisprudence of the European Court of Human Rights.\nSecondly, he pointed out that although there were many statutory exceptions to that principle founded on countervailing public and private interests, none of them applied in the case before them.\nIn particular, section 39 of the Children and Young Persons Act 1933, which as it then stood covered much of the ground now covered by section 45 of the Youth Justice and Criminal Evidence Act 1999, was limited to protecting children and young persons concerned in the mothers trial as defendant, witness or victim.\nLord Steyn was unwilling to introduce a wider exception to the open justice principle by what he called a process of accretion and analogy.\nThird, while the impact of publicity attending the trial would be extremely painful, S was not himself involved in the trial and the impact on him was essentially indirect.\nAt para 26, Lord Steyn observed: This is an application for an injunction beyond the scope of section 39, the remedy provided by Parliament to protect juveniles directly affected by criminal proceedings.\nNo such injunction has in the past been granted under the inherent jurisdiction or under the provisions of the ECHR.\nThere is no decision of the Strasbourg court granting injunctive relief to non parties, juvenile or adult, in respect of publication of criminal proceedings.\nMoreover, the Convention on the Rights of the Child, which entered into force on 2 September 1990, protects the privacy of children directly involved in criminal proceedings, but does not protect the privacy of children if they are only indirectly affected by criminal trials: articles 17 and 40.2(vii); see also Geraldine Van Bueren, The International Law on the Rights of the Child (1995), pp 141 and 182.\nThe verdict of experience appears to be that such a development is a step too far.\nFourth, if harm arising indirectly was enough to justify a pre emptive order, it would be difficult to set rational boundaries on the jurisdiction.\nAt paras 32 33, he said about this: First, while counsel for the child wanted to confine a ruling to the grant of an injunction restraining publication to protect a child , that will not do.\nThe jurisdiction under the ECHR could equally be invoked by an adult non party faced with possible damaging publicity as a result of a trial of a parent, child or spouse.\nAdult non parties to a criminal trial must therefore be added to the prospective pool of applicants who could apply for such injunctions.\nThis would confront newspapers with an ever wider spectrum of potentially costly proceedings and would seriously inhibit the freedom of the press to report criminal trials.\nSecondly, if such an injunction were to be granted in this case, it cannot be assumed that relief will only be sought in future in respect of the name of a defendant and a photograph of the defendant and the victim.\nIt is easy to visualise circumstances in which attempts will be made to enjoin publicity of, for example, the gruesome circumstances of a crime.\nThe process of piling exception upon exception to the principle of open justice would be encouraged and would gain in momentum.\nIn In re Trinity Mirror (A intervening) [2008] QB 770, the defendant pleaded guilty in the Crown Court to 20 counts of making or possessing child pornography.\nNo direction was made for withholding the defendants identity in court, but the Crown Court made an order in the interest of the defendants children prohibiting any publication in the media of material identifying him or his children.\nThe Court of Appeal held that the Crown Court had no power to make such an order.\nBut they also held that it would have been an inappropriate order even in the High Court, which did have jurisdiction.\nSir Igor Judge P, delivering the judgment of the Court, observed (para 32) that it was impossible to over emphasise the importance to be attached to the ability of the media to report criminal trials.\nIn simple terms this represents the embodiment of the principle of open justice in a free country.\nHe went on to say, at para 33: It is sad, but true, that the criminal activities of a parent can bring misery, shame, and disadvantage to their innocent children.\nInnocent parents suffer from the criminal activities of their sons and daughters.\nHusbands and wives and partners all suffer in the same way.\nAll this represents the further consequences of crime, adding to the list of its victims.\nEveryone appreciates the risk that innocent children may suffer prejudice and damage when a parent is convicted of a serious offence However we accept the validity of the simple but telling proposition put by the court reporter to Judge McKinnon on 2 April 2007, that there is nothing in this case to distinguish the plight of the defendants children from that of a massive group of children of persons convicted of offences relating to child pornography.\nIf the court were to uphold this ruling so as to protect the rights of the defendants children under article 8, it would be countenancing a substantial erosion of the principle of open justice, to the overwhelming disadvantage of public confidence in the criminal justice system, the free reporting of criminal trials and the proper identification of those convicted and sentenced in them.\nSuch an order cannot begin to be contemplated unless the circumstances are indeed properly to be described as exceptional.\nIn re British Broadcasting Corporation.\nIn re Attorney Generals Reference (No 3 of 1999) [2010] 1 AC 145 was another case arising out of an application by a defendant in criminal proceedings for an order restraining publication of material identifying him.\nA man referred to in the speeches as D had been charged with rape on the strength of DNA evidence, but acquitted on the judges direction after that evidence had been ruled inadmissible.\nThat ruling had subsequently been held on a reference by the Attorney General to be wrong.\nAlthough he was at risk of being retried, there were no pending or imminent proceedings against him which could found an order under section 4(2) of the Contempt of Court Act 1981.\nIn those circumstances, the BBC wished to make a programme about the functioning of the criminal justice system, focussing on controversial acquittals, including Ds.\nThe use of the material deployed at his trial and at the hearing of the reference would inevitably tend to suggest that he was guilty.\nShort of acquittal at a retrial, he had no means of vindicating his reputation since the facts derived from that source were true.\nLord Hope (with whom Lord Phillips, Lord Walker and Lord Neuberger agreed) considered (para 13) that the only possible basis for an order preventing D from being identified was article 8 of the Convention.\nIn his view proceedings at the trial, being public, gave rise to no legitimate expectation of privacy.\nBut he held that article 8 of the Convention was nevertheless engaged because the link between his DNA and the rape was personal information which would suggest to the public that he was guilty: see paras 6, 20, 22.\nThat consideration was, however, substantially outweighed by the right of the media to publish and the right of the public to receive information about the functioning of the criminal justice system.\nThe fullest treatment of the balance between articles 8 and 10 appears in the speech of Lord Brown (with whom the rest of the Appellate Committee agreed).\nHe considered that subject to Ds article 8 rights and to the law of defamation, the BBC was entitled to publish material questioning the merits of Ds acquittal: paras 59 60, 63.\nHe attached very little weight to Ds article 8 rights because, as he observed at para 68, to say that his article 8 rights were interfered with by the unlawful retention and use of his sample is one thing; to assert that in consequence he must be entitled to anonymity in respect of the subsequent criminal process is quite another.\nIn In re Guardian News and Media Ltd [2010] 2 AC 697 five claimants challenged the lawfulness of Treasury directions freezing their assets under the Terrorism (United Nations Measures) Order 2006 on the ground that they were suspected of facilitating terrorism.\nThe Supreme Court set aside anonymity orders made in their favour, whose effect was to prohibit any report of the proceedings that enabled them to be identified.\nThe orders had been sought on the ground that disclosure of the fact that they were suspected of facilitating terrorism would cause some people to assume that the suspicion was justified, and would violate their article 8 rights.\nIn particular, one of them, M, claimed that his reputation and his and his familys relations with his local community would be seriously damaged.\nThe judgment of the Court was delivered by Lord Rodger.\nHe applied the test derived from Lord Hoffmanns speech in Campbell v MGN Ltd [2004] 2 AC 457 at paras 55 56 and the judgment of the European Court of Human Rights in Von Hannover v Germany [2004] 40 EHRR, paras 57, 76, namely whether the publication of a report sufficiently contributes to a question of legitimate public interest to justify any curtailment of his and his familys right to private and family life: para 52.\nIn Von Hannover there had been no public interest in the publication of photographs of Princess Caroline in the course of her ordinary daily pursuits.\nLord Rodger concluded that the operation of the freezing order system for those suspected of facilitating terrorism was a matter of legitimate public interest, and that any damage to the applicants right to private and family life was incidental.\nAt para 73, he said: Although it has effects on the individuals private life, the purpose of a freezing order is public: it is to prevent the individual concerned from transferring funds to people who have nothing to do with his family life.\nSo this is not a situation where the press are wanting to publish a story about some aspect of an individuals private life, whether trivial or significant.\nRather, they are being prevented from publishing a complete account of an important public matter involving this particular individual, for fear of the incidental effect that it would have on Ms private and family life.\nA v British Broadcasting Corpn [2015] AC 588 was an appeal from Scotland, which is relied upon by PNM as marking a change of approach.\nA was a foreign national who had served a sentence of imprisonment for sexual offences against a child.\nThe Home Secretary had served notice of her intention to deport him.\nHe appealed against that decision on the ground that his deportation would violate his rights under articles 2 and 3 of the Convention, because if he returned to his country of origin he would be at risk of death or ill treatment at the hands of people who knew the nature of his offences.\nDirections had been made at an early stage of the proceedings to enable A to conduct them using initials instead of his name, and an ancillary order had been made under section 11 of the Contempt of Court Act 1981 to prohibit his identification out of court.\nThe appeal failed, one of the principal grounds being that these measures would prevent him from being identifiable after his return to his country of origin.\nThe Supreme Court dismissed the BBCs application to lift the order on the ground that although there was a legitimate public interest in publication, it would not only have violated his article 2 and 3 rights but would have subverted the basis of the decision to authorise his deportation, thereby undermining the administration of justice.\nThe decision itself therefore turned on very particular facts.\nBut the general approach of Lord Reed (with whom the rest of the committee agreed) was very similar to that of Lord Rodger in In re Guardian News and Media Ltd, whose statement of the test he adopted (para 48).\nIn the hierarchy of Convention rights, articles 2 and 3 stand very high, but Lord Reed was prepared to accept (para 41) that a lesser interest such as serious commercial damage would be enough to justify an order in a case where there was no public interest in publication.\nIn most of the recent decisions of this Court the question has arisen whether the open justice principle may be satisfied without adversely affecting the claimants Convention rights by permitting proceedings in court to be reported but without disclosing his name.\nThe test which has been applied in answering it is whether the public interest served by publishing the facts extended to publishing the name.\nIn practice, where the court is satisfied that there is a real public interest in publication, that interest has generally extended to publication of the name.\nThis is because the anonymised reporting of issues of legitimate public concern are less likely to interest the public and therefore to provoke discussion.\nAs Lord Steyn observed in In re S, at para 34, from a newspapers point of view a report of a sensational trial without revealing the identity of the defendant would be a very much disembodied trial.\nIf the newspapers choose not to contest such an injunction, they are less likely to give prominence to reports of the trial.\nCertainly, readers will be less interested and editors will act accordingly.\nInformed debate about criminal justice will suffer.\nWhats in a name?, Lord Rodger memorably asked in In re Guardian News and Media Ltd, before answering his own question, at para 63, in the following terms: A lot, the press would answer.\nThis is because stories about particular individuals are simply much more attractive to readers than stories about unidentified people.\nIt is just human nature.\nAnd this is why, of course, even when reporting major disasters, journalists usually look for a story about how particular individuals are affected.\nWriting stories which capture the attention of readers is a matter of reporting technique, and the European court holds that article 10 protects not only the substance of ideas and information but also the form in which they are conveyed: News Verlags GmbH & Co KG v Austria (2000) 31 EHRR 246, 256, para 39 More succinctly, Lord Hoffmann observed in Campbell v MGN Ltd [2004] 2 AC 457, 474, para 59, judges are not newspaper editors.\nSee also Lord Hope of Craighead in In re British Broadcasting Corpn [2010] 1 AC 145 , para 25.\nThis is not just a matter of deference to editorial independence.\nThe judges are recognising that editors know best how to present material in a way that will interest the readers of their particular publication and so help them to absorb the information.\nA requirement to report it in some austere, abstract form, devoid of much of its human interest, could well mean that the report would not be read and the information would not be passed on.\nUltimately, such an approach could threaten the viability of newspapers and magazines, which can only inform the public if they attract enough readers and make enough money to survive.\nThe public interest in the administration of justice may be sufficiently served as far as lawyers are concerned by a discussion which focusses on the issues and ignores the personalities, but the target audience of the press is likely to be different and to have a different interest in the proceedings, which will not be satisfied by an anonymised version of the judgment.\nIn the general run of cases there is nothing to stop the press from supplying the more full blooded account which their readers want.\nCf In re British Broadcasting Corporation.\nIn re Attorney Generals Reference (No 3 of 1999), at paras 25 26 (Lord Hope), 56, 66 (Lord Brown).\nNone of this means that if there is a sufficient public interest in reporting the proceedings there must necessarily be a sufficient public interest in identifying the individual involved.\nThe identity of those involved may be wholly marginal to the public interest engaged.\nThus Lord Reed remarked of the Scottish case of Devine v Secretary of State for Scotland (unreported, 22 January 1993), in which soldiers who had been deployed to end a prison siege were allowed to give evidence from behind a screen, that their appearance and identities were of such peripheral, if any, relevance to the judicial process that it would have been disproportionate to require their disclosure: A v British Broadcasting Corpn, at para 39.\nIn other cases, the identity of the person involved may be more central to the point of public interest, but outweighed by the public interest in the administration of justice.\nThis was why publication of the name was prohibited in A v British Broadcasting Corpn.\nAnother example in a rather different context is R (C) v Secretary of State for Justice (Media Lawyers Association intervening) [2016] 1 WLR 444, a difficult case involving the disclosure via judicial proceedings of highly personal clinical data concerning psychiatric patients serving sentences of imprisonment, which would have undermined confidential clinical relationships and thereby reduced the efficacy of the system for judicial oversight of the Home Secretarys decisions.\nApplication to the present case\nThe nature of the article that The Times and the Oxford Mail wish to publish has varied over the period since the section 4(2) order was first sought.\nThe current position of The Times was explained in an e mail sent shortly before the application to Tugendhat J.\nIt is that they wish to report the court proceedings concerning the imposition and lifting of the section 4(2) order in an article which will focus on issues relating to open justice.\nIn particular, it will focus on the position of persons not party to proceedings about whom allegations are made in those proceedings, the extent of the protection which the law gives to those who are facing imminent or pending criminal proceedings and the challenges of reporting criminal proceedings where such issues arise.\nThey have said that they propose to identify PNM because this would make the piece considerably more engaging and meaningful for our readers, but that any report would make clear that he had been released from police bail and was not facing imminent or pending proceedings.\nThe position of the Oxford Mail was set out in a letter of the same date and is similar.\nThey added: We consider that the recent proceedings involving your client during which these issues were carefully explored in open court on several occasions, and in respect of which a detailed ruling was handed down, provide a very vivid illustration of how these issues are treated by the courts.\nIt is our wish to explain these proceedings fully and fairly.\nI mention these matters because the limited nature of the proposed publication was relied upon by the two newspapers as part of their case against the making of the order sought.\nThey are not, however, critical to the issue before us.\nIf no order is made, the two newspapers, and indeed other media organisations, will be at liberty, subject to the law of defamation, to publish anything that was said and done at the trial at the Central Criminal Court, and the appeal must be approached on that basis.\nAfter an impeccable summary of the relevant legal principles, Tugendhat J began his assessment of the balance between the divergent interests involved with an assessment of PNMs interest in restricting the reporting of the trial so far as it related to him.\nHe accepted that there would be some members of the public who would equate suspicion with guilt and that there was some risk that PNM and members of his family, including his children, would be subject to some unpleasant behaviour, possibly amounting to harassment.\nHe also acknowledged that, not being a defendant in the trial, he would have no means of clearing his name if the media confined themselves to fair, accurate and contemporaneous reporting attracting absolute privilege.\nHowever, he considered that the significance of these facts was diminished by two factors.\nFirst, he approached the case on the footing set out in Lord Rodgers observation in In re Guardian News and Media, at para 66, namely that members of the public generally will understand the difference between suspicion and guilt.\nSecondly, he thought that because of its public nature, some knowledge of what had been said about him at the trial would spread among those who knew him personally or by name, so that restrictions on press reporting would be of little if any benefit to him or his family.\nIndeed, the prohibition of media reporting might lead to the circulation of ill informed or misleading versions of what was said that would aggravate PNMs situation.\nBy comparison, he considered that there was the highest public interest in the allegations of child abuse, which were the subject of continuing police investigations.\nThe reports would be likely to make an important contribution to the knowledge of the public and to informed debate about the administration of justice.\nPublication might also encourage witnesses to come forward, or lend significance to the fact if they did not come forward.\nIn these circumstances, he thought that the case was not materially different from In re section Under section 12(3) of the Human Rights Act 1998, the judge could not make the order unless satisfied that PNM was likely to succeed at a trial.\nHe concluded that PNMs claim was likely to fail.\nThe legal basis of the judges analysis was challenged in only two respects.\nFirst, it was argued on PNMs behalf that the decision of this court in A v British Broadcasting Corpn had modified the approach to such applications in a way which made the analysis in In re S less relevant.\nSecondly, it was suggested that in adopting Lord Rodgers observations in In re Guardian News and Media about the publics ability to distinguish between suspicion and guilt, the judge had applied a legal presumption which was not warranted.\nI have explained in para 28 above why I reject the first of these arguments.\nI also reject the second.\nLord Rodger was describing the basis on which English law (unlike, say, German law) allows the publication of the identities of persons charged with offences in advance of their trial.\nNo doubt this also represents the publics reaction in the generality of cases.\nBut Lord Rodger was not putting this last point forward as a legal presumption to be applied irrespective of the circumstances, let alone an irrebuttable one.\nNor have the courts subsequently proceeded as if he was, as the analysis of the facts in In re British Broadcasting Corporation: In re Attorney Generals Reference (No 3 of 1999) demonstrates.\nRead as a whole, this part of Tugendhat Js judgment was doing no more than saying that while some members of the public would equate suspicion with guilt, most would not.\nIn my opinion, Tugendhat J committed no error of law, and his conclusion was one that he was entitled to reach.\nLeft to myself, I might have been less sanguine than he was about the reaction of the public to the way in which PNM featured in the trial.\nBut that would have made no difference to the conclusion, for the following reasons: (1) PNMs application is not that the trial should be conducted so as to withhold his identity.\nIf it had been, the considerations urged by Lord Kerr and Lord Wilson in their judgments in this case, might have had considerable force.\nBut it is now too late for that.\nPNMs application is to prohibit the reporting, however fair or accurate, of certain matters which were discussed at a public trial.\nThese are not matters in respect of which PNM can have had any reasonable expectation of privacy.\nThe contrast between this situation and the case where a newspaper responds to a tip off about intensely personal information such as a claimants participation in private drug rehabilitation sessions could hardly be more stark. (2) That is not the end of PNMs article 8 right, because he is entitled to rely on the impact which publication would have on his relations with his family and their relations with the community in which he lives.\nI do not underestimate that impact.\nThere is force in the judges observation that the public nature of the trial, combined with the notoriety of the case, especially in the Oxford area, means that some people will know of the allegations about PNM in any event.\nBut whether that be so or not, the impact on PNMs family life of what was said about him at the trial is no different in kind from the impact of many disagreeable statements which may be made about individuals at a high profile criminal trial.\nA defendant at such a trial may be acquitted, possibly on an issue of admissibility, after bruising disclosures have been made about him at the trial.\nWithin the limits of professional propriety, a witness may have his integrity attacked in cross examination.\nHe may be accused by other witnesses of lying or even of having committed the offence himself.\nAll of these matters may be exposed in public under the cloak of the absolute immunity of counsel and witnesses from civil liability, and reported under the protection of the absolute privilege from liability for defamation for fair, accurate and contemporaneous publication.\nThe immunity and the privilege reflect the laws conviction that the collateral impact that this process has on those affected is part of the price to be paid for open justice and the freedom of the press to report fairly and accurately on judicial proceedings held in public. (3) The impact on PNMs family life is indirect and incidental, in the same way as the impact on the claimants family life in In re S and on Ms family life in In re Guardian News and Media Ltd. Neither PNM nor his family participated in any capacity at the trial, and nothing that was said at the trial related to his family.\nBut it is also indirect and incidental in a different and perhaps more fundamental sense.\nPNM is seeking to restrain reporting of the proceedings in order to protect his reputation.\nA party is entitled to invoke the right of privacy to protect his reputation but, as I have explained, there is no reasonable expectation of privacy in relation to proceedings in open court.\nThe only claim available to PNM is based on the adverse impact on his family life which will follow indirectly from the damage to his reputation.\nIt is clear that in an action for defamation no injunction would issue to prevent the publication of a fair and accurate report of what was said about PNM in the proceedings.\nIt would be both privileged and justified.\nIn the context of the publication of proceedings in open court, it would be incoherent for the law to refuse an injunction to prevent damage to PNMs reputation directly, while granting it to prevent the collateral impact on his family life in precisely the same circumstances.\nIt would also, as Lord Steyn pointed out in In re S, make it particularly difficult to distinguish the many other cases in which judicial proceedings generate damaging or distressing collateral publicity for those not directly involved. (4) I would not rule out the possibility of a pre emptive injunction in a case where the information was private or there was no sufficiently substantial public interest in publication.\nBut in relation to the reporting of public court proceedings such cases are likely to be rare.\nThis is clearly not such a case.\nThe sexual abuse of children, especially on an organised basis, is a subject of great public concern.\nThe processes by which such cases are investigated and brought to trial are matters of legitimate public interest.\nThe criticisms made of the police and social services inevitably reinforce the public interest in this particular case.\nThe use of section 4(2) of the Contempt of Court Act 1981 to postpone the reporting of aspects of a public trial is justified by the need to protect the interests of justice, but it is nonetheless a proper matter for debate which the media are entitled to raise. (5) Does the public interest extend to PNMs identity? This case differs from earlier cases in which the same question has arisen because the order sought by PNM would not prevent the identification of a party to the criminal proceedings or even of a witness.\nTo my mind that makes it even more difficult to justify an injunction, for reasons which I have given.\nBut in any event I do not think it can be a relevant distinction.\nThe policy which permits media reporting of judicial proceedings does not depend on the person adversely affected by the publicity being a participant in the proceedings.\nIt depends on (i) the right of the public to be informed about a significant public act of the state, and (ii) the laws recognition that, within the limits imposed by the law of defamation, the way in which the story is presented is a matter of editorial judgment, in which the desire to increase the interest of the story by giving it a human face is a legitimate consideration.\nPNMs identity is not a peripheral or irrelevant feature of this particular story.\nI conclude with two points.\nThe first is that the only question before us is whether a pre emptive interlocutory injunction should issue.\nNothing that I have said should be taken to limit the range of remedies that may be available after publication if the rights of the claimant are found to have been violated.\nThe second is that restrictions on the reporting of proceedings in open court are particularly difficult to justify.\nIt may in some cases be easier to justify managing the trial in a way which avoids the identification of those with a sufficient claim to anonymity.\nApplications for anonymity in the courtroom will generally raise many issues other than the impact on the applicant or his family.\nThey will include the fairness of the trial, the nature of the issues, and the existence and extent of any legitimate public interest in the applicants identity.\nI am in no position to suggest that such an application would have succeeded in PNMs case, if it had been made.\nBut if there is a solution to the problem of collateral damage to those not directly involved in criminal proceedings, that is where it is to be found.\nI would dismiss the appeal.\nThe parties have agreed that in those\ncircumstances the anonymity order made by this court on 17 January 2017 undersection 4(2) of the Contempt Court Act 1981 should be revoked and that the Appellant may be referred to in the title of the proceedings by his name, Tariq Khuja.\nLORD KERR AND LORD WILSON: (dissenting)\nWe would have allowed the appeal.\nSubject to what we regard as a controversial presumption, the legal framework within which PNMs application for an injunction fell to be considered is not in dispute.\nThe law required Tugendhat J to appraise the competing rights of, on the one hand, the press and the public under article 10 of the European Convention and, on the other, of PNM and his family under article 8.\nThat appraisal had to take place on the basis that neither right was in principle stronger than the other and that a decision as to which should prevail required first an intense focus on their comparative importance in the particular circumstances and then an assessment of the proportionality of the interference with each of them which the grant or refusal of the injunction would represent: see the propositions of Lord Steyn in the S case at para 17, quoted by Lord Sumption at para 22 above.\nIf this approach was followed, there would be no danger that grant of the injunction would establish some further legal exception to the principle of open justice; and the risk referred to by Lord Woolf MR in the Kaim Todner case, cited at para 14 above, of an insidious growth by accretion of exceptions which would erode the general principle, would not materialise.\nThe judges task was therefore to evaluate the strength of the rival considerations.\nIf there was no legal error in his approach to the task, the Court of Appeal would have been right to have dismissed PNMs appeal.\nWe have come to the conclusion, however, that, through no fault of his own, he did fall into error.\nThe controversial presumption to which we have referred originates in the judgment of Lord Rodger in the Guardian case, cited by Lord Sumption at para 8 above.\nLord Rodger, who was delivering the judgment of this court, referred at para 66 to the freedom of the press to publish the identity of a person charged with an offence.\nHe then observed: In allowing this, the law proceeds on the basis that most members of the public understand that, even when charged with an offence, you are innocent unless and until proved guilty in a court of law.\nThat understanding can be expected to apply, a fortiori, if you are someone whom the prosecuting authorities are not even in a position to charge with an offence and bring to court.\nLord Rodgers observation in the Guardian case could not have been clearer: it was that the law proceeds on the basis that most people understand that persons charged with an offence and even more obviously persons not or not yet charged with an offence but simply arrested on suspicion of it are innocent until their guilt has been established.\nSo Tugendhat J proceeded on that basis.\nHe quoted para 66 of Lord Rodgers judgment and said that I approach the case on [that] footing.\nIn her judgment in the Court of Appeal, with which Lord Dyson MR and Vos LJ agreed, Sharp LJ correctly observed that the assumption or (as she elsewhere described it) the presumption set out in para 66 of Lord Rodgers judgment was the basis upon which the judge proceeded.\nSharp LJ thereupon proceeded to explain why, in her view, Tugendhat J had been entitled to proceed on that basis.\nShe said at para 38: The approach to the open justice principle which guided the judge has been settled at the highest level In my view, the appellants argument ignores a fundamental part of that approach, which is that most members of the public understand the presumption of innocence and are able to distinguish between the position of someone who has been (merely) arrested, someone who has been charged, and someone who has been convicted of a criminal offence.\nOnce that is understood, it follows that the effect of disclosing the fact of the appellants arrest on his article 8 rights is significantly more limited than [counsel for PNM] contends.\nTo the extent that in this passage Sharp LJ was suggesting that most members of the public would not regard PNMs arrest as indicative of guilt, not only would the effect on him of its publication be significantly more limited but his case under article 8 would largely fall away.\nLord Sumption suggests in para 33 above that in para 66 of the Guardian case Lord Rodger was not articulating a legal presumption to be applied irrespective of the circumstances but merely explaining the basis on which English law allows publication in advance of trial of the names of those charged with offences.\nWe cannot agree.\nThe statement that the law proceeds on the basis surely means at least that, absent good reason for departing from it, the courts should act on the principle that most people believe that someone charged with an offence, and still more someone not charged with an offence but simply arrested on suspicion of it, is innocent until proved guilty.\nIf the law does not proceed on that basis, the courts inquiry into the attitude of members of the public to those charged with criminal offences or merely arrested on suspicion of them would be at large.\nIts conduct of the inquiry would require investigation and evidence.\nThe statement of Lord Rodger can be interpreted only as indicating that investigation and the adduction of evidence are not needed.\nHis statement plainly partakes of a legal presumption.\nWe consider it necessary both to confront the fact that Lord Rodger articulated a presumption and then critically to examine it.\nThis is necessary since, in our judgment, Tugendhat J applied the asserted presumption and his application of it was endorsed by the Court of Appeal.\nIf, as we believe to be the case, the asserted presumption can be shown to have no proper legal foundation, both courts would have fallen into error and the evaluative exercise would fall to be conducted again.\nSo our question becomes: on what grounds did Lord Rodger adopt and purport to cast as a presumption the proposition that most members of the public understand that a person who has been merely charged with an offence, and, even more obviously, a person who has been simply arrested on suspicion of an offence, is innocent until proved guilty? Lord Rodger cited no authority for the proposition.\nIndeed, he referred to no evidence in support of it.\nNo such evidence had been adduced in those proceedings.\nWe find that we cannot answer our question.\nWe have no difficulty in accepting the proposition that most people understand that the law does not regard as guilty a man who has been no more than arrested or even charged.\nThat, however, is distinctly different from saying that most people do not themselves regard him as guilty.\nYet this is assuredly the proposition which is the subject of Lord Rodgers asserted presumption.\nThe respondents have not filed evidence in support of the proposition that most members of the public would not regard as guilty of sexual abuse a man whom they learned to have been arrested on suspicion of it.\nThey can hardly be criticised for not doing so: for there appeared already to be a legal presumption to that effect.\nNor did PNM file contrary evidence in attempted rebuttal of it.\nIt is important, however, to put the absence of such evidence in context.\nHis application was only for an interim injunction and was made in the circumstances of great urgency explained by Lord Sumption at para 11 above.\nOn an interim application, while the court is disabled by section 12(3) of the 1998 Act from granting an injunction unless satisfied that the applicant is likely to secure an injunction at the full hearing, its approach is as preliminary as is the requested order.\nPlainly there is increasing concern, judicial and extra judicial, about the effect upon an innocent persons reputation of publication of the fact of his arrest.\nIn the second volume of the report of his Inquiry into the Culture, Practices and Ethics of the Press dated 29 November 2012, HC 780 11, Leveson LJ referred at para 3.25 to the case of Mr Christopher Jefferies, addressed in Attorney General v MGN Ltd [2011] EWHC 2074 (Admin); [2012] 1 WLR 2408.\nMr Jefferies was exposed as having been arrested on suspicion of murder.\nHe was later demonstrated to have been innocent of it but meanwhile he had been subjected to a protracted campaign of vilification in the press, which had led him to leave his home and to change his appearance.\nAlthough in that case the press had committed contempt of court and had published actionable libels about Mr Jefferies, the significance of the case for present purposes lies in the ease with which arrest may generally be associated with guilt.\nIn the event Leveson LJ recommended at para 2.39 that, save in exceptional and clearly defined circumstances, the police should not release the names or identifying details of those who are arrested or suspected of a crime.\nOn 4 March 2013 Treacy LJ and Tugendhat J issued a paper entitled Contempt of Court.\nA Judicial Response to Law Commission Consultation Paper No 209.\nThey made clear that it reflected the views of the President of the Queens Bench Division, the Senior Presiding Judge, Leveson and Goldring LJJ and other senior judges.\nThey observed at para 5: The police arrest many people who are never charged.\nIf there were a policy that the police should consistently publish the fact that a person has been arrested, in many cases that information would attract substantial publicity, causing irremediable damage to the persons reputation. (Emphasis supplied) They proceeded to indorse the recommendation made by Leveson LJ in para 2.39 of his report.\nOn 31 October 2016 Sir Richard Henriques, a former High Court judge, made a report entitled An Independent Review of the Metropolitan Police Services handling of non recent sexual offence investigations alleged against persons of public prominence.\nSir Richard said at para 1.67: I consider it most unlikely that a Government will protect the anonymity of suspects pre charge.\nTo do so would enrage the popular press whose circulation would suffer.\nPresent arrangements, however, have caused the most dreadful unhappiness and distress to numerous suspects, their families, friends and supporters.\nThose consequences were avoidable by protecting anonymity.\nNobody is safe from false accusation and damaging exposure under present arrangements.\nA reputation built on a lifetime of public service or popular entertainment can be extinguished in an instant.\nI sincerely believe that statutory protection of anonymity pre charge is essential in a fair system.\nOnly days prior to the date of Sir Richards report Cobb J had given judgment in Rotherham Metropolitan Borough Council v M [2016] EWHC 2660 (Fam).\nRotherham had made a teenage girl a ward of court and had secured interim injunctions that four named men should not associate with her.\nIt had alleged that they had been sexually exploiting her.\nNone of the four men had been charged with any offence in relation to her but two of them had been arrested in that connection and they remained on police bail.\nIn the event, however, Rotherham decided that it would not be able to substantiate its allegations against any of the four men and Cobb J acceded to its application that the injunctions be discharged.\nRotherham also sought an indefinite extension of interim reporting restriction orders against identification not only of the girl but also of the four men.\nTimes Newspapers Ltd, also the first respondent to the present appeal, opposed extension of the orders insofar as they related to the four men.\nCobb J said at para 39: I next ask myself what is the public interest in naming these four men in the press as persons against whom injunction proceedings were once brought, interim injunctions (without evidence being tested) once made, but in respect of whom in the end no findings were sought, let alone made.\nIn my judgment there is no, or if any, negligible, such public interest On the other hand, there is a substantial risk that, given the strength of feeling in Rotherham and elsewhere about those who engage in child sexual exploitation and similar offences, they would be perceived to be perpetrators or likely perpetrators, and pilloried and\/or targeted in their communities if they were known to have been under suspicion in this way.\nThen Cobb J quoted from a leading article in The Times on 19 October 2016 as follows: False rape and abuse accusations can inflict terrible damage on the reputations, prospects and health of those accused.\nFor all the presumption of innocence, mud sticks.\nIn the end Cobb J concluded that the restriction orders against identification of the men should be continued indefinitely.\nHe said at para 46: I have reached the firm conclusion that there is no true public interest in naming the four associated males, against whom, in the end, no findings have been sought or made. [Their] article 8 rights would be in my judgment significantly violated were they to be publicly exposed in the media as having been implicated to a greater or lesser degree, but not proved to be engaged, in this type of offending.\nThese observations seem to us to show great insight and to resonate strongly with the facts of the present case.\nNor should this court spurn the opportunity to derive insight from decisions in other jurisdictions, in particular in the courts of Canada.\nIt is clear that in the law of Canada the principles of free expression and of open justice, enshrined in sections 2(b) and 11(d) of the Canadian Charter of Rights and Freedoms, have the central importance with which they are invested in the law of England and Wales.\nBut the privacy rights of those suspected or accused, but not convicted, of grave crimes are not undermined by any presumption analogous to the controversial presumption articulated by Lord Rodger.\nThe result is that they are afforded significantly greater value and they not infrequently prevail.\nThus in BG v The Queen in Right of The Province of British Columbia (2002) BCSC 1417 the Supreme Court of British Columbia prohibited, until the conclusion of the proceedings, identification of school staff accused of abusing boys in an action brought by them in later life against the school.\nThe judge held at para 38 that protection of innocent people was a social value of superordinate importance which, were they to suffer irreparable harm to their reputation, would justify overriding the general principle of open justice; at para 41 that, accused of being paedophiles, the staff had been put in the category of persons most condemned and reviled by society; and at para 53 that, were they to be publicly identified, they would suffer irreparable harm before they had had any opportunity to rebut the accusations.\nTwo years later, after the action had been dismissed, the Court of Appeal was required to decide whether a prohibition against identifying the complainants (as opposed to the staff) had rightly been discharged.\nIn his judgment at (2004) BCCA 345 para 26, Finch CJ cited substantial authority in support of his proposition that replacing the names of certain parties with initials relates only to a sliver of information and minimally impairs the openness of judicial proceedings.\nIrrespective of whether, by our standards, it goes too far, the proposition articulated by the Chief Justice highlights the chasm, which we would be unwise to ignore, between the approach taken by Tugendhat J to the determination of PNMs application and that which would be taken to the determination of an analogous application in a highly respected fellow jurisdiction.\nIn R v Henry (2009) BCCA 86 the same Court of Appeal had granted permission to Mr Henry to reopen his appeal against conviction for offences of sexual assault.\nHis case was to be that Mr X, who had already been convicted of other assaults, had instead been the perpetrator of the assaults for which he, Mr Henry, had been convicted.\nThe court prohibited public identification of Mr X until determination of the appeal.\nNewbury JA observed at para 17 that the public interest in the openness of trials and in the administration of justice was not diminished by withholding his identification and she concluded as follows: If our society takes seriously the proposition that a person in Mr Xs position is presumed innocent until proven guilty, it seems to me that the deleterious effects, both on his privacy interests and on the administration of justice, of the publication of his name do outweigh the public interest in knowing that fact.\nSo there the presumption of innocence, instead of precipitating a conclusion that the public would generally act by reference to it and that there was thus no need for injunctive intervention, prompted the opposite conclusion, namely that intervention was necessary in order to make the presumption as effective in the street as it would be in the court room.\nAlbeit with natural hesitation, we conclude that there was no basis for the presumption articulated by Lord Rodger in para 66 of the Guardian case and that accordingly Tugendhat J fell into error in dismissing PNMs application on foot of it.\nThe balancing exercise needs to be conducted again.\nThe newspapers strongly argue that the subject matter of the proposed publications extends beyond the arrest of PNM on suspicion of sexual offences against children in that it extends to the part which his name played in criminal proceedings open to the public.\nThere is no doubt that the naming of him in the criminal trial creates a powerful extra dimension to the public interest in the proposed publications.\nBut it is worthwhile to reflect on the circumstances in which he came to be named in the trial.\nFirst, he was named in the course of the successful application which on 25 January 2013 he made to the judge for continuation of the order under section 4(2) of the 1981 Act.\nThen, in the course of the evidence, he was named by a police officer as not having been identified in the course of an identification procedure.\nAfter his name had thus been introduced into the evidence, it was mentioned very occasionally by counsel during the succeeding months of the trial.\nIn assessing the strength of the public interest in unrestricted reporting of what was said at the trial, it is not, so we suggest, irrelevant that PNMs name first figured there in the context of his successful application for a temporary prohibition against identification and thereafter mostly by reason of evidence indicative of his innocence.\nIn Von Hannover v Germany (2004) 40 EHRR 1 the European Court of Human Rights held that, in allowing publication in the press of articles, and in particular of photographs, which described and depicted aspects of the daily life of Princess Caroline of Monaco, Germany had breached her rights under article 8 of the convention.\nIt concluded at para 76: the decisive factor in balancing the protection of private life against freedom of expression should lie in the contribution that the published photos and articles make to a debate of general interest.\nIt is clear in the instant case that they made no such contribution In the present case the newspapers argue that the debate of general interest surrounds the power of the court to postpone publication of a report of part of its proceedings under section 4(2) of the 1981 Act.\nWhat, then, is suggested to be the contribution to that debate which identification of PNM would make? By email dated 8 October 2013, Times Newspapers Ltd offered its answer: We wish to identify your Client in our reporting since this would make the piece considerably more engaging and meaningful for our readers.\nWe would not quarrel with this.\nIt accords with the observations made by Lord Rodger in the Guardian case when in para 63 he answered Romeos question about the significance of a name.\nBut, against the public interest that the proposed piece about section 4(2) would be considerably more engaging and meaningful, this court needed first to recognise the risk to PNM that his identification would generate a widespread belief not only that he was guilty of crimes which understandably attract an extreme degree of public outrage but also that he had so far evaded punishment for them; and then, in consequence, to balance the risk of profound harm to the reputational, social, emotional and even physical aspects of his private and family life, notwithstanding that he is presumed by the law to be innocent and has had no opportunity to address in public the offences of which at one time the police suspected him to be guilty.\nAt the end of this only interim inquiry, our view is that the scales have descended heavily in favour of PNMs rights under article 8; that he was likely to have established his right to an injunction against identification at full trial; and, with great respect to our colleagues, that they are wrong today to be dismissing his appeal.\n","output":"This appeal arises out of the trial of nine men on charges involving organised child sex grooming and child prostitution in the Oxford area as part of Thames Valley Polices Operation Bullfinch.\nOn 14 May 2013 seven of the men were convicted.\nThe appellant is a prominent figure in the Oxford area, who was arrested at about the same time as the nine and was released on bail.\nThe reason for his arrest was that one of the complainants had told the police that she had been abused by a man with the same, very common, first name.\nShe failed, however, to pick him out at an identity parade.\nHe was later told by police that he would be released from arrest without charge, but that the case would be kept under review.\nThat remains the position.\nThe Times and the Oxford Mail wish to publish information identifying the appellant as someone who had been arrested, bailed, his passport impounded and then de arrested in connection with Operation Bullfinch, or as someone suspected by the police of being involved in sexual offences against children.\nMagistrates originally granted an injunction shortly after the appellants arrest, prohibiting the disclosure of any information which might identify the appellant until such time as he was charged with an offence.\nAt trial the judge made an order which ultimately prohibited the publication of any report which referred to evidence which might identify or tend to identify the appellant until a decision had been made whether or not to charge him.\nA significant part of the relevant complainants evidence related to a man who shares the appellants first name.\nThe appellant was also referred to a number of times in the course of the trial: in a police officers evidence of his attendance at an identity parade; in the evidence of at least one of the defendants; and in the closing speeches of prosecuting and defence counsel.\nAfter the police released the appellant from arrest without charge, the newspapers applied to lift the order on the ground that there were now no pending or imminent proceedings against the appellant which might be prejudiced by publication.\nThe judge circulated a draft ruling stating that he proposed to lift the order, but never formally did so.\nThe matter moved to the High Court where the appellant applied for an interim injunction restraining publication, on the basis that it was necessary to protect him against the misuse of private information and the infringement of his right to private and family life protected by article 8 of the European Convention on Human Rights (ECHR).\nThe judge dismissed the application, and the Court of Appeal dismissed the appellants subsequent appeal.\nBy a majority of 5 to 2, the Supreme Court dismisses the appeal.\nLord Sumption gives the judgment, with which Lord Neuberger, Lady Hale, Lord Clarke and Lord Reed agree.\nLord Kerr and Lord Wilson write a joint dissenting judgment.\nWith limited exceptions, the English courts administer judgments in public, at hearings which any member of the public may attend and which the press may report [12].\nThe limits on permissible reporting of public legal proceedings are set by the law of contempt, defamation and the law protecting ECHR rights [17].\nThe present appeal turns on the last category.\nIn Campbell v MGN Ltd, the House of Lords expanded the scope of the equitable action for breach of confidence by absorbing into it the values underlying articles 8 (right to respect for private and family life) and 10 (freedom of expression) of the ECHR.\nThis effectively recognised a qualified common law right of privacy [21].\nThe legal basis of the judges analysis was challenged in two respects.\nFirstly, it was argued that the decision of the Supreme Court in A v British Broadcasting Corporation marked a new approach to the balancing test between competing rights laid out in In re S (Identification: Restrictions on Publication).\nIn A the Court had dismissed the BBCs application to lift an order prohibiting identification of a deportee who had been convicted of child sex offences because it would not only have violated his article 2 and 3 ECHR rights, but would have also subverted the basis of the decision to authorise his deportation.\nThat argument fails in the present case because while A turned on very particular facts, the general approach adopted in Lord Reeds leading judgment was in fact very similar to that of Lord Rodger in In re Guardian News and Media Ltd [28, 33].\nThe second argument was that in adopting Lord Rodgers observations in In re Guardian News and Media Ltd about the publics ability to distinguish between suspicion and guilt, the judge had applied a legal presumption which was not warranted.\nThis also fails: Lord Rodger was not presenting this as a legal presumption to be applied irrespective of the circumstances.\nThis part of the judges reasoning was doing no more than saying that while some members of the public would equate suspicion with guilt, most would not [33].\nThe judge committed no error of law, and was entitled to reach the conclusion that he did [34].\nThe appellant seeks to prohibit the reporting of matters discussed at public trial.\nThese are not matters about which he can have had any reasonable expectation of privacy [34(1)].\nThe impact on the appellants family life is indirect and incidental: neither he nor his family participated in any capacity at trial, and nothing that was said at trial related to his family.\nIt would be incoherent for the law to refuse an injunction to prevent damage to the appellants reputation directly, while granting it to prevent the collateral impact on his family life in the same circumstances [34(3)].\nLord Sumption would not, however, rule out the possibility of a pre emptive injunction in a case where the information was private or there was no sufficiently substantial public interest in publication.\nSuch cases will be rare in relation to the reporting of public court proceedings [34(4)].\nThe public interest in allowing the press reporting of court proceedings extends to the appellants identity.\nThe policy which permits media reporting on judicial proceedings depends on (i) the right of the public to be informed about a significant public act of the state, and (ii) the laws recognition that the way in which the story is presented is a matter of editorial judgment.\nThe appellants identity is not an irrelevant feature of this particular story [34(5)].\nIn their dissenting judgment, Lord Kerr and Lord Wilson consider that the judge had erred in his approach to balancing the strength of the rival considerations [39].\nThey take the view that Lord Rodger was stating a legal presumption that courts should act on the basis that most people believe that someone charged with an offence is innocent until proven guilty [44 5], but that he had offered no evidence or authority to support such a presumption.\nLord Kerr and Lord Wilson conclude that there was no basis for the presumption and, accordingly, the judge erred in dismissing the appellants application because of it.\nTheir Lordships also indicate that, under article 8, it is likely that the appellant would have established his right to an injunction at full trial [59].\n","id":39}
{"input":"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.\nThe statutory framework\nLiability for non domestic rates depends on a property being entered as a hereditament in the rating list.\nThe 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.\nSubject 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.\nIt is then shown in the rating list as a separate hereditament (or hereditaments), and is valued as if it were complete (section 46A(2)).\nOnce 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.\nThe 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.\nParagraph 1(2) contains a similar provision in respect of a new building that has been completed.\nThe 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)).\nIn 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)).\nA 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)).\nWhere an appeal is not withdrawn or dismissed, the completion day shall be such day as the tribunal shall determine (para 4(2)).\nAn 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).\nParagraph 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.\nGeneral provision for the service of statutory notices by local authorities is also made by section 233 of the Local Government Act 1972.\nIn 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.\nAs 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.\nFactual background\nIn January 2009 the respondent (UKI) began the redevelopment of a building at 1 Kingsway to provide 130,000 sq ft of office space.\nIn February 2012 the appellant council informed UKIs agents that it intended to serve a completion notice specifying a completion date of 1 June 2012.\nIt 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.\nAt 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.\nOn 5 March 2012, the council delivered a completion notice by hand to the building, specifying 1 June 2012 as the completion date.\nThe notice was addressed to the Owner, 1 Kingsway, London WC2B 6AN.\nIt was given to a receptionist employed by Eco, who scanned and emailed a copy of the notice to UKI.\nIt was received by UKI not later than 12 March 2012.\nOn 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.\nOn 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.\nThis was met by a proposal on behalf of UKI that the entry be deleted.\nThe proposal was not accepted by the valuation officer and was transmitted to the Valuation Tribunal for determination on appeal.\nThe 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.\nThat 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.\nThe 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.\nAccordingly, 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.\nThe 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.\nService the authorities\nIt 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.\nThere is no serious dispute as to what that entails.\nIn 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.\nTherefore, 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.\nSpecific 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.\nAs 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.\nIn 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.\nOn 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)\nIndirect service\nMore 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.\nOn 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.\nThat concerned a break option in a lease exercisable by either party upon the giving of written notice to the other.\nThe 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.\nIt 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.\nThe 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.\nHe said: I do not think that a requirement to give notice is one that excludes the indirect giving of notice.\nThe question is whether the notice has been given, not whether it has been given directly.\nIf 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)\nElectronic communication\nThe other main issue in this appeal is whether it matters that the notice was received by UKI in electronic form.\nWe were referred to no direct authority on service of a scanned copy of a notice by email.\nHowever, Mr Kokelaar for the council relied on two earlier authorities in which delivery of notices by fax was accepted as valid.\nIn 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.\nIn 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.\nHowever, this submission fails to distinguish between the method of transmission and the result of the transmission by fax.\nWhat 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.\nWhat is required is that a legible copy of the document should be in the possession of the party to be served.\nThis fax achieves.\nI 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).\nI 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.\nI realise that transmission of documents by fax is a relatively recent development.\nIf, 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.\nHe would have preferred to wait for consideration of the question by the Supreme Court Procedure Committee.\nAs 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).\nThe other authority to which we were referred on this point was PNC Telecom plc v Thomas [2003] BCC 202.\nSir 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.\nThe 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.\nSome such modifications had been made, but not in respect of section 368.\nCounsel 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).\nIn 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).\nAmong other authorities he referred to the words of Woolf LJ set out above.\nHe 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.\nHe 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).\nThe 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.\nSection 8 empowers Ministers to make regulations to modify primary and secondary legislation for the purpose of authorising or facilitating the use of electronic communications.\nElectronic communication is widely defined as including any form of communication transmitted while in an electronic form (section 15(1)).\nIn 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).\nThus 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).\nNo such modification has been made in respect of completion notices.\nThe judgments below\nIn 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.\nIn 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.\nThe Upper Tribunal took a different view.\nThe 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.\nReferring 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.\nIn 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).\nHe 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).\nThe Court of Appeals conclusion turned principally on what they understood to be the natural or normal usage of the statutory language.\nAs 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.\nFor 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.\nIn 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)\nShe also attached weight to the statutory context: it is a taxing statute which imposes rating liability on a property owner on an assumed basis.\nThe 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.\nIn those circumstances there are obvious policy considerations which point to a need for certainty and precision as to the date of service (para 49)\nOn 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.\nThus, 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.\nThe 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.\nLikewise, 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.\nGlen 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.\nIn 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.\nBut 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).\nThe submissions in this court\nFor the council, Mr Kokelaar adopts the reasoning of the Upper Tribunal, as supported by the authorities to which I have referred.\nIn 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.\nUnder general principles, a notice (under statute or contract) is regarded as having been served if it has been received by the intended recipient.\nIn 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.\nAs in Townsends Carriers the fact that it passed through the hands of the receptionist did not invalidate service.\nAlternatively, the receptionist must be taken as having been impliedly authorised to pass it on to UKI.\nIn relation to service by email, the reasoning of the authorities on service by fax is indistinguishable.\nThere 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.\nFor UKI Mr Kolinsky QC supports the reasoning of Gloster LJ in the Court of Appeal.\nIn 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.\nWhatever method is adopted, it must be the authority itself (acting through its officers) which effects the service.\nService 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.\nFurther, Mr Kolinsky submits that the involvement of the Eco receptionist broke the necessary chain of causation.\nMr 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.\nIt would have been different if for example the council had used a process server under its contractual control to carry out personal service.\nUse 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.\nHe 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.\nMr Kolinsky also repeats Gloster LJs emphasis on the need for certainty in a taxing statute.\nIn 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.\nThere can be no such certainty if the council has no control over the process by which the notice reaches the recipient.\nOn 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.\nThis carefully drawn scheme would be otiose if there existed some common law rule permitting the use of electronic service as a generality.\nFurther 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.\nDiscussion\nThe method of attempted service adopted by the council was far from ideal.\nAs 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.\nGiven 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.\nWe have had no satisfactory explanation for this failure, nor indeed for the failure to take corrective action when the objection to service was raised.\nNothing 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.\nHowever, the two legal issues on which the judges below disagreed are of some general importance and merit consideration by this court.\nHence the grant of permission to appeal.\nIndirect service\nThe difference between the Upper Tribunal and the Court of Appeal comes down to a narrow point.\nThe 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.\nGloster LJ thought that this approach failed to give effect to the concept of service on the owner by the authority (emphasis added).\nFor my part I would accept that the means by which the notice arrives at its destination is not wholly immaterial.\nIn 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.\nThe 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.\nIn other words there must be a sufficient causal connection between the authoritys actions and the receipt of the notice by the recipient.\nMr 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.\nHe challenged Mr Kokelaars suggestion that the receptionist was given implied authority to serve the notice, at least in any formal sense.\nTo 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.\nAs 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.\nIt was the natural consequence of the councils actions.\nMr 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.\nHowever, causation does not necessarily depend on control.\nMr 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.\nLike 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.\nThis approach to indirect service is consistent with that of Sir Robert Megarry V C in the Townsends Carriers case.\nI 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.\nThere needs to be actual receipt of the notice, and a sufficient causal link with the actions of the council.\nOf 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.\nMore pertinent perhaps is her reference to cases relating to service of notice on solicitors.\nAs 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.\nShe cited Glen International which concerned service of a notice by the landlord in relation to leasehold enfranchisement.\nIt 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.\nIt 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.\nThere 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.\nThat situation is readily distinguishable in my view from the purely mechanical role played by the receptionist in this case.\nA further argument against the Upper Tribunals approach was the potential uncertainty it leaves as to the date of service.\nAs 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.\nThus, 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.\nIn 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)).\nThe 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.\nThe 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.\nIf it chooses a non statutory method it must bear that risk.\nThe 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.\nElectronic communication\nIn 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.\nNotably 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.\nAlthough 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.\nGiven 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.\nMr 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).\nIn my view he was unable to do so.\nNor did he refer to any authority to support such a submission.\nIt is not enough that the new law may overlap in certain respects with the general law.\nThe purpose of the 2000 Act, as stated in its long title, was to make provision to facilitate the use of electronic communications .\nThere is nothing to indicate an intention to cut down the existing law.\nAgainst 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.\nHowever, 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.\nThat purpose is not undermined by a conclusion that under general principles, and on the particular facts of this case, the notice was successfully served.\nConclusion\nFor these reasons, in respectful disagreement with the Court of Appeal, I would allow the appeal and restore the order of the Upper Tribunal.\n","output":"Liability for non domestic rates depends on a property being entered as a hereditament in the rating list.\nSection 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.\nWhere 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.\nIt 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.\nIn January 2009, the respondent (UKI) began the redevelopment of a building at 1 Kingsway.\nIn February 2012, the appellant council informed UKIs agents that it intended to serve a completion notice specifying a completion date of 1 June 2012.\nThe building was being managed by Eco FM (Eco), under a contract with UKI, but Eco had no authority to accept service on UKIs behalf.\nOn 5 March 2012, the council delivered a completion notice by hand to the building, specifying 1 June 2012 as the completion date.\nIt was addressed to Owner, 1 Kingsway, London WC2B 6AN.\nIt 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.\nOn 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.\nOn 7 May 2013, the premises were brought into the rating list with effect from 1 June 2012.\nUKI proposed that the entry be deleted due to invalid service, but this was not accepted by the valuation officer.\nThe Valuation Tribunal allowed the appeal against the completion notice and the inclusion of the premises in the rating list.\nThe Upper Tribunal reversed that decision, but it was re instated by the Court of Appeal.\nThe 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.\nIndirect service\nThe Supreme Court unanimously allows the appeal and restores the order of the Upper Tribunal.\nLord Carnwath gives the lead judgment.\n(i) The means of service prescribed by the statute are not exclusive.\nUnder ordinary principles the real issue is whether the council caused the notice to be received by UKI [36].\nRegarding 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.\nAs the Upper tribunal observed, the Eco receptionist did no more than would reasonably be expected of a responsible employee in that position.\nIt was the natural consequence of the councils actions [37].\nCausation does not depend on control.\nFor 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].\nArguments 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.\nWhere 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.\nIf it chooses a non statutory method, it must bear that risk.\nThe 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.\nThere is no good reason for distinguishing transmission by fax from transmission by email as in this case.\nParliament must be taken to have legislated against that background.\nThe 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].\nThe 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.\nThat 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.\nTherefore, the property was correctly brought into the rating list with effect from 1 June 2012 [46].\n","id":40}
{"input":"The issue raised on this appeal and cross appeal is whether three products manufactured by the Actavis group of companies (Actavis) would infringe a patent whose proprietor is Eli Lilly & Company (Lilly), namely European Patent (UK) No 1 313 508 (the Patent), and its corresponding designations in France, Italy and Spain.\nThis judgment was circulated in draft to the parties legal representatives in the normal way on 5 July 2017, on the basis that it would be handed down a week later.\nOn the following day, just after midday, Actaviss solicitors emailed the Court expressing concern about the potential prejudice which their clients could suffer if they did not know of the outcome of this appeal until 12 July.\nNot least because publication of our decision could have an effect on the share prices of Actavis or Lilly or both of them, the Court proposed to the parties respective solicitors that we should announce our decision at once, while maintaining the intention, in accordance with this Courts usual practice, to hand down the judgment a week after circulation of the draft.\nThis was agreed by both solicitors, and accordingly on 7 July at 11.30 am, the following announcement appeared on the Courts website: The Supreme Court allows Eli Lillys appeal and holds that Actaviss products directly infringe Eli Lillys patent in the United Kingdom, France, Italy and Spain.\nThe Court dismisses Actaviss cross appeal on the basis that if its products did not directly infringe, they would indirectly infringe to the extent held by the Court of Appeal.\nAccordingly, these are technically the reasons for those conclusions.\nThe factual and technical background\nThe factual background\nPemetrexed is a chemical which has been known for some time to have therapeutic effects on cancerous tumours.\nHowever, when used for that purpose on its own, pemetrexed can often have seriously damaging, sometimes even fatal, side effects.\nAccordingly, its use as an anti cancer drug was effectively precluded in practice.\nThe essential disclosure of the Patent was that the damaging side effects could largely be avoided if a compound called pemetrexed disodium was administered together with vitamin B12.\nThis has enabled pemetrexed disodium to be used for treatment in the form of a medicament which includes the vitamin.\nSuch a medicament has been successfully marketed, under the brand name Alimta, by Lilly since 2004.\nThe Patent primarily claims the use of pemetrexed disodium in the manufacture of a medicament for use in combination with vitamin B12 (and, optionally, folic acid) for the treatment of cancer.\nPemetrexed itself is a member of a class of chemicals known as antifolates, and its molecular structure is shown below, with C, N, O and H being respectively the chemical symbols for carbon, nitrogen, oxygen and hydrogen; and the unallocated points on the chains and the rings being carbon.\nThe presence of the two CO2H units results in pemetrexed being an acid (hence it is also known as pemetrexed diacid), or as it is sometimes called, a free acid.\nWhen pemetrexed is dissolved in water, the hydrogens in those two units separate from the rest of the molecule as positively charged entities, protons, and the rest of the molecule becomes a negatively charged entity called an anion.\nThe structure of pemetrexed disodium is similar except that, instead of the two CO2H units, it has two CO2Na units (Na being the symbol for sodium).\nPemetrexed disodium dissolves in water, where the two sodiums separate from the rest of the molecule as positively charged entities called cations, and the rest of the molecule becomes an anion.\nBecause it is the pemetrexed anion which is of interest, the sodium cation is often referred to as a counter ion.\nA substance such as pemetrexed disodium, where the acidic hydrogens have been replaced, is known chemically as a salt.\nAlthough one might have thought that the actual invention should have been characterised as a disclosure that pemetrexed could be administered safely if it was combined in a medicament with vitamin B12, the claimed invention in the Patent is, as mentioned in para 4 above, the manufacture of such a medicament.\nThis formulation was required by the then prevailing law contained in article 52(4) of the European Patent Convention 1973 (EPC 1973), which prohibited from patentability any method of treatment of humans or animals.\nThis led to inventions which otherwise might have been expected to be expressed as being new therapeutic treatments being cast as manufacturing claims.\nSuch claims are known as Swiss form claims, and they were illuminatingly discussed by Kitchin J in Ranbaxy (UK) Ltd v Astrazeneca AB [2011] FSR 45, paras 42 to 60.\nAs he explained, the prohibition was substantially modified in article 53 in the European Patent Convention 2000 (EPC 2000), but that modification had not come into force when Lilly applied for the Patent.\nActaviss proposed products involve pemetrexed compounds being used together with vitamin B12 for cancer treatment.\nHowever, rather than pemetrexed disodium, the active ingredient in those products (the Actavis products) is (a) pemetrexed diacid, (b) pemetrexed ditromethamine, or (c) pemetrexed dipotassium.\nIn other words, rather than including the disodium salt referred to in claim 1 of the Patent, the Actavis products include as the active ingredient (a) pemetrexed itself (ie the free acid), or pemetrexed with the hydrogens on the two CO2H units replaced by (b) tromethamine, or (c) potassium.\nActavis contend that, because they intend to use the Actavis products which do not include pemetrexed disodium, the claims of the Patent, which are expressed as involving the use of pemetrexed disodium, would not be infringed.\nBy contrast, Lilly contends that there would be either direct or indirect infringement of the Patent if Actavis launch any of the Actavis products on the market in the UK or in France, Italy, or Spain.\nThe allegation of direct infringement is based simply on the proposition that marketing or use of the Actavis products would infringe the Patent; indirect infringement is said to arise because pemetrexed disodium is claimed to be involved in the preparation of the Actavis products before they are administered.\nAfter a four day trial, Arnold J decided that none of the Actavis products would directly or indirectly infringe the Patent in the UK or in France, Italy or Spain [2015] Bus LR 154; [2015] RPC 6.\nThe Court of Appeal allowed Lillys appeal to the limited extent of holding that there would be indirect infringement in the four jurisdictions, but they agreed with the Judge that there would be no direct infringement [2015] Bus LR 1068.\nLilly appeals against the rejection of its case that there would be direct infringement, and Actavis cross appeal against the rejection of their case that there would be no indirect infringement.\nAs Floyd LJ explained in the Court of Appeal, the appeal raises the issue of the correct approach under UK law (and the law of the three other states) to the interpretation of patent claims, and in particular the requirement of EPC 2000 to take account of equivalents, and also the extent to which it is permissible to make use of the prosecution history of a patent when determining its scope.\nThe issue on the cross appeal is rather more fact specific, namely whether the application of the law of contributory infringement justifies a finding of indirect infringement in this case.\nIt is appropriate to start by setting out the relevant provisions of the Patent and the knowledge of its assumed addressee, topics on which my account is largely taken from the clear judgment of Floyd LJ in the Court of Appeal.\nI will then turn to the issue of direct infringement, which involves considering the proper approach to that issue generally, and also the relevance of the prosecution history.\nI will then consider the position in the three other states and finally I will address the issue of indirect infringement.\nThe specification and claims in the Patent\nThe Patent is entitled Combination containing an antifolate and methylmalonic acid lowering agent, and it has a claimed priority date of 30 June 2000.\nThe specification begins at para [0001] by stating that [p]otentially, life threatening toxicity remains a major limitation to the optimal administration of antifolates.\nIt then explains at para [0002] that antifolates work by inhibiting anti folate requiring enzymes by competing with reduced folates for binding sites on those enzymes.\nThe specification identifies several antifolate drugs as being in development, including Lillys branded product Alimta.\nThe specification then explains at para [0003] that a limitation to the development of these drugs is that they may be associated with substantial toxicity, including mortality, for some patients.\nThese toxicity effects had led to the abandonment of the development of some antifolates.\nIn para [0004] the specification explains that previous work had been done on the use of folic acid as a treatment for toxicity in this area.\nIt also records work on vitamin B12 as a predictor of cytotoxic events.\nThe specification then states in para [0005]: Surprisingly and unexpectedly, we have now discovered that certain toxic effects such as mortality and non hematologic events, such as skin rashes and fatigue, caused by antifolates, as a class, can be significantly reduced by the presence of a methylmalonic acid lowering agent as vitamin B12, without adverse adversely affecting therapeutic efficacy.\nThe present invention thus generally relates to a use in the manufacture of a medicament for improving the therapeutic utility of antifolate drugs by administering to the host undergoing treatment with a methylmalonic acid lowering agent as vitamin B12.\nPara [0006] of the specification continues: Additionally, we have discovered that the combination of a methylmalonic acid lowering agent as vitamin B12 and folic acid synergistically reduces the toxic events associated with the administration of antifolate drugs.\nAlthough, the treatment and prevention of cardiovascular disease with folic acid in combination with vitamin B12 is known, the use of the combination for the treatment of toxicity associated with the administration of antifolate drugs was unknown heretofore.\nThese early, general statements are made in relation to antifolates as a class.\nHowever, at para [0010] the specification says, in what is known as a consistory clause, that the invention: specifically provides the use of the antifolate pemetrexed disodium in the manufacture of a medicament for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with a methylmalonic acid lowering agent selected from vitamin B12 and pharmaceutical derivatives thereof.\nHaving referred specifically to pemetrexed disodium, the specification reverts to generality at para [0016], where it states: The current invention concerns the discovery that administration of a methylmalonic acid lowering agent such as vitamin B12 or a pharmaceutical derivative thereof, in combination with an antifolate drug such as pemetrexed disodium reduces the toxicity of the said antifolate drug.\nPara [0022] contains a definition: The terms antifolate and antifolate drug generally refer to a chemical compound which inhibits at least one key folate requiring enzyme of the thymidine or purine biosynthetic pathways . by competing with reduced folates for binding sites of these enzymes.\nThe antifolate or antifolate drug for use in this invention is Pemetrexed Disodium (ALIMTA), as manufactured by Eli Lilly & Co.\nThe invention is then illustrated by reference to a number of examples relating to animal and human tests, in which the only antifolate used is pemetrexed disodium.\nAt para [0035] the specification states that animals were treated with pemetrexed disodium (ALIMTA) (100 mg\/kg or 150 mg\/kg) once daily by intraperitoneal injection alone or along with folic acid.\nThe specification also indicates at para [0044] that, in a typical clinical evaluation using cancer patients, the antifolate is to be administered in four doses over a two week period by rapid intravenous injection.\nTurning to the claims, it is only necessary for present purposes to refer to claims 1 and 12, which are in these terms: 1.\nUse of pemetrexed disodium in the manufacture of a medicament for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof [which it then specifies]. 12.\nA product containing pemetrexed disodium, vitamin B12 or a pharmaceutical derivative thereof said pharmaceutical derivative [which it again specifies], and, optionally, a folic binding protein binding agent selected from [a specified group of chemicals including folic acid], as a combined preparation for the simultaneous, separate or sequential use in inhibiting tumour growth.\nThe notional addressee of the Patent\nA patent is interpreted on the basis that it is addressed to a person or group of persons who is or are likely to have a practical interest in the claimed invention, ie through the eyes of a person or persons skilled in the article There is now no challenge to the Judges conclusion that the notional addressee of the Patent would be a group consisting of an oncologist and a chemist, a conclusion upheld by the Court of Appeal.\nThe Judge found that the common general knowledge of an oncologist as at the relevant time, 2001\/2002, included the following: i) Antifolates were used in cancer chemotherapy, but their use caused toxic side effects which it would be desirable to avoid or reduce. ii) Pemetrexed was the subject of clinical trials for use in chemotherapy, and it targeted multiple enzymes and was administered intravenously. iii) The only form of pemetrexed which had been shown to be effective and safe to any extent was pemetrexed disodium, which was manufactured by Lilly under the trade mark Alimta. iv) The characteristics of both vitamin B12 and folic acid were well understood, and it was well known that there were many different safe and effective forms of both available.\nThe Judge also concluded that oncologists did not think about drugs such as pemetrexed in their ionic form, nor did they consider issues regarding the choice of counter ion or the effect, if any, of counter ions on the efficacy, safety or other properties of the drug.\nThis was the province of the chemist and, because the properties of different salt forms and free acids were difficult to predict, a chemist would need to address any such issue by conducting experiments.\nThe Judge made the following findings as to the common general knowledge of a chemist as at 2001\/2002: i) Where a drug is or is based on an acid, different salts of the parent acid can be formed by reacting it with a complementary base or acid.\nThe salt will often have different properties from the parent acid, and different salts will often have different properties from each other.\nSo, salt screening is a routine but important exercise in determining the most suitable form of a drug. ii) The facts set out in paras 5 and 6 above. iii) Solid salts consist of the anions and cations regularly arranged in a fixed lattice structure.\nBecause the cations and anions are present in fixed proportions and in fixed relative positions it is possible to speak meaningfully of the salt as being present in solid form. iv) When a salt is dissolved in water, the ions dissociate, forming free cations and anions in solution.\nAlthough the salt ceases to exist, it is common to refer to a salt solution or a salt in solution. v) The salt form can have a significant impact on the effectiveness of a drug in that it can modify many aspects of the drug. vi) When considering a drug for intravenous chemotherapy, the solubility of the salt form is crucial, as good solubility is an indicator of how likely it is that the drug will be absorbed in the gut. vii) But if a salt is too soluble, it cannot be made in solid form. viii) In general, there can be many dead ends and false leads when attempting to prepare salts of a parent molecule for the first time. ix) One cannot predict (a) whether one could make a particular salt form of a parent molecule, (b) what its properties would be once it was made or (c) whether it would affect the efficacy of the drug.\nThe Judge made specific findings about a chemists state of knowledge about three types of salts and about free acids: i) Sodium was generally the preferred counter ion, and so would be first choice.\nSodium salts generally were not toxic, and would be expected to be reasonably soluble, but they were not always easy to make. ii) Potassium salts were also generally soluble, but there were exceptions.\nThere were concerns about the potential toxicity of such salts, which was particularly significant if large quantities of the drug were involved. iii) There were only a small handful of examples of tromethamine salts being used in 2001.\nIt was known that tromethamine salts might well be too soluble, so one would not be able to make and harvest the solid form.\nIn principle, the acidic parent molecule could be administered in the iv) form of the free acid.\nBut it was often necessary to change from the free acid to a salt form for various reasons including solubility.\nDirect infringement\nIn a nutshell, the rival contentions are these.\nLilly argues that the Actavis products infringe the Patent because they are medicaments to be used as a treatment for cancer consisting of pemetrexed diacid, or a pemetrexed salt, with vitamin B12, which represents the essence of the teaching and claim of the Patent.\nBy contrast, Actavis argues that their products do not infringe because the claims of the Patent are limited to a specific pemetrexed salt, namely pemetrexed disodium, and the Actavis products contain either pemetrexed diacid or different pemetrexed salts.\nThe legislative context\nThe domestic provision governing direct patent infringement is section 60(1) of the Patents Act 1977.\nHowever, section 130(7) declares that certain provisions of that Act, including section 60, are so framed as to have, as nearly as practicable, the same effects in the United Kingdom as the corresponding provisions of the European Patent Convention have in the territories to which [that Convention applies].\nAccordingly, it is common ground that it is appropriate to consider the present case by reference to the EPC 2000.\nArticle 69(1) EPC 2000 provides that [t]he extent of the protection conferred by a European patent shall be determined by the claims, although it is followed by another sentence, namely [n]evertheless, the description and drawings shall be used to interpret the claims.\nAs a matter of ordinary language, it is quite clear that the only type of pemetrexed compound to which the Patents claims expressly extend is pemetrexed disodium.\nOne only needs to read claim 1 and claim 12 to justify that: as a matter of ordinary language, pemetrexed disodium means that particular salt, and no other salt, let alone the free acid.\nIf the first few words of each claim were not enough to make this good, the contrast between the specific reference to pemetrexed disodium and the wider reference to vitamin B12 or a pharmaceutical derivative thereof underlines the point.\nAs Floyd LJ said, this conclusion is also supported by what is said in the specification eg in paras [0010] and [0022] quoted above.\nIt is fair to say that para [0016] could be said to point the other way, but it is far too weak a basis for even arguing that the Patents claims extend, as a matter of language, to pemetrexed compounds other than pemetrexed sodium.\nIn these circumstances, The Protocol on the Interpretation of article 69 as amended in 2000 (the Protocol) is crucial to Lillys contention that the scope of protection afforded by the Patent extends to the Actavis products.\nThe Protocol provides: Article 1 General principles Article 69 should not be interpreted as meaning that the extent of the protection conferred by a European patent is to be understood as that defined by the strict, literal meaning of the wording used in the claims, the description and drawings being employed only for the purpose of resolving an ambiguity found in the claims.\nNor should it be taken to mean that the claims serve only as a guideline and that the actual protection conferred may extend to what, from a consideration of the description and drawings by a person skilled in the art, the patent proprietor has contemplated.\nOn the contrary, it is to be interpreted as defining a position between these extremes which combines a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties.\nArticle 2 Equivalents For the purpose of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims.\nThe original Protocol was agreed in 1973; the amendments made in 2000 effected very slight modifications to what is now article 1, and introduced article 2 for the first time.\nThe drafting of the Protocol bears all the hallmarks of the product of a compromise agreement.\nThis is unsurprising.\nThere is an inevitable conflict between the desirability of giving an inventor an appropriate degree of protection in a particular case and the need for clarity of principle as to the extent of such protection generally; and, of course, there is an unavoidable tension between the appropriateness of giving an inventor a monopoly and the public interest in maximising competition.\nIn addition, the EPC 2000 and the Protocol apply in many different states which have different traditions and approaches in relation to the law of patents.\nIn that connection, as the Supreme Court observed in Schtz (UK) Ltd v Werit (UK) Ltd (Nos 1 to 3) [2013] Bus LR 565; [2013] RPC 16, para 40, complete consistency of approach between different national courts of the EPC states is not a feasible or realistic possibility at the moment, but nonetheless it is sensible for national courts at least to learn from each other and to seek to move towards, rather than away from, each others approaches.\nMore specifically, two points appear to be clear from the Protocol.\nThe first, which can be deduced from article 1, is that the scope of protection afforded to a patentee is not to be limited by the literal meaning of the claims.\nHowever, it is not at all clear how far a court is permitted to move away from the literal meaning.\nI do not consider that the last part of the first sentence of article 1 only enables the description (ie the specification) and the drawings to be taken into account when interpreting the claims, in cases where the claims would otherwise be ambiguous.\nAny doubt about this must be put to rest by the second and third sentences, which make it clear to my mind that that would be too narrow a reading.\nHowever, it is very hard to be confident how far they were intended to permit a court to go beyond the actual language of a claim when interpreting a claim.\nSecondly, it is apparent from article 2 that there is at least potentially a difference between interpreting a claim and the extent of the protection afforded by a claim, and, when considering the extent of such protection, equivalents must be taken into account, but no guidance is given as to precisely what constitutes an equivalent or how equivalents are to be taken into account.\nThe question of how far one can go outside the wording of a claim to enable the patentee to enjoy protection against products or processes which are not within the ambit of the actual language, construed in accordance with ordinary principles of interpretation, has been considered in three significant UK cases and in a number of significant cases decided in the courts of other Convention states.\nThe domestic case law\nThe UK case of Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 was decided under the previous, purely domestic, legislation, the Patents Act 1949.\nAt pp 242 to 243, Lord Diplock deprecated the notion that there were two types of infringement, textual infringement and infringement of the pith and marrow of the invention, and said that there was a single cause of action, which involved asking the question: He continued: whether persons with practical knowledge and experience of the kind of work in which the invention was intended to be used, would understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside the monopoly claimed, even though it could have no material effect upon the way the invention worked.\nThe question, of course, does not arise where the variant would in fact have a material effect upon the way the invention worked.\nNor does it arise unless at the date of publication of the specification it would be obvious to the informed reader that this was so.\nWhere it is not obvious, in the light of then existing knowledge, the reader is entitled to assume that the patentee thought at the time of the specification that he had good reason for limiting his monopoly so strictly and had intended to do so, even though subsequent work by him or others in the field of the invention might show the limitation to have been unnecessary.\nIt is to be answered in the negative only when it would be apparent to any reader skilled in the art that a particular descriptive word or phrase used in a claim cannot have been intended by a patentee, who was also skilled in the art, to exclude minor variants which, to the knowledge of both him and the readers to whom the patent was addressed, could have no material effect upon the way in which the invention worked.\nIn that case, the patent was for a novel type of galvanised steel lintel, which the relevant claim described as including a rear support back plate extending vertically from a horizontal plate.\nThe allegedly infringing article included a rear support member which was inclined between 6 degrees and 8 degrees from the vertical.\nOverruling the Court of Appeals decision that this meant that there was no infringement, Lord Diplock said at p 244, that it would have been: obvious to a builder familiar with ordinary building operations that the description of a lintel in the form of a weight bearing box girder of which the back plate was referred to as extending vertically from one of the two horizontal plates to join the other, could not have been intended to exclude lintels in which the back plate although not positioned at precisely 90 degree to both horizontal plates was close enough to 90 degree to make no material difference to the way the lintel worked when used in building operations.\nHe then added this: No plausible reason has been advanced why any rational patentee should want to place so narrow a limitation on his invention.\nOn the contrary, to do so would render his monopoly for practical purposes worthless, since any imitator could avoid it and take all the benefit of the invention by the simple expedient of positioning the back plate a degree or two from the exact vertical.\nA few years later, Hoffmann J (as he then was) gave judgment in Improver Corpn v Remington Consumer Products Ltd [1990] FSR 181.\nThe case concerned a patent for a depilator, known as the Epilady, which worked by trapping hairs in a rotating coiled helical spring, and the alleged infringement worked in very much the same way save that, instead of a spring, it used a slotted rubber rod.\nThe case had already gone on an interlocutory issue to the Court of Appeal, where it was held that Lord Diplocks approach in Catnic [1982] RPC 183 was consistent with the 1977 Act, the EPC 1973 and the Protocol as it then was see [1989] RPC 69.\nAt [1990] FSR 181, 189, Hoffmann J suggested the following approach, largely based on his reading of the reasoning in Catnic [1982] RPC 183, 242 to 243: If the issue was whether a feature embodied in an alleged infringement which fell outside the primary, literal or a contextual meaning of a descriptive word or phrase in the claim (a variant) was nevertheless within its language as properly interpreted, the court should ask itself the following three questions: (1) Does the variant have a material effect upon the way the invention works? If yes, the variant is outside the claim.\nIf no (2) Would this (ie that the variant had no material effect) have been obvious at the date of publication of the patent to a reader skilled in the art? If no, the variant is outside the claim.\nIf yes (3) Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention? If yes, the variant is outside the claim.\nOn the other hand, a negative answer to the last question would lead to the conclusion that the patentee was intending the word or phrase to have not a literal, but a figurative meaning (the figure being a form of synecdoche or metonymy) denoting a class of things which included the variant and the literal meaning, the latter being perhaps the most perfect, best known or striking example of the class.\nHoffmann J then proceeded to apply those three questions to the facts of the case before him.\nHe held that the first two questions were to be answered in the patentees favour and then turned to the third question.\nOn that question, he held that the patentee failed for the reasons he gave at p 197, namely that [t]he rubber rod is not an approximation to a helical spring, that the spring [cannot] be regarded as an inessential or the change from metal spring to rubber rod as a minor variant, and that it could be appreciated that the patentee would wish to restrict his claim to helical springs as [i]t would be obvious that the rubber had problems of hysteresis which might be very difficult to overcome.\nThereafter, for the next 15 years or so, this three stage approach was almost routinely applied by judges in UK patent infringement cases, where the three Improver questions were subsequently renamed the three Protocol questions see Wheatley v Drillsafe Ltd [2001] RPC 7, para 23.\nLord Hoffmann (as he had by then become) addressed the issue again in his speech in Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2005] RPC 9, where one of the issues was whether a protein manufactured by gene activation infringed a patent relating to production of the same protein by recombinant DNA technology.\nAt paras 27 to 35, Lord Hoffmann discussed the English rules of construction.\nAt paras 30 to 32 he effectively equated Lord Diplocks approach to patents in Catnic [1982] RPC 183, 243 with purposive construction of commercial contracts.\nAt para 34, he said that [t]he question is always what the person skilled in the art would have understood the patentee to be using the language of the claim to mean.\nAnd for this purpose, the language he has chosen is usually of critical importance.\nLord Hoffmann then turned to the doctrine of equivalents, which he explained in para 37 had been developed in the United States courts and allow[ed] the patentee to extend his monopoly beyond his claims, so as to prevent the unscrupulous copyist [from making] unimportant and insubstantial changes and substitutions in the patent which, though adding nothing, would be enough to take the copied matter outside the claim, and hence outside the reach of law, quoting Jackson J in Graver Tank & Manufacturing Co Inc v Linde Air Products Co 339 US 605, 607 (1950).\nLord Hoffmann expressed concern that once the monopoly had been allowed to escape from the terms of the claims, it is not easy to know where its limits should be drawn, and concluded that, rather than adhering to literalism and adopting the doctrine, the solution was to adopt a principle of construction which actually gave effect to what the person skilled in the art would have understood the patentee to be claiming, as Lord Diplock had done in Catnic [1982] RPC 183.\nHe also said that article 69 EPC 2000 firmly shuts the door on any doctrine which extends protection outside the claims (see at paras 39 and 42 to 44).\nHaving considered the issue in the three preceding paragraphs of his speech, at para 48 Lord Hoffmann stated that the approach adopted by Lord Diplock was precisely in accordance with the Protocol, as it was intended to give the patentee the full extent, but no more than the full extent, of the monopoly which a reasonable person skilled in the art, reading the claims in context, would think he was intending to claim.\nHe concluded his discussion by quoting with approval the passages quoted above from Catnic [1983] RPC 183, 243 and Improver [1990] FSR 181, 189, and saying in para 52 that the principle of purposive construction as Lord Diplock and he had explained it, gave effect to the requirements of the Protocol and was the bedrock of patent construction, universally applicable, whereas the Protocol or Improver questions were simply guidelines for applying that principle to equivalents , more useful in some cases than in others.\nThe approach in the courts of other EPC states\nIn Germany, the Bundesgerichtshof has stated that a variant will infringe if (i) it solves the problem underlying the invention with modified but objectively equivalent means, (ii) this would be recognised by the person skilled in the relevant art, and (iii) that person focus[sing] on the essential meaning of the technical teaching protected in the patent would regard the variant as being equivalent to the solution offered by the invention see Case No X ZR 168\/00, 2002 GRUR 519 (Schneidmesser I), para 30. (It is worth noting that in paras 36 to 38 of its judgment in that case, the Bundesgerichtshof expressly considered the approach which had been adopted in Catnic [1982] RPC 183 and Improver [1990] FSR 181.) Judge Meier Beck of the Bundesgerichtshof, writing extra judicially (The Scope of Patent Protection The Test for Determining Equivalence (2005) 36 IIC 339, 342 to 343) has suggested that the second step involves asking whether the person skilled in the art, using his specialist knowledge, [would be] able to find the modified means at the priority date as having the same effect, which he then says has the meaning that no inventive step is needed.\nThat seems to be supported by what was said by the Bundesgerichtshof in Case No X ZR 156\/97, 1999 GRUR 977, (Rumschild), paras II.2(c)(aa) and III.1.\nFurther guidance as to the German approach to equivalents was very recently given by the Munich Oberlandesgericht, upholding the decision of the Landgericht, in Case No 6 U 3039\/16 (Eli Lilly & Co v ratiopharm GmbH), when considering whether pemetrexed ditromethamine infringed the German equivalent of the Patent in this case.\nAt para II.B.3(a), the Oberlandesgericht said that in order for an embodiment that deviates from the literal meaning of the claim to be within the scope of protection, generally three requirements must be met.\nThe first was that the embodiment must solve the problem underlying the invention with means that are indeed modified, but are objectively equivalent.\nThe second requirement was that the expertise of the person skilled in the art must enable him to discover the modified embodiment with its divergent means to be equivalent.\nThirdly, the thought processes that the person skilled in the art has to perform in order to do so must be oriented on the meaning of the teaching protected in the claim.\nIn para II.B.3(b)(aa), the Oberlandesgericht suggested that the decisive factor was what individual effects the features according to the patent provide in order to attain the object underlying the claims and whether these effects are achieved through other means by the [allegedly infringing] embodiment.\nThe court added that the doctrine of equivalence would apply to an embodiment if it not only essentially achieves the entire effect of the invention, but specifically also achieves the effect that the feature, which has not been literally implemented, is supposed to achieve.\nFrench law, according to the expert witnesses in this case, applies the doctrine of equivalents where the variant is different in form but perform[s] the same function as the invention, but only where the function [claimed in the patent] is a new one.\nThis seems to be supported by Azma and Galloux, Droit de la proprit industrielle, 7th ed (2012), which distinguishes at p 442 between two categories of patents.\nThe first category is those which in general terms claim the means that provide for a particular function (moyens gnraux), or as Arnold J put it in para 160 of his judgment, claims which cover general means.\nThe second category is patents which indicate the particular means which infer such function (moyens particuliers), or claims which are narrowly worded to cover specific means as Arnold J expressed it.\nThe doctrine is only normally applicable to the first category of claims.\nArnold J added in para 160 that the categorisation of a patent for this purpose may depend in part on what was known at the priority date see the decisions of the Cour de Cassation in Appeal S 09 15668 Institut Pasteur v Chiron Healthcare, 23 November 2010 and of the Paris Tribunal de Grande Instance in Case 09\/01863 Mundipharma Laboratories GmbH v Sandoz SAS, 2 July 2010.\nAs Arnold J also explained in para 159 of his judgment, there is no need for the claim to be unclear or for it to be widely worded for the doctrine of equivalents to be invoked in the French court.\nThus, in the decision of the Cour de Cassation in Appeal No 06 17915 B2M Industries v Acome, 20 November 2007, the function of the particular integer that was said to be infringed pursuant to an equivalent was held to be novel, and therefore because the means that was said to be equivalent to that integer performed the same function and produced the result sought by the invention the means was equivalent to that integer, to quote from para 161 of Arnold Js judgment.\nIn the Italian courts, the expert witnesses in this case agreed that a variant would be held to infringe if (i) it reproduced the inventive core of the patent and (ii) it was an obvious variation, although (iii) the fact that the variant included some modifications which were not obvious and\/or the fact that the variant does not include some of the elements of the patent claim does not necessarily prevent the variant infringing see per Arnold J at para 171 of his judgment.\nThis analysis is supported by the Corte di Cassazione decisions in Case No 257, Forel SpA v Lisec (13 January 2004), Case No 30234, Barilla GER Fratelli SpA v Pastifico Fazion SpA (30 December 2012) and Case No 622, Entsorga Italia Srl v Ecodeco Srl (11 January 2013).\nAt any rate at local appellate level, Spanish courts appear to have effectively adopted the approach embodied in the three questions suggested by Hoffmann J in Improver [1990] FSR 181 see for instance Laboratorios Cinfa SA v Eli Lilly & Co Ltd (Olanzapine) Court of Appeal of Barcelona judgment no 8\/2008, 17 January 2008.\nFollowing circulation of this judgment in draft, Actavis referred us to a decision of the Spanish Tribunal Supremo Lundbeck v Cinfa, no 223\/2015, 29 April 2015.\nIn the closely reasoned section ELEVEN of its judgment, the Tribunal Supremo (i) recorded the fact that none of the parties challenged the approach of the Court below which applied the three Improver questions (para 5), (ii) stated that the real issue in the case centred on the second question (para 6), (iii) cast some doubt on the applicability of the Improver questions in Spanish law (para 10), (iv) disapproved the notion that the test for obviousness in patentability is necessarily applicable to the second Improver question (paras 10 and 14), (v) disapproved the notion that, for the second Improver question to be answered yes, the skilled person must be absolutely certain that the variant would work successfully in resolving the technical problem faced by the patented invention (paras 11 and 12), (vi) preferred instead, a test of easy to see or comprehend and a degree of predictability (paras 11 and 18), which involves a high probability, rather than a reasonable expectation that the variant would work (paras 15 and 18), and (vii) concluded on this basis that the Court of Appeal was right to rule that the allegedly infringing products in that case did not infringe (paras 18 and 19).\nAs for the Netherlands, helpful guidance may be found in a lecture given in 2016 by Judge Kalden, the head of the IP division in the Court of Appeal in The Hague Article 69 EPC the Scylla and Charybdis of the European Patent Convention Which route did the Dutch courts take? (2016 Symposium German Bundespatentgericht).\nShe said that, although there have been subtle changes of emphasis in its decisions, the Supreme Court tends to focus on the inventive concept in order to prevent a too literal interpretation of the claims, which could do injustice to fair protection for the patentee (or lead to an unnecessary broad interpretation).\nShe also explained that the doctrine of equivalents applies if (i) the variant is foreseeable at the priority date, (ii) the inventive concept is sufficiently broad to cover [the] variant, (iii) the variant makes use of and thus benefits from the inventive concept, and (iv) reasonable legal certainty [is not thereby] unduly compromised.\nShe added that, despite the first condition: Variants that are not foreseeable at the priority date may well, due to later developments, become an obvious variant at a later date.\nThis may happen in case of a pioneer invention, where at the priority date the full breadth of the possible applications could or has not been fully recognised and therefore was not sufficiently taken into account when drafting a claim.\nAnother possibility is that a new technique becomes available after the patent was granted, which makes available an obvious variant.\nIt would be harsh and contrary to fair protection for the patentee to deny him the right to attack those, again provided such variant falls within the inventive concept and reasonable legal certainty is taken into account.\nSo infringement by equivalence is not limited to foreseeable variants only.\nIt may be of some significance that the product which Hoffmann J concluded in Improver [1990] FSR 181 was non infringing was held by the German, Italian and Dutch courts to infringe.\nOf course, the fact that courts of two states reach different conclusions on the same issue does not of itself mean that there is a difference in the law of those states, let alone that one court is wrong and the other right: the evidence may be different, and there may be issues of judgment on which reasonable judges could differ.\nHowever, consideration of the judgments in those three other courts does suggest a difference of approach.\nThus, in Germany, the Dsseldorf Oberlandesgericht based its conclusion on the propositions that a person skilled in the art will not interpret the coil spring as a spring, but as an elastic body with gaps . as it is obvious that the helical spring is not used as a spring per se, and that its only essential function, which was shared by the allegedly infringing products slitted rubber rod, was that it could enter between adjacent areas of the body (walls), and that the walls must approach it up to clamping it see Epilady Germany II (1993) 24 IIC 838.\nIn Italy, the Milan District Court held that there was infringement because the slitted rubber rod had structural characteristics which enabled it to perform the same function in the same way as the coiled spring referred to in the patent in suit see Epilady Italy (1992) Giur Ann Dir Ind, Case No 2823.\nIn the Netherlands, the Gerechtshof upheld the first instance decision that the allegedly infringing device embodies an application of the patented invention, on the grounds that the hair engaging component [ie the slitted rubber rod] of the device is a mechanical equivalent of the helical spring specified in the patent claims, and the rod was not state of the art in the field of depilatory devices Epilady Netherlands III (1993) 24 IIC 832, paras 9 and 11.\nThe proper approach to infringement claims\nAny patent system must strike a balance between the two competing factors referred to at the end of article 1 of the Protocol, namely a fair protection for the patent proprietor [and] a reasonable degree of legal certainty for third parties.\nThe balance cannot be struck on an ad hoc case by case basis without any guiding principles, as that would mean that there was no legal certainty.\nOn the other hand, striking the balance by adopting a normal approach to interpretation would risk depriving patentees of a proper measure of protection; as explained in paras 37 to 39 and 52 above, that is clear from the approach of all the courts which considered the Epilady patent, where it could not seriously have been suggested that, as a matter of language, a slotted rubber rod falls within the expression helical metal spring, even if one was construing those words in the context of the claim in the patent in suit.\nBut, if one departs from ordinary language, it is necessary to have some guidance or to draw some lines, as Lord Hoffmann implied in Kirin Amgen [2005] RPC 9, para 37.\nThat is why he promulgated his three questions in Improver [1990] FSR 181, 189.\nBy means of an extended version of the ordinary concept of construction or interpretation, Hoffmann J explained how our domestic law, as laid down in Catnic [1982] RPC 183, implements article 2 of the Protocol and thus, as I see it, how it gives effect to the doctrine of equivalents.\nThat approach was (perhaps unsurprisingly) then adopted in Kirin Amgen [2005] RPC 9.\nIn my view, notwithstanding what Lord Diplock said in Catnic [1982] RPC 183, 242, a problem of infringement is best approached by addressing two issues, each of which is to be considered through the eyes of the notional addressee of the patent in suit, ie the person skilled in the relevant article Those issues are: (i) does the variant infringe any of the claims as a matter of normal interpretation; and, if not, (ii) does the variant nonetheless infringe because it varies from the invention in a way or ways which is or are immaterial? If the answer to either issue is yes, there is an infringement; otherwise, there is not.\nSuch an approach complies with article 2 of the Protocol, as issue (ii) squarely raises the principle of equivalents, but limits its ambit to those variants which contain immaterial variations from the invention.\nIt is also apparent that the two issues comply with article 1 of the Protocol in that they involve balancing the competing interests of the patentee and of clarity, just as much as they seek to balance the encouragement of inventions and their disclosure with the need for a competitive market.\nIn my view, issue (i) self evidently raises a question of interpretation, whereas issue (ii) raises a question which would normally have to be answered by reference to the facts and expert evidence.\nIn Kirin Amgen [2005] RPC 9, Lord Hoffmann, following his approach in Improver [1990] FSR 181 (which itself had followed Lord Diplocks analysis in Catnic [1982] RPC 183) effectively conflated the two issues, and indicated that the conflated issue involved a question of interpretation.\nI have considerable difficulties with the notion that there is a single conflated, or compound, issue, and, even if that notion is correct, that that issue raises a question of interpretation.\nIndeed, in my view, to characterise the issue as a single question of interpretation is wrong in principle, and unsurprisingly, therefore, can lead to error.\nWhile normal principles of interpretation could, I think, accommodate the notion that vertically extended to an item which was not at precisely 90 to another item, I do not see how such principles could possibly lead to the conclusion that a slotted rubber rod was within the expression helical metal spring.\nAs Hoffmann J said in Improver [1990] FSR 181, 197, the angle of the support member [in the allegedly infringing product in Catnic [1982] RPC 183] can be regarded as an approximation to the vertical, but [t]he rubber rod is not an approximation to a helical spring.\nThe problem with treating the issue as one of normal interpretation is thus that that point alone may be thought to have been sufficient to put an end to the patentees infringement argument on facts such as those in Improver [1990] FSR 181, and there would seem to have been little purpose in going through the three questions in that case.\nI had wondered whether the question whether issue (ii) truly involves a question of interpretation raised what was merely an arid issue of categorisation.\nHowever, I have concluded that that nettle needs to be grasped, because, so long as the issue is treated as one of interpretation, it will lead to a risk of wrong results in patent infringement cases and it will also lead to a risk of confusing the law relating to the interpretation of documents.\nIn my opinion, issue (ii) involves not merely identifying what the words of a claim would mean in their context to the notional addressee, but also considering the extent if any to which the scope of protection afforded by the claim should extend beyond that meaning.\nAs Sir Hugh Laddie wrote in his instructive article Kirin Amgen The End of Equivalents in England? (2009) 40 IIC 3, para 68, [t]he Protocol is not concerned with the rules of construction of claims but with determining the scope of protection.\nI might add that the notion of a product or process which infringes despite an immaterial variation from the invention as claimed is by no means new to domestic patent law.\nThat point is convincingly demonstrated by Sir Hugh in his article at paras 33 to 39.\nThus, in Walton v Potter & Horsfall (1843) 1 WPC 585, Tindal CJ told the jury that they had to decide whether the defendants product was perfectly distinct from the patented product, or whether it varied only in certain circumstances, which are not material to the principle and substance of the invention.\nAnd Lord Cairns LC in Clark v Adie (1877) 2 App Cas 315, 320, referred to the alleged infringer having really taken and adopted the substance of the instrument patented, and having taken in substance the pith and marrow of the invention.\nThe patents in these cases included relatively primitive forms of claim, but that does not undermine the fact that our domestic law has long recognised that an immaterial variation does not get an infringer off the hook.\nParticularly in the light of what he said in Catnic [1983] RPC 183, 242, it is worth mentioning that Lord Diplock himself in Beecham Group Ltd v Bristol Laboratories Ltd [1978] RPC 153, 200 rejected a submission that [t]he increasing particularity with which claims are drafted has made the doctrine [of pith and marrow] obsolete, and said that the doctrine still remains a part of patent law.\nTurning to the two issues identified in para 54 above, issue (i), as already mentioned, involves solving a problem of interpretation, which is familiar to all lawyers concerned with construing documents.\nWhile the answer in a particular case is by no means always easy to work out, the applicable principles are tolerably clear, and were recently affirmed by Lord Hodge in Wood v Capita Insurance Services Ltd [2017] 2 WLR 1095, paras 8 to 15.\nIn the present case, there is no doubt that, according to normal principles of interpreting documents, the Actavis products do not infringe the Patent, as in no sensible way can pemetrexed free acid, pemetrexed ditromethamine, or pemetrexed dipotassium mean, ie be said to fall within the expression, pemetrexed disodium in claim 1 of the Patent, any more than a slotted rubber rod can be said to be within the expression a helical metal spring in the claim in the Improver patent.\nAccording to normal principles of interpreting documents, then, this would be the end of the matter.\nHowever, the second issue poses more difficulties of principle: what is it that makes a variation immaterial? In that connection, I consider that Hoffmann Js three questions in Improver [1990] FSR 181 provide helpful assistance, a view supported by the fact explained in paras 44 to 52 above that similar but not identical tests have been adopted in other EPC jurisdictions.\nHowever, each of the three questions requires some exegesis, and, particularly the second question, some reformulation.\nThe first Improver question, which asks whether the variant has a material effect on the way in which the invention works, seems generally satisfactory.\nIt is a question which was framed in the context of a mechanical patent, and is not wholly aptly expressed for every type of case.\nHowever, in practice, the question as framed by Hoffmann J, with its emphasis on how the invention works, should correctly involve the court focussing on the the problem underlying the invention, the inventive core, or the inventive concept as it has been variously termed in other jurisdictions.\nIn effect, the question is whether the variant achieves the same result in substantially the same way as the invention.\nIf the answer to that question is no, then it would plainly be inappropriate to conclude that it could infringe.\nIf, by contrast, the answer is yes, then it provides a sound initial basis for concluding that the variant may infringe, but the answer should not be the end of the matter.\nThe second Improver question is more problematic.\nIn my view, it imposes too high a burden on the patentee to ask whether it would have been obvious to the notional addressee that the variant would have no material effect on the way in which the invention works, given that it requires the addressee to figure out for himself whether the variant would work.\nThe facts of the present case serve to make that proposition good.\nAs Floyd LJ explained in para 65 of his judgment below, because a chemist would not be able to predict the effect of [a] substitution [for the sodium counter ion] without testing at least the solubility of the [active ingredient in the Actavis products], it followed that predicting in advance whether any particular counter ion would work was not possible, and therefore that the second Improver test could not be answered yes.\nHowever, as mentioned in para 25(i) above, salt screening is a routine exercise in determining suitability, and as Floyd LJ said, the chemist would be reasonably confident that he would come up with a substitute for the sodium counter ion.\nIn those circumstances, given that the inventive concept of the patent is the manufacture of a medicament which enables the pemetrexed anion to be administered with vitamin B12, it appears to me that application of the second Improver question fails to accord a fair protection for the patent proprietor as required by article 1 of the Protocol.\nIn my opinion, the second question is better expressed as asking whether, on being told what the variant does, the notional addressee would consider it obvious that it achieved substantially the same result in substantially the same way as the invention.\nIn other words, it seems to me that the second Improver question should be asked on the assumption that the notional addressee knows that the variant works to the extent that it actually does work.\nThat, I think, would be a fair basis on which to proceed in terms of balancing the factors identified in article 1 of the Protocol, and it is, I think, consistent with the approach of the German, Italian and Dutch courts.\nIt is also consistent with the fact that the notional addressee is told (in the patent itself) what the invention does.\nThis reformulated second question should also apply to variants which rely on, or are based on, developments which have occurred since the priority date, even though the notional addressee is treated as considering the second question as at the priority date.\nSuch an approach is supported by the desirability of both consistency of approach and pragmatic justice.\nIt seems right in principle to have the same question, including the same assumption (ie that the variant works) for all cases.\nAs to pragmatism, the point is touched on by Judge Kalden in the passage quoted at the end of para 51 above: while the notional addressee may answer the reformulated second question affirmatively even where the variant was unforeseeable at the priority date, he is less likely to do so than in relation to a variant which was unforeseeable as at that date.\nThe second test applied by the German courts, as I understand it, at least sometimes appears to require the variation not to be inventive, but I am not sure that that is an appropriate requirement, although it is unnecessary to decide that point on this appeal.\nIf the variation represents an inventive step, while it may render it less likely that the patentee will succeed on the second reformulated question, I find it hard to see why that alone should prevent the resultant variant from infringing the original invention.\nIt may entitle the infringer to a new patent, in the same way as the invention of a novel use for a patented invention can itself be patented, but like such a novel use I see no reason why the variant should not infringe the original patent.\nHaving said that, it should be added that the German version of the second test will, I suspect, usually produce the same result as the reformulated second question.\nThe third Improver question as expressed by Hoffmann J is whether the notional addressee would have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention.\nThat is in my view an acceptable test, provided that it is properly applied.\nIn that connection, I would make four points.\nFirst, although the language of the claim is important, consideration of the third question certainly does not exclude the specification of the patent and all the knowledge and expertise which the notional addressee is assumed to have.\nSecondly, the fact that the language of the claim does not on any sensible reading cover the variant is certainly not enough to justify holding that the patentee does not satisfy the third question.\nHence, the fact that the rubber rod in Improver [1990] FSR 181 could not possibly be said to be an approximation to a helical spring (to quote from p 197) was not the end of the infringement issue even in Hoffmann Js view: indeed, as I have already pointed out, it was because the rubber rod could not possibly be said to be a helical spring that the allegedly infringing product was a variant and the patentee needed to invoke the three Improver questions.\nThirdly, when considering the third question, it is appropriate to ask whether the component at issue is an essential part of the invention, but that is not the same thing as asking if it is an essential part of the overall product or process of which the inventive concept is part.\nSo, in Improver [1990] FSR 181, 197, Hoffmann J may have been (and I mean may have been) wrong to reject the notion that the spring could be regarded as an inessential: while it was undoubtedly essential to the functioning of the Epilady, the correct question was whether the spring would have been regarded by the addressee as essential to the inventive concept, or inventive core, of the patent in suit.\nFourthly, when one is considering a variant which would have been obvious at the date of infringement rather than at the priority date, it is, as explained in para 63 above, necessary to imbue the notional addressee with rather more information than he might have had at the priority date.\nIn these circumstances, given the weight that has been given by courts in this jurisdiction (and indeed in some other jurisdictions) to the three Improver questions, I think it must be right for this court to express in our own words our reformulated version of those questions.\nIn doing so, it is right to emphasise, as Lord Hoffmann did in Kirin Amgen [2005] RPC 9, para 52, that these questions are guidelines, not strict rules (as indeed the Oberlandesgericht indicated in Case No 6 U 3039\/16, when saying that it was generally true that three requirements must be met).\nWhile the language of some or all of the questions may sometimes have to be adapted to apply more aptly to the specific facts of a particular case, the three reformulated questions are as follows: i) Notwithstanding that it is not within the literal meaning of the relevant claim(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention, ie the inventive concept revealed by the patent? ii) Would it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention? iii) Would such a reader of the patent have concluded that the patentee nonetheless intended that strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention? In order to establish infringement in a case where there is no literal infringement, a patentee would have to establish that the answer to the first two questions was yes and that the answer to the third question was no.\nProvisional conclusion on direct infringement in the UK\nGiven that the Actavis products do not infringe on the basis of a normal interpretation of claim 1 of the Patent, it is necessary to consider whether they represent an immaterial variation on that claim.\nI propose to address that issue initially disregarding the prosecution history, and having reached a provisional conclusion, I will then address that history and its effect on the provisional conclusion.\nIn my view, application in the present case of the three questions just identified results in the conclusion that the Actavis products infringe.\nSo far as the first question is concerned, there can be no doubt but that those products work in the same way as the invention: they all ultimately involve a medicament containing the pemetrexed anion and vitamin B12.\nThus, they achieve substantially the same result in substantially the same way as the invention.\nIndeed, as in the Court of Appeal, Actavis realistically accept that the first question is to be answered yes.\nAs to the second question, it seems to me clear that the notional addressee of the Patent would appreciate (and would have appreciated as at the priority date) that each of the Actavis products would work in precisely the same way as pemetrexed disodium when included in a medicament with vitamin B12.\nWhen it comes to different versions of pemetrexed medicaments, it is clear that the use of a free acid, and of ditromethamine and dipotassium salts was in each case well established as at the priority date see para 26(ii) to (iv) above.\nFurthermore, the notional addressee of the Patent would regard investigating whether pemetrexed free acid, pemetrexed ditromethamine or pemetrexed dipotassium worked as a purely routine exercise see para 25(i) above.\nThe reason why I differ from the Court of Appeal and Arnold J on this second question is that, in accordance with the second question as formulated in Improver [1990] FSR 181, 189, they considered that the notional addressee should not be treated as knowing that the Actavis products did in fact work at all, whereas, as explained above, that seems to me to involve too strict a test.\nTurning to the third question, the Court of Appeal considered that the notional addressee would understand that the patent was clearly limited to the disodium salt, and did not extend to the diacid, or the dipotassium or ditromethamine salts.\nThey based this conclusion on the fact that the specification of the Patent contains a number of passages (eg in Para [0022] of the specification, quoted in para 19 above) which refer to anti folates and the like and other passages which refer to pemetrexed disodium, which is a highly specific chemical compound, and the fact that the claim is limited to pemetrexed disodium would therefore lead the notional addressee to conclude that the claim is indeed intended to be so limited (see paras 71 and 72 of Floyd LJs judgment).\nIn my opinion, the Court of Appeal adopted an approach which places too much weight on the words of the claim and not enough weight on article 2 of the Protocol (and it is only right to add that, in doing so, they were, like Arnold J at first instance, following Lord Hoffmanns guidance in Kirin Amgen [2005] RPC 9).\nThus, when considering the third test, Floyd LJ made the point at para 72(ii) of his judgment that there is no obvious leeway as a matter of language for giving it a broad as opposed to a narrow construction.\nThat seems to me to demonstrate the risk of treating the issue raised by the third question as being one of normal interpretation. (Another way of looking at the point is, in the language of Sir Hugh Laddie, that it involves wrongly conflating the issue of interpretation with the issue of scope of protection.) As already explained, if it was a decisive point it would make a nonsense of asking the three questions: if one cannot depart from the language of the claim when considering those questions, what is the point of the questions in the first place?\nMore specifically, I do not agree with the Court of Appeals view that, because the specification referred to anti folates and anti folate drugs, the fact that the claims were limited to pemetrexed disodium means that the drafter of the Patent would have been understood to intend that the other pemetrexed compounds would not infringe.\nAs Mr Mitcheson QC contended in his well argued case, the point is neutral because there is no reference to pemetrexed salts as a class in the specification, and the contrast therefore does not help on the question whether pemetrexed salts other than pemetrexed disodium were intended to be excluded.\nFurther, contrary to the Court of Appeals reasoning, I would have thought that if the specification had not referred to anti folates but had only referred to pemetrexed disodium, that would have been a more powerful indication that the patentee was intending to limit himself to pemetrexed disodium.\nThe very fact that the specification teaches that there are other anti folate drugs which have a similar effect to pemetrexed disodium (coupled with the fact that it was generally known that cations other than sodium could be successfully used with anti folates) highlights a point similar to that made by Lord Diplock in Catnic [1982] RPC 183, 244, namely No plausible reason has been advanced why any rational patentee should want to place so narrow a limitation on his invention as to limit the scope of protection afforded by the Patent to pemetrexed disodium a telling but not always conclusive point.\nAdditionally, there is no teaching in the specification which relates to the relevance or importance of the sodium cation.\nLooking at matters more broadly, the addressee of the Patent would, as I see it, understand that the reason why the claims were limited to the disodium salt was because that was the only pemetrexed salt on which the experiments described in the specification had been carried out.\nHowever, it does not follow that the patentee did not intend any other pemetrexed salts to infringe: the suggestion confuses the disclosure of the specification of a patent with the scope of protection afforded by its claims.\nParticularly given the facts set out in para 25 above, it seems to me very unlikely that the notional addressee would have concluded that the patentee could have intended to exclude any pemetrexed salts other than pemetrexed disodium, or indeed pemetrexed free acid, from the scope of protection.\nAccordingly, I would conclude that, subject to considering the prosecution history, the Actavis products infringe claim 1 of the Patent.\nThe effect of the prosecution history\nThe application for the patent was filed at the EPO in June 2001, and it contained claims directed to a method of treatment, claims in Swiss form, and purpose related product claims.\nIn January 2003, Dr Burnside, Lillys patent attorney, filed a revised set of claims which omitted the method of treatment claims.\nClaims 1 and 2 were as follows: 1.\nUse of a methylmalonic acid lowering agent in the preparation of a medicament useful in lowering the mammalian toxicity associated with an antifolate, and the medicament is administered in combination with an antifolate. 2.\nUse of a methylmalonic acid lowering agent in the preparation of a medicament useful in lowering the mammalian toxicity associated with an antifolate, and the medicament is administered in combination with an antifolate and a FBP binding agent.\nClaim 10 was a dependent claim wherein the antifolate is ALIMTA.\nAs Floyd LJ said, these claims are in the reverse order from the claims ultimately granted (as they start with the use of the methylmalonic lowering agent rather than pemetrexed disodium), but nothing hangs on that.\nThe essential point is that these claims were entirely general as to the identity of the antifolate.\nIn March 2004, the EPO examiner wrote raising various objections including some under articles 83 and 84 EPC 2000 (disclosure and clarity).\nThe clarity and lack of disclosure objections were that the claims related to too many possible combinations of compounds by using general expressions such as antifolate, methylmalonic acid lowering agent and FBP binding agent.\nMoreover, the examiner was concerned that the claims covered all compounds having these characteristics or properties, whereas the application provided support and disclosure for only a very limited number of such compounds.\nDr Burnside replied in a letter of December 2004, under cover of which he filed new claims 1 and 2, this time starting with the use of the antifolate, now limited to pemetrexed in these terms: 1.\nUse of pemetrexed in the manufacture of a medicament for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof. 2.\nUse according to claim 1 wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof and a folic binding protein binding agent [which was then defined].\nIn support of these new claims, Dr Burnside said that, in order to expedite the application proceeding to grant, Lilly had elected to amend the claims so as to reflect more closely the specific examples provided.\nHowever, he added, the amendments were made without prejudice to Lillys right to obtain protection for other patentable subject matter in one or more divisional applications.\nNotwithstanding these amendments, in May 2005 the EPO examiner formally objected to the admissibility of the new claims.\nHe contended that the amendments introduced subject matter beyond the content of the originally filed documents, contrary to article 123(2) EPC 2000.\nThus, he said, the inclusion in claim 1 of use of pemetrexed . and similar provisions in other claims did not find any basis in the application documents as filed.\nAccording to the examiner, pemetrexed was a distinct compound from pemetrexed disodium. (This is supported by the Chemical Abstracts Service Registry, where the pemetrexed is recorded as being the free diacid.) The patent does contain one mention of the term pemetrexed at para [0004] of the specification, followed by a Lilly reference number which shows it to be pemetrexed disodium.\nIt was therefore, at best, uncertain as to what the term pemetrexed on its own was intended to refer.\nDr Burnside replied in March 2006 by a letter under cover of which he filed new claims, which this time were limited to pemetrexed disodium, and are now embodied in the claims of the Patent as set out in para 21 above.\nDr Burnside said: The Claims have been amended to refer to the preferred embodiment, the use of pemetrexed disodium (ALIMTA) as manufactured by Eli Lilly and Company, as the antifolate drug.\nThe Claims have also been amended to incorporate the list of vitamin B12 derivatives set out on p 7 lines 6 7 of the application as filed.\nThe EPO examiner accepted the claims in this form, and the application proceeded to grant.\nActavis contends that the prosecution history, as summarised in paras 76 to 80 above, makes it clear that the claims of the Patent should be interpreted as being limited to pemetrexed disodium not only as a matter of language, but in the sense that the use of any other pemetrexed compound, including other pemetrexed salts and the free acid, could not infringe.\nThis contention gives rise to two issues.\nThe first is one of relatively general application, namely whether and if so when it is permissible to have recourse to the prosecution history of a patent when considering whether a variant infringes that patent.\nThe second issue is whether the prosecution history of the Patent in this case alters the provisional conclusion reached in para 75 above.\nSo far as the first issue is concerned, Lord Hoffmann said in Kirin Amgen [2005] RPC 9, para 35: The courts of the United Kingdom, the Netherlands and Germany certainly discourage, if they do not actually prohibit, use of the patent office file in aid of construction.\nThere are good reasons: the meaning of the patent should not change according to whether or not the person skilled in the art has access to the file and in any case life is too short for the limited assistance which it can provide.\nIt is however frequently impossible to know without access, not merely to the file but to the private thoughts of the patentee and his advisors as well, what the reason was for some apparently inexplicable limitation in the extent of the monopoly claimed.\nIn the absence of good reason to the contrary, it would be wrong to depart from what was said by the House of Lords.\nIt is said by Actavis that there is good reason to depart from what Lord Hoffmann said on the ground that he was wrong in his description of the German and Dutch approaches to this issue, and that anyway he failed to have regard to the jurisprudence of other European courts.\nIn my view, Lord Hoffmann was right about the approach of the German and Dutch courts to this issue.\nThus, the Bundesgerichtshof, in a decision involving the German equivalent of the instant Patent, Case No X ZR 29\/15 (Eli Lilly v Actavis Group PTC), paras 39 40, stated that it is permissible to use statements made by the applicant [and the examiner] during the grant procedure as an indication of how the person skilled in the art understands the subject matter of the patent but such indications cannot be readily used as the sole basis for construction.\nAnd in Ciba Geigy AG v Ot Optics BV (1995) 28 IIC 748, the Dutch Supreme Court said that a court will only be justified in using clarifying information from the public part of the granting file, when it holds that even after the average person skilled in the art has considered the description and the drawings, it is still open to question how the contents of the claims must be interpreted.\nIt is argued by Actavis that this limited approach to the circumstances in which reference can be made to the prosecution file may be more restrictive than the approach adopted in France, Italy, and Spain, as analysed by Arnold J.\nThus, he said in para 162 of his judgment, that the Cour dAppel observed in Case No 08\/00882, Hewlett Packard GmbH v Agilent Technologies Deutschland GmbH (27 January 2010) that the patentee who amended its clauses to give them a limited scope may not, without putting the safety of third parties at risk, claim that the amendments were not necessary, nor that the limited claims have the same scope as the broader claims.\nHowever, the court in that case had already decided on the natural meaning of the patent, and the contents of the file were merely being invoked to confirm the decision.\nThe position in Italy, according to Arnold J in para 174 of his judgment, is that there is no doctrine of prosecution history estoppel and there is no clear rule as to the relevance, if any, of the prosecution history as an aid to the interpretation of claims.\nIn Spain there is a doctrine of actos propios, which as Arnold J explained in para 184, is the doctrine of ones own acts, but it only justifies relying on the prosecution file in relation to statements which are unequivocal, clear, precise, conclusive, undoubted and [do] not reflect any kind of ambiguity.\nWhile the French courts appear to be more ready to refer to the prosecution file on issues of interpretation or scope than the German or Dutch courts, it is unclear how much, if any, difference there is in outcome.\nThe position in relation to the Italian courts is more unclear, and it may well be that the effect of the approach of the Spanish courts is the same in outcome as that of the German and Dutch courts.\nIn those circumstances, particularly as it may be inevitable that there is a degree of difference in the approach of different national courts on such an issue, there is nothing in the French, Italian, or Spanish jurisprudence which causes me to depart from the conclusion expressed by Lord Hoffmann.\nIn my judgment, it is appropriate for the UK courts to adopt a sceptical, but not absolutist, attitude to a suggestion that the contents of the prosecution file of a patent should be referred to when considering a question of interpretation or infringement, along substantially the same lines as the German and Dutch courts.\nIt is tempting to exclude the file on the basis that anyone concerned about, or affected by, a patent should be entitled to rely on its contents without searching other records such as the prosecution file, as a matter of both principle and practicality.\nHowever, given that the contents of the file are publicly available (by virtue of article 128 EPC 2000) and (at least according to what we were told) are unlikely to be extensive, there will be occasions when justice may fairly be said to require reference to be made to the contents of the file.\nHowever, not least in the light of the wording of article 69 EPC 2000, which is discussed above, the circumstances in which a court can rely on the prosecution history to determine the extent of protection or scope of a patent must be limited.\nWhile it would be arrogant to exclude the existence of any other circumstances, my current view is that reference to the file would only be appropriate where (i) the point at issue is truly unclear if one confines oneself to the specification and claims of the patent, and the contents of the file unambiguously resolve the point, or (ii) it would be contrary to the public interest for the contents of the file to be ignored.\nThe first type of circumstance is, I hope, self explanatory; the second would be exemplified by a case where the patentee had made it clear to the EPO that he was not seeking to contend that his patent, if granted, would extend its scope to the sort of variant which he now claims infringes.\nTurning to the second issue, I do not consider that the contents of the prosecution file in this case justify departing from the provisional conclusion expressed in para 75 above.\nIt seems to me clear that the reason why the examiner considered that the claims in the patent should be limited to pemetrexed disodium was because the teaching in the specification did not expressly extend to any other anti folates.\nIt is unnecessary to decide the issue, but, at least as at present advised, I am inclined to think that the examiner was wrong in taking that view.\nIndeed, in the course of his well presented argument for Actavis, Mr Alexander QC seemed to accept that Lilly could have expressed its claims more widely than it did (albeit that this was not a point which was carefully explored).\nHowever, even if the examiner was right or at least justified in taking the stance that he did, I do not consider that that consideration can have any bearing on the question whether any pemetrexed salts other than pemetrexed disodium should be within the scope of the patent pursuant to the doctrine of equivalents.\nThe whole point of the doctrine is that it entitles a patentee to contend that the scope of protection afforded by the patent extends beyond the ambit of its claims as construed according to normal principles of interpretation.\nThis point was well made by the Dutch Court of Appeals in Boston Scientific Ireland Ltd v Cordis Europa NV 01\/639 (unreported) 3 July 2003, when they held that the contents of the prosecution file were of no assistance, as they related to a concern which the examiner had expressed about added matter which went to disclosure, whereas that had no relevance to the point at issue which was the scope of the claim which properly included equivalents.\nI draw comfort from the fact that neither party was able to refer to a case where a French or Spanish Court had relied upon the patentees response to a disclosure or added matter objection by the examining officer as being relevant to the scope of claim.\nIt is true that the Madrid Appeal Court in Inmobiliaria Masife SL v Vale y Tino SA (decision 268\/2013) (unreported) 27 September 2013 held that a patentee was bound by an exclusion which he had agreed during prosecution but that was to overcome an objection of the examiner based on the prior art, a very different point.\nI draw even greater comfort from the fact that the Bundesgerichtshof reached the same conclusion on this very issue in relation to the German equivalent of the Patent in this case in Case No X ZR 29\/15 (Eli Lilly v Actavis Group PTC), para 72.\nDirect infringement in France, Italy and Spain\nHaving concluded that the Actavis products directly infringe the Patent as a matter of UK law, it is necessary to consider whether the same result obtains under French, Italian and Spanish law.\nIn my judgment, direct infringement is established in those jurisdictions as well.\nTurning first to French law, it appears to me that the answer to the question of direct infringement ultimately turns on whether the Patent in this case falls into the moyens gnraux category or the moyens particuliers category, because, as discussed in para 46 above, the doctrine of equivalents is apparently only applicable to patent claims in the former category.\nWith some diffidence, I have reached a different conclusion from Arnold J on this issue and have concluded that the Patent in this case falls into the former category.\nIt is of course true that an appellate court should be very slow indeed to differ from the trial judge on a question of fact.\nHowever, the notion that the resolution of a dispute as to foreign law involves a factual finding rather than a legal conclusion is somewhat artificial, and in any event, the Judge did not hear any oral evidence from the expert foreign law witnesses.\nWe are therefore in as good a position as he was to analyse the effect of the evidence as to foreign law.\nThe Judge considered that the Patent in this case represents a moyen particulier, because pemetrexed disodium was the relevant means and the Patent did not reveal it having a novel function: it merely revealed a new and better way in which its function could be achieved.\nTo my mind the better analysis is that the Patent discloses that pemetrexed disodium could be used for a function for which it could not previously have been satisfactorily or safely used in practice; specifically, that pemetrexed disodium could be used with vitamin B12 to achieve an end which could not have been achieved by either chemical on its own, pemetrexed disodium because of its harmful side effects and vitamin B12 because it would not have worked.\nThe essential point, as I see it, is that the Patent revealed for the first time the existence of a combined means which functioned in a certain way, namely to alleviate certain cancers without serious side effects.\nIt would be different if the overall function of the combination of the two chemicals had not been new.\nSupport for this conclusion appears in the book referred to in para 46 above, Droit de la proprit industrielle, whose two authors were the expert witnesses on French law in this case.\nAt para 719, p 443, they wrote when the claim is over a combination of means for which global function is novel, any combination of means with a different structure but achieving the same global function is a priori equivalent and thus infringing.\nThat passage was effectively applied by the Cour de Cassation in Appeal P08 14741, Diffusion Equipements Loisirs v Helge, 15 September 2009.\nAs to Italian law, Arnold J said at paras 178 and 179 of his judgment that he had concluded that the Actavis products did not infringe the Italian designation of the Patent on two grounds.\nThe first (which he only accepted with some hesitation) was because on its face the patent clearly demonstrated a conscious intention of the patentee to limit the claims to pemetrexed disodium.\nThe second ground was because if there was any doubt about that, it was amply confirmed by the prosecution history.\nIt is clear that (as one would expect) the Italian courts accept the doctrine of equivalents, and accordingly for the reasons given in paras 70 to 74 above, I would reject the first ground; and, for the reasons given in paras 91 to 93 above, I would reject the second ground also.\nSo far as Spanish law is concerned, it is common ground that the Spanish courts have followed the United Kingdom approach, which leads to the difficult question whether one should assume that they would follow this decision in modifying the Improver questions and in particular the second question.\nI incline to the view that judicial comity would tend to suggest that the Spanish courts would follow this court in modifying the Improver questions, not least because this appears to render the UK courts and therefore the Spanish courts more consistent with the German and Dutch courts, and no more inconsistent with the French and Italian courts.\nIn a written note dated 10 July 2017, Actavis applied for what would amount to a reconsideration of the conclusion expressed in para 97 above, on the ground that the reasoning of the Spanish Tribunal Supremo in the Lundbeck decision, discussed in para 50 above, should lead to the opposite conclusion, namely that marketing Actaviss products in Spain would not infringe the Patent.\nIn my view, it is too late for Actavis to raise such an argument.\nLilly had sought to rely on the Lundbeck decision in its written case in this appeal, and Actavis had objected on the ground that the decision had been given after the Court of Appeal decision in these proceedings.\nIt seems to me that in these circumstances it would be wrong to permit Actavis to raise the Lundbeck decision to support their case, especially as they are seeking to do so after knowing the result of this appeal and the reasons for that result.\nI am unimpressed by Actaviss argument that their application is nonetheless justified because the reasoning in para 97 above was not raised on this appeal.\nActaviss written case stated that Spanish law has been directly modelled on Catnic and Improver, and in paras 182 and 187 of his judgment on this case Arnold J effectively treated the Improver questions as part of Spanish law.\nIt appears to me that the conclusion that, if the UK Supreme Court modifies the Improver questions, the Spanish courts would adopt any such modification, was therefore within the scope of the argument raised in this Court.\nFurthermore, I consider that it would be wrong for Actavis to be permitted to raise a new ground in support of their contention that their products would not infringe in Spain, after publication of our decision, which was done with their consent and at their instigation following receipt of our draft judgment which concluded that their products would infringe in Spain.\nIt is not as if Actavis had come across new information since they had agreed to that publication.\nIt is true that, as explained in para 2 above, Actaviss solicitors wrote to the Court very shortly after they received the draft judgment, but thereafter they had nearly a full 24 hours within which they could have withdrawn their agreement to publication of our decision.\nIn any event, there is obvious force in the simple point that, having agreed to publication of the decision in advance of the handing down of the judgment, they have to take the consequences.\nI do not suggest that, in every case where the decision is published with the consent of the parties after they have seen the draft judgment, it would be impossible for either party to invite the court to change the decision, or any aspect of it.\nHowever, it seems to me that, in the absence of a good reason, the interests of finality and certainty should prevail, and I do not consider that Actavis have come up with a good enough reason in this case.\nIt is right to add that I am by no means convinced that, even if we had permitted Actavis to re argue their case in relation to Spain, on the basis of the Lundbeck decision, I would have reached a different conclusion from that expressed in para 97 above.\nQuite what constitutes a degree of predictability or a high probability when it comes to assessing whether the notional addressee would expect the variant to work must be fact sensitive.\nFurther, if, as seems likely but not, I accept, certain, the German, Dutch, French and Italian courts would all hold that Actaviss products infringed, there would have been much to be said for the view, which I have already expressed, that the Spanish courts would follow suit.\nAccordingly, I would hold that the French, Italian and Spanish designations of the Patent are also directly infringed by the Actavis products.\nIndirect infringement\nIn these circumstances, Actaviss cross appeal, which seeks to challenge the Court of Appeals conclusion that its products indirectly infringed does not, I think, arise in the sense that it has no practical effect on the parties (other, perhaps, than on the issue of costs).\nHowever, as the point was fully argued, gave rise to a disagreement between the Court of Appeal and the trial judge, and can be dealt with shortly, it is appropriate to consider it.\nIndirect infringement is provided for in section 60(2) of the 1977 Act, and it states that a person infringes a patent if, without the patentees consent, he supplies or offers to supply in the United Kingdom to someone not authorised by the patentee with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect.\nThe reason why Lilly contends that, even if they did not directly infringe, the Actavis products would indirectly infringe is because, when they are supplied to a doctor or a pharmacist, they are, as Actavis would know, dissolved in a saline solution in order to enable them to be administered to patients.\nSaline is a solution of common salt, ie sodium chloride, in water, and when common salt is dissolved in water, it separates into sodium cations and chloride anions.\nAccordingly, when one of Actaviss products, say that containing pemetrexed dipotassium, is dissolved in saline, the solution contains pemetrexed anions and potassium cations plus sodium cations and chloride anions.\nIn those circumstances, argues Lilly, even if pemetrexed dipotassium would not of itself infringe if it was administered with vitamin B12, at least provided that the ratio of sodium ions to pemetrexed ions was at least 2:1, there will be infringement when it is administered in saline solution, because the solution which is administered will contain pemetrexed disodium.\nThe Court of Appeal, disagreeing with the Judge, acceded to Lillys argument on this point.\nActavis argue that a solution consisting of, or including, pemetrexed ions and sodium ions is not within the expression pemetrexed disodium in the Patent, because it is limited to the solid, or crystalline, chemical.\nI agree with Floyd LJ in rejecting that argument.\nThere is no reason to think that the patentee intended to limit the expression in that way; quite the contrary.\nIt is clear that solubility was an important issue, and indeed that was one of the two main reasons on which Actavis rested their contention that their products did not infringe, as discussed in paras 24 to 25, 59, and 66 above.\nFurther, and even more in point, as Floyd LJ said, in the passages quoted in para 19 above the specification made it clear that references to pemetrexed disodium extended to that chemical in solution.\nActavis also argue that there is an inconsistency between the Court of Appeal holding, when considering direct infringement, that the notional addressee could not be assumed to know that pemetrexed dipotassium would dissolve, and holding, when considering indirect infringement, that pemetrexed dipotassium did in fact dissolve.\nEven if I had not concluded that the notional addressee should be treated as knowing that pemetrexed dipotassium could dissolve, I would have rejected that argument which seems to me to involve a non sequitur.\nBy the time that they were ready to market their products, Actavis knew perfectly well that they were all soluble.\nActavis further argue that a solution of pemetrexed dipotassium dissolved in saline does not in any event contain pemetrexed disodium within the meaning of that term in the Patent; it is simply pemetrexed dipotassium dissolved in saline.\nIn my view that is a bad point.\nIf dissolving pemetrexed disodium in an aqueous solution of potassium chloride can be said to result in a solution containing pemetrexed disodium (as Actaviss argument impliedly accepts), then it must follow as a matter of elementary chemical logic that dissolving pemetrexed dipotassium in saline also result in a solution which contains pemetrexed disodium: the two solutions are chemically identical, as each would consist of potassium and sodium cations and chloride and pemetrexed anions in water.\nActavis additionally argue that it is irrational to hold that there could be indirect infringement because it would all depend on the solvent in which the Actavis product is dissolved, and, even if that solvent was saline, it would depend on the proportion of sodium ions and pemetrexed ions in the solution which would vary by reference to the weight of the patient.\nThe fact that infringement may depend on the nature of solvent and the relative amounts of ions in the solution does not seem to me to be irrational.\nIt is simply a result of the extent of the scope of protection afforded by the patent given that (as determined by the Court of Appeal) its claims are limited to pemetrexed disodium, which, when dissolved in water produces two sodium cations to every one pemetrexed anion.\nFinally, Actavis argue that, rather than being used in the manufacture of a medicament as described in claim 1 of the Patent, pemetrexed disodium is part of the medicament.\nLike the Court of Appeal, I do not agree.\nThe pemetrexed disodium comes into the manufacturing process rather later than it would if the original medicament included pemetrexed disodium rather than pemetrexed dipotassium, but that cannot alter the fact that, before it is administered to the patient, the medicament includes pemetrexed disodium and vitamin B12.\nAccordingly, I would uphold the Court of Appeals determination that Actavis are liable to Lilly for indirect infringement in the United Kingdom with respect to their products if Actavis know, or it is obvious in the circumstances, that ultimate users will dilute in saline or at least Actavis would be liable for indirect infringement if they were not liable for direct infringement.\nThe Court of Appeal said that this conclusion would apply equally to France, Italy, and Spain, and there is no challenge to that from Actavis.\nConclusion\nFor these reasons, I would (i) allow Lillys appeal in direct infringement and hold that the Actavis products infringe the Patent in the United Kingdom, and also in France, Italy and Spain, (ii) dismiss Actaviss cross appeal on the basis that if its products did not directly infringe, they would indirectly infringe to the extent held by the Court of Appeal.\n","output":"The appeal concerns whether three products manufactured by the Actavis group of companies (Actavis) would infringe a patent whose proprietor is Eli Lilly & Company (Lilly), namely European Patent (UK) No 1 313 508 and its corresponding designations in France, Italy and Spain.\nThe patent relates to the use of the chemical pemetrexed.\nThis has therapeutic effects on cancerous tumours, but, when used on its own it can have seriously damaging side effects.\nThe Patent discloses that these side effects can largely be avoided if a compound called pemetrexed disodium is administered together with vitamin B12.\nSuch a medicament has been successfully marketed, under the brand name Alimta, by Lilly since 2004.\nActavis proposed products (the Actavis products) involve pemetrexed compounds being used together with vitamin B12 for cancer treatment; however, rather than pemetrexed disodium, the active ingredient is (a) pemetrexed diacid; (b) pemetrexed ditromethamine, or (c) pemetrexed dipotassium.\nActavis contend that because they intend to use the Actavis products which do not include pemetrexed disodium, the claims of the Patent would not be infringed.\nAt trial, Arnold J decided that none of the Actavis products would directly or indirectly infringe the Patent in the UK, or in France, Italy or Spain [2015] RPC 6.\nThe Court of Appeal allowed Lillys appeal to the limited extent of holding that there would be indirect infringement in the four jurisdictions, but agreed with the Judge that there would be no direct infringement [2015] Bus LR 68.\nLilly appeals to the Supreme Court against the holding that there would be direct infringement and Actavis cross appeal against the holding that there would be no indirect infringement.\nThe appeal raises the issue of the correct approach to the interpretation of patent claims, and the requirement of the European Patent Convention 2000 (EPC) to take account of so called equivalents.\nIt also raises the issue of the extent to which it is permissible to make use of the prosecution history of a patent when determining its scope.\nThe issue on the cross appeal is whether the application of the law of contributory infringement would justify a finding of indirect infringement in this case.\nThe Supreme Court unanimously allows Lillys appeal and holds that the Actavis products would infringe the Patent in the United Kingdom, and in France, Italy and Spain.\nActavis cross appeal is unanimously dismissed, so that, if its products would not directly infringe, they would indirectly infringe as held by the Court of Appeal.\nOn direct infringement, Article 1 of the Protocol on the Interpretation of Article 69(1) EPC provides that the scope of protection afforded to a patentee is not to be limited by the literal meaning of the claims.\nArticle 2 provides that there can be a difference between the interpreted scope of a claim and the scope of protection afforded by it, and when considering the scope of protection equivalents must be taken in to account [33 34].\nFurther guidance is needed to guide a court through this exercise [53].\nWhether an item directly infringes a patent is best approached by addressing two questions through the eyes of the notional addressee of the patent, i.e. the person skilled in the relevant art, namely: 1.\nDoes the item infringe any of the claims as a matter of normal interpretation; and if not, 2.\nAlthough the item may be characterised as a variant, does it nonetheless infringe because it varies from the invention in a way which is immaterial? If the answer to either question is yes, there is an infringement; otherwise there is not [54].\nOn question 1, according to normal principles of interpretation the Actavis products do not infringe the Patent [58].\nQuestion 2 raises the issue of equivalents and poses a more difficult question of principle [59].\nThe following questions should be considered by a court as a guide to the question of materiality [66]: 1.\nNotwithstanding that it is not within the literal meaning of the relevant claim(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention, i.e. the inventive concept revealed by the patent? 2.\nWould it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention? 3.\nWould such a reader of the patent have concluded that the patentee nonetheless intended strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention? To establish infringement where there is no literal infringement, a patentee would have to establish that the answer to the first two questions was yes and the answer to the third was no [66].\nThe Actavis products directly infringe the Patent [68].\nThey all involve a medicament containing the pemetrexed anion and vitamin B12, and achieve substantially the same result in substantially the same way as the invention.\nOnce he or she knew that the Actavis products achieved substantially the same result as the invention, the notional addressee of the Patent would have thought it obvious that this was so, particularly as he or she would have regarded investigating whether pemetrexed free acid, pemetrexed ditromethamine or pemetrexed dipotassium worked as a routine exercise [69].\nOn the third question, the Court of Appeal had placed too much weight on the words of the claim.\nIt is very unlikely that the notional addressee would have concluded that the patentee could have intended to exclude any pemetrexed salts other than pemetrexed disodium from the scope of protection [70 74].\nDirect infringement is also established under French, Spanish and Italian law [92 102].\nRecourse to the contents of the prosecution file by a UK court will only be appropriate in limited circumstances, particularly if they clearly resolve a genuine ambiguity in the patent or it would be contrary to the public interest to disregard the file [87 88].\nThe contents of the file do not justify departing from the conclusion in this case [89].\nIn the circumstances, Actavis cross appeal does not arise.\nHowever, the Supreme Court would have upheld the Court of Appeals determination that Actavis are liable to Lilly for indirect infringement in the United Kingdom [103 112].\n","id":41}
{"input":"Recitals 4, 5 and 7, taken together with Article 1, of Council Directive 2003\/9\/EC (the Reception Directive), encapsulate its purpose.\nThey respectively provide: The recitals (4) The establishment of minimum standards for the reception of asylum seekers is a further step towards a European asylum policy. (5) This Directive respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union.\nIn particular, this Directive seeks to ensure full respect for human dignity and to promote the application of Articles 1 and 18 of the said Charter [inviolability of human dignity and the guarantee of the right to asylum with due respect to the Geneva Convention 28 July 1951 and the Protocol of 31 January 1967 relating to the status of refugees] (7) Minimum standards for the reception of asylum seekers that will normally suffice to ensure them a dignified standard of living and comparable living conditions in all Member States should be laid down.\nArticle 1 Purpose The purpose of this Directive is to lay down minimum standards for the reception of asylum seekers in Member States.\nNotwithstanding the seemingly clear terms of these provisions, the appellant in these cases argues that where an asylum seeker makes a second application for asylum after his first application has been finally rejected, he is not entitled to the benefits that are conferred by the Reception Directive.\nThose benefits include (in Article 11) certain provisions in relation to entitlement to be employed while awaiting the outcome of an asylum application.\nThe Secretary of States argument was rejected by the Court of Appeal (Regina (ZO (Somalia) and others) v Secretary of State for the Home Department [2009] 1 WLR 2477, [2009] EWCA Civ 442) in its judgment delivered on 20 May 2009, allowing appeals by ZO (Somalia) and MM (Burma) from a decision of HH Judge Mackie QC of 25 June 2008.\nThe Court of Appeal had also dismissed an appeal by the Secretary of State from a decision of Blake J of 11 December 2008 in the case of DT (Eritrea).\nOriginally the appellant had appealed to this court against all three decisions of the Court of Appeal.\nSubsequently, however, DT was granted indefinite leave to remain in this country and, with the agreement of all the parties, the Secretary of State was permitted to withdraw the appeal in that case.\nThe facts and history of proceedings\nZO is a Somali national who arrived in the United Kingdom in 2003.\nShe applied for asylum.\nThat application was refused on 17 February 2004.\nA number of challenges were made to that refusal but the last of these finally foundered towards the end of 2004.\nOn 31 March 2005 the Immigration Appeal Tribunal issued its determination in the case of NM and others (Lone Women Ashraf) (Somalia) CG [2005] UKIAT 00076.\nOn 9 May 2005, solicitors acting on behalf of ZO made further submissions to the Secretary of State based on the IATs determination in the NM case.\nIt was contended that this amounted to a fresh claim for asylum within the meaning of rule 353 of the Immigration Rules.\nAT the time of the hearing of this appeal, the Secretary of State had yet to decide whether leave to enter the UK should be given to ZO or whether the further submissions made on her behalf constitute a fresh claim.\nOn 27 February 2007 ZO was granted permission to apply for judicial review to challenge the delay in dealing with her further submissions.\nOn 5 June 2007 she wrote to the Secretary of State asking for permission to work.\nShe advanced this claim on the grounds of hardship and suggested that, if it could not be granted, she would seek priority for her application for judicial review.\nThe Secretary of State refused to prioritise consideration of ZOs further submissions and on 31 August 2007 refused permission to work.\nZO renewed her application for permission to work on 8 October 2007, referring to rule 360 of the Immigration Rules (which deals with applications for permission to work) but this was rejected on 15 October 2007, on the ground that her application for asylum had been refused on 17 February 2004.\nPrompted by consideration of the decision of the High Court in R (FH) v Home Secretary [2007] EWHC 1571 (Admin), ZO conceded the ground of her application in relation to delay but in November 2007 she was given permission to amend the judicial review proceedings in order to challenge the refusal of permission to work under rule 360 of the Immigration Rules.\nThe gravamen of the grounds of this latter challenge was that she had made an asylum claim on 9 May 2005.\nAt an oral hearing on 30 January 2008, Stanley Burnton J set aside the grant of permission on the delay ground and refused permission to apply for judicial review on the Secretary of States refusal of consent to her taking up employment.\nShe was subsequently given permission to appeal the dismissal of her application in relation to the employment ground and by a consent order of 7 May 2008, the Court of Appeal granted permission to apply for judicial review.\nThis was the application that was subsequently heard and dismissed by HH Judge Mackie QC.\nMM is a Burmese national who made an application for asylum after he arrived in the United Kingdom in 2004.\nThat application was refused and all attempts to challenge the refusal had failed by March 2005.\nOn 9 May 2005 he also made further submissions which, he said, amounted to a fresh claim based on new evidence.\nAgain in his case the Secretary of State has not yet decided whether to grant MM leave to enter the United Kingdom or whether he has made a fresh claim for asylum.\nOn 27 July 2007 MM wrote to the Secretary of State asking for permission to work and referring to rule 360.\nThis application was refused on 26 September.\nOn 25 October 2007 MM applied for judicial review to challenge the delay in considering his further submissions and to challenge the refusal of permission to work.\nAs in the case of ZO he based this on the circumstance that he had made an asylum application some 2 years and 5 months previously.\nOn 10 March 2008, applying the decision in FH, the High Court refused permission to apply for judicial review on the delay ground but granted permission on the refusal of consent to take up employment.\nThis application was also dismissed by Judge Mackie and allowed by the Court of Appeal.\nThe issues\nOn the hearing of the appeal to this court two principal issues were identified.\nThe first was whether Article 11 of the Reception Directive applies to a person who has had an application for asylum in the United Kingdom finally determined against him when he makes a further application for asylum.\nArticle 11 (2) of the Reception Directive is the critical provision in this instance.\nIt provides: If a decision at first instance has not been taken within one year of the presentation of an application for asylum and this delay cannot be attributed to the applicant, Member States shall decide the conditions for granting access to the labour market for the applicant.\nThe second main issue was whether this court should make a request of the Court of Justice for the European Union under Article 267 of the Treaty on the Functioning of the European Union (TFEU) for a preliminary ruling on the proper interpretation of the Reception Directive, in particular whether it is a measure intended to cover only the first application for asylum made by an individual to a Member State.\nA subsidiary argument was made in the printed case for MM and supported by ZO in her printed case.\nIt was contended that, even if the Secretary of States claimed interpretation of the Reception Directive was accepted, the policy of refusing permission to work was in violation of Article 8 of the European Convention on Human Rights and Fundamental Freedoms.\nBlake J had dealt with this argument in the case of DT.\nHe held that the Secretary of States policy was unlawful as an unjustified interference with the right to respect for a private life.\nThe Court of Appeal did not address the Article 8 issue because of its conclusion on the reach of the Reception Directive.\nNotwithstanding this, Mr Fordham QC for MM submitted that this court should deal with the Article 8 argument and uphold the reasoning of Blake J.\nThe court indicated that, if we required argument on the Article 8 point, an opportunity would be given to present it.\nIn the event, however, since we have reached the same conclusion as did the Court of Appeal on the interpretation of the Reception Directive, this is not necessary.\nThe case for the Secretary of State\nFor the appellant Mr Tam QC submitted that the clear purpose of the Reception Directive was to devise minimum standards for those who were received by Member States for the first time as asylum seekers.\nHe drew particular attention to the use of the expression reception in Article 1 and the title of the Directive.\nThis, he said, indicated that the Directive was concerned with the initial encounter between the asylum seeker and the receiving State.\nThat this was its purpose was reinforced by consideration of the corresponding words in some of the other Community languages, for example, opvang, accueil, aufnahme, accoglienza, acogida which translated to acceptance, reception or welcome.\nMr Tams second argument was that the Directive had a settled meaning at the time of its adoption.\nThat meaning could not be influenced by subsequent EU measures such as Directive 2004\/83\/EC of 29 April 2004 (the Qualifications Directive), Council Directive 2005\/85\/EC of 1 December 2005 (the Procedures Directive) or Council Regulation 343\/2003\/EC (the Dublin Regulation) adopted on 18 February 2003.\nThe Court of Appeal had been wrong, Mr Tam said, to have had regard to these subsequent measures in reaching a conclusion on the interpretation to be applied to the Reception Directive.\nMr Tam also argued that support for the interpretation that he advanced was to be found in various of the specific provisions of the Reception Directive.\nHe suggested that, if the literal interpretation that the respondents contended for was adopted, a number of anomalies in the application of those provisions would be produced.\nHe further claimed that the scheme that the Directive contained for dealing with abuse was inapt for repeat applications.\nIf the Reception Directive was held to apply to such applications there was no effective mechanism to deal with abuse of the system.\nThe enactment of the Directives, the Immigration Rules and the Dublin Regulation\nThe Reception Directive was made pursuant to the power conferred by Article 63 (1) (b) of the Treaty Establishing the European Community (TEC).\nArticle 63 was introduced to the TEC by the Treaty of Amsterdam which was concluded on 2 October 1997 and came into force on 1 May 1999.\nSo far as is material, Article 63 provides: The Council, acting in accordance with the procedure referred to in Article 67, shall, within a period of five years after the entry into force of the Treaty of Amsterdam, adopt: 1. measures on asylum, in accordance with the Geneva Convention of 28 July 1951 and the Protocol of 31 January 1967 relating to the status of refugees and other relevant treaties, within the following areas: (a) criteria and mechanisms for determining which Member State is responsible for considering an application for asylum submitted by a national of a third country in one of the Member States, (b) minimum standards on the reception of asylum seekers in Member States, (c) minimum standards with respect to the qualification of nationals of third countries as refugees, (d) minimum standards on procedures in Member States for granting or withdrawing refugee status;\nQuite clearly, a comprehensive charter dealing with the various aspects of asylum applications was contemplated.\nThis circumstance alone suggests that an identity of purpose for all the measures adopted to implement the proposed scheme was to be expected and, as we shall see, this conclusion is reinforced by examining the legislative history of those measures.\nThe Reception Directive was adopted on 27 January 2003 and by Article 26 (1) it was required to be transposed into national law by 6 February 2005.\nImmigration Rules intended to implement the Directive were laid before Parliament on 11 January 2005.\nRules 360 and 360A provide: 360 An asylum Applicant may apply to the Secretary of State for permission to take up employment which shall not include permission to become self employed or to engage in a business or professional activity if a decision at first instance has not been taken on the Applicant's asylum application within one year of the date on which it was recorded.\nThe Secretary of State shall only consider such an application if, in his opinion, any delay in reaching a decision at first instance cannot be attributed to the Applicant. 360A If an asylum Applicant is granted permission to take up employment under Rule 360 this shall only be until such time as his asylum application has been finally determined.\nRules 353 and 353A of the Immigration Rules deal with the question of whether submissions made after an asylum claim has been refused should be treated as a fresh claim.\nThey provide: 353 When a human rights or asylum 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.\nThe submissions will amount to a fresh claim if they are significantly different from the material that has previously been considered.\nThe submissions will only be significantly different if the content: had not already been considered; and (i) (ii) taken together with the previously considered material, created a realistic prospect of success, notwithstanding its rejection.\nThis paragraph does not apply to claims made overseas. 353A Consideration of further submissions shall be subject to the procedures set out in these Rules.\nAn Applicant who has made further submissions shall not be removed before the Secretary of State has considered the submissions under paragraph 353 or otherwise.\nThis paragraph does not apply to submissions made overseas.\nThe Secretary of State does not treat as an asylum seeker a person who has made a new application for asylum until that application has been accepted as a fresh claim.\nOnce it is accepted, however, the asylum seeker enjoys the same rights of appeal as those given to a person whose first claim for asylum in this country has been rejected.\nHe is also given the right to apply for permission to work (PTW).\nThe Enforcement Instructions and Guidance Manual (the manual) issued by the Secretary of State provides in paragraph 23.10.4: Permission to work Fresh claims If a failed asylum seeker makes a fresh asylum claim then provided it is accepted as a fresh claim the procedures set out above should be followed, i.e. the Claimant will be entitled to apply for PTW provided he satisfies the criteria in Paragraph 360 of the Rules, otherwise any request for PTW would be a mandatory refusal.\nIf the new asylum claim is not accepted as a fresh claim the person will have no entitlement to apply for PTW.\nAs a matter of general practice the Secretary of State does not make a preliminary decision on whether a repeat application constitutes a fresh claim.\nInstead, the decision on whether the new application is to be treated as a fresh claim is made at the same time as the decision to either allow or reject the claim.\nOn this account, the Court of Appeal unsurprisingly decided that paragraph 23.10.4 was unlikely to benefit a subsequent asylum seeker.\nIt was also concluded that the fact that para 23.10.4 of the manual gives the potential benefit of article 11 to a subsequent asylum seeker whose claim has been accepted as a fresh claim does not assist in the interpretation of the Reception Directive.\nA short time after the adoption of the Reception Directive, on 18 February 2003, the Dublin Regulation was adopted.\nThis established the criteria and mechanisms for determining which Member State should have the responsibility of examining an asylum application lodged in one of the Member States by a third country national.\nIt came into force on 17 March 2003.\nThe Qualification Directive was adopted on 29 April 2004.\nIt prescribed minimum standards for the qualification and status of third country nationals or stateless persons as refugees or as persons who otherwise need international protection and the content of the protection to be granted to them.\nThe Procedures Directive was adopted on 1 December 2005.\nAs Mr Tam pointed out, this was some ten months after the Reception Directive was required to be transposed into national law.\nThe Procedures Directive set out minimum standards on procedures in Member States for granting and withdrawing refugee status.\nThe interpretation of application for asylum in the Reception and Procedures\nDirectives\nArticle 2 of the Reception Directive contains definitions of the expressions, application for asylum and applicant or asylum seeker as follows: (b) 'application for asylum' shall mean the application made by a third country national or a stateless person which can be understood as a request for international protection from a Member State, under the Geneva Convention.\nAny application for international protection is presumed to be an application for asylum unless a third country national or a stateless person explicitly requests another kind of protection that can be applied for separately; (c) 'applicant' or 'asylum seeker' shall mean a third country national or a stateless person who has made an application for asylum in respect of which a final decision has not yet been taken;\nVirtually identical definitions are contained in Article 2 of the Procedures Directive: (b) \"application\" or \"application for asylum\" means an application made by a third country national or stateless person which can be understood as a request for international protection from a Member State under the Geneva Convention.\nAny application for international protection is presumed to be an application for asylum, unless the person concerned explicitly requests another kind of protection that can be applied for separately; (c) \"applicant\" or \"applicant for asylum\" means a third country national or stateless person who has made an application for asylum in respect of which a final decision has not yet been taken;\nThere can be no doubt that subsequent applications for asylum come within the definitions contained in Article 2 of the Procedures Directive and Mr Tam did not seek to argue otherwise.\nSubsequent applications are mentioned in recital 15 of the Procedures Directive and in Articles 7 (2), 23 (4) (h), 32, 34 and 39 (1) (c).\nIt is clear that the scheme of the Directive is workable only if the definition covers repeat applications.\nIn particular, Article 32 gives power to Member States to undertake a preliminary examination of a subsequent application in order to ascertain whether new elements or findings have arisen or have been presented by the applicant which touch on the question whether he or she qualifies as a refugee.\nThis unquestionably means that a subsequent application is an application for asylum within the meaning given to that term in Article 2 (b).\nOn the Secretary of States case, the expression application for asylum must be given a markedly different meaning in the Reception Directive from that in the Procedures Directive.\nMr Tam seeks to dismiss this apparent anomaly by suggesting that the purpose of each of the Directives is quite different.\nBy way of preliminary observation on this claim, one may note that, if it is correct, it is surprising that the draftsman of the later measure did not employ a different formulation for the definitions of the terms application for asylum and applicant for asylum from those used in the Reception Directive.\nIf Mr Tam is right, using almost identical language was, at best, highly misleading.\nBut it is even more surprising, if the Reception Directive was not intended to apply to subsequent applications, that the text of the Directive did not make it unequivocally clear that these would not be covered.\nIt is in any event clear that the purpose of both Directives (and, incidentally the Qualification Directive and the Dublin Regulation) is the same.\nApart from mirroring the definitions contained in Article 2 of the Reception Directive, the critical recitals in the Procedures Directive bear a striking resemblance to those in the Reception Directive.\nWhile Mr Tam may be right that, as a matter of general principle, later legislation should not operate to change the established meaning of an earlier enactment, the manner in which the later legislation is framed may provide an insight into the proper interpretation of the earlier instrument.\nWhatever may be said on this matter on a theoretical basis, however, the matter is put beyond any doubt by an examination of the legislative history of the two measures.\nMuch was made by Mr Tam of the fact that the Procedures Directive was a much later instrument than the Reception Directive but it is quite clear that both Directives shared if not an exactly time coincident genesis at least a broadly common ancestry.\nIn fact, the proposal for a Council Directive on minimum standards on procedures in Member States for granting and withdrawing refugee status was first made on 20 September 2000 whereas the proposal for the Reception Directive was published in the Official Journal of the European Union on 31 July 2001 (Official Journal 213E, 31\/07\/2001 P. 0286 0295).\nThe proposal for the Reception Directive contained an overview of the standards that the Directive would be designed to cover.\nAmong these were the reception conditions that should be granted, in principle, at all stages and in all kinds of asylum procedures (the emphasis has been added).\nThe most significant portion of the proposal document, however, is found in the part that deals with definitions.\nThe proposed definition for application for asylum is in broadly similar terms to those that ultimately were enacted.\nThe proposal for Article 2 (c) is particularly illuminating.\nIt is in these terms: Applicant or applicant for asylum means a third country national or a stateless person who has made an application for asylum in respect of which a final decision has not yet been taken.\nA final decision is a decision in respect of which all possible remedies under Council Directive \/\/EC [on minimum standards on procedures in Member States for granting and withdrawing refugee status] have been exhausted;\nFrom this it is indisputably clear that it had always been intended not only that the definitions of applicant for asylum in both Directives should be congruent with one another but also that an application should not be regarded as having been subject to a final decision until all possible remedies had been pursued and determined.\nThis can only mean that subsequent applications would fall within the purview of the definitions of application for asylum and asylum seeker in the Reception Directive.\nIf further proof that this was so was needed, it is provided in a document which sets out the suggested amendments of the proposal document.\nAmendment 114 deals with Article 2 (c).\nIt states: (c) Applicant means a third country national or a stateless person who has made an application for asylum or another form of international protection in respect of which a final decision has not yet been taken.\nA final decision is a decision in respect of which all possible remedies have been exhausted (original emphasis but underlining added).\nI therefore conclude that an application for asylum in the Reception Directive must be interpreted to include a subsequent application made after an original application has been determined and that the term asylum seeker should be construed accordingly to include a person who makes such a subsequent application.\nThis conclusion seems to me to chime well with the spirit of the recitals to the Directive, particularly recital 7.\nThe Directive seeks to set minimum standards for the reception of asylum seekers that will normally suffice to ensure them a dignified standard of living.\nIt would be, in my view, anomalous and untoward that an applicant who makes a subsequent application after his first application has been finally disposed of should be denied access to standards that are no more than the minimum to permit him to live with some measure of dignity.\nMoreover, if the Directive was found not to apply to subsequent applications for asylum this would give rise to a surprising incongruity.\nFirst time applications for asylum made long after an asylum seeker arrived in this country would be governed by the Directive but a perfectly genuine applicant who makes a subsequent application, perhaps within a relatively short time of arrival, would be denied the benefits that it affords.\nArticle 3 applies the Directive to all third country nationals and stateless persons who make an application for asylum at the border or in the territory of a Member State.\nIt is clear, therefore, that a person who has been in the United Kingdom for some time can apply for asylum and, on the interpretation that the appellant espouses, such a person would be entitled to the benefits of the Reception Directive whereas an applicant who has made an application immediately on arrival would lose those benefits forever after the first application has been determined.\nThe Court of Appeal considered that the strongest argument in favour of the interpretation advanced by the Secretary of State was that the word reception had been used so prominently in the Directive.\nI have therefore considered that argument carefully but, as Mr Fordham pointed out, one can be received, or have an application received, or return to reception more than once.\nThe Directive stipulates what must happen when one is received into the asylum system.\nThere is nothing unusual or untoward in the notion that one can be received into that system on more than one occasion.\nI do not consider that the corresponding words of the other Community languages on this point detract from that conclusion.\nOne can be received, accepted or even welcomed several times.\nI would therefore dismiss the appeals.\nSince, however, much of the argument for the appellant was devoted to the anomalies that, it was said, would arise if the Reception Directive was held to apply to subsequent applications, it is right that I should deal, albeit briefly, with those claims.\nBy way of preamble, however, I should observe that, while seeking to deduce the purpose of an item of legislation from claimed difficulties that its literal implementation will involve is not an illegitimate exercise, it is one that must be approached with caution.\nWhere a different purpose from that canvassed is unmistakably clear from, for instance, the text of the instrument and its enacting history, supposed problems that may arise from giving effect to that purpose cannot be permitted to frustrate the intention of the legislative body.\nThe claimed anomalies\nArticles 5 and 6 of the Reception Directive deal respectively with information and documentation that must be given to an applicant for asylum.\nMr Tam pointed out that there is no reference in either article to subsequent applications and it is therefore to be supposed that, if the Reception Directive applies to these, the same information and documentation will have to be provided on each occasion.\nIn order to assess the administrative burden that Mr Tam suggests will thereby be cast on the Home Department, it is necessary to look at the actual provisions.\nArticle 5 is in the following terms: Article 5 Information 1.\nMember States shall inform asylum seekers, within a reasonable time not exceeding fifteen days after they have lodged their application for asylum with the competent authority, of at least any established benefits and of the obligations with which they must comply relating to reception conditions.\nMember States shall ensure that applicants are provided with information on organisations or groups of persons that provide specific legal assistance and organisations that might be able to help or inform them concerning the available reception conditions, including health care. 2.\nMember States shall ensure that the information referred to in paragraph 1 is in writing and, as far as possible, in a language that the applicants may reasonably be supposed to understand.\nWhere appropriate, this information may also be supplied orally.\nThe information that is required to be provided under this Article is likely to be of a routine nature and one may reasonably anticipate that in most cases it will involve no more than issuing precisely the same material as was provided when the first application was made.\nPresumably, it could be conveniently held on file and generated more or less automatically on receipt of a second or subsequent application.\nOn that basis, it is difficult to accept that this would impose a substantial logistical burden on the authorities.\nIn any event, it is not in dispute that subsequent applicants for asylum must be provided with information under Article 10 (1) (a) of the Procedures Directive which provides: 1.\nWith respect to the procedures provided for in Chapter III, Member States shall ensure that all applicants for asylum enjoy the following guarantees: (a) they shall be informed in a language which they may reasonably be supposed to understand of the procedure to be followed and of their rights and obligations during the procedure and the possible consequences of not complying with their obligations and not cooperating with the authorities.\nThey shall be informed of the time frame, as well as the means at their disposal for fulfilling the obligation to submit the elements as referred to in Article 4 of Directive 2004\/83\/EC.\nThis information shall be given in time to enable them to exercise the rights guaranteed in this Directive and to comply with the obligations described in Article 11;\nTo have to provide the further information that Article 5 of the Reception Directive requires does not seem to me to be a significant encumbrance.\nThere has to be a relay of information in any event.\nThe extra material that has to be provided will in most cases have been prepared already.\nIn those circumstances, I find it impossible to accept that the requirement to supply the Article 5 information again could be described as an anomaly.\nMoreover, as Mr Fordham put it, a renewed entitlement to information is not in the least absurd.\nIf it is considered that the provision of the information on the first application for asylum is vital, why should it not be considered important on subsequent applications?\nArticle 6 of the Reception Directive provides: Documentation 1.\nMember States shall ensure that, within three days after an application is lodged with the competent authority, the applicant is provided with a document issued in his or her own name certifying his or her status as an asylum seeker or testifying that he or she is allowed to stay in the territory of the Member State while his or her application is pending or being examined.\nIf the holder is not free to move within all or a part of the territory of the Member State, the document shall also certify this fact. 2.\nMember States may exclude application of this Article when the asylum seeker is in detention and during the examination of an application for asylum made at the border or within the context of a procedure to decide on the right of the applicant legally to enter the territory of a Member State.\nIn specific cases, during the examination of an application for asylum, Member States may provide applicants with other evidence equivalent to the document referred to in paragraph 1. 3.\nThe document referred to in paragraph 1 need not certify the identity of the asylum seeker. 4.\nMember States shall adopt the necessary measures to provide asylum seekers with the document referred to in paragraph 1, which must be valid for as long as they are authorised to remain in the territory of the Member State concerned or at the border thereof. 5.\nMember States may provide asylum seekers with a travel document when serious humanitarian reasons arise that require their presence in another State.\nThe provision of a document that confirms the holder as an asylum seeker is obviously important to any applicant for asylum.\nWithout it, he or she is liable to be removed from the jurisdiction.\nSo far from being anomalous that this should be provided to someone who has made a subsequent application for asylum, it seems to me that, in order to forestall removal, the availability of such a document is imperative so that the applicants continued entitlement to remain in the jurisdiction may be established.\nI do not therefore accept that the need to provide documentation under Article 6 on subsequent applications can be characterised as irregular or anomalous.\nFurthermore, there is no requirement under the Procedures Directive to supply the documentation specified by Article 6 of the Reception Directive.\nPlainly, an asylum seeker who makes a subsequent application must be entitled to remain in the jurisdiction in which the application is made until the procedures provided for in the Procedures Directive have been completed.\nThis is a clear indication that Article 6 of the Reception Directive was intended to apply to subsequent applications for asylum and, by the same token, an obvious sign that the Procedures Directive was drafted on the assumption that this was so.\nOtherwise, one would have expected that the Directive which was enacted later would have contained provision for the supply of documentation that would have protected the asylum seeker from removal.\nThe next avowed anomaly that Mr Tam identified was in the application of Article 9.\nIt provides that Member States may require medical screening for applicants on public health grounds.\nHe suggested that this power makes sense only in the context of an initial encounter between an asylum seeker and a Member State.\nProperly understood, the appellants complaint about this Article being applied to subsequent applications, is that it is unnecessary rather than anomalous for this to happen.\nEven if this is so, it is contrived to argue that because medical screening is not necessary for subsequent applications for asylum, it must be taken that the entire Reception Directive should be held not to apply to such applications.\nThis is a power to be used when required and it is entirely unsurprising that it is expressed in the general and pithy way in which it appears in the Directive.\nThe assertion made by the appellant in relation to Article 10 falls into essentially the same category.\nIt provides: Schooling and education of minors 1.\nMember States shall grant to minor children of asylum seekers and to asylum seekers who are minors access to the education system under similar conditions as nationals of the host Member State for so long as an expulsion measure against them or their parents is not actually enforced.\nSuch education may be provided in accommodation centres.\nThe Member State concerned may stipulate that such access must be confined to the State education system.\nMinors shall be younger than the age of legal majority in the Member State in which the application for asylum was lodged or is being examined.\nMember States shall not withdraw secondary education for the sole reason that the minor has reached the age of majority. 2.\nAccess to the education system shall not be postponed for more than three months from the date the application for asylum was lodged by the minor or the minor's parents.\nThis period may be extended to one year where specific education is provided in order to facilitate access to the education system. 3.\nWhere access to the education system as set out in paragraph 1 is not possible due to the specific situation of the minor, the Member State may offer other education arrangements.\nThe appellant is unquestionably right that some of the provisions contained in this Article cannot be fitted comfortably into second time applications.\nThe power to postpone access to education, for instance, provided for in para 2 of the Article cannot have been intended to be exercisable by the Member State on more than one occasion.\nBut this is not a sound basis on which to reason that, as a consequence, it cannot have been intended that the Reception Directive should apply to subsequent asylum applications.\nThe Article should be understood for what it is a general purpose provision setting out various duties and powers covering a variety of circumstances.\nIt would perhaps have been preferable if the Article had stated which of its parts should not apply to subsequent applications but the absence of such a statement does not establish that those applications are not covered by the Directive.\nI have concluded therefore that none of the claimed anomalies (or their collective impact) constitutes a reason for believing that it was intended that the Reception Directive should not apply to subsequent applications for asylum.\nI am reinforced in that view by the consideration that, if the Reception were held not to apply, some decidedly curious consequences would follow.\nFor instance, the duties under Article 8 of the Directive (to maintain as far as possible family unity) and under Article 13 (2) (to ensure a standard of living adequate for the health of applicants and capable of ensuring their subsistence) and 15 (1) (the provision of necessary health care) would not apply to those who make subsequent applications for asylum.\nWhen one considers that many of these will be genuine applicants, it is impossible to believe that it was intended that they should not have access to these basic amenities and facilities.\nMr Tam submitted that, if the Reception Directive is held to apply to subsequent applications, the potential for abuse of the system of applications for asylum is greatly increased.\nWholly unmeritorious claims would be put forward by applicants who saw the opportunity of not only delaying their removal but also of gaining access to the benefits that the Directive confers.\nThis argument was rejected by the Court of Appeal on, according to Mr Tam, two grounds first that administrative problems because of unmeritorious claims should not determine the proper interpretation to be given to the Directive and, second, that abuse of the system by lodging subsequent applications was sufficiently catered for by Article 16 of the Directive which provides: Reduction or withdrawal of reception conditions 1.\nMember States may reduce or withdraw reception conditions in the following cases: (a) where an asylum seeker: abandons the place of residence determined by the competent authority without informing it or, if requested, without permission, or does not comply with reporting duties or with requests to provide information or to appear for personal interviews concerning the asylum procedure during a reasonable period laid down in national law, or has already lodged an application in the same Member State.\nWhen the applicant is traced or voluntarily reports to the competent authority, a duly motivated decision, based on the reasons for the disappearance, shall be taken on the reinstallation of the grant of some or all of the reception conditions; (b) where an applicant has concealed financial resources and has therefore unduly benefited from material reception conditions.\nIf it transpires that an applicant had sufficient means to cover material reception conditions and health care at the time when these basic needs were being covered, Member States may ask the asylum seeker for a refund. 2.\nMember States may refuse conditions in cases where an asylum seeker has failed to demonstrate that the asylum claim was made as soon as reasonably practicable after arrival in that Member State. 3.\nMember States may determine sanctions applicable to serious breaching of the rules of the accommodation centres as well as to seriously violent behaviour. 4.\nDecisions for reduction, withdrawal or refusal of reception conditions or sanctions referred to in paragraphs 1, 2 and 3 shall be taken individually, objectively and impartially and reasons shall be given.\nDecisions shall be based on the particular situation of the person concerned, especially with regard to persons covered by Article 17, taking into account the principle of proportionality.\nMember States shall under all circumstances ensure access to emergency health care. 5.\nMember States shall ensure that material reception conditions are not withdrawn or reduced before a negative decision is taken.\nSystemic difficulties which the interpretation adopted by the Court of Appeal would create were not advanced in order to influence the choice of interpretation, Mr Tam claimed, but to demonstrate that an interpretation that leads to such difficulties is not consistent with the purpose of the Reception Directive.\nAs a general principle, it is of course correct that difficulties in implementing legislation may provide a useful guide to the identification of the true purpose of an enactment but where, as here, the purpose of the Directive is unmistakably clear, the fact that this may give rise to administrative difficulties cannot impel an interpretation which is inconsistent with that purpose.\nIt appears to me that Hooper LJ was saying no more when he observed in para 70 that he would be loath to interpret the Reception Directive restrictively because of the administrative problems which this country faces dealing with the backlog.\nIt is, I think, clear that the impact of Article 16 will fall principally on first time applications for asylum.\nI consider that there is force in the appellants argument that the first and second tirets of Article 16 (1) (a) cannot sensibly be applied to subsequent applications.\nMr Tam accepted, however, that the third tiret could perform an effective attenuation of abuse but he characterised this as a bootstrap argument.\nIn other words, just because the third tiret can be applied to those who re apply for asylum after their first application has been finally determined, this is not a reason to expand the overall relevance of the Directive to subsequent applications.\nThis argument is eclipsed, however, by the determination that, for the reasons given earlier, the Directive does apply to subsequent applications.\nOnce that position is reached, the efficacy albeit limited of Article 16 (1) (a) to subsequent applications emerges.\nMr Tam is also undoubtedly right in saying that Article 16 (2) does not apply to subsequent applications but his submission on this point is met by his own bootstrap argument.\nSimply because one aspect of a particular provision is not capable of adaptation to a particular species of application it does not follow that it must fall outside the Directives ambit.\nIn other words, although the principal focus of Article 16 is on first applications, it should not be assumed that it was not intended to cover subsequent applications as well.\nArticle 16 (4) requires individual attention to be given to decisions for reduction, withdrawal or refusal of reception conditions and the appellant has argued that the detailed assessment that this will entail would impose an onerous burden on the immigration authorities which would in turn limit the scope for withdrawal or reduction of reception conditions.\nI cannot accept this argument.\nThere does not appear to be any reason in principle why the State should not be able to adopt what the respondents described as the screening short cut of accelerated determinations, particularly in view of the inroads which Mr Tam has told us are being made in the backlog of repeat applications.\nThe answer to the possibility of abuse in the making of repeat applications must surely lie in the devising of streamlined procedures for identifying and rejecting promptly those that are devoid of merit.\nThis is undoubtedly what was contemplated by certain provisions in the Procedures Directive, particularly Article 24 (1) (a) (which empowers Member States to create specific procedures to allow for a preliminary examination for the purposes of processing cases); and Article 32 (2) (which permits a specific procedure to be applied after a decision has been taken on a previous application).\nRecital 15 of the Procedures Directive is also relevant.\nIt states: (15) Where an applicant makes a subsequent application without presenting new evidence or arguments, it would be disproportionate to oblige Member States to carry out a new full examination procedure.\nIn these cases, Member States should have a choice of procedure involving exceptions to the guarantees normally enjoyed by the applicant.\nThese provisions point powerfully to the way in which the problem of unmeritorious applications should be confronted and dealt with.\nThis is not to be achieved by disapplying the Reception Directive to all repeat applications whether or not they have merit.\nThe problem of undeserving cases should be counteracted by identifying and disposing promptly of those which have no merit and ensuring that those applicants who are genuine are not deprived of the minimum conditions that the Directive provides for.\nA reference under Article 267 of TFEU?\nIn support of the application for a reference to ECJ under Article 267 of TFEU, the appellant relied on Case 283\/81 CILFIT Srl v Ministro della Sanita [1982] ECR 3415.\nAt paragraph 16 of its judgment in that case, the ECJ had said: the correct application of Community Law may be so obvious as to leave no scope for any reasonable doubt as to the manner in which the question raised is to be resolved.\nBefore it comes to the conclusion that such is the case, the national court or tribunal must be convinced that the matter is equally obvious to the courts of the other Member States and to the Court of Justice.\nOnly if those conditions are satisfied, may the national court or tribunal refrain from submitting the question to the Court of Justice and take upon itself the responsibility for resolving it.\nThis sets what appears at first sight to be a very high standard.\nThe national court must not only be convinced that there is no reasonable doubt as to how the question should be answered but must also be of the unequivocal view that its opinion would be shared by courts in all the Member States and the Court of Justice.\nBut I do not believe that this passage was meant to convey to national courts the need to conduct an analysis of how the matter might be approached in all of those other courts.\nRather, it seems to me that what is required is for the national court to conduct a careful examination of the reasoning underlying any contrary argument ranged against the view that it has formed.\nIf, having done so, the court is of the opinion that such an argument, on any conventional basis of reasoning, could not be accepted, a reference should not be made.\nHaving anxiously assessed the appellants arguments against this yardstick, I have come firmly to the view (particularly in light of the legislative history of the Reception Directive and the Procedures Directive) that a reference is not required in this case and I would therefore also dismiss the appellants application under Article 267 of TFEU.\n","output":"The Supreme Court unanimously dismisses the Secretary of States Appeal holding that the Reception Directive can apply to second and subsequent applications for asylum.\nLord Kerr delivered the judgment of the Court.\nThe Supreme Court identified two principal issues in the appeal: (1) whether Article 11 of the Reception Directive applies to a person who has had an application for asylum in the United Kingdom finally determined against him when he makes a further application for asylum, and (2) whether the Court should apply for a reference to the European Court of Justice for a preliminary ruling on the proper interpretation of the Reception Directive, in particular whether it is intended to cover only the first application for asylum made by an individual to a Member State (paras [8][9]).\nIn relation to the first issue, considering the context in which the Reception Directive was made, it is clear that it was part of a comprehensive charter dealing with the various aspects of asylum applications.\nThe Procedures Directive, which was adopted ten months after the Reception Directive was required to be transposed into national law and sets out minimum standards on procedures in Member States for granting and withdrawing refugee status, is part of that charter.\nArticle 2 of both Directives contain virtually identical definitions for the terms application for asylum and applicant or asylum seeker.\nThere can be no doubt that subsequent applications for asylum come within the definitions contained in Article 2 of the Procedures Directive.\nFor the Secretary of State to be correct therefore, the expression application for asylum must be given a different meaning in each of two Directives.\nWhilst as a matter of general principle, later legislation should not operate to change the established meaning of an earlier enactment, the later legislation may give an insight into the proper interpretation of the earlier instrument.\nIn any event, in this case the matter is put beyond doubt by an examination of the legislative history of the two measures (paras [14][15], [22][28]).\nThe proposal for the Reception Directive makes it clear that it had always been intended not only that the definitions of applicant for asylum in both Directives should be the same but also that an application should not be regarded as having been subject to a final decision until all possible remedies had been pursued and determined.\nThis can only mean that subsequent applications would fall within the definitions of application for asylum and asylum seeker in the Reception Directive.\nAccordingly, an application for asylum in the Reception Directive must be interpreted to include a subsequent application made after an original application has been determined and asylum seeker should be construed accordingly to include a person who makes such a subsequent application (paras [29][30]).\nHaving decided to dismiss the appeals for the reasons set out above, the Court then considered the Secretary of States arguments that numerous anomalies would arise if the Reception Directive was held to apply to subsequent asylum claims.\nThe Court concludes that none of the claimed anomalies leads to the view that it was intended that the Reception Directive should not apply to subsequent asylum applications.\nOn the contrary, curious consequences would follow if the Reception were held not to apply to such applications (paras [33][42]).\nThe Secretary of State further argued that if the Reception Directive is held to apply to subsequent applications for asylum, the potential for abuse of the system would be greatly increased.\nThe Secretary of States concern was that applicants would bring wholly unmeritorious claims with the aim of delaying their removal and gaining access to the benefits that the Reception Directive confers.\nWhilst there was some force in the Secretary of States arguments in this context, the Court considers that the problem of unmeritorious applications should be dealt with not by disapplying the Reception Directive to all repeat applications but by identifying and disposing promptly of those which have no merit and ensuring that genuine applicants are not deprived of the minimum conditions that the Reception Directive provides for (paras [43][49]).\nOn the second issue, the Court concluded, particularly in light of the legislative history of the Reception Directive and the Procedures Directive, that a reference to the ECJ was not required (paras [50][51]).\n","id":42}
{"input":"It was not until the end of the last century that those who were thinking about the reform of the law in Scotland paid any attention to the problems created when men and women decide to live together without getting married.\nThe traditional approach was that nothing short of marriage would create rights in each others property in the event of death or separation.\nBut entering into a regular marriage, with all the formalities that this involved, was not essential.\nAs every student of Scots law knows, the common law recognised three ways in which an irregular marriage could be constituted: by declaration de praesenti; by a promise to marry subsequente copula; and by cohabitation with habit and repute.\nThe first two were abolished by the Marriage (Scotland) Act 1938.\nThe third survived until it too was abolished by section 3 of the Family Law (Scotland) Act 2006.\nIrregular marriages had to be proved, however.\nSo a form of action was devised for this purpose.\nEither of the parties could bring proceedings for declarator of marriage, even after the death of the other party.\nThe declarator was a judgment in rem.\nIts effect was to provide conclusive proof that a marriage had been constituted, and it was binding on all persons whomsoever: Longworth v Yelverton (1867) 5 M (HL) 144, per Lord Chancellor Chelmsford at 147.\nThere were various reasons why such an order might be sought.\nUsually it was to obtain the benefit of the property rights that were enjoyed by the parties to a regular marriage.\nBefore the law on legitimacy was reformed it was used to enable the children of the relationship to obtain the rights that were conferred on the children of a marriage too.\nVery occasionally, when it was still the practice for undefended actions of divorce to be heard in the Court of Session, the unremitting diet of divorce proofs would be varied by an action for declarator of marriage which the other party did not wish to defend.\nBut the opportunity of proving a marriage by cohabitation with habit and repute was of use only to those who had the capacity to marry, were free to do so and were content to live together as husband and wife.\nIt was not available to cohabiting couples who had deliberately chosen not to marry.\nAnd couples who had not made that choice but had made no effort to pretend that they were married to each other were unlikely to be able to produce evidence of habit and repute to show that they were living together as husband and wife.\nIt was an unsatisfactory system, as many people who had committed themselves to a relationship as cohabiting couples and were under the impression that their relationship was one of common law marriage were unable to meet the legal requirements of the common law.\nSocial attitudes were changing too, and pre marital cohabitation was becoming the norm.\nOne of the recommendations in the Scottish Law Commissions Report on Family Law (Scot Law Com No 135) (6 May 1992) was that this form of irregular marriage should be abolished, as it was anomalous: recommendation 42.\nIt addressed the issue of cohabitation in Part XVI of the same report.\nThis issue had been the subject of a discussion paper issued two years previously: The Effects of Cohabitation in Private Law (Discussion Paper No 86, May 1990).\nIn para 16.1 of its Report the Scottish Law Commission said that the results of its consultation, and of a survey of public opinion, had confirmed it in its view that there was a strong case for some limited reform of Scottish private law to enable certain legal difficulties faced by cohabiting couples to be overcome and to enable certain anomalies to be remedied.\nIt accepted, however, that legal intervention in this area, as to which widely differing views were held, ought to be limited.\nThere was a respectable body of opinion that it would be unwise to impose marriage like legal consequences on couples who had deliberately chosen not to marry.\nThe reform ought not to undermine marriage, nor should it undermine the freedom of those who had deliberately opted out of marriage.\nIt went on to say that the presumption of equal sharing of household goods acquired during marriage under section 25(2) of the Family Law (Scotland) Act 1985 should, in a case of cohabitation, be modified.\nA comprehensive system of financial provision on termination of cohabitation comparable to the system of financial provision on divorce on principles analogous to those in sections 9(1)(d) or 9(1)(e) of the 1985 Act was not favoured.\nThat would be to impose a regime of property sharing, and in some cases, continuing financial support on couples who might well have opted for cohabitation to avoid such consequences: para 16.15.\nBut the principle in section 9(1)(b), which enables fair account to be taken of any economic advantage derived by either party from contributions by the other, and of any economic disadvantage suffered by either party in the interests of the other party or the family could be applied, quite readily and appropriately, to cohabitants: para 16.18.\nA similar approach was taken to the question whether a surviving cohabitant should succeed on intestacy to his or her deceased partners estate.\nA discretionary system, to enable the court to take account of all the circumstances of the relationship, would be preferable to any fixed rules.\nThese proposals were summarised in recommendations 80 to 83, and a draft Bill was appended to the Report.\nPart III of the Bill dealt with cohabitation.\nMore than 10 years were to pass, however, before legislation was introduced to give effect to these recommendations.\nIn the meantime the trend for couples to prefer cohabitation rather than marriage had increased.\nIt was estimated that, of families by type of family in Scotland, the percentage of cohabiting couple families had increased from 4% in 1991 to 7% in 2001, and that the percentage of married couple families had decreased from 50.7% in 1991 to 42.5% in 2001: Legal of May 2010): Practitioners Perspectives on the Cohabitation Provisions of the Family Law (Scotland) Act 2006 (Centre for Research on Families and Relationships, University see Edinburgh, http:\/\/www.crfr.ac.uk\/reports\/Cohabitation%20final%20report.pdf.\nThis is a trend which can be expected to have continued.\nIn March 1999 the Scottish Office Home Department issued a Consultation Paper entitled Improving Scottish Family Law.\nBut the opportunity to bring the Scottish Law Commissions proposals into law did not present itself at Westminster during the period prior to the coming into effect of the Scotland Act 1998.\nThe process of consultation was then taken up by the Scottish Executive, and on 7 February 2005 a Bill which became the Family Law (Scotland) Act 2006 was introduced by the then Minister for Justice, Cathy Jamieson.\nIt was considered by, among others, the Justice 1 Committee whose Stage 1 Report was published on 7 July 2005.\nIn accordance with the normal procedure the Deputy Minister of Justice, Hugh Henry, provided a detailed written response to the issues raised by the Committee in August 2005.\nThe Stage 2 procedure then followed, and there was a debate in the Parliament on 15 December 2005 when the Bill was passed.\nThe Family Law (Scotland) Act 2006, asp 2, received its Royal Assent on 20 January 2006.\nThis appeal is concerned with the meaning and effect of section 28 of the 2006 Act.\nIt provides that a cohabitant can apply to a court for financial provision when the cohabitation has ended otherwise than by the death of one of the cohabitants.\nThe drafting of this section was much criticised while it was undergoing Parliamentary scrutiny, and the questions that it raises are not free from difficulty.\nThe facts\nThe appellant, Mrs Gow, met the respondent, Mr Grant, in 2001 at a singles club which they had both joined.\nMrs Gow, who was born on 2 January 1937, was then about 64.\nMr Grant, who was born on 18 December 1943, was about 58.\nThey commenced a relationship, and in about December 2002 Mr Grant asked Mrs Gow to live with him at his home in Penicuik.\nMrs Gow agreed to do so if they became engaged to be married, which they then did.\nThey lived together as husband and wife and engaged in an active social life together from June 2003 to January 2008, when their relationship came to an end.\nWhen the parties met they each owned their own home and they were each in employment.\nMrs Gow owned a studio flat in Edinburgh which was subject to an interest only mortgage, of which 11,876 was outstanding in December 2002.\nMr Grant owned a three bedroom house in Penicuik which was free of any mortgage.\nHe encouraged Mrs Gow to sell her flat.\nIndeed, as Sheriff Mackie who conducted the proof put it in para 4 of her note, her evidence, which the sheriff accepted, was that he was adamant that she should do so.\nMrs Gow, as the owner of the property, dealt with the legal and practical aspects of the sale.\nBut Mr Grant discussed the sale with her and gave her advice, particularly as to the price at which the property should be offered.\nThe sheriff held that there was no evidence that Mrs Gow was forced to sell the flat because she was in financial difficulties.\nShe accepted that Mrs Gow sold the property in the interests of furthering her relationship with Mr Grant.\nThe flat was sold in June 2003 for 50,000, from which Mrs Gow received a net sum after repayment of the mortgage and expenses of 36,559.\nShe used the money to repay various debts, including credit card debts and the balance of the cost of a new kitchen, amounting in total to 14,133.\nShe invested 5,000 in a guaranteed investment account and 5,000 in a Sterling Investment Bond, and she loaned 4,000 to her son.\nThe balance of 8,425 was contributed by Mrs Gow to her relationship with Mr Grant, as it was used towards the parties living expenses.\nMr Grant was able to continue to live in his own house when the parties relationship came to an end.\nIt was worth about 200,000 in June 2003.\nMrs Gow continued to live in Mr Grants home until she obtained rented accommodation in June 2009.\nThe sheriff found that the value in July 2009 of the flat which had formerly belonged to her was 88,000.\nThe difference between that figure and the price at which the flat was sold in June 2003 was 38,000.\nMrs Gow was employed as an audio typist until the parties began living together.\nHer contract came to an end in May 2003, and at Mr Grants request she did not seek further work.\nShe was in receipt of an occupational pension and a state pension amounting in total to about 640 per month.\nMr Grant was employed part time as a lecturer at Jewel & Esk Valley College.\nHe was also in receipt of a widowers pension from the Bank of Scotland in excess of 600 per month.\nHe stopped working as a lecturer in 2006, and obtained part time work as a courier.\nDuring their cohabitation the parties purchased two timeshare weeks in their joint names, each of which cost 7,000.\nMrs Gow paid 1,500 towards the first week, and in about July 2005 she surrendered her Sterling Investment Bond and used the proceeds together with other funds to pay the whole price of the second week.\nIn about 2006 her guaranteed investment account matured in the sum of about 6,000.\nShe spent 2,000 on paintings, two of which she gave to Mr Grant, and spent 1,000 on a holiday.\nThe balance of the proceeds was used towards the parties day to day expenses.\nIn consequence of the position in which she found herself when the cohabitation came to an end Mrs Gow brought an action against Mr Grant in the Sheriff Court in Edinburgh, in which she sought payment of a capital sum in terms of section 28 of the 2006 Act.\nIt was not disputed that the parties were cohabitants in terms of section 25 of the Act, which provides that the word cohabitant means, in the case of two persons of the opposite sex, a man and a woman who are, or were, living together as if they were husband and wife.\nMr Grant maintained, however, on various grounds that Mrs Gow was not entitled to any payment under section 28.\nSection 28 of the 2006 Act\nSection 28(1) provides that subsection (2) of that section applies where cohabitants cease to cohabit otherwise than by reason of the death of one (or both) of them.\nSubsections (2) to (6) are in these terms: (2) On the application of a cohabitant (the applicant), the appropriate court may, after having regard to the matters mentioned in subsection (3) (a) make an order requiring the other cohabitant (the defender) to pay a capital sum of an amount specified in the order to the applicant; (b) make an order requiring the defender to pay such amount as may be specified in the order in respect of any economic burden of caring, after the end of the cohabitation, for a child of whom the cohabitants are the parents; (c) make such interim order as it thinks fit. (3) Those matters are (a) whether (and, if so, to what extent) the defender has derived economic advantage from contributions made by the applicant; and (b) whether (and, if so, to what extent) the applicant has suffered economic disadvantage in the interests of (i) the defender; or (ii) any relevant child. (4) In considering whether to make an order under subsection (2)(a), the appropriate court shall have regard to the matters mentioned in subsections (5) and (6). (5) The first matter is the extent to which any economic advantage derived by the defender from contributions made by the applicant is offset by any economic disadvantage suffered by the defender in the interests of (a) the applicant; or (b) any relevant child. (6) The second matter is the extent to which any economic disadvantage suffered by the applicant in the interests of (a) the defender; or (b) any relevant child, is offset by any economic advantage the applicant has derived from contributions made by the defender.\nSubsection (4), (5) and (6) were inserted into the draft Bill at Stage 2 of the proceedings in the Parliament.\nIn subsection (9) the expressions contributions and economic advantage are defined.\nContributions includes indirect and non financial contributions.\nEconomic advantage includes gains in capital, income and earning capacity; and economic disadvantage is to be construed accordingly.\nThe same expressions, together with the phrase in the interests of, appear in section 9(1)(b) of the Family Law (Scotland) Act 1985.\nBut the wording of that provision, which sets out one of the principles which the court is to apply in deciding what order for financial provision to make on divorce, is not the same as that used in section 28(5) and (6) of the 2006 Act.\nSection 9(1)(b) states that fair account is to be taken of any economic advantage and disadvantage, whereas the extent of the economic advantage and disadvantage mentioned in section 28(5) and (6) are matters to which section 28(4) says the court is to have regard in considering whether to make an order under section 28(2)(a).\nNor is the context, as one of the principles to be applied on divorce is that the net value of the matrimonial property should be shared fairly between the parties to the marriage and the sharing is to be taken to have been fair if the property is shared equally: sections 9(1)(a) and 10(1) of the 1985 Act.\nSection 28 requires the court to conduct an entirely different exercise.\nThe proceedings below\nThe sheriff delivered her judgment on 7 December 2009: 2010 Fam LR 21.\nShe observed in para 39 of her note, at the outset of her discussion of the issues, that the approach which she required to adopt was not the same as under section 9(1)(b) of the 1985 Act, as there was no matrimonial property to be divided fairly between the parties.\nConcentrating on the language of section 28 in para 41, she noted that section 28 says that the court may make an order in terms of section 28(2) after having regard to the matters mentioned in section 28(3)(a) and (b).\nSo the court had a discretion to make an order, and a precise calculation of loss did not require to be made.\nIt was significant that the court was not directed to make a fair division of property acquired during or for the purpose of cohabitation.\nHaving regard to section 28(3)(a), the sheriff said in para 48 that she was satisfied that Mrs Gow had contributed financially to the parties expenditure during the period of cohabitation, and that Mr Grant had also derived an economic advantage from her non financial contribution in looking after the house in which the parties cohabited and in other ways.\nShe then had to consider under section 28(5) the extent to which the economic advantage enjoyed by Mr Grant had been offset by economic disadvantage suffered by him in the interests of Mrs Gow.\nIt appeared to her that there was no evidence that he had suffered any such economic disadvantage: para 55.\nAs for section 28(3)(b), the sheriff said in para 56 that she was satisfied on the evidence that Mrs Gow had suffered economic disadvantage in the interests of Mr Grant.\nShe accepted Mrs Gows evidence that the only reason that she sold her house was as a result of Mr Grants encouragement and in the interests of furthering the relationship.\nShe also accepted her evidence that had she not embarked on a new life with Mr Grant she would have continued to maintain her own property and would have continued to work to enable her to do so.\nAs a result of the sale she had lost her principal capital asset, required now to live in rental accommodation and was unlikely to be able to afford to purchase another property.\nShe had enjoyed the benefit of a substantial amount of the sale proceeds, but the balance of 8,000 had been contributed to the parties relationship.\nAs the value of her flat was 88,000 in July 2009, she had suffered economic disadvantage in the interests of Mr Grant to the extent of 38,000, which was the difference between the sale proceeds and the flats current value: para 59.\nAlthough the parties owned the two weeks timeshare jointly, Mrs Gow had paid more than 50% of the price.\nShe had suffered economic disadvantage in the interests of Mr Grant to the extent of 1,500 in the acquisition of these assets: para 60.\nTurning lastly to section 28(6), the sheriff examined the question whether any economic disadvantage suffered by Mrs Gow in the interests of Mr Grant was offset by any economic advantage derived by her from contributions made by Mr Grant.\nIt was not disputed that he had made various contributions, financial and non financial, to the relationship.\nBut in her opinion such contributions as were made were not sufficient to offset the economic disadvantage suffered by Mrs Gow in the interests of Mr Grant: para 65.\nHer conclusion, having regard to the matters to which she was directed to have regard by the statute, was that there was a net economic disadvantage in favour of Mrs Gow, and that she should be compensated in the sum of 39,500.\nMr Grant appealed against the sheriffs decision to the Inner House of the Court of Session.\nThe appeal was heard by the Second Division (the Lord Justice Clerk (Gill), Lord Mackay of Drumadoon and Lord Drummond Young), and the opinion of the court was delivered by Lord Drummond Young on 22 March 2011: [2011] CSIH 25, 2011 SC 618.\nThe appeal was allowed and Mrs Gows application for an award of a capital sum was refused.\nLord Drummond Young noted in para 3 of his opinion that there had been a number of cases which disclosed varying and contradictory approaches to the construction of section 28.\nBut he said that it was not necessary for present purposes for the court to express any view on the detailed issues that arose in them, nor was it necessary for it to express any general view as to the construction of section 28.\nHe did however make two observations.\nFirst, in contrast to the scheme in sections 8 to 10 of the 1985 Act as to the rights of a spouse on divorce, the financial provision which the court was permitted to make by section 28 was in the nature of compensation for an imbalance of economic advantage or disadvantage.\nSecondly, the court had to have regard to the precise wording of the section, and it must be satisfied that the requirements set out in the section are satisfied on the evidence.\nThe difficulties would be minimised if it was recognised that the objective of the section was limited in scope.\nIt was intended to enable the court to correct any clear and quantifiable economic imbalance that might have resulted from cohabitation.\nAfter summarising the findings of fact and the crucial part of the sheriffs reasoning, Lord Drummond Young said in para 9 that the court was of the opinion that the sheriffs award was not justified by her findings of fact.\nThree reasons for this conclusion are set out in that paragraph.\nFirst, what was required by the phrase in the interests of in section 28(3)(b) was that the applicant should suffer an economic disadvantage in a manner intended to benefit the defender.\nIn the present case all that the findings of fact indicated was that Mrs Gow was encouraged to sell her house.\nThe proceeds were then used either for her own purposes or to meet the parties joint living expenses.\nAnd the fact that the sale was encouraged by Mr Grant was clearly insufficient to draw the inference that the transaction was in his interests.\nSecondly, the fact that the sale was intended to further the parties relationship was insufficient to justify the conclusion that it was in the defenders interests.\nThese two matters appeared to the court to be conceptually quite distinct.\nThirdly, to the extent that Mrs Gow might be said to have suffered an economic disadvantage in relation to the timeshares, it was plainly offset by the economic advantage that Mrs Gow derived from Mr Grants contributions towards joint living expenses.\nThe issues\nThe parties are agreed that the decision of the Inner House raises the following issues: (i) Is an intention to benefit the other cohabitant a necessary element of the requirements of section 28(3)(b) and (6)? (ii) Is it necessary for the applicant to establish that the defender derived actual economic benefit as a result of economic disadvantage suffered by the applicant? (iii) Must any benefit so conferred be in the interests of the defender alone, or may it be of benefit to both parties? (iv) Whether, if relevant economic disadvantage is established which is not offset by relevant economic advantage, the court has a discretion as to the amount of any award, and the extent of any such discretion.\nFor Mr Grant it was submitted that, having regard to the ordinary meaning of the text of section 28, an intention to benefit the other cohabitant is essential for a claim under that section to succeed.\nIt was also submitted that, for a claim under that section based on economic disadvantage to succeed, it is necessary for the applicant to establish that, as a result of economic disadvantage suffered by the applicant, the defender has derived economic benefit.\nIt was accepted that the words of the section are not apt to exclude a successful claim where both parties have benefitted from economic disadvantage suffered by the other.\nOn the other hand, for a claim to succeed, it is not sufficient simply to establish economic disadvantage in the interests of the parties wider, non economic affairs, such as the nature of their relationship or other social or emotional concerns.\nThe section requires the court to assess the net economic advantage or disadvantage derived or suffered by each party.\nBackground\nIn order to find an answer to these problems it is necessary to look more closely at the background to the legislation.\nWhat was the mischief that section 28 was designed to address? And what were the principles to which it seeks to give effect?\nAs already mentioned (see para 5, above), the Scottish Law Commission rejected the concept of equal sharing where a relationship of cohabitation was terminated: Report on Family Law, para 16.15.\nOn the other hand it recommended that a former cohabitant should be able to apply for a financial provision based on the principle in section 9(1)(b) of the 1985 Act.\nThe existing common law on unjustified enrichment did not provide a clear or certain remedy: para 16.17.\nThe principle in section 9(1)(b), on the other hand, could be applied, quite readily and appropriately, to cohabitants.\nThe argument for doing so was that it would be unfair to let economic gains and losses arising out of contributions or sacrifices made in the course of a relationship simply lie where they fell.\nApplying it would give them the benefit of a principle which was designed to correct imbalances arising out of a non commercial relationship where parties are quite likely to make contributions or sacrifices without counting the cost or bargaining for a return: para 16.18.\nThe formula which is set out in section 9(1)(b) was adopted in clause 36(2) of the draft Bill which was annexed to the Report.\nIt provided: (2) The court shall make an award to the applicant in pursuance of an application under subsection (1) above only if it is satisfied (a) that the other former cohabitant has derived economic advantage from contributions by the applicant, or that the applicant has suffered economic disadvantage in the interests of the other former cohabitant or their children; and (b) that having regard to all the circumstances of the case it is fair and reasonable to make such an award.\nIn para 16.20 the Commission observed that, although a claim based on contributions or sacrifices could often not be valued precisely, it would provide a way of awarding fair compensation, on a rough and ready valuation, in cases where otherwise none could be claimed.\nThe Deputy Minister for Justice, Hugh Henry, commented on the provisions in the Bill relating to legal safeguards for cohabiting couples and their children in his response to the Justice 1 Committees Stage 1 Report on the Bill in August 2005.\nHe said that it might be helpful if he clarified the policy principles that had informed the detailed drafting.\nThe Executives view was that the function of the law in relation to cohabitants should be both protective and remedial.\nThe law needed to provide a framework for a fair remedy when committed relationships founder or the parties to them are separated by death.\nOur focus in policy terms is therefore on those cohabiting relationships which offer some evidence of the parties commitment to a joint life.\nIt is that evidence that justifies a remedial intervention by law, the allocation of rights and obligations by the parties towards one another, and the redistribution of certain of their property.\nAt the same time, however, we think it would be wrong to impose on cohabitants a legal requirement to support one another financially during the relationship: we can never know why people have not married and chosen not to incur that responsibility and in the absence of such knowledge we believe an obligation of mutual aliment would be unjustifiable.\nOur sense of a fair and just outcome when committed relationships come to an end involves setting a framework for compensation where one partner can show that they have suffered net economic disadvantage in the interests of the relationship.\nReference to Parliamentary material has, of course, become commonplace since the previous rule that excluded this was relaxed by Pepper v Hart [1983] AC 593, and the rather strict rules that were laid down in that case have become gradually more relaxed.\nIt remains the case that this approach should be used only where the legislation is ambiguous, and then only with circumspection.\nWhen it is used, however, the purpose of the exercise is to determine the intention of the legislator.\nThe Deputy Ministers remarks were set out in a letter.\nThey were not made orally in the course of a debate in the Committee or in the Parliament.\nBut I do not think that this, in itself, is a reason for excluding reference to them.\nIt is the normal procedure for Ministers to provide the relevant committee with a letter setting out the governments views in response to issues raised by the committee in its Stage 1 Report.\nThis is the kind of thing that is done orally under the procedures which are familiar in the case of the Parliament at Westminster.\nThe Scottish Parliament has devised a different system of procedure, but that should not inhibit reference to written material of this kind that may be of assistance.\nIn my opinion the Deputy Ministers letter is as much a guide as to the intention of the legislator as if its contents had been set out in a statement made by him to the Justice 1 Committee orally.\nWhen the Bill was debated in the Parliament on 15 December 2005 the Minister for Justice, Cathy Jamieson, said that the Executive had been at pains to ensure two things (Official Report, col 21922): first, that any financial award that the courts make to an applicant addresses the net economic disadvantage that the person may face as a direct result of joint decisions that were made by the couple during the relationship; and secondly, that the economic burden of caring for a child that cohabitants have had together is shared until the child is 16.\nLater in the same contribution which she made to the debate, referring to what is now section 28 of the Act, she said (ibid): Cohabitants are under no legal obligation to aliment each other during their relationship, so there is no reason that we should seek to ensure that they do so when the relationship is over.\nHowever, it is important to achieve fairness.\nThat is why we have adopted the provisions set out in section 21.\nThose provisions will ensure that one partner compensates the other for any net economic disadvantage that has resulted from the relationship that they formed together and that they will share the cost of caring for their children.\nWe believe that that offers fairness to both parties, while respecting their rights to live as they choose without the Government imposing other financial obligations.\nCommon to all these statements is an emphasis on fairness to both parties.\nThis is the principle that lies at the heart of the award that the court is able to make under this section.\nThe words fair and reasonable which were in clause 36(2)(b) of the Scottish Law Commissions draft Bill do not appear anywhere in section 28.\nIt lacks any reference to fairness as the guiding principle.\nBut the background shows that this is what was intended by the legislature.\nSection 28(2) tells the court that it may make the orders of the kind referred to in subsection (1) after having regard to the matters referred to in subsection (3), and the same phrase appears again in subsection (4).\nThe purpose of this exercise must be taken to be to achieve fairness between both parties to the relationship in the assessment of any capital sum that the defender is to be ordered to pay to the other cohabitant.\nThe same approach must be taken to the sharing of the economic burden of caring for any child of whom they are the parents.\nFairness in the context of section 28 embraces a different concept than it does in the context of section 9(1) of the 1985 Act.\nSection 9(1)(a) states that one of the principles that the court must apply is that the net value of the matrimonial property should be shared fairly between the parties to the marriage.\nThis provision must be read together with section 10(1), which states that in applying the principle which it sets out the net value of the matrimonial property shall be taken to be shared fairly when it is shared equally or in such other proportions as are justified by special circumstances.\nAs Sheriff M G Hendry observed in F v D 2009 Fam LR 111, para 7, the rebuttable presumption at the stage of the dissolution of a marriage or civil partnership is that property will be shared fairly if it is shared equally.\nThe rebuttable presumption at the end of cohabitation is that each party will retain his or her own property.\nIn that context what section 28 seeks to achieve is fairness in the assessment of compensation for contributions made or economic disadvantages suffered in the interests of the relationship.\nThe wording of subsections (3), (5) and (6) should be read broadly rather than narrowly, bearing in mind the point that the Scottish Law Commission made in para 16.18 that the principle in section 9(1)(b) of the 1985 Act which these subsections adopt was designed to correct imbalances arising out of a non commercial relationship where parties are quite likely to make contributions or sacrifices without counting the cost or bargaining for a return.\nAs Lady Hale points out (see para 54, below), in most cases it is quite impracticable to work out who has paid for what and who has enjoyed what benefits in kind during the cohabitation, as people do not keep such running accounts and the cost of working things out in detail is quite disproportionate to the task of doing justice between the parties.\nDiscussion\nThe first point to be considered is whether section 9(1)(b) of the 1985 Act has any bearing on the way the matters referred to in section 28(3), (5) and (6) of the 2006 Act should be approached.\nThe Second Division say in para 3 of their opinion that sections 8 to 10 of the 1985 Act have no bearing on the construction of section 28.\nThis, as they observe in the same paragraph, is a matter on which varying and contradictory views have been expressed: contrast, for example, the Lord Ordinarys opinion in M v S [2008] CSOH 125, 2008 SLT 871, para 272, that the provisions, while not absolutely identical, are so similar as to make it clear that the Scottish Parliament must have intended the courts to approach them in the same way, with Sheriff K R W Hoggs observation in Jamieson v Rodhouse 2009 Fam LR 111, para 51 that they are of no assistance.\nIn this case Sheriff Mackie said in para 39 of her note that, as there are no references in section 28 to fair and reasonable division and the Minister for Justice said during Stage 3 of the Bill that the provisions were not about seeking to replicate the financial arrangements between spouses and civil partners, there was force in the argument that one cannot adopt the same approach in its application as that to claims in terms of section 9(1)(b).\nIt is, of course, true that section 28 does not seek to replicate the arrangements that are available for financial provision on divorce or the termination of a civil partnership.\nFor this reason it would not be right to adopt the same approach to the application of that section as would be appropriate if the exercise was being conducted under section 9 of the 1985 Act.\nThe starting points of principle are significantly different: Malcolm, Kendall and Kellas, Cohabitation (2nd edition, 2011), para 1 10.\nBut it is sufficiently clear from the background to the enactment of section 28 that in its case too the underlying principle is one of fairness and that it is designed to correct imbalances of the kind referred to by the Scottish Law Commission in para 16.18 of its Report.\nThe Deputy Minister for Justice referred to the Executives sense of a fair and just outcome: para 28, above.\nThe Minister for Justice too said that it was important to achieve fairness, and that the Executive believed that the provisions offered fairness to both parties: para 30, above.\nAs Sheriff A D Miller put it in Lindsay v Murphy 2010 Fam LR 156, para 58, the statutory purpose does no more than reflect the reality that cohabitation is a less formal, less structured and more flexible form of relationship than either marriage or civil partnership.\nI think therefore, contrary to the views expressed by the Second Division in para 3, that it would be wrong to approach section 28 on the basis that it was intended simply to enable the court to correct any clear and quantifiable economic imbalance that may have resulted from the cohabitation.\nThat is too narrow an approach.\nAs the Commission observed in para 16.20 of its Report, a claim based on contributions or sacrifices in non commercial relationships of the kind that family law must deal with cannot often be valued precisely.\nSection 9(1)(b) enables fair compensation to be awarded, on a rough and ready valuation, in cases where otherwise none could be claimed.\nSection 28 is designed to achieve the same effect.\nSo it may be helpful to refer to cases decided under section 9(1)(b) when the court is considering what might be taken to be an economic advantage, disadvantage or contribution for this purpose or how the economic burden of caring for a child is to be dealt with under section 28(2)(b).\nAn assessment of what is in the interests of any relevant child cannot sensibly be reduced to purely financial factors.\nThe next point is directed to the meaning and effect of the phrase in the interests of the defender in section 28(3)(b) and (6).\nLord Drummond Young said in para 9 of his opinion that the phrase requires that the applicant should suffer economic disadvantage in a manner intended to benefit the defender, and that the transaction in question must have been in that partys interests.\nThat interpretation provided the basis for holding that the sheriff erred in making an award in this case.\nHer findings were that the sale of the house was encouraged by Mr Grant, that it was undertaken in the interests of furthering the relationship and that the proceeds were used in part to meet the parties joint living expenses.\nBut this was held to be insufficient to show that it was intended by Mrs Gow to benefit Mr Grant.\nAn intention to further the parties relationship did not justify the conclusion that the sale was in his interests.\nHere again, however, this is to take too narrow a view of the effect of these provisions.\nThe phrase in the interests of the defender can be taken to mean in a manner intended to benefit the defender.\nBut it does not compel that interpretation, and in the present context, where the guiding principle is one of fairness, its more natural meaning is directed to the effect of the transaction rather than the intention with which it was entered into.\nThe reference to the defender at the end of the phrase does, of course, require that the disadvantage which the applicant suffered was in his interests.\nBut it does not say that this must have been his interests only, or that the fact that it was in the applicants interests also means that it must be left out of account.\nStill less does it say that interests have to be equated with economic advantage or benefit.\nTo adopt that interpretation does not fit easily with a relationship of this kind, where many decisions are taken jointly in its interests without counting the cost or bargaining for a return: see para 16.18 of the Scottish Law Commissions Report.\nNor does it fit in with the reference to the interests of any relevant child in section 28(3)(b).\nI agree with the approach that Sheriff Principal R A Dunlop QC took to this problem in Mitchell v Gibson 2011 Fam LR 53, para 13.\nProvided that disadvantage has been suffered in the interests of the defender to some extent, the door is open to an award of a capital sum even though it may also have been suffered in the interests of the applicant.\nIt seems to me, therefore, that the Second Divisions discussion of the sheriffs reasoning did not give effect to the true meaning and effect of sections 28(3)(b) and (6) of the 2006 Act.\nThe sheriff was entitled to take the sale of the house into account, notwithstanding her findings that the proceeds were used by Mrs Gow for her own purposes or to meet the parties joint living expenses, that it was encouraged by Mr Grant and that it was in the interests of furthering the parties relationship.\nThe question for her was whether, at the end of the exercise directed by the subsections, the applicant was left with some economic disadvantage for which an award might be made.\nBut, as the sheriff said in para 45 of her note, it would be an unusual relationship if parties, from the commencement, proceeded to keep full and detailed accounts of their respective finances so that upon termination a mathematical calculation might be made of any contributions made, economic advantage derived or disadvantage suffered.\nThe Second Division appear to have overlooked the sheriffs finding that the economic disadvantage that Mrs Gow suffered in the interests of Mr Grant was her loss of the benefit of the increase in value of her principal capital asset.\nThey concentrated on Mrs Gows use of the proceeds as showing that the transaction was not, on their interpretation of sections 28(3)(b) and (6), intended to benefit Mr Grant and in his interests.\nThe sheriff, for her part, accepted that Mrs Gow had had the benefit of a substantial amount of the sale proceeds.\nSo she left the proceeds out of account in her assessment.\nBut she had a discretion as to what order she should make.\nThe overriding principle was one of fairness, rather than precise economic calculation having regard, as Lady Hale puts it in para 54, to where the parties were at the beginning of their cohabitation and where they were at the end.\nShe was entitled to hold that the loss of the benefit of the increase in value was an economic disadvantage, and that it was suffered by Mrs Gow in the interests of her relationship with Mr Grant.\nAs she noted in para 66 of her note, when the cohabitation ended Mrs Gow did not have a home whereas Mr Grant still had a home which had increased in value.\nI do not think that her conclusion that Mrs Gow should be compensated for that disadvantage can reasonably be criticised.\nThere remains the sum that the sheriff awarded in relation to the acquisition of the timeshare.\nThe Second Division held in para 10 of their opinion that it was unwarranted.\nTheir reasons for doing so were not based on a finding that, in making this award, the sheriff erred in principle.\nThey were based on their own analysis of the facts.\nReference was made to the fact that the sum in question was relatively small in relation to the parties total expenditure and the fact that they enjoyed a relatively extravagant lifestyle, with both incurring substantial amounts of debt in order to fund it.\nReference was also made to relative significance of the contributions made by one party to the other when set against their level of expenditure.\nIt is clear, however, from the sheriffs note that this part of her award was arrived at after carrying out a careful analysis of all the facts.\nSection 28 leaves both the making of an award and the amount to be awarded to the discretion of the court.\nThere must, of course, be a basis in fact for the decision that it takes.\nBut, as Sheriff Principal Dunlop observed in Mitchell v Gibson, para 13, as with all discretionary decisions, the scope for interference by the appellate court is constrained according to well recognised principles.\nIt is clear that it ought not to interfere with the decision of a judge in the exercise of his discretion unless it can be shown that he misdirected himself in law or failed to take account of a material factor or reached a result which was manifestly inequitable or plainly wrong: Gray v Gray 1968 SC 185, per Lord Guthrie at p 193; see also Little v Little 1990 SLT 785, 786.\nThe making of an award under section 28 of the 2006 Act is as much a matter of discretion as it is under section 9 of the 1985 Act, and the same principles apply in its case too.\nI do not think that the Second Division were able to demonstrate in their reasoning that they had a proper basis for disturbing this part of the sheriffs award.\nConclusion\nIn my opinion the sheriffs approach to the issues with which she was faced in this case cannot be faulted.\nShe based her conclusions on a careful analysis of all the issues that she was directed by section 28 to consider, and it was well within the band of reasonable decisions that were open to her.\nI would allow the appeal, recall the Second Divisions interlocutor and affirm the sheriffs finding in fact and law that the pursuer has suffered economic disadvantage in the interests of the defender to the extent of 39,500.\nLADY HALE (WITH WHOM LORD WILSON AND LORD CARNWATH AGREE)\nI agree that this appeal should be allowed for the reasons given by Lord Hope.\nI add a few words because there are lessons to be learned from this case in England and Wales.\nThe first is that there is a need for some such remedy as this in England and Wales.\nIn July 2007, the Law Commission published their report on Cohabitation: the financial consequences of relationship breakdown (Law Com No 307).\nThey too rejected two of the principles which are applicable to financial relief upon the breakdown of a marriage: they would not impose upon unmarried couples the principle that marital assets should be fairly shared between them or that either should provide for the needs of the other.\nThese reflect the concept of partnership and the responsibilities towards one another which are undertaken in marriage but not in setting up home together.\nBut setting up home together may well result either in benefit to one party or in loss to the other for which it would be fair to expect some redress.\nLike the Scots, therefore, the Law Commission adopted a principle of compensation for the economic advantages and disadvantages resulting from the relationship, although the details of their scheme contained some important differences from the Scots.\nThe Government had invited the Law Commission to undertake the project as a matter of some urgency and, unusually, the Report was produced without a draft Bill attached.\nIn March 2008, however, the Parliamentary Under Secretary of State for Justice (Bridget Prentice) announced that the Government proposed to await the results of research into the Scottish scheme before deciding what to do.\nIt was said then that the Scottish Executive intended to undertake research into the cost of such a scheme and its efficacy in resolving the issues faced by cohabitants when their relationships end.\nThe Government therefore planned to extrapolate the likely cost in England and Wales of bringing into effect a similar scheme and the likely benefits it would bring (Hansard, HC Deb 6 March 2008, c122WS).\nWhile one can understand entirely that it is prudent to try to estimate the likely cost of any new legislation, it is much more difficult to understand how the benefits can be quantified.\nNor can the benefits in England and Wales be directly compared with those in Scotland.\nThe existing law relating to cohabitants property rights is quite different in England and Wales and has led to a good deal of litigation.\nIt has twice recently had to be clarified by the highest court in the land (Stack v Dowden [2007] 2 AC 432, Jones v Kernott [2011] UKSC 53, [2011] 3 WLR 1121).\nThere is some reason to think that a family law remedy such as that proposed by the Law Commission would be less costly and more productive of settlements as well as achieving fairer results than the present law.\nBe that as it may, there is, so far as I am aware, no published research commissioned by the Scottish Executive into the costs and benefits of the Scottish scheme.\nThere is an important piece of research, by Fran Wasoff, Jo Miles and Enid Mordaunt, funded by the Nuffield Foundation, into Legal Practitioners Perspectives on the Cohabitation Provisions of the Family Law (Scotland) Act 2006 (2010), to which Lord Hope refers in paragraph 6 above.\nOne message from that research was that the introduction of broadly similar provisions in England and Wales would not place significant additional demands on court and legal aid resources (CRFR research briefing 51).\nIn September 2011, the Parliamentary Under Secretary of State for Justice Mr Jonathan Djanogly made the following announcement (Hansard, HC Deb 6 September 2011 cc15 16WS) : The findings of the research into the Scottish legislation do not provide us with a sufficient basis for change in the law.\nFurthermore, the family justice system is in a transitional period, with major reforms already on the horizon.\nWe do not therefore intend to take forward the Law Commissions recommendations for reform of cohabitation law in this Parliamentary term.\nIn the House of Lords, it became clear that the research referred to was the study by Fran Wasoff and her colleagues.\nLord McNally emphasised, however, that (Hansard, HL Deb, 6 September 2011, c 119): The main message to concentrate on is that a significant period of change is due in the family justice system, which we are using to consider legislation in general.\nWe have taken the Scottish research on board, but it is, as I say, rather narrow, very early and not enough to persuade us that we should implement the Law Commissions recommendations now.\nResponding to the Governments announcement (Law Commission, 6 September 2011), Professor Elizabeth Cooke, the Law Commissioner who leads the Commissions work in family and property law, said this: We hope that implementation will not be delayed beyond the early days of the next Parliament, in view of the hardship and injustice caused by the current law.\nThe prevalence of cohabitation, and the birth of children to couples who live together, means that the need for reform of the law can only become more pressing over time.\nAs Professor Cooke also pointed out, the existing law is uncertain and expensive to apply and, because it was not designed for cohabitants, often gives rise to results that are unjust.\nThe reality is that the sufficient basis for changing the law had already been amply provided by the long standing judicial calls for reform (dating back at least as far as Burns v Burns [1984] Ch 317, at 332); by the Law Commissions analysis of the deficiencies in the present law and the injustices which can result; by the demographic trends towards cohabitation and births to cohabiting couples, which are even more marked south of the border than they are in the north; and by the widespread belief that cohabiting couples are already protected by something called common law marriage which has never existed in the south.\nThere was no need to wait for experience north of the border to make the case for reform.\nThe second lesson is that reform needs to cater for a wide variety of cohabiting relationships which may result in advantage or, more commonly, disadvantage to one of the parties.\nThere is a tendency to concentrate upon the younger couples who have children, where one of them suffers financial disadvantage as a result of having to look after the children both during and after the relationship.\nIt may be very difficult to say that the other party has derived any economic advantage from those sacrifices, but it is entirely fair that he should compensate the childrens carer for the disadvantages that she has suffered.\nThis case is an example of such disadvantages arising in a completely different context, but one which is by no means uncommon these days: a mature couple, both of whom have been married before, each of whom has a home and an income from pensions or employment, but where one of them gives up her home and at least some of her income as a result of their living together (an occupational widows pension, for example, may well be lost on cohabitation as well as marriage).\nAt the end of the relationship, one of them may be markedly less well off than she was at the beginning, whereas the other may be in much the same position as he was before or even somewhat better off.\nSuch cases should not be forgotten in any scenario testing of proposed reforms (although they do not feature in the worked examples given in Appendix B to the Law Commissions Report).\nThis case also illustrates the fact, well established by research, that many, even most, cohabiting couples have not deliberately rejected marriage (A Barlow, S Duncan, G James and A Park, Marriage, Cohabitation and the Law, 2005).\nFor many couples, co habitation is a preliminary to the marriage they hope to enter into one day.\nIn this case, it is stronger than that: Mrs Gow only agreed to move in with Mr Grant if they became engaged to be married.\nA third lesson from Scotland is that the lack of any definition of cohabitation, or a qualifying period of cohabitation for couples who do not have children, has not proved a problem.\nVery few cases have involved short relationships and people have not disputed whether or not they have been cohabitants, although they have sometimes disputed when their cohabitation came to an end.\nIt might be less productive of disputes for there to be no minimum qualification period in England and Wales and, equally, for there to be no one year limitation period from the end of the cohabitation in Scotland (Wasoff et al; see also J Miles, F Wasoff and E Mordant, Cohabitation: lessons from research north of the border? (2011) 23 CFLQ 302).\nA fourth lesson from Scotland is that the compensation principle, although attractive in theory, can be difficult to apply in practice because of the problems of identifying and valuing those advantages and disadvantages.\nLord Lesters Cohabitation Bill, which received a second reading in the House of Lords on 13 March 2009 (see Hansard, HL Deb, 13 March 2008, cc1413 1443), would have given the courts a much wider discretion to do what was just and equitable having regard to all the circumstances.\nThe Law Commissions proposals sought to cut down the problems by focussing on the end of the relationship: on the benefit retained by one party and on the present and future losses sustained by the other.\nThe object was to avoid protracted analysis of what may be called water under the bridge: every past gain and loss over the course of a long relationship, regardless of whether they have any enduring impact at the point of separation (see J Miles et al, (2011) 23 CFLQ 302, 316).\nThis case illustrates the problem very well.\nIt is in most cases quite impracticable to work out who has paid for what and who has enjoyed what benefits in kind during the cohabitation.\nPeople do not keep such running accounts and the cost of working things out in detail is quite disproportionate to the task of doing justice between the parties.\nSection 28(3)(a) and (9) requires regard to be had to non financial contributions; the economic disadvantage to which regard must be had under section 28(3)(b) must be suffered in the interests of the other, but does not have to amount even to a non financial contribution.\nWho can say whether the non financial contributions, or the sacrifices, made by one party were offset by the board and lodging paid for by the other? That is not what living together in an intimate relationship is all about.\nIt is much more practicable to consider where they were at the beginning of their cohabitation and where they are at the end, and then to ask whether either the defender has derived a net economic advantage from the contributions of the applicant or the applicant has suffered a net economic disadvantage in the interests of the defender or any relevant child.\nThere is nothing in the Scottish legislation to preclude such an approach, as the court is bound to be assessing the respective economic advantage and disadvantage at the end of their relationship.\nThe English proposals make it rather clearer.\nFinally, the case illustrates that it may be unwise to be too prescriptive about the order which the court should make to redress such advantage or disadvantage.\nIn principle, if one party has derived a clear and quantifiable economic benefit from the economic contributions of the other, it may be fair to order what is, in effect, restitution of the value of that benefit.\nBut sometimes the benefit will result from non financial contributions or be very hard to quantify.\nEven more problematic are the cases where there is identifiable economic disadvantage, as here, without a corresponding economic advantage.\nIn some cases, it may be entirely fair to expect the better off partner to compensate the other in full for the losses she has sustained as a result of their relationship: as, for example, where a rich widower persuades a widow to give up her secure tenancy and widows pension to move in with him and can well afford to put her back in the position in which she was before their cohabitation began.\nIn others, this may be impossible or quite unfair.\nThus, it seems to me, the flexibility inherent in the Scottish provisions is preferable to the Law Commissions proposal that the losses should be shared between them.\nOn the other hand, the Law Commissions proposed list of factors to be taken into account in the exercise of the courts discretion might be a useful addition to the Scottish law, as also might the power to make a periodical payments order in those rare cases where it is not practicable to make an order that a capital sum be paid by instalments.\nThe main lesson from this case, as also from the research so far, is that a remedy such as this is both practicable and fair.\nIt does not impose upon unmarried couples the responsibilities of marriage but redresses the gains and losses flowing from their relationship.\nAs the researchers comment, The Act has undoubtedly achieved a lot for Scottish cohabitants and their children.\nEnglish and Welsh cohabitants and their children deserve no less.\n","output":"This appeal is concerned with the meaning and effect of section 28 of the Family Law (Scotland) Act 2006 which, for the first time, enables a cohabitant to apply to the court for a financial provision where the cohabitation ends otherwise than by the death of one of the parties.\nThe court may make an order for payment by the other cohabitant of a capital sum, having regard to whether that party (the defender) has derived economic advantage from contributions made by the applicant and whether the applicant has suffered economic disadvantage in the interests of the defender or any child.\nThe court must then have regard to the extent to which any economic advantage derived by one party is offset by economic disadvantage suffered by that party, or economic disadvantage suffered by one party is offset by economic advantage derived by that party.\nThe Appellant, Mrs Gow, met the Respondent, Mr Grant in 2001, when she was about 64 years old and he was about 58.\nThey commenced a relationship, and in about December 2002 Mr Grant asked Mrs Gow to move in with him at his home in Penicuik.\nMrs Gow agreed to do so if they became engaged, which they then did.\nThey lived together as husband and wife and engaged in an active social life together until January 2008, when their relationship came to an end.\nWhen the parties met Mrs Gow also owned a flat in Edinburgh.\nAfter the couple moved in together, Mr Grant strongly encouraged Mrs Gow to sell her property, which she did in June 2003.\nThe sheriff held that there was no evidence that Mrs Gow was forced to sell the flat because she was in financial difficulties.\nRather, she had sold the property in the interests of furthering her relationship with Mr Grant.\nThe net proceeds of the sale had been used partly for her own purposes and partly for the couples living expenses.\nMrs Gow continued to live in Mr Grants home until she obtained rented accommodation in June 2009.\nThe sheriff found that the value in July 2009 of Mrs Grants former flat was 88,000.\nThe difference between that figure and the price at which the flat was sold in June 2003 was 38,000.\nThe sheriff also heard evidence that during their cohabitation the parties purchased two timeshare weeks in their joint names, each of which cost 7,000.\nMrs Gow paid 1,500 towards the first week, and the whole price of the second week.\nThe sheriff recognised that the language of section 28 allowed her a discretion to make an order and that a precise calculation of loss, based on specific payments and receipts, did not require to be made.\nHer conclusion, having regard to the relevant matters, was that Mrs Gow had suffered a net economic disadvantage, and that she should be compensated in the sum of 39,500.\nMr Grants appeal to the Inner House was allowed and the sheriffs award of a capital sum to Mrs Gow was set aside.\nThe Supreme Court unanimously allows Mrs Gows appeal, overturns the decision of the Second Division, and affirms the sheriffs finding that the Appellant has suffered economic disadvantage in the interests of the Respondent to the extent of 39,500.\nThe leading judgment is given by Lord Hope, with whom Lady Hale, Lord Wilson, Lord Reed and Lord Carnwath agree.\nA concurring judgment is also given by Lady Hale, with whom Lord Wilson and Lord Carnwath also agree.\nSection 28 does not seek to replicate the arrangements that are available for financial provision on divorce or the termination of a civil partnership.\nFor this reason it would not be right to adopt the same approach to the application of that section as would be appropriate if the exercise was being conducted under section 9 of the Family Law (Scotland) Act 1985.\nThat would be to impose a regime of property sharing, and in some cases,\ncontinuing financial support, on couples who might well have opted for cohabitation to avoid such consequences.\nBut it is sufficiently clear from the background to the enactment of section 28 that in its case too the underlying principle is one of fairness.\nThe section is designed to enable the court to correct imbalances arising out of a non commercial relationship where parties are quite likely to have made contributions or sacrifices without counting the cost or bargaining for a return.\nThe statutory purpose does no more than reflect the reality that cohabitation is a less formal, less structured and more flexible form of relationship than either marriage or civil partnership [35].\nIt would therefore be wrong to approach section 28 on the basis that it was intended simply to enable the court to correct any clear and quantifiable economic imbalance that may have resulted from the cohabitation.\nThat is too narrow an approach.\nSection 9(1)(b) of the 1985 Act enables fair compensation to be awarded, on a rough and ready valuation, in cases where otherwise none could be claimed.\nSection 28 of the 2006 Act is designed to achieve that effect.\nSo it may be helpful to refer to cases decided under section 9(1)(b) when the court is considering what might be taken to be an economic advantage, disadvantage or contribution for this purpose or how the economic burden of caring for a child is to be dealt with under section 28(2)(b).\nAn assessment of what is in the interests of any relevant child cannot simply be reduced to purely financial factors [36].\nThe phrase in the interests of the defender can be taken to mean in a manner intended to benefit the defender as the Second Division indicated.\nBut it does not compel that interpretation, and in the present context, where the guiding principle is one of fairness, its more natural meaning is directed to the effect of the transaction rather than the intention with which it was entered into.\nProvided that disadvantage has been suffered in the interests of the defender to some extent, the door is open to an award of a capital sum even though it may also have been suffered in the interests of the applicant [38].\nThe sheriff was therefore entitled to take the sale of the house into account, notwithstanding her findings that the proceeds were used by Mrs Gow for her own purposes or to meet the parties joint living expenses, that it was encouraged by Mr Grant and that it was in the interests of furthering the parties relationship [39].\nThe sheriff was also entitled to hold that the loss of the benefit of the increase in value was an economic disadvantage, and that it was suffered by Mrs Gow in the interests of her relationship with Mr Grant.\nWhen the cohabitation ended Mrs Gow did not have a home whereas Mr Grant still had a home which had increased in value.\nMrs Gow should be compensated for that disadvantage [40].\nIn relation to the sums spent on acquisition of the timeshare, this was a matter for the discretion of the sheriff.\nHer note indicates that this part of her award was arrived at after carrying out a careful analysis of all the facts.\nThe Second Division therefore had no proper basis for disturbing this part of the award [41 42].\nLady Hale states that there are lessons to be learned from this case in England and Wales.\nThere is a need for some such remedy south of the border.\nSufficient basis for changing the law has been amply provided by the long standing judicial calls for reform; by the Law Commissions analysis of the deficiencies in the present law and the injustices which can result; by the demographic trends towards cohabitation and births to cohabiting couples, which are even more marked south of the border than they are in Scotland; and by the widespread belief that cohabiting couples are already protected by something called common law marriage which has never existed in the south [50].\nThe main lesson from this case, as also from the research carried out in Scotland and England to date, is that a remedy such as this is both practicable and fair, focusing on where parties were at the beginning of the relationship and where they are at the end.\nIt does not impose upon unmarried couples the responsibilities of marriage but redresses the gains and losses flowing from their relationship [56].\n","id":43}
{"input":"The Aarhus Convention (more fully, the Convention on Access to Information, Public Participation in Decision Making and Access to Justice in Environmental Matters) requires that the procedures to which it refers should be fair, equitable, timely and not prohibitively expensive (article 9.4).\nAlthough the United Kingdom is a party to the Convention, it is not directly applicable in domestic law.\nHowever, the same requirements have been incorporated by amendments made in 2003 into directives, relating in particular to environmental impact assessment (EIA Directive 85\/337\/EEC) and integrated pollution prevention and control (IPPC Directive 96\/61\/EC); compliance was required by 25 June 2005 (Council Directive 2003\/35\/EC article 6) (The EIA Directive is now consolidated at 2011\/92\/EC).\nIt has not been disputed that the present proceedings, though begun before that date, are at least at this level subject to what I will call the Aarhus tests under directly applicable European law.\nFor reasons explained in its judgment of December 2010 ([2010] UKSC 57; [2011] 1 WLR 79), the Supreme Court referred to the Court of Justice of the European Union (CJEU) certain questions relating to the expression not prohibitively expensive.\nThe reference followed the dismissal of the substantive appeal, and the making of an order for costs against the effective appellant, Mrs Pallikaropoulos (Edwards v Environment Agency [2008] 1 WLR 1587; [2008] UKHL 22).\nThe answers of the CJEU were given in a judgment dated 11 April 2013: Edwards v Environment Agency (No 2) (Case C 260\/11) [2013] 1 WLR 2914 (following an opinion of Advocate General Kokott dated 18 October 2012).\nWe heard oral submissions from the parties on 22 July 2013.\nFollowing that hearing it was agreed that our decision would be deferred pending receipt of the same Advocate Generals opinion in infraction proceedings against the United Kingdom relating to alleged non implementation of the directives.\nThat opinion was delivered on 12 September 2013 (Commission of the European Union v United Kingdom (Case C 530\/11)).\nWe have received further submissions of the parties on that opinion.\nWe have also been informed that a request by the UK government to reopen the oral procedure in that case has been refused by the court.\nJudicial review proceedings\nBefore turning to those issues, it is necessary to recall briefly the subject matter, and somewhat unusual course, of the substantive judicial review proceedings, including the circumstances in which Mrs Pallikaropoulos became a party.\nThe proceedings concerned a cement works in Rugby.\nOn 12 August 2003 the Environment Agency issued a permit to continue operations with an alteration in its fuel from coal and petroleum coke to shredded tyres.\nThis proposal gave rise to a public campaign on environmental grounds, one opponent being a local pressure group called Rugby in Plume.\nJudicial review proceedings were begun on 28 October 2003 challenging the Agencys decision.\nThe proceedings were begun in the name of a local resident, Mr David Edwards.\nThe background to his involvement was described by Keith J, when permitting the claim to proceed ([2004] EWHC 736 (Admin)), paras 12 13).\nHe noted the public campaign led by Rugby in Plume, its leading light being Mrs Pallikaropoulos, who claimed to speak for between 50,000 and 90,000 local residents affected by the proposals, and to have committed substantial funds of her own to the campaign.\nFollowing the decision of the Rugby Borough Council, on advice from leading counsel, not to pursue its own claim for judicial review, she was reported as pledging to carry on the battle using legal aid, and was also reported as saying: I'm too rich [to get legal aid], because I own my own house, so someone in Rugby has to come forward who feels strongly enough to take the case forward under the legal aid scheme.\nAlthough there was no direct evidence from Mr Edwards that he had responded to this request for assistance, the judge found it difficult to resist the inference that he had been put up as a claimant in order to secure public funding of the claim by the Legal Services Commission when those who are the moving force behind the claim believe that public funding for the claim would not otherwise have been available.\nKeith J held that this somewhat unconventional background neither deprived Mr Edwards of a sufficient interest to bring judicial review proceedings, nor constituted an abuse of process.\nThere was no appeal from that conclusion.\nIt had the consequence that the proceedings in the High Court continued at public expense and without significant risk to the applicant, or to his supporters, of an adverse costs order if they lost.\nThe substantive application was heard by Lindsay J and dismissed on 19 April 2005: [2005] EWHC 657 (Admin), [2006] Env L R 56.\nHe observed that the public opposition was not unnatural: I say that that was not unnatural as burning rubber is notorious for the noxious smell given off and the dense smoke created and many, unaware of the way in which the chipped tyres would be burned in a modern state of the art kiln at temperatures of up to 1400 degrees, would expect and fear the worst. (para 5) However, as he found in the course of his judgment, these fears, natural or not, were contradicted by the evidence.\nHe dismissed an argument that the proposal was a change which may have significant adverse effects on the environment (EIA Directive Annex II para 13), saying: it is plain that tyre burning in itself as a fuel has no significant adverse effects on the environment and, indeed, overall may even have beneficial effects on the environment. (para 31).\nLord Hoffmann, giving the leading judgment in the House of Lords on the substantive appeal, described this as an unchallenged finding of fact that the only change in operation proposed by the application, namely the use of tyres, would not have significant negative effects on human beings or the environment ([2008] 1 WLR 1587, para 30) Lindsay J rejected grounds alleging non compliance with the two directives.\nHe upheld a complaint of procedural unfairness by the Agency arising from failure to disclose an internal assessment report AQMAU 1 relating to emissions of particulate matter (PM10), but exercised his discretion to refuse relief.\nHe also declined to make a reference to the CJEU.\nMr Edwards appealed to the Court of Appeal with permission granted by Keene LJ.\nThe appeal was heard over three days beginning on 6 February 2006, and was dismissed on similar grounds, including the exercise of discretion ([2006] EWCA Civ 877; [2007] Env LR 126).\nThe court held that the change was not a project within the meaning of the EIA directive, but that if that were wrong there had been substantial compliance.\nOn the procedural issues, Auld LJ observed: given the Judge's finding on the evidence before him of no environmental harm from the plant and the continuous and dynamic nature of the PPC regulatory system enabling assessments to be made on what is known rather than predicted by AQMAU over three years ago, it would be pointless to quash the permit simply to enable the public to be consulted on out of date data. (para 126) The court again declined to make a reference to the CJEU.\nThere had been an unexpected development on the third and final day of the hearing.\nMr Edwards, while wishing to continue with his appeal, withdrew his instructions from both solicitors and counsel (Mr Wolfe QC).\nMrs Pallikaropoulos, described by Auld LJ as a prime mover, who had been in court throughout the appeal, applied without objection to be joined as an additional appellant.\nThis course was described by Auld LJ as plainly in the public interest to enable the appeal to be concluded.\nHe agreed to Mr Wolfes proposal that her potential liability to costs in the Court of Appeal should be capped at 2,000.\nFollowing dismissal of the appeal, the respondents costs capped at this level were awarded against her.\nShe was given leave to appeal by the House of Lords.\nShe applied to the House of Lords for an order varying or dispensing with the ordinary requirement, under the applicable practice direction of the House (not replicated in the new Supreme Court rules), to give security for costs in the sum of 25,000, and for a protective costs order, under the principles set out in R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, [2005] 1 WLR 2600.\nOn 22 March 2007 the Judicial Office wrote to the parties informing them that the applications had been rejected for the following reasons: Their Lordships proceed on the basis that the appeal raises an issue or issues of general importance and they are prepared to assume that [existence] of private interest may not always preclude the making of a special costs order in such a case.\nBut their Lordships do not accept that information about the applicant's means, about the identity and means of any who she represents and about the position generally in the absence of any special order, are or should be regarded as immaterial; further, they do not consider that the suggested protective orders regarding costs appear proportionate on the information which is before them and in the light of the nature of the issues involved; and they do not consider that any case has been made for saying that the proposed appeal would be 'prohibitively expensive' or that Directive 2003\/35\/EC would be breached without a special order.\nMrs Pallikaropoulos was evidently not deterred by that ruling.\nThe security was duly paid and the appeal proceeded.\nIn the substantive hearing before the House of Lords, the main issues came down to two, one of interpretation of the EIA Directive, the other procedural.\nThe first was whether the proposed use of tyres and the related adaptations constituted a waste disposal installation within paragraph 10 of Annex I to the Directive, rather than a change or extension of an Annex I project, within paragraph 13 of Annex II.\nThe main practical difference was that paragraph 13 was limited to changes which may have significant adverse effects on the environment, and therefore (on the findings of Lindsay J) would have had no application to this case.\nThe second issue was one of fairness, relating to failure to disclose the AQMAU report.\nThe House split on the issue of interpretation: the majority held that that the proposal was not within paragraph 10, but accepted that, if this point had been determinative, a reference to the European Court would have been necessary.\nHowever, all were agreed that it was not determinative, because, if the EIA directive applied, its requirements had been complied with (para 58, per Lord Hoffmann; para 82, per Lord Mance).\nOn the procedural issue, Lord Hoffmann doubted whether a common law duty arose as claimed (para 44), but held in agreement with the courts below that relief should in any event be refused since the relevance of the reports had been completely overtaken by events, in the shape of more recent reports showing no exceedances as a result of the Cemex plant (para 64 65).\nThe dispute over costs\nThe present dispute arises out of the order for costs of the appeal in the House of Lords made on 18 July 2008 in favour of both respondents, the Environment Agency and the Secretary of State.\nThey submitted bills totalling respectively 55,810 and 32,290.\nIn the course of the assessment, following transfer of jurisdiction to the Supreme Court, the costs officers determined, as a preliminary issue, that in accordance with the directives they should disallow any costs which they considered prohibitively expensive ([2011] 1 WLR 79, 92 et seq).\nOn the defendants application to the full court for a review, it was decided that the costs officers had had no jurisdiction to consider this issue, but that it was a matter that could be considered by the court under its jurisdiction to correct a possible injustice arising from the original costs order ([2011] 1 WLR 79 para 35, per Lord Hope).\nAs to the application of the Aarhus test, the court referred to the judgment of Sullivan LJ in R (Garner) v Elmbridge Borough Council [2011] 3 All ER 418; [2010] EWCA Civ 1006, in which he had identified an important point of principle, as to whether the question should be approached objectively or subjectively: Should the question whether the procedure is or is not prohibitively expensive be decided on an 'objective' basis by reference to the ability of an 'ordinary' member of the public to meet the potential liability for costs, or should it be decided on a 'subjective' basis by reference to the means of the particular claimant, or upon some combination of the two bases? (para 42) Sullivan LJ had taken the view that a purely subjective approach would not be consistent with the objectives underlying the Directive.\nOn the facts of the Garner case, which was concerned only with the position at first instance, he held that an order should have been made capping the claimants potential costs liability to the defendant at 5,000.\nLord Hope thought it plain that the difficult issues highlighted by Sullivan LJ had not been previously addressed by the House of Lords in the present case, either when declining to make a protective costs order or in its final order for costs, both decisions apparently being based on a purely subjective approach (para 33).\nHe concluded that there was no clear and simple answer, and that accordingly a reference should be made to the CJEU for guidance, the order for costs being stayed in the meantime (para 36).\nGovernment consultation\nWhile the reference was pending, the government issued a consultation paper on the issue of cost capping, and the scope for providing clearer guidance in the procedural rules: Costs Protection for Litigants in Environmental Judicial Review Claims (CP16\/11 October 2011).\nThis consultation ran in parallel with the consultation on the proposals for reform of costs rules generally, following the report of Jackson LJ.\nThe paper noted the developing practice of the courts: 18 A number of domestic cases dating from R (Corner House Research) v Secretary of State for Trade and Industry [2005] 1 WLR 2600 including R (Garner) v Elmbridge Borough Council [2011] 1 Costs LR 48 (8 September 2010), have set out the basic principles underpinning the use of PCOs in judicial review proceedings. 19 The cases did not provide detailed guidance on the level at which a PCO should be set, but Garner made it clear that a level of twice the national average income would be too high.\nIn Garner itself the court awarded a PCO at 5,000.\nOne question raised was whether any figure laid down by the rules should be absolute, or merely presumptive: 27 An absolute cap would have the advantage for users of providing the most certainty, but it would also provide the same protection for wealthy organisations and individuals as for those of more limited means.\nA presumptive limit would be more capable of being targeted at those most in need, but if too flexible could give rise to unnecessary and time consuming arguments about costs.\nAs to the level of cap a figure of 5,000 was proposed: 35 Taking account of the levels which are currently being used by the courts as well as the importance of setting a level which could not be further reduced, it is proposed that the cap should be set at a level of 5,000.\nThis is on the basis that any claimant who is so impecunious that the possibility of being liable for 5,000 would present an insuperable barrier to proceeding would in most cases be eligible for legal aid, with its attendant cost protection in any event.\nThe conclusions on these issues were given in a Report on Response to Consultation (CP(R) 16\/11 August 2012).\nAs to the level of the cap, it was noted that while there was only minority support for the proposed cap of 5,000 there was no strong consensus for any alternative: 3 On the basis of the results of this consultation and the evidence of current practice in the courts, the Government takes the view that a cap of 5,000 is a proportionate amount to ask individual claimants to pay.\nOn the same basis it believes that it is reasonable to make a distinction between the position of individuals and organisations and therefore proposes to set a cap of 10,000 for organisations.\nConsideration was also given to the position on appeal: 8 The similarity of the proposals to a fixed costs regime indicates in the Governments view, and as one respondent strongly argued, that it will be appropriate for appeals to be dealt with in accordance with the rule proposed by Lord Justice Jackson for appeals in cases to which a fixed or restricted costs regime applied at first instance.\nUnder that rule, when it is implemented as part of the wider Jackson reforms, the judge considering whether to give permission to appeal in a case which was subject at first instance to a fixed or restricted costs regime will at the outset determine the appropriate costs limit or limits having had regard to the decisions in the lower court.\nThese proposals were given effect by amendment to the Civil Procedure Rules.\nIt is enough for present purposes to refer to a summary of the changes in an update to the rules dated 1 April 2013: Amendments are made to comply with the Aarhus Convention so that any system for challenging decisions in environmental matters is open to members of the public and is not prohibitively expensive.\nTwo limits are set: on the costs recoverable by a defendant from a claimant (5,000 where the claimant is an individual and 10,000 in any other circumstances) and; on the costs recoverable by a claimant from a defendant (35,000).\nConsequential amendments are made to PD 25A, Part 54 and the Pre Action Protocol Judicial Review.\nThe amendments do not apply to a claim commenced before 1 April 2013.\nFor appeals a new rule was added in CPR 52: Orders to limit the recoverable costs of an appeal 52.9A.(1) In any proceedings in which costs recovery is normally limited or excluded at first instance, an appeal court may make an order that the recoverable costs of an appeal will be limited to the extent which the court specifies. (2) In making such an order the court will have regard to (a) the means of both parties; (b) all the circumstances of the case; and (c) the need to facilitate access to justice. (3) If the appeal raises an issue of principle or practice upon which substantial sums may turn, it may not be appropriate to make an order under paragraph (1). (4) An application for such an order must be made as soon as practicable and will be determined without a hearing unless the court orders otherwise.\nIn the Supreme Court, the Costs Practice Direction No 13 (as amended with effect from November 2013) now includes specific provision for an order limiting the recoverable costs of an appeal in an Aarhus Convention claim (para 2.2.c).\nThe CJEUs decision\nThe court reaffirmed the principles established in its judgment in Commission of the European Communities v Ireland (Case C 427\/07) [2010] Env LR 123; [2009] ECR I 6277, noting in particular that Aarhus Convention does not affect the powers of national courts to award reasonable costs, and that the costs in question are all the costs arising from participation in the judicial proceedings (paras 25 27).\nIn response to the questions raised by the Supreme Court, it began by affirming the duty of member states to ensure that the directive is fully effective, while retaining a broad discretion as to the choice of methods (para 37).\nThe national court, in turn, when ruling on issues of costs, must satisfy itself that that requirement has been complied with, taking into account both the interest of the person wishing to defend his rights and the public interest in the protection of the environment (para 35).\nThe following paragraphs of the judgment, which contain the substantive guidance, must be set out in full: 40 That assessment cannot, therefore, be carried out solely on the basis of the financial situation of the person concerned but must also be based on an objective analysis of the amount of the costs, particularly since, as has been stated in para 32 of the present judgment, members of the public and associations are naturally required to play an active role in defending the environment.\nTo that extent, the cost of proceedings must not appear, in certain cases, to be objectively unreasonable.\nThus, the cost of proceedings must neither exceed the financial resources of the person concerned nor appear, in any event, to be objectively unreasonable. 41 As regards the analysis of the financial situation of the person concerned, the assessment which must be carried out by the national court cannot be based exclusively on the estimated financial resources of an average applicant, since such information may have little connection with the situation of the person concerned. 42 The court may also take into account the situation of the parties concerned, whether the claimant has a reasonable prospect of success, the importance of what is at stake for the claimant and for the protection of the environment, the complexity of the relevant law and procedure and the potentially frivolous nature of the claim at its various stages: see, by analogy, DEB Deutsche Energiehandels und Beratungsgesellschaft mbH v Bundesrepublik Deutschland (Case C 279\/09) [2010] ECR I 13849, para 61. 43 It must also be stated that the fact, put forward by the Supreme Court of the United Kingdom, that the claimant has not been deterred, in practice, from asserting his or her claim is not in itself sufficient to establish that the proceedings are not, as far as that claimant is concerned, prohibitively expensive for the purpose (as set out above) of Directives 85\/337 and 96\/61. 44 Lastly, as regards the question whether the assessment as to whether or not the costs are prohibitively expensive ought to differ according to whether the national court is deciding on costs at the conclusion of first instance proceedings, an appeal or a second appeal, an issue which was also raised by the referring court, no such distinction is envisaged in Directives 85\/337 and 96\/61, nor, moreover, would such an interpretation be likely to comply fully with the objective of the European Union legislature, which is to ensure wide access to justice and to contribute to the improvement of environmental protection. 45 The requirement that judicial proceedings should not be prohibitively expensive cannot, therefore, be assessed differently by a national court depending on whether it is adjudicating at the conclusion of first instance proceedings, an appeal or a second appeal.\nA number of significant points can be extracted from the Edwards judgment: First, the test is not purely subjective.\nThe cost of proceedings must not exceed the financial resources of the person concerned nor appear to be objectively unreasonable, at least in certain cases. (The meaning of i) the latter qualification is not immediately obvious, but it may be better expressed in the German version in Einzelfllen, meaning simply in individual cases.) The justification is related to the objective of the relevant European legislation (referred to in para 32 of the judgment), which is to ensure that the public plays an active role in protecting and improving the quality of the environment. ii) The court did not give definitive guidance as to how to assess what is objectively unreasonable.\nIn particular it did not in terms adopt Sullivan LJs suggested alternative of an objective assessment based on the ability of an ordinary member of the public to meet the potential liability for costs.\nWhile the court did not apparently reject that as a possible factor in the overall assessment, exclusive reliance on the resources of an average applicant was not appropriate, because it might have little connection with the situation of the person concerned. iii) The court could also take into account what might be called the merits of the case: that is, in the words of the court, whether the claimant has a reasonable prospect of success, the importance of what is at stake for the claimant and for the protection of the environment, the complexity of the relevant law and procedure, the potentially frivolous nature of the claim at its various stages. (para 42) iv) That the claimant has not in fact been deterred for carrying on the proceedings is not in itself determinative. v) The same criteria are to be applied on appeal as at first instance.\nI do not understand the last point as intended to imply that the same order must be made at each stage of the proceedings, or that there should be a single global figure covering all potential stages, but rather that the same principles should be applied to the assessment at each stage, taking account of costs previously incurred.\nIn her 2013 opinion in Commission of the European Union v United Kingdom (Case C 530\/11), the Advocate General said of the courts reasoning on this point: that finding cannot be interpreted as meaning that in assessing the permissible cost burden in appeal proceedings the costs already incurred in courts below may be ignored.\nInstead, each court must ensure that the costs at all levels of jurisdiction taken together are not prohibitive or excessive. (para 23)\nHowever, as she had recognised in her earlier opinion (2012 opinion in Edwards v Environment Agency (No 2) (Case C 260\/11) [2013] 1 WLR 2914, paras 58 61), while prohibitive costs must be prevented at all levels of jurisdiction, the considerations may differ at each level.\nThus, on the one hand, as she notes, the decision of the House of Lords as the final court was potentially of special significance, because it alone had a duty to make a reference to the CJEU in case of doubt as to EU law.\nOn the other hand, it is possible that after the decision by the lower court, public interest in the further continuation of the proceedings would be reduced.\nAccordingly, she said, it was compatible with Aarhus tests to re examine at each level of jurisdiction the extent to which prohibitive costs must be prevented.\nMore generally, in her 2012 opinion, in support of the need for account to be taken of both objective and subjective considerations, she had emphasised the importance of the public interest in the protection of the environment: 42.\nRecognition of the public interest in environmental protection is especially important since there may be many cases where the legally protected interests of particular individuals are not affected or are affected only peripherally.\nHowever, the environment cannot defend itself before a court, but needs to be represented, for example by active citizens or non governmental organisations.\nConversely A person who combines extensive individual economic interests with proceedings to enforce environmental law can, as a rule, be expected to bear higher risks in terms of costs than a person who cannot anticipate any economic benefit.\nThe threshold for accepting the existence of prohibitive costs may thus be higher where there are individual economic interests. (para 45) It is less clear how the court saw the merits of the case (para 23(iii) above)\nbeing brought into account.\nThere is in the judgment no indication as to how the identified factors might affect the ultimate level of recovery, one way or the other. (The comparison there drawn with DEB Deutsche Energiehandels und Beratungsgesellschaft mbH v Bundesrepublik Deutschland (Case C 279\/09) [2010] ECR I 13849 provides little direct assistance.\nThat case was not related to environmental law, and it concerned the circumstances in which legal aid should be granted to a claimant, rather than the extent of his potential liability to the other party.)\nTaking the points in turn I would suggest the following: i) A reasonable prospect of success Lack of a reasonable prospect of success in the claim may, it seems, be a reason for allowing the respondents to recover a higher proportion of their costs.\nThe fact that frivolity is mentioned separately (see below), suggests that something more demanding is envisaged than, for example, the threshold test of reasonable arguability. ii) The importance of what is at stake for the claimant As indicated by Advocate General Kokott, this is likely to be a factor increasing the proportion of costs fairly recoverable.\nAs she said, a person with extensive individual economic interests at stake in the proceedings may reasonably be expected to bear higher risks in terms of costs. iii) The importance of what is at stake for the protection of the environment Conversely, and again following the Advocate Generals approach, this is likely to be a factor reducing the proportion of costs recoverable, or eliminating recovery altogether.\nAs she said, the environment cannot defend itself, but needs to be represented by concerned citizens or organisations acting in the public interest. iv) The complexity of the relevant law and procedure This factor is not further explained.\nIts relevance seems to be that a complex case is likely to require higher expenditure by the respondents, and thus, objectively, to justify a higher award of costs.\nAlthough mention is only made of complexity of law or procedure, the same presumably should apply to technical or factual complexity. v) The potentially frivolous nature of the claim at its various stages The respondents should not have to bear the costs of meeting a frivolous claim.\nIn domestic judicial review procedures, whether at first instance or on appeal, this issue is likely to be resolved in favour of the claimant by the grant of permission,\nThe present case\nThe present case is unusual in that the Aarhus issue did not arise in the same form at a lower level.\nFull protection at first instance was given by legal aid.\nIn the Court of Appeal the costs cap provided for Mrs Pallikaropoulos reflected the unusual circumstances in which she became a party, and the courts view that it was in the public interest that the case could be completed with the same representation.\nIt therefore provides no guide to the appropriate order on the further appeal.\nOn the other hand, as Lord Hope recognised, the initial decision of the House itself not to provide any costs protection was made without full consideration of all the factors now known to be relevant.\nThe respondents are not now seeking recovery of their full costs.\nThey have agreed to limit their joint claim to 25,000, which is the amount of the security already paid by the appellant as the condition for bringing the appeal.\nThere is limited evidence as to the resources of the appellant herself, and none that an order for payment of the sum of 25,000 already in court would be beyond her means or cause her hardship.\nFurthermore, it must be assumed that following the refusal of a protective costs order in March 2007, her decision to proceed was made with full knowledge of the risks involved.\nIt is impossible in my view on the material before us to hold that the order sought would be subjectively unreasonable.\nThe more difficult question is whether there should be some objectively determined lower limit, and if so how it should be assessed.\nAlthough this was one of the main issues raised by the reference, the European court has not offered a simple or straightforward answer.\nMr Wolfe relies on the last sentence of para 40 of the judgment in Edwards v Environment Agency (No 2 ) (Case C 260\/11) [2013] 1 WLR 2914, supported as he says by the Advocate Generals 2013 opinion in Commission of the European Union v United Kingdom (Case C 530\/11), para 55: the correct position is that litigation costs may not exceed the personal financial resources of the person concerned and that, in objective terms, that is to say, regardless of the persons own financial capacity, they must not be unreasonable.\nIn other words, even applicants with the capacity to pay may not be exposed to the risk of excessive or prohibitive costs and, in the case of applicants with limited financial means, objectively reasonable risks in terms of costs must in certain circumstances be reduced further. (emphasis added) Thus, he says, it is necessary to start from an objectively defined standard, the circumstances of the particular individual being relevant only to the extent that they may reduce that figure.\nFurthermore, in his submission, the question of what is objectively reasonable was answered definitively by the government itself, when following extensive consultation it adopted the figure of 5,000 (as now embodied in the High Court rules).\nAs he submits, the respondents cannot properly go behind that figure, at least without evidence to support any alternative suggestion.\nI am doubtful whether so prescriptive an approach can be extracted from the\nEuropean courts decision.\nIf it were, it is difficult to see how the merits factors would play a significant part.\nIn any event, I cannot agree that the respondents are bound by the figure of 5,000 adopted for the purpose of the new rules.\nThe new rules only apply to proceedings commenced after June 2013.\nMore importantly, they recognise (as did the Advocate General: para 25 above) that, while the same general principles apply in the Court of Appeal, the factors affecting the judgment of what is subjectively or objectively reasonable may have changed.\nThis applies with even more force at the highest level, where the case for a second appeal needs special justification.\nFurthermore, the factors which justify a relatively low standard figure for an advance cap, including the desirability of avoiding satellite litigation in advance of a hearing on the merits, will not apply with the same force to consideration after the event.\nAt that stage the court will be in a much better position to take a view on both the merits of the case (in the sense discussed above) and on the costs incurred and their consequences for the parties.\nThe test in principle remains the same but the court is considering it in a different context.\nOf the five merits factors mentioned by the court, I would discount the second and fifth immediately.\nThere is no evidence that the appellant had any economic interest of her own in the proceedings, and, given the grant of permission at each stage, including the appeal to the House of Lords, they could not be said to be frivolous.\nThe relative complexity of the case (factor (iv)) is evidenced by the fact that it took three days before the House.\nIt has not been suggested that the costs incurred by the respondents were excessive in respect of the issues involved in the case.\nThey are not out of line with those incurred by the appellant.\nThe 25,000 now claimed represents a very significant reduction from that figure.\nThe other two factors (i) the prospects of success and (iii) the importance of the case for the protection of the environment are at best neutral from the applicants point of view.\nThe issue of construction of the EIA Directive was one of some difficulty, as is clear from the division of views within the House.\nHowever, by the time it reached the House it seems to have become a point of limited practical significance for the protection of the environment in the area, given the judges unchallenged finding on that aspect.\nNor was there any clear evidence of more general public support for her appeal at this level.\nFurthermore the prospects of a final order in her favour in the appeal were highly questionable.\nWhatever the answer to the bare legal issue, there was a serious risk of the courts discretion being exercised against her, in the same way as had happened in the lower courts.\nAccordingly, the potential significance of the legal issue in my view carries relatively little weight in the overall balance.\nThe alternative disclosure issue had been overtaken by events, as the Court of Appeal had held, and the House confirmed.\nTaking all these factors into account, I find it impossible to say that the figure of 25,000, viewed objectively, is unreasonably high, either on its own or in conjunction with the 2,000 awarded in the Court of Appeal.\nMr Wolfe submits that if this court has any doubt as to his interpretation of the European courts decision and the Advocate Generals opinions, we should delay matters until the final judgment in the infraction proceedings.\nI do not think that is necessary or desirable.\nResolution of this case has already been long delayed.\nThe European court has given such specific answers as it thought appropriate to the questions referred in the present case.\nAlthough they leave some scope for judgment in their application, there is nothing in the Advocate Generals later opinion, in my view, which suggests that more definitive guidance for the purposes of the present case is to be expected from the forthcoming judgment.\nobjectively excessive.\nAccordingly, I would make an order for costs in that amount in favour of the respondents jointly.\nMichaelmas Term [2010] UKSC 57 JUDGMENT R (on the application of Edwards and another (Appellant)) v Environment Agency and others (Respondents) Lord Hope, Deputy President before Lord Walker Lord Brown Lord Mance Lord Dyson JUDGMENT GIVEN ON 15 December 2010 Heard on 11 November 2010 Appellant David Wolfe (Instructed by Richard Buxton Environmental and Public Law) Respondents James Eadie QC James Maurici Charles Banner (Instructed by Treasury Solicitor) LORD HOPE, delivering the judgment of the Panel 1.\nThis is an appeal against a decision by two costs officers appointed by the President of the Supreme Court under rule 49(1) of the Supreme Court Rules 2009, Mrs Registrar di Mambro and Master OHare, a copy of which is annexed to this judgment.\nFrom the issues they were asked to decide they selected two preliminary issues which arose in the detailed assessment of bills of costs lodged by the respondents in an appeal to the House of Lords in which they were successful.\nThe appellant, Mrs Pallikaropoulos, had been ordered to pay the costs of the appeal.\nThe first respondent, the Environment Agency, had lodged a bill totalling 55,810.\nThe second respondent, the Secretary of State for the Environment, Food and Rural Affairs, had lodged a bill totalling 32,290. 2.\nThe preliminary issues were about the proper application of article 10a of Council Directive 85\/337\/EEC of 27 June 1985 on the assessment of the effects of certain public and private projects on the environment (the EIA Directive) and article 15a of Council Directive 96\/61\/EC of 24 September 1996 concerning integrated pollution prevention and control (the IPPC Directive).\nThose articles had been inserted by articles 3(7) and 4(4) of Council Directive 2003\/35\/EC of 26 May 2003 to implement provisions which first appeared in the Convention on Access to Information, Public Participation in Decision Making and Access to Justice in Environmental Matters of 25 June 1998 (the Aarhus Convention).\nAmong the provisions as to access to justice in article 9 of the Aarhus Convention is a requirement that the procedures to which it refers should be fair, equitable and timely and not prohibitively expensive: article 9(4).\nIn proceedings to which the EIA Directive applies, article 10a requires 3.\nMember States to ensure that members of the public have access to a review procedure before a court of law or another independent and impartial body established by law to challenge the substantive or procedural legality of decisions, acts or omissions subject to the public participation provisions of the directive.\nIt also provides that Any such procedure shall be fair, equitable, timely and not prohibitively expensive.\nArticle 15a of the IPPC Directive makes identical provision with respect to proceedings to which that directive applies. 4.\nThe costs officers were asked to consider the proper application of those articles to this case.\nThe issues which were identified from the skeleton arguments provided by the parties were as follows: (i) where an order for costs has been made, whether as a general rule the court assessing those costs has any jurisdiction to implement the directives; (ii) if so, whether in the particular circumstances of this case the costs officers should seek to do so; and (iii) if so, whether on the evidence presented the amount of costs payable by the appellant should be moderated or even excluded altogether.\nThe costs officers decided the first two issues in favour of the appellant.\nThey reserved their opinion on the third issue until they had given written reasons for their decision on the first two issues and the parties had had an opportunity to consider whether to appeal against it. 5.\nThe respondents appealed against the costs officers decision under rule 53 of the Supreme Court Rules.\nThey asked the single Justice to refer the following questions to a panel of Justices under rule 53(2): (1) whether it was open to the costs officers, in the circumstances of this case in which applications to the court to reduce or cap a partys liability had been made to and considered by and rejected by the Court, to achieve that result through the detailed assessment process; and (2) if it was, whether the test indicated by the phrase prohibitively expensive should be focused exclusively on the actual circumstances of the parties to the litigation and not on the question what would be prohibitively expensive for the ordinary member of the public.\nThe single Justice referred the application to a panel of five Justices and directed that these questions should be decided after an oral hearing.\nThe panel, having now heard counsel, is grateful for their assistance on these issues of principle.\nBackground 6.\nThe issues about costs are in respect of the appellants application for judicial review of the decision of the first respondent to issue a permit on 12 August 2003 for the operation of a cement works in Lawford Road, Rugby.\nPermission had been sought and granted to replace the fuel that had previously been used for their operation, which was coal and petroleum coke, with shredded tyres.\nThe use of tyres for this purpose gave rise to a public campaign against the proposal on environmental grounds.\nThe application was originally brought in the name of a Mr David Edwards.\nHis claim for judicial review was dismissed by Lindsay J: [2005] EWHC 657 (Admin), [2006] Env L R 3.\nHe appealed to the Court of Appeal, but on the third and final day of the hearing he withdrew his instructions from his solicitors, Richard Buxton & Co, and his counsel, David Wolfe.\nMrs Pallikaropoulos, who had been present in court throughout the appeal and had been closely involved in opposition to the permit, was added as an appellant for the remainder of the proceedings.\nHer liability in the Court of Appeal was capped at 2,000.\nThe appeal was dismissed and the respondents costs, capped at 2,000, were awarded against Mrs Pallikaropoulos: [2006] EWCA Civ 1138.\nMrs Pallikaropoulos was given leave to appeal by the House of Lords. 7.\nMrs Pallikaropoulos then applied to the House of Lords for an order varying or dispensing with the requirement to give security for costs in the sum of 25,000 in accordance with House of Lords Practice Direction 10.6.\nShe also applied for a protective costs order, in which she sought a cap on her liability for costs on her appeal under the principles set out in R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, [2005] 1 WLR 2600.\nShe relied in support of these applications on the requirement of articles 10a and 15a of the EU Directives and article 9(4) of the Aarhus Convention that access to the courts should not be prohibitively expensive.\nShe declined to provide details of her means or details of the means of those whom she claimed to represent.\nHer applications were opposed by the respondents. 8.\nBy letter dated 22 March 2007 the Judicial Office of the House of Lords wrote to the parties informing them that Mrs Pallikaropouloss applications had been rejected.\nThe following reasons were given for this decision: Their Lordships proceed on the basis that the appeal raises an issue or issues of general importance and they are prepared to assume that absence of private interest may not always preclude the making of a special costs order in such a case.\nBut their Lordships do not accept that information about the applicants means, about the identity and means of any who she represents and about the position generally in the absence of any special order, are or should be regarded as immaterial; further, they do not consider that the suggested protective orders regarding costs appear proportionate on the information which is before them and in the light of the nature of the issues involved; and they do not consider that any case has been made for saying that the proposed appeal would be prohibitively expensive or that Directive 2003\/35\/EC would be breached without a special order.\nNotwithstanding the rejection of these applications Mrs Pallikaropoulos proceeded with her appeal. 9.\nOn 16 April 2008 the House of Lords affirmed the Court of Appeals decision and dismissed the appeal: [2008] UKHL 22, [2008] Env LR 34.\nThe parties were given time to make written submissions on costs.\nIt was submitted for Mrs Pallikaropoulos that there should be no order as to costs.\nAs in the case of her application for a protective costs order, she relied in support of that submission on the requirement of articles 10a and 15a of the EU Directives and article 9(4) of the Aarhus Convention that access to the courts should not be prohibitively expensive.\nSome information was given about her means, but it was in general terms and it was not accompanied by detailed evidence.\nHer submission was opposed by the respondents, who sought an order for the costs of the appeal.\nOn 18 July 2008, following consideration of what had been offered on either side, the House of Lords pronounced a costs order in these terms: That the appellant do pay or cause to be paid to the respondents their costs of the appeal to this House, the amount of such costs to be certified by the Clerk of the Parliaments if not agreed between the parties.\nNo reasons were given for this decision. 10.\nOn 1 October 2009 the jurisdiction of the House of Lords was transferred to the Supreme Court by section 40 of the Constitutional Reform Act 2005.\nAmong the transitional provisions in Schedule 10 to the Act relating to proceedings transferred to the Supreme Court from the House of Lords or the Judicial Committee of the Privy Council is para 5, which provides: (1) Any act, judgment or order of the original court in the transferred proceedings is to have the same effect after the transfer day as if it had been an act, judgment or order of the Supreme Court in corresponding proceedings in that court. (2) Accordingly, after the transfer day, further proceedings may be taken in the Supreme Court in respect of such an act, judgment or order. 11.\nRule 49 of the Supreme Court Rules 2009 provides that every detailed assessment of costs shall be carried out by two costs officers appointed by the President.\nRule 50, as to the basis of the assessment, provides: (1) Where the Court is to assess the amount of costs it will assess those costs (a) on the standard basis, or (b) on the indemnity basis, in the manner specified by rule 51 or (where appropriate) on the relevant bases that apply in Scotland or Northern Ireland. (2) Where (a) the Court makes an order about costs without indicating the basis on which the costs are to be assessed, or (b) the Court makes an order for costs to be assessed on a basis other than one specified in paragraph (1), the costs will be assessed on the standard basis. (3) This rule applies subject to any order or direction to the contrary. 12.\nSupreme Court Practice Direction 13, para 16.1 provides: The costs officers have discretion as to the amount to allow.\nIn exercising this discretion they bear in mind the terms unreasonably incurred and unreasonable in amount in CPR 44.4, (or in appeals from Scotland the provisions of rule 42.10 of the Rules of the Court of Session 1994) and in particular consider to what extent an item assisted the Court in determining the appeal.\nThe costs officers judgment 13.\nHaving identified the three preliminary issues referred to in para 4 above, the costs officers dealt with them as follows.\nThey held that compliance with the EU Directives was a relevant factor for them to take into account on the detailed assessment of costs in cases to which the directives apply unless the court awarding costs had already done so: para 13.\nIn deciding what costs it was reasonable for the respondents to obtain, they said that they would disallow any costs which they considered to be prohibitively expensive: para 17.\nAs to the meaning of the phrase prohibitively expensive, they said that they were minded to adopt the test which had been propounded by Mr Justice Sullivan, as he then was, in the report of his Working Group, Ensuring access to environmental justice in England and Wales (May 2008), where he said costs, actual or risked, should be regarded as prohibitively expensive if they would reasonably prevent an ordinary member of the public (that is, one who is neither very rich nor very poor, and would not be entitled to legal aid) from embarking on the challenge falling within the terms of Aarhus. 14.\nThey then addressed the respondents argument that, as the appellant had raised the Aarhus principles on two occasions in the House of Lords and those submissions had been rejected on both occasions, she was estopped from raising those issues again before the costs officers.\nThey rejected it, for the reasons given in para 23 where they said: We neither have nor assert any right to set aside or vary any decision already made by the Law Lords or by the Justices in this case.\nIf, in advance of the hearing before us, the Law Lords or the Justices had made any decision on the implementation of the EU Directives in this case we would of course act in compliance with that decision.\nHowever, we take the view that the pronouncements which the Law Lords have made in this case do not prevent us from applying the Aarhus principles in the course of our assessment.\nIn their view no part of the decision in March 2007 ruled out their discretion to decide that the reasonable costs in the case should be nil or should be no more than a nominal amount: para 25.\nWhile the costs order of 18 July 2008 gave the respondents stronger ground for saying that the appellant had raised the Aarhus principles already and had lost them, they noted that the order did not expressly deal with them.\nThey said that this was consistent with their finding that those matters were best dealt with at the stage at which costs are assessed rather than at the stage at which costs are awarded.\nThe order expressly left the amount of costs to be determined.\nThey decided that they should determine that amount taking into account the Aarhus principles: para 27.\nThe jurisdiction of the costs officers 15.\nThe costs officers judgment raises a short but important point about the extent of their jurisdiction when they are carrying out their detailed assessment of costs under rule 49(1) of the Supreme Court Rules 2009. 16.\nIn Lahey v Pirelli Tyres Ltd [2007] EWCA Civ 91, [2007] 1 WLR 998, the Court of Appeal held that, where a costs order was deemed to have been made on the standard basis, the claimant was entitled to 100% of his assessed costs and that the costs judge had no power in advance of the assessment to vary the deemed order so as to reduce the claimants percentage entitlement to costs.\nThe relevant rules of the CPR were rule 44.3(1), which gives the court a discretion as to (a) whether costs are payable by one party to another, (b) the amount of those costs and (c) when they are to be paid; rule 44.4, which sets out the basis of assessment; and rule 44.5, which sets out the factors to be taken into account in deciding the amount of costs. 17.\nThe Supreme Court rule which corresponds to CPR rule 44.3 is rule 46(1), which provides: The Court may make such orders as it considers just in respect of the costs of any appeal, application for permission to appeal, or other application to or proceeding before the Court.\nThe rules about the basis of assessment of costs which correspond to those in CPR rules 44.4 and 44.5 are set out in rule 49 which provides for the detailed assessment of costs to be carried out by the costs officers (see para 11, above), and in rule 51 which provides with regard to the standard basis of assessment: (1) Costs assessed on the standard basis are allowed only if they are proportionate to the matters in issue and are reasonably incurred and reasonable in amount. (2) Any doubt as to whether costs assessed on the standard basis are reasonably incurred and are reasonable and proportionate in amount will be resolved in favour of the paying party. 18.\nAs Dyson LJ explained in Lahey v Pirelli Tyres Ltd, paras 20 21: 20 There is a real distinction between (a) carrying out an assessment and deciding as part of the assessment to reduce the bill by a percentage and (b) deciding in advance of the assessment that the receiving party will only receive a percentage of the assessed costs.\nThe figure that results from (a) represents 100% of the assessed costs.\nIn deciding as part of the assessment to reduce the bill by a percentage, the costs judge is giving effect to an order that the successful party is entitled to his costs, to be assessed if not agreed.\nThe figure that results from (b) represents less than 100% of the assessed costs.\nIn deciding in advance of the assessment that the receiving party will only receive a percentage of the assessed costs, the costs judge is not giving effect to an order that the successful party is entitled to his costs, to be assessed if not agreed. 21 Rule 44.3 gives a judge jurisdiction to make a type (b) order.\nThere is no doubt that at the end of a hearing the judge may make an order of the kind that the defendant sought from the [costs judge] in the present case.\nIn such a case, the judge is not purporting to vary an order if he disallows the successful party a proportion of his costs.\nHe is making the order.\nHe does not have the advantage accorded to the costs judge of having a detailed bill of costs.\nHe cannot, therefore, carry out a detailed assessment.\nBut he usually has the benefit, denied to the costs judge, of knowing a good deal about the case, and is often in a good position to form a view about the reasonableness of the parties conduct.\nWhen carrying out a detailed assessment, the costs judge is not making an order for costs.\nHis position is quite different from that of a judge exercising the jurisdiction given by rule 44.3. 19.\nThe distinction in principle between carrying out an assessment and then deciding as part of the assessment to reduce the bill by a percentage on the one hand, and deciding in advance that the receiving party will receive only a percentage of the assessed costs on the other, is fully recognised by the Supreme Court Rules.\nThe function of the costs officers under rule 49(1), read together with Practice Direction 13, para 16.1 (see para 12, above) is to carry out the detailed assessment.\nThat is the limit of their jurisdiction.\nDecisions as to whether the receiving party is to receive less than 100% of the assessed costs are reserved to the Court, in the exercise of the jurisdiction that is given to it by rule 46(1). 20.\nThe costs officers recognised the distinction that was drawn between these two functions in Lahey v Pirelli Tyres Ltd. But they were persuaded that the task of giving effect to the EU Directives fell naturally within the assessment of reasonableness.\nThey drew an analogy with the task that has to be performed where a party was legally aided for some but not all of the proceedings covered by the order for costs.\nSection 11(1) of the Access to Justice Act 1999 provides: Except in prescribed circumstances, costs ordered against an individual in relation to any proceedings or part of proceedings funded for him shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including (a) the financial resources of all the parties to the proceedings, and (b) their conduct in connection with the dispute to which the proceedings relate; and for this purpose proceedings, or a part of proceedings, are funded for an individual if services relating to the proceedings or part are funded for him by the Commission as part of the Community Legal Service.\nSince in most cases the reasonable sum that results from this exercise is nil, the assessments of reasonableness could vary substantially between periods when a losing litigant was legally aided and when he was not.\nIn the costs officers view the factors which they would have to take into account in implementing the EU Directives were not wholly dissimilar from the factors that they have to take into account under section 11 of the 1999 Act when it applies: para 16. 21.\nThis view of the costs officers jurisdiction is, with respect, misconceived.\nWhere section 11 of the 1999 Act applies the statute itself gives to the costs judge the authority to depart from the ordinary basis of assessment by setting a limit on the amount which it is reasonable for the paying party to pay.\nIn this case a statutory direction of that kind is absent, and there has been no direction by the Court that any basis of assessment other than the standard basis is to be applied.\nSo the costs officers must confine the exercise which they carry out to that which they are directed to perform under the rules.\nIt is not enough for them to refrain from deciding in advance of their assessment that the respondents will receive only a part of the assessed costs, which they have no jurisdiction to do for the reasons explained in Lahey v Pirelli Tyres Ltd. They must refrain from introducing a different basis than that prescribed by the rules when they are carrying out their assessment.\nThe test of reasonableness which they must apply is directed to their assessment of the costs incurred by the receiving party: see CPR 44.5 as to the factors to be taken into account by the costs judge when exercising his discretion as to costs.\nIt is not directed to the entirely different question whether the cost to the paying party would be prohibitively expensive, which is what the Aarhus test is concerned with. 22.\nMr Wolfe submitted that the costs officers were obliged to give effect to the EU Directives under the principle explained in Case C 62\/00 Marks & Spencer plc v Customs and Excise Comrs [2003] QB 866, 888, para 24 where the European Court said that in applying domestic law the national court called upon to interpret that law is required to do so, as far as possible, in the light of the wording and purpose of a directive, in order to achieve its purpose and thereby comply with the third paragraph of article 189 of the EC Treaty (now the third paragraph of article 288 TFEU): see also Case C 106\/89 Marleasing SA v La Commercial Internacional de Alimentacin SA [1990] ECR I 4135, 4159, para 8; Case C 72\/95 [1996] ECR I 5403 Aannemersbedrijf P K Kraaijeveld BV v Gedeputeerde Staten van Zuid Holland, para 55, where it was said in the context of an EIA Directive that the obligation of a Member State to take all the measures necessary to achieve the result prescribed by a directive is a binding obligation imposed by the EC treaty and by the directive itself.\nHe said that this obligation had to be given effect to by the costs officers unless the words of the rules precluded this, which in his submission they did not. 23.\nThe answer to this submission is to be found in the division of responsibility that the rules themselves recognise between the Court on the one hand and the costs officers on the other.\nThe question whether the review procedure is prohibitively expensive is a matter that can, and should, be addressed by the Court itself.\nPreferably this should be done at the outset of the proceedings.\nThe Sullivan Working Group recommended in Appendix 4 to its May 2008 Report that, for the proper conduct of the case, a protective costs order should be sought with the application for permission for judicial review and should wherever possible be decided at the same time as permission.\nNo mention was made in its recommendations of what is to be done at the stage of an appeal.\nBut the advantages of having the matter resolved at the outset apply just as much at that stage as they do at first instance.\nSo a protective costs order to meet the requirement that the proceedings should not be prohibitively expensive should be sought when permission to appeal is being asked for, or as soon as possible thereafter.\nThat is what Mrs Pallikaropoulos did in this case. 24.\nBut the refusal of a protective costs order does not preclude further consideration of the matter by the Court at the end of the proceedings.\nThe Aarhus Convention has been authenticated in three languages: English, French and Russian.\nThe English word prohibitively in the English version of article 9 suggests that the question is for consideration at the outset, as the act of prohibiting must always anticipate what is prohibited.\nThe French language version uses the word prohibitif.\nThe Russian text uses the word , indicating that the costs must not be inaccessibly high.\nThe words prohibitively and prohibitif are carried forward into the English and French language versions of the EU directives and the adjective in the Greek version carries the same meaning.\nBut the words used in the translations of the directives into German (bermssig teuer), Italian (eccessivamente onerosa) and Spanish (excesivamente onerosos) indicate that, so far as the directives are concerned, the question of expense is not exclusively for consideration at the outset. 25.\nThe general rule is that EU Directives should be interpreted in a manner that is consistent with international agreements concluded by the EU: Case C 341\/95 Bettati v Safety Hi Tech Srl [1998] ECR I 4355, para 20.\nThe emphasis of the Convention, as all three language versions show, is on facilitating access to an effective remedy.\nBut its object and purpose would not be well served if a narrow view were to be taken of the time when the issue about the expense of the proceedings can be considered.\nThe essential question seems to be whether the bill of costs will be, or is, excessive bearing in mind the overriding requirement of access to justice.\nThis is best dealt with by making a protective costs order, but the Court can deal with the matter at the end of the case by setting a limit on the paying partys liability which meets the objective of the directives.\nIt does not need to carry out a detailed assessment of the costs in order to do this, any more than it does when it is making a protective costs order.\nThe costs officers, for their part, must confine their attention to the basis of assessment prescribed by rule 50, subject to any directions that may be given to them by the Court. 26.\nFor these reasons the answer to the first question which the respondents referred to the single Justice under rule 53 (see para 5, above) must be in the negative.\nThe ruling by the costs officers that they have jurisdiction to implement the EU Directives must be set aside.\nThe Courts obligation under the Directives 27.\nAs there is a division of responsibility, the question that must now be addressed is whether the House of Lords fulfilled its obligation to take the measures that were necessary to achieve the objects of the Directives.\nThat is an obligation which, in its turn, rests on this Court. 28.\nMr Eadie QC for the respondents submitted that the issue was fully and properly addressed in March 2007 when the appellant applied for a protective costs order.\nHe said that the House of Lords was right to rely on the fact that Mrs Pallikaropoulos had not provided the information that was needed for her to show that the proceedings would be prohibitively expensive.\nAs the House made clear in the reasons that it gave for not considering it appropriate to make the order, she had not made out a case for saying that the proposed appeal would be prohibitively expensive.\nFurthermore she proceeded with the appeal notwithstanding that decision.\nSo there were no grounds for taking a different view at the stage when the order for costs was made on 18 July 2008.\nThat was a final decision, and the issue was not open to be considered again. 29.\nThe question however is whether, when it made these decisions, the House was proceeding upon a correct understanding of the test that is to be applied in order to determine whether the proceedings in question are prohibitively expensive.\nThere are various possible approaches to this issue.\nIn R (Garner) v Elmbridge Borough Council [2010] EWCA Civ 1006 the judge had refused to grant a protective costs order because he was of the view that it was impossible to tell whether the proceedings would be prohibitively expensive unless there was detailed information about the appellants resources to fund the proceedings.\nIn the Court of Appeal Sullivan LJ said of his decision in para 42: This raises an important issue of principle.\nShould the question whether the procedure is or is not prohibitively expensive be decided on an objective basis by reference to the ability of an ordinary member of the public to meet the potential liability for costs, or should it be decided on a subjective basis by reference to the means of the particular claimant, or upon some combination of the two bases? 30.\nSullivan LJ observed that in an ideal world he would have preferred to defer taking a decision on such an important issue of principle until after the findings of the Aarhus Convention Compliance Committee as to whether our domestic costs rules are Aarhus compliant, and until after it was known whether the European Commission will accept or reject the United Kingdoms response to the Commissions reasoned opinion, announced in a press release dated 18 March 2010, in which the Commission was contending that the United Kingdom is failing to comply with the EIA Directive because challenges to the legality of environmental decisions are prohibitively expensive: para 43.\nBut as the court had to reach a decision as to whether the judge was wrong to refuse to grant a protective costs order, he went on to say this in para 46: Whether or not the proper approach to the not prohibitively expensive requirement under article 10a should be a wholly objective one, I am satisfied that a purely subjective approach, as was applied by Nicol J, is not consistent with the objectives underlying the directive.\nEven if it is either permissible or necessary to have some regard to the financial circumstances of the individual claimant, the underlying purpose of the directive to ensure that members of the public concerned having a sufficient interest should have access to a review procedure which is not prohibitively expensive would be frustrated if the court was entitled to consider the matter solely by reference to the means of the claimant who happened to come forward, without having to consider whether the potential costs would be prohibitively expensive for an ordinary member of the public concerned.\nThere was evidence that without a protective costs order the liability and costs of an unsuccessful appellant was likely to be prohibitively expensive to anyone of ordinary means.\nSo the judges decision was set aside. 31.\nThe importance that is to be attached to Sullivan LJs observations in R (Garner) v Elmbridge Borough Council gathers strength when they are viewed in the light of the proposal in para 4.5 of Chapter 30 of the Jackson Review of Civil Litigation Costs (December 2009) as to environmental judicial review cases that the costs ordered against the claimant should not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances, and the entirely different proposal in para 30 of the Update Report of the Sullivan Working Group (August 2010) that an unsuccessful claimant in a claim for judicial review should not be ordered to pay the costs of any other party other than where the claimant has acted unreasonably in bringing or conducting the proceedings.\nThey have to be viewed too in the light of the conclusion of the Aarhus Convention Compliance Committee which was communicated by letter dated 18 October 2010 that, in legal proceedings in the UK within the scope of article 9 of the Convention, the public interest nature of the environmental claims under consideration does not seem to have been given sufficient consideration in the apportioning of costs by the courts and that despite the various measures available to address prohibitive costs, taken together they do not ensure that the costs remain at a level which meets the requirements of the Convention: see paras 134 135.\nIt is clear that the test which the court must apply to ensure that the proceedings are not prohibitively expensive remains in a state of uncertainty.\nThe balance seems to lie in favour of the objective approach, but this has yet to be finally determined. 32.\nIt is unclear too whether a different approach is permissible at the stage of a second appeal from that which requires to be taken at first instance.\nThe question in R (Garner) v Elmbridge Borough Council was about the approach that was required to be taken at first instance.\nIn this case Mrs Pallikaropoulos did not appear at first instance.\nShe was given a protective costs order in the Court of Appeal, where her appeal was unsuccessful, because her liability in costs was capped at 2,000.\nBy the stage when her appeal reached the House of Lords the question which she wished to raise had already been considered twice in the courts below without the claimant having been deterred from seeking judicial review on grounds of expense.\nIt is questionable whether the public interest is best served if a limit must be set on the amount of the costs payable to the successful party in the event of a second appeal as this will inevitably mean that, if the public authority wins, some of the costs reasonably incurred by it will not be recoverable. 33.\nIt is plain from the reasons that were given by the House of Lords for its decision to refuse a protective costs order on 22 March 2007 that these difficult issues were not addressed at that stage.\nIt took a purely subjective approach to the question whether a case for such an order had been made.\nNo reasons were given for the costs order of 18 July 2008.\nBut it is to be inferred from its terms that the House was not satisfied that a case had been made out for any modification of its approach.\nIt must be concluded that here too the House took an approach to this issue which was a purely subjective one.\nIt is to say the least questionable whether in taking this approach, which has now been disapproved by the Court of Appeal in Garner v Elmbridge Borough Council, it fulfilled its obligations under the directives.\nConclusion 34.\nIn R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 2) [2000] 1 AC 119, 132 Lord Browne Wilkinson observed that the respondents concession that their Lordships had jurisdiction in appropriate cases to rescind or vary an earlier order of the House of Lords was rightly made both in principle and on authority: In principle it must be that your Lordships, as the ultimate court of appeal, have power to correct any injustice caused by an earlier order of this House.\nThere is no relevant statutory limitation on the jurisdiction of the House in this regard and therefore its inherent jurisdiction remains unfettered.\nIn Broome v Cassell & Co Ltd (No 2) [1972] AC 1136 your Lordships varied an order for costs already made by the House in circumstances where the parties had not had a fair opportunity to address argument on the point.\nHe went on to say that it should be made clear that the House would not reopen any appeal save in circumstances where, through no fault of a party, he or she had been subjected to an unfair procedure. 35.\nThe Supreme Court is a creature of statute.\nBut it has inherited all the powers that were vested in the House of Lords as the ultimate court of appeal.\nSo it has the same powers as the House had to correct any injustice caused by an earlier order of the House or this Court.\nIt would however be more consistent with the principle which Lord Browne Wilkinson described to say that the power is available to correct any injustice, however it may have arisen.\nIn this case it seems that, through no fault of the appellant, an injustice may have been caused by the failure of the House to address itself to the correct test in order to comply with the requirements of the directives. 36.\nThe appellant has submitted that, taken overall, no clear and simple answer is available to the question as to what is the right test.\nThat indeed does seem to be the position.\nIn any event it cannot be said to be so obvious as to leave no reasonable scope for doubt as to the manner in which the question would be resolved: CILFIT (Srl) v Ministry of Health (Case C 283\/81) [1983] 1 CMLR 472.\nIn these circumstances the Court will refer the issue to the Court of Justice of the European Union for a preliminary ruling under article 267 TFEU (ex article 234 EC).\nThe order for costs of 18 July 2008 will be stayed pending the reference.\nThe parties are invited to make submissions in writing within 28 days on the questions to be referred to the Court of Justice.\nANNEX IN THE SUPREME COURT OF THE UNITED KINGDOM Parliament Square London, Date: 15 January 2010 MRS REGISTRAR DI MAMBRO AND MASTER OHARE Before : Between : THE QUEEN ON THE APPLICATION OF [DAVID EDWARDS] LILIAN PALLIKAROPOULOS THE ENVIRONMENT AGENCY THE FIRST SECRETARY OF STATE FOOD AND RURAL AFFAIRS CEMEX UK CEMENT LIMITED and and SECRETARY OF STATE FOR THE ENVIRONMENT Appellant Respondents Intervener Mr Wolfe (instructed by Richard Buxton) for the Appellant Mr Maurici (instructed by Environment Agency Legal Services and the Treasury Solicitors) for the Respondents Hearing date: 4 December 2009 Approved Judgment . . . . . .\nMrs Registrar di Mambro and Master OHare: 1.\nThis is our decision on two preliminary issues which arose in the detailed assessment of the bills of costs lodged by the Respondents in respect of the appeal to the House of Lords in this case.\nThe appeal arose out of a Judicial Review, which was initially brought by a Mr David Edwards.\nHe instructed Mr Richard Buxton, whose fees were funded by the Legal Services Commission.\nThe claim was dismissed by Lindsay J ([2005] EWHC 657) and Mr Edwards brought an appeal to the Court of Appeal.\nOn the third and final day of that appeal Mr Edwards withdrew his instructions from Messrs Richard Buxton, and, at that stage, Mrs Pallikaropoulos was added as an additional party in order to continue the appeal.\nMrs Pallikaropoulos was not eligible for legal aid, but the Court of Appeal made a costs capping order limiting her exposure to the Respondents costs to the sum of 2,000. 2.\nThe appeal to the Court of Appeal was dismissed ([2006] EWCA Civ 1138) and Mrs Pallikaropoulos successfully petitioned the House of Lords for leave to appeal to that court.\nHaving obtained leave she then applied for a waiver of the security sum payable on such an appeal, and also applied for a protective costs order.\nBy letter dated 22 January 2007 the Judicial Office indicated to her that, on the basis of the information then before them, the members of the Appeal Committee were not then minded to grant either application. 3.\nThe appeal was heard in January 2008 and lasted three days.\nOn 16 April 2008 the House of Lords dismissed the appeal, thereby affirming the Court of Appeals decision.\nThe matter was then adjourned for the parties to make written representations on costs.\nOn 18 July 2008, despite her Counsels written submissions to the contrary, Mrs Pallikaropoulos was ordered to pay the Respondents costs of the appeal.\nThe First Respondent has now lodged a bill totalling 55,810, and the Second Respondent has lodged a bill totalling 32,290. 4.\nThe preliminary issues which arose in this case concern the proper application of certain articles under the Environment Impact Assessment (EIA) Directive (85\/337\/EEC), and the Integrated Pollution Prevention and Control (IPPC) Directive (96\/61\/EC) both of which implement provisions which first appeared in the Treaty known as the Aarhus Convention (UNECE Convention on Access to Information, Public Participation in Decision Making and Access to Justice in Environmental Matters: 25 June 1998).\nIn proceedings to which the EIA Directive applies, Article 10a requires Member States to ensure that members of the public as there defined: have access to a review procedure before a court of law or another independent and impartial body established by law to 5. challenge the substantive or procedural legality of decisions, acts or omissions subject to the participation provisions of this directive. and it also provides that: Any such procedure shall be fair, equitable, timely and not prohibitively expensive. 6.\nIn proceedings to which the IPPC Directive applies, Article 15a makes provision identical to that set out above in respect of Article 10a of the EIA Directive. 7.\nThese EU Directives were considered by the Court of Appeal in Morgan v Hinton Organics (Wessex) Ltd [2009] EWCA Civ 107 from which judgment we would like to set out two quotations.\nThe first concerns points made in a document called the 2008 Sullivan Report, which has influenced our decision in this case.\nThe second quotation summarised the argument heard by the Court of Appeal on these directives.\nThe Court of Appeal did not give a ruling on these arguments since, as paragraph 47(ii) indicates, the directives were not applicable in that case. 32.\nThe 2008 Sullivan report, to which Carnwath LJ referred in granting permission in the present case, was a report of another informal working group representing a range of interested groups, this time under Sullivan J (Ensuring Access to Environmental Justice in England and Wales Report of the Working Group on Access to Environmental Justice May 2008).\nThe report expressed views on the application of the Aarhus principles, in the context of domestic procedures relevant to environmental proceedings, including protective costs orders.\nThe present case was mentioned, without further discussion, as apparently the first which has reached this court raising issues under the Convention in relation to a costs order in private law proceedings.\nThe following points from the report are possibly relevant in the present context: i) That the \"not prohibitively expensive\" obligation arising under the Convention extends to the full costs of the proceedings, not merely the court fees involved (in this respect differing from the Irish High Court in Sweetman v An Bord [2007] including Pleanala and the Attorney General IEHC 153); ii) That the requirement for procedures not to be to all prohibitively expensive applies for proceedings, applications injunctive relief, and not merely the overall application for final relief in the proceedings; iii) That costs, actual or risked, should be regarded as \"prohibitively expensive\" if they would reasonably prevent an \"ordinary\" member of the public (that is, \"one who is neither very rich nor very poor, and would not be entitled to legal aid\") from embarking on the challenge falling within the terms of Aarhus (para 20). iv) That there should be no general departure from the present \"loser pays\" principle, provided that the loser's potential liability does not make litigation prohibitively expensive in the way described above (para 38).\nIt may be helpful at this point to draw together some of the threads of the discussion, without attempting definitive conclusions: i) The requirement of the Convention that costs should not be \"prohibitively expensive\" should be taken as applying to the total potential liability of claimants, including the threat of adverse costs orders. ii) Certain EU Directives (not applicable in this case) have incorporated Aarhus principles, and thus given them direct effect in domestic law.\nIn those cases, in the light of the Advocate General's opinion in the Irish cases, the court's discretion may not be regarded as adequate implementation of the rule against prohibitive 47. costs.\nSome more specific modification of the rules may need to be considered. iii) With that possible exception, the rules of the CPR relating to the award of costs remain effective, including the ordinary \"loser pays\" rule and the principles governing the court's discretion to depart from it.\nThe principles of the Convention are at most a matter to which the court may have regard in exercising its discretion. iv) This court has not encouraged the development of separate principles for \"environmental\" cases (whether defined by reference to the Convention or otherwise).\nIn particular the principles governing the grant of Protective Costs Orders apply alike to environmental and other public interest cases.\nThe Corner House statement of those principles must now be regarded as settled as far as this court is concerned, but to be applied \"flexibly\".\nFurther development or refinement is a matter for legislation or the Rules Committee. v) The Jackson review provides an opportunity for considering the Aarhus principles in the context of the system for costs as a whole.\nModifications of the present rules in the light of that report are likely to be matters for Parliament or the Civil Procedure Rules Committee.\nEven if we were otherwise attracted by Mr Wolfe's invitation (on behalf of CAJE) to provide guidelines on the operation of the Aarhus convention, this would not be the right time to do so. vi) Apart from the issues of costs, the Convention requires remedies to be \"adequate and effective\" and \"fair, equitable, timely\".\nThe variety and lack of coherence of jurisdictional routes currently available to potential litigants may arguably be seen as additional obstacles in the way of achieving these objectives. 8.\nAlthough the EIA Directive and the IPPC Directive were not applicable in Morgan, both of them are applicable in the case now before us.\nThat was accepted by Counsel for the Respondents, who also accepted that the directives were therefore directly binding upon the courts.\nThe skeleton argument for the Appellant set out the following quotation from the judgment of the ECJ in Marks & Spencer v Commissioners for Customs & Excise [2002] ECR I 06325: 24.\nIn that regard it should be remembered, first that the member states obligation under a directive is to achieve the result envisaged by the directive and their duty to take all appropriate measures whether general or particular, to ensure fulfilment of that obligation, are binding on all the authorities of the member state including, for matters within their jurisdiction, the courts 25. whenever the provisions of a directive appear, so far as their subject matter is concerned, to be unconditional and sufficiently precise, they may be relied upon before the national courts by individuals against the state where the latter has failed to implement the directive in domestic law 26. implementation of a directive must be such as to ensure its application in full 9.\nIn preparation for the hearing before us both parties supplied skeleton arguments which were extremely helpful and explicit.\nFrom these we were able to identify three preliminary issues, which are as follows: i) Where an order for costs has been made, whether, as a general rule, the court assessing those costs has any jurisdiction to implement the EU Directives.\nIf so, whether, in the particular circumstances of this case, we should seek to implement the EU Directives.\nIf so, whether, on the evidence presented to the court, the amount of costs payable by the Appellant should be moderated or even excluded. 10.\nAt the hearing we decided the first two issues in favour of the Appellant, but thought it right not to hear argument as to the third issue until we had given written reasons for our decision, sight of which by the parties might enable them to agree the third issue subject of course to any appeal against ii) iii) our ruling on the first two issues.\nWe also ruled that the time for appealing our decision on the first two issues should not expire until 28 days after the delivery of our written decision.\nIssue 1 : Jurisdiction of Costs Officers Generally 11.\nOn this point Mr Maurici, Counsel for the Respondents, argued that application of EU Directives falls wholly outside the jurisdiction of Costs Officers.\nHe placed reliance upon the Supreme Court Practice Direction 13 para 16.1, which states as follows: The Costs Officers have discretion as to the amount to allow.\nIn exercising this discretion they bear in mind the terms unreasonably incurred and unreasonable in amount in CPR 44.4 and in particular consider to what extent an item assisted the court in determining the appeal 12.\nFrom this he argued that Costs Officers are limited to assessing the reasonableness of the costs awarded by another court.\nIt is for the court awarding costs to decide how and in what way to implement the European Directives.\nIt is not a proper function of the assessing court.\nCounsel also placed reliance upon the Court of Appeal decision in Lahey v Pirelli Tyres Ltd [2007] EWCA Civ 91 which held that, where a court awards costs, the Costs Judges duty is to assess 100% of the reasonableness of the costs awarded.\nThe Costs Judge has no power to vary the award of costs made so as to allow less than 100% of the reasonable costs.\nCounsel drew our attention to paragraphs 20 and 21 of the judgment in that case, which we now set out: 20.\nThere is a real distinction between (a) carrying out an assessment and deciding as part of the assessment to reduce the bill by a percentage and (b) deciding in advance of the assessment that the receiving party will only receive a percentage of the assessed costs.\nThe figure that results from (a) represents 100% of the assessed costs.\nIn deciding as part of the assessment to reduce the bill by a percentage, the costs judge is giving effect to an order that the successful party is entitled to his costs, to be assessed if not agreed.\nThe figure that results from (b) represents less than 100% of the assessed costs.\nIn deciding in advance of the assessment that the receiving party will only receive a percentage of the assessed costs, the costs judge is not giving effect to an order that the successful party is entitled to his costs, to be assessed if not agreed. 21.\nRule 44.3 gives a judge jurisdiction to make a type (b) order.\nThere is no doubt that at the end of a hearing, the judge may make an order of the kind that the defendant sought from the district judge in the present case.\nIn such a case, the judge is not purporting to vary an order if he disallows the successful party a proportion of his costs.\nHe is making the order.\nHe does not have the advantage accorded to the costs judge of having a detailed bill of costs.\nHe cannot, therefore, carry out a detailed assessment.\nBut he usually has the benefit, denied to the costs judge, of knowing a good deal about the case, and is often in a good position to form a view about the reasonableness of the parties' conduct.\nWhen carrying out a detailed assessment, the costs judge is not making an order for costs.\nHis position is quite different from that of a judge exercising the jurisdiction given by rule 44.3. 13.\nWe take the view that compliance with the EU Directives is a relevant factor for us to take into account on the detailed assessment of costs in cases to which the Directives apply unless, of course, the court awarding costs has already taken them into account. 14.\nWe accept the submission of Mr Wolfe, Counsel for the Appellant, that the reasonableness. falls within task naturally Reasonableness can mean different things in different contexts.\nWe draw an analogy here with what happens when costs are awarded against a party who was legally aided for some but not all of the proceedings covered by the order for costs.\nSection 11 of the Access to Justice Act 1999 provides that costs ordered against a legally aided party: the definition of shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including (a) the financial resources of all the parties to the proceedings, and their conduct in connection with the dispute to which the proceedings relate (b) 15.\nThe Legal Aid Regulations now leave the task of making that assessment to the Costs Officers of the courts in which those costs were awarded.\nIn this court paragraph 4 of Practice Direction 13 requires the Costs Officers to 16. assess the sum reasonable for a legally aided party to pay as part of the detailed assessment proceedings.\nSince, in most cases, the reasonable sum is nil, the assessments of reasonableness vary substantially between periods when a losing litigant was legally aided and when he was not.\nIn our judgment the factors we ought to take into account in implementing the EU Directives are not wholly dissimilar from the factors we have to take into account in applying section 11 of the Access to Justice Act when it applies.\nIt seems to us that the implementation of any relevant EU Directive is more naturally and conveniently dealt with at the detailed assessment stage rather than at the stage of awarding costs, unless of course, the court awarding costs had already made a decision on these questions. 17.\nWe take the view that in deciding what costs it is reasonable for the Respondents to obtain we will disallow any costs which we consider to be prohibitively expensive.\nTherefore, in making any such disallowance, we will be acting in compliance with, and not defiance of, the principles stated in Lahey. 18.\nThe passages from Morgan which we have quoted indicate that the EU Directives here in question have not yet been implemented by Parliament or by the Civil Procedure Rule Committee.\nIn Morgan the Court of Appeal expressed the hope that the current Jackson Review may consider the Aarhus principles and stated that it was not appropriate to give guidance in the context of Morgan.\nIn the absence of authority we are presently minded to adopt the test of prohibitively expensive which was propounded in the 2008 Sullivan Report: costs, actual or risked, should be regarded as prohibitively expensive if they would reasonably prevent an ordinary member of the public (that is, one who is neither very rich nor very poor, and would not be entitled to legal aid) from embarking on the challenge falling within the terms of Aarhus. 19.\nThat seems to us to require us to start by making an objective assessment of what costs are reasonable costs.\nHowever, any allowance or disallowance of costs we make must be made in the light of all the circumstances.\nWe presently take the view that we should also have regard to the following: i) The financial resources of both parties. ii) Their conduct in connection with the appeal. iii) The fact that the threat of an adverse costs order did not in fact prohibit the appeal. security was in fact provided. iv) The fact that a request to waive security money was refused and v) The amount raised and paid for the Appellants own costs.\nIssue 2 : Issue Estoppel 20.\nFor the Respondents, Mr Maurici submitted that the Appellants have raised Aarhus principles on two occasions in the House of Lords and those submissions were rejected on both occasions.\nThe first occasion was in respect of the Appellants applications for waiver of security monies and for a protective costs order.\nOn 22 March 2007 the Appeal Committee made the following decision: Their Lordships do not consider it appropriate to make any order on the application made to them for a dispensation in respect of the requirement to put up security and for a protective costs order.\nTheir Lordships have considered the criteria in R (Cornerhouse Research) v Secretary of State for Trade & Industry [2005] EWCA Civ 192 and the submissions made with regard to their application and potential relaxation.\nTheir Lordships proceed on the basis that the appeal raises an issue or issues of general importance and they are prepared to assume that absence of private interest may not always preclude the making of a special costs order in such a case.\nBut their Lordships do not accept that information about the Applicants means, about the identity and means of any who she represents and about the position generally in the absence of any special order, are or should be regarded as immaterial: further, they do not consider that the suggested protective orders regarding costs appear proportionate on the information which is before them and in the light of the nature of the issues involved; and they do not consider that any case has been made for saying that the proposed appeal would be prohibitively expensive or that Directive 2003\/35\/EC would be breached without a special order. 21.\nThe second occasion upon which the Aarhus principles were considered in this case preceded the making of the costs order dated 18 July 2008.\nIn the written submissions on costs lodged on behalf of the Appellant, much greater information about the Appellants financial resources was given than had been given on the previous occasion.\nIn the light of that information it was submitted that there should be no order for costs.\nIn the alternative, the following submissions were made: In the event of their Lordships, notwithstanding the above, deciding to award costs in favour of the Respondents, they are requested to consider: Limiting them to the costs of one Respondent Limiting the costs to 70% of the Respondents costs.\nAt the High Court and Court of Appeal stages only 70% of costs were awarded Reducing the burden on the Appellant by ordering any costs in excess of the 25,000 security monies already lodged with the House of Lords to be payable by instalments of at most 5,000 per annum and without interest (other than in the event of late payment).\nIn any event staying the effect of the order until the issues relating to prohibitive expense and Directive 2003\/35\/EC are resolved between the Commission and the UK Authorities. 22.\nIn response to those submissions the House made a standard order for costs: That the Appellant do pay or cause to be paid to the Respondents their costs of the appeal to this House, the amount of such costs to be certified by the Clerk of the Parliaments if not agreed between the parties. 23.\nWe neither have nor assert any right to set aside or vary any decision already made by the Law Lords or by the Justices in this case.\nIf, in advance of the hearing before us, the Law Lords or the Justices had made any decision on the implementation of the EU Directives in this case we would of course act in compliance with that decision.\nHowever, we take the view that the pronouncements which the Law Lords have made in this case do not prevent us from applying the Aarhus principles in the course of our assessment. 24.\nThe decision made in March 2007 was made without a hearing and was made on the basis of the information about the Appellants means, about the identity and means of any who she represents and about the position generally.\nThis being so the order states that their Lordships did not consider that any case had been made for saying that the proposed appeal would be prohibitively expensive.\nIn the circumstances, we do not think that that was a final ruling upon these principles in this case.\nOn the 25. contrary, we think the wording their Lordships there adopted invited the Appellant to provide the court with the information it would need to decide such principles.\nIn our view no part of the decision made in March 2007 rules out our discretion to decide that the reasonable costs in this case should be nil or should be no more than a nominal amount.\nWhilst it is difficult to imagine circumstances in which it would be appropriate for us to allow less than 25,000 if the Respondents costs would otherwise reasonably exceed that sum, it is not in theory impossible that we should do so.\nIn requiring the Appellant to raise such a sum as security monies their Lordships could not know, for example, what terms and conditions the Appellant might be required to agree to in order to borrow such a sum.\nIt may be appropriate for us to take any such terms and conditions into account when assessing whether the costs of this appeal would have been prohibitively expensive. 26.\nAt the hearing before us we made reference to a Court of Appeal decision on security for costs raised for an appeal: R v The Common Professional Examination Board, ex p.\nMealing McLeod [2000] EWCA Civ 138.\nIn that case the Court of Appeal overturned an earlier order which permitted monies paid as security for an appeal to be used in part satisfaction of costs orders made in earlier proceedings.\nThe Court of Appeal made its decision on the basis of the terms of the loan agreement by which the security monies had been raised: they had been raised solely for the purpose of providing security and not for any other purpose.\nIn fact, on examination of the decision in that case, we now appreciate that it is not directly relevant to the issues which arise in this case.\nIn our view, the costs order dated 18 July 2008 gives the Respondents stronger ground for saying that the Appellant has raised the Aarhus principles already in this case and has lost them.\nHowever, on this point also, we find in favour of the Appellant.\nThe order dated 18 July 2008 does not expressly deal with the Aarhus principles.\nAs such, it is consistent with our finding that these matters are better dealt with at the stage at which costs are assessed rather than at the stage at which costs are awarded.\nThe order expressly leaves the amount of costs to be determined.\nIn our view we should determine that amount taking into account the Aarhus principles. 27.\nNEXT STEPS 28.\nIn a draft of this judgment which was sent to the parties some time ago we foresaw the possibility that the parties may agree what sums should reasonably be allowed as costs in this case and may make such agreement subject to the decision upon any appeal the Respondents may bring against our rulings on Issues 1 and 2.\nAlternatively, the parties may agree to defer any decision as to the amount of reasonable costs pending a decision on such an appeal.\nThe draft stated that the parties are neither required nor expected to attend the hearing at which we shall formally deliver this judgment, although they may do so if they wish. 29.\nAccordingly, we will now consider any submissions any party wishes to make.\nIf appropriate, we will adjourn this matter to a further hearing and, perhaps, fix a date for that hearing.\nIn conclusion, I am satisfied that in the special circumstances of this case the figure of 25,000 now claimed by the respondents is neither subjectively nor\n","output":"This appeal concerns the meaning of prohibitively expensive under the Aarhus Convention.\nThe proceedings concerned a cement works in Rugby.\nOn 12 August 2003, the Environment Agency issued a permit to continue operations with an alteration in its fuel from coal and petroleum coke to shredded tyres.\nThis proposal gave rise to a public campaign on environmental grounds.\nThe public campaign was being led by Mrs Pallikaropolous who had committed substantial funds of her own to the campaign.\nFollowing the decision of the Rugby Borough Council not to pursue its own claim for judicial review, Mrs Pallikaropolous was reported as pledging to carry on the battle using legal aid and, because she was too rich to get legal aid, asked for someone to come forward to take the case under legal aid.\nA local resident, Mr David Edwards, began judicial review proceedings on 28 October 2003 challenging the Agencys decision.\nThe judge inferred that Mr David Edwards had been put up as a claimant in order to secure public funding of the claim.\nThe substantive application for judicial review was dismissed on 8 February 2006.\nMr Edwards appealed to the Court of Appeal.\nOn the final day of the Court of Appeal hearing, Mr Edwards withdrew his instructions from both solicitors and counsel.\nMrs Pallikaropolous applied without objection to be joined as an additional appellant in the public interest to enable the appeal to be concluded.\nHer potential liability to costs in the Court of Appeal was capped at 2,000.\nFollowing dismissal of the appeal, the respondents costs capped at this level were awarded against her.\nMrs Pallikaropolous was given leave to appeal by the House of Lords.\nShe provided security for costs in the sum of 25,000 and the appeal proceeded.\nHer appeal was dismissed by the House of Lords.\nThe present dispute arises out of the order for costs of the appeal in the House of Lords made in favour of the respondents.\nThe Environment Agency and the Secretary of State submitted bills totally respectively 55,810 and 32,290.\nThe Supreme Court made a reference to the Court of Justice of the European Union (CJEU) for guidance relating to the expression not prohibitively expensive.\nWhile the reference was pending, the government issued a consultation paper on the issue of cost capping and the scope for providing clearer guidance in the procedural rules.\nThe proposals were given effect to by amendment to the Civil Procedure Rules.\nThe Supreme Court makes an order for costs in the amount of 25,000 in favour of the respondents jointly.\nLord Carnwath gives the lead judgment with which Lord Neuberger, Lord Hope, Lord Mance and Lord Clarke agree.\nThe following points could be extracted from the CJEUs Edwards judgment: (i) The test is not purely subjective.\nThe cost of proceedings must not exceed the financial resources of the person concerned nor appear to be objectively unreasonable, at least in certain cases. (ii) The court did not give definitive guidance as to how to assess what is objectively unreasonable. (iii) The court could take into account the merits of the case: that is whether the claimant has a reasonable prospect of success, the importance of what is at stake for the claimant and for the protection of the environment, the complexity of the relevant law and procedure, the potentially frivolous nature of the claim at its various stages. (4)That the claimant has not in fact been deterred for carrying on the proceedings is not itself determinative. (5) The same criteria are to be applied on appeal as at first instance [28].\nThe respondents are not now seeking recovery of their full costs.\nThey have agreed to limit their joint claim to 25,000 which is the amount of security already paid by the appellant as the condition for bringing the appeal.\nIt is impossible on the material available to hold that the order was subjectively unreasonable.\nThe more difficult question is whether there should be some objectively determined lower limit, and if so how it should be assessed.\nAlthough this was one of the main issues raised by the reference, the European court has not offered a simple or straightforward answer [30 31].\nOf the five factors mentioned by the court, the second and fifth can be discounted immediately.\nThere is no evidence that the appellant had any economic interest of her own in the proceedings and, given the grant of permission at each stage, they could not be said to be frivolous [34].\nThe relative complexity of the case is evidenced by the fact that it took three days before the House [35].\nThe other two factors (i) the prospects of success and (iii) the importance of the case for the protection of the environment are at best neutral from the applicants point of view [36].\nTaking factors mentioned by the court into account, it is impossible to say that the figure of 25,000, viewed objectively, is unreasonably high, either on its own or in conjunction with the 2,000 awarded in the Court of Appeal [37].\n","id":44}
{"input":"The respondents, Birmingham City Council, are a local housing authority within the meaning of Part VII of the Housing Act 1996.\nThis is the Part of the Act which sets out the duties that local housing authorities owe to a person who is homeless or threatened with homelessness.\nAmong its provisions is section 193, which identifies the duty that the authority owes where it is satisfied that an applicant is homeless, eligible for assistance and has a priority need and is not satisfied that he became homeless intentionally.\nIn that situation the duty that the authority owes is to secure that accommodation is available for the applicant: section 193(2).\nThe section also defines circumstances in which the authority will cease to be subject to that duty.\nVarious circumstances will bring this about.\nThe one that is relevant to these appeals is where the applicant, having been informed of the possible consequences of refusal, refuses an offer of accommodation which the authority are satisfied is suitable for him and the authority notify him that they regard themselves as having discharged their duty under the section: section 193(5).\nThe applicant has the right to request a review of any decision of a local housing authority as to what duty, if any, is owed to him under section 193: section 202(1)(b).\nThe procedure for review requires that the reviewing officer must be someone who was not involved in the decision and who is senior to the officer who made it.\nIf the applicant is dissatisfied with the decision on the review he may appeal to the county court.\nBut he may only do so on a point of law arising from the decision: section 204(1).\nThe jurisdiction which the county court exercises under that provision is one of judicial review.\nThere is no general right of appeal against the decision of the reviewing officer.\nThe county court judge may not make fresh findings of fact.\nHe must accept the conclusions on credibility that have been reached by the reviewing officer.\nThe question which these appeals raise is whether a decision that the local housing authority take under section 193(5) of the 1996 Act that they have discharged their duty to the applicant is a determination of his civil rights within the meaning of article 6(1) of the European Convention on Human Rights and, if so, whether the quality of review that the statute provides for is sufficient to meet the requirements of that article.\nUnderlying these questions, however, there is a wider and more fundamental issue which has prompted the Secretary of State for Communities and Local Government to intervene.\nHis interest arises because he has policy responsibility for the 1996 Act.\nBut he is concerned at the effect, if these appeals are successful, that this result will have on the conduct of local government homelessness decision making across England and Wales and upon the way proceedings have to be conducted in the county court if these decisions are taken to appeal.\nHe suggests that the outcome could affect indirectly the way decisions are made in other areas of local and central government activity such as community care and education.\nLord Hoffmann drew attention to this problem in Runa Begum v Tower Hamlets London Borough Council [2003] UKHL 5, [2003] 2 AC 430, paras 42 44.\nAs he pointed out, it is one thing for the rule of law to require that certain decisions, such as findings of breaches of the criminal law or adjudications of private rights, be entrusted to the judicial branch of government.\nBut there are other areas where utilitarian considerations have their place.\nIt is not in the public interest that an excessive proportion of the funds available for schemes for the regulation of social welfare should be consumed in administration and legal disputes.\nHe referred to a passage in the joint dissenting opinion in Feldbrugge v The Netherlands (1986) 8 EHRR 425, 443, para 15 which, as he said, seems highly material in this context.\nIt contains the following sentence: The judicialisation of dispute procedures, as guaranteed by article 6(1), is eminently appropriate in the realm of relations between individuals but not necessarily so in the administrative sphere, where organisational, social and economic considerations may legitimately warrant dispute procedures of a less judicial and formal kind.\nI would venture to suggest that those words are as true today as when they were written over twenty years ago.\nIn that case the minority were unable to persuade the majority to restrict the application of article 6, in the civil sphere, to rights and obligations in private law.\nIt has now been extended to public law rights, such as social security or other cash under publicly funded schemes.\nNo clearly defined stopping point to this process of expansion has yet been identified by the Strasbourg court.\nBut concerns about over judicialisation of dispute procedures in the administration of social and welfare benefits have not gone away.\nI believe that this case provides us with an opportunity to introduce a greater degree of certainty into this area of public law.\nThe facts\nThe Court of Appeal heard argument in two cases, those of Ms Fazia Ali and Ms Khadra Ibrahim.\nThere was a third case, that of Ms Emma Tomlinson.\nThe respondents refused her application that she was homeless on the basis that she was intentionally homeless.\nThis was because she had been evicted from her home on account of rent arrears.\nTheir decision was confirmed by the reviewing officer, who held that she had not acted in good faith in relation to her finances and the way she had given up her tenancy.\nHer appeal to the county court was dismissed on the grounds that an appeal lay on a point of law only and that the finding of the reviewing officer was not irrational or perverse.\nBut her case had become academic by the time it reached the Court of Appeal as the respondents, having accepted that the homelessness duty was owed to her, had provided her with accommodation.\nSo the Court of Appeal declined to hear her appeal: [2008] EWCA Civ 1228, para 17.\nIt did however hear the appeals in the cases of Ms Ali and Ms Ibrahim.\nThe way the Court of Appeal dealt with their appeals was strongly influenced by the approach which the House of Lords took to issues arising under Part VII of the 1996 Act in Runa Begum v Tower Hamlets London Borough Council [2003] 2 AC 430.\nIn that case the question decided by the reviewing officer, and on appeal to the county court on conventional judicial review grounds, was whether the accommodation offered to Runa Begum, which she had refused, was suitable.\nThe House heard argument as to whether the decision of the reviewing officer under section 202 was a determination of Runa Begums civil rights within the meaning of article 6(1) of the Convention.\nBut it declined to express a concluded view one way or the other on this issue.\nAs Lord Bingham of Cornhill explained in para 6, it preferred to assume, without deciding, that her domestic law right was also a civil right and to consider, on that assumption, whether the statutory provision of an appeal to the county court on a point of law satisfied the requirements of that article.\nHaving done so, it concluded that the context did not require a full fact finding jurisdiction and that the county courts appellate jurisdiction was sufficient to satisfy its requirements.\nThe Court of Appeal too proceeded on the assumption that article 6(1) was engaged in these cases: para 21.\nThe issue that they raised was not, as in Runa Begum, whether the accommodation was suitable.\nFor reasons that I shall explain, they raised simple questions of primary fact which were decided against the appellants by the reviewing officer.\nIt was submitted that, as these questions did not depend on specialist knowledge or expertise, the appellants cases were not within the scope of the decision in Runa Begum.\nThe Court of Appeal rejected this argument.\nThomas LJ said that no proper distinction could be drawn between these appeals and the appeal in that case.\nThe appellants seek to persuade this court that, where simple questions of fact are in issue, the court must exercise a full fact finding jurisdiction if the requirements of article 6(1) are to be satisfied.\nThey submit that the decisions of the review officers should be remitted to the county court for consideration on their merits or that it be declared that section 204(1) of the 1996 Act is incompatible with the appellants rights under that article.\nThe question that arose in the cases of Ms Ali and Ms Ibrahim was indeed, a very simple one, and it was a question of fact.\nIt was whether they received a letter from the respondents of the kind that section 193(5) requires, informing them of the possible consequences if they were to refuse their offer of accommodation under that section.\nThe respondents case is that the letters were sent as required by the statute.\nThe appellants maintain that they never received them.\nThe circumstances in which this issue arose in each case are as follows.\n(a) Ms Ali\nMs Ali is single and has two children.\nShe applied for assistance under Part VII of the 1996 Act in October 2006.\nBy letter dated 7 November 2006 the respondents notified her that they were satisfied that she was eligible for assistance and that they would be securing accommodation for her occupation.\nThey also told her that their housing policy was that homeless applicants received only one offer of suitable accommodation.\nOn 8 November 2006 she received an offer of accommodation which she refused because she was unhappy with the location.\nThe respondents told her that in their opinion the accommodation was suitable but, following a review of their decision which was determined in Ms Alis favour, they agreed to make her another offer.\nOn 14 March 2007 a housing officer informed her by telephone that a further offer was being made, that a viewing had been arranged and that a letter would follow.\nShe was not, during this conversation, given the full address of the property.\nThe respondents case is that on 14 March 2007 they sent a letter to Ms Ali headed Final offer of accommodation offering her accommodation at 16 Bromford Lane, Erdington, Birmingham which, as discussed, was to be available for viewing by her on 16 March.\nThe letter satisfied the requirements of the statute, as it contained a statement that if she refused the offer without good cause the respondents would consider that they had discharged their duty to her under Part VII.\nIn the county court it was agreed that the letter had been sent and that the offer which it contained had been communicated orally beforehand.\nBut Ms Ali denied receiving it.\nShe said that she had to telephone the housing office to obtain the address and that the viewing appointment was re arranged.\nHaving viewed the property on 19 March 2007 she refused the offer as she was not happy with the condition of the communal area.\nBy letter dated 21 March 2007 the respondents notified her that they were satisfied that the accommodation at 16 Bromford Lane was suitable for her needs and that of her family.\nThey told her that they considered that their duty to her under Part VII had been discharged by her refusal.\nBy letter dated 29 March 2007 Ms Alis solicitors requested a review under section 202.\nIn another letter of the same date they said that she had never received an offer of accommodation at 16 Bromford Lane in writing.\nOn 3 April 2007, while her case was still pending before the review panel, the respondents made another offer of accommodation to Ms Ali.\nThis offer, which was made under Part VI of the 1996 Act, was of accommodation in a flat at Teviot Tower, Mosborough Crescent, Birmingham.\nAlthough it was stated in this letter that Ms Ali had provisionally accepted the property she did not in the event accept this offer.\nAbout a month later on 1 May 2007 Arlene Daniel, a homelessness review officer employed by the respondents, conducted a telephone interview with Ms Ali in order to establish her reasons for refusing the offer of accommodation at 16 Bromford Lane.\nBy letter dated 2 May 2007 she informed Ms Ali that she had decided to uphold the respondents decision that they had discharged their duty to her under section 193.\nArlene Daniels reasons for this decision were set out in her letter of 2 May 2007.\nShe said that she was aware that the offer of accommodation letter was sent and that she had no reason to believe that Ms Ali did not receive it, as it was sent to her current address to which a number of other letters had been sent and received by her.\nThere then followed this passage: In the light of the above I contacted you on the 1 May 2007 to establish the reasons why you had decided not to accept this offer of accommodation as it was apparent from the reasons given in the letter from your representatives, dated 29 March 2007, that you (sic) alleging that you had not received the offer letter was not the reason you had refused the offer of accommodation.\nI put this to you and you advised that you had in fact received the offer letter and refused the offer of accommodation for a number of reasons, firstly that there was no lift.\nAlso the entrance was dirty and smelly.\nYour son was born premature and suffers with lots of infections.\nTherefore, had you accepted this offer your sons (sic) health would have been at risk.\nMs Ali does not deny saying that she had received the offer.\nHer explanation is that she initially thought that she was being asked about the offer of a flat at Teviot Tower.\nShe then realised that she was being asked about the offer of accommodation at 16 Bromford Lane.\nShe gave her reasons for refusing that offer, but failed to mention her earlier confusion as to which offer was being referred to.\nMs Ali then appealed to Birmingham County Court, but on 29 August 2007 HHJ MacDuff dismissed her appeal.\nHe held that the decision as to whether the letter had been received was properly and fairly to be made by the reviewing officer, and he declined to hear evidence on the point.\nHe added that he understood Ms Alis counsel to concede that if he were to hold, as he did, that it was a decision for the reviewing officer rather than for the court hearing live evidence, it could not be regarded as perverse or otherwise capable of being set aside.\n(b) Ms Ibrahim\nMs Ibrahims household consists of herself and six children.\nShe applied to the respondents for assistance under Part VII of the 1996 Act in May 2005.\nBy letter dated 29 May 2005 the respondents notified her that they were satisfied that she was eligible for assistance and that they would be securing accommodation for her occupation under Part VII of the 1996 Act.\nThey also told her that their housing policy was that all homelessness applicants accepted under that Part received one offer of suitable accommodation.\nOn 16 August 2005 they made an offer of accommodation which she refused.\nShe sought a review of this decision which was determined in her favour.\nOn 12 October 2005 they agreed to make her a further offer.\nOn 26 October 2005 they offered her accommodation at 11 Dawberry Road, Birmingham which she also refused.\nThe dispute between the parties relates to the way in which this further offer was made.\nThe respondents say that their housing officer, Lisa Hopkins, sent two letters both dated 26 October 2005 and both offering accommodation at 11 Dawberry Road to Ms Ibrahim in a single envelope.\nAs HHJ McKenna was later to observe when the case came before him in Birmingham County Court on 4 October 2006, somewhat unusually and confusingly these letters were in different terms.\nOne was a Part VI offer letter.\nIt was the type of letter which is sent to people awaiting accommodation who are on the respondents housing register.\nIt made no reference to the respondents homelessness duty under Part VII of the 1996 Act.\nThe other was a Part VII letter.\nIt referred to the respondents duty under that Part of the Act to secure accommodation for her, stating that to discharge their duty the respondents only had to provide one suitable offer of accommodation.\nIt also warned her that if she decided to refuse the offer without good reason to do so the respondents would consider that they had discharged their duty under Part VII and that no further offers of accommodation would be made.\nMs Ibrahims case is that she received the first letter but not the second.\nShe refused the offer of accommodation at 11 Dawberry Road without viewing it because she did not want accommodation in that area and because it was too small for her family.\nBy letter dated 3 November 2005 the respondents notified Ms Ibrahim that they considered that they had discharged their duty to secure accommodation for her and her family under Part VII and that no further offers of accommodation would be made.\nBy letter dated 14 November 2005 Ms Ibrahims representative requested a review of that decision.\nBy letter dated 7 December 2005 the respondents reviewing officer, David Colston, informed Ms Ibrahim that he had decided to uphold the decision of discharge of duty.\nHe was persuaded by Ms Ibrahims representative to take a second look at the case, but by letter dated 16 December 2005 he informed her that he had decided not to change his mind.\nMs Ibrahim then appealed to Birmingham County Court, where her appeal was disposed of by means of a consent order to the effect that the decision of 7 December 2005 be quashed and the case referred back to the review panel for a further decision to be made.\nA further review was then carried out by Martin Dewell, another of the respondents review officers.\nBy letter dated 19 May 2006 he notified Ms Ibrahim that he was minded to uphold the respondents decision letter of 3 November 2005.\nMartin Dewells reasons for this decision were set out in his letter of 19 May 2006.\nHe said that among the matters that he had been asked to consider were various respects in which it was submitted that the accommodation was unsuitable.\nThere was also a point that had not been raised before, that the offer letter did not comply with section 193(5) of the 1996 Act.\nAfter dealing with the question whether the accommodation was suitable, the letter went on to say this: I consider that we have adequately dealt with the point you raise about the validity of the offer letter.\nIn her statement dated 21 February 2006 the housing officer Lisa Hopkins clearly states that the two offer letters were sent to you in the same envelope.\nOne was originally addressed to you at your previous temporary address of 110 Fernley Road, Sparkhill, Birmingham.\nThis letter was sent to this address by mistake as it was the last address showing on the computer system following your move to 61 Adria Road, Sparkhill, Birmingham.\nThis mistake was realised and both copies of the offer letter were then sent to you in the same envelope.\nYour argument that the offer letter does not comply with section 193(5) is therefore not substantiated.\nThe information contained in the offer letter sent to 110 Fernley Road and then sent to 61 Adria Road is fully compliant with section 193(5).\nIt is therefore entirely reasonable to conclude that you were fully acquainted with your options following either acceptance or refusal of the offer.\nMs Ibrahim then appealed again to Birmingham County Court under section 204 of the 1996 Act.\nShe raised, as a factual issue, her contention that she did not receive the Part VII offer letter.\nBut by the time her case came before HHJ McKenna it had been conceded that this was a matter for the reviewing officer to decide.\nNo point was taken that to approach that issue in this way was incompatible with article 6(1) of the Convention.\nThe judge said that the issue for his determination was whether or not it was reasonable for Ms Ibrahim to have accepted the offered accommodation, and that in his judgment it was reasonable for her to have accepted it.\nHe rejected arguments about the content of the offer letter, holding that it was made crystal clear to her that she had the one offer only and what the consequences of refusal would be.\nThe issues\nThe issues that arise in this case can be summarised in this way.\nFirst, does on appeal under section 204 of the 1996 Act involve the determination of a civil right for the purposes of article 6(1) either generally or in cases such as the present ones where the issue is simply one of fact? Second, if so, does article 6(1) require that the court hearing such an appeal must have a full fact finding jurisdiction so that it can determine for itself a dispute of fact either generally or in a case such as these? Third, if so, can section 204 of the 1996 Act be read compatibly with article 6(1) so as to entitle the county court to exercise that jurisdiction? If not, it is agreed that a declaration of incompatibility will have to be made.\nIn order to set the scene for an examination of these issues I must say a bit more about the statutory background.\nThis is important, as the questions that arose for decision in this case must be seen in that context.\nThey were, as I have said, pure questions of fact.\nBut they were, in each case, only one of a number of questions that had to be addressed in order to decide whether the respondents duty under section 193 had come to an end.\nTheir resolution was a stepping stone to a consideration of the much broader question as to whether the accommodation that had been declined was suitable.\nThis called for the exercise of expertise and judgment on a variety of factual issues.\nThe scheme of the statute is that a decision on all these questions is entrusted, in the event of a review, to the reviewing officer and is subject to appeal on a point of law only.\nThe statutory provisions\nSection 193 of the 1996, as amended by the Homelessness Act 2002 and so far as relevant, provides as follows: (1) This section applies where the local housing authority are satisfied that an applicant is homeless, eligible for assistance and has a priority need, and are not satisfied that he became homeless intentionally. (2) Unless the authority refer the application to another local housing authority (see section 198), they shall secure that accommodation is available for occupation by the applicant. (3) The authority are subject to the duty under this section until it ceases by virtue of any of the following provisions of this section. (5) The local housing authority shall cease to be subject to the duty under this section if the applicant, having been informed by the authority of the possible consequence of refusal and of his right to request a review of the suitability of the accommodation, refuses an offer of accommodation which the authority are satisfied is suitable for him and the authority notify him that they regard themselves as having discharged their duty under this section. (6) The local housing authority shall cease to be subject to the duty under this section if the applicant (a) ceases to be eligible for assistance, (b) becomes homeless intentionally from the accommodation made available for his occupation, (c) accepts an offer of accommodation under Part V1 (allocation of housing), or (cc) accepts an offer of an assured tenancy (other than an assured shorthold tenancy) from a private landlord, (d) otherwise voluntarily ceases to occupy as his only or principal home the accommodation made available for his occupation.\nSection 202(1) as amended by the 2002 Act and the Housing and Regeneration Act 2008 deals with the right to request a review of a decision of the local housing authority.\nIt provides a useful guide to the nature and range of decisions that a local housing authority may have to take in the performance of their duties under Part VII of the Act.\nIt provides: An applicant has the right to request a review of (a) any decision of local housing authority as to his eligibility for assistance, (b) any decision of a local housing authority as to what duty (if any) is owed to him under sections 190 to 193 and 195 and 196 (duties to person found to be homeless or threatened with homelessness), (c) any decision of a local housing authority to notify another authority under section 198(1) (referral of cases), (d) any decision under section 198(5) whether the conditions are met for the referral of his case, (e) any decision under section 200(3) or (4) (decision as to duty owed to applicant whose case is considered for referral or referred), (f) any decision of a local housing authority as to the suitability of accommodation offered to him in discharge of their duty under any of the provisions mentioned in paragraph (b) or (e) or as to the suitability of accommodation offered to him as mentioned in section 193(7), or (g) any decision of a local housing authority as to the suitability of accommodation offered to him by way of a private accommodation offer (within the meaning of section 193).\nSection 203(1) provides that the Secretary of State may make provision by regulations as to the procedure to be followed in connection with a review under section 202.\nSection 203(2)(a) provides that provision may be made by regulations requiring the decision on review to be made by a person of appropriate seniority who was not involved in the original decision.\nThe Allocation of Housing and Homelessness (Review Procedures) Regulations 1999 (SI 1999\/71) provide that the officer shall be someone who was not involved in the original decision and who is senior to the officer who made the original decision.\nThe reviewer is required to consider any representations that may be made to him.\nIf he considers that there is a deficiency or irregularity in the original decision, or in the manner in which it was made, but is minded nevertheless to make a decision which is against the interests of the applicant on one or more issue, he must notify the applicant that he is so minded and the reasons why he is of that view so that the applicant or someone on his behalf may make representations about them.\nSection 204(1) provides that, if an applicant is dissatisfied with the decision on review, he may appeal to the county court on any point of law arising from the decision or, as the case may be, the original decision.\nNo provision is made for an appeal against the facts found by the reviewing officer.\nThe scheme which Part VII lays down can be seen, therefore, to have these characteristics.\nIt provides a right to assistance if the relevant conditions are satisfied.\nBut this is not a pecuniary right, nor is the benefit that is to be provided defined by the application of specific rules laid down by the statute.\nEven where the full homelessness duty arises under section 193, the content of the statutory duty lacks precise definition.\nThere is no private law analogy.\nThe duty is expressed in broad terms to secure that accommodation is available which leave much to the discretionary administrative judgment of the authority.\nAs Professor Ian Loveland, Does Homelessness Decision making Engage Article 6(1) of the European Convention on Human Rights? [2003] EHRLR 176, 184 observes, no tightly defined rules are laid down.\nThe legislative requirement is couched only in terms of broad principle.\nIs this a civil right?\nThe appellants submit that the right to accommodation under section 193 of the 1996 Act is a civil right within the meaning of article 6(1) of the Convention.\nMr Goudie QC summarised his argument in this way.\nThe effect of the statutory scheme was to confer on the appellants an entitlement to accommodation.\nThis was a right, the correlative of which was a duty on the local housing authority which subsisted until it ceased to be subject to the duty in one or other of the ways provided for by the statute.\nThe right to accommodation was an individual economic right which flowed from specific rules laid down in a statute, according to the Strasbourg courts reasoning in Salesi v Italy (1993) 26 EHRR 187 and Mennitto v Italy (2000) 34 EHRR 1122.\nFrom this it followed that the reviewing officers decision, which brought that right to an end, was a determination of the appellants civil rights within the meaning of the article.\nMr Goudie acknowledged that a right to accommodation was a right to a benefit in kind rather than a right to a financial payment or a subsidy.\nBut he said this did not in itself disqualify it from being a civil right.\nA series of Russian cases beginning with Teteriny v Russia, application no 11931\/03, 1 July 2005, and ending with Nagovitsyn v Russia, application no 6859\/02, 24 January 2008, indicated the contrary.\nIt was held in those cases, which arose out of failures to comply with judgments by which the applicants were to be provided with accommodation of a certain size in a specified location, that there had been a violation of article 6(1).\nIt was also held that the effect of the judgments, under which the applicants were entitled to a social tenancy agreement, was that their claim was sufficiently established to constitute a possession falling within the ambit of article 1 of Protocol No 1: see, eg, Teteriny, paras 48 50.\nIn Stec v United Kingdom (2005) 41 EHRR SE 295, para 48 the Grand Chamber said that it was in the interests of the coherence of the Convention as a whole that the autonomous concept of possessions in article 1 of Protocol No 1 should be interpreted in a way which is consistent with the concept of pecuniary rights under article 6(1) and that it was important to adopt an interpretation which avoids inequalities of treatment based on distinctions which, at the present day, appear illogical or unsustainable.\nMr Arden QC for the respondents was content to follow the approach of the House of Lords in Runa Begum v Tower Hamlets London Borough Council [2003] 2 AC 430 and to assume that the appellants entitlement to accommodation under section 193 was a civil right within the meaning of article 6(1).\nAs he put it, the respondents approached this issue with equanimity.\nTheir concern was to deal fairly with the cases that were before them.\nBut he said that, if this was a civil right, it was very much at the edge of cases that were engaged by that concept.\nMiss Lieven QC for the Secretary of State, on the other hand, addressed this point head on.\nShe submitted that the proper conclusion in this case was that there was no civil right within the meaning of that article.\nStrasbourg case law had limited civil rights to those which were related to individual economic rights which were enforceable through the courts.\nAny right under section 193 was subject to a large number of decisions that were left to the judgment of the local housing authority.\nThere was also a judgmental decision as to how any such right was to be delivered, as the duty under section 193 was merely to secure that accommodation was available.\nThe inclusion of benefits in kind such as these in the determination of rights protected by article 6(1) was a step further than the Strasbourg court had gone, and this Court should decline to take it.\nAs already noted, the House preferred not to decide this question in Runa Begum.\nIt chose instead to concentrate on the question whether the statutory provision of an appeal to the county court on a point of law only satisfied the requirements of article 6(1).\nNo doubt it was content to do this because it was satisfied that the absence of a full fact finding jurisdiction in the county court did not mean that, in the context of the statutory scheme that Part VII lays down, it did not have the jurisdiction that it needed to satisfy the requirements of that article.\nBut the reason that Lord Hoffmann gave for preferring not to decide whether rights under section 193 should be classified as civil rights is instructive.\nIn para 70 he said that this was for one reason only.\nThis, as he explained in the previous paragraph, was his concern should it be decided in Strasbourg that the administration of social welfare benefits falling within the Salesi principle required a more intrusive form of judicial review, that no obstacle should be placed in the way of the UK Government arguing that, in a case such as that, the principle did not apply at all.\nAlmost seven years have now passed since the judgment in Runa Begum was delivered.\nThe contingency which Lord Hoffmann had in mind has not yet arisen.\nThe jurisprudence of the Strasbourg court has not developed in the way he thought it perhaps might.\nThe balance of advantage now points in a different direction.\nThe time has come for the Court to address this question and take a decision upon it.\nThe present state of uncertainty as to whether the administration of social welfare benefits, such as those which are available to those who are homeless or threatened with homelessness, is unhealthy.\nIt encourages litigation on issues that would not require to be addressed at all if their right to accommodation under section 193 did not give rise to a civil right within the meaning of article 6.\nThe delay and expense that uncertainty on this issue gives rise to involves a waste of resources which would be much better deployed elsewhere in the public interest.\nIt may be helpful, as Miss Lieven suggested, to approach the question in stages: to look at the position in Strasbourg before Runa Begum; to look at Runa Begum itself; and then to look at how the law has developed since the decision in that case.\n(a) before Runa Begum\nAs Lord Walker of Gestingthorpe said in Runa Begum, para 112, the cases on this topic start with Feldbrugge v The Netherlands (1986) 8 EHRR 425 and lead on to Salesi v Italy (1993) 26 EHRR 187 and Mennitto v Italy (2000) 34 EHRR 1122.\nIn these cases the Strasbourg court extended the concept of civil rights to social security benefits for employees and their dependants that were analogous to benefits under insurance schemes in private law, and then to entitlements to welfare payments which lacked the analogy to private insurance as they were non contributory and not related to employment.\nIn Feldbrugge the issue was whether the applicants entitlement to a statutory sickness allowance, which was a contributory scheme but for which she had not registered due to illness, was a civil right within the meaning of article 6: see also Deumeland v Germany (1986) 8 EHRR 448, a case about a widows supplementary pension arising from her husbands death in an industrial accident in which judgment was delivered on the same day.\nIn para 37 of Feldbrugge the court said that the applicant was claiming a right flowing from specific rules laid down by the legislation in force and that the right in question was a personal, economic and individual right, a factor which brought it close to the civil sphere.\nTaking account of the affinity of the statutory scheme with insurance under the ordinary law, it held that the features of private law predominated and that they conferred on her entitlement the character of a civil right within the meaning of the article: para 40.\nThis was a significant development because, as a powerful dissenting opinion in that case pointed out, the phrase civil rights and obligations was originally intended to mean those rights and obligations that were adjudicated upon by the civil courts: see also Runa Begum, paras 28 and 64, per Lord Hoffmann.\nThe scope of article 6 was then extended to statutory schemes financed entirely out of public funds.\nIn Salesi v Italy (1993) 26 EHRR 187 the principle was applied to welfare payments which, as they were not contributory, could not be said to be analogous to a scheme of insurance.\nIn para 19 the court said that the development in the law that was initiated by the judgments in Feldbrugge and Deumeland and the principle of equality of treatment warranted taking the view that the general rule now was that article 6(1) applied in the field of social insurance.\nThe considerations that pointed in favour of the applicability of the article were said in that paragraph to be that: Mrs Salesi was not affected in her relations with the administrative authorities as such, acting in the exercise of discretionary powers; she suffered an interference with her means of subsistence and was claiming an individual, economic right flowing from specific rules laid down in a statute giving effect to the Constitution.\nThat decision was followed in Mennitto v Italy (2000) 34 EHRR 1122.\nBut there was an important qualification.\nIn para 23 of its decision in that case the court said that the outcome of the proceedings must be directly decisive for the right in question.\nAs in Salesi, the entitlement was to an amount of benefit that was not in the discretion of the public authority.\nI do not find support in these cases for Mr Goudies submission that the right to accommodation under Part VII of the 1996 Act is a civil right because, as he put it, it is an individual economic right which flows from specific rules laid down in a statute.\nThe entitlement in section 193(2) is simply to accommodation.\nThere is a considerable area of administrative discretion as to how that accommodation is to be provided by the authority in any given case.\n(b) Runa Begum\nAlthough the House preferred not to take a decision on this issue in Runa Begum, there are some pointers to the decision that it would have taken had it felt obliged to do so.\nIn para 6 Lord Bingham said that to hold that the right enjoyed by Runa Begum was a civil right for the purposes of article 6 would be to go further than the Strasbourg court had yet gone.\nI respectfully agree with this assessment.\nIt would seem to follow, applying the principle which he was later to enunciate in R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323, para 20 that, as the duty of national courts is to keep pace with the Strasbourg jurisprudence as it evolves over time, Runa Begums right to accommodation under Part VII was not a civil right within the autonomous meaning of that expression.\nTo reach that conclusion would not have been to dilute or weaken the effect of existing Strasbourg case law.\nIt would, on the contrary, be to transgress Lord Binghams warning that it was not for the national courts to interpret the Convention in a way that provides for rights more generous than those that have hitherto been found by Strasbourg.\nIn para 67 Lord Hoffmann said that the whole scheme of Part VII was shot through with discretions in which either the councils duty was dependent upon it being satisfied of some state of affairs or could be discharged in various ways of its own choosing.\nHe contrasted that situation with Mennitto where, once the applicant had satisfied the conditions for entitlement to the allowance, all that remained was an arithmetical calculation of its amount.\nIn para 69 he too said that to apply the Salesi doctrine to the provision of benefits in kind, involving the amount of discretion that is inevitably needed in such cases, would be to go further than the Strasbourg court has so far gone.\nIn para 91 Lord Millett listed among features which took the case beyond the existing case law the authoritys discretion as to how it will discharge its duties and the fact that ultimately this called for an exercise of judgment.\nRuna Begum could not be said to be claiming an individual, economic right flowing from specific rules laid down in a statute: para 92.\nThis is directly contrary to the view Mr Goudie invited the Court to take of the appellants position in this case.\nMiss Lieven said that these observations were a powerful steer towards the conclusion that to extend the concept of a civil right to a claim under Part VII of the 1996 Act would be to go beyond the tests that had been so far laid down by the Strasbourg court.\nI agree, but this leaves open the question whether anything that has come from Strasbourg since the date of that decision points to the contrary conclusion.\n(c) since Runa Begum\nOne of the issues raised in R (A) v Croydon London Borough Council [2009] UKSC 8: [2009] 1 WLR 2557 was whether a decision that a local authority makes as to whether or not to provide accommodation for a child in need under section 20(1) of the Children Act 1989 was a determination of a civil right within the meaning of article 6(1).\nThe question was fully and carefully argued, and with that advantage I ventured to suggest that it could be asserted with reasonable confidence that the local authoritys duty, which is to provide accommodation for any child in need within their area who appears to them to require accommodation as a result of the factors mentioned in that subsection, did not give rise to a civil right: para 65.\nI reached that conclusion after an examination of various decisions by the Strasbourg court since Runa Begum and Lady Hale said in para 44 that she would be most reluctant to accept that article 6 requires the judicialisation of such claims.\nWe have now been shown a decision which did not appear on the list that was provided to the court in Croydon: the courts admissibility decision in Associazione Nazionale Reduci dalla Prigionia dallInternamento e dalla Guerra di Liberazione v Germany (2007) 46 EHRR SE143.\nThe first case that needs to be mentioned is Tsfayo v United Kingdom (2006) 48 EHRR 457.\nThe applicant had failed to renew her application for housing and council tax benefit.\nAfter taking advice she submitted a prospective claim and a backdated claim for both types of benefit.\nThe council accepted the prospective claim but rejected the backdated one on the ground that the applicant had failed to show good cause why she had not claimed this benefit earlier.\nThe councils housing benefit and council tax benefit review board rejected her appeal against this decision.\nHer complaint was that the board was not an independent and impartial tribunal, contrary to article 6(1).\nThe court held that disputes about entitlement to social security and welfare benefits generally fell within the scope of article 6(1) and that the article applied to the applicants claim for housing benefit: para 40.\nThe question whether the claim concerned the determination of the applicants civil rights was not disputed.\nThis was not surprising, as the case fell within the mainstream of cases such as Salesi v Italy (1993) 26 EHRR 187 and Mennitto v Italy (2000) 34 EHRR 1122 where the issue was one as to the entitlement to an amount of benefit that was not in the discretion of the public authority.\nThe case offers important guidance as to what is needed to satisfy the requirements of article 6(1).\nBut it takes us no further on the question whether a statutory duty to provide benefits in kind as part of a scheme of social welfare falls within the scope of that article.\nThere are however, as I said in the Croydon case, para 62, a number of straws in the wind since Runa Begum that suggest that a distinction can indeed be made between the class of social security and welfare benefits that are of the kind exemplified by Salesi v Italy whose substance the domestic law defines precisely and those benefits which are, in their essence, dependent upon the exercise of judgment by the relevant authority.\nThe phrase civil rights is, of course, an autonomous concept: eg Woonbron Volkshuisvestingsgroep v The Netherlands (2002) 35 EHRR CD161.\nIn that case it was held that decisions about state subsidies to housing associations do not raise issues about civil rights.\nBut the phrase does convey the idea of what, in Stec v United Kingdom (2005) 41 EHRR SE295, para 50, the Grand Chamber referred to as an assertable right.\nThe courts references in Loiseau v France application no 46809\/99, 18 November 2003 (unreported), para 7, to a private right which can be said, at least on arguable grounds, to be recognised under domestic law and to an individual right of which the applicant may consider himself the holder are consistent with this approach.\nSo too are the references in Mennitto v Italy (2000) 34 EHRR 1122, para 23, to a right which can be said, at least on arguable grounds, to be recognised under domestic law, where the court added: The dispute must be genuine and serious; it may relate not only to the actual existence of a right but also to its scope and the manner of its exercise.\nThe outcome of the proceedings must be directly decisive for the right in question.\nIn para 64 in the Croydon case I said that the series of cases about the enforceability of judgments made by the courts about social housing in Russia to which Mr Goudie referred in this case, of which the latest is Nagovitsyn v Russia application no 6859\/02, 24 January 2008 (not reported), offer no assistance as the question whether a duty to provide social housing gives rise to a civil right before it results in a court order was not argued.\nI remain of that opinion.\nNo consideration was given in any of these cases to that question, as the only point in issue was whether a final, binding judicial decision for the provision of accommodation of a specified kind should be allowed to remain inoperative: Teteriny v Russia, application no 11931\/03, 1 July 2005, para 40.\nAs Lady Hale said in Croydon, para 40, it is easy to slip into the assumption that once a right has been crystallised in a court judgment against a public authority it must amount to a civil right.\nReferences to the line of authority exemplified by cases such as Salesi v Italy (1993) 26 EHRR 187 and Mennitto v Italy (2000) 34 EHRR 1122 are conspicuous by their absence.\nThe case of Associazione Nazionale Reduci dalla Prigionia dallInternamento e dalla Guerra di Liberazione v Germany (2007) 46 EHRR SE143 is of interest because it appears to be the only decision after Stec v United Kingdom (2005) 41 EHRR SE 295 in which the court has considered the application of article 1 of Protocol No 1.\nThe applicants complaint was that they had claims for compensation for forced labour under German civil law prior to the coming into force in August 2000 of a law, referred to as the Foundation Law, which excluded claims going beyond the benefits provided by the Foundation Law, as a result of which their claims were lost.\nThe question was whether the facts of the case attracted the protection of article 14 in conjunction with article 1 of Protocol No 1.\nThe court found that the applicants could not claim to have a legitimate expectation of compensation for their detention and forced labour and that the facts at issue did not fall within the ambit of Protocol No 1: para 75.\nThe court went on to say that this finding was not contradicted by its judgment in Stec, in which it was held that non contributory social benefits funded by general taxation fell within the scope of article 1 of Protocol No 1 and that, although that provision does not grant the right to receive a social security payment of any kind, if a state does decide to establish a benefits scheme, it must do so in a manner compatible with article 14.\nThis was because the payments of compensation were made outside the framework of social security legislation and could not be likened to the payments in Stec: para 77.\nIt also held that the case was distinguishable from Wo v Poland (2006) 45 EHRR 667 where the applicant was held to enjoy, at least on arguable grounds, a right to compensation which fell within the ambit of article 6.\nBut I do not detect in the courts reasoning any indication that it would hold that the right to accommodation that is in issue in this case was a civil right for the purposes of article 6(1).\nIf anything, the comment that article 1 of Protocol No 1 does not grant the right to receive a social security payment of any kind is an indication to the contrary.\nIn Crompton v United Kingdom, application no 42509\/05, 27 October 2009, the applicant who had joined the Territorial Army as a pay and accounts clerk was made redundant.\nHe claimed redress in respect of his redundancy from his Commanding Officer.\nThere then followed a prolonged series of proceedings which took eleven years to reach their conclusion before he achieved a settlement of his claim.\nHe contended that this was a breach of his right to a hearing within a reasonable time under article 6(1).\nThe Government accepted that his civil rights were determined in the civil proceedings and that article 6 was applicable: para 53.\nLike Tsfayo v United Kingdom (2006) 48 EHRR 457, the case is of interest as to what is needed to satisfy the requirements of article 6(1).\nBut it takes us no further on the question whether a statutory duty to provide benefits in kind as part of a scheme of social welfare falls within the scope of that article.\nThe other members of the court in the Croydon case preferred to leave open the question whether a local authoritys duty under section 20(1) of the Children Act 1989 gave rise to a civil right for the purposes of article 6(1).\nIn para 45 Lady Hale said that, if it was a civil right at all, she would be inclined to hold that it rested at the periphery of such rights.\nThe issue having been left open in that case, the way is clear for us, if we wish, to reach a concluded view on the matter.\nThat being the present state of the authorities, I would be prepared now to hold that cases where the award of services or benefits in kind is not an individual right of which the applicant can consider himself the holder, but is dependent upon a series of evaluative judgments by the provider as to whether the statutory criteria are satisfied and how the need for it ought to be met, do not engage article 6(1).\nIn my opinion they do not give rise to civil rights within the autonomous meaning that is given to that expression for the purposes of that article.\nThe appellants right to accommodation under section 193 of the 1996 Act falls into that category.\nI would hold that article 6 was not engaged by the decisions that were taken in the appellants cases by the reviewing officer.\nThe article 6 review\nThe question whether the scheme of decision making that is set out in Part VII is compliant with article 6(1) was fully argued and, although I would hold that this is not necessary for the disposal of the appeals, I would like to make some brief observations about it.\nMr Goudie invited the court to hold that the decisions that were made in these cases were directly analogous to those that were considered in Tsfayo v United Kingdom (2006) 48 EHRR 457.\nIn that case the Housing Benefit Review Board was deciding a simple question of fact, namely whether there was a good cause for the applicants delay in making a claim for housing and council tax benefit.\nHe said that this was a gateway question of fact, a positive answer to which would determine her entitlement to the benefit.\nSo too in this case, he said, there were two gateway questions of fact: was the applicant informed of the consequences of a refusal, and did she refuse the accommodation.\nOnly when those questions were answered against her would the question arise as to the accommodations suitability.\nAs the court said in Tsfayo, para 46, the issues in cases such as Runa Begum required a measure of professional knowledge or experience and the exercise of administrative discretion pursuant to wider policy aims.\nThat was not so here, as no specialist knowledge was required to determine the issue whether or not the letters were received by the appellants.\nHe sought to draw support for these submissions from Crompton v United Kingdom, application no 42509\/05, 27 October 2009, para 71 where the court said: The Court has previously held that in order to determine whether the article 6 compliant second tier tribunal had full jurisdiction, or provided sufficiency of review to remedy a lack of independence at first instance, it was necessary to have regard to such factors as the subject matter of the decision appealed against, the manner in which that decision was arrived at and the content of the dispute, including the desired and actual grounds of appeal.\nReference was made to Bryan v United Kingdom (1995) 21 EHRR 342, paras 44 47 and Tsfayo v United Kingdom, para 43 in which those factors were said to be among those to which it was necessary to have regard: see also the concurring opinion of Mr Bratza as he then was, in Bryan at p 354 where he set out a similar list of considerations.\nCommenting on Tsfayo in para 73, the court said that the determination of the issue in that case did not require any specialist expertise.\nNor could the factual findings there be said to be merely incidental to the reaching of broader judgments of policy or expediency which it was for the democratically accountable authority to take.\nThat, said Mr Goudie, was the situation in the case of these appeals.\nThe questions that they raised were not incidental to a judgment as to whether or not accommodation was suitable, such as whether there was a lift.\nThe subject matter of the decision was simply whether or not the letters had been received.\nI agree that the questions that had to be decided in these cases can be distinguished from the question that had to be decided in Runa Begum.\nAs the Strasbourg court acknowledged in Crompton, the question in that case could not be said to be purely and simply one of fact as the question whether the accommodation was suitable was one for the expert assessment of the housing officer.\nBut the subject matter of the decision appealed against here is exactly the same.\nThe question whether or not the letters were received was just one among a number of questions that had to be addressed to determine whether the respondents duty under section 193 had been discharged.\nThey are dealt with together in section 193(5) in a way that shows that they are all interlinked.\nThe scheme of the Act is that they are to be dealt with together both at the initial stage and, in the event of a review, by the reviewing officer.\nTo separate out questions as to whether the formalities laid down by the subsection were complied with from those as to whether the accommodation was suitable would complicate a scheme which, in the interests of speed and economy, was designed to be simple to administer.\nSeveral of the further cases referred to in section 193(6) in which the authority ceases to be subject to the duty also raise issues that require the exercise of judgment.\nThat is inherent in the entire structure of Part VII of the 1996 Act.\nThe way the reviewing officers approached their task in these cases shows very clearly how the scheme works in practice.\nFor ease of administration the review is entrusted to a single officer who is equipped to deal with issues as to the suitability of the accommodation that has been declined.\nAn answer to the question whether or not the letters were received was incidental to a more searching and judgmental inquiry into the accommodations suitability.\nIt was, as Lord Bingham put it in Runa Begum, para 9(2), a staging post on the way to the much broader judgment that had to be made.\nThese cases are quite different from Tsfayo, where no broad questions requiring professional knowledge or experience had to be addressed once the question whether there was good cause had been answered.\nIn these circumstances I would hold that the ratio of the decision in Runa Begum should be applied and that the absence of a full fact finding jurisdiction in the court to which an appeal lies under section 204 does not deprive it of what it needs to satisfy the requirements of article 6(1).\nI am fortified in this view by the absence of any indication by the Strasbourg court that it disagrees with the decision in Runa Begum.\nOn the contrary, I interpret its reference to this decision in Tsfayo, paras 45 46 as endorsing its approach.\nAn important factor is the way in which the House addressed the relationship between the article 6(1) concept of civil rights on the one hand and the article 6(1) requirement of an independent and impartial tribunal on the others.\nAs Lord Bingham put it in para 5, the narrower the interpretation given to civil rights, the greater the need to insist on a review by a tribunal exercising full powers.\nConversely, the more elastic the interpretation given to that concept, the more elastic must be the approach to the independent and impartial review if the emasculation by over judicialisation of administrative welfare schemes is to be avoided.\nMr Bratzas concurring opinion in Bryan v United Kingdom (1995) 21 EHRR 342, 354, where he said that the requirement that a court or tribunal should have full jurisdiction cannot be applied mechanically, provides valuable support for this approach.\nSupport for it is to be found also in Crompton, paras 71 72 and in the concept of sufficiency of review which is now well established in the jurisprudence of the Strasbourg court.\nA consequence of this approach has been to drive the courts to applying a test which is imprecise and uncertain.\nIs the case near or close to the borderline? Is it at the periphery, as Lady Hale said in Croydon, para 45? In Runa Begum, para 59, Lord Hoffmann expressed his agreement with Laws LJs observation in R (Beeson's Personal Representatives) v Dorset County Council [2002] EWCA Civ 1812 that there is some danger of undermining legal certainty by excessive debates over how many angels can stand on the head of the article 6 pin.\nThat is why I prefer to dispose of these appeals by holding that the appellants cases are outside the scope of article 6 altogether.\nThe third issue, whether section 204 of the 1996 Act can be read compatibly with article 6(1) so as to entitle the county court to exercise a full fact finding jurisdiction, is superseded.\nI would dismiss these appeals.\nLORD COLLINS\nI agree with Lord Hope that the appeals should be dismissed on the basis that a decision of the local housing authority under section 193(5) of the 1996 Act that it has discharged its duty to the applicant is not a determination of the applicants civil rights for the purposes of Article 6(1) of the Convention.\nAlthough I agree with much of Lord Hopes reasoning, I would place less emphasis on the evaluative nature of the exercise under section 193, and greater emphasis on the nature of the applicants rights under Part VII of the 1996 Act, and in particular on the absence of what the Strasbourg Court has characterised as an important, and perhaps necessary, feature, namely an individual economic right in the applicant.\nThe crucial developments in Strasbourg relevant to the present case are the decisions in Ringeisen v Austria (No 1) (1971) 1 EHRR 455; Knig v Federal Republic of Germany (1978) 2 EHRR 170; Feldbrugge v Netherlands (1986) 8 EHRR 425; Deumeland v Germany (1986) 8 EHRR 448; and Salesi v Italy (1993) 26 EHRR 187.\nIt is not necessary to elaborate on them here, because they have been the subject of characteristically helpful discussion by Lord Hoffmann in R (Alconbury Developments Ltd) v Secretary of State for the Environment [2001] UKHL 23, [2003] 2 AC 295, at [78] [84] and in Runa Begum v Tower Hamlets London Borough Council [2003] UKHL 5, [2003] 2 AC 430, at [28] [33]; and see also Lord Millett in the latter decision at [82] [90].\nFor present purposes it is only necessary to say that in Ringeisen and Knig the Court applied Article 6(1) to disputes with public authorities concerning licences to, respectively, sell land and to practise as a doctor.\nArticle 6(1) was extended to social insurance claims against the State in Feldbrugge and Deumeland, and then to welfare assistance in Salesi.\nThe Strasbourg Court has said that it is not necessary to give what it has called an abstract definition of the concept of civil rights and obligations: Benthem v Netherlands (1985) 8 EHRR 1 at [35]; Feldbrugge v Netherlands (1986) 8 EHRR 425 at [27]; and Deumeland v Germany (1986) 8 EHRR 448 at [61].\nIt is understandable that the Court has been reluctant to provide abstract definitions.\nWhat is not so comprehensible is its apparent reluctance to enunciate principles which will enable a line to be drawn between those rights in public law which are to be regarded as civil rights and those which are not to be so regarded.\nThe mere fact that evaluative judgments are required will not take the case out of Article 6(1).\nFor example, in Schuler Zgraggen v Switzerland (1993) 16 EHRR 405 the applicants invalidity pension depended on a finding that she was at least 66.66% incapacitated.\nIt was held that, despite the public law features of the case, the applicant suffered an interference with her means of subsistence, and that she was claiming an individual, economic right flowing from specific rules in legislation: at [46].\nThe reference in that decision to an individual, economic right flowing from specific rules in legislation reflects a thread running through the case law in this area.\nIt is plain from the jurisprudence of the Court that an important factor in the application of Article 6(1) in disputes with public authorities in areas which in national law would normally be regarded as public law is the assertion by the applicant of what has been variously described as an economic right or an individual, economic right or a purely economic right.\nThe citation of passages from three decisions, among many others, will illustrate the point.\nIn Feldbrugge v Netherlands (1986) 8 EHRR 425 the Court said (at [37]) 37.\nTo begin with, Mrs. Feldbrugge was not affected in her relations with the public authorities as such, acting in the exercise of discretionary powers, but in her personal capacity as a private individual.\nShe suffered an interference with her means of subsistence and was claiming a right flowing from specific rules laid down by the legislation in force.\nFor the individual asserting it, such a right is often of crucial importance; this is especially so in the case of health insurance benefits when the employee who is unable to work by reason of illness enjoys no other source of income.\nIn short, the right in question was a personal, economic and individual right, a factor that brought it close to the civil sphere.\nSo also in Deumeland v Germany (1986) 8 EHRR 448 the Court said (at [71]) [T]he widow of Mr. Deumeland Senior was not affected in her relations with the public authorities as such, acting in the exercise of discretionary powers, but in her personal capacity as a private individual.\nShe was claiming a right flowing from specific rules laid down by the legislation in force.\nThe right in question was a personal, economic and individual right, a factor that brought it close to the civil sphere.\nand which involved a contributory invalidity scheme, the Court said (at [46]) In Schuler Zgraggen v Switzerland (1993) 16 EHRR 405, referred to above, today the general rule is that Article 6(1) does apply in the field of social insurance, including even welfare assistance .\nState intervention is not sufficient to establish that Article 6(1) is inapplicable; other considerations argue in favour of the applicability of Article 6(1) in the instant case.\nThe most important of these lies in the fact that despite the public law features pointed out by the Government, the applicant was not only affected in her relations with the administrative authorities as such but also suffered an interference with her means of subsistence; she was claiming an individual, economic right flowing from specific rules laid down in a\nfederal statute\nIn a long series of cases the Court has held that Article 6(1) applied to claims by civil servants against the State which were pecuniary and which asserted a purely or essentially economic right: e.g. Abenavoli v Italy Application No 25587\/94 (unreported) 2 September 1997; Couez v France Application No 24271\/94 (unreported) 24 August 1998; Kirsten v Germany Application No 19124\/02 (unreported) 15 February 2007.\nSo also in Mennitto v Italy (2000) 34 EHRR 1122 the Court emphasised that the applicants right to an allowance as the father of a disabled child was an economic right.\nIn Wo v Poland (2006) 45 EHRR 667 the Court held, applying Salesi v Italy and Mennitto v Italy, that Article 6(1) applied to claims by Polish victims of Nazi persecution against a fund set up by a Polish German agreement.\nThe applicant had suffered an interference with his means of subsistence and was claiming an individual, economic right flowing from specific rules laid down in the Foundations Statute and its by laws: at [76].\nThere is an emphasis in many of the Strasbourg cases on the pecuniary nature of the applicants rights.\nBut there is no reason to suppose that that is anything more than a factor in the evaluation.\nConsequently there is nothing in principle to prevent rights in relation to housing, whether pecuniary or not, from being civil rights for the purposes of Article 6(1).\nThus in Tsfayo v United Kingdom (2006) 48 EHRR 457 it was conceded (see at [36]) that Article 6(1) applied to a dispute concerning entitlement to housing benefit, a means tested benefit payable towards housing costs in rented accommodation.\nThe cases relied on by the appellants for the proposition that benefits in kind, as opposed to pecuniary benefits, are protected as civil rights under Article 6, are both cases not only where the applicants were entitled to the housing, but where the entitlement had been reflected in a court judgment.\nIn Teteriny v Russia Application No 11931\/03 (unreported) 30 June 2005 the applicants (husband and wife) were retired judges.\nUnder Russian law judges were entitled to priority treatment in the allocation of flats.\nA court ordered the town council to provide the husband with a flat, but the order was not complied with.\nThe complaint was that the failure to comply with the judgment violated the applicants rights under Article 6(1), and also their right under Article 1 of the First Protocol not to be deprived of their possessions.\nThe Russian Government made no submissions on the merits of the claim, and the Court found, without any discussion of whether the application concerned civil rights, that there had been a violation of Article 6(1) on the ground that it applied to the enforcement of judicial decisions.\nAlthough Article 1 of the First Protocol did not apply to a right to live in a property not owned by the applicant because it was not a possession, the claim to a flat was sufficiently established by the Russian courts judgment to constitute a possession.\nSypchenko v Russia Application No 38368\/04 (unreported) 1 March 2007 and Nagovitsyn v Russia Application No 6859\/02 (unreported) 24 January 2008 are similar cases involving, respectively, judgments awarding housing to a person suffering from infectious tuberculosis, and to a person exposed to radiation as a result of the Chernobyl explosion.\nNone of these cases decides whether a civil right is engaged before a duty to provide housing provision crystallises in a court order.\nBut it does not follow from that the fact that Article 6(1) may apply in some circumstances to disputes relating to housing benefits that it applies to all such disputes.\nThe following aspects of the homelessness legislation in Part VII of the 1996 Act (on which see the valuable article by Loveland, Does Homelessness Decision Making Engage Article 6(1) of the European Convention on Human Rights? [2003] EHRLR 176) are important.\nThe duties of the local authority arise only if a person is homeless.\nA person is homeless if he has no accommodation available for his occupation.\nHe may be in accommodation but nevertheless homeless if the accommodation is not such that it would be reasonable for the person to occupy (section 175(1), (3)).\nAccommodation is regarded as available for a persons occupation only if it is available for occupation by them together with (a) any other person who normally resides with him as a member of his family; or (b) any other person who might reasonably be expected to reside with him: section 176, as amended.\nIt is not reasonable for a person to continue to occupy accommodation if it is probable that this will lead to domestic violence, or other violence, against him: section 177.\nCertain homeless persons are treated as having a priority need for accommodation, including, persons who are vulnerable as a result (inter alia) of old age or mental illness: section 189(1)(c).\nCertain homeless persons are treated as becoming homeless intentionally, where they deliberately do or fail to do anything in consequence of which they cease to occupy accommodation which is available for their occupation and which it would have been reasonable for them to continue to occupy: section 191(1).\nWhere a person is intentionally homeless but has a priority need, the local authority has a duty to secure that accommodation is available for his occupation for such period as they consider will give him a reasonable opportunity of securing accommodation for his occupation, and provide him with advice and assistance in securing accommodation: section 190(2).\nBut if he is not in priority need, the duty is limited to advice and assistance: section 190(3).\nWhere a person is homeless, but not in priority need and not intentionally homeless, the local authority is under a duty to provide advice and assistance (section 192(1)) and may secure that accommodation is available for occupation by the applicant (section 192 (3)).\nSection 193 sets out the duties to persons in priority need, in particular the duty to secure that accommodation is available for occupation by the applicant (section 193(2)).\nThe consequence is that the local authority has to investigate whether applicants are homeless, whether they are in priority need, and whether they are intentionally homeless.\nIt is only in relation to applicants with priority need that the local authority comes under the full duty to secure accommodation.\nBy section 193(5) the local authority ceases to be subject to the duty if the applicant refuses an offer of accommodation which the authority is satisfied is suitable.\nAs Lord Hope points out (at [27]) the content of the statutory duty lacks precision.\nThere is no right to any particular accommodation.\nThe duty is to secure that accommodation is available.\nIn my judgment, these factors together with the essentially public nature of the duty mean that the duty does not give rise to an individual economic right, and a dispute concerning the question whether the applicant has been properly notified of the consequences of refusal of accommodation is not within Article 6(1).\nLORD KERR\nI agree with Lord Hope and Lord Collins that this appeal should be dismissed.\nOne can recognise, however, the initial attraction of the argument that the right involved here was a civil right within the autonomous meaning of article 6.\nTo be provided with accommodation in the circumstances in which the appellants find themselves may be argued to constitute a statutory entitlement; the right to accommodation is conferred by section 193 (2) of the 1996 Act and therefore has a statutory base; it endures until determined by the occurrence of one of the events provided for in the succeeding provisions of section 193; and it can be argued to fulfil what have been recognised as the necessary criteria for an article 6 right.\nIn particular, the right can be said to be an economic right; it is individual or personal to the applicant; it is the product of or flows from the application of rules; those rules are specific and they are laid down in statute.\nBut I have been persuaded by the respondents argument that the case law points unmistakably in the opposite direction and I think that now is the time to recognise its effect.\nI have not found it easy to reach a principled basis for the distinction between social security payments and social welfare provision for both require the expenditure of public resources; both provide a valuable resource to the recipient; and both are activated by a need on the part of the beneficiary.\nBut, the lack of similarity to (or, rather, the distinction that can be made with) a private insurance scheme; and the dependence on discretionary judgments not only to establish entitlement but also to discharge the states obligation and the way in which the obligation can be met all combine to make this a different type of case from the Salesi (Salesi v Italy (1993) 26 EHRR 187) or Mennitto (Mennitto v Italy (2000) 34 EHRR 1122) models.\nThis is not an assertable right as that term was used in Stec v UK (2005) 41 EHRR SE 295.\nOn the question of whether judicial review provides a sufficient review by an independent and impartial tribunal, I confess to some feelings of unease about the way in which this issue has been tackled in the past.\nAt a fundamental level, the purpose of the article 6 review might be said to be to nullify or offset the effect of the established lack of the appearance of partiality.\nIn Crompton v UK 27 October 2009, application 42509\/05, at para 71, the purpose was described in this way: The Court has previously held that in order to determine whether the Article 6 compliant second tier tribunal had full jurisdiction, or provided sufficiency of review to remedy a lack of independence at first instance, it was necessary to have regard to such factors as the subject matter of the decision appealed against, the manner in which that decision was arrived at and the content of the dispute, including the desired and actual grounds of appeal (see [Bryan v the United Kingdom (1995) 21 EHRR 342, paras 44 to 47 and Tsfayo v Untied Kingdom (2006) 48 EHRR 457, para 43] [My emphasis.]\nThe underlying purpose is identified in this passage as to remedy a lack of independence at first instance.\nIn Tsfayo v United Kingdom (2006) 48 EHRR 457 this was also given as the purpose of the article 6 review see para 43, sufficiency of review to remedy a lack of independence at first instance.\nThe means by which the examination takes place i.e. having regard to such factors as the subject matter of the decision appealed against; the manner in which that decision was arrived at; and the content of the dispute must be distinguished from the purpose of the exercise.\nWhere the decision involves an evaluative judgment one can quite see that a judicial review challenge would be appropriate but where a conclusion on a simple factual issue is at stake, judicial review does not commend itself as an obviously suitable means by which to rid the original decision of its appearance of bias.\nIn particular, judicial review might be said to be a singularly inapt means of examining issues of credibility which lie at the heart of the present appeals.\nJudicial review is suitable to deal with issues such as the rationality of the judgment reached; whether relevant factors have been taken into account; whether sufficient opportunity has been given to the affected party to make representations etc.\nAll of these take place on if not an agreed factual matrix at least one in which the areas of factual controversy are confined.\nIt is quite different when one comes to decide a sharply conflicting factual issue.\nBut, the decision in Runa Begum v Tower Hamlets LBC [2003] 2 AC 430 continues to occupy this particular field.\nThe observations of Lord Bingham (in paragraph 10) and of Lord Hoffmann in paragraphs 59 et seq effectively conclude the arguments on the second issue arising on the appeal.\nThere is also much force in Ms Lieven QCs argument that Part VII decisions invariably partake of factual inquiry and discretionary judgment.\nThe nature of the scheme as a whole, therefore, dictates the answer.\nI agree with Lord Collins that the Russian cases do not assist in reaching a conclusion on the second issue.\nThere is much to be said for Lord Browns suggestion (made during argument) that even where one litigates a claim that does not itself involve an article 6 civil right, one may nevertheless assert that such a right arises where the judgment obtained on the claim which does not fall within article 6 remains unsatisfied.\nBut, it is quite clear that the European Court of Human Rights did not in the Russian cases address the question whether cases such as Salesi and Mennitto should be extended.\nIt is impossible to conclude that the Strasbourg court intended to radically expand the category of article 6 rights by these judgments.\n","output":"The Housing Act 1996 places a duty on local housing authorities to ensure that suitable accommodation is available for homeless persons who fulfil certain criteria.\nAn authority may cease to be subject to that duty where an applicant refuses an offer of accommodation, but only if the authority notifies him, in writing, that it regards itself as having discharged its duty.\nIf dissatisfied with an authoritys decision that its duty has been discharged, an applicant may appeal to the county court.\nBut he may only do so on a point of law arising from the decision; the county court judge is not entitled to decide factual disputes as to whether or not events have happened.\nIn this case, Birmingham City Council maintained that it had successfully discharged its duty to a number of applicants who were homeless and fulfilled the relevant criteria.\nThe applicants disputed this, claiming that, although written notification of the kind the law requires may have been sent to them by the authority, they never actually received it.\nThe dispute between the parties as to whether the duty had been discharged therefore turned entirely on a pure question of fact.\nIt was therefore of a nature which a county court judge on appeal has no power to determine.\nBefore this Court, the applicants argued that the lack of a fact finding jurisdiction for a county court on appeal put that aspect of the system in breach of Article 6(1) of the European Convention on Human Rights, which guarantees the right to a fair trial in the determination of civil rights and obligations.\nTwo main issues arose for the courts determination: (1) whether an appeal to the county court involved the determination of a civil right for the purposes of Article 6(1); (2) if so, whether Article 6(1) required that a court hearing such an appeal must itself be able to determine issues of fact such as those raised in the present case.\nThe Supreme Court unanimously dismissed the appeal.\nIt held that a decision that a local housing authority takes under the Housing Act 1996 that it has discharged its duty to an applicant is not a determination of the applicants civil rights for the purposes of Article 6(1).\nIt therefore lies outside\nthe protection of that Article.\nThe Court also holds that, although it is unnecessary to decide the point, the appeal procedure as a whole complies with Article 6(1) in any event.\nAs to the first issue: Lord Hope (with whom Lady Hale and Lord Brown agreed) reasoned that in cases such as this, where the award of services or benefits in kind is not an individual right of which the applicant can consider himself the holder, but is dependent upon a series of evaluative judgments by the provider as to whether the statutory criteria are satisfied and how the need for it ought to be met, Article 6(1) is not engaged (see para [49]).\nLord Collins, whilst agreeing with Lord Hopes reasoning, placed less emphasis on the evaluative nature of the decision making process (para [58]).\nThe mere fact that evaluative judgments are required did not take the case out of Article 6(1) (para [61]).\nThe main reason why the decision fell outside the scope of the Article was that the statutory duty lacked precision.\nThere was no right to any particular accommodation; the duty was simply to ensure that accommodation was available.\nTogether with the essentially public nature of the duty, those factors meant that the duty did not give rise to an individual economic right (para [73]).\nAs to the second issue: Although the question whether or not the letters were received was factual, it was just one among a number of interlinked questions that had to be addressed to determine whether the housing authoritys duty had been discharged.\nNo case of the European Court of Human Rights was to the effect that an appeal from such a determination on a point of law only would constitute a breach of Article 6(1) (paras [53] [55], [79]).\n","id":45}
{"input":"The facts giving rise to this appeal can be shortly summarised, although they are more fully set out in the judgments of Lord Sumption at paras 56 59 and of Lords Toulson and Hodge at paras 113 116 below.\nBilta (UK) Ltd is an English company which was compulsorily wound up in November 2009 pursuant to a petition presented by HMRC.\nBiltas liquidators then brought proceedings against, inter alia, its two former directors, Mr Chopra, who was also its sole shareholder, and Mr Nazir; and Jetivia SA, a Swiss company and its chief executive, Mr Brunschweiler, who is resident in France (the four defendants).\nThe pleaded claim alleges that the four defendants were parties to an unlawful means conspiracy to injure Bilta by a fraudulent scheme, which involved Messrs Chopra and Nazir breaching their fiduciary duties as directors, and Jetivia and Mr Brunschweiler (the appellants) dishonestly assisting them in doing so.\nThe liquidators claim (i) through Bilta, (a) damages in tort from each of the four defendants, (b) compensation based on constructive trust from the appellants, and (ii) directly from each of the four defendants, a contribution under section 213 of the Insolvency Act 1986.\nThe case against the four defendants is based on the contention that between April and July 2009, Messrs Chopra and Nazir caused Bilta to enter into a series of transactions relating to European Emissions Trading Scheme Allowances with various parties, including Jetivia, and that those transactions constituted what are known as carousel frauds.\nThe effect of the transactions was that they generated (i) an obligation on Bilta to account to HMRC for output VAT and (ii) an obligation on HMRC to pay a slightly lower sum by way of input VAT to another company.\nWhile the input VAT was paid by HMRC, it was inherent in the fraud that Bilta would always be insolvent and unable to pay the output VAT to HMRC.\nThe amount of output VAT for which Bilta consequently remains liable is said to be in excess of 38m.\nThe application to strike out\nThe appellants applied to strike out Biltas claim against them on the ground that (i) Bilta could not maintain the proceedings in view of the principle ex turpi causa non oritur actio, or, to put it another way, the appellants were bound to defeat the claims against them on the basis of an illegality defence, and (ii) in so far as the claims were based on section 213, it could not be invoked against the appellants as it does not have extra territorial effect.\nThe application was dismissed by Sir Andrew Morritt C, whose decision was upheld by the Court of Appeal.\nThe appellants now appeal to the Supreme Court.\nIn common with all members of the court, I consider that this appeal should be dismissed because the Court of Appeal were right to hold that (i) illegality cannot be raised by Jetivia or Mr Brunschweiler as a defence against Biltas claim because the wrongful activity of Biltas directors and shareholder cannot be attributed to Bilta in these proceedings, and (ii) section 213 of the Insolvency Act 1986 has extra territorial effect.\nAttribution\nSo far as attribution is concerned, it appears to me that what Lord Sumption says in his paras 65 78 and 82 97 is effectively the same in its effect to what Lords Toulson and Hodge say in their paras 182 209.\nBoth judgments reach the conclusion which may, I think be stated in the following proposition.\nWhere a company has been the victim of wrong doing by its directors, or of which its directors had notice, then the wrong doing, or knowledge, of the directors cannot be attributed to the company as a defence to a claim brought against the directors by the companys liquidator, in the name of the company and\/or on behalf of its creditors, for the loss suffered by the company as a result of the wrong doing, even where the directors were the only directors and shareholders of the company, and even though the wrong doing or knowledge of the directors may be attributed to the company in many other types of proceedings.\nIt appears to me that this is the conclusion reached by Lord Sumption and Lords Toulson and Hodge as a result of the illuminating discussions in their respective judgments in paras 65 78 and 82 95 and paras 182 209.\nParticularly given the full discussion in those passages, I do not think that it would be sensible for me to say much more on the topic.\nHowever, I would suggest that the expression the fraud exception be abandoned, as it is certainly not limited to cases of fraud see per Lord Sumption at para 71 and Lords Toulson and Hodge at para 181.\nIndeed, it seems to me that it is not so much an exception to a general rule as part of a general rule.\nThere are judicial observations which tend to support the notion that it is, as Lord Sumption says in his para 86, an exception to the agency based rules of attribution, which is based on public policy or common sense, rationality and justice, according to the judicial observations quoted in paras 72, 73, 74, 78 and 85 of Lord Sumptions judgment.\nHowever, I agree with Lord Mances analysis at paras 37 44 of his judgment, that the question is simply an open one: whether or not it is appropriate to attribute an action by, or a state of mind of, a company director or agent to the company or the agents principal in relation to a particular claim against the company or the principal must depend on the nature and factual context of the claim in question.\nSection 213 of the 1986 Act\nI agree with Lord Sumption and Lords Toulson and Hodge for the reasons they give in paras 107 110 and 210 218 that section 213 of the 1986 Act has extra territorial effect, at least to the extent of applying to individuals and corporations resident outside the United Kingdom.\nThe matters in dispute\nThere are some issues on which Lord Sumption and Lords Toulson and Hodge differ.\nIn that connection, I think that there are three areas of disagreement to which it is right to refer, and, taking them in the order in which it is most convenient to discuss them, they are as follows.\nFirst, there is disagreement as to the basis upon which a defence based on illegality, or ex turpi causa, is to be approached compare Lord Sumption at paras 60 63 and 98 100 with Lords Toulson and Hodge at paras 170 174.\nSecondly, Lords Toulson and Hodge would also dismiss this appeal on the attribution issue on the ground of statutory policy (see their paras 122 130), whereas Lord Sumption would not (see his paras 98 102).\nThirdly, there are differences between Lord Sumption and Lords Toulson and Hodge as to the proper interpretation of two cases, namely Stone & Rolls Ltd v Moore Stephens [2009] UKHL 39, [2009] 1 AC 1391 (see Lord Sumption at paras 79 81 and Lords Toulson and Hodge at paras 134 155), and Safeway Foodstores Ltd v Twigger [2010] EWCA Civ 1472, [2011] 2 All ER 841 (see Lord Sumption at para 83 and Lords Toulson and Hodge at paras 156 162). 14.\nThe proper approach to the illegality defence\nFirst, then, there is the proper approach which should be adopted to a defence of illegality.\nThis is a difficult and important topic on which, as the two main judgments in this case show, there can be strongly held differing views, and it is probably accurate to describe the debate on the topic as involving something of a spectrum of views.\nThe debate can be seen as epitomising the familiar tension between the need for principle, clarity and certainty in the law with the equally important desire to achieve a fair and appropriate result in each case.\nIn these proceedings, Lord Sumption considers that the law is stated in the judgments in the House of Lords in Tinsley v Milligan [1994] 1 AC 340, which he followed and developed (with the agreement of three of the four other members of the court, including myself and Lord Clarke) in Les Laboratoires Servier v Apotex Inc [2014] UKSC 55, [2014] 3 WLR 1257.\nHe distinguishes the judgment of Lord Wilson in Hounga v Allen [2014] UKSC 47, [2014] 1 WLR 2889 as involving no departure from Tinsley v Milligan, but as turning on its own context in which a competing public policy required that damages should be available even to a person who was privy to her own trafficking (para 47).\nBy contrast Lord Toulson (who dissented from that approach in Les Laboratoires) and Lord Hodge favour the approach adopted by the majority of the Court of Appeal in Tinsley and treat that of Lord Wilson in para 42ff of Hounga as supporting that approach.\nIn my view, while the proper approach to the defence of illegality needs to be addressed by this court (certainly with a panel of seven and conceivably with a panel of nine Justices) as soon as appropriately possible, this is not the case in which it should be decided.\nWe have had no real argument on the topic: this case is concerned with attribution, and that is the issue on which the arguments have correctly focussed.\nFurther, in this case, as in the two recent Supreme Court decisions of Les Laboratoires and Hounga, the outcome is the same irrespective of the correct approach to the illegality defence.\nIt would, in my view, be unwise to seek to decide such a difficult and controversial question in a case where it is not determinative of the outcome and where there has been little if any argument on the topic.\nIn Les Laboratoires, the majority did opine on the proper approach not because it was necessary to decide the appeal, but because they considered that the Court of Appeal (who had reached the same actual decision) had adopted an approach which was inconsistent with Tinsley.\nSimilarly in Hounga, as Lord Sumption has shown in para 99, it may well not have been necessary to 16. 15. consider the proper approach to the illegality defence, but it nonetheless remains the fact that it was the subject of argument, and that Lord Wilson did express a view on the point, and two of the four other members of the court agreed with his judgment. 17.\nLes Laboratoires provides a basis for saying that the approach in Tinsley has recently been reaffirmed by this court and that it would be inappropriate for this court to visit the point again.\nHowever, it was not argued in Les Laboratoires that Tinsley was wrongly decided, and, as Lord Toulson pointed out in his judgment, the majority decision was reached without addressing the reasoning in Hounga.\nLord Sumption is right to say that, unless and until this court refuses to follow Tinsley, it is at the very least difficult to say that the law is as flexible as Lords Toulson and Hodge suggest in their judgment, but (i) in the light of what the majority said in Hounga at paras 42 43, there is room for argument that this Court has refused to follow Tinsley, and (ii) in the light of the Law Commission report, the subsequent decisions of the Court of Appeal, and decisions of other common law courts, it appears to me to be appropriate for this court to address this difficult and controversial issue but only after having heard and read full argument on the topic.\nThe role of statutory policy in this case 18.\nAs well as dismissing this appeal on the attribution issue on the same grounds as Lord Sumption, Lords Toulson and Hodge would also dismiss the appeal on the grounds of statutory policy.\nThey suggest that it would make a nonsense of the statutory duty contained in section 172(3) of the Companies Act 2006 (and explained by them in their paras 125 127), if directors against whom a claim was brought under that provision could rely on the ex turpi causa or illegality defence.\nThat defence would be based on the proposition, relied on by the appellants in this case, that, as the directors in question (here the first and second defendants, Mr Nazir and Mr Chopra) were, between them, the sole directors and shareholders of Bilta, their illegal actions must be attributed to the company, and so the defence can run.\nI agree with Lords Toulson and Hodge that this argument cannot be correct.\nApart from any other reason, it seems to me that Lord Mance must be right in saying in his para 47 that, at least in this connection, the 2006 Act restates duties which were part of the common law.\nIt also appears to me to follow that, if Lords Toulson and Hodge are right about the proper approach to the illegality principle, then their reasoning in paras 128 130 would be correct.\nHowever, I would not go further than that, because, as I have already indicated, this is not an appropriate case in which this court should decide conclusively (in so far as the issue can ever be decided conclusively) on the 19. right approach to the illegality principle.\nIt is unnecessary to decide the right approach even in order to determine whether the illegality defence can be run in relation to the section 172(3) claim in the present case. 20.\nThat is, of course, because it is clear, for the very reasons given by Lord Toulson and Lord Hodge in paras 126 130 that a claim against directors under section 172(3) cannot be defeated by the directors invoking the defence of ex turpi causa.\nIt is clear from the language of the rule ([as] it is in a statute) and its content and policy that the act (or knowledge or state of mind) was for this purpose [not] intended to count as the act etc of the company, to quote and apply the test laid down by Lord Hoffmann in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, 507, set out by Lord Sumption at the end of his para 67.\nThe proper analysis of Stone & Rolls and of Safeway Foodstores 21.\nIn para 3.32 of the Report referred to above, the Law Commission observed that [i]t is difficult to anticipate what precedent, if any, Stone & Rolls will set regarding the illegality defence, explaining that, in their view at any rate, there was no majority reasoning with the members of the committee reaching different conclusions on how the defence should be applied.\nThe confusing nature of the decision has been commented on in a number of articles (see eg Halpern Stone & Rolls Ltd v Moore Stephens: An Unnecessary Tangle (2010) 73 MLR 487, Watts, Audit Contracts and Turpitude (2010) 126 LQR 14 and Illegality and agency law: authorising illegal action [2011] JBL 213, Ferran, Corporate Attribution and Directing Mind and Will (2011) 127 LQR 239, Watson, Conceptual Confusion: Organs, Agents and Identity in the English Courts (2011) 23 Sing Ac Law Jo 762). 22.\nThese critics have been joined by Lord Walker himself, who was of course a member of the majority in Stone & Rolls.\nIn the course of his illuminating judgment in Moulin Global Eyecare Trading Ltd (in liquidation) v Commissioner of Inland Revenue [2014] HKCFA 22, (2014) 17 HKCFAR 218, he described the decision in Stone & Rolls as a controversial exception to a general rule and referred to its facts as extreme and exceptional see para 133.\nIn para 106, he rightly added that the judgment of Patten LJ in the Court of Appeal in the present case had achieved a welcome clarification of the law in this area.\nCasting further doubt on the decision in Stone & Rolls, in para 101 of Moulin Global Lord Walker recanted part of his reasoning in the House of Lords. 23.\nIt seems to me that the view that it is very hard to seek to derive much in the way of reliable principle from the decision of the House of Lords in Stone & Rolls is vindicated by the fact that, in their judgments in this case, Lord Sumption and Lords Toulson and Hodge have reached rather different conclusions as to the effect of the majority judgments. 24.\nParticularly given the difference between them as to the ratio decidendi of Lord Phillipss opinion, and subject to what I say in the next four paragraphs, I am of the view that, so far as it is to be regarded as strictly binding authority, Stone & Rolls is best treated as a case which solely decided that the Court of Appeal was right to conclude that, on the facts of the particular case, the illegality defence succeeded and that the claim should be struck out.\nI believe that this largely reflects the views of both Lord Sumption (see his para 81) and Lords Toulson and Hodge (see their para 152 154). 25.\nBut it would be unsatisfactory for us to leave the case without attempting to provide some further guidance as to its effect, in so far as we fairly can.\nFor that purpose I welcome Lord Sumptions enumeration of the three propositions which he suggests in his para 80 can be derived from Stone & Rolls.\nWith the exception of the first, I agree with what he says about them, although even the second and third propositions are supported by only three of the judgments at least one of which is by no means in harmony with the other two. 26.\nSubject to that, I agree that the second and third of the propositions which Lord Sumption identifies in his para 80 can be extracted from three of the judgments in Stone & Rolls.\nThose propositions concern the circumstances in which an illegality defence can be run against a company when its directing mind and will have fraudulently caused loss to a third party and it is relying on the fraud in a claim against a third party.\nThe second proposition, with which I agree, is that the defence is not available where there are innocent shareholders (or, it appears, directors).\nThe third proposition, with which I also agree, is that the defence is available, albeit only on some occasions (not in this case, but in Stone & Rolls itself) where there are no innocent shareholders or directors.\nI need say no more about the second proposition, which appears to me to be clearly well founded.\nAs to the third proposition, I agree with Lords Toulson and Hodge that it appears to be supported (at least in relation to a company in sound financial health at the relevant time) by the reasoning in the clear judgment of Hobhouse J in Berg, Sons & Co Ltd v Mervyn Hampton Adams [2002] Lloyds Rep PN 41, which was referred to with approval and quoted from in Stone & Rolls by Lord Phillips (at paras 77 79) and Lord Walker (at 27. paras 150, 158 161), and indeed by Lord Mance, dissenting (at paras 258 260). 28.\nHowever, I note that Lord Mance suggests that it should be an open question whether the third proposition would apply to preclude a claim against auditors where, at the relevant audit date, the company concerned was in or near insolvency.\nWhile it appears that the third proposition, as extracted from three judgments in Stone & Rolls, would so apply, I have come to the conclusion that, on this appeal at least, we should not purport definitively to confirm that it has that effect.\nI am of the view that we ought not shut the point out, in the light of (a) our conclusion that attribution is highly context specific (see para 9 above), (b) Lord Walkers change of mind (see para 22 above), (c) the fact that the three judgments in Stone & Rolls which support the third proposition) are not in harmony (in the passages cited at the end of para 27 above), and (d) the fact that the third proposition is in any event not an absolute rule (see the end of para 26 above).\nI cannot agree that the first proposition identified by Lord Sumption, namely that the illegality defence is only available where the company is directly, as opposed to vicariously, responsible for the illegality, can be derived from Stone & Rolls (whether or not the proposition is correct in law, which I would leave entirely open, although I see its attraction).\nI agree that, in paras 27 28, Lord Phillips accepted that the illegality defence is available against a company only where it was directly, as opposed to vicariously, responsible for it, albeit that that was ultimately an obiter conclusion.\nMore importantly, I do not think that Lord Walker accepted that proposition at paras 132 133: he merely identified an issue as to whether the company was primarily liable for the fraud practised on KB, or was merely vicariously liable for the fraud of Mr Stojevic, but as he then went on to accept that the Court of Appeal was clearly right in holding that the company was primarily liable, he did not have to address the point in question. 29. 30.\nSubject to these points, the 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 [1963] Ch 459, 483, be put on one side and marked not to be looked at again.\nWithout 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.\nI turn, finally, to Safeway Foodstores.\nLord Sumption has accurately summarised the effect of the decision in his para 83.\nLords Toulson and 31.\nHodge deal with it a little more fully and much more critically in their paras 157 162.\nI would take a great deal of persuading that the Court of Appeal did not arrive at the correct conclusion in that case.\nHowever, I do not believe that it would be right on this appeal to express a concluded opinion as to whether the case was rightly decided, and, if so, whether the reasoning of the majority or of Pill LJ was correct.\nIt is unnecessary to reach any such conclusion and the points were not argued in detail before us: indeed, they were hardly addressed at all.\nLORD MANCE: 32.\nThe respondent, Bilta (UK) Ltd (Bilta), claims damages from the appellants for losses suffered through its involvement in a carousel fraud on the Revenue.\nThe defendants in the proceedings include Biltas two directors, Mr Chopra who was also its sole shareholder and Mr Nazir, as well as a Swiss company, Jetivia SA (Jetivia), and Jetivias chief executive, Mr Brunschweiler.\nJetivia and Mr Brunschweiler are the appellants in this appeal.\nThe scheme involved the purchase of carbon credits by Bilta from sources outside the United Kingdom (so not subject to VAT), followed by their resale (mostly at a loss, if one takes the basic resale price excluding VAT) to UK companies registered for VAT, and the remission of the proceeds to Jetivia and other offshore companies.\nInevitably, the scheme rendered Bilta at all material times insolvent, it cannot meet its liabilities to the Revenue and the present claim is brought by liquidators, for the ultimate benefit no doubt of the Revenue as Biltas creditors. 33.\nThe appellants defence is that Bilta was through its directors and shareholder party to illegality which precludes it pursuing its claim.\nI have read with great benefit the judgments prepared by Lords Toulson and Hodge, by Lord Sumption and by Lord Neuberger.\nNeither they, nor I understand any other member of the Court, consider that the defence can succeed, and I agree that it cannot.\nBut there are some differences in reasoning, particularly regarding the general approach to be adopted to illegality.\nSave perhaps for a slight difference of view (in para 52 below) regarding Safeway Stores Ltd v Twigger [2010] EWCA Civ 1472, [2011] 2 AER 814, I agree on all points in substance with Lord Neuberger. 34.\nThis is not, in my view, the occasion on which to embark on any re examination either of the House of Lords decision in Tinsley v Milligan [1994] 1 AC 340 or of the Supreme Courts recent decisions in Hounga v Allen [2014] UKSC 47; [2014] 1 WLR 2889 and Les Laboratoires Servier v Apotex Inc [2014] UKSC 55; [2014] 3 WLR 1257.\nThere was no challenge to or detailed examination of any of these decisions.\nI agree however that these cases and their inter relationship merit further examination by this court whenever the opportunity arises. 35.\nThe present appeal raises the question whether a company can pursue its directors and sole shareholder for breaches of duty towards the company depriving it of its assets.\nLord Toulson and Lord Hodge consider that the straightforward answer to the question is that that it would deprive the duties which the shareholder directors owed Bilta of all content, if the defence of illegality were open to the appellants.\nBut they consider that, if analysed in terms of attribution, the case is not one where the shareholder directors acts and state of mind can or should be attributed to Bilta.\nMore generally, they favour a policy based approach to illegality, but I will not examine that possibility, in view of what I have said in para 34. 36.\nLord Sumption in contrast sees the case as turning on rules of attribution, which he views as applying regardless of the nature of the claim or the parties involved (para 86) and amongst which he identifies a rule that the acts and state of mind of a directing mind and will be attributed to a company.\nBut he qualifies the effect of his analysis by reference to a policy based breach of duty exception which covers the present case in order to avoid, injustice and absurdity, as Lord Walker put it in a passage in Moulin Global Eyecare Trading Ltd v The Commissioner of Inland (Hong Kong Final Court of Appeal) FACV (No 5 of 2013), which Lord Sumption quotes in para 85.\nLater in his judgment however in para 92, he modifies this approach by describing it as no more than a valuable tool of analysis.\nIn common, as I see it, with Lords Neuberger, Toulson and Hodge, and for reasons which I set out in paras 39 44 below, I do not think it appropriate to analyse the present case as one of prima facie attribution, which is then negatived under a breach of duty exception.\nAs Lord Sumptions judgment demonstrates, it would, however, make no difference to the outcome in this case, if the matter were to be so analysed, though the plethora of difficult authority to which such an analysis has given rise, far from proving its value, argues for what is to my mind a simpler and more principled analysis. 37. 38.\nOne way or another, it is certainly unjust and absurd to suggest that the answer to a claim for breach of a directors (or any employees) duty could lie in attributing to the company the very misconduct by which the director or employee has damaged it.\nA company has its own separate legal personality and interests.\nDuties are owed to it by those officers who constitute its directing mind and will, similarly to the way in which they are owed by other more ordinary employees or agents.\nAll the shareholders of a solvent company acting unanimously may in certain circumstances (which need not here be considered, since it is not suggested that they may apply) be able to authorise what might otherwise be misconduct towards the company.\nBut even the shareholders of a company which is insolvent or facing insolvency cannot do this to the prejudice of its creditors, and the companys officers owe a particular duty to safeguard the interest of such creditors.\nThere is no basis for regarding the various statutory remedies available to a liquidator against defaulting officers as making this duty or its enforcement redundant. 39.\nRules of attribution are as relevant to individuals as to companies.\nAn individual may him or herself do the relevant act or possess the relevant state of mind.\nEqually there are many contexts in which an individual will be attributed with the actions or state of mind of another, whether an agent or, in some circumstances, an independent contractor.\nBut in relation to companies there is the particular problem that a company is an artificial construct, and can only act through natural persons.\nIt has no actual mind, despite the laws persistent anthropomorphism as to which see the references by Lord Hoffmann in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, 507A and 509G H to the absence of any ding an sich, and by Professor Eilis Ferran in Corporate Attribution and the Directing Mind and Will (2011) 127 LQR 239, 239 240 to the distracting effect of references to a companys brain and nerve centre or hands. 40.\nAs Lord Hoffmann pointed out in Meridian Global at pp 506 507, the courts task in all such situations is to identify the appropriate rules of attribution, using for example general rules like those governing estoppel and ostensible authority in contract and vicarious liability in tort.\nIt is well recognised that a company may as a result of such rules have imputed to it the conduct of an ordinary employee, and this is so also in the context of illegality.\nBy acquiescing in the overloading of the hauliers lorries in Ashmore, Benson, Pease & Co Ltd v A V Dawson Ltd [1973] 1 WLR 828 the consignors assistant transport manager and his assistant made the haulage contract unenforceable at the instance of the consignors, who were unable to recover when a lorry toppled over damaging the goods being carried.\nBut it is not always appropriate to apply general rules of agency to answer questions of attribution, and this is particularly true in a statutory context.\nParticular statutory provisions may indicate that a particular act or state of mind should only be attributed when undertaken or held by a companys directing mind and will: see eg Lennards Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 and Tesco Supermarkets Ltd v Nattrass [1972] AC 153, cited in Meridian Global at pp 507 509.\nIn contrast in Meridian Global itself the company was for criminal purposes attributed with the conduct and knowledge of the senior portfolio manager who, without knowledge of the board or managing director, had entered into the relevant transaction of which the company had failed to give notice as required by the legislation. 41.\nAs Lord Hoffmann made clear in Meridian Global, the key to any question of attribution is ultimately always to be found in considerations of context and purpose.\nThe question is: whose act or knowledge or state of mind is for the purpose of the relevant rule to count as the act, knowledge or state of mind of the company? Lord Walker said recently in Moulin Global, para 41 that: One of the fundamental points to be taken from Meridian is the importance of context in any problem of attribution.\nEven when no statute is involved, some courts have suggested that a distinction between the acts and state of mind of, on the one hand, a companys directing mind and will or alter ego and, on the other, an ordinary employee or agent may be relevant in the context of third party relationships.\nThis is academically controversial: see Professor Peter Watts, The companys alter ego an impostor in private law (2000) LQR 525; Campbell and Armour, Demystifiying the civil liability of corporate agents (2003) CLJ 290.\nAny such distinction cannot in any event override the need for attention to the context and purpose in and for which attribution is invoked or disclaimed. 42.\nWhere the relevant rule consists in the duties owed by an officer to the company which he or she serves, then, whether such duties are statutory or common law, the acts, knowledge and states of mind of the company must necessarily be separated from those of its officer.\nThe purpose of the rule itself means that the company cannot be identified with its officers.\nIt is self evidently impossible that the officer should be able to argue that the company either committed or knew about the breach of duty, simply because the officer committed or knew about it.\nThis is so even though the officer is the directing mind and will of the company.\nThe same clearly also applies even if the officer is also the sole shareholder of a company in or facing insolvency.\nAny other conclusion would ignore the separate legal identity of the company, empty the concept of duty of content and enable the companys affairs to be conducted in fraud of creditors. 43.\nAt the same time, however, if the officers breach of duty has led to the company incurring loss in the form of payments to or liability towards third parties, the company must be able as part of its cause of action against its officer to rely on the fact that, in that respect, its officers acts and state of mind were and are attributable to the company, causing it to make such payments or incur such liability.\nIn other words, it can rely on attribution for one purpose, but disclaim attribution for another.\nThe rules of attribution for the purpose of establishing or negating vicarious liability to third parties 44. differ, necessarily, from the rules governing the direct relationship inter se of the principal and agent.\nIt follows that I would, like Lords Toulson and Hodge (para 191), endorse the observations of Professors Peter Watts and Francis Reynolds QC as editors of Bowstead & Reynolds on Agency 19th ed, (2010) para 8 213, in relation to the argument that a principal should be attributed with the state of mind of his agent who has defrauded him, so as to relieve either the agent or a third party who had knowingly assisted in the fraud: Such arguments by defendants, though hazarded from time to time, are plainly without merit.\nHowever, in such situations imputation has no reason to operate.\nThe rules of imputation do not exist in a state of nature, such that some reason has to be found to disapply them.\nWhether knowledge is imputed in law turns on the question to be addressed.\nThe same point is made in rephrased terms in their 20th ed (2014), para 8 213: The simple point is that, were the principal deemed to possess the agents knowledge of his own breaches of duty, and thereby to have condoned them, the principal could never successfully vindicate his rights. [T]here is no need for an exception as such.\nThe putative defence that the exception is used to rebut is premised on the fallacy that the principal is prima facie deemed to know at all times and for all purposes that which his agents know.\nAs observed already, imputation never operated in such a way.\nBefore imputation occurs, there needs to be some purpose for deeming the principal to know what the agent knows.\nThere is none in this type of case. 45.\nThe breach of duty exception has been more plausibly deployed in situations where the issue is the legal effect of relations between the company and a third party.\nFor example, in J C Houghton & Co v Nothard, Lowe and Wills [1928] AC 1, the issue was whether the knowledge of the directors of the latter company should be attributed to it, with the effect that the latter company could and should be treated as estopped from denying that it had consented to a particular arrangement with a third party company.\nHowever, the arrangement was one that was against the companys interests and for the benefit of the third party company which the directors also controlled and which was in financial difficulties.\nIn the words of Viscount Dunedin, both common sense and authority in the form of In re Hampshire Land Co [1896] 2 Ch 743 led to the conclusion that, although It may be assumed that the knowledge of directors is in ordinary circumstances the knowledge of the company, that cannot be so if the knowledge of an infringement of the companys rights is only brought home to the man who himself was the artificer of such infringement (pp 14 15).\nEven in this context it may be questioned whether an analysis involving prima facie imputation subject to exception is necessary or fruitful: see Professor Peter Watts critique in Imputed knowledge in agency law excising the fraud exception (2001) LQR 300, 316 et seq.\nSince it leads to a right result and involves a different context to the present, I need however say no more about that here. 46.\nWith regard to Stone & Rolls Ltd v Moore Stephens [2009] 1 AC 1391 I do not propose to say very much.\nThe potential qualification on the application of the maxim ex turpi causa, which the majority accepted in the case of a company with innocent shareholders indicates that they too must ultimately have regarded context as having at least some relevance to attribution, and Lord Walker has in Moulin now explicitly withdrawn from the position that attribution operates independently of context: see paras 41 and 101.\nMore fundamentally, the context in which issues of attribution arose in Stone & Rolls was different from the present.\nThe companys claim was against its auditors rather than against an officer.\nLord Phillips at least in the majority clearly saw that as important, in particular in the light of what he viewed as the scope of an auditors duty.\nI remain of the view, which I expressed in para 265 in Stone & Rolls, that this ought to have been the central issue in that case, not a preliminary issue about ex turpi causa into which the majority view, that the claim even though pursued for the benefit of the companys creditors should fail, was in the event fitted.\nI note that Professor Eilis Ferran takes a similar view in her article, cited at para 39 above, at p 251; see also the statement by Professor Peter Watts, Audit contracts and turpitude (2010) LQR 126, that Ultimately, what divided the judges in Stone & Rolls was determining the classes of innocent parties whose interests the contract of audit is designed to protect (p 14).\nI say nothing of course about the correct answer to a question addressed in terms of what an auditors duty would or should have been.\nHowever, so far as concerns the nature and enforceability of a companys claim for misconduct by its directing mind and sole shareholder, I remain of the views expressed in paras 224 225 in Stone & Rolls: 47. 224. [B]efore the House Mr Sumptions submission was that S & R could only claim against Mr Stojevic on a narrow basis for abstraction of its moneys (a proprietary claim like that mentioned by O'Connor LJ in Caparo : see para 214 above); and that any claim against him for damages for breach of duty as an officer would be barred by the maxim ex turpi causa because it would involve pleading S & R's fraud on the banks.\nI do not accept this submission.\nIt would mean that, if one element of Mr Stojevic's fraud on the banks had involved persuading the banks to pay the funds direct into an account represented as being S & R's but in fact Mr Stojevic's, S & R could not sue Mr Stojevic.\nMr Stojevic's common law duty as a director to S & R was to conduct its affairs honestly and properly.\nSection 172(1) of the Companies Act 2006 now states the duty, in terms expressly based on common law rules and equitable principles (see section 170(3)), as being to act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole a duty made expressly subject to any enactment or rule of law requiring directors, in certain circumstances, to consider or act in the interests of creditors of the company: see section 172(3).\nSection 212 of the Insolvency Act 1986 provides a summary remedy available in the course of winding up against anyone who is or has been an officer of the company in respect of, inter alia, any misfeasance or breach of any fiduciary or other duty in relation to the company. (This is in addition to the specific remedies that apply in circumstances of fraudulent or wrongful trading under sections 213 and 214.) 225.\nAs between S & R and Mr Stojevic, Mr Stojevic's fraud on the banks was and is just as objectionable as the later abstraction of moneys to which it was designed to lead.\nIn holding a director responsible in such a case, a company is as a separate legal entity enforcing duties owed to it by the director.\nIt is not acting inconsistently, or asking the court to act inconsistently, with the law.\nIt is a remarkable proposition, that the directing mind of a company can commit the company to a scheme of fraud and then avoid liability in damages if the company would have to plead and rely on this scheme to establish such liability. 48.\nLike Lord Neuberger, I would not endorse Lord Sumptions suggestion (paras 79 and 80) that Stone & Rolls establishes an apparently general and context unspecific distinction between personal and vicarious liability as central to the application of the illegality defence.\nOutside the statutory sphere, where such a distinction originated and has been found useful, there is very little authority for any such distinction, and there is certainly none for its application as a key to a resolution of issues of attribution in the context of illegality.\nIts origin in that context lies in a concession by counsel (Mr Jonathan Sumption QC), no doubt tactically well judged, in Stone & Rolls (p 1443B C).\nThe only member of the House who referred to this concession as a requirement, along with turpitude, of an ex turpi causa defence was Lord Phillips, but he did so expressly on the basis that (para 24): Those are valid qualifications to the defence of ex turpi causa in the context in which it is raised on this appeal.\nThey are not, however, of general application to the defence of ex turpi causa. 49.\nAs I have already noted in para 40 above, with reference to Ashmore, Benson, it is not the law that the ordinary principles of attribution are replaced in the case of a company, any more than they are in the case of an individual, by some general principle that the only relevant conduct or state of mind is that of someone who is or can be treated as an alter ego or directing mind and will of the relevant company or individual.\nIn his article Audit contracts and turpitude, to which I have referred in para 46 above, at p 17, Professor Watts says this about the way in which the concept of directing mind and will entered the debate in Stone & Rolls: Their Lordships were drawn into recognising the mind and will concept by Mr Sumption QCs concession on the auditors behalf that a claimant cannot be caught by the ex turpi causa rule except as a result of his own conduct, not conduct for which he is vicariously liable or which is otherwise attributed to him under principles of the law of agency.\nThis is simply wrong.\nGenerally speaking, the ex turpi causa rule will preclude a principal from taking advantage of an agents illegal acts (see eg Apthorp v Nevill (1907) 23 TLR 575 for a human principal, and Ashmore, Benson Pease & Co Ltd v AV Dawson Ltd [1973] 1 WLR 828 CA for a company).\nNonetheless, as we have noted, context is important with the ex turpi rule, and in the case of contracts designed to deal with the risks of agents dishonesty (such as audit and insurance contracts) the law looks to where guilt really lies. 50.\nWith regard to the three points for which Lord Sumption suggests in para 80 that Stone & Rolls is authority, it follows from what I have said in paras 48 49 that I do not agree that the case is authority for the first point, viz that the illegality defence is only available to a company where it is directly as opposed to vicariously responsible for the illegality.\nAs Professor Watts says, 51. 52. there are no doubt some limited contexts in which this may be the appropriate analysis, but there is no such general rule.\nI agree with Lord Sumptions second point, viz that the House rejected the auditors argument that merely because Mr Stojevic was the companys mind and will and sole owner, his conduct and state of mind should be attributed to Stone & Rolls in relation to its claim against its auditors.\nI have already pointed out in para 46 above that the majority was thereby at least accepting that context must have some relevance.\nThe third point appears 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.\nI turn to a defence of circuity of action which the appellants suggest arises on this appeal.\nThe claim against Jetivia and Mr Brunschweiler is that they dishonestly assisted Mr Chopras and Mr Nazirs breaches of duty towards Bilta, or were co conspirators with Mr Chopra and Mr Nazir.\nOn the face of it, Jetivia and Mr Brunschweiler cannot raise a defence of illegality if Mr Chopra and Mr Nazir cannot.\nThe suggestion is that Jetivia could have a defence of circuity of action.\nThis is, I understand, on the basis that any liability on its part arose from a conspiracy between Bilta, through Mr Chopra and Mr Nazir, and Mr Brunschweiler.\nApart from this being unpleaded, I cannot, at present at least, see how a company (here Jetivia) which is through its director or other agent held liable to another company (here Bilta) for dishonestly assisting or conspiring with the latter companys directors or agents to cause loss to the latter company can then turn round and say that it has been damaged by the former company by the very liability which it has incurred to the former company.\nThat would turn the law governing dishonest assistance and conspiracy on its head.\nI sympathise with the views expressed by Lords Toulson and Hodge in paras 156 162 regarding the Court of Appeal decision in Safeway Stores Ltd v Twigger [2010] EWCA Civ 1472, [2011] 2 All ER 814, but any decision about its correctness must be for another day, after full argument. 53.\nFor the reasons given by Lords Sumption, Toulson and Hodge and again in agreement with Lord Neuberger, I consider that section 213 of the Insolvency Act 1986 has extra territorial effect, and do not regard any reference to the Court of Justice as necessary.\nIt follows that I also would dismiss the appeal. 54.\nLORD SUMPTION: 55.\nThe main issue on this appeal is the scope of the rule of public policy ex turpi causa non oritur actio.\nNo court will lend its aid to a man who founds his cause of action on an immoral or an illegal act: Holman v Johnson (1775) 1 Cowp 34l, 343 (Lord Mansfield CJ).\nIt is convenient to call this the illegality defence, although the label is not entirely accurate for it also applies to a very limited category of acts which are immoral without being illegal.\nThe proceedings 56.\nBilta (UK) Ltd is an English company which was ordered to be wound up by the High Court on 29 November 2009 on the application of Her Majestys Revenue and Customs.\nBefore that order was made, its sole directors were Mr Chopra and Mr Nazir.\nMr Chopra was also Biltas sole shareholder. 57.\nThe present proceedings were brought by Bilta (through its liquidators) against the two former directors and a Swiss company, Jetivia SA, together with Jetivias chief executive Mr Brunschweiler.\nThere are other defendants also, but for present purposes they can be ignored.\nThe appeal arises out of a preliminary issue on the pleadings as between Bilta on the one hand and Jetivia and Mr Brunschweiler on the other.\nIn summary, Biltas pleaded allegation is that between April and July 2009 the two directors caused Bilta to engage in fraudulent trading in carbon credits (European Emissions Trading Scheme Allowances) recorded on the Danish Emission Trading Registry.\nThe fraud was very simple.\nAt the relevant time carbon credits traded between parties both of whom were in the United Kingdom were treated as taxable supplies subject to VAT at the standard rate of 15%, but if either the buyer or the seller of the credit was outside the United Kingdom, the sale was not subject to VAT.\nBilta bought carbon credits free of VAT from Jetivia.\nIt resold them back to back to UK companies registered for VAT.\nIn most cases, the onsale price of the credits net of VAT was artificially fixed at a level marginally below Biltas purchase price, thus enabling Biltas UK buyer to sell them on at a small profit.\nThe proceeds of Biltas sales, together with the VAT thereon, were paid either to Bilta and then on to Jetivia, or directly by the UK buyers to Jetivia or an offshore company called THG.\nSince Bilta had no other business and no assets other than the cash generated by its sales, the result was to make the company insolvent and to generate a liability on Biltas part to account to HMRC which it was unable to satisfy. 58.\nAs against the directors, Biltas claim is that in breach of their fiduciary duties they organised and participated in a conspiracy to defraud and injure [Bilta] by trading in carbon credits and dealing with the proceeds therefrom in such a way as to deprive [Bilta] of its ability to meet its VAT obligations on such trades, namely to pass the money (which would otherwise have been available to [Bilta] to meet such liability) to accounts offshore, including accounts of Jetivia (Amended Particulars of Claim, para. 14(a)) As against Jetivia and Mr Brunschweiler, the allegation is that they were (i) liable as parties to the same conspiracy (ii) accountable as constructive trustees on the footing of knowing assistance in the dishonest diversion of book debts due to Bilta.\nJetivia, but not Mr Brunschweiler, is also said to be liable to account on the footing of knowing receipt of the proceeds of those book debts.\nAs against all parties, there is in addition a claim for fraudulent trading under section 213 of the Insolvency Act 1986. 59.\nThe victim identified in the pleading is Bilta.\nIt is not in terms pleaded that it was any part of the object of the scheme to defraud HMRC.\nPatten LJ in the Court of Appeal considered that the case had to be decided without regard to the possibility that HMRC were a victim.\nBut that, with respect, seems unrealistic.\nIn Everet v Williams (1725), the famous case in which two highwaymen sought an account of their partnership profits, they did not plead the nature of their business.\nBut that did not prevent the court from looking through the gaps and circumlocutions to the substance of the transaction: see (1893) 9 LQR 197.\nThe substance of the transactions in issue on this appeal, if the pleaded facts are true, is a fraud on HMRC, who will be the real losers.\nThe pleadings describe a classic missing trader fraud.\nWhether it was technically a carousel fraud (in which the trader sells to a connected entity, arranges for the latter to obtain a VAT refund, then pays away the VAT collected and disappears) or the simpler so called acquisition fraud where he simply disappears without accounting for VAT, does not matter.\nThe common feature of both is the intention of the fraudster to collect VAT and disappear before it can be accounted for, and this is the aspect of the scheme which founds the pleaded case of conspiracy.\nThe dishonesty alleged against the directors consists wholly in their having removed assets of Bilta which would otherwise have been available to pay creditors, in particular HMRC.\nThe illegality defence 60.\nAlthough it begs many questions, the most succinct and authoritative statement of the law remains that of Lord Mansfield CJ in Holman v Johnson (1775) 1 Cowp 34l, 343: No court will lend its aid to a man who founds his cause of action on an immoral or an illegal act.\nIf, from the plaintiffs own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the court says that he has no right to be assisted.\nIt is upon that ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff.\nSo if the plaintiff and defendant were to change sides, and the defendant was to bring his action against the plaintiff, the latter would then have the advantage of it; for where both are equally in fault, potior est conditio defendentis.\nThus stated, the law of illegality is a vindication of the public interest as against the legal rights of the parties.\nThe policy is one of judicial abstention, by which the judicial power of the state is withheld where its exercise in accordance with ordinary rules of private law would give effect to advantages derived from an illegal act.\nIn the two centuries which followed Lord Mansfields apparently simple proposition, it was among the most heavily litigated rules of common law, and by the end of the twentieth century it had become encrusted with an incoherent mass of inconsistent authority.\nThe main reason for this was the unfortunate tendency of the common law to fragmentation, as judges examined each case in its own factual and legal context without regard to broader legal principle.\nBy the time that the illegality defence came before the Court of Appeal in Euro Diam Ltd v Bathurst [1990] 1 QB 1, the law of illegality had generated a mass of sub rules, each appropriate to its own context, a state of affairs which necessarily gave rise to difficulty when the law had to be applied to situations which were either new or not classifiable according to existing categories.\nThe Court of Appeal resolved this problem by treating the whole body of authority as illustrative of a process which was essentially discretionary in nature.\nKerr LJ, delivering the only reasoned judgment, expressed that principle at p 35 by saying that the test was whether in all the circumstances it would be an affront to the public conscience to grant the plaintiff the relief which he seeks 61. because the court would thereby appear to assist or encourage the plaintiff in his illegal conduct or to encourage others in similar acts.\nThat question, he suggested, needed to be approached pragmatically and with caution, depending on the circumstances.\nThis view of the law was unanimously rejected by the House of Lords four years later in Tinsley v Milligan [1994] 1 AC 340.\nLord Goff of Chievely, delivering the leading judgment on this point, said that it would constitute a revolution in this branch of the law, under which what is in effect a discretion would become vested in the court to deal with the matter by the process of a balancing operation, in place of a system of rules ultimately derived from the principle of public policy enunciated by Lord Mansfield CJ in Holman v Johnson. (p 363B). 62.\nThe Law Commission struggled valiantly with the issue in the early years of this century, and at one point proposed a structured statutory discretion of the kind which has been adopted in New Zealand.\nIt abandoned this proposal in the expectation that the courts would reintroduce a measure of the flexibility which Tinsley v Milligan had rejected.\nBut Tinsley v Milligan is binding authority, subject to review in this court, and in the twenty years since it was decided, the highest court has never been invited to overrule it.\nIn those circumstances, the law has moved in a different direction, accepting that the illegality defence depends on a rule of law which applies regardless of the equities of any particular case but seeking to rationalise an area that has generated a perplexing mass of inconsistent case law.\nIn its recent decision in Les Laboratoires Servier v Apotex Inc [2014] UKSC 55; [2014] 3 WLR 1257 at paras 19 20, this court reaffirmed the principle that the illegality defence is based on a rule of law on which the court is required to act, if necessary of its own motion, in every case to which it applies.\nIt is not a discretionary power on which the court is merely entitled to act, nor is it dependent upon a judicial value judgment about the balance of the equities in each case: In the light of the rejection of the public conscience test, it is incumbent on the courts to devise principled answers which are no wider than is necessary to give effect to the policy stated by Lord Mansfield and are certain enough to be predictable in their application.\nIn Les Labratoires Servier, it was pointed out that the illegality defence commonly raised three questions: (i) what are the illegal or immoral acts which give rise to the defence? (ii) what relationship must those acts have to the claim? (iii) on what principles should the illegal or immoral acts of an 63. agent be attributed to his principal, especially when the principal is a company? Les Laboratoires Servier was about the first of the three questions.\nIt is authority for the proposition that the illegality defence is potentially engaged by any act of the claimant which is criminal or dishonest or falls into a limited number of closely analogous categories.\nIt is not disputed that the acts alleged in this case were of that kind.\nVarious tests have been proposed for the connection which the law requires between the illegal act and the claim, but it has not been disputed that any of them would be satisfied on the facts alleged in this case.\nIt is obvious, and apparent from the pleadings, that the claim against both the directors and Jetivia is directly founded on the VAT frauds. 64.\nThe sole question on this part of the appeal is therefore the third.\nAs applied to the present case, it is whether the dishonesty which engages the illegality defence is to be attributed to Bilta for the specific purpose of defeating its claim against the directors and their alleged co conspirators.\nThe question is whether the defence is available to defeat an action by a company against the human agent who caused it to act dishonestly for damages representing the losses flowing from that dishonesty.\nThe Chancellor of the High Court and Court of Appeal both held that it was not.\nWhile there are dicta in the judgments below, especially in the Court of Appeal, which range wider than is really necessary, their essential reason was the same, namely that the agent was not entitled to attribute his own dishonesty to the company for the purpose of giving himself immunity from the ordinary legal consequences of his breach of duty.\nFor reasons which I shall explain below, I think that the courts below were right about that, and I understand that view to be shared by every other member of the court.\nAttribution 65.\nEnglish law might have taken the position that a company, being an artificial legal construct, was mindless.\nIf it had done that, then legal wrongs which depended on proof of some mental element such as dishonesty or intention could never be attributed to a company and the present question could not arise.\nIn the early years of English company law, there were powerful voices which denied that a tort dependent on proof of a mental element could be committed by a company.\nFor many years this view was principally associated with Lord Bramwell, who in a well known dictum in Abrath v North Eastern Railway Co [1886] 11 App Cas 247, 250 251, declared that a fictitious person was incapable of malice or of motive even if the whole body of its directors or shareholders in general meeting approved its acts for improper reasons.\nThis question was, however, settled as far as English civil law was concerned by the end of the nineteenth century.\nAs Lord Lindley put it in Citizens Life Assurance Co Ltd v Brown [1904] AC 423, 426, once 66. companies were recognised by the law as legal persons, they were liable to have the mental states of agents and employees such as dishonesty or malice attributed to them for the purpose of establishing civil liability.\nIn the criminal law, the notion that a corporation was incapable of committing an offence requiring mens rea persisted rather longer.\nIt was asserted in both the first edition (1909) and the second edition (1933) of Halsburys Laws of England.\nBut it was rejected in a series of decisions in 1944: see Director of Public Prosecutions v Kent and Sussex Contractors Ltd [1944] KB 146; R v ICR Haulage Ltd [1944] KB 551; Moore v I Bresler Ltd [1944] 2 All ER 515.\nIt is now well established that a company can be indicted for conspiracy to defraud (R v ICR Haulage Ltd [1944] KB 551) or manslaughter before statute intervened in 2007 (Attorney Generals Reference (No 2 of 1999) [2000] QB 796), provided that an agent with the relevant state of mind can be sufficiently identified with it.\nIt cannot be emphasised too strongly that neither in the civil nor in the criminal context does this involve piercing the corporate veil.\nIt is simply a recognition of the fact that the law treats a company as thinking through agents, just as it acts through them.\nIt follows that in principle, the illegality defence applies to companies as it applies to natural persons.\nThis is the combined effect of the companys legal personality and of the attribution to companies of the state of mind of those agents who for the relevant purpose can be said to think for it.\nBut the principles can only apply to companies in modified form, for they are complex associations of natural persons with different interests, different legal relationships with the company and different degrees of involvement in its affairs.\nA natural person and his agent are autonomous in fact as well as in law.\nA company is autonomous in law but not in fact.\nIts decisions are determined by its human agents, who may use that power for unlawful purposes.\nThis gives rise to problems which do not arise in the case of principals who are natural persons. 67.\nThe question what persons are to be so far identified with a company that their state of mind will be attributed to it does not admit of a single answer.\nThe leading modern case is Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500.\nThe primary rule of attribution is that a company must necessarily have attributed to it the state of mind of its directing organ under its constitution, ie the board of directors acting as such or for some purposes the general body of shareholders.\nLord Hoffmann, delivering the advice of the Privy Council, observed that the primary rule of attribution together with the principles of agency and vicarious liability would ordinarily suffice to determine the companys rights and obligations.\nHowever, they would not suffice where the relevant rule of law required that some state of mind should be that of the company itself.\nHe explained, at p 507: This will be the case when a rule of law, either expressly or by implication, excludes attribution on the basis of the general principles of agency or vicarious liability.\nFor example, a rule may be stated in language primarily applicable to a natural person and require some act or state of mind on the part of that person himself as opposed to his servants or agents.\nThis is generally true of rules of the criminal law, which ordinarily impose liability only for the actus reus and mens rea of the defendant himself.\nThe directing organ of the company may expressly or implicitly have delegated the entire conduct of its business to the relevant agent, who is actually although not constitutionally its directing mind and will for all purposes.\nThis was the situation in the case where the expression directing mind and will was first coined, Lennards Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705.\nSuch a person in practice stands in the same position as the board.\nThe special insight of Lord Hoffmann, echoing the language of Lord Reid in Tesco Supermarkets Ltd v Nattrass [1972] AC 153, 170, was to perceive that the attribution of the state of mind of an agent to a corporate principal may also be appropriate where the agent is the directing mind and will of the company for the purpose of performing the particular function in question, without necessarily being its directing mind and will for other purposes.\nThis is always a matter of interpretation: given that it 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. (p 507, and see pp 509 511) 68.\nA modern illustration of the attribution of knowledge to a company on the basis that its agent was its directing mind and will for all purposes is Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378, where the Privy Council was concerned with the knowledge required to make a company liable as a constructive trustee on the footing of knowing assistance in a dishonest breach of trust.\nThe defendants were a one man company, BLT, and the one man, Mr Tan.\nAt pp 392 393, Lord Nicholls, delivering the advice of the Board, observed that Mr Tan had known the relevant facts and was therefore liable.\nBy the same token, and for good measure, BLT also acted dishonestly.\nMr Tan was the company and his state of mind is to be imputed to the company.\nOn the other hand, El Ajou v Dollar Land Holdings Ltd [1994] 2 All ER 685 did not concern a one man company.\nThe issue was whether knowledge of the origin of funds received for investment by Dollar Land Holdings, a public company, could be imputed to it so as to found a liability to account as a constructive trustee on the footing of knowing receipt.\nLord Hoffmann, delivering the leading judgment of the Court of Appeal and applying the principles which he would later explain in Meridian Global, held that the company was fixed with the knowledge of one Mr Ferdman, its part time chairman and a non executive director, because he had acted as its directing mind and will for the particular purpose of arranging its receipt of the tainted funds. 69.\nThese refinements can give rise to nice questions of fact.\nBut their application in a case like the present one is perfectly straightforward.\nOn the pleaded facts, Mr Chopra and Mr Nazir were the directing organ of Bilta under its constitution.\nThey constituted the board.\nMr Chopra was also the sole shareholder.\nAs between Bilta and Jetivia it is common ground on the pleadings that they were the directing mind and will of Bilta for all purposes, and certainly in relation to those of its functions which are relevant in these proceedings. 70.\nThe search for a test of a companys direct or personal liability has sometimes been criticised as a distraction or an artificial anthropomorphism, and it is certainly true that English law might have developed along other lines.\nAs it is, the distinction between a liability which is direct or personal and one which is merely vicarious is firmly embedded in our law and has had a considerable influence on the way it has developed in relation to both kinds of liability.\nVicarious liability does not involve any attribution of wrongdoing to the principal.\nIt is merely a rule of law under which a principal may be held strictly liable for the wrongdoing of someone else.\nThis is one reason why the law has been able to impose it as broadly as it has.\nIt extends far more widely than responsibility under the law of agency: to all acts done within the course of the agents employment, however humble and remote he may be from the decision making process, and even if his acts are unknown to the principal, unauthorised by him and adverse to his interest or contrary to his express instructions (Lloyd v Grace Smith & Co [1912] AC 716), indeed even if they are criminal (Lister v Hesley Hall Ltd [2002] 1 AC 215).\nPersonal or direct liability, on the other hand, has always been fundamental to the application of rules of law which are founded on culpability as opposed to mere liability.\nOne example, as Lord Hoffmann pointed out in Meridian Global, is provided by the rules governing criminal responsibility, which do not usually recognise vicarious responsibility.\nAnother is the class of statutory provisions dependent on a companys personal misconduct, such as a shipowners right to limit his liability for a loss which is not attributable to his personal act or omission: see article 4 of the Convention on Limitation of Liability for Maritime Claims (1976) (Merchant Shipping Act 1995, Schedule 7, Part I), a principle derived from the nineteenth century Merchant Shipping Acts of the United Kingdom.\nA third example is provided by the illegality defence, which the House of Lords held in Stone & Rolls v Moore Stephens [2009] 1 AC 1391 to apply only to direct and not to vicarious responsibility.\nIt is, for example, the reason why public policy precludes recovery under a liability policy in respect of a criminal act where the insureds liability is personal or direct, but not where it is purely vicarious: Lancashire County Council v Municipal Mutual Insurance Ltd [1997] QB 897, 907.\nAs cases like this illustrate, if the illegality defence were to be engaged merely by proof of a purely vicarious liability, it would apply irrespective of any question of attribution, to any case in which the human wrongdoer was acting within the scope of his employment.\nThis would extend the scope of the defence far more widely than anything warranted by the demands of justice or the principle stated by Lord Mansfield.\nOn the footing that the attribution of culpability is essential to the defence, the concept of a directing mind and will remains valuable.\nIt describes a person who can be identified with the company either generally or for the relevant purpose, as distinct from one for whose acts the company is merely vicariously liable.\nThe exception: breach of the agents duty to the company 71.\nBiltas answer to this, which was accepted by both the judge and the Court of Appeal, is that the dishonesty of Mr Chopra and Mr Nazir is not to be attributed to Bilta, because in an action for breach of duty against the directors there cannot be attributed to the company a fraud which is being practised against it by its agent, even if it is being practised by a person whose acts and state of mind would be attributable to it in other contexts.\nIt is common ground that there is such a principle.\nIt is commonly referred to as the fraud exception, but it is not limited to fraud.\nIt applies in certain circumstances to prevent the attribution to a principal of his agents knowledge of his own breach of duty even when the breach falls short of dishonesty.\nIn the context of the illegality defence, which is mainly concerned with dishonest or criminal acts, this exception from normal rules of attribution will normally arise when it is sought to attribute to a principal knowledge of his agents fraud or crime but that is not inherent in the underlying principle.\nI shall call it the breach of duty exception. 72.\nThe breach of duty exception is commonly referred to as the Hampshire Land principle, after the judgment of Vaughan Williams J in In re Hampshire Land [1896] 2 Ch 743.\nThis case did not involve any allegation of fraud.\nThe facts were that the Hampshire Land Company had borrowed money from a building society.\nThe borrowing required the authority of the shareholders in general meeting, but their authority, although it was given, was vitiated by defects in the notice by which it was summoned.\nThe issue was whether a building society was affected by notice of the irregularity so as to be prevented from relying on the internal management rule.\nThe contention was that the building society was on notice because its secretary happened also to be the secretary of the borrower, and in the latter capacity he knew the facts.\nIn the course of discussing that question, the judge observed at p 749: If Wills had been guilty of a fraud, the personal knowledge of Wills of the fraud that he had committed on the company would not have been knowledge of the society of the facts constituting that fraud; because common sense at once leads one to the conclusion that it would be impossible to infer that the duty either of giving or receiving notice will be fulfilled where the common agent is himself guilty of fraud. 73.\nVaughan Williams Js dictum was subsequently adopted by two members of the House of Lords in Houghton & Co v Nothard, Lowe & Wills [1928] AC 1, where the issue was whether a company was bound by an arrangement adverse to the companys interest which had been made by two of its directors for their own benefit and was never approved by the board.\nIt was contended that the knowledge of the two directors could be attributed to the company so as to found a case of acquiescence.\nViscount Dunedin (at p 14) summarily rejected the suggestion that the company could be treated as knowing about a directors breach of duty by virtue only of the knowledge of the defaulting director himself: My Lords, there can obviously be no acquiescence without knowledge of the fact as to which acquiescence is said to have taken place.\nThe person who is sought to be estopped is here a company, an abstract conception, not a being who has eyes and ears.\nThe knowledge of the company can only be the knowledge of persons who are entitled to represent the company.\nIt may be assumed that the knowledge of directors is in ordinary circumstances the knowledge of the company.\nThe knowledge of a mere official like the secretary would only be the knowledge of the company if the thing of which knowledge is predicated was a thing within the ordinary domain of the secretary's duties.\nBut what if the knowledge of the director is the knowledge of a director who is himself particeps criminis, that is, if the knowledge of an infringement of the right of the company is only brought home to the man who himself was the artificer of such infringement? Common sense suggests the answer, but authority is not wanting.\nHe then cited the dictum of Vaughan Williams J. Lord Sumner agreed, observing (p 19) that it would be contrary to justice and common sense to treat the knowledge of such persons as that of their company, as if one were to assume that they would make a clean breast of their delinquency. 74.\nThese dicta are concerned only with the attribution of knowledge.\nThe argument which they reject is that there is no breach of duty because the company must be deemed to know the facts and therefore cannot be misled or must be supposed to have consented.\nThey are not concerned with the ambit of the illegality defence or the breach of duty exception to it.\nFor the first full consideration of the exception, one must move forward seven decades to the decision of the Court of Appeal in Belmont Finance Ltd v Williams Furniture Ltd [1979] Ch 250, which is the starting point for the modern law.\nThat case arose out of an elaborate scheme, to which Belmonts directors were party, to extract value from Belmont by causing it to buy the shares of a company called Maximum at a considerable overvalue.\nThis was a breach of the fiduciary duties of the directors.\nTheir object was to recycle the profit on the sale of Maximum so that it could be used to fund the purchase by three companies associated with the directors of Belmonts own shares.\nThis was not only a breach of the directors fiduciary duty but a criminal contravention of what was then section 54 of the Companies Act 1948.\nBelmont subsequently went into liquidation, and an action was brought in its name by receivers for damages for breach of duty against the directors who had authorised the transaction, and for an account on the footing of knowing receipt against the three companies.\nThe plaintiff was met by the illegality defence.\nThe judge dismissed the action at the close of the plaintiffs case on that ground, holding that the company was a party to the conspiracy.\nThis was because it must be taken to have known, through its directors, that the asset was over valued and that the purpose of the transaction was to fund the purchase of Belmonts shares.\nReversing the judge, Buckley LJ said (pages 261 262): But in my view such knowledge should not be imputed to the company, for the essence of the arrangement was to deprive the company improperly of a large part of its assets.\nAs I have said, the company was a victim of the conspiracy.\nI think it would be irrational to treat the directors, who were allegedly parties to the conspiracy, notionally as having transmitted this knowledge to the company; and indeed it is a well recognised exception from the general rule that a principal is affected by notice received by his agent that, if the agent is acting in fraud of his principal and the matter of which he has notice is relevant to the fraud, that knowledge is not to be imputed to the principal.\nSo in my opinion the plaintiff company should not 75. 76. be regarded as a party to the conspiracy, on the ground of lack of the necessary guilty knowledge.\nIn Attorney Generals Reference (No 2 of 1982) [1984] 1 QB 624 two men were charged with theft from a company which they wholly owned and controlled.\nThe issue was whether, for the purpose of section 2(1)(b) of the Theft Act 1968, they had appropriated the property of another in the belief that [they] would have the other's consent if the other knew of the appropriation and the circumstances of it.\nThe argument was that they must have had that belief because the company had no other will than theirs, so that it must be taken to consent to whatever they consented to.\nThis argument had been accepted by the trial judge but it failed in the Court of Appeal for two reasons.\nOne turned on the construction of the Theft Act and is of no present relevance.\nThe other was that the decision in Belmont Finance directly contradicts the basis of the defendants argument in the present case.\nThere can be no reason, in our view, why the position in the criminal law should be any different.\nIn Brinks Mat v Noye [1991] 1 Bank LR 68, gold had been stolen from Brinks Mats warehouse and delivered to a company called Scadlynn to be melted down, recast and sold.\nThe directors and sole shareholders of Scadlynn, who were well aware that the gold was stolen, caused the proceeds to be paid into the companys bank account and then paid away, thus leaving it without assets to meet its liabilities to Brinks Mat.\nThe appeal arose out of an application by Brinks Mat to amend the pleadings so as to add a number of claims against the bank.\nThe proposed amendments proceeded on the basis that since the payments into Scadlynns bank account represented property to which Brinks Mat was beneficially entitled, it was entitled to enforce Scadlynns rights against the bank.\nIt was alleged that the bank was liable to Scadlynn as a constructive trustee on the footing of knowing receipt and that Brinks Mat was entitled to enforce that liability for its own benefit.\nOne of the issues which arose was whether Scadlynn would have been precluded from advancing a claim against the bank because it had known (through its directors) about the origin of the gold.\nMustill LJ, rejecting this argument, considered that the corporate entity named Scadlynn was, however, odd the notion may seem at first sight, the victim of wrongful arrangements to deprive it improperly of a large part of its assets: p 72.\nNicholls LJ, agreeing, observed (p 73): On the facts alleged in the proposed amendments, Scadlynn was at all material times being used by Chappell and Palmer and others for a fraudulent purpose, viz, to realize the proceeds of sale of the robbery.\nBut the plaintiff was not implicated in any such fraudulent purpose.\nOn the contrary, along with the owners of the gold, the plaintiff was the intended victim of the scheme.\nLikewise, Scadlynn itself was an intended victim, in that Scadlynn was being used as a vehicle for committing a fraud on its creditors and a fraud on those beneficially interested in property held by Scadlynn.\nIn those circumstances the fraudulent purposes of those controlling Scadlynn are not to be imputed to the company itself: see Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250, per Buckley LJ at pp 261 262. 77.\nArab Bank v Zurich Insurance [1999] 1 Lloyds Rep 262 was a decision of Rix J arising out of a claim under the Third Parties (Rights against Insurers) Act 1930 against the liability insurer of a valuer.\nThe valuer was alleged to have issued fraudulent valuations to induce banks to lend money to third parties.\nThe valuations had been issued by a Mr Browne, who was the managing director and also a personal assured.\nThe insurer defended the claim on the ground that the company was not entitled to indemnity under the policy because Brownes dishonesty was attributable to it by virtue of his knowledge.\nRix J thought that Browne would on ordinary principles of attribution have been treated as the directing mind and will of the valuer for the relevant purpose (pp 278 279).\nBut he rejected the illegality defence because it was inconsistent with the terms of the contract of insurance under which Mr Browne and the company were separately insured each for his own interest (pp 272 273).\nIt followed that only Mr Browne would be precluded from recovering.\nThe attribution of his knowledge to the company would be contrary to the agreement to insure their interests separately.\nThe companys liability was therefore purely vicarious.\nHaving made these points, Rix J dealt briefly (and obiter) at p 282 with the question of attribution.\nHe said that although Brownes valuations were frauds on the lending banks, the valuer itself should be treated as a secondary victim, first because Brownes frauds exposed it to liability to the banks, and secondly because Brownes conduct involved such a breach of duty to [the valuer] as in justice and common sense must entail that it is impossible to infer that the knowledge of his own dishonesty was transferred to [the valuer].\nHe thought that the position might well be different in the case of a one man company. 78.\nMcNicholas Construction Co Ltd v Customs & Excise Commissioners [2000] STC 553 arose out of a classic VAT fraud against the Customs and Excise.\nThe fraudsters submitted invoices to McNicholas for VAT in respect of non existent goods and services.\nThe companys site managers, who were in league with them, procured the VAT to be paid to them.\nThe VAT was then reclaimed as input tax from the Customs and Excise.\nThe scheme inflicted a loss on the Customs & Excise but the net financial effect on the company was neutral.\nThe Customs & Excise claimed statutory penalties on the basis that that the companys conduct was dishonest.\nThis case was simply about attribution.\nThe illegality defence did not arise, for McNicholas was claiming nothing.\nDyson J held that as a matter of construction the statute implicitly fixed the company with the knowledge of those of its employees who handled its VAT payments, including the site managers.\nThe company argued that knowledge of the fraud should nevertheless not be imputed to it because it was a victim of the fraud, which exposed it to statutory penalties.\nRejecting this argument (at paras 55 56), the judge said: In my judgment, the tribunal correctly concluded that there should be attribution in the present case, since the company could not sensibly be regarded as a victim of the fraud.\nThey were right to hold that the fraud was neutral from the companys point of view.\nThe circumstances in which the exception to the general rule of attribution will apply are where the person whose acts it is sought to impute to the company knows or believes that his acts are detrimental to the interests of the company in a material respect It follows that, in judging whether a company is to be regarded as the victim of the acts of a person, one should consider the effect of the acts themselves, and not what the position would be if those acts eventually prove to be ineffective.\nAs the tribunal pointed out, in Director General of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 456 the company suffered a large fine for contempt of court on account of the wrongful acts of its managers.\nThe fact that their wrongful acts caused the company to suffer a financial penalty in this way did not prevent the acts and knowledge of the managers from being attributed to it.\nThe [breach of duty exception] is founded in common sense and justice.\nIt is obvious good sense and justice that the act of an employee should not be attributed to the employer company if, in truth, the act is directed at, and harmful to, the interests of the company.\nIn the present case the fraud was not aimed at the company.\nIt was not intended by the participants in the fraud that the interests of the company should be harmed by their conduct.\nThe Court of Appeal approved this reasoning in rejecting a somewhat similar argument in Bank of India v Morris [2005] BCC 739.\nThe facts of this case, baldly summarised, were that BCCI had placed deposits with Bank of India on unusual terms as part of a scheme to window dress its accounts at the year end.\nThe liquidators of BCCI brought proceedings against Bank of India under section 213 of the Insolvency Act on the ground that it had been knowingly party to the carrying on of business by BCCI with intent to defraud.\nThe judge found that the general manager of the Bank of India had deliberately turned a blind eye to what was going on, and that his knowledge was attributable to the bank.\nThe bank advanced an argument somewhat similar to that which had been advanced by McNicholas before Dyson J.\nThe Court of Appeal rejected it for the same reason, namely that the general managers acts were not targeted at Bank of India: see paras 114 118. 79.\nThis was the state of the authorities when Stone & Rolls v Moore Stephens [2009] 1 AC 1391 came before the courts.\nStone & Rolls was a company created solely for the purpose of defrauding banks.\nIt never did anything else.\nThe author of the frauds was a Mr Stojevic, its sole director, manager and shareholder.\nThe action was brought by the company at the instance of its liquidators against the auditors on the basis that if they had exercised due skill and care, they would have discovered that the company had no legitimate business.\nThe course of frauds against the bank would then have ceased earlier than it actually did.\nThey claimed the losses said to have been incurred as the direct result of the companys course of fraudulent behaviour continuing for longer than it would otherwise have done.\nThe House of Lords held that the illegality defence applied and upheld the order of the Court of Appeal striking out the proceedings.\nIt is a difficult case to analyse, because it was decided by a majority comprising Lord Phillips, Lord Walker and Lord Brown and there are significant differences between the reasoning of Lord Walker (with whom Lord Brown agreed) and Lord Phillips.\nBut the fact that they differed on critical points does not undermine the authority of their speeches on those points on which they were agreed. 80.\nLord Phillips and Lord Walker were agreed on three points for which the case is accordingly authority.\nThe first was that the illegality defence is available against a company only where it was directly, as opposed to vicariously, responsible for it: see Lord Phillips at paras 27 28.\nLord Walker refers to this at paras 132 133 and must have taken the same view, for if vicarious liability was enough to engage the illegality defence the attribution of Mr Stojevics knowledge to the company (with which the whole of the rest of his speech is concerned) would have been irrelevant.\nThis is because the company was vicariously liable for Mr Stojevics defaults whether or not it was treated as privy to them.\nSecondly, the majority was agreed in rejecting the primary argument of the auditors that once it was shown that the directing mind and will of a company (whether generally or for the relevant purpose) had caused it to defraud a third party and that the company was relying on that fraud to found its cause of action, the illegality defence necessarily barred the claim.\nBoth Lord Phillips (para 63) and Lord Walker (para 173) rejected this submission as too broad, because it would involve the attribution of the agents dishonesty to the company even if there were innocent directors or shareholders.\nAccordingly, both of them regarded it as critical that Stone & Rolls was a one man company, ie a company in which, whether there was one or more than one controller, there were no innocent directors or shareholders.\nThird, Lord Phillips and Lord Walker were agreed that, as between a one man company and a third party, the latter could raise the illegality defence on account of the agents dishonesty, at any rate where it was not itself involved in the dishonesty. 81.\nThere are difficulties about treating Stone & Rolls as authority for any wider principles than these.\nThere are two main reasons for this.\nThe first is that Lord Phillips and Lord Walker differed in their reasons for holding that the illegality defence could be taken against a one man company.\nLord Walker adopted the sole actor principle, a label which he derived from the case law of the United States, but which he supported by reference to ordinary principles of English company law.\nLord Phillips on the other hand was guided by the principle that a loss is recoverable only if the relevant duty was to protect against loss of that kind: South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191.\nHe regarded this as expressing a rule of policy, which led him to conclude that Mr Stojevic constituted the entire constituency whose interests the auditors were bound to protect.\nIt followed in his opinion that there was no reason not to attribute his state of mind to the company for the purposes of the illegality defence.\nThe second reason is that Lord Phillipss view that it was no part of the purpose of an audit report to protect the interests of current or prospective creditors was peculiarly his own.\nAlthough Lord Walker agreed with it (see para 168), the proposition was not part of his reasoning on the impact of illegality.\nThis has proved more controversial than any other feature of the reasoning in the case: see, for example, E Ferran, Corporate attribution and the directing mind and will (2011) 127 LQR 239, paras 251 257.\nThe scope of an auditors duty and its relationship to the illegality defence may one day need to be revisited by this court, but it is not an issue in this appeal.\nApplication to claims by the company against the defaulting agent 82.\nThe real issue in the present case is a different one.\nDoes the illegality defence bar a claim by the company against the dishonest agent who procured the fraud, in the same way as it bars a claim by the company against an honest outsider who is said to be liable to indemnify them? In Stone & Rolls the question whether the illegality defence would have been available to Mr Stojevic to defeat an action by the company did not arise directly, but it was considered by every member of the committee.\nLord Phillips did not express a concluded view.\nLord Walker presumably thought that the company could not have sued Mr Stojevic, since he regarded them as co conspirators and likened their case to an action for an account between highwaymen (paras 187 188).\nLord Scott and Lord Mance thought that Mr Stojevic could not have raised the defence against the company.\nSince then the position as between the company and its dishonest agent has reached the Court of Appeal twice, in Safeway Stores Ltd v Twigger [2011] All ER 841, where the illegality defence succeeded, and in the present case where it failed.\nThe same question was considered, although it did not arise directly, by the Court of Final Appeal of Hong Kong in Moulin Global Eyecare Trading Ltd v Commissioner of Inland Revenue FACV (No 5 of 2013) (decided on 13 March 2014), in which Lord Walker gave the leading judgment. 83.\nSafeway Stores was an action against a number of directors and senior employees of a supermarket group who by exchanging pricing information with competitors had caused the company to contravene section 2 of the Competition Act 1998.\nUnder section 36 of the Act, the company became liable to a penalty, provided that the OFT was satisfied that it had committed the infringement intentionally or negligently.\nSafeway was not a one man company, but the statutory scheme had the peculiarity, which was critical to the reasoning of the Court of Appeal, that the offence was not capable of being committed by the individuals directly responsible.\nThe Act imposed the prohibition and the resulting penalty only on the company.\nIt was held that this required the attribution of the infringement to the company and its non attribution to the defendants.\nOn that ground, it was held that to apply the breach of duty exception so as to allow recovery of the penalty from the defendants would be inconsistent with the statutory scheme.\nThe decision is not authority for any proposition applying more generally.\nIn the present case, the Court of Appeal dealt with the question as a matter of general principle and reached a different conclusion.\nPatten LJ, delivering the leading judgment, considered that the answer depended on the duty which was sought to be enforced and the parties between whom the issue was raised.\nIn an action against the company by a third party who had been defrauded, the company was responsible.\nBut it did not follow that the company was to be treated as responsible for a fraud for the purposes of an action against the dishonest director.\nIn such an action, the illegality defence cannot be available, whether the damages claimed arose from the liability which the company was caused to incur to a third party or from the direct abstraction of the companys assets.\nPatten LJs reasoning on these points is encapsulated in paras 34 and 35 of his judgment: 84. 34. attribution of the conduct of an agent so as to create a personal liability on the part of the company depends very much on the context in which the issue arises.\nIn what I propose to refer to as the liability cases like El Ajou, Tan, McNicholas and Morris, reliance on the consequences to the company of attributing to it the conduct of its managers or directors is not enough to prevent attribution because, as Mummery LJ pointed out, it would prevent liability ever being imposed.\nAs between the company and the defrauded third party, the former is not to be treated as a victim of the wrongdoing on which the third party sues but one of the perpetrators.\nThe consequences of liability are therefore insufficient to prevent the actions of the agent being treated as those of the company.\nThe interests of the third party who is the intended victim of the unlawful conduct take priority over the loss which the company will suffer through the actions of its own directors. 35.\nBut, in a different context, the position of the company as victim ought to be paramount.\nAlthough the loss caused to the company by its director's conduct will be no answer to the claim against the company by the injured third party, it will and ought to have very different consequences when the company seeks to recover from the director the loss which it has suffered through his actions.\nIn such cases the company will itself be seeking compensation by an award of damages or equitable compensation for a breach of the fiduciary duty which the director or agent owes to the company.\nAs between it and the director, it is the victim of a legal wrong.\nTo allow the defendant to defeat that claim by seeking to attribute to the company the unlawful conduct for which he is responsible so as to make it the companys own conduct as well would be to allow the defaulting director to rely upon his own breach of duty to defeat the operation of the provisions of sections 172 and 239 of the Companies Act whose very purpose is to protect the company against unlawful breaches of duty of this kind.\nFor this purpose and (it should be stressed) in this context, it ought therefore not to matter whether the loss which the company seeks to recover arises out of the fraudulent conduct of its directors towards a third party (as in McNicholas and Morris) or out of fraudulent conduct directed at the company itself which the Chancellor accepted was what is alleged in the present case.\nThere is a breach of fiduciary duty towards the company in both cases.\nPatten LJ declined to apply the sole actor principle for two reasons.\nFirst, he considered that it had no place in the context of a claim by the company against the fraudulent director, because it would be inconsistent with the duty of the directors to have regard to the interests of creditors and to the statutory restrictions on the ratification of breaches of the duty of directors.\nSecondly, he regarded it as having the support of only Lord Walker and Lord Brown in Stone & Rolls and did not accept that it was now an established feature of English law for all purposes. 85.\nMoulin Global Eyecare Trading Ltd FACV (No 5 of 2013) was an application for judicial review of the decision of the Hong Kong Commissioner of Inland Revenue to reject a claim by Moulin for the repayment of tax overpaid in a previous years of assessment.\nRepayment had been claimed on the ground that the companys profits for the reference year had been fraudulently inflated by certain of its then directors.\nThe Commissioner contended that no repayment could be claimed because the dishonesty of the directors was attributable to the company.\nIn the Court of Final Appeal the claim failed because neither of the two provisions of the Inland Revenue Ordinance relied upon applied as a matter of construction.\nFor present purposes, the relevant provision was section 70A which provided for the reopening of an assessment on the ground of error.\nLord Walker, with whom the majority of the court agreed, held that there was no error because for the purpose of preparing the companys tax returns, its directing mind and will consisted of the two directors who knew the facts and had deliberately falsified them.\nTheir dishonesty was therefore to be attributed to the company.\nA deliberate lie is not an error for the purposes of that section.\nLord Walker considered that the ordinary rules of attribution should apply unless the breach of duty exception was engaged.\nHe resiled from the view that he had expressed in Stone & Rolls (at para 145) that the fraud exception applied generally to any issue as to a companys notice, knowledge or complicity.\nReviewing the authorities in the light of the Court of Appeals decision in the present case, he concluded that the breach of duty exception was in fact of limited application.\nIts rationale was to prevent the illegality defence from barring a claim by a company against its own agents.\nHe summarised the proper scope of the exception as follows, in para 80: The situation to which it most squarely applies (and some would say, the only situation to which it should properly be applied) is where a director or senior employee of a company seeks to rely on his own knowledge of his own fraud against the company as a defence to a claim by the company against him (or accomplices of his) for compensation for the loss inflicted by his fraud.\nThe injustice and absurdity of such a defence is obvious, and for more than a century judges have had no hesitation in rejecting it.\nIt is clear that Lord Walker numbered himself among the some who would say that this was the only situation in which the fraud exception should properly be applied.\nAt para 106(4) of his summary, he said: The underlying rationale of the fraud exception is to avoid the injustice and absurdity of directors or employees relying on their own awareness of their own wrongdoing as a defence to a claim against them by their own corporate employer.\nAnd at para. 106(6): But the exception does not apply to protect a company where the issue is whether the company is liable to a third party for the dishonest conduct of a director or employee. 86.\nThe problem posed by the authorities is that until the Court of Appeals decision in this case, they have generally treated the imputation of dishonesty to a company as being governed by tests dependent primarily on the nature of the companys relationship with the dishonest agent, the result of which is then applied universally.\nThis was the point made by Lord Walker in Stone & Rolls at para 145, from which he resiled in Moulin.\nThe fundamental point made by the Court of Appeal in this case and the Court of Final Appeal in Moulin is that, while the basic rules of attribution may apply regardless of the nature of the claim or the parties involved, the breach of duty exception does not.\nI agree with this.\nIt reflects the fact that the rules of attribution are derived from the law of agency, whereas the fraud exception, like the illegality defence which it qualifies, is a rule of public policy.\nViewed as a question of public policy, there is a fundamental difference between the case of an agent relying on his own dishonest performance of his agency to defeat a claim by his principal for his breach of duty; and that of a third party who is not privy to the fraud but is sued for negligently failing to prevent the principal from committing it. 87.\nThere are three situations in which the question of attribution may arise.\nFirst, a third party may sue the company for a wrong such as fraud which involves a mental element.\nSecondly, the company may sue either its directors for the breach of duty involved in causing it to commit that fraud, or third parties acting in concert with them, or (as in the present case) both.\nThird, the company may sue a third party who was not involved in the directors breach of duty for an indemnity against its consequences.\nIn the first situation, the illegality defence does not arise.\nThe company has no claim which could be barred, but is responding to a claim by the third party.\nIt will be vicariously liable for any act within the course of the relevant agents employment, and in the great majority of cases no question will arise of attributing the wrong, as opposed to the liability, to the company.\nWhere 88. the law requires as a condition of liability that that the company should be personally culpable, as Lord Nicholls appears to have assumed it did in Royal Brunei Airlines, the sole function of attribution is to fix the company with the state of mind of certain classes of its agents for the purpose of making it liable.\nThe same is true in cases like McNicholas, involving statutory civil penalties for quasi criminal acts.\nIt is also true of cases like El Ajou where the relevant act (receipt of the money) was unquestionably done by the company but the law required as a condition of liability that it should have been done with knowledge of some matter.\nThis will commonly be the case with proprietary claims, where vicarious liability is irrelevant. 89.\nA claim by a company against its directors, on the other hand, is the paradigm case for the application of the breach of duty exception.\nAn agent owes fiduciary duties to his principal, which in the case of a director are statutory.\nIt would be a remarkable paradox if the mere breach of those duties by doing an illegal act adverse to the companys interest was enough to make the duty unenforceable at the suit of the company to whom it is owed.\nThe reason why it is wrong is that that the theory which identifies the state of mind of the company with that of its controlling directors cannot apply when the issue is whether those directors are liable to the company.\nThe duty of which they are in breach exists for the protection of the company against the directors.\nThe nature of the issue is therefore itself such as to prevent identification.\nIn that situation it is in reality the dishonest directors who are relying on their own dishonesty to found a defence.\nThe companys culpability is wholly derived from them, which is the very matter of which complaint is made. 90.\nThis would be obvious if the company were suing the agent for a criminal or dishonest act committed against it where there was no third party involved: for example where the agent had embezzled the companys funds and made off with them.\nThis was the situation before the Court of Appeal in Attorney Generals Reference (No 2 of 1982) [1984] 1 QB 624, when the notion of attribution and the inference of consent were alike rejected.\nThe position would have been no different if consent had been more than an inference, for example because the fraudsters had procured the companys express consent in their capacity as its sole directors or shareholders: see Prest v Prestodel Resources Ltd [2013] 2 AC 415, 491.\nAs Lord Browne Wilkinson put it in Director of Public Prosecutions v Gomez [1993] AC 442, 496 497, it would offend both common sense and justice to hold that the very control which enables such people to extract the companys assets constitutes a defence to a charge of theft from the company.\nThe question in each case must be whether the extraction of the property from the company was dishonest, not whether the alleged thief has consented to his own wrongdoing.\nWhere the directors simply embezzle the companys funds the question of attribution arises but the illegality defence does not.\nThere is no wrongdoing by the company.\nBut the analysis would be precisely the same if there were.\nThis was the position in Belmont Finance Ltd v Williams Furniture Ltd [1979] Ch 250, where the directors scheme for abstracting the companys assets necessarily involved a criminal contravention by the company of the Companies Act.\nThe Court of Appeal declined to attribute knowledge of the conspiracy to the company so as to make it party to the scheme.\nThis was because the companys claim was against the directors who had authorised the transaction.\nThey could not raise the illegality defence by fixing the company with knowledge of their own plans, for the same reason that the defendants in Attorney Generals Reference (No 2 of 1982) could not raise the defence of consent on that basis.\nThis is so whether the company is a one man company or not, because the objection to the attribution of the culpable directors state of mind to the company is that they are being sued for abusing their powers.\nIt is the same objection whether they were one, some or all of the directors and whether or not they were also shareholders.\nIn Belmont Finance, it was held on appeal from the judgment after trial that the directors knowledge was not to be attributed to Belmont although the transaction was formally approved by the Board and completed under the companys seal: see [1980] 1 All ER 393, 398.\nIf the fraudulent agent cannot raise the defence of illegality in these circumstances, the same must be true of third parties who are under an ancillary liability for participating in the fraudulent agents wrong: co conspirators, aiders and abetters, knowing assisters and receivers, and so on.\nThat was the basis on which in Belmont Finance it was held that the companies who sold the Maximum shares at an overvalue and acquired Belmonts shares were potentially liable along with the culpable directors of Belmont. 91.\nThe position is different where the company is suing a third party who was not involved in the directors breach of duty for an indemnity against its consequences.\nIn the first place, the defendant in that case, although presumably in breach of his own distinct duty, is not seeking to attribute his own wrong or state of mind to the company or to rely on his breach of duty to avoid liability.\nSecondly, as between the company and the outside world, there is no principled reason not to identify it with its directing mind in the ordinary way.\nFor a person, whether natural or corporate, who is culpable of fraud to say to an innocent but negligent outsider that he should have stopped him in his dishonest enterprise is as clear a case for the application of the illegality defence as one could have.\nStone & Rolls was a case of just this kind.\nLeaving aside the admittedly important question of the scope of an auditors duty, if the illegality defence had not applied in that case, it could only have been because (i) the company was treated in point of law as a mindless automaton, or (ii) the defence could never apply to companies even in circumstances where it would have applied to natural persons.\nNeither proposition is consistent with established principle. 92.\nThe technique of applying the general rules of agency and then an exception for cases directly founded upon a breach of duty to the company is a valuable tool of analysis, but it is no more than that.\nAnother way of putting the same point is to treat it as illustrating the broader point made by Lord Hoffmann in Meridian Global that the attribution of legal responsibility for the act of an agent depends on the purpose for which attribution is relevant.\nWhere the purpose of attribution is to apportion responsibility between a company and its agents so as to determine their rights and liabilities to each other, the result will not necessarily be the same as it is in a case where the purpose is to apportion responsibility between the company and a third party. 93.\nThis makes it unnecessary to address the elusive distinction between primary and secondary victimhood.\nThat distinction could arise only if the application of the breach of duty exception depended on where the loss ultimately fell, or possibly on where the culpable directors intended it to fall.\nIf, however, the application of the exception depends on the nature of the duty and the parties as between whom the question arises, the only question is whether the company has suffered any loss at all.\nApplication to Bilta 94.\nAs between Bilta and its former directors, the present action is brought to recover compensation for breach of the duties which they owed to the company.\nThey are alleged to have broken those duties by causing it to conduct its business in a manner calculated to prevent it from meeting its obligation to account to HMRC for VAT.\nIn particular, they are alleged to have caused the proceeds of the sales to UK purchasers, together with the VAT charged on them, to be paid out to Jetivia.\nThose proceeds were either the property of Bilta (in those cases where they reached Biltas accounts), or were owed to Bilta (in those cases where they were paid by the UK purchasers directly to Jetivia).\nIn either case, they represented assets of Bilta.\nSince the issue thus stated arises directly between the company and its directors, the fraud exception applies and the illegality defence cannot lie.\nWhether the payment out to Jetivia of funds which may represent the fruits of the fraud is truly a loss may well be a difficult question, but it is a different question which will have to be examined in the light of all the facts at a trial.\nIt does not affect the application of the fraud exception. 95.\nJetivia and Mr Brunschweiler are in no different position from the directors, since the claim against them is that they were party to the directors misfeasance.\nThey are said to have participated in the conspiracy to defraud Bilta, and to have knowingly assisted the directors breach of their fiduciary duties.\nThe claim against Jetivia for an account on the footing of knowing receipt is likewise based on an allegation of participation in the directors misfeasance, since it is based on that companys knowledge (through Mr Brunschweiler) that the receipts represented assets of Bilta which the directors had caused to be paid to Jetivia in breach of their fiduciary duties. 96.\nBefore leaving these questions I should briefly refer to two further arguments of the appellants.\nThe first is that if Jetivia is liable to Bilta for conspiring with Biltas directors, then Bilta is liable on the same basis to Jetivia for conspiring with Mr Brunschweiler against Jetivia.\nThe claim therefore fails for circuity.\nThe Court of Appeal ignored this ingenious and problematical argument, and I would do so too.\nThe facts which would be necessary to found it are not agreed or even pleaded.\nThe second argument is that Bilta has suffered no loss because they had not been deprived of any assets that they had legitimately acquired.\nIn the words of Lord Phillips in Stone & Rolls, at para 5, if a person starts with nothing and never legitimately acquires anything, he cannot realistically be said to have suffered any loss.\nLord Walker (para 171) agreed.\nThese observations were, however, made with reference to the facts of that case, which had been found in great detail by Toulson J in parallel proceedings between the defrauded banks and Stone & Rolls.\nIt is not in my opinion appropriate to examine how far they are analogous to the facts of the present case at a stage of the proceedings when those facts are far from clear. 97.\nFor these reasons, which substantially correspond to those of the Court of Appeal and those expressed by Lord Toulson and Lord Hodge in the second part of their judgment (on attribution), I would dismiss the appeal on the illegality defence.\nSo far as that point is concerned, this is enough to decide the present appeal.\nPolicy 98.\nI add to my judgment on this point only because Lord Toulson and Lord Hodge would also decide the appeal on the ground that the application of the illegality defence is inconsistent with a statutory policy requiring directors to have regard to the interests of the creditors of an insolvent or prospectively insolvent company.\nSince I am unwilling to follow them down that route, I should briefly explain why. 99.\nGiven that the illegality defence is based on public policy, it is understandable that policy should have been invoked in a number of academic and judicial analyses of these problems.\nIt is, however, important to bear in mind the proper role of policy in the law of illegality, for arguments based upon it can easily degenerate into the kind of discretionary weighing of the equities which was rejected in Tinsley v Milligan and Les Laboratoires Servier v Apotex Inc. The fact that the illegality defence is based on policy does not entitle a court to reassess the value or relevance of that policy on a case by case basis.\nIn a broad sense, any rule of law which imposes civil liability in respect of a wrong may be described as a reflection of legal policy.\nIt does not follow that the courts may apply the illegality defence or not according to the relative importance which they attach to the policy underlying it by comparison with desirability of allowing an otherwise sound claim to succeed.\nThis was the essential problem about the reasoning of the Court of Appeal in Les Laboratoires Servier, which explains why this court felt unable to adopt that reasoning while arriving at the same result. 100.\nThe illegality defence is based on the subordination of private rights and liabilities to certain interests belonging to the public sphere.\nThe underlying rationale, as I sought to explain in Les Laboratoires Servier, at paras 23 and 25, is that the rights of private parties to remedies in private law may be overridden if the claims based on them are founded on acts which are contrary to the public law of the state and engage the public interest.\nThese are acts which engage what in French and other civil law systems would be categorised as interests belonging to the ordre public or, as a writer has put it, that part of law that is not at the free disposition of private individuals (R de Lange, The European Public Order, Erasmus Law Review 3 (2007), 11).\nThis is why a judge, as a public officer, may be required to take a point on illegality of his own motion, contrary to the ordinary adversarial practice of the English courts.\nAnd it is why ordinary private wrongs, sounding in tort or contract, do not give rise to the illegality defence. 101.\nCourts normally examine the policy rationale of a rule of law in order to discover what the rule is, not in order to decide whether they approve of its application in a particular case.\nThe scope for conflict between competing public policies is therefore limited.\nIt is, however, implicit in the reasoning in Les Laboratoires Servier that there is one situation in which an examination of competing policies may be required, and that is where a competing public policy (as opposed to a competing legal interest) requires the imposition of civil liability notwithstanding that the claim is founded on illegal acts.\nA good example is a claim for damages for breach of EU or national competition law, which may in certain circumstances succeed notwithstanding that it is founded on a contract or other act which is unlawful: Case C 453\/99 ECR I 6314 Crehan v Courage Ltd at paras 34, 36; Crehan v Inntrepreneur Pub Co CPC [2004] 2 CLC 803 at paras 149 153.\nThis was because the correction by an award of damages of the economic effects of the breach of public competition law is required in order to give effect to its purpose. 102.\nMore recently, a somewhat similar question came before this court in a very different context in Hounga v Allen [2014] UKSC 47.\nThis was a claim for unlawful discrimination in relation to the claimants dismissal.\nEighteen months before her dismissal, Ms Houngas employer had conspired with her to bring her into the United Kingdom under a false identity and had arranged for her to receive a visitors visa for six months.\nThe factual basis on which the appeal was argued was that by dismissing her Mrs Allen discriminated against Miss Hounga in that on racial grounds, namely on ground of nationality, she treated Miss Hounga less favourably than she would have treated others: see para 3.\nIt was contended that in these circumstances the claim was barred because it was founded on the illegal conspiracy.\nThere was no doubt that the relevant illegality constituted turpitude and no issue about attribution.\nThe question was whether the employees unlawful entry into the United Kingdom was sufficiently connected to her dismissal.\nBecause Ms Hounga had no right to work in the United Kingdom, her contract of employment was illegal and unenforceable.\nBut she had a distinct cause of action for the statutory tort of discrimination: see paras 24 25.\nTo make good that cause of action Ms Hounga did not rely, and did not need to rely on the circumstances in which she had entered into the United Kingdom, either by way of pleading or by way of evidence.\nThey were in reality no more than background facts.\nThe reliance test, which had been adopted in Tinsley v Milligan, is the narrowest test of connection which is consistent with the existence of an illegality test at all, and by that test, Ms Hounga would certainly have been entitled to succeed.\nBut in Cross v Kirkby [2000] EWCA Civ 426, the Court of Appeal had suggested a wider test of connection, dependent on whether the illegal act was inextricably bound up with the facts on which the cause of action depended even if it was unnecessary to rely on it.\nThis would have substantially extended the range of cases in which the illegality defence could apply.\nLord Wilson (with whom Baroness Hale and Lord Kerr agreed), regarded the question whether the inextricable connection test applied to the facts of that case as the bigger question: see para 41.\nHe answered it by holding that international conventions against human trafficking required that compensation should be available, so that the inextricably bound up test could not be applied in those circumstances.\nThe court was not purporting to depart from Tinsley v Milligan without saying so.\nIt simply recognised the case before it as one in which a competing public policy required that damages should be available even to a person who was privy to her own trafficking.\nLord Hughes (with whom Lord Carnwath agreed) did not agree with the majoritys construction of the relevant conventions, but agreed in the result on the ground that the illegal entry was not sufficiently closely connected with the dismissal.\nThe result was that although the panel disagreed on the effect of the conventions, so far as the law of illegality was concerned, there was no inconsistency between their approaches.\nOn the footing that the conventions required a right of damages to be available, the illegality defence failed on both grounds.\nThe result of Hounga v Allen would have been exactly the same even if Ms Hounga had entered the United Kingdom legally or had done so illegally by her own unaided efforts (so that no question of trafficking arose) and the Allens had merely known of and taken advantage of that fact.\nIn its recent decision in R (on the application of Best) v Chief Land Registrar [2015] EWCA Civ 17, the Court of Appeal was divided on the significance of Hounga although it was able to decide the case without reference to it.\nArden LJ expressed some scepticism about its significance as a statement of principle of general application.\nIt will be apparent from what I have said that I have considerable sympathy for her approach. 103.\nIn the present case, Lord Toulson and Lord Hodge have suggested that such a relevant countervailing public policy may be found in the rule requiring the directors of an actually or potentially insolvent company to have regard to the interests of creditors.\nI would prefer to leave this question open for two reasons. 104.\nThe first is that it is not by any means clear that the duty of directors to have regard to the interests of creditors does require the imposition of civil liability notwithstanding the illegality defence.\nIt is true that many of the central principles and detailed rules of company law are matters of public policy.\nThey do not simply sound in private law.\nThis is in particular true of those rules which impose duties for the benefit of third parties, such as creditors, who are not party to the contract of incorporation.\nThese rules include rules for the conservation of capital, and for ensuring that companies do not trade while insolvent.\nMore generally, section 172 of the Companies Act 1972, which includes among the general duties of directors a duty to promote the success of the companies for the benefit of its members as a whole, treats the interests of members as corresponding to those of employees, suppliers, customers and, in certain respects the public at large.\nThe common law goes further than this, treating the interests of an actually or prospectively insolvent company as synonymous with those of its creditors: West Mercia Safetyware v Dodd [1988] BCLC 250.\nThe duty to have regard to the interests of creditors is not one of the general duties of directors identified in the statute, but the common law duty is preserved by section 172(3) of the Act, notwithstanding the directors obligation to serve the interests of members.\nHowever, it does not follow that the public policy reflected in these principles requires the imposition of civil liability on directors notwithstanding the illegality defence.\nOne reason is that although the general duties of directors have effect notwithstanding any enactment or rule of law, by way of exception to this the company may in principle validly authorise something which would otherwise be a breach of those duties: Companies Act 2006, section 180(4) and (5).\nAnother is that the Companies Acts confer on the liquidator of a company in the course of winding up a wide range of statutory powers which enable effect to be given to these principles whether or not an ordinary civil action is available.\nThese include not only provisions for misfeasance proceedings against directors and other officers, but provisions for recovering the dissipated assets of insolvent companies from third parties.\nThese points were not fully developed in argument, and I do not think that it is desirable to resolve them on the present appeal.\nAs presently advised, I cannot accept that sections 172 and 180 are a sufficient answer to Jetivias reliance on the illegality defence. 105.\nThere is, however, a more fundamental reason why I would prefer not to go down this path in the present case, which is that it is unnecessary and undesirable.\nThis is a case about attribution.\nIt was approached in that way in both courts below, and that seems to me to be realistic.\nThe problem about the policy argument is that it focuses too narrowly on the status of Mr Chopra and Mr Nazir as directors and on the insolvency of this particular company given the way in which they caused it to carry on business.\nIn my opinion, it is perfectly clear that the illegality defence would fail even if these particular features of the facts were not present, just as in Hounga v Allen, the illegality defence would have failed even if Ms Hounga had not been trafficked.\nThe company would be entitled to claim against Mr Chopra and Mr Nazir (and any collaborator of theirs) for their breach of duty to the company even if those gentlemen had not been directors but mere agents who happened to be the companys directing mind and will for the relevant particular purpose.\nIt is equally clear that the company would be entitled to claim against them if it were solvent.\nI am unwilling to decide this case on a basis which invites distinctions between different situations which are irrelevant to the principle that we are applying.\nI would be extremely reluctant to see the law of illegality revert to the multiplicity of micro topics and sub rules which once characterised it.\nI agree with Lord Toulson and Lord Hodge that Occams Razor is a valuable analytical tool, but only if it is correctly understood.\nEntia non sunt multiplicanda praeter necessitatem.\nDo not gratuitously multiply your postulates.\nInsolvency Act 1986, section 213 106.\nThis is a short point and a straightforward one. 107.\nSection 213 of the Insolvency Act provides: (1) If in the course of the winding up of a company it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, the following has effect. (2) The court, on the application of the liquidator may declare that any persons who were knowingly parties to the carrying on of the business in the manner above mentioned are to be liable to make such contributions (if any) to the companys assets as the court thinks proper.\nThe appellants case is that the provision has no extraterritorial effect and therefore no application to Jetivia which is domiciled in Switzerland or Mr Brunschweiler, who is domiciled in France.\nIn effect the submission is that in subsection (2) any persons means only persons in the United Kingdom.\nIn my opinion this argument is misconceived. 108.\nMost codes of insolvency law contain provisions empowering the court to make orders setting aside certain classes of transactions which preceded the commencement of the liquidation and may have contributed to the companys insolvency or depleted the insolvent estate.\nThey will usually be accompanied by powers to require those responsible to make good the loss to the estate for the benefit of creditors.\nSuch powers have been part of the corporate insolvency law of the United Kingdom for many years.\nIn the case of a company trading internationally, it is difficult to see how such provisions can achieve their object if their effect is confined to the United Kingdom. 109.\nThe English court, when winding up an English company, claims world wide jurisdiction over its assets and their proper distribution.\nThat jurisdiction is not universally recognised, but it is recognised within the European Union by articles 3 and 16 of Council Regulation (EC) No 1346\/2000.\nIn Schmid v Hertel [2014] 1 WLR 633, the Court of Justice of the European Union considered these articles in the context of the jurisdiction of the German courts to make orders setting aside transactions with a bankrupt.\nIt held not only that articles 3 and 16 applied to such orders, but that member states must be treated as having power to make them notwithstanding any limitations under its domestic law on the territorial application of its courts orders. 110.\nSection 213 is one of a number of discretionary powers conferred by statute on the English court to require persons to contribute to the deficiency who have dealt with a company now in liquidation in a manner which has depleted its assets.\nNone of them have any express limits on their territorial application.\nAnother such provision, section 238, which deals in similar terms with preferences and transactions at an undervalue, was held by the Court of Appeal to apply without territorial limitations in In re Paramount Airways Ltd [1993] Ch 223.\nDelivering the leading judgment in that case, Sir Donald Nicholls V C observed (i) that current patterns of cross border business weaken the presumption against extra territorial effect as applied to the exercise of the courts powers in conducting the liquidation of a United Kingdom company; (ii) that the absence in the statute of any test for what would constitute presence in the United Kingdom makes it unlikely that presence there was intended to be a condition of the exercise of the power; and (iii) that the absence of a connection with the United Kingdom would be a factor in the exercise of the discretion to permit service out of the proceedings as well in the discretion whether to grant the relief, which was enough to prevent injustice.\nThese considerations appear to me, as they did to the Chancellor and the Court of Appeal, to be unanswerable and equally applicable to section 213. 111.\nI would accordingly dismiss the appeal on this point also.\nLORD TOULSON AND LORD HODGE: 112.\nWhen the directors of a company involve it in a fraudulent transaction, is the company barred by the doctrine of illegality from suing them and their accessories for losses caused by their breach of fiduciary duty? Secondly, does section 213 of the Insolvency Act 1986 (IA 1986), which empowers a liquidator of a company registered in the United Kingdom to seek financial contributions from persons involved in the companys fraudulent trading, have extra territorial effect? These questions arise on an appeal by Jetivia SA (Jetivia) and Mr Brunschweiler against the dismissal of their applications for the summary dismissal or striking out of the claims against them. 113.\nBilta (UK) Ltd (Bilta), a company incorporated in England, seeks through its joint liquidators, Mr Hellard and Mr Ingram, to recover damages or equitable compensation in respect of its alleged loss.\nAs against the directors, Bilta claims damages for conspiracy or equitable compensation for breach of fiduciary duty.\nThe conspiracy is alleged to have been an unlawful means conspiracy, and the unlawful means are the directors alleged breach of their fiduciary duties.\nAs against Jetivia and Mr Brunschweiler, Bilta claims damages for conspiracy or compensation for dishonest assistance in the directors breach of their fiduciary duties.\nSince the matter comes before the court on Jetivias and Mr Brunschweilers application for the claims against them to be summarily struck out or dismissed, it is to be assumed for present purposes that the factual allegations made in Biltas amended particulars of claim are capable of proof, and there is no need to repeat the word alleged whenever referring to the defendants conduct.\nThe liquidators also pursue a separate claim for fraudulent trading under section 213 of IA 1986.\nJetivia is a Swiss company and Mr Brunschweiler, who is resident in France, is its sole director. 114.\nBilta had two directors, Mr Nazir and Mr Chopra (the directors), who are the first and second defendants.\nMr Chopra owned all the issued shares.\nBilta was registered for the purposes of VAT.\nIts only trading activity, which took place between 22 April and 21 July 2009, was trading in European Emissions Trading Scheme Allowances (EUAs), which are commonly known as carbon credits.\nEUAs were treated as taxable supplies under the VAT Act 1994 until 31 July 2009.\nSince then they have been zero rated.\nThe VAT status of supplies of the EUAs at the relevant time explains Biltas activities. 115.\nIn short, Bilta bought large numbers of EUAs from overseas suppliers, including Jetivia, free of VAT, and sold them in the UK with VAT to companies described as first line buffers, which immediately sold them on.\nThe price for which Bilta sold the EUAs was lower before VAT than the price at which it bought, and Bilta was therefore never going to be in a position to meet its liabilities to HM Revenue and Customs (HMRC).\nBilta had minimal capital and was insolvent virtually from the outset.\nThe money payable to Bilta, including the VAT due to HMRC, was either paid to Bilta and paid on by it to its overseas supplier, or was paid by the first line buffer (or a later company in the chain) directly to Biltas supplier, or was otherwise paid to offshore accounts.\nAt the end of the chain the EUAs would be resold to a company outside the UK, generating a right to a VAT refund.\nIt is a familiar kind of carousel or missing trader fraud. 116.\nBilta was insolvent throughout the period of its trading in EUAs.\nIn that three month period, Bilta sold more than 5.7m EUAs for about 294m.\nIts liability for VAT on those transactions amounts to 38,733,444.\nIt did not submit any VAT returns to HMRC.\nOn the application of HMRC Mr Hellard and Mr Ingram were appointed provisional liquidators of Bilta on 29 September 2009.\nThey commenced the companys claim against the defendants who were its directors and other parties, including the appellants.\nThe company was compulsorily wound up on 25 November 2009.\nThe proceedings were amended on 13 October 2011 to include the liquidators claims under section 213 of IA 1986. 117.\nPatten LJ has set out the principal allegations in Biltas particulars of claim in paras 9 14 of his impressive judgment.\nWe can therefore summarise them very briefly.\nBiltas pleaded case focuses on the injury done to it rather than to HMRC.\nIt alleges that the appellants among others were parties to a conspiracy to defraud and injure it by depriving it of the money needed to pay its VAT liabilities and thereby rendering it insolvent.\nThe conspirators knew that their fraudulent scheme involved the breach by Mr Nazir and Mr Chopra of their fiduciary duties as directors of Bilta.\nAgainst its directors Bilta claims compensation for breach of fiduciary duty, damages for unlawful means conspiracy and a contribution under section 213 of IA 1986.\nAgainst the appellants Bilta alleges that they were parties to the conspiracy to defraud it, that they are liable for dishonestly assisting Mr Nazir and Mr Chopra in the breaches of their fiduciary duties to it and (under section 213) for carrying on its business with intent to defraud creditors. 118.\nOn 30 July 2012 Sir Andrew Morritt, the Chancellor of the High Court, dismissed the appellants application for summary dismissal of the claims.\nHe held that the maxim ex turpi causa non oritur actio (no action may be founded on illegal or immoral conduct) was not available as a defence to Biltas directors or the appellants and that section 213 of IA 1986 had extra territorial effect.\nThe Court of Appeal (the Master of the Rolls, Rimer and Patten LJJ) in a judgment dated 31 July 2013 dismissed the appellants appeal. 119.\nThe principal issues raised by this appeal in relation to the defence based on the maxim ex turpi causa are (i) the purpose of that maxim and its application in relation to Biltas claims and (ii) the circumstances in which and mechanisms by which the knowledge of directors and other persons is attributed to a legal person such as a registered company.\nThe other issue is whether section 213 of IA 1986 has extra territorial effect.\nWe deal with each in turn.\nIlllegality: ex turpi causa non oritur actio 120.\nAt the heart of Biltas claims is the allegation that the directors acted in breach of their fiduciary duties to the company, in concert with others including Jetivia and its director, Mr Brunschweiler.\nAlthough the directors have played no part in the current proceedings, it is rightly accepted by the parties to the appeal that in relation to the defence of illegality there is no distinction to be drawn between the position of Jetivia and Mr Brunschweiler and that of the directors.\nThe primary question for the court is whether Biltas claim against the directors for breach of fiduciary duty is barred by the doctrine of illegality.\nIf so, the claim for damages for conspiracy must equally fail, since the breach of fiduciary duty constitutes the unlawful means on which Bilta relies.\nAnd the converse also applies. 121.\nThe appellants argue that Biltas claims against its directors are barred by reason of the criminal nature of its conduct under their control.\nIts function was to serve as a vehicle for defrauding HMRC, and it is submitted that the doctrine of illegality bars it from suing the directors who caused its participation in the scheme, and their co conspirators, as a means of recovering the companys loss for the benefit of the companys creditors. 122.\nIn any case where the defence of illegality is raised, it is necessary to begin by considering the nature of the particular claim brought by the particular claimant and the relationship between the parties.\nSo we start with the nature of the directors duty to Bilta. 123.\nIt is well established that the fiduciary duties of a director of a company which is insolvent or bordering on insolvency differ from the duties of a company which is able to meet its liabilities, because in the case of the former the directors duty towards the company requires him to have proper regard for the interest of its creditors and prospective creditors.\nThe principle and the reasons for it were set out with great clarity by Street CJ in Kinsella v Russell Kinsela Pty Ltd (in liquidation) (1986) 4 NSWR 722, 730: In a solvent company the proprietary interests of the shareholders entitle them as the general body to be regarded as the company when questions of the duty of directors arise.\nIf, as a general body, they authorise or ratify a particular action of the directors, there can be no challenge to the validity of what the directors have done.\nBut where a company is insolvent the interests of the creditors intrude.\nThey become prospectively entitled, through the mechanism of liquidation, to displace the power of the shareholders and directors to deal with the companys assets.\nIt is in a practical sense their assets and not the shareholders assets that, through the medium of the company, are under the management of the directors pending either liquidation, return to solvency, or the imposition of some alternative administration. 124.\nThis passage was cited with approval by Dillon LJ in West Mercia Safetywear v Dodd [1988] BCLC 250, 252 253.\nThe principle now has statutory recognition in the Companies Act 2006.\nIn Part 10, Chapter 2 of the Act, concerning the general duties of directors, section 172 provides: (1) A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole (3) The duty imposed by this section has effect subject to any enactment or rule of law requiring directors, in certain circumstances, to consider or act in the interests of creditors of the company. 125.\nSection 180 (5) provides that the general duties under the Act have effect (except as otherwise provided or the context otherwise requires) notwithstanding any enactment or rule of law.\nA director of an insolvent company is not directly a fiduciary agent of the creditors and cannot be sued by an individual creditor for breach of the fiduciary duty owed by the director to the company (Yukong Line Ltd v Rendsburg Investments Corporation (No 2) [1998] 1 WLR 294). 126.\nInstead, the protection which the law gives to the creditors of an insolvent company while it remains under the directors management is through the medium of the directors fiduciary duty to the company, whose interests are not to be treated as synonymous with those of the shareholders but rather as embracing those of the creditors. 127.\nSuch protection would be empty if it could not be enforced.\nTo give effect to it, this action is brought by the liquidators in the name of the company to recover, for the benefit of the creditors, the loss caused to the company by the directors breach of their fiduciary duty. 128.\nIt is argued on behalf of the appellants that it would offend against the doctrine of illegality for the claim to succeed.\nIt is said that the fact that the errant directors were in sole control of the company makes it unlawful for the company to enforce their fiduciary duty towards it.\nIf this were the law, it would truly deserve Mr Bumbles epithet a ass, a idiot.\nFor it would make a nonsense of the principle which the law has developed for the protection of the creditors of an insolvent company by requiring the directors to act in good faith with proper regard for their interests. 129.\nIt has been stated many times that the doctrine of illegality has been developed by the courts on the ground of public policy.\nThe context is always important.\nIn the present case the public interest which underlies the duty that the directors of an insolvent company owe for the protection of the interests of the companys creditors, through the instrumentality of the directors fiduciary duty to the company, requires axiomatically that the law should not place obstacles in the way of its enforcement.\nTo allow the directors to escape liability for breach of their fiduciary duty on the ground that they were in control of the company would undermine the duty in the very circumstances in which it is required.\nIt would not promote the integrity and effectiveness of the law, but would have the reverse effect.\nThe fact that they were in sole control of the company and in a position to act solely for their own benefit at the expense of the creditors, makes it more, not less, important that their legal duty for the protection of the interests of the creditors should be capable of enforcement by the liquidators on behalf of the company. 130.\nFor that reason in our judgment this appeal falls to be dismissed.\nThe courts would defeat the very object of the rule of law which we have identified, and would be acting contrary to the purpose and terms of sections 172(3) and 180(5) of the Companies Act, if they permitted the directors of an insolvent company to escape responsibility for breach of their fiduciary duty in relation to the interests of the creditors, by raising a defence of illegality to an action brought by the liquidators to recover, for the benefit of those creditors, the loss caused to the company by their breach of fiduciary duty.\nIn everyday language, the purpose of the inclusion of the creditors interests within the scope of the fiduciary duty of the directors of an insolvent company towards the company is so that the directors should not be off the hook if they act in disregard of the creditors interests.\nIt would be contradictory, and contrary to the public interest, if in such circumstances their control of the company should provide a means for them to be let off the hook on the ground that their illegality tainted the liquidators claim. 131.\nThere would be much to say for ending this judgment at this point, except that it would be wrong not to identify the principal counter arguments and show that we have considered them.\nThere is an attendant risk, in going on at further length, of losing sight of the simple and central point that the defence of illegality would undermine the rule of law, reinforced by Act of Parliament, which exists for the protection of those for whose benefit the action is brought, namely the creditors who have a right to such assets as the liquidators may recover in the name of the company.\nWe see no need, for example, to get into the subject of attribution and the Hampshire Land principle in order to decide the appeal, but in discussing it (as we do below) we hope by the end to achieve some simplicity and clarity. approach and whether they require reconsideration. 132.\nWe turn to the question whether any authorities present an impediment to this 133.\nMr Alan Maclean QCs primary submission was that it follows from the decision of the House of Lords in Stone & Rolls Ltd v Moore Stephens [2009] UKHL 39, [2009] 1 AC 1391 that Biltas claims are barred by the doctrine of illegality by reason of its being a one man company which engaged in deliberate fraud. 134.\nStone & Rolls has been a much debated and much criticised case.\nA lot of the criticism stems from the fact that there were five judgments running to nearly 100 pages, the judges were divided three to two, and differing reasons were given by the majority.\nThe claim was by a company in liquidation against the firm of chartered accountants, who had acted as its auditors, for negligence and breach of contract in failing to detect and report that the companys business consisted mainly of defrauding banks (by obtaining credit through presenting false documents purportedly relating to commodity trading which was fictitious).\nThe company was under the complete control of a Mr Stojevic.\nWhen the bank which was the principal victim discovered the fraud it sued the company and Mr Stojevic and obtained judgment for over $90m.\nThe judgment was unpaid, the company was put into liquidation and it brought proceedings through the liquidators against the accountants for the benefit of the creditors.\nNegligence was admitted, but the accountants applied successfully to strike out the action on the ground of illegality.\nThe shares in the company were held by an Isle of Man company, whose shareholders were nominee companies acting under a trust.\nIn the proceedings brought by the bank Mr Stojevic was evasive about the beneficial interest behind the trust, although he acknowledged that he had a beneficial interest in the company, and there was no evidence to suggest that any innocent person had a share in it.\nAll but one of the House of Lords (Lord Scott) proceeded on the basis that the company was Mr Stojevics company in the fullest sense. 135.\nThe opinions of the majority (Lords Phillips, Walker and Brown), although differently expressed in various ways, have in common that they identified two features which were critical to their analysis.\nOne concerned the scope of the accountants duty.\nThe other was the fact that no one who had any part in the ownership or management of the company was unaware of the fraud which the accountants failed to detect and report.\nPut shortly, the majority (in disagreement with Lord Mance) held that the accountants owed no contractual or tortious duty of care in respect of the interests of the creditors, notwithstanding that the companys solvency depended on the fraud being undetected.\nTheir sole duty was to report to the company the matters which the directors and shareholders ought to know for the purpose of making informed decisions.\nIf those people were already aware of and complicit in the fraud, that fact provided a complete barrier to the claim.\nLord Phillips was explicit that the case turned critically on whether the auditors duty extended to protecting those for whose benefit the claim was brought.\nHe also observed that one fundamental proposition appeared to him to underlie the reasoning of Lord Walker and Lord Brown that the duty owed by an auditor to the company was for the benefit of the interests of the shareholders, but not those of the creditors and that here lay the critical point of difference of opinion between them and Lord Mance (para 68). 136.\nWhile it would shorten this judgment considerably if we were to say simply that the present case is plainly distinguishable from Stone & Rolls on its facts, since this case concerns directors who unquestionably owed duties for the protection of the interests of the creditors (unlike the auditor, according to the opinions of the majority in Stone & Rolls), the case has caused so much difficulty that it would be wrong for us to leave it there.\nIt is therefore necessary to analyse the judgments in closer detail before expressing our final view about its status. 137.\nLord Phillips summarised his conclusions (para 18) before developing his analysis.\nHe said that those for whose benefit the claim was brought (the creditors) fell outside the scope of any duty owed by the accountants; and that the sole person for whose benefit the accountants duty was owed (Mr Stojevic, who owned and ran the company) was himself the person responsible for the fraud.\nIn those circumstances he said that ex turpi causa afforded a defence. 138.\nLord Phillips made some comments about the law of illegality and the decision of the House of Lords in Tinsley v Milligan [1994] 1 AC 340.\nHe rejected the idea that Tinsley v Milligan laid down a universal test of ex turpi causa.\nIt was concerned with the effect of illegality on title to property.\nIt established that once title had passed, it could not be attacked on the basis that it passed pursuant to an illegal transaction.\nIf title could be asserted without reliance on the illegality, the defendant could not rely on illegality to defeat the title (para 21).\nBut he did not believe that it was right to proceed generally on the basis that the reliance test could automatically be applied as a rule of thumb, because it was necessary to consider the policy underlying the ex turpi causa maxim in order to decide whether the defence was bound to defeat the claim (para 25). 139.\nLord Phillips said that the underlying policy in relation to contractual obligations could be divided into two principles: the court will not enforce a contract which is expressly or impliedly forbidden by statute or is entered into with the intention of committing an illegal act; and the court will not assist a claimant to recover a benefit from his own wrongdoing.\nIn the instant case the claim is not brought for the benefit of the shareholder\/directors, but for the benefit of the defrauded creditors for whose benefit the relevant duty was owed.\nWhereas in Stone & Rolls no such duty was owed for the benefit of the creditors, in this case it was.\nOn Lord Phillips analysis of Tinsley v Milligan there is no inconsistency between that decision and the reasons which we have given for dismissing this appeal. 140.\nLord Phillips considered the consequences of the primary argument advanced by the accountants in a case where the company carried on a legitimate business and had honest shareholders, but the person who was in charge of running it (its directing mind and will) involved it in fraudulent trading, which its auditors negligently failed to discover and report.\nIn such circumstances any claim by the company for the benefit of the shareholders, whose interests the auditors should have protected, would according to the accountants argument be barred by the very wrongdoing which the auditors negligence had allowed to occur (paras 29 30).\nLord Phillips did not accept that if Stone & Rolls had been a company with independent shareholders, which had been high jacked by Mr Stojevic, its claim would necessarily have been defeated by reason of the reliance test or the underlying principle of public policy (para 63). 141.\nLord Phillips considered that where a companys complaint was that its directing mind and will had infected it with turpitude, if ex turpi causa was not to apply, the reason should simply be that the public policy underlying it does not require its application (para 60).\nThat would be a very easy conclusion where all the shareholders were innocent (para 61).\nHe considered that the situation would be more problematic if some shareholders were innocent and some were not, but it was not necessary for the court to solve that problem in the case of Stone & Rolls, because it had no innocent shareholders.\nIn short, whether ex turpi causa applied was dependent on identifying the underlying public policy and on identifying for whose benefit the action was being brought. 142.\nIn Stone & Rolls (as in the present case) there was a good deal of argument about attribution and the application of the so called Hampshire Land principle (In re Hampshire Land Co [1896] 2 Ch 743), but in a passage which is important to Lord Phillips analysis he said that the real issue was not whether the fraud should be attributed to the company but whether ex turpi causa should defeat the companys claim for breach of the auditors duty, and that this depended critically on whether the scope of the auditors duty extended to protecting those for whose benefit the claim was brought (para 67). 143.\nLord Phillips proceeded to examine that issue and he concluded that the accountants owed no duty for the protection of the companys creditors. (That, of course, places them in stark contrast with the directors of an insolvent company.) In examining that question Lord Phillips cited with approval the decision of Hobhouse J in Berg, Sons & Co Ltd v Mervyn Hampton Adams (1992) [2002] Lloyds Rep PN 41.\nThat was also a claim by a company in liquidation, brought for the benefit of its creditors (banks and discount houses), against a firm of chartered accountants which had acted as the companys auditors.\nThe company operated under the sole control of a Mr Golechha, who was the beneficial owner of its entire share capital.\nThe accountants were found to have acted with lack of proper skill in accepting too readily assurances given to them by Mr Golechha about the recoverability of certain debts owed to the company.\nThe judge found that the auditors ought to have qualified the companys accounts.\nAt the relevant time the company was not insolvent, but it was accepted (as indeed the accountants had said in a letter to Mr Golechha) that it was foreseeable that the companys bankers and discount houses with whom it did business might place some reliance on its audited accounts.\nThe company asserted, but did not prove, that Mr Golechhas conduct had been fraudulent.\nThe claim failed on various grounds, including reasons directly comparable to the position in Stone & Rolls. 144.\nLord Phillips quoted (paras 78 and 79) the following passages from Hobhouse Js judgment: It follows [from the decision of the House of Lords in Caparo Industries Plc v Dickman [1990] 2 AC 605] that the purpose of the statutory audit is to provide a mechanism to enable those having a proprietary interest in the company or being concerned with its management or control to have access to accurate financial information about the company.\nProvided that those persons have that information, the statutory purpose is exhausted.\nWhat those persons do with the information is a matter for them and falls outside the scope of the statutory purpose.\nIn the present case the first plaintiffs have based their case not upon any lack of information on the part of Mr Golechha but rather upon the opportunity that the possession of the auditors certificate is said to have given for the company to continue to carry on business and to borrow money from third parties.\nSuch matters do not fall within the scope of the duty of the statutory auditor.\nHowever one identifies the company, whether it is the head management, or the company in general meeting, it was not misled and no fraud was practised on it.\nThis is a simple and unsurprising consequence of the fact that every physical manifestation of the company Berg was Mr Golechha himself.\nAny company must in the last resort, if it is to allege that it was fraudulently misled, be able to point to some natural person who was misled by the fraud.\nThis the plaintiffs cannot do. 145.\nLord Phillips observed that this comment demonstrated that Hampshire Land had no application to the facts of that case, but that it also had wider implications (para 80).\nIt supported the proposition that the law could not rationally hold the auditor liable when the entire shareholder body and the entire management was embodied in a single individual who knew everything because he had done everything.\nThe passages set out above correspond with and support the twin factors to which we have referred (para 26) as central to the reasoning of the majority the limited nature of the auditors duty, and the knowledge of everyone involved in the ownership and management of the company about the matters which the auditors failed to discover and report to them.\nLord Phillips returned to those points at the end of his judgment (para 86). 146.\nLord Walker concluded that he would apply what he referred to as the sole actor principle to a claim made against its former auditors by a company in liquidation, where the company was a one man company engaged in fraud, and the auditors were accused of negligence in failing to call a halt to the fraud (para 168).\nHe defined what he meant by a one man company, by reference to what Hobhouse J had said in Berg v Adams, as a company which has no individual concerned in its management and ownership other than those who are, or must (because of their reckless indifference) be taken to be, aware of the fraud or breach of duty with which the court is concerned (para 161).\nHe cited Berg v Adams as a clear case of a one man company, which did not involve fraud, but in which every physical manifestation of the company was Mr Golechha himself who knew all about the irrecoverable loans; and there is a clear echo of Hobhouse Js judgment in Lord Walkers explanation for rejecting Stone & Rolls claim (para 168).\nHe said that any duty of care owed by the auditors was to the company as a whole, not to current or prospective creditors, and that there was no protection which the auditors could give to the company if the only human embodiment of the company knew all about its fraudulent activities. 147.\nLord Walkers judgment was a great deal more detailed than that summary, because he considered the various arguments advanced by the company, but his critical reasoning was that the auditors were in a very different position from the companys directors (para 190), their duty of care was limited in the way that he identified, and the companys sole actor knew all that was to be known. 148.\nLord Brown agreed with Lord Walker.\nHe said that the claim against the accountants ran diametrically counter to the principles established in Caparo and was difficult to reconcile with Hobhouse Js decision in Berg v Adams (para 202).\nIn that case (see para 144 above) Hobhouse J had said that the claim against the accountants was based on the opportunity which possession of the auditors certificate was said to have given for the company to continue to carry on business and borrow money, but such matters did not fall within the scope of the auditors duty.\nSimilarly, said Lord Brown, the assumed negligence of the accountants had enabled the company to continue to carry on business, in this case stealing rather than borrowing from third parties. 150.\nLord Scott emphasised the public policy foundation of the doctrine of illegality.\nFor this reason he differentiated between an action for damages for breach of the auditors duty of care brought by a solvent company and a similar action brought by an insolvent company.\nIf the company had remained solvent, an action against the auditors which would have enabled Mr Stojevic to benefit from any damages would have offended the ex turpi causa rule.\nBut the company was insolvent and there was no possibility of Mr Stojevic benefitting from any damages recoverable from the accountants.\nThere was therefore no public policy reason to bar an action against the auditors based on their breach of duty.\nThe wielding of a rule of public policy he said, in circumstances where public policy is not engaged constitutes, in my respectful opinion, bad jurisprudence (paras 119 122). 151.\nCritics of Stone & Rolls for being over long and diffuse have a fair point, and commentators and practitioners have found the case difficult.\nLord Walker himself commented in Moulin Global Eyecare Trading Ltd (in liquidation) v The Commissioner of Inland Revenue, HKFCA, final Appeal (No 5 of 2013) (Civil), 13 March 2014, that it is difficult to extract a clear ratio from the speeches of the majority, and he praised the Court of Appeal in the present case for achieving a welcome clarification of the law (paras 100 and 106).\nWe have endeavoured to apply Occams razor in concentrating on the critical features of the case: the scope of the auditors duty and the inability of the company to show that anyone who had any part in the ownership or management of the company was misled by the auditors negligence, which was a prerequisite for the companys claim to succeed. 152.\nMuch of the difficulty of Stone & Rolls is that the treatment of the issues was more roundabout, for example with much discussion of principles of attribution.\nWe have already referred to the fact that Lord Phillips considered that the real issue was not about attribution, but about the scope of the auditors duty, and to Lord Mances comment that the centrality of this issue had been obscured by the spread of argument over other issues.\nThe centrality of the point was further emphasised by the parallel with Berg v Adams which each of the majority drew in their judgments.\nThat parallel had nothing to do with the fraudulent nature of Stone & Rolls business.\nThe restricted nature of the auditors duty and the knowledge of those in charge of the company had the same significance whether the nature of the business was fraudulent (Stone & Rolls) or not (Berg v Adams).\nLikewise, Lord Mances ground for distinguishing Berg v Adams had nothing to do with whether the business was lawful or fraudulent.\nLord Mance distinguished Hobhouse Js decision because the insolvency of Stone & Rolls at the time of the statutory audits made all the difference in his view to the scope of the auditors duty.\nWe are not of course concerned in this case to revisit the point of disagreement between Lord Mance and the majority on that question.\nThe finding that all whose interests were the subject of the auditors duty of care knew the facts which the auditors failed to detect was dispositive.\nThe conclusion of the majority that the claim was therefore barred by illegality may be seen as a reflection upon the illegal nature of the conduct as a matter of fact and perhaps a perceived need to bring their conclusion within the scope of the issues as argued, but it was not the illegality which on a proper analysis of their reasoning drove the conclusion.\nAs Lord Phillips observed, the fundamental proposition which underlay the reasoning of Lord Walker, Lord Brown and himself was that the auditors owed no duty for the benefit of those for whose benefit the claim was brought.\nIt necessarily followed that the claim should be struck out. 153.\nLord Sumption analyses the case differently.\nThere is no disguising the fact that serious difficulties arise from the different ways in which the majority expressed themselves.\nThe Law Commission in its report on The Illegality Defence (2010) Law Com 320, commented at para 3(32): It is difficult to anticipate what precedent, if any, Stone & Rolls will set regarding the illegality defence.\nThough there was a majority verdict, there was no majority reasoning, with all their Lordships reaching different conclusions on how the defence should be applied. 154.\nWe conclude that Stone & Rolls should be regarded as a case which has no majority ratio decidendi.\nIt 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. 155.\nStone & Rolls in any event does not support Mr Macleans primary submission that in the present case Biltas claims are barred because it was a one man company.\nThe duty of the directors was significantly different from the duty of the statutory auditors, and Stone & Rolls attempt to compare the two was rejected by the majority (see, for example, Lord Walker at para 190), although it found favour with Lord Mance.\nThe fact that Stone & Rolls was a one man company was relevant because it meant that the company was unable to point to anyone involved in the ownership or management of the company who was adversely affected by the accountants failure to discover what that one man had concealed from it.\nBut it does not follow that the person in charge of a one man company can never be liable for any form of wrongdoing towards the company.\nAs Lord Mance pointed out in Stone & Rolls (para 230), the controller of a one man company who dishonestly strips its assets is guilty of theft from the company (Attorney Generals Reference (No 2 of 1982) [1984] QB 624).\nIf the majority had agreed with Lord Mances view as to the scope of the auditors duty, it is plain from their reasoning that they would not have struck out the action, albeit that it was a one man company and its activities were fraudulent.\nThey saw the claim as an attempt to get around Caparo, whereas Lord Mance saw no conflict with Caparo. 156.\nMr Maclean also relied on the decision of the Court of Appeal in Safeway Stores Ltd v Twigger [2010] EWCA Civ 1472, [2011] 2 All ER 841.\nThe issue was whether a company could recover the amount of financial penalties imposed on it by the Office of Fair Trading, for anti competitive activity in contravention of the Competition Act 1998, from the directors or employees who were responsible for the illegal activity in breach of their contractual and fiduciary duties to the company.\nThe court held that the claim was barred by the illegality principle. 157.\nThe leading judgment was given by Longmore LJ.\nHis reasoning was as follows: i) The companys liability to the OFT was not a vicarious liability for the wrongful conduct of its directors or employees, because the Competition Act did not impose any liability on the directors or employees for which the company could be held vicariously responsible.\nThe liability under the Act was imposed on the company itself, which acted (as any company must) through agents. iii) iv) ii) The liability was therefore the personal liability of the company, so that its claim against the directors and employees was based on its own wrongdoing.\nIts claim was therefore barred by illegality.\nIt was not open to the company to argue that it was a victim of the directors and employees misconduct, and to rely on the Hampshire Land principle, because the statutory scheme imposed responsibility on the company.\nIt was unnecessary to consider the position if the companys liability had been strict, because the OFT could only impose a penalty under the Competition Act if the infringement had been committed intentionally or negligently by the company. v) 158.\nIf that reasoning is sound, it would support Mr Macleans argument that the doctrine of illegality should apply in the present case, although this would have nothing to do with Bilta being a one man company. 159.\nWe disagree with the reasoning.\nWe have been greatly helped by the analysis provided by Professor Watts in a characteristically lucid article, Illegality and agency law: authorising illegal action [2011] JBL 213. 160.\nSafeways direct liability (or personal liability in the words of the Court of Appeal) under the Competition Act arose through the acts of its directors and employees as its agents, but should the company therefore be denied the right to hold its errant directors and employees to account? We agree with Professor Watts proposition that it simply does not follow that because under the law of agency a principal becomes directly a party to an illegal agreement as a result of its agents acts, it is thereby to be deprived of its rights under separate contracts, not otherwise illegal, with its employees and other agents to act in its interests and to exercise due care and skill.\nIndeed, it would not follow even if the 1998 Act were found to have invoked some sui juris concept of direct liability other than the law of agency.\nIn the absence of some countervailing policy reason, it is not just for someone who falls foul of a statute by reason of the acts of its employees or other agents to add to its burdens and disabilities by depriving it of any recourse against those employees or other agents. 161.\nUnless there are special circumstances, the innocent shareholders should not be made to suffer twice.\nThe reasoning in Safeway, if taken to its logical conclusion, would also mean that the company could not lawfully dismiss the errant employees or directors; for to rely on their misconduct would be to rely on its own misconduct, as Professor Watts has observed.\nIt might be argued that unfair dismissal is different, but that could only be on public policy grounds. 162.\nReference to public policy takes us to the only basis on which we consider that the decision of the Court of Appeal in Safeway may have been justified.\nPill LJ considered that the policy of the Competition Act would be undermined if undertakings were able to pass on their liability to their employees.\nThat may have been a sound reason for striking out Safeways claims, and we express no view as to the merits of the decision.\nWe accept that there may be circumstances where the nature of a statutory code, and the need to ensure its effectiveness, may provide a policy reason for not permitting a company to pursue a claim of the kind brought in Safeway. 163.\nIn Bowman v Secular Society Ltd [1917] AC 406 the House of Lords established the principle that the illegality of a companys objects does not make its existence invalid in law.\nPut broadly, a company has the same power to act illegally as an individual.\nLord Parker of Waddington also stated at 439: [I]f the directors of the society applied its funds for an illegal object, they would be guilty of misfeasance and liable to replace the money, even if the object for which the money had been applied were expressly authorised by the memorandum. 164.\nThat is a generalisation.\nIt would be harsh on directors if the law were to impose strict liability, and to do so would exceed the general duties of directors set out in the Companies Act.\nBut the reasoning of Longmore LJ would negate the companys right of recourse against the director who acted in breach of his fiduciary duty if his conduct as its agent was such as to give rise to a direct liability of the company to a third party.\nThat would be inconsistent with the dictum of Lord Parker and contrary to ordinary principles of agency.\nAs we have said, where the liability arises under a statute, there may in some circumstances be cause to conclude that the statutory scheme would be undermined by allowing the principal to enforce its ordinary right of recourse against its agent, but that would be a departure from ordinary rules of agency based on the specific nature of the statutory scheme and the requirements of public policy arising from it. 165.\nBrinks Mat Ltd v Noye [1991] 1 Bank LR 68 provides an illustration of the application of Lord Parkers dictum.\nThe proceeds of the theft of gold bullion from a warehouse owned by the plaintiffs were laundered through the bank account of a company called Scadlynn Ltd with Barclays Bank.\nThe directors and sole shareholders of Scadlynn were signatories of the account and drew cheques on it for cash totalling nearly 8m over four months.\nThe plaintiffs sought to enforce rights which Scadlynn was said to possess against the bank in consequence of the payments out of its account.\nThe issue before the Court of Appeal (Mustill and Nicholls LJJ and Sir Roualeyn Cumming Bruce) was whether the pleading should be permitted.\nThis raised the question, among others, whether it was open to Scadlynn to sue the bank in respect of withdrawals made or authorised by the companys sole directors and shareholders.\nThe court held that there was no reason why Scadlynn, which was being put into compulsory liquidation, should be prevented from enforcing such a claim for the benefit of the creditors who would look to the assets for the satisfaction of their debts.\nNicholls LJ described the existence of the directors fiduciary duties to the company as a means by which the law sought to protect the companys creditors.\nIn that context, Mustill LJ rightly described Scadlyn as being an intended victim of arrangements intended dishonestly to deprive it of a large part of its assets and Nicholls LJ agreed with him. 166.\nMr Maclean submitted that there was no scope for applying the Hampshire Land principle (so as not to attribute the directors conduct to Bilta because they were acting in fraud of the company) in the circumstances that Bilta is a one man company and in any event that Biltas role in the fraud was that of villain and not victim.\nThe argument proceeds on the false premise that Biltas role must be characterised in the same way both as between Bilta and HMRC and as between the company and its directors; and that the attribution of the fraud to the company for the first purpose applies equally when considering the second.\nWe do not consider the question of attribution to be the real issue in this case.\nThe real issue is simpler: whether it is contrary to public policy that the company, through the liquidators, should enforce for the benefit of its creditors the duty which the directors owed for the protection of the creditors interests as part of their fiduciary duty to the company.\nIn this respect we echo Lord Phillips observation in Stone & Rolls (para 67) that the real issue was not whether the fraud should be attributed to the company, but whether ex turpi causa should defeat the companys claim for breach of the auditors duty.\nThis, as he said, depends critically on whether the scope of that duty extends to protecting those for whose benefit the claim was brought.\nThe answer to that question in the present case is clear.\nThe directors fiduciary duty to the company did extend to protecting the interests of those for whose benefit the claim is brought.\nHowever, because the issue of attribution loomed large in the course of argument (as it did in Stone & Rolls), and because the topic has caused a fair amount of confusion, we address it below in the hope of providing some clarification. 167.\nMr Maclean further submitted that Biltas claims fall within the illegality principle because the claims are inextricably linked with, and it is relying on, its own dishonest actions.\nThe flaw in this argument is that when a company is insolvent or on the border of insolvency its interests are not equated solely with the proprietary interests of its owners.\nCompany law requires that the interests of creditors receive proper consideration by the shareholders and directors.\nAlthough the creditors are not shareholders, as creditors they are recognised at that point as having a form of stakeholding in, or being a constituency of, the company which is under the management of the directors, and their interests are to be protected at law through the directors fiduciary duty to the company, which encompasses proper regard for the creditors interests.\nIt is therefore misleading to say that when the company, through the liquidators, brings an action against the directors for breach of that duty, the company (whose interests ex hypothesi include the interests of those for whose benefit the duty is owed and the action is brought) is claiming in respect of its dishonest actions. 168.\nThe argument about reliance harks back to Tinsley v Milligan.\nWe have referred (at para 138) to Lord Phillips treatment of that case in Stone & Rolls and to his statement that whether ex turpi causa should apply should depend on whether the public policy underlying it required its application.\nTinsley v Milligan sparked a debate which has continued ever since then.\nThis is not surprising because the judges in that case themselves considered the law to be very unsatisfactory, but they were of the opinion that it was beyond judicial reform, although it was based on public interest and was a common law doctrine.\nLord Goff referred to the New Zealand Illegal Contracts Act 1970, which provides that the court may deal with an illegal contract howsoever as the court in its discretion thinks just.\nHe suggested that there should be a full inquiry, and said that he would be more than happy if a new system could be evolved which was satisfactory in its effect and capable of avoiding indiscriminate results. 169.\nThe Law Commission studied the subject over many years with wide consultation.\nIt did not recommend that the court should have an open ended discretion.\nHowever, it agreed with the great majority of consultees and commentators that the law was in an unsatisfactory state if, in the words of Lord Browne Wilkinson in Tinsley v Milligan, The effect of illegality is not substantive but procedural.\nThe objections were well expressed by McHugh J in the High Court of Australia in Nelson v Nelson (1995) 184 CLR 538, 609 (and many others have written or spoken in similar vein): The [reliance] rule has no regard to the legal and equitable rights of the parties, the merits of the case, the effect of the transaction in undermining the policy of the relevant legislation or the question whether the sanctions imposed by the legislation sufficiently protect the purpose of the legislation.\nRegard is had only to the procedural issue; and it is that issue and not the policy of the legislation or the merits of the parties which determines the outcome.\nBasing the grant of legal remedies on an essentially procedural criterion which has nothing to do with the equitable positions of the parties or the policy of the legislation is unsatisfactory, particularly when implementing a doctrine which is founded on public policy.\nThe Law Commission did not recommend that the solution should be statutory.\nIts reason or primary reason was not the difficulty of obtaining Parliamentary time for law reform, although that has been a serious problem.\nIts study of various possible legislative models did not result in it finding an altogether satisfactory version, but there also appeared to the Commission to be signs of fresh judicial thinking since Tinsley v Milligan.\nIt considered that judicial reform was the best way forward and it made recommendations to that end.\nThe Commission suggested that it was within the power of the courts to develop the law in a way which was neither simply discretionary nor arbitrary and indiscriminate, but which had regard to the underlying public policies, and its recommendations were intended to assist the courts in that direction. 170.\nIn Gray v Thames Trains Ltd [2009] AC 1339, para 30, Lord Hoffmann said that the doctrine is founded not on a single rationale but number of policy objectives.\nHis observation was echoed by Lord Phillips in Stone & Rolls (at para 25).\nWe have given our reasons for saying that application of the doctrine in the present context would undermine the purpose and relevant provisions of the Companies Act for the protection of the creditors of insolvent companies through the duty imposed on the directors towards the company. 171.\nThere may be cases which are less clear cut where there are public policy arguments which pull in opposite directions.\nHounga v Allen [2014] UKSC 47, [2014] 1 WLR 2889 was such a case.\nThe claimant was a victim of unlawful discrimination occurring within the context of a contract of employment, which was contrary to the terms on which the claimant had been permitted to enter the United Kingdom.\nLord Wilson, giving the judgment of the majority, adopted Lord Phillips statement in Stone & Rolls that the reliance test was not to be applied automatically but that it was necessary to consider the policy underlying ex turpi causa in order to decide whether it should defeat the claim.\nHe referred next to the test of inextricable link and said that he would conclude that the link was missing.\nBut he did not consider that to be the determining question for reasons which he set out in the critical part of his judgment under the heading Public policy.\nHe said (para 42): The defence of illegality rests upon the foundation of public policy Rules which rest upon the foundation of public policy, not being rules which belong to the fixed or customary law, are capable, on proper occasion, of expansion or modification: Maxim Nordenfelt Guns and Ammunition Co v Nordenfelt [1893] 1 Ch 630, 661 (Bowen LJ).\nSo it is necessary, first, to ask What is the aspect of public policy which founds the defence? and, second, to ask But is there another aspect of public policy to which application of the defence would run counter? 172.\nLord Wilson examined what, if any, considerations of public policy underlying the doctrine of illegality, in particular the importance of preserving the integrity of the legal system (highlighted by McLachlin J in Hall v Hebert [1993] 2 SCR 159), militated in favour of applying the defence to defeat Miss Houngas claim, and he judged them scarcely to exist.\nHe considered next the second question which he had posed in para 42.\nHe concluded that there was an important aspect of public policy to which application of the defence would run counter, namely the protection of victims of trafficking, about which the United Kingdom was party to a European Convention.\nLord Wilson described as fanciful the idea that an award of compensation to the claimant would give the appearance of encouraging others to enter into illegal contracts of employment, whereas its refusal might engender a belief among employers that they could discriminate against such employees with impunity (para 44), and he said that to uphold the defence of illegality would run strikingly counter to the prominent strain of current public policy against trafficking and in favour of protection of its victims (para 52).\nHe concluded his judgment by saying: The public policy in support of the application of that defence, to the extent that it exists at all, should give way to the public policy to which its application is an affront. 173.\nLord Sumption says that the illegality defence is not dependent on a judicial value judgment about the balance of the equities in each case, and he cites Tinsley v Milligan and Les Laboratoires Servier v Apotex Inc [2014] UKSC 55 [2014] 3 WLR 1257.\nIn Tinsley v Milligan the House of Lords disapproved the public conscience test which had been developed by the Court of Appeal.\nBut that decision did not preclude this court from adopting the approach in Hounga v Allen set out above at para 129 above.\nLord Wilsons statement was one of principle.\nIt was made after a review of the authorities in which Lord Wilson referred to the rejection of the public conscience test in Tinsley v Milligan (para 28).\nLord Wilsons statement was part of the ratio decidendi in Hounga v Allen because it formed the foundation for the conclusion in the final paragraph of the judgment, to which we have referred at para 174.\nIt is not the courts practice consciously to depart from an earlier decision of the House of Lords or Supreme Court without saying so.\nNo member of the court in Les Laboratoires Servier suggested that the courts approach in Hounga v Allen had been wrong.\nThe issue in Les Laboratoires Servier was whether the doctrine of illegality should be expanded beyond the reach of previous authorities to include a tort of strict liability.\nThe decision is not inconsistent with ratio of Hounga v Allen.\nSome of the dicta are in a different direction from Hounga v Allen but that is not a sufficient reason to conclude that the majority consciously meant to disapprove the approach in Hounga v Allen.\nSince the hearing of the appeal, the Court of Appeal has considered Hounga v Allen and Les Laboratoires Servier in R (on the application of Best) v Chief Land Registrar [2015] EWCA Civ 17.\nSales LJ, with whom McCombe LJ agreed, analysed them at paras 51 to 61 and adopted the analytical framework of Lord Wilson in weighing the considerations of public policy in favour of and against applying the ex turpi causa defence in the particular circumstances.\nHe did not consider Les Laboratoires Servier to be incompatible with that approach and he applied Lord Wilsons guidance at para 70 and following.\nArden LJ dissociated herself from the reliance on Hounga v Allen by the majority (paras 111 to 112).\nThe analysis of Sales LJ accords with our views. 174.\nThe Law Commissions report has been considered in some detail by the Court of Appeal on two occasions, Les Laboratoires Servier and Parkingeye Ltd v Somerfield Stores Ltd [2013] 1 QB 840.\nIn a chapter in English and European Perspectives on Contract and Commercial Law: Essays in honour of Hugh Beale, Professor Andrew Burrows, writing before the decision of this court in Les Laboratoires Servier commended these decisions as an example of the work of the Commission helping to influence judicial law reform.\nThe report has not so far been considered in any detail by this court, nor has this court been invited to review the decision in Tinsley v Milligan.\nThe differences between Lord Sumption and us suggest to us that there is a pressing need for both.\nIn any future review the court would undoubtedly wish to examine the law in other countries and particularly the judgments of the High Court of Australia in Nelson v Nelson, all of which merit reading.\nConspiracy 175.\nFor the reasons explained we have concentrated on the claim against the directors for breach of fiduciary duty, which the appellants are said dishonestly to have assisted.\nIt is difficult to see that the claim for conspiracy adds anything.\nMr Maclean argued that the real conspiracy was to injure HMRC and that it is artificial to regard there as having been a conspiracy against Bilta, when it was in truth nothing more than a vehicle for defrauding HMRC.\nIt may be that Bilta will fail to establish the conspiracy alleged, but the merits of that argument are not fit for determination on a summary application.\nBilta has a triable case, and the only issue before the court is whether it must fail for illegality.\nIn that respect the appellants are on no stronger ground in relation to conspiracy than in relation to the breach of fiduciary duty relied on as the unlawful means.\nIt is perhaps worth observing that in Berg Sons & Co Ltd v Adams Hobhouse J noted that there was no allegation of conspiracy by the accountants and Mr Golechha to defraud the company (p 1066), implying that this would have made a potential difference.\nIn this case there is an allegation of conspiracy between the directors and others to defraud the company.\nIt does not alter the analysis to say that the aim of the dishonest director shareholders was to make a dishonest profit for themselves and their accomplices at the expense of HMRC, for this itself involved a breach of fiduciary duty towards Bilta (representing the interests of its creditors) and the intentional causation of loss to Bilta.\nLoss 176.\nMr Maclean submitted that Bilta suffered no loss since it began life with negligible assets and never acquired any lawful assets, so it had none to lose.\nHe relied on an obiter dictum of Lord Phillips to similar effect in Stone & Rolls (para 5), but Lord Mance observed (para 231) that to cause a deficit to a company making it insolvent is to cause it loss.\nLord Phillips described his own remark as an initial impression and it was no part of his reasoning. 177.\nIn Brinks Mat Ltd v Noye one of the arguments advanced by the bank was that Scalynn suffered no loss because it never had any property of its own and held the proceeds of the bullion on trust.\nThe argument was dismissed.\nNicholls LJ observed that a director was as much in breach of fiduciary duties which he owed to the company if he misappropriated property of which the company was a trustee as if he misappropriated property belonging beneficially to the company. 178.\nA companys profit and loss account and its balance sheet may be positive or negative.\nWhen the directors caused Bilta to incur VAT liabilities, and simultaneously caused it to misapply money which should have been paid to HMRC, leaving the company with large liabilities and no means of paying them, the directors caused it to suffer a recognisable form of loss.\nCircuity 179.\nThe appellants also submit that if Bilta is entitled to a remedy against Jetivia because it conspired with Biltas directors, so also is Jetivia entitled to claim against Bilta for conspiring with Mr Brunschweiler against it.\nThere is, it is submitted, circuity of action.\nIn our view Jetivia will be liable only if it is established that it knowingly assisted in the fraud against Bilta, which would result from Mr Brunschweilers knowledge and actions being attributed to it.\nWe discuss attribution below.\nIf the fraud against HMRC was designed to benefit Jetivia and the other overseas suppliers, we see no reason why there should not be such attribution and doubt if Jetivia would have a claim against Bilta.\nBut, as Lord Sumption states, the facts relevant to this issue have not been pleaded.\nAttribution 180.\nThe issue of attribution arises in the context that Mr Nazir and Mr Chopra were the only directors of the company and Mr Chopra was its sole shareholder.\nBilta in its amended particulars of claim (at para 42) referred to them as its directing mind and will.\nWhile there is a role in our law for the concept of the directing mind and will of a company, it is important to analyse that role and in particular to avoid the dangers of ascribing human attributes to a non natural person such as a company. 181.\nIn most circumstances the acts and state of mind of its directors and agents can be attributed to a company by applying the rules of the law of agency.\nIt has become common to speak of the Hampshire Land principle or the fraud exception as the exception to an otherwise general rule that attribution occurs.\nIt is our view that the fraud exception is not confined to fraud but is simply an instance of a wider principle that whether an act or a state of mind is to be attributed to a company depends upon the context in which the question arises.\nThe fraud exception, applied to prevent an agent from pleading his own breach of duty in order to bar his principals claim against him, is the classic example of non attribution.\nBut it is not the only one. 182.\nWe set out our conclusions on the importance of context to the process of attribution in paragraphs 202209 below.\nBefore then, we examine the case law which has led us to those conclusions. 183.\nThe starting point in an analysis of attribution is the recognition of the separate personality of the company, which the House of Lords recognised long ago in Salomon v Salomon & Co Ltd [1897] AC 22 and which this court recently confirmed in Prest v Petrodel Resources Ltd [2013] 2 AC 415.\nA company, the creation of law, is, in Lord Halsburys words (Salomon at p 33), a real thing and has a legal existence even if it is controlled by one person.\nBecause the company is not a natural person it can operate only by the acts of its officers, employees and agents.\nIn Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq 461, 471, Lord Cranworth LC stated: The directors are a body to whom is delegated the duty of managing the general affairs of the company.\nA corporate body can act only by agents.\nSimilar statements about the necessity of agency can be found in Ferguson v Wilson (1866) LR 2 Ch App 77 (Cairns LJ at p 89) and Citizens Life Assurance Co Ltd v Brown [1904] AC 423, (Lord Lindley at p 426). 184.\nWhile a company cannot act but through the agency of others, it can incur obligations and have rights; and directors, including a sole director who is also the sole shareholder of a company, owe it the general duties set out in sections 171 to 177 of the Companies Act 2006.\nThe company can also incur liability to a third party because the law holds it responsible for the tortious acts and omissions of an employee. 185.\nLord Diplock stated the principles in a contractual context in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, 848: My Lords, it is characteristic of commercial contracts, nearly all of which today are entered into not by natural legal persons, but by fictitious ones, ie companies, that the parties promise to one another that something will be done.\nSuch a contract is the source of primary legal obligations upon each party to it to procure that whatever he has promised will be done is done .\nWhere what is promised will be done involves the doing of a physical act, performance of the promise necessitates procuring a natural person to do it; but the legal relationship between the promisor and the natural person by whom the act is done, whether it is that of master and servant, or principal and agent, or of parties to an independent sub contract, is generally irrelevant.\nIf that person fails to do it in the manner in which the promisor has promised to procure it to be done, as, for instance, with reasonable skill and care, the promisor has failed to fulfil his own primary obligation.\nThis is to be distinguished from vicarious liability a legal concept which does depend upon the existence of a particular legal relationship between the natural person by whom a tortious act was done and the person sought to be made vicariously liable for it.\nIn the interests of clarity the expression should, in my view, be confined to liability for tort. 186.\nSuch vicarious liability is indirect liability; it does not involve the attribution of the employees act to the company.\nIt entails holding that the employee has committed a breach of a tortious duty owed by himself, and that the company as his employer is additionally answerable for the employees tortious act or omission. 187.\nA company can incur direct liability in at least three circumstances.\nFirst, the provisions of company legislation, a companys constitution (its articles of association, including provisions of a companys memorandum of association now deemed to be provisions of its articles by section 28 of the Companies Act 2006 (the 2006 Act)) and the non statutory rules of company law provide that certain acts of its board of directors are treated as the acts of the company.\nFor example, in the Companies (Model Articles) Regulations 2008 (SI 2008\/3229) Schedule 3, article 3 provides that [s]ubject to the articles, the directors are responsible for the management of the companys business, for which purpose they may exercise all the powers of the company.\nSimilarly, certain resolutions of the shareholders in general meeting are treated as the acts of the company.\nFurther, the non statutory consent principle, that shareholders who have a right to vote may by unanimous agreement bind the company in a matter in which they had power to do so by passing a resolution at a general meeting (In re Duomatic Ltd [1969] 2 Ch 365), is preserved by section 281(6) of the 2006 Act. 188.\nSecondly, a company can also incur direct liability through the transactions of agents within the scope of their agency (actual or apparent).\nThus, when an agent commits his or her company to a contract, the company incurs direct liabilities (and acquires rights) as a party to the contract under ordinary principles of the law of agency. 189.\nThirdly, a statute or subordinate legislation or a regulatory bodys code or rules of the common law or equity may impose liabilities or confer rights on a company.\nFor example, a company as a legal entity is owed by its directors the general duties set out in sections 171 to 176 of the Companies Act even when the controlling director is also the sole shareholder. 190.\nIn Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, Lord Hoffmann (at p 506) pointed out that it is a necessary part of corporate personality that there should be rules by which acts are attributed to the company.\nFirst, he identified the primary rules of attribution from company law, which is the first of the direct forms of liability which we describe above.\nHe then referred to the general principles of agency and vicarious liability which in most circumstances determine a companys rights and obligations (p 507B).\nHe recognised that there was a third category where, exceptionally, a rule of law expressly or impliedly excludes attribution on the basis of those general principles.\nFor this third category, which is relevant to the third form of direct liability (above), he stated: the court must fashion a special rule of attribution for the particular substantive rule.\nHe described the fashioning of that special rule of attribution in these terms (p 507E F): This is always a matter of interpretation: given that it is intended to apply to a company, how is 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. 191.\nThe relevance of the context in which the question is asked Is Xs conduct or state of mind to be treated as the conduct or state of mind of the company for the purpose in hand? is not limited to Lord Hoffmanns third category.\nThe legal context, ie the nature and subject matter of the relevant rule and duty, is always relevant to that question.\nIn Bowstead & Reynolds on Agency (20th ed 2014) Professor Peter Watts and Professor Francis Reynolds stated (at para 8 213): Before imputation occurs there needs to be some purpose for deeming the principal to know what the agent knows.\nIn the 19th ed the learned editors made the same point in the same paragraph thus: The rules of imputation do not exist in a state of nature, such that some reason must be found to disapply them.\nWhether knowledge is imputed in law turns on the question to be addressed.\nWe agree; an analysis of the relevant case law supports that view in relation to each category of rules of attribution.\nWe turn first to the special rules of attribution which Lord Hoffmann saw as providing the answer in exceptional cases when the other rules did not determine the companys rights and obligations. 192.\nThus, in Lennards Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705, the Merchant Shipping Act 1894 excluded the liability of a ship owner for loss or damage if it occurred without his actual fault or privity.\nThat phrase prevented the ship owner incurring such liability vicariously.\nThe House of Lords treated the fault of Mr J M Lennard, who was a director of another company which managed the ship, was registered in the ships register as the manager, and was also a director of the ship owning company, as the fault of the latter company.\nBoth Viscount Haldane LC and Lord Dunedin, who gave the only substantive speeches in the case saw the question as one of statutory construction which depended on the particular facts of the case.\nIn Tesco Supermarkets Ltd v Nattrass [1972] AC 153, the supermarket company was charged with an offence under the Trade Descriptions Act 1968.\nIt pleaded a defence under section 24 of the Act namely (a) that the commission of the offence was due to the act or default of another person, in this case the manager of the store at which the misleading representations as to price had occurred, and (b) that it had taken all reasonable precautions to avoid the commission of such an offence.\nThe House of Lords upheld that defence.\nLike the Divisional Court, the House of Lords treated the store manager as another person for the purpose of section 24 of the Act and focused on the question whether the task of taking reasonable precautions was that of the board of the company or was delegated to its store managers.\nIt construed the statutory defence as allowing an employer who was personally blameless to escape liability and held that in this case the board of directors had not delegated their management functions to the shop managers.\nAs a result Tesco established the statutory defence. 193.\nAs in each case the court is engaged in the interpretation of a particular statute and in its application to particular facts, other statutory provisions have given rise to different approaches.\nThus in Tesco Stores Ltd v Brent London Borough Council [1993] 1 WLR 1037 the Divisional Court was concerned with the offence in section 11 of the Video Recordings Act 1984 of supplying a video recording to a person under the age specified in the classification certificate.\nThe court rejected Tescos statutory defence that it had neither known nor had reasonable grounds to believe that the purchaser was under 18.\nIt distinguished Tesco Supermarkets Ltd v Nattrass, holding that the knowledge or information that the section 11(2) defence addressed was that of the employee who supplied the video film to the purchaser and not that of the companys senior management. 194.\nIn Attorney Generals Reference (No 2 of 1982) [1984] 1 QB 624, to which we referred in para 155 above, the Court of Appeal had to consider whether a person or persons who through shareholding and directorship had total control of a company were capable of stealing the property of the company.\nThis involved, among other things, considering section 2(1)(b) of the Theft Act 1968 which provides that a persons appropriation of property is not regarded as dishonest if he appropriates the property in the belief that he would have the others consent if the other knew of the appropriation and the circumstances of it.\nThe Court of Appeal held that the company could not be regarded as the other for the purpose of this provision because the mind and will of the defendants fell to be treated as the mind and will of the company.\nThe defendants could be charged with theft of the companys property and their appropriate defence (if made out) would be that they appropriated the property in the honest belief that they had the right to deprive the company of it (section 2(1)(a)).\nAgain, the court approached the question of attribution as one of statutory construction. 195.\nIn McNicholas Construction Co Ltd v Customs and Excise Commissioners [2000] STC 553 Dyson J attributed to a main contractor the knowledge of its site managers that fraudulent invoices for sub contract labour were being created, in circumstances in which the main contractor suffered no loss because it could claim input VAT but evaded income tax.\nSection 60 of the Value Added Tax Act 1994 imposes civil penalties on a person who dishonestly acts or omits to act for the purpose of evading VAT.\nDyson J recorded that it was common ground in that case that the knowledge and dishonest acts of the site managers could be attributed to the main contractors only if a special rule of attribution, of which Lord Hoffmann had written in Meridian, could be applied.\nHe stated (para 44): The question in each case is whether attribution is required to promote the policy of the substantive rule, or (to put it negatively) whether, if attribution is denied, that policy will be frustrated.\nHe held (paras 48 49) that the statutory policy of discouraging the dishonest evasion of VAT would be frustrated if the knowledge of the employees of a company who had to play a part in the making and receiving of supplies, as well as those involved in its VAT arrangements, were not attributed to the employing company.\nFurther, as the participants in the fraud had not intended to harm the interests of their employing company, there was no basis for excluding such attribution. 196.\nThe Court of Appeal took a similar approach in Morris v Bank of India, [2005] 2 BCLC 328 which concerned a claim for fraudulent trading under section 213 of the Insolvency Act 1986.\nThe court upheld Patten Js finding that the knowledge, which the general manager of Bank of Indias London branch had of BCCIs fraud, was to be attributed to his employers for the purpose of section 213.\nIn paras 156 162 above we discussed Safeway Stores Ltd v Twigger.\nWhat is relevant for present purposes is that the court in that case looked to the wording and policy of the relevant statute in order to determine whether the acts and the intention or negligence underlying those acts were to be attributed to the company. 197.\nIt is not only in the field of statute that the court, when deciding whether to attribute anothers act or state of mind to a company, has regard to the purpose of the rule of law which is in play.\nIn the different context of a claim based on knowing receipt of the proceeds of a fraud, the Court of Appeal in El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 had to consider whether the knowledge of an agent who was also the director of a company should be attributed to that company.\nMr Ferdman, who was a non executive director of Dollar Land, had made the arrangements by which Dollar Land acquired an interest in assets in which others had invested funds that they had earlier obtained by fraud.\nHe had acted without the authority of a resolution by Dollar Lands board.\nBecause Mr Ferdman managed and controlled the transactions, the court attributed his knowledge to the company, treating him as the directing mind and will of the company in relation to those transactions.\nThe court recognised that different persons could be treated as the directing mind and will of a company for different purposes (Rose LJ at p 699h and Hoffmann LJ at p 706e).\nWhile a Mr Stern generally managed Dollar Land, Mr Ferdman was for the purpose of the receipt of the funds the companys mind and will, and on that basis his knowledge of the fraud was attributed to the company.\nThe plaintiffs alternative basis of attribution on the ground of agency failed.\nWe see force in the suggestion by the editors of Bowstead & Reynolds on Agency (at para 8.214) that the rules of agency could have resulted in imputation of knowledge in that case.\nBut in the event the court decided otherwise.\nThus the only basis on which Mr El Ajou succeeded was the attribution of Mr Ferdmans knowledge to the company based on the concept of a person being a companys directing mind and will in relation to a particular transaction.\nSimilarly, although in that case it was not necessary to do so in order to establish Mr Tans accessory liability for dishonest assistance of a breach of trust, the Judicial Committee of the Privy Council in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 (p 393B C) attributed Mr Tans objective dishonesty to the travel agency company which he controlled. 198.\nThe courts have also had to consider questions of attribution of knowledge or actions in a contractual context such as that of an insurance policy.\nIn that context the terms of the insurance policies are relevant and can be decisive as the court seeks to give effect to the intentions of the parties as expressed in their contract.\nIn Arab Bank plc v Zurich Insurance Co [1999] 1 Lloyds Rep 262 Rix J addressed a professional indemnity policy which covered the legal liability of both a company which provided estate agency and valuation services and its directors.\nThe assumed facts included the assertion that one of the directors, who was the managing director, had made a number of fraudulent valuations in the companys name.\nThe plaintiffs obtained judgments against the company, which went into liquidation, and sought to enforce them against the insurance company under the Third Parties (Rights against Insurers) Act 1930.\nZurich purported to avoid the policy on the basis of the directors fraud.\nBut the insurance policy included fidelity insurance which indemnified the company against liabilities resulting from the fraudulent acts of a director.\nBecause he construed the policy as insuring the company and its directors as separate insureds, the logic of the policy was that the guilty knowledge and conduct of a director could not be attributed to the company for the purpose of giving effect to the insurance contract even if he were the directing mind and will of the company in relation to the particular transactions.\nHe referred to Lord Hoffmanns analysis of a special rule of attribution which we have quoted in para 190 above, and held that in the context of the particular contract he was not prepared to find that the fraudulent director was the directing mind and will of the company (pp 278 279).\nIn Morris v Bank of India [2005] 2 BCLC 328 the Court of Appeal (at paras 122 124) explained the Arab Bank case as a case which rested on the construction of the terms of the insurance contract. 199.\nIn Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250 (Belmont No 1), the Court of Appeal considered a claim by the receiver of an insolvent company (A) that its shareholders and directors had dishonestly conspired to use As funds to purchase shares in another company (B) at an excessive price and thereby give unlawful financial assistance to the shareholders of B to purchase As shares.\nThe Court of Appeal held that the directors knowledge that they were effecting an illegal transaction should not be imputed to A because the object of the conspiracy was improperly to deprive A of a large part of its assets.\nBuckley LJ (pp 261 262) explained the non attribution on the basis that when an agent, who is acting in fraud of his principal, has knowledge which is relevant to the fraud, that knowledge is not imputed to the principal to defeat the companys claim against the conspirators (as to which rule see Bowstead & Reynolds on Agency 20th ed 2014 paras 8 207 (article 95 rule 4) and 8 213).\nWhen the case returned to the Court of Appeal after a retrial, (Belmont Finance Corporation Ltd v Williams Furniture Ltd (No 2) [1980] 1 All ER 393 (Belmont No 2)) the courts findings made clear that the transaction had been approved by resolution at a formal board meeting of A and completed at two further board meetings, including by the sealing by A of the share transfers of Bs issued share capital (Buckley LJ at p 398G H).\nAlthough the transaction was clearly subject to what Lord Hoffmann in the Meridian Global Funds case [1995] 2 AC 500 described as the primary rules of attribution, the knowledge which some of As directors (Mr James and Mr Foley) had of the illegal transaction and their misfeasance was not attributed to A so as to bar its claim but was attributed to the defendant parent companies of which they were officers. 200.\nWe think that the court would have reached the same conclusion in the Belmont case if it had approached the question of attribution on the basis that the board of directors of A was its directing mind and will because the company was pursuing a claim against, among others, its directors for conspiracy.\nWere it otherwise a company could not vindicate its rights against its directors and those who assisted them or benefited from the conspiracy.\nThis approach is consistent with the older case of Gluckstein v Barnes [1900] AC 240, in which the promoters of a company, who also comprised its entire board of directors, were aware of a secret profit which they made on the asset which they had sold to the company.\nThe House of Lords looked at the question of disclosure in the context of the particular claim.\nThe Earl of Halsbury LC thought that it was absurd to suggest that the knowledge of those who were hoodwinking the shareholders should be treated as disclosed to the company (p 247) and Lord Robertson (p 258) agreed, stating colourfully that the boardroom was occupied by the enemy. 201.\nFinally, in Moulin Global Eyecare Trading Ltd v Commissioner of Inland Revenue, to which we have referred, the Court of Final Appeal of Hong Kong was concerned with a claim by way of judicial review by an insolvent companys liquidator to be entitled to object out of time to tax assessments and obtain repayment of the tax paid on the basis that its former management had fraudulently inflated its profits over several years.\nThe companys entitlement to object out of time and also to claim repayment based on error in its tax returns depended on whether the company was attributed with its managers knowledge of the fraud.\nThe majority of the court held that the company was to be attributed with the knowledge of its management.\nIn the leading judgment, which contained an admirable analysis of the law, Lord Walker of Gestingthorpe NPJ supported an approach to the attribution to a company of a directors knowledge in civil cases which had regard to the factual situation in which they arose and the purpose of the legal rules that were in play.\nSee his summary (at para 129).\nHe distinguished between: (i) claims by the company against its directors or employees and their accomplices for loss which the company suffered as a result of their wrongdoing, where it was absurd to allow the directors or employees to rely on their own awareness of their wrongdoing and attribute it to the company as a defence against its claim, and (ii) third party claims against a company for loss caused to the third party by the misconduct of a director or employee, where the dishonesty of the director or employee would not prevent his act and knowledge being attributed to the company. 202.\nIt is clear from those cases that a finding that a person is for a specific purpose the directing mind and will of a company, when it is not merely descriptive, is the product of a process of attribution in which the court seeks to identify the purpose of the statutory or common law rule or contractual provision which might require such attribution in order to give effect to that purpose.\nSimilarly, when the question of attribution arises in the context of an agency relationship, the nature of the principals or other partys claim is highly material as the learned editors of Bowstead and Reynolds discuss at para 8 213.\nEven when the primary rules of attribution apply, where the transaction is approved by the board of directors and completed under company seal as in Belmont (No 2), the court will not attribute to a company its directors or employees knowledge of their own wrongdoing to defeat the companys claim against them and their associates.\nWe agree with Lord Walker in Moulins case when (at para 113) having discussed the Court of Appeals judgment in this case he stated: the crucial matter of context includes not only the factual and statutory background, but also the nature of the proceedings in which the question [of attribution] arises. 203.\nIn our view, that applies to the knowledge of directors whether one applies the primary rules of attribution of the companys constitution (the cases of Gluckstein v Barnes and Belmont (No 2)), the rules of attribution of agency (Belmont (No 1)), or the special rules of attribution which Lord Hoffmann discussed in the Meridian Global Funds case.\nWhere a companys liability is only vicarious, it is attributed with responsibility for the act of the other, usually the employee; but neither the others act nor his or her state of mind is attributed to the company. 204.\nIt is helpful in the civil sphere, to consider the attribution of knowledge to a company in three different contexts, namely (i) when a third party is pursuing a claim against the company arising from the misconduct of a director, employee or agent, (ii) when the company is pursuing a claim against a director or an employee for breach of duty or breach of contract, and (iii) when the company is pursuing a claim against a third party. 205.\nIn the first case, where a third party makes a claim against the company, the rules of agency will normally suffice to attribute to the company not only the act of the director or employee but also his or her state of mind, where relevant.\nIn this context, the company is like the absent human owner of a business who leaves it to his managers to run the business, while he spends his days on the grouse moors (to borrow Staughton LJs colourful metaphor in PCW Syndicates v PCW Reinsurers [1996] 1 WLR 1136, 1142).\nWhere the rules of agency do not achieve that result, but the terms of a statute or contract are construed as imposing a direct liability which requires such attribution, the court can invoke the concept of the directing mind and will as a special rule of attribution.\nThus where the company incurs direct liability as a result of a wrongful act or omission of another (as in Lennards Carrying Co Ltd v Asiatic Petroleum Co Ltd and McNicholas Construction Co Ltd v Customs and Excise Comrs) it is deemed a wrongdoer because of those acts or omissions.\nIf it is only vicariously liable for its employees tort, it is responsible for the act of the other without itself being deemed a wrongdoer and without the employees state of mind being attributed to it. 206.\nIn the second case, where the company pursues a claim against a director or employee for breach of duty, it would defeat the companys claim and negate the directors or employees duty to the company if the act or the state of mind of the latter were to be attributed to the company and the company were thereby to be estopped from founding on the wrong.\nIt would also run counter to sections 171 to 177 of the 2006 Act, which sets out the directors duties, for the act and state of mind of the defendant to be attributed to the company.\nThis is so whether or not the company is insolvent.\nA company can be attributed with knowledge of a breach of duty when, acting within its powers and in accordance with section 239 of the 2006 Act, its members pass a resolution to ratify the conduct of the director.\nBut, as this court discussed in Prest v Petrodel Resources Ltd [2013] 2 AC 415, para 41, shareholders of a solvent company do not have a free hand to treat a companys assets as their own.\nFurther, as we have discussed, actual or impending insolvency will require the directors to consider the interests of the companys creditors when exercising their powers.\nThis might prevent them from seeking such ratification.\nSimilarly, where a company ratifies a breach of duty by an agent or employee, it must be attributed with the relevant knowledge.\nBut otherwise, as the courts have recognised since at least Gluckstein v Barnes [1900] AC 240, it is absurd to attribute knowledge to the company and so defeat its claim. 207.\nIn the third case, where the company claims against a third party, whether or not there is attribution of the directors or employees act or state of mind depends on the nature of the claim.\nFor example, if the company were claiming under an insurance policy, the knowledge of the board or a director or employee or agent could readily be attributed to the company in accordance with the normal rules of agency if there had been a failure to disclose a material fact.\nBut if the claim by the company, for example for conspiracy, dishonest assistance or knowing receipt, arose from the involvement of a third party as an accessory to a breach of fiduciary duty by a director, there is no good policy reason to attribute to the company the act or the state of mind of the director who was in breach of his fiduciary duty.\nIf the company chose not to sue the director who was in breach of his duty, the third party defendant could seek a contribution from him or her under the Civil Liability (Contribution) Act 1978.\nWe have set out above why we consider that the defence of illegality is not available to a companys directors or their associates who are involved in a conspiracy against the company or otherwise act as accessories to the directors breach of duty.\nEqually, there is no basis for attributing knowledge of such behaviour to the company to found an estoppel. 208.\nIn the present case Patten LJ rightly stated that attribution of the conduct of an agent so as to create liability on the part of the company depends very much on the context in which the issue arises.\nHe said that as between the company and the defrauded third party, the company should be treated as a perpetrator of the fraud; but that in the different context of a claim between the company and the directors, the defaulting directors should not be able to rely on their own breach of duty to defeat the operation of the provisions of the Companies Act in cases where those provisions were intended to protect the company (paras 34 and 35). 209.\nWe agree.\nAccordingly, if, contrary to our view, the doctrine of illegality were insensitive to context and to competing aspects of public policy, the rules of attribution would achieve the same result and preserve Biltas claim.\nInsolvency Act 1986 section 213 210.\nThe appellants second challenge is that the courts powers under section 213 of IA 1986 do not extend to people and corporations resident outside any of the jurisdictions of the United Kingdom. 211.\nSection 213 of IA 1986 provides: (1) If in the course of the winding up of a company it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, the following has effect. (2) The court, on the application of the liquidator may declare that any persons who were knowingly parties to the carrying on of the business in the manner above mentioned are to be liable to make such contributions (if any) to the companys assets as the court thinks proper. 212.\nThe appellants accept that the English courts have jurisdiction in personam.\nTheir challenge is to the courts subject matter jurisdiction as discussed by Hoffmann J in MacKinnon v Donaldson, Lufkin and Jenrette Securities Corpn [1986] 1 Ch 482, 493 and Lawrence Collins LJ in Masri v Consolidated Contractors International (UK) Ltd and Others (No 2) [2008] 2 All ER (Comm) 1099, paras 30 and 31.\nIt relates to whether the court can regulate the appellants conduct abroad.\nWhether a court has such subject matter jurisdiction is a question of the construction of the relevant statute.\nIn the past it was held as a universal principle that a United Kingdom statute applied only to United Kingdom subjects or foreigners present in and thus subjecting themselves to a United Kingdom jurisdiction unless the Act expressly or by necessary implication provided to the contrary (Ex p Blain (1879) 12 Ch D 522, James LJ at p 526).\nThat principle has evolved into a question of interpreting the particular statute (Clark v Oceanic Containers Inc [1983] 2 AC 130, Lord Scarman at p 145, Lord Wilberforce at p 152; Masri v Consolidated Contractors (UK) Ltd and others (No 4) [2010] 1 AC 90, Lord Mance at para 10; and Cox v Ergo Versicherung [2014] AC 1379, Lord Sumption at paras 27 29).\nIn Cox Lord Sumption suggested that an intention to give a statute extra territorial effect could be implied if the purpose of the legislation could not effectually be achieved without such effect (para 29). 213.\nIn our view section 213 has extra territorial effect.\nIts context is the winding up of a company registered in Great Britain.\nIn theory at least the effect of such a winding up order is worldwide (Stichting Shell Pensioenfonds v Krys [2015] 2 WLR 289 at paras 34 and 38).\nThe section provides a remedy against any person who has knowingly become a party to the carrying on of that companys business with a fraudulent purpose.\nThe persons against whom the provision is directed are thus (a) parties to a fraud and (b) involved in the carrying on of the now insolvent companys business.\nMany British companies, including Bilta, trade internationally.\nModern communications enable people outside the United Kingdom to exercise control over or involve themselves in the business of companies operating in this country.\nMoney and intangible assets can be transferred into and out of a country with ease, as the occurrence of VAT carousel frauds demonstrates.\nWe accept what HMRC stated in their written intervention: there is frequently an international dimension to contemporary fraud.\nThe ease of modern travel means that people who have committed fraud in this country through the medium of a company (or otherwise) can readily abscond abroad.\nIt would seriously handicap the efficient winding up of a British company in an increasingly globalised economy if the jurisdiction of the court responsible for the winding up of an insolvent company did not extend to people and corporate bodies resident overseas who had been involved in the carrying on of the companys business. 214.\nIn our view the Court of Appeal reached the correct decision in In re Paramount Airways Ltd [1993] Ch 223, in which it held that the court had jurisdiction under section 238 of IA 1986 (which empowers the court to make orders against any person to reverse transactions at an undervalue) to make an order against a foreigner resident abroad.\nSir Donald Nicholls V C expressed the view (p 239D E) that Parliament did not intend to impose any limitation on the expression any person in sections 238 and 239 of IA 1986 and that it must be left to bear its literal, natural meaning.\nWe reach the same conclusion in relation to the use of that expression in section 213 for essentially the same reasons.\nThe section, like sections 238 and 239 and also section 133 (which concerns the public examination of persons responsible for the formation and running of a British company) share the statutory context of the winding up of a British company.\nThe Court of Appeal considered section 133 in In re Seagull Manufacturing Co Ltd [1993] Ch 345.\nPeter Gibson J, who produced the leading judgment, expressed the views (a) that Parliament could not have intended that a person who had been responsible for the state of affairs of an insolvent British company should escape liability to be investigated simply because he was not within the jurisdiction (p 354G H) and (b) that reasons of international comity would not prevent the summoning for public examination of a person who had participated in the running of a British company (p 356E).\nHirst LJ said (p 360G H) that the process of investigating why a company had failed would be frustrated if a non resident director were immune from public examination.\nAgain, that reasoning is in our view both correct and equally applicable to section 213. 215.\nThe appellants argued that it was wrong that they should be required to defend themselves against a claim when it would only be after the substantive hearing that the court could decide whether to exercise its jurisdiction on the basis that the defendants were sufficiently connected with England.\nWe do not agree.\nWhile the court which hears the claim will have to decide whether in all the circumstances the appellants are sufficiently connected with England, we think that the respondents have a good arguable case that they are.\nThe substance of the section 213 allegation is that the appellants were party to a conspiracy to defraud Bilta in the context of a wider VAT fraud, that they were parties to the conduct of Biltas business to that end, and that Jetivia obtained the proceeds of that fraud.\nIf Biltas liquidators establish those allegations after trial, we think it is likely that the court would decide to exercise its jurisdiction under section 213 of IA 1986 against the appellants, their foreign residence notwithstanding. 216.\nBiltas liquidators also asserted that the English courts had jurisdiction by virtue of article 3(1) Council Regulation 1346\/2000 on insolvency proceedings (the European Insolvency Regulation).\nIt provides: The courts of the member state within the territory of which the centre of a debtors main interests is situated shall have jurisdiction to open insolvency proceedings.\nIn the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary. 217.\nIn Schmid v Hertel (Case C 328\/12) [2014] 1 WLR 633, the Court of Justice of the European Union (CJEU) held (a) that article 3(1) conferred international jurisdiction to hear and determine actions which derive directly from those proceedings and which are closely connected with them (para 30) and (b) that the court of the relevant Member State had jurisdiction to hear and determine an action to set aside a transaction by virtue of insolvency that is brought against a person who is not resident in the territory of a Member State (para 39).\nThus, Biltas liquidators submitted, the European Insolvency Regulation, so interpreted, conferred jurisdiction against both appellants.\nOn the other hand, the appellants submitted that the question whether the territorial reach of section 213 of IA 1986 was worldwide was now governed by the European Insolvency Regulation, whose natural meaning was that it related to relationships between Member States and not with third party states.\nMr Maclean said that the decision in Schmid was controversial and suggested that there should be a reference to the CJEU to determine whether the section 213 proceedings were covered by the European Insolvency Regulation. 218.\nWe do not think that it is necessary to rely on the European Insolvency Regulation as the Court of Justice has interpreted it in Schmid in order to determine whether there is subject matter jurisdiction against Jetivia.\nIf the proceedings against Jetivia were not covered by the Regulation, there is a basis for the exercise of subject matter jurisdiction in our domestic law, as we have discussed above.\nThere is therefore no need for a reference to the CJEU.\nConclusion 219.\nWe therefore would dismiss the appeal. 149.\nWhat divided the minority (Lords Scott and Mance) from the majority is that they took a different view about the classes of parties in respect of whose interests the auditors owed a duty of care.\nThey both regarded the insolvency of the company as critical, but Lord Mance set out his reasoning more fully.\nHe held that just as a directors fiduciary duty to a company which is insolvent or bordering on insolvency embraces a duty to the companys creditors, a parallel principle applied to the auditor, so that the duty of care owed by an auditor to such a company embraced a duty to have regard to the interests of the creditors.\nHe distinguished Berg v Adams because in that case the company was solvent at each audit date (paras 260 and 265).\nHe said that the fact that Stone & Rolls was insolvent at each audit date was critical.\nHe defined the issue as being whether the auditors duty to the company extended, like the directors, beyond the protection of the interests of shareholders in a situation where the auditors ought to have detected the companys insolvency.\nHe observed that the centrality of this issue may have been obscured by the spread of argument over other issues (para 265).\nHe considered that it was not inconsistent with Caparo to hold that the company was entitled to pursue a claim against the auditors for loss resulting from its breach of its duty in failing to detect that the company was subject to a continuing fraudulent scheme in circumstances in which it was insolvent (paras 269 271).\n","output":"Bilta (UK) Ltd was compulsorily wound up in November 2009 pursuant to a petition presented by HMRC.\nBiltas liquidators then brought proceedings against its two former directors (the directors) and against Jetivia SA, (a Swiss company) together with Jetivias chief executive (the appellants).\nThe claim alleges that the appellants and the directors were parties to an unlawful means conspiracy to injure Bilta by a fraudulent scheme, which involved the directors breaching their fiduciary duties as directors, and the appellants dishonestly assisting them in doing so.\nThe conspiracy alleged is that between April and July 2009, the directors caused Bilta to enter into a series of transactions relating to European Emissions Trading Scheme Allowances (commonly known as carbon credits) with various parties, including Jetivia, and that those transactions constituted what is known as a carousel fraud, a species of VAT fraud.\nThe liquidators now claim (i) through Bilta, (a) damages in tort from each of the four defendants, (b) compensation based on constructive trust from the appellants, and (ii) directly from each of the four defendants, a contribution under section 213 of the Insolvency Act 1986.\nThe appellants applied to strike out Biltas claim on the basis (i) that the appellants were bound to defeat the claims against them on the basis of a defence of illegality and, (ii) in relation to the section 213 claim, that it could not be invoked against the appellants as section 213 does not have extra territorial effect.\nIn essence, the appellants argument on illegality was that Biltas claims against its directors are barred by reason of the criminal nature of Biltas conduct while under their control.\nAllegedly, Biltas function was to serve as a vehicle for defrauding HMRC, and the appellants argued that the doctrine of illegality bars Bilta from suing the directors as a means of recovering the companys loss for the benefit of the companys creditors.\nThis raises the issues of (i) the purpose of the illegality defence and its application in relation to Biltas claims and (ii) the circumstances in which the knowledge of directors and other persons is attributed to a legal person such as a registered company.\nThe Supreme Court unanimously dismisses the appeal both in relation to the illegality defence and in relation to section 213.\nOn the first ground, the Court unanimously holds that the illegality defence cannot bar Biltas claims against the appellants on the basis that the conduct of the directors cannot be attributed to the company in the context of a claim against the directors for a breach of their duties.\nOn the second ground, the Supreme Court holds that section 213 of the Insolvency Act 1986 has extra territorial effect, and therefore can be invoked against the appellants.\nAttribution A company has separate legal personality, but it can act only through its directors and agents.\nIn most circumstances the acts and state of mind of a companys directors and agents can be attributed to the\ncompany by applying the rules of the law of agency; however, whether an act or state of mind is attributed to a company depends upon the context in which the question arises [41, 92, 181].\nWhen the question of attribution arises in the context of an agency relationship, the nature of the principals or other partys claim is highly material [87 91, 202].\nIn an action like the present for breach of duty against directors for using the company to commit a fraud on a third party in a way alleged to have caused the company loss, it is inappropriate to attribute to the company the fraud to which the alleged breach of duty relates, even if it is being practised by a person whose acts and state of mind would be attributable to it in other contexts [7 9, 71, 181].\nAs between the company and a defrauded third party, the company should be treated as a perpetrator of the fraud but in the different context of a claim between the company and the directors, the defaulting directors should not be able to rely on their own breach of duty to defeat the operation of the provisions of the Companies Act in cases where those provisions were intended to protect the company [42 43, 208].\nA claim by a company against its directors could be said to be the paradigm case where attribution is inappropriate [89].\nFor these reasons all of the members of the Supreme Court would dismiss the appeal on the illegality defence.\nThe purpose and scope of the illegality defence Lord Neuberger (Lord Clarke and Lord Carnwath agreeing) and Lord Mance all consider that this is an inappropriate case in which to decide, on a general basis, the proper approach to the defence of illegality, though they (together with Lord Toulson and Lord Hodge) emphasise the need for a review of the law of illegality by the Supreme Court in an appropriate case [15 17, 34, 174].\nLord Toulson and Lord Hodge express the view that the defence of illegality is a rule of public policy which depends on the nature of the particular claim brought by the claimant and the relationship between the parties [122].\nIn this case, the fiduciary duties of a director of a company which is insolvent requires the director to have proper regard for the interests of its creditors [123 126].\nSuch protection would be empty if it could not be enforced [127].\nThe doctrine of illegality has been developed on the ground of public policy and in the circumstances of this case, to allow the directors to escape liability for breach of their fiduciary duty on the ground that they were in control of the company would undermine the duty in the very circumstances in which it is required [129 130].\nLord Sumption, by contrast, regards the defence of illegality as a rule of law, independent of any judicial value judgment about the balance of the equities in each case [62].\nLord Sumption expressly disagrees with the statutory policy argument put forward by Lord Toulson and Lord Hodge.\nDoes Section 213 of the Insolvency Act 1986 have extra territorial effect? The Supreme Court unanimously holds that section 213 does have extra territorial effect.\nSection 213 provides a remedy against any person who has knowingly become a party to the carrying on of that companys business with a fraudulent purpose.\nThe provision is directed against (a) parties to a fraud and (b) persons involved in the carrying on of the now insolvent companys business.\nThe context of section 213 is the winding up of a company registered in Great Britain; however, the effect of such a winding up order is worldwide.\nIt would seriously handicap the efficient winding up of a British company in an increasingly globalised economy if the jurisdiction of the court responsible for the winding up of an insolvent company did not extend to people and corporate bodies resident overseas who had been involved in the carrying on of the companys business [108, 213].\nMoreover Section 238, a provision in similar terms to section 213, has previously been held by the Court of Appeal to apply without territorial limitations [110, 214].\n","id":46}
{"input":"In March 1998 Mr Brian Pitchers owned two buildings, at 23 and 25 Moss Street, Paisley.\nThe tenants of the ground floor shop at number 23 were Morrison Sports Ltd (Morrison Sports).\nOn 6 March 1998 the building at number 23 was destroyed by fire.\nThe neighbouring building at number 25 was also damaged and had to be demolished.\nThis left the gable wall between numbers 25 and 27 exposed.\nAs a result, the owners of flats at 27 Moss Street had to carry out weatherproofing work to the gable wall.\nInvestigations identified the seat of the fire as an electricity meter cupboard in number 23.\nMr Pitchers, Morrison Sports Ltd and the flat owners at 27 Moss Street (the pursuers) raised three separate actions for damages against Scottish Power UK plc (Scottish Power) in Glasgow Sheriff Court.\nThe actions were remitted to the Court of Session.\nAll three actions are framed in the same way.\nThe pursuers aver that, in order to improve the fit between the prongs and the fuse holder, a metal shim had been wrapped around the end of the prongs of the cut out fuse before it was inserted into the fuse holder in the ground floor premises at number 23.\nThe pursuers further aver that the presence of the shim caused heating and that this led to arcing which in turn caused the fire.\nThe pursuers allege that the shim was fitted by employees of Scottish Power.\nScottish Power largely admit the pursuers averments as to the cause of the fire, but deny that the shim was fitted by their employees.\nThey believe and aver, rather, that the cut out fuse had been tampered with by someone acting on behalf of Morrison Sports.\nOn the basis of their factual averments the pursuers seek to hold Scottish Power liable on two bases.\nFirst, they allege that Scottish Power are vicariously liable for the negligence of their employees in fitting the shim.\nSecondly, and separately, in article 6 of condescendence they aver that the fire was caused by Scottish Powers breach of their statutory duty under regulations 17, 24 and 25 of the Electricity Supply Regulations 1988 (SI 1988 no 1057) (the 1988 Regulations).\nThe defenders deny the averments of fault and aver that the fire was caused by the sole fault of Morrison Sports.\nScottish Power accept that a proof before answer must be allowed in respect of the pursuers common law case of negligence.\nBut they plead that the pursuers averments in article 6 of condescendence, relating to the alleged breach of statutory duty, are irrelevant and should not be admitted to probation.\nIn short, Scottish Power submit that a breach of the relevant provisions of the 1988 Regulations does not give rise to any liability in damages to those who may suffer loss as a result of the breach.\nThe Lord Ordinary (Lord Wheatley) rejected Scottish Powers argument and allowed a proof before answer on the whole case: 2007 CSOH 131; 2007 SLT 1103.\nScottish Power reclaimed, but, varying the Lord Ordinarys interlocutor, an Extra Division (Lady Paton, Lady Dorrian and Lord McEwan) repelled Scottish Powers plea to the relevancy insofar as it extends to the pursuers averments in article 6 of condescendence: 2009 CSIH 92; 2010 SLT 243.\nIn effect, therefore, they allowed a proof of those averments.\nBefore this Court the Dean of Faculty explained that, in pronouncing this particular interlocutor, the Extra Division proceeded on the basis of a concession that, if they rejected Scottish Powers argument that a breach of the regulations did not give rise to civil liability, the averments in article 6 should be treated as being otherwise relevant.\nThe 1988 Regulations were made by the Secretary of State by virtue of his powers under section 16 of the Energy Act 1983 (the 1983 Act).\nSo far as relevant, section 16 provided: The Secretary of State may make such regulations as he thinks fit for the purpose of (a) securing that supplies of electricity by Electricity Boards or other persons are regular and efficient; and (b) eliminating or reducing the risk of personal injury, or damage to property or interference with its use, arising from the supply of electricity by an Electricity Board or any other person, from the use of electricity so supplied or from the installation, maintenance or use of any electrical plant. (3) Regulations under this section may provide that any person who contravenes any specified provision of the regulations, or any person who does so in specified circumstances, shall be guilty of an offence under this section. (4) A person guilty of an offence under this section shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.\nIn 1988 section 16 was the latest embodiment of a power to make regulations, for securing the supply of electricity and for preserving the safety of life and property, which has existed in different incarnations since the earliest days of the public supply of electricity in this country.\nSee, for instance, section 6 of the Electric Lighting Act 1882 and section 60(1) of the Electricity Act 1947.\nPart I of the 1983 Act, including section 16, was repealed by the Electricity Act 1989 (the 1989 Act), but the power to make regulations was maintained in section 29 of the new Act which, so far as relevant, provides: (1) The Secretary of State may make such regulations as he thinks fit for the purpose of (a) securing that supplies of electricity are regular and efficient; (b) protecting the public from dangers arising from the generation, transmission, distribution or supply of electricity, from the use of electricity interconnectors, from the use of electricity supplied or from the installation, maintenance or use of any electric line or electrical plant; and (c) without prejudice to the generality of paragraph (b) above, eliminating or reducing the risks of personal injury, or damage to property or interference with its use, arising as mentioned in that paragraph. (2) Without prejudice to the generality of subsection (1) above, regulations under this section may (e) make provision requiring compliance with notices given by the Secretary of State specifying action to be taken in relation to any electric line or electrical plant, or any electrical appliance under the control of a consumer, for the purpose of (i) preventing or ending a breach of regulations under this section; or (ii) eliminating or reducing a risk of personal injury or damage to property or interference with its use. (3) Regulations under this section may provide that any person (a) who contravenes any specified provisions of the regulation; or (b) who does so in specified circumstances, shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale; but nothing in the subsection shall affect any liability of any such person to pay compensation in respect of any damage or injury which may have been caused by the contravention.\nIn the Court of Session Scottish Power argued that, even though the 1983 Act had been repealed by the 1989 Act, the court should proceed on the basis that the 1988 Regulations still have effect on the basis that they were made under the 1983 Act.\nUnder reference to para 3(a) of Schedule 17 to the Electricity Act 1989 (the 1989 Act), however, the Extra Division rejected that argument and held that the 1988 Regulations have effect as if they were made under section 29 of the 1989 Act.\nScottish Power now accept this and so there is no need to examine that particular argument: the 1988 Regulations are to be treated as having effect as if they had been made under section 29(1) of the 1989 Act.\nThe difference between section 16 of the 1983 Act and section 29 of the 1989 Act and, hence, the point of the dispute in the Court of Session lies in the concluding words of section 29(3).\nWhile both section 16(3) and (4) of the 1983 Act and section 29(3) of the 1989 Act envisage that regulations may provide for a person who contravenes the regulations, or who does so in specified circumstances, being guilty of a criminal offence and liable to a fine not exceeding level 5 on the standard scale, section 29(3) goes on to provide that nothing in subsection (3) shall affect any liability of any such person to pay compensation in respect of any damage or injury which may have been caused by the contravention.\nRegulation 39 of the 1988 Regulations does indeed provide that any supplier who fails to comply with any provision of the Regulations shall be guilty of an offence under section 16 of the 1983 Act, now section 29(3) of the 1989 Act.\nIt follows that, if, as the pursuers aver, Scottish Power failed to comply with regulations 17, 24 and 25 of the 1988 Regulations, they would be liable to a fine under section 29(3).\nIn these circumstances the Extra Division attributed critical importance, for present purposes, to the concluding words of section 29(3).\nThey noted that section 27(5) of the 1989 Act provides for a licence holder to be liable in damages to those suffering loss as a result of a breach of a final or provisional order; similarly, section 39 provides for a public electricity supplier to make compensation to any person affected by a failure to meet a prescribed standard of performance.\nThe Extra Division then said, 2010 SLT 243, 252, paras 43 46: This is not therefore a regulatory scheme conferring no private rights of action for damages.\nOn the contrary, it is a regulatory scheme conferring certain private rights of action for damages.\nThus it is a different type of statutory scheme from those being considered by Lord Browne Wilkinson in X (Minors) v Bedfordshire County Council [1995] 2 AC 633 when he noted at page 731G H: Although the question is one of statutory construction and therefore each case turns on the provisions in the relevant statute, it is significant that your Lordships were not referred to any case where it had been held that statutory provisions establishing a regulatory system or a scheme of social welfare for the benefit of the public at large had been held to give rise to a private right of action for damages for breach of statutory duty. 44.\nAgainst that background, while criticisms might be levelled at the style of drafting (in particular the apparent introduction of an important private right of action for damages by reservation in section 29(3) of the 1989 Act), we consider that the plain meaning of section 29(3) is that Parliament intended any member of the public who suffers any damage or injury which may have been caused by the contravention of the 1988 Regulations to be entitled to raise an action for damages against the person who contravened the regulations, founding the action upon that breach of statutory duty. 45.\nWe accept that a similar reservation provision relating to compensation did not appear in the 1983 Act.\nThus the wording of section 29(3) represents an important innovation.\nHowever as was made clear in Stevens v General Steam Navigation Co Ltd [1903] 1 KB 890, the proper approach to the construction of statutory provisions may change if Parliament directs that the provisions are to be construed in terms of a later, modified, enactment. 46.\nIn the result therefore, when construing the Electricity Supply Regulations 1988 as if they had been made under section 29 of the Electricity Act 1989, Parliament's intention is in our view clear, and it is unnecessary to define a protected class.\nThe Extra Division were, of course, right to point out that the scheme of the 1989 Act makes provision in section 27(5) for individuals to recover damages and in section 39 for the payment of compensation to individuals.\nBut, where Parliament has made specific provision of this kind in two sections, the natural inference is that it does not intend there to be a right to damages or compensation for loss or injury caused by other breaches of the statute or of subordinate legislation for which no such specific provision is made.\nAs emerges from para 44 of their judgment, however, the Extra Division thought that, by enacting section 29(3), Parliament had indeed made specific provision for a private right of action of damages for loss caused by breaches of the regulations.\nThey considered that in section 29(3) Parliament had introduced an important private right of action for damages by reservation.\nIn other words, although the Division appear to have accepted that, on its face, the relevant words in section 29(3) merely make a reservation, they nevertheless held that, by using these words, Parliament actually intended to introduce, and did introduce, a new right of action.\nThe Division indicate that the drafting of this provision might be open to criticism for the style of the legislative language used to create the right.\nNevertheless, in their view, the plain meaning of section 29(3) of the 1989 Act is that Parliament intended any member of the public who suffers any damage or injury due to a contravention of the 1988 Regulations to be entitled to raise an action of damages for loss caused by the contravention.\nIn the hearing before this Court, Mr Ivey QC, who appeared for the pursuers, adopted the reasoning of the Extra Division.\nIndeed, he expressly conceded that section 29(3) was the only indication in either the 1989 Act or in the 1988 Regulations that a person who contravened a provision of the Regulations would, ipso facto, be liable in damages to anyone who suffered loss as a result.\nThe Extra Divisions construction of section 29(3) is untenable.\nThere is no basis whatever for thinking that the drafter of the provision intended to introduce a civil right of action but somehow botched that comparatively straightforward task and came up with the words in the subsection which are so singularly ill suited to the supposed purpose.\nOn the contrary, the main thrust of the subsection is to provide that, where the regulations so stipulate, a person who contravenes a provision is to be guilty of a criminal offence carrying a maximum penalty of a fine not exceeding level 5 on the standard scale.\nThe subsection then goes on, in unmistakable terms, to provide that this criminal liability is not to affect any liability of that person to pay compensation in respect of any damage or injury caused by the contravention.\nSo far from itself providing that such a person should be liable to pay compensation, the subsection merely confirms that liability to the criminal penalty is not to affect any liability of the offender to pay compensation.\nBy any liability Parliament means the offenders liability, if any, to pay compensation.\nSince section 29(3) cannot be construed as introducing a private right of action, it is, strictly speaking, unnecessary for present purposes to determine its precise scope.\nOne feature which stands out, however, is the reference to liability to pay compensation.\nAs the Extra Division held, this cannot be a reference to the compensation which may be payable under section 27(5) or section 39(3) of the 1989 Act, since section 29(3) is dealing with contraventions of regulations made under section 29(1).\nThe industry of junior counsel for Scottish Power has, however, cast some light on the language of the subsection, which can be seen to reflect language used in earlier regulations.\nAs already noted, section 6 of the Electric Light Act 1882 gave the Board of Trade power to make such regulations as they might think expedient for securing the safety of the public from personal injury or from fire or otherwise.\nSection 2 of the Electricity (Supply) Act 1919 made provision for Electricity Commissioners to exercise that power.\nThe Commissioners proceeded to do so.\nRegulation 35 of the (A) Regulations for Securing the Safety of the Public made by the Electricity Commissioners under the Electricity (Supply) Acts 1882 to 1922 provided for undertakers who failed to comply with any of the regulations to be liable to a criminal penalty.\nRegulation 35 added: The recovery of a penalty under these regulations shall not affect the liability of the undertakers to make compensation of any damage or injury which may be caused by reason of the default.\nIn Stevens v Aldershot Gas, Water and District Lighting Co (1932) LJKB 12 the plaintiff alleged that she had suffered damage to electrical apparatus and loss of profits because the defendants had failed to supply electric current at the voltage at which they had said that they would.\nMacnaghten J explained that the question was whether, if they have failed in that obligation, the plaintiff has a remedy at common law or is she limited to penalties in a court of summary jurisdiction? His Lordship held that the plaintiff was limited to the penalties.\nIn the course of what appears to have been an extempore judgment, Macnaghten J noted that the (B) Regulations which he had to apply, and which related to ensuring a proper supply, did not contain an equivalent of regulation 35.\nThis may suggest that he took the inclusion of regulation 35 in the regulations for securing the safety of the public to be some kind of an indication that an undertaker would be civilly liable for a breach of those regulations.\nBut the remark was obiter and he did not explore the point.\nIn December 1936 the Commissioners made a new set of Regulations, the Electricity Supply Regulations 1937.\nRegulation 39 again made provision for a criminal penalty to be imposed for non compliance with the Regulations, but provided that The recovery of a penalty under these Regulations shall not affect the liability (if any) of the Undertakers to make compensation in respect of any damage or injury which may have been caused by reason of the default.\nNote that the liability (if any) of the Undertakers replaces the reference to the liability of the undertakers in the old regulation 35.\nRegulation 39 of the 1937 Regulations was considered by the Court of Appeal (Morton, Tucker and Somervell LJJ) in Heard v Brymbo Steel Company Ltd [1947] KB 692.\nThe plaintiff was injured in an explosion at the factory in which he worked.\nIt was held that the explosion had been due to a short circuit which had occurred because of breaches by the second defendants, the North Wales Power Co Ltd, of regulations 24 and 25 of the Electricity Supply Regulations 1937.\nIt was accepted that the Electric Lighting (Clauses) Act 1899 applied to the power company.\nParagraph 77 of the schedule to that Act provided for undertakers to be answerable for all accidents, damages and injuries happening through their act or default default being a word that was to be found in regulation 39.\nIn these circumstances the Court of Appeal held the power company liable in damages for the plaintiffs injuries.\nSomervell LJ explained, at p 699, that the default, which was a breach of regulations 24 and 25, and which might cause damage or injury under regulation 39, was a default for which undertakers were answerable under para 77 of the schedule to the 1899 Act.\nIn other words, the power company were held liable to pay damages, not because the breaches of regulations 24 and 25 of the 1937 Regulations per se gave rise to civil liability, but because the default which constituted the breach of those regulations was also a default which made the company liable to pay damages under para 77 of the schedule to the 1899 Act.\nThe 1899 Act was repealed by the 1989 Act.\nIt is unnecessary to trace the subsequent course of the legislation governing the supply of electricity before the 1983 Act.\nEnough has been said to suggest that, when Parliamentary counsel came to draft section 29(3) of the 1989 Act, the choice of language was influenced by the language which had been used in the old regulations.\nHence, in particular, the use of the term compensation.\nOn the other hand there is nothing to show why the tailpiece was omitted from section 16(4) of the 1983 Act but inserted in section 29(3) of the 1989 Act.\nThe fact that the language of section 29(3) can be traced back at least as far as the earlier of the two sets of regulations made by the Electricity Commissioners does, however, undermine part of the reasoning of Mr Peregrine Simon QC, Deputy High Court Judge, in A E Beckett & Sons (Lyndons) Ltd v Midland Electricity Plc 2000 WL 664506.\nThe claimants alleged that they had suffered loss as a result of the defendants breach of regulation 25(1) of the 1988 Regulations.\nHaving referred to the indicators of liability for breach of a statutory provision in the speech of Lord Browne Wilkinson in X (Minors) v Bedfordshire County Council [1995] 2 AC 633, the Deputy High Court Judge continued at para 31: It is arguable that the claimants fell within a class which was intended to be protected by regulations introduced under the powers conferred by section 29(1)(c): namely, those affected by the risks of damage to property.\nHowever, in my judgment, the claimants fail at the second stage of the analysis in that it is clear that Parliament did not intend to confer a private right to claim damages for a breach of the statutory duty.\nFirst, the sanction of the criminal law for breach of the Regulations provides a clear method of securing the protection that the statute was intended to confer and militates against the intention to create private rights of action.\nSecondly, by section 29(4), the power to bring criminal proceedings is confined to the Secretary of State and the DPP.\nThis suggests that Parliament did not intend a breach of the regulations to be widely invoked.\nThirdly, the claimants rely on the reference to compensation in section 29(3) as showing that the Act contemplated a civil action for breach of the [regulations].\nHowever, the reference to compensation in section 29(3) is, in its context, clearly a reference to a claim for compensation under section 35 of the Powers of Criminal Courts Act 1973 and not to a civil action.\nAlthough the decision was reversed on appeal, [2001] 1 WLR 281, this part of the reasoning was not affected.\nThe equivalent of section 35 of the Powers of Criminal Courts Act 1973 in Scots Law is to be found in section 249 of the Criminal Procedure (Scotland) Act 1980, which derives from section 58 of the Criminal Justice (Scotland) Act 1980.\nSince, as has been seen, the term compensation was being used in the present context long before Parliament made provision for criminal courts to make compensation orders, it is implausible to confine the reference in section 29(3) to that kind of compensation.\nWe would therefore reject the construction adopted in A E Beckett & Sons (Lyndons) Ltd v Midland Electricity Plc.\nIt is apparent that, in Heard v Brymbo Steel Company Ltd [1947] KB 692, the Court of Appeal considered that the reference to compensation in regulation 35 of the then current regulations was apt to cover a liability to pay damages for a default in complying with regulations which also constituted a default for purposes of para 77 of the schedule to the 1899 Act.\nBe that as it may, section 29(3) obviously envisages a situation where a person may contravene a provision of regulations made under the section and be liable to pay compensation for damage or injury which he has thereby caused.\nBut it does not follow that Parliament is saying that someone who contravenes any provision of any regulations made under the section is automatically liable to pay compensation for any resulting damage or injury.\nRather, it will all depend on the terms of the regulations which the Secretary of State decides to make.\nAnd, of course, the drafter of section 29(3) did not know what regulations the Secretary of State might choose to make in the years to come.\nSo section 29(3) simply provides that, if in terms of any regulations made under the section a person is to be liable to pay compensation for damage or injury caused by a contravention of some provision of the regulations, then the persons liability to pay that compensation is not affected by his liability to pay a fine for the selfsame contravention.\nSo it all depends on what the regulations made by the Secretary of State provide.\nThere is, of course, nothing in the 1988 Regulations which makes express provision for a person who contravenes them to be liable to pay compensation for damage or injury.\nIn that situation, it is common ground that the well known authorities, as to whether a breach of a statute or subordinate legislation gives rise to a private law statutory right of action, are conveniently summarised in the speech of Lord Browne Wilkinson in X (Minors) v Bedfordshire County Council [1995] 2 AC 633.\nHaving separated out a number of different types of case, he dealt with breaches of statutory duty simpliciter, at pp 731 732: This category comprises those cases where the statement of claim alleges simply (a) the statutory duty, (b) a breach of that duty, causing (c) damage to the plaintiff.\nThe cause of action depends neither on proof of any breach of the plaintiffs' common law rights nor on any allegation of carelessness by the defendant.\nThe principles applicable in determining whether such statutory cause of action exists are now well established, although the application of those principles in any particular case remains difficult.\nThe basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action.\nHowever a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty.\nThere is no general rule by reference to which it can be decided whether a statute does create such a right of action but there are a number of indicators.\nIf the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection the statute was intended to confer.\nIf the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action: Cutler v Wandsworth Stadium Ltd [1949] AC 398; Lonrho Ltd v Shell Petroleum Co. Ltd. (No 2) [1982] A.C. 173.\nHowever, the mere existence of some other statutory remedy is not necessarily decisive.\nIt is still possible to show that on the true construction of the statute the protected class was intended by Parliament to have a private remedy.\nThus the specific duties imposed on employers in relation to factory premises are enforceable by an action for damages, notwithstanding the imposition by the statutes of criminal penalties for any breach: see Groves v Wimborne (Lord) [1898] 2 QB 402.\nAlthough the question is one of statutory construction and therefore each case turns on the provisions in the relevant statute, it is significant that your Lordships were not referred to any case where it had been held that statutory provisions establishing a regulatory system or a scheme of social welfare for the benefit of the public at large had been held to give rise to a private right of action for damages for breach of statutory duty.\nAlthough regulatory or welfare legislation affecting a particular area of activity does in fact provide protection to those individuals particularly affected by that activity, the legislation is not to be treated as being passed for the benefit of those individuals but for the benefit of society in general.\nThus legislation regulating the conduct of betting or prisons did not give rise to a statutory right of action vested in those adversely affected by the breach of the statutory provisions, i e bookmakers and prisoners: see Cutler's case [1949] AC 398; Reg v Deputy Governor of Parkhurst Prison Ex parte Hague [1992] 1 AC 58.\nThe cases where a private right of action for breach of statutory duty have been held to arise are all cases in which the statutory duty has been very limited and specific as opposed to general administrative functions imposed on public bodies and involving the exercise of administrative discretions.\nAs Lord Browne Wilkinson explains, if a statute provides some means, other than a private law action for damages, of enforcing any duty which it imposes, that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action.\nIn Cutler v Wandsworth Stadium Ltd [1949] AC 398, 408, Lord Simonds observed that, where the statutory remedy was by way of criminal proceedings for a penalty, it could be argued that the criminal sanction emphasises that the statutory obligation is imposed for the public benefit and, hence, that the breach of it is a public rather than a private wrong.\nThis is indeed one of the arguments advanced against private law liability for breach of the 1988 Regulations in Beckett & Sons (Lyndons) Ltd v Midland Electricity Plc 2000 WL 664506.\nBut, in the case of regulations made under section 29 of the 1989 Act, that argument is really neutralised by the terms of section 29(3): the mere fact that there was criminal liability for a contravention would plainly not be inconsistent with there being civil liability to pay compensation for the same contravention.\nOn the other hand, section 29(2)(e) of the 1989 Act envisages regulations being made to give the Secretary of State power to take enforcement action in relation to any electric line or electrical plant, or any electrical appliance under the control of a consumer for the purpose of preventing or ending a breach of the regulations or eliminating or reducing a risk of personal injury or damage to property or interference with its use.\nAnd regulation 38 of the 1988 Regulations does indeed contain a regulation with precisely that effect.\nSection 30 of the 1989 Act provides for the Secretary of State to appoint inspectors to carry out various checks of electric lines and electrical plant, including lines and plant on consumers premises, with a view to determining, inter alia, whether any requirement imposed by or under Part I of the Act has been complied with.\nRegulation 33 of the 1988 Regulations provides for inspections by people authorised by the Secretary of State to ascertain whether a breach of the Regulations has occurred.\nThese provisions point strongly to the conclusion that the regulations are to be enforced by the Secretary of State and those appointed to act on his behalf, rather than by individuals raising private actions.\nIndeed, a private right of action to require, say, a supplier to comply with a regulation would be basically inconsistent with this scheme for enforcement by the Secretary of State and his representatives.\nPresumably for that reason, Mr Ivey felt obliged to argue that the only right of action arising out of the 1989 Act and the 1988 Regulations was a right to damages, not, say, to interdict or to an action to require compliance with a duty.\nOf course, in theory, Parliament could provide for a limited right of this kind.\nBut, if it had been its intention to do so, it would surely have said so in express terms.\nThere are further indications that the 1989 Act, as it applied in 1998, envisaged that the legislation would be enforced by means other than private action.\nSection 1 provided for the appointment of a Director General of Electricity Supply.\nBy section 45 it was his duty to investigate any matter which appeared to him to be an enforcement matter.\nWhile the range of such matters was prescribed by section 25 of the Act, section 46 also provided for consumers committees to investigate certain other relevant matters.\nThe Dean of Faculty drew attention to two other factors which tend to point against a private right of action for contraventions of the 1988 Regulations.\nFirst, regulation 27(1) envisages that a consumer may use his electrical installation in a way that may give rise to danger or cause undue interference with the suppliers system or with the supply to others.\nRegulation 28 then contains an elaborate scheme under which the supplier can discontinue supply to the consumers installation.\nIn addition, where the Secretary of State is satisfied that the suppliers works are being used otherwise than in accordance with the Regulations, he may serve notice on the consumer requiring him to take various steps to deal with the situation.\nThese regulations therefore envisage situations where a consumer may be in breach of a requirement of the Regulations and where that breach may give rise to a risk of danger to others.\nWhile some consumers of electricity will, of course, be large businesses, others will be individuals.\nIf the pursuers argument were correct, the Regulations would confer a right of action against them for any failure to comply with a requirement made under these provisions.\nAgain, it seems unlikely that Parliament intended the legislation to operate in that way and more likely that it intended any such failures to be dealt with in accordance with the specific mechanisms in the legislation.\nSecondly, the Dean referred to section 21(b) of the 1989 Act under which a supplier of electricity under section 16(1) of the Act may require any person who requires a supply of electricity to accept any terms restricting any liability of the supplier for economic loss resulting from negligence which it is reasonable in all the circumstances for that person to be required to accept.\nIf it really were the case that a supplier could be held liable in damages for a contravention of any regulations made under section 29, then the protection afforded by section 21(b) would be ineffective in the not uncommon situation where the suppliers negligence constituted a contravention of the regulations.\nLooked at as a whole, therefore, the scheme of the legislation, with its carefully worked out provisions for various forms of enforcement on behalf of the public, points against individuals having a private right of action for damages for contraventions of regulations made under it.\nThat argument is reinforced by the fact that it is difficult to identify any limited class of the public for whose protection the 1988 Regulations were enacted and on whom Parliament intended to confer a private right of action for breach of the provisions of the Regulations.\nIn A E Beckett & Sons (Lyndons) Ltd v Midland Electricity Plc 2000 WL 664506 Mr Simon QC thought that it was arguable that regulations introduced under the powers conferred by section 29(1)(c) were intended to protect a class comprising those affected by the risks of damage to property.\nThe Extra Division were much bolder: assuming that a class required to be identified, they considered that Parliament intended to confer rights upon all members of the public within the United Kingdom: 2010 SLT 252, para 46.\nIn so holding, the Division relied on a dictum of Atkin LJ in Phillips v Britannia Hygienic Laundry [1923] 2 KB 832, 841.\nBut, as Neuberger J, speaking for the Court of Appeal, recognised in Todd v Adams and Chope (The Margaretha Maria) [2002] 2 Lloyds LR 293, 298, para 20, that dictum is inconsistent with the approach which was authoritatively laid down by the House of Lords in X (Minors) v Bedfordshire County Council [1995] 2 AC 633 and three other cases.\nThe Division also referred to Roe v Sheffield City Council [2004] QB 653, 672 673.\nBut in that case Pill LJ did actually identify a limited class, albeit one as broad as road users.\nThe potentially far reaching effects of the Extra Divisions approach are well illustrated by the claim of the owners of the flats at number 27 for the costs of weatherproofing their gable wall.\nAfter all, their property suffered no damage in the explosion: their claim arose out of the effects of the demolition of the intervening property at number 25.\nOn one view, they can simply be regarded as members of the public who are averred to have suffered loss as a result of Scottish Powers breach of the 1988 Regulations.\nIt seems extremely unlikely, however, that Parliament would ever have intended persons in that position to have a right of action for damages for breach of the 1988 Regulations.\nThese are the kinds of considerations which have led the courts to hold that one of the necessary preconditions of the existence of a private law cause of action is that the statutory duty in question was imposed for the protection of a limited class of the public.\nAs support for their view that the Regulations gave rise to a private right of action, the Extra Division attached some weight to the fact that the aim of some of the 1988 Regulations is to reduce the risk of personal injury or damage to property: 2010 SLT 243, 252, para 47.\nEven if that is a consideration which can, in an appropriate case, point to an intention on the part of the legislator to create a private right of action, the mixed aims of the 1988 Regulations weaken any argument of that kind in respect of them.\nIn any event, the fact that legislation is designed to reduce the risk of personal injury or damage to property is by no means an infallible indication that Parliament intended to give individuals a private right of action for breach of its provisions.\nIt is simply one factor to be taken into account.\nSee, for example, Weir v East of Scotland Water Authority 2001 SLT 1205, 1210, para 10, where Lord McCluskey considered that, although the water authority was under a statutory duty to supply wholesome water, it was not a duty that was owed to a defined limited class of the public.\nThe duty was accordingly enforceable in various ways, but not by a private right of action.\nFor these reasons we are satisfied that contraventions of regulations 17, 24 and 25 of the 1988 Regulations do not give rise to a private right of action.\nThe appeal must accordingly be allowed, and the interlocutors of the Extra Division and the Lord Ordinary recalled.\nThe Court will sustain the first plea in law for the defenders in each of the actions to the extent of excluding article 6 of condescendence from probation.\nQuoad ultra the Court will allow the parties a proof before answer.\n","output":"At the heart of this appeal is whether a breach of certain provisions of the Electricity Supply Regulations 1988 can give rise to a private right of action.\nIn March 1998 Mr Brian Pritchers owned two buildings, at 23 and 25 Moss Street, Paisley.\nThe tenants of the ground floor shop at number 23 were Morrison Sports Ltd. On 6 March 1998 the building at number 23 was destroyed by fire.\nTwo other buildings were also damaged.\nInvestigations identified the seat of the fire as an electricity meter cupboard in number 23.\nThose affected by the fire, who are now the respondents, raised three separate actions for damages against Scottish Power UK plc.\nAll three actions are framed in the same way.\nThe respondents aver that it was the presence of a shim fitted by employees of Scottish Power that was the cause of the fire.\nScottish Power deny that the shim was fitted by their employees.\nOne of the bases on which the respondents seek to hold Scottish Power liable is that the fire was caused by Scottish Powers breach of their statutory duty under regulations 17, 24 and 25 relating to a suppliers works of the 1988 Regulations.\nThe 1988 Regulations were made by the Secretary of State by virtue of his powers under section 16 of the Energy Act 1983.\nPart I of the 1983 Act, including section 16, was repealed by the Electricity Act 1989, but the power to make regulations was maintained in section 29 of the new Act.\nScottish Power now accept that the 1988 Regulations have effect as if they were made under section 29 of the 1989 Act.\nThe difference between section 16 of the 1983 Act and section 29 of the 1989 Act and, hence, the point in dispute in the Court of Session lies in the concluding words of section 29(3).\nSection 29(3) of the 1989 Act, but not section 16(3) and (4) of the 1983 Act, provides that nothing in subsection (3) shall affect any liability of any such person to pay compensation in respect of any damage or injury which may have been caused by the contravention.\nThe Extra Division thought that, by enacting section 29(3), Parliament had indeed made specific provision for a private right of action for damages for loss caused by breaches of the regulations.\nThey therefore considered that in section 29(3) Parliament had introduced an important private right of action for damages by reservation.\nScottish Power appealed to the Supreme Court.\nThe Supreme Court unanimously allows the appeal.\nIt holds that contraventions of regulations 17, 24 and 25 of the 1988 Regulations do not give rise to a private right of action.\nThe judgment of the Court is delivered by Lord Rodger.\nThere is no basis whatever for thinking that the drafter of section 29(3) of the 1989 Act intended to introduce a civil right of action but somehow botched that comparatively straightforward task and came up with the words in the subsection which are so singularly ill suited to the supposed purpose.\nFar from itself providing that a person who contravenes a provision should be liable to pay compensation, the subsection merely confirms that the liability to the criminal penalty is not to affect any liability of the offender to pay compensation.\nBy any liability Parliament means the offenders liability, if any, to pay compensation, for which regulations made under section 29 may provide [paras 16 and 27].\nThe language used in the subsection reflects language used in earlier regulations.\nOn the other hand there is nothing to show why the tailpiece was omitted from section 16(4) of the 1983 Act [paras 18 22].\nThere are indications in the overall legislative scheme that a breach of the relevant provisions of the 1988 Regulations would not give rise to a private law statutory right of action.\nFirst, there are provisions in the 1989 Act and the 1988 Regulations that point strongly to the conclusion that the regulations are to be enforced by the Secretary of State and those appointed to act on his behalf, rather than by individuals raising private actions [paras 30 32].\nIn addition, there are provisions in the 1988 Regulations which envisage situations where a consumer may be in breach of a requirement of the 1988 Regulations and where that breach may give rise to a risk of danger to others.\nIf the respondents argument were correct, the 1988 Regulations would confer a right of action against individual consumers of electricity for any failure to comply with a requirement under these provisions.\nIt seems unlikely that Parliament intended the legislation to operate in that way [para 35].\nIf it really were the case that a supplier could be held liable in damages for a contravention of any regulations made under section 29 of the 1989 Act, then the protection afforded by section 21(b) of the Act (under which a supplier of electricity under section 16(1) of the Act may require any person who requires a supply of electricity to accept any terms restricting any liability of the supplier for economic loss resulting from negligence which it is reasonable in all the circumstances for that person to be required to accept) would be ineffective in the situation where the suppliers negligence constituted a contravention of the regulations [para 36].\nThat no private right of action is available is reinforced by the fact that it is difficult to identify any limited class of the public for whose protection the 1988 Regulations were enacted and on whom Parliament intended to confer a private right of action for breach of the provisions of the Regulations.\nOne of the necessary preconditions of the existence of a private law cause of action is that the statutory duty was imposed for the protection of a limited class of the public [paras 38 40].\n","id":47}
{"input":"The first and principal question before us is whether the parties right of prorogation, to opt in to the jurisdiction of an EU country which would not otherwise have jurisdiction to determine a childs future, contained in article 12 of Council Regulation (EC) No 2201\/2003 (Brussels II Revised), can apply to a child who is habitually resident outside the European Union.\nIf the answer to that question is yes, then the second question is whether that is what has happened in this case.\nThat depends both upon the interpretation of the criteria for opting in and upon an evaluation of what these parties did.\nThe first question is a good deal easier to answer than the second.\nThe facts\nThe child in question was born on 27 July 2000 and is now aged nine.\nHe was born in this country and is a British citizen.\nHis mother originates from India but has lived in this country for many years.\nHis father originates from Pakistan.\nBoth are British citizens.\nThey married in Pakistan on 28 October 1999 and later lived together in this country.\nThey separated in September 2002 and divorced in 2003.\nAs is common, no orders were made about the child in the course of the divorce proceedings.\nIn this case there were already care proceedings on foot about the child.\nHe was taken to hospital on 1 November 2001 and found to have several fractures to his arms.\nThe local authority began proceedings on 6 November 2001 and a split hearing was directed.\nAt the fact finding hearing in May 2002, District Judge Brasse found that the injuries were non accidental and that the father had caused them.\nHowever, at the welfare hearing in December 2002, he reviewed that finding in the light of the new evidence which had emerged during the welfare inquiries and decided that the mother had been responsible.\nAt the final hearing on 22 May 2003, he made an order that the child should live with his father and have supervised contact with his mother in accordance with an agreement made between the local authority and the mother.\nHe also made a supervision order for 12 months.\nThat concluded the care proceedings.\nIt is an automatic condition of all residence orders that the child is not to be taken out of the jurisdiction without either the written consent of every person who has parental responsibility for the child or the leave of the court: Children Act 1989, s 13(1).\nIn mid 2004 the father applied for leave to take the child to live in Pakistan with the fathers mother and sister.\nOn 16 September 2004, Hedley J granted that leave.\nAt the same time, the father (who was represented by counsel at the hearing) gave the conventional undertaking to return the child to this jurisdiction when ordered to do so by the court.\nThe order also provided for interim contact with the mother until the child left the jurisdiction.\nThe father took him to Pakistan on 22 December 2004 and he has lived there ever since.\nIt is common ground that, whatever the precise legal test to be applied, he is now habitually resident in Pakistan.\nHis father returned to this country some months later.\nHis mother has visited him in Pakistan and he has visited his parents here.\nThe relevant parts of the Brussels II Revised Regulation applied from 1 March 2005.\nOn 31 October 2007 the mother, acting in person, issued an application in the Principal Registry of the Family Division for a contact and prohibition order, seeking to enforce telephone contact and as much contact as possible and to stop the paternal grandparents encouraging the child to call them mum and dad.\nIt is common ground between the parties that this is when the relevant proceedings began for the purposes of the jurisdictional questions before us.\nAt the first directions hearing on 5 November 2007, both parties attended, acting in person, and the matter was adjourned to a conciliation hearing on 12 December 2007.\nAgain, both attended that hearing acting in person and an agreed order for contact was made.\nAmong other things, the father agreed to facilitate the child visiting the UK if possible on an annual basis during his school holidays and seeing his mother then.\nOn 15 April 2008, the mother issued a further application, seeking to enforce and vary the contact order so as to ensure that the child was in the UK to facilitate contact and a local authority assessment of the possibility of unsupervised contact.\nThe matter eventually came before Hedley J on 17 June 2008.\nThe parties were still acting in person.\nAt that stage it appeared uncontentious that the child should come back here in 2009, possibly for more than a visit; but the parties were hopelessly divided about 2008.\nHedley J remarked that it was unusual for the Court to be retaining jurisdiction as the child was living in Pakistan, but that the Court undoubtedly does have jurisdiction because both parties have not only submitted to the jurisdiction but have actually invoked it on a number of occasions (para 29).\nHe directed that CAFCASS appoint a guardian for the child.\nHe also ordered the father to bring the child into the jurisdiction in June and July 2009, the child to have reasonable contact with the mother, and the mother to be at liberty to visit the child in Pakistan.\nShe spent about three weeks there in the summer of 2008 and saw the child then but she has not seen him since.\nThe CAFCASS guardian reported in January 2009 that his provisional view was that the child should visit this country every other year and the mother visit Pakistan in the intervening years.\nThe matter came back before the High Court on 2 March 2009.\nBy this time both parties were legally represented.\nA position statement filed by counsel on the fathers behalf stated that The court has retained jurisdiction in this case and the father accepts the Courts jurisdiction and that The father accepts the court has retained jurisdiction to make orders directed towards himself in relation to contact.\nHe had, however, changed his mind about bringing the child to this country in 2009 and undertook to issue an application to set aside Hedley Js order that he should do so.\nThis he duly did on 4 March 2009.\nAt a directions hearing on 12 March 2009, Black J for the first time questioned whether the court did indeed have jurisdiction to make orders relating to the child.\nThat issue was tried before HHJ Barnett, sitting as a deputy High Court judge, on 5 and 6 May 2009.\nIt was then common ground between counsel that Brussels II Revised did not apply.\nOn 28 May 2009 HHJ Barnett held that the court did not have jurisdiction under the Family Law Act 1986.\nHowever he also held that if the court did have jurisdiction he would not have granted a stay on the ground of forum non conveniens.\nThe childs guardian considered that the English court was the most appropriate forum to decide the issues between the parents, both of whom were resident here.\nThe mother appealed and for the first time it was argued on her behalf that article 12 of Brussels II Revised applied.\nOne can only feel sympathy for the Court of Appeal, confronted as they were with a novel and at first blush surprising argument.\nThorpe LJ found it obvious that HHJ Barnett had reached the right result and would have been dismayed had it been necessary to set aside his very sensible conclusion: [2009] EWCA Civ 965, para 35.\nThe House of Lords gave permission to appeal to this Court over the long vacation.\nThe law\nAs amended following the implementation of Brussels II Revised, section 2 of the Family Law Act 1986 reads as follows: (1) A court in England and Wales shall not make a section 1(1)(a) order with respect to a child unless (a) it has jurisdiction under the Council Regulation, or (b) the Council Regulation does not apply but (i) the question of making the order arises in or in connection with matrimonial proceedings or civil partnership proceedings and the condition in section 2A is satisfied, or (ii) the condition in section 3 of this Act is satisfied.\nThe council regulation is Brussels II Revised.\nA section 1(1)(a) order includes a section 8 order made by a court in England and Wales under the Children Act 1989, other than an order varying or discharging such an order.\nSection 2A need not concern us as there are no continuing matrimonial proceedings between the parties, nor were any orders made in connection with them.\nSection 3 gives jurisdiction on the basis that the child is either habitually resident in England and Wales on the date of the application or (if there was no application) of the order, or was present here on that date and not habitually resident in another part of the United Kingdom.\nIt will be noted that, if Brussels II Revised applies, it governs the situation.\nIf some other EU country (excluding Denmark for this purpose) has jurisdiction under the Regulation, then this country does not.\nBut if Brussels II Revised applies and gives this country jurisdiction, it will give jurisdiction even though the residual jurisdictional rules contained in the 1986 Act would not.\nOnly if Brussels II Revised does not apply at all will the residual rules in the 1986 Act come into play.\nThe basic rule in Brussels II Revised governing jurisdiction in childrens cases is in article 8.1: The courts of a Member State shall have jurisdiction in matters of parental responsibility over a child who is habitually resident in that Member State at the time the court is seised.\nBut that is subject to articles 9, 10 and 12.\nWe are concerned with article 12, which deals with Prorogation of jurisdiction.\nIt is worth quoting article 12 in full, although articles 12.1 and 12.2 are not directly relevant in this case, because the answer to the first question must apply equally to the prorogation covered by article 12.1 as it does to the prorogation covered by article 12.3: at least one of the spouses has parental responsibility in the judgment allowing or refusing the application for divorce, 1.\nThe courts of a Member State exercising jurisdiction by virtue of Article 3 on an application for divorce, legal separation or marriage annulment shall have jurisdiction in any matter relating to parental responsibility connected with that application where: (a) relation to the child; and (b) the jurisdiction of the courts has been accepted expressly or otherwise in an unequivocal manner by the spouses and by the holders of parental responsibility, at the time the court is seised, and is in the superior interests of the child. 2.\nThe jurisdiction conferred in paragraph 1 shall cease as soon as: (a) legal separation or marriage annulment has become final; (b) in those cases where proceedings relating to parental responsibility are still pending on the date referred to in (a), a judgment in these proceedings has become final; (c) for another reason. 3.\nThe courts of a Member State shall also have jurisdiction in relation to parental responsibility in proceedings other than those referred to in paragraph 1 where: (a) the child has a substantial connection with that Member State, in particular by virtue of the fact that one of the holders of parental responsibility is habitually resident in that Member State or that the child is a national of that Member State; and (b) the jurisdiction of the courts has been accepted expressly or otherwise in an unequivocal manner by all the parties to the proceedings at the time the court is seised and is in the best interests of the child. 4.\nWhere the child has his or her habitual residence in the territory of a third State which is not a contracting party to the Hague the proceedings referred to in (a) and (b) have come to an end Convention of 19 October 1996 on jurisdiction, applicable law, recognition, enforcement and co operation in respect of parental responsibility and measures for the protection of children, jurisdiction under this Article shall be deemed to be in the childs interest, in particular if it is found impossible to hold proceedings in the third State in question.\nThe first question\nCan article 12 apply at all where the child is lawfully resident outside the European Union? In my view it clearly can.\nThere is nothing in either article 12.1 or article 12.3 to limit jurisdiction to children who are resident within the EU.\nJurisdiction in divorce, nullity and legal separation is governed by article 3 of the Regulation, which lists no less than seven different bases of jurisdiction.\nIt is easy to think of cases in which a court in the EU will have jurisdiction under article 3 but one of the spouses and their children will be resident outside the EU.\nA court in England and Wales would have jurisdiction if the petitioning mother were living with the children in the USA and the respondent father were living in this country.\nA court in England and Wales would have jurisdiction if the petitioning father had lived here for at least a year and the respondent mother were living with the children in the USA.\nA court in England and Wales would have jurisdiction if the spouses were living here but their children were living in the USA.\nIn some of these cases the spouses might well wish to accept the jurisdiction of the English court to decide matters relating to parental responsibility so that their childrens future could be decided in the same jurisdiction as their status, property and finances.\nProfessor Rauscher is quite clear that the new rule not only applies to children residing in a Member State which is not the forum State (as Article 3 Brussels II did) but also to children residing in Non Member States (T Rauscher, Parental Responsibility Cases under the new Council Regulation Brussels IIA, The European Legal Forum, 1 2005, 37 46 at p 40).\nThere is nothing to differentiate article 12.3 from article 12.1 in this respect.\nThis view of the matter is confirmed, if the third State which is referred to in article 12.4 means a non Member State.\nThe term third State occurs only twice in Brussels II Revised.\nArticle 61 provides that: As concerns the relation with the Hague Convention of 19 October 1996 on Jurisdiction, Applicable law, Recognition, Enforcement and Co operation in Respect of Parental Responsibility and Measures for the Protection of Children, this Regulation shall apply: (a) where the child concerned has his or her habitual residence on the territory of a Member State; (b) as concerns the recognition and enforcement of a judgment given in a court of a Member State on the territory of another Member State, even if the child concerned has his or her habitual residence on the territory of a third State which is a contracting Party to the Convention.\nIf third State in article 61 referred to some other Member State, there would be no need for paragraph (b) because paragraph (a) would cover all cases.\nBut in any event, both article 61 and article 12.4 are looking at the relationship between the Regulation and the 1996 Hague Convention. 16 countries have so far ratified that Convention, half within and half outside the EU (the UK has signed but not ratified; Pakistan has done neither).\nIf the child is habitually resident in a third State which is a party to the 1996 Convention, the Regulation applies to the recognition and enforcement in one Member State of a judgment given in another Member State.\nIf the child is habitually resident in a third State which is not a party to the Convention, article 12.4 lays down a presumption that it will be in the interests of the child for the EU State to assume jurisdiction if the parties have agreed to accept it.\nAll of this makes sense if the third State lies outside the EU but would add nothing if it lies within it.\nIndeed, why limit the presumption in article 12.4 to the rare case where there are three EU States involved but not apply it to the more common situation where there are two? Nor does the reference in article 12.4 to the impossibility of holding proceedings in the third State make much sense within the EU.\nProfessor Rauscher predicts that Most cases under Article 12(3) will probably feature strange situations of habitual residence particularly with children being nationals of a Member State but residing farther abroad in countries with unreliable judicial structures (loc cit, p 41).\nThere is no case law on the meaning of third State in Brussels II Revised.\nFor what it is worth, the Practice Guide to the Regulation states that the option of voluntarily accepting the jurisdiction of a Member State is not limited to situations where the child is habitually resident within the territory of a Member State (p 45).\nReunite have helpfully also drawn our attention to other sources emanating from the EU which define the term to mean a State outside the EU: see, for example, the Community Research and Development Information Service (CORDIS), which uses the term Third State to mean a state that is neither a Member State nor an Associated State.\nThis merely reinforces the conclusion arrived at on ordinary principles of construction that article 12 can apply to children who are habitually resident outside the EU.\nThe second question\nThe second question is whether the criteria in article 12.3 are made out.\nParagraph (a) of article 12.3 requires that the child have a substantial connection with the Member State in question, in particular by virtue of the fact that one of the holders of parental responsibility is habitually resident in that State or that the child is a national of that State.\nThis is clearly satisfied in this case.\nAt the time these proceedings began, both parents were habitually resident in the United Kingdom and the child was and is a British national.\nMore complicated questions arise under paragraph (b) of article 12.3.\nThis can be broken down into two components: first, that the jurisdiction of the courts has been accepted expressly or otherwise in an unequivocal manner by all the parties to the proceedings at the time the court is seised; and second, that the jurisdiction of the court is in the best interests of the child.\nEach of these raises interesting subsidiary questions.\nAt the time the court is seised\nThe most difficult questions are posed by the words at the time the court is seised.\nThe first is whether they refer to a moment in time or, as held by the Court of Appeal, to any time while the proceedings are continuing.\nAs a general proposition, it should be clear at any particular point during the proceedings, and preferably from the outset, whether or not the court has jurisdiction.\nCertainly a party who has once accepted jurisdiction should not be able to withdraw it at any time before the conclusion of the case.\nAcceptance of jurisdiction must include acceptance of the courts decision whatever it may be.\nOtherwise there would be no point in submitting to the courts jurisdiction.\nThis provides that: It is clear from article 16 that a court is seised at a particular moment in A court shall be deemed to be seised: (a) at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the applicant has not subsequently failed to take the steps he was required to take to have service effected on the respondent; or (b) if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the applicant has not subsequently failed to take the steps he was required to take to have the document lodged with the court.\nFrom this it is clear that the time of seisin is fixed when the document initiating the proceedings is lodged with the court or, if it has to be served before lodging, is received by the authority responsible for service, although in each case the court may not actually be seised if the applicant does not take the steps required to inform either the respondent or the court.\nThere has to be a fixed time of seisin for the purpose of the rule in article 19, that the court second seised of divorce, separation or nullity proceedings shall decline jurisdiction in favour of the court first seised.\nThere was some debate about what constituted the proceedings in this case.\nIn one sense, no order about the upbringing of a child is ever final.\nThe parties can always agree to make different arrangements or bring the matter back to court for the court to do so.\nBut the reality in this case was that there were care proceedings brought by the local authority in 2002 which were concluded by the residence, contact and supervision orders made in 2003.\nThere were then private law proceedings brought by the father to enable him to take the child abroad to live which were concluded by the orders made by Hedley J on 16 September 2004.\nThere were then new proceedings brought by the mother in 2007, the object of which was to make provision for her contact with the child which had not been done in the 2004 order.\nIt is common ground between the parties that these are the proceedings for this purpose and in my view that is correct.\nIt follows, therefore, that the court became seised of this matter on 31 October 2007.\nBut the next question is what do those words describe? Do they, as had been assumed by all before the hearing in this Court, describe the time at which the parties have accepted jurisdiction? Or do they, as proposed by Mr Setright QC on behalf of the interveners Reunite, describe the parties whose acceptance is required? In other words, does article 12.3(b) mean the jurisdiction of the courts was accepted when the proceedings began by all those who were then parties? Or does it mean the jurisdiction of the courts has been accepted at any time after the proceedings have begun by all those who were parties when they began?\nThere is much to be said for Mr Setrights interpretation, both linguistically and in practice.\nHe draws our attention to the German text of article 12.3(b), which begins alle Parteien des Verfahrens zum Zeitpunkt der Anrufung des Gerichts .\nHowever, given what to us is the reverse word order of most German sentences, it would be unwise to place too much reliance upon this.\nThe French, Italian and Spanish texts follow the same word order as the English and are therefore equally ambiguous.\nAnother linguistic clue could be the particular tense used in the English text.\nHas been accepted is more consistent with the possibility of later acceptance of jurisdiction.\nIf it had been intended to limit acceptance to the exact time of seisin, it would have been more natural to use the words was accepted.\nOnce again, however, it might be unwise to place too much reliance upon the precise tense chosen in the English text, given that other European languages do not have the same variety of ways of referring to something which has happened in the past.\nThe practical attraction of Mr Setrights argument is that this interpretation would enable the court considering whether there has been unequivocal acceptance of jurisdiction to take into account the parties conduct after as well as before the proceedings have begun.\nGiven that the court may be seised before the respondent knows anything about the proceedings (as may well have happened here), it should be possible for the respondent to accept jurisdiction expressly or in an unequivocal manner by the way in which he reacts to the proceedings when he learns about them.\nIf the respondent is indeed content to accept the jurisdiction of the court it should be possible for him to indicate that, either expressly or by his conduct, even though he had not addressed his mind to the matter before the court became seised.\nOtherwise the scope of both article 12.1 and article 12.3 would be limited (in the vast majority of cases) to cases where there was a written agreement in place when the proceedings were instituted.\nAdmittedly, this was said by the Court of Appeal in Bush v Bush [2008] EWCA Civ 865, [2008] 2 FLR 1437, at para 53, to be the paradigm case but there is no reason why it should be virtually the only case.\nProrogation of jurisdiction under article 17 of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 was limited to agreements in writing or in a form which accords with the practice of the international trade or commerce in question.\nProrogation under article 12 is not so limited.\nIt is clearly contemplated that conduct other than express agreement can constitute unequivocal acceptance of the jurisdiction.\nFurthermore, as Lord Collins demonstrates at paragraph 53, there is no reason in principle why there should not be acceptance of jurisdiction after the proceedings have began.\nProfessor Rauscher accepts that jurisdiction must be accepted at the time the court is seised but argues that too literal an interpretation would render article 12.1 almost useless.\nThe parties to a divorce proceeding wont even think about jurisdiction as to parental responsibility before the court is seised.\nTherefore a more liberal interpretation is advisable.\nThe wording should probably be understood in the sense of at the time the court has been seised, thereby excluding any binding prorogation before the case has been brought to court. (p 40) So now we have a suggestion that prior agreement is not the paradigm case and the parties conduct once the proceedings have begun is what matters.\nAfter all, the parallel with agreements under the Brussels Convention is not close in matrimonial and family cases, where it is less common (and in some cases not possible) to have a binding agreement between spouses or parents before proceedings have begun.\nThere is, however, another way of achieving much the same result.\nArticle 16 fixes which is first in time for priority purposes under article 19.\nBut it contains within itself the possibility that apparent seisin may not mature into actual seisin unless the applicant later effects service or lodges the document with the court.\nWhether this is regarded as a condition defeasant makes no difference: the result in the actual decision depends upon what happens later.\nIt might be possible to take a similar approach to prorogation, so that the apparent seisin when the application is lodged does not mature into actual seisin until the respondent is served and has an opportunity to indicate whether or not he accepts jurisdiction.\nThis too would be consistent with the English use of has been rather than was.\nAs will become apparent shortly, we do not need to resolve this question in this particular case, because we have unequivocal acceptance of the jurisdiction both before and after the proceedings were begun.\nMoreover, it may not matter much in practice.\nEven if the words at the time the court is seised qualify the parties acceptance, and refer only to the precise date when the proceedings are initiated rather than to once they have begun, the court is entitled to look at the parties conduct after the proceedings have begun in order to decide whether they had accepted jurisdiction at the time the proceedings did begin.\nThere is nothing unusual about this.\nCourts often take into account later behaviour as evidence of an earlier state of affairs.\nWhichever is the correct interpretation, the acceptance in question must be that of the parties to the proceedings at the time when the court is seised.\nLater parties cannot come along and upset the agreement which the original parties have made.\nIn this case, as it happens, the child was later made a party to the proceedings.\nBrussels II Revised rightly places great stress on the importance of the voice of the child in proceedings about his future: see paragraph 19 of the Preamble and article 11.2 dealing with the return of children under the Hague Convention on the Civil Aspects of International Child Abduction 1980.\nBut the way in which the child is heard will depend upon national procedures.\nAs was made plain by the House of Lords in In re D (A Child) (Abduction: Rights of Custody) [2006] UKHL 51, [2007] 1 AC 619, para 60, there are different ways of doing this, ranging from full scale legal representation of the child, through independent expert reporting, to a face to face interview with the judge.\nIt is not usually necessary for the child to become a full party to proceedings between his parents, although of course it can and should be done in an appropriate case.\nThe participation of the child is aimed at helping the court decide what outcome to the proceedings will be in the best interests of the child.\nIt is usually less relevant to questions of jurisdiction.\nAcceptance\nThe father expressly accepted the courts jurisdiction in the position statement put before the court by his counsel for the hearing on 2 March 2009.\nThis is scarcely surprising, as all his conduct up until that time had been consistent with this stance.\nHe appeared before the court in response to the mothers application.\nHe participated in a conciliation appointment on 12 December 2007 and consented to the order then made.\nHe participated in the hearing before Hedley J on 17 June 2008.\nAt that stage he was acting in person.\nBut the solicitors who had appeared for him in the care proceedings and their aftermath then came on the record for the purpose of his application to set aside Hedley Js order that he bring the child back into the jurisdiction in 2009.\nNo objection was then taken to the courts jurisdiction.\nFar from it.\nCounsel was instructed for the hearing before the Deputy High Court Judge on 2 March 2009 and expressly accepted jurisdiction on his behalf.\nAll of this conduct indicates his acceptance of jurisdiction both expressly and in an unequivocal manner from the outset of the proceedings.\nHe recanted only when the court itself indicated that there might not be any basis upon which there could be jurisdiction.\nBut there was also a binding prior acceptance.\nOn 16 September 2004, with the benefit of legal advice, he gave an undertaking to the court to return the child to this jurisdiction when called upon to do so.\nThe object of the proceedings was to enable him to take the child to live in Pakistan and thus lawfully to establish a habitual residence outside the jurisdiction.\nYet at the same time he was undertaking to bring the child back when required by the court to do so.\nThis inevitably involved accepting the courts jurisdiction to make an order in relation, not only to him, but to the child.\nIn my view, the jurisdiction of the English courts has been accepted by the father, both expressly and otherwise in an unequivocal manner.\nThis is so whatever interpretation is placed upon article 12.3, but the diversity of views expressed by this court indicates that the interpretation is not acte clair and may have to be the subject of a reference to the European Court of Justice in another case.\nBut I would favour an interpretation which catered both for a binding acceptance before the proceedings began and for an unequivocal acceptance once they had begun.\nIn the best interests of the child\nThe final requirement in article 12.3 is that the jurisdiction of the English courts should be in the best interests of the child.\nNothing turns, in my view, on the difference between the best interests of the child in article 12.3, the superior interests of the child in article 12.1 and the childs interest in article 12.4.\nThey must mean the same thing, which is that it is in the childs interests for the case to be determined in the courts of this country rather than elsewhere.\nThis question is quite different from the substantive question in the proceedings, which is what outcome to these proceedings will be in the best interests of the child? It will not depend upon a profound investigation of the childs situation and upbringing but upon the sort of considerations which come into play when deciding upon the most appropriate forum.\nThe fact that the parties have submitted to the jurisdiction and are both habitually resident within it is clearly relevant though by no means the only factor.\nIn this case there are two reasons to conclude that the exercise of jurisdiction in this country would be in the childs interests.\nThe first is the presumption in article 12.4.\nAlthough expressed as a deeming provision, no one suggests that this is irrebuttable.\nBut it makes sense.\nIf the child is habitually resident in a country outside the EU which, like Pakistan, is not a party to the 1996 Hague Convention on jurisdiction, applicable law, recognition, enforcement and co operation in respect of parental responsibility and measures for the protection of children, then even if the EU country in question is a party to that Convention, there would be no provision for recognition and enforcement of one anothers orders.\nIf, therefore, the parties have accepted the jurisdiction of an EU State, it makes sense for that State to determine the issue.\nThe difficulty or otherwise of holding the proceedings in the third State in question are obviously relevant.\nIt is not suggested that it would be impossible to hold these proceedings in Pakistan, but while neither party has had difficulty with the proceedings here, the mother would certainly face difficulties litigating in Pakistan.\nThe other factor in this case is the very proper stance taken by the childs guardian ad litem.\nWhen the issue of forum non conveniens was ventilated before HHJ Barnett in the High Court, the guardian took the view that on balance it would be better for the case to be heard here.\nThe nub of the issue is the contact which the child should have with his mother in this country.\nAny continuing risks associated with that contact will be better assessed here and any safeguards will need to be put in place here.\nInquiries in Pakistan can be made through international social services or other agencies.\nOf course, the difficulties of enforcement must also be taken into account.\nBut it must be borne in mind that contact orders have always been enforced in personam, against the person to whom they are addressed.\nUnlike residence orders, they are not enforced by the physical transport of the child from one place to another.\nThe court is bound to view with some scepticism the protestations of a father, who has the benefit of an order that the child is to live with him, that he will be unable in practice to secure the childs compliance with an order for contact with the mother.\nIt may be so but it is not very likely.\nBut this is to anticipate the outcome of the courts investigation into what will be in the best interests of this child as he grows up.\nIs he to make a clean break from the past and be cut off from his mother and his mothers family indefinitely? Or should he be enabled to have a relationship with both sides of his heritage and in due course to form his own opinions of his mother? If the latter, how practically can that be facilitated? All of that lies in the future.\nThere are many conclusions which the court hearing this case might reach.\nAmong them is an order that it would be better for the child to make no order at all: Children Act 1989, s 1(5).\nBut this is not a refusal of jurisdiction (cf Owusu v Jackson (Case C 281\/02) [2005] QB 801).\nIt is a positive conclusion, reached after the court has exercised its jurisdiction to hear and determine the case, that in all the circumstances it will be better for the child to make no further order about his future.\nIt is impossible at this stage to speculate upon how likely that will be.\nThe Pakistan Protocol\nThorpe LJ was understandably troubled about the implications for the Pakistan Protocol if the English courts were to accept jurisdiction in respect of a child who was habitually resident in Pakistan.\nWe have had the benefit of an intervention from Reunite, an organisation with great knowledge and experience in the field of international child abduction, and represented by lawyers who also have knowledge and experience of how these things work on the ground.\nThe UK Pakistan Judicial Protocol on Children Matters is not an international agreement between States.\nIt is an understanding first reached in January 2003 between the then President of the Family Division of the High Court in England and Wales and the then Chief Justice of the Supreme Court of Pakistan, supplemented in September 2003 by guidelines for judicial co operation to which Judges from the Court of Session in Scotland and the High Court in Northern Ireland were also party.\nIt was agreed that in normal circumstances the welfare of a child is best determined by the courts of the country of the childs habitual\/ordinary residence (para 1).\nHence, if a child is wrongfully removed from his country of ordinary residence, the courts of the country to which he is taken should not ordinarily exercise jurisdiction save for the purpose of sending the child back (para 2).\nThe same should apply if a child is brought from one country to the other for the purposes of contact, and is then wrongfully retained (para 3).\nThis very largely reflects the principal provisions of the Hague Convention on Child Abduction.\nNeither of the two substantive paragraphs is directly applicable to this case.\nThere has been no abduction or wrongful retention.\nWe are concerned only with a very limited exception, in far from normal circumstances, to the general statement in paragraph 1.\nThe two can, as Mr Setright pointed out, complement one another.\nThe courts in Pakistan might welcome the fact that the courts in England had investigated the situation here and put in place safeguards which would enable the child to visit his mother and other members of his family in this country in safety.\nThe Protocol would operate to secure his prompt return to Pakistan after any such visit.\nAlternatively, the court in this country might, after beginning its investigation, conclude that, had this been a case within the EU, it would have been appropriate to invoke the procedure in article 15 of Brussels II Revised, for requesting the courts of another Member State which is better placed to hear the case to assume jurisdiction.\nThe Protocol, with the associated Guidelines for judicial co operation, provides the ideal vehicle for achieving this outside the EU.\nIn the view of Reunite, therefore, far from undermining the Protocol, article 12 can work harmoniously with it.\nIn any event, it has to be acknowledged that the proper interpretation of the Brussels II Revised Regulation cannot be affected by the terms of a private agreement between the judiciaries of one Member State and a non Member State.\nConclusion\nFor these reasons, therefore, I would allow this appeal and declare that the courts of England and Wales have jurisdiction in this case.\nI agree with Lady Hale that the appeal should be allowed and that the I agree with Lady Hale that the appeal should be allowed, for the reasons\nLORD HOPE\ngiven by her and by Lord Collins.\nLORD COLLINS\ndeclaration proposed by her should be made.\nThere is something to be said for the view that the proceedings began with the fathers application in mid 2004 for leave to take the child to live in Pakistan.\nIf that view were right, then the proceedings would have commenced before the Brussels II Revised Regulation (Council Regulation (EC) 2201\/2203) became applicable in March 2005.\nThe then existing Brussels II Regulation (Council Regulation (EC) 1347\/2000) did not deal with matters of parental responsibility outside the context of matrimonial proceedings, and the court would have had jurisdiction on the basis of the then habitual residence or presence of the child in England: Family Law Act 1986, sections 2 and 3.\nBut as a matter of English law, the mothers application in 2007, was treated, and is to be treated, as a new proceeding.\nSince it was issued after the Brussels II Revised Regulation became applicable, there must be a basis of jurisdiction in that Regulation.\nThe general rule under the Brussels II Revised Regulation is that the Member State in which the child has his or her habitual residence has jurisdiction in matters of parental responsibility: Article 8(1).\nIn the present case it is common ground that the child is habitually resident in Pakistan, where his residence reflects integration in a social and family environment: In re A (Case C 523\/07) [2009] 2 FLR 1, at para 38.\nConsequently, the English court will have jurisdiction only if one of the exceptions to the general rule applies.\nThe only potentially relevant exception is in Article 12 (which is set out in full by Lady Hale at para 16).\nArticle 12 deals with prorogation of jurisdiction in matters of parental responsibility both in matrimonial proceedings and in separate proceedings.\nThese are not matrimonial proceedings, and the only available basis of jurisdiction, if any, is in Article 12(3).\nWhere there has been a submission to the jurisdiction within the terms of Article 12(3), the court will have jurisdiction if it is in the best interests of the child.\nWhere the child has his or her habitual residence in the territory of a third State which is not a party to the Hague Convention of 1996, jurisdiction under Article 12 shall be deemed to be in the childs interest, in particular if it is impossible to hold proceedings in the third State in question: Article 12(4).\nThere is no significance in the difference between best interests in Article 12(3) and superior interests in Article 12(1).\nOther language versions use the identical term for both: suprieur in French, superiore in Italian, and superior in Spanish.\nIt is also plain from the context and from other language versions that shall be deemed means no more than shall be presumed and that the presumption is rebuttable: est prsume\/si presume\/se presumir.\nLady Hale has shown that third State means a State which is not a Member State for the purposes of the Brussels II Revised Regulation.\nOn Article 12(4) see Professor Alegria Borrs, in Brussels II bis: its Impact and Application in the Member States (ed.\nBoele Woelki and Gonzales Beilfuss, 2007), 3 at 14 15.\nThe question is whether the jurisdiction of the [English court] has been accepted expressly or otherwise in an unequivocal manner by all the parties to the proceedings at the time the court is seised.\nThe difficulty arises from the use of the words at the time the court is seised.\nDoes the use of those words in the place in which they occur mean that it is necessary that the acceptance of jurisdiction by all parties must take place, or must have taken place, at the time the court is seised, which by Article 16 is, in a case of this kind, the time when the document instituting the proceedings is lodged with the court . ? Or are those words intended simply to identify the parties at the time the court is seised whose acceptance of jurisdiction is required, as the German version of the Regulation (but not the English, French, Italian, or Spanish versions) suggests?\nThe answer to this question must be found in the light of Article 12 as a whole in the context of the Regulation as a whole, and in the light of the instruments which preceded it.\nThe Brussels Convention and the Brussels I Regulation (Council Regulation (EC) 44\/2001) each contain sections on prorogation of jurisdiction by prior agreement (Article 17 and 23 respectively) and by appearance after the proceedings have commenced (Articles 18 and 24).\nThey both show that, as is obvious, there is no reason in principle why there should not be acceptance of jurisdiction after the commencement, or service, of proceedings.\nThe basic rule of jurisdiction in the 1996 Hague Convention is the habitual residence of the child; but where the courts of a Contracting State are exercising jurisdiction in matrimonial proceedings, they may take measures directed to the protection of a child habitually resident in another Contracting State if at the a time of commencement of the proceedings, one of his or her parents habitually resides in that State and one of them has parental responsibility in relation to the child, and b the jurisdiction of these authorities to take such measures has been accepted by the parents, as well as by any other person who has parental responsibility in relation to the child, and is in the best interests of the child. (Article 10)\nA draft Convention on jurisdiction and the recognition and enforcement of judgments in matrimonial matters was approved by the EU Council on 28 May 1998 ([1998] OJ C221), but was superseded by the Brussels II Regulation in 2000.\nNeither the draft Convention nor the Brussels II Regulation contained provision for matters of parental responsibility outside the context of matrimonial proceedings.\nArticle 3(2) of the draft Convention (in the same terms as what became Article 3 of the Brussels II Regulation) provides that the courts of a Member State have jurisdiction in relation to matters of parental responsibility where the child is habitually resident in another Member State and (a) at least one of the spouses has parental responsibility in relation to the child and, (b) the jurisdiction of the courts has been accepted by the spouses and is in the best interests of the child.\nThis provision was modelled on Article 10(1) of the Hague Convention: see the Report by Professor Alegria Borrs on the draft Convention, para 38.\nIt is therefore apparent that there was no suggestion that the acceptance of jurisdiction under Article 3 of the draft Convention or of the Brussels II Regulation had to be prior to, or at the time of, commencement of the proceedings.\nThe Commission proposal for what became the Brussels II Revised Regulation was presented on 17 May 2002: COM(2002) 222 final\/2.\nThe proposal in relation to what became Article 12(1) in the Regulation provided for jurisdiction in matters of parental responsibility where the child was habitually resident in one of the Member States, at least one of the spouses had parental responsibility in relation to the child and if the jurisdiction of the courts has been accepted by the spouses and is in the best interests of the child (Article 12(1)(c)).\nThe proposal in relation to what became Article 12(3) provided that the courts of a Member State would have jurisdiction where all holders of parental responsibility have accepted jurisdiction at the time the court is seised (Article 12(2)(a)), where the child had a substantial connection with that State (in particular where one of the holders of parental responsibility was habitually resident there, or the child was a national) and jurisdiction was in the best interests of the child.\nArticle 12(4) of the draft provided: For the purposes of this Article the appearance of a holder of parental responsibility before a court shall not be deemed in itself to constitute acceptance of the courts jurisdiction.\nThe draft contained in Article 16 the same provision as to date of seisin as the Regulation.\nThis suggests that the Commissions intention was to require acceptance of jurisdiction at or before the date of seisin, and the Commissions Practice Guide on the Brussels II Revised Regulation (pp 16 17), which is of course not authoritative, expresses the view (in relation to both Article 12(1) and Article 12(3)) that it is at the time the court is seised when the judge has to determine whether the relevant parties have accepted the jurisdiction either explicitly or otherwise unequivocally.\nIf this is the correct interpretation of Article 12(1) and Article 12(3) it leads to a result which does not commend itself to common sense.\nThere is no reason in principle why there should not be provision for acceptance of jurisdiction after the commencement of proceedings, as Article 18 of the Brussels Convention and Article 24 of the Brussels I Regulation show.\nIn Bush v Bush [2008] EWCA Civ 865, [2008] 2 FLR 1437, para 53 I expressed the view that the paradigm case for acceptance of jurisdiction would be actual agreement by the parents at the time the matrimonial proceedings were instituted.\nThe question in that case was not the time when acceptance of jurisdiction was to be tested but whether the steps taken by the father amounted to an acceptance of the jurisdiction of the English court.\nLady Hale has referred (at 29) to Rauscher, Parental Responsibility Cases under the new Council Regulation Brussels IIA, in European Legal Forum (E) I 2005, 35 at 40.\nHe points out, in relation to Article 12(1) that if at the time the court is seised is to be understood literally, only an acceptance before the relevant steps under Article 16 are taken would be sufficient.\nIn practice such an interpretation would render Article 12(1) almost useless.\nThe parties to a divorce proceeding will not think about jurisdiction as regards parental responsibility before the court is seised.\nHe suggests a more liberal interpretation, so that it would be understood in the sense of at the time the court has been seised, thereby not requiring prorogation before the case has been brought to court.\nAs soon as the case is pending, consensus can be achieved (and other holders of parental responsibility must also agree).\nHe suggests the same solution for Article 12(3).\nAnother way of approaching Article 12 is to treat the words at the time the court is seised as qualifying the words by the holders of parental responsibility in Article 12(1) and the words all the parties to the proceedings in Article 12(3).\nIn each case this would be a sensible construction, and would be consistent with the approach in the Brussels Convention, the Brussels I Regulation, the Hague Convention, and the Brussels II Regulation.\nIt would also be consistent with the German version of the Brussels II Revised Regulation.\nIt is well established that provisions of EU law must be interpreted and applied uniformly in the light of the versions in all the official languages: see, among many others, Dirk Endendijk (Case C 187\/07) [2008] ECR I 2115, at paras 22 24.\nIn the context of Article 18 of the Brussels Convention the European Court adopted the French version as being more in keeping with the objectives and spirit of the Convention: Elefanten Schuh GmbH v Jacqmain (Case 150\/80) [1981] ECR 1671, at para 14.\nThis solution is an attractive one, but it is by no means an inevitable or a clear one, and, if the appeal depended on whether it was right, it would be necessary to make a reference to the European Court under Articles 68 and 234 of the EC Treaty.\nBut it is not necessary for this important question to be decided because on the facts it is clear that as at the date the court was seised with the mothers proceedings in 2007, the father had unequivocally accepted the courts jurisdiction in his own prior application and that everything he did after the mothers application confirmed his acceptance of the jurisdiction.\nThe mother has plainly accepted the jurisdiction of the court by making her application in October 2007.\nNor can there be any doubt that the father has in an unequivocal manner accepted the jurisdiction of the English court to deal with matters of parental responsibility.\nOn his own application in 2004 he gave an undertaking to the court to return the child from Pakistan to England if ordered by the court so to do.\nWhen the mother issued her own application in 2007, the father attended a hearing when an agreed order for contact was made.\nHe appeared at a hearing in 2008 before Hedley J when it was ordered that the mother could visit the child in Pakistan, and that he should bring the child to England in June\/July 2009.\nFinally, counsel stated in March 2009 on the fathers behalf that he accepted the courts jurisdiction, and that the court retained jurisdiction to make contact orders directed to him.\nAll of those steps confirmed what was apparent and inevitable when the mother issued her application, namely that the father was already subject to the jurisdiction of the court and had accepted it in relation to matter of parental responsibility.\nThere was, therefore, in the circumstances of the case an unequivocal acceptance of the courts jurisdiction at the date of seisin.\nI also agree with Lady Hale that the appeal should be allowed and that the\nLORD KERR\ndeclaration proposed by her should be made.\nI wish to say but a few words on the approach to the interpretation of article 12.1 and 12.3 of Council Regulation (EC) No 2201\/2003.\nI consider that the interpretation discussed by Lord Collins in paragraph 62 of his judgment (which was that advanced by Mr Setright QC on behalf of the intervener) is the correct one.\nThe structure of both article 12.1 and article 12.3, if closely examined, support that conclusion, in my opinion.\nArticle 12.1 (b) provides that the courts of a Member State exercising jurisdiction by virtue of article 3 on an application for divorce etc shall have jurisdiction in relation to any matter relating to parental responsibility connected with the application where at least one of the spouses has parental responsibility in relation to the child and: the jurisdiction of the courts has been accepted expressly or otherwise in an unequivocal manner by the spouses and by the holders of parental responsibility, at the time the court is seised, and is in the best interests of the child.\nIf it had been intended that the words, at the time the court is seised should qualify the words, accepted expressly or otherwise in an unequivocal manner, the composition of the sentence would surely have been different.\nTo achieve that result the provision should have read thus: the jurisdiction of the courts has been accepted expressly or otherwise in an unequivocal manner at the time that the court is seised by the spouses and by the holders of parental responsibility and is in the best interests of the child.\nThe juxtaposition of the phrase, at the time the court is seised with the preceding, the holders of parental responsibility and the enclosing of the phrase referring to the timing by commas indicate that the time that the court is seised was intended to refer to the holders of parental responsibility, in my opinion.\nThat this should be so is entirely to be expected.\nThe holders of parental responsibility may change from time to time.\nIt is important that those who purport to consent to the jurisdiction of the court should be those who hold that responsibility at a time when the court is seised of the proceedings.\nSelf evidently, spouses do not need to be identified in any temporal dimension and the words, at the time the court is seised have no reference to them.\nThe position is at least equally clear in relation to article 12.3 (b).\nUnder this provision the courts of a Member State shall have jurisdiction in relation to parental responsibility where the child has a substantial connection with that Member State and: the jurisdiction of the courts has been accepted expressly or otherwise in an unequivocal manner by all the parties to the proceedings at the time the court is seised and is in the best interests of the child.\nIf it had been intended that the words, at the time the court is seised should refer to the timing of the acceptance of jurisdiction, it appears to me that the structure of the sentence best suited to achieve that result would be as follows: the jurisdiction of the courts has been accepted expressly or otherwise in an unequivocal manner at the time the court is seised by all the parties to the proceedings and is in the best interests of the child.\nThis interpretation would be, as Lord Collins suggests, sensible and would accord with the spirit of the Brussels Convention, the Brussels I Regulation, the Hague Convention, and the Brussels II Regulation.\nIt also avoids the spectre, identified by Professor Rauscher, of rendering article 12. 1 virtually ineffectual.\nI am afraid that I could not be sanguine about the workability of article 12.1 or 12.3 if the interpretation advanced by the respondent is accepted.\nAlthough I am reasonably firm in my opinion that the proper construction of these provisions is as Mr Setright submitted it should be, I agree with Lady Hale and Lord Collins that it is not necessary for a final view on the question to be reached in the present case.\nThis is so because it is clear that the father had unequivocally accepted the jurisdiction of the court when, in 2007, it was indisputably seised of the proceedings.\nAs has been pointed out, moreover, his subsequent attitude to the proceedings evinced unambiguous acceptance of the courts jurisdiction.\nLORD CLARKE\nI agree with Lady Hale that this appeal should be allowed and that we should\nmake a declaration that the courts of England and Wales have jurisdiction in this case.\nI entirely agree with the reasoning and conclusions of Lady Hale and Lord Collins as to the meaning of third State, as to the use that can properly be made of post seisin evidence to demonstrate unequivocal acceptance at the time of seisin, as to the fathers unequivocal acceptance at that time on the facts and as to the best interests of the child.\nThose conclusions are sufficient for this appeal to be decided by declaring that the English court has jurisdiction.\nThe only point which has caused me some concern, and which I wish briefly to address in this judgment, is the true construction of article 12.3(b) of the Brussels II Revised Regulation.\nLord Collins has considered article 12.3(b) in some detail.\nI entirely agree with paragraphs 47 to 58 of his analysis.\nI also agree with him that the questions whether the relevant acceptance of jurisdiction must be before the court is seised or whether it can be later and, if so when, are important questions and, if the appeal depended upon the answers, (subject to what I say below) may have to be referred to the European Court of Justice.\nIt is perhaps for this reason that Lord Collins does not express a concluded view on the point.\nAs stated above, I agree with him and Lady Hale that the outcome of the appeal does not depend upon the answers to these questions.\nI add a few words of my own because I am less concerned than Lady Hale and\nLord Collins about what I regard as the natural construction of article 12.3(b).\nIndeed it seems to me that there is much to be said for the conclusion that that construction is acte clair.\nAs I see it, the natural construction of article 12.3(b) construed in its context and having regard to its provenance as set out by Lord Collins at paragraphs 57 and 58 is that the relevant acceptance of jurisdiction must be before the court is seised.\nThe question is what is meant by the expression at the time the court is seised in articles 12.1 and 12.3 of Brussels II Revised.\nFor present purposes the relevant provision is article 12.3, which provides: 3.\nThe courts of a Member State shall also have jurisdiction in relation to parental responsibility in proceedings other than those referred to in paragraph 1 where: (a) the child has a substantial connection with that member State, in particular by virtue of the fact that one of the holders of parental responsibility is habitually resident in that Member State or that the child is a national of that Member State and (b) the jurisdiction of the courts has been accepted expressly or otherwise in an unequivocal manner by all the parties to the proceedings at the time the court is seised and is in the best interests of the child.\nArticle 12.1(b) is in very similar terms.\nUntil after Mr Setright QC had made his submissions, it had been contended by Mr Baker QC on behalf of the mother that the expression the time the court is seised in both article 12.1 and article 12.3 meant the specific point when the court is seised as defined by article 16 of the Regulation.\nMr Baker submitted that that construction was to be preferred to that of the Court of Appeal, which held, as Thorpe LJ put it at para 28, that the court was seised throughout the continuance of the proceedings.\nArticle 16 has been set out by Lady Hale.\nIt identifies the time when a court shall be deemed to be seised.\nIt is plain that it is describing a particular moment and not a period of time.\nThus in both (a) and (b) it provides for a particular moment when the court is seised, namely either when the document instituting the proceedings is lodged with the court or, if the document has to be served before being lodged with the court, when it is received by the authority responsible for service.\nIn each case there is a proviso (or condition defeasant), namely that the applicant has not subsequently failed to take steps he was required to take, in the first case to have service effected on the respondent and in the second case to have the document lodged with the court.\nAs Lady Hale says, the importance of having a fixed time when the court is seised is explained by article 19 because, if the court first seised has jurisdiction, the court second seised must decline jurisdiction.\nIt is thus important to know in each case when the court is seised and which is the court first seised.\nMr Bakers submission was based on the natural construction of the article construed in its context, which includes articles 16 and 19.\nWhile I entirely agree with Lady Hale that evidence of subsequent events may (and often will) assist the court to decide what the position was at the moment identified as the time the court is deemed to be seised under article 16, I see nothing in the language of article 12.3 (or the equivalent language of article 12.1) to suggest that, if the court was not seised in accordance with article 16 at the time the document instituting the proceedings is lodged, it can somehow become seised at a later date.\nThe only provision affecting the position as at the date of seisin is the proviso in article 16, which might defeat the seisin.\nHowever, subject to that, as I see it, there is no scope for later seisin.\nOnce jurisdiction is acquired, the court has jurisdiction throughout the proceedings.\nIt appears to me that in principle no one should commence proceedings of any kind unless the court has jurisdiction or will have it at the moment it is seised of the proceedings.\nOtherwise the court is being asked to exercise jurisdiction which it does not have.\nThis is of particular importance in this context because, where the court first seised has jurisdiction, under article 19 a court second seised must decline jurisdiction, once it is established that the court first seised has jurisdiction.\nArticle 16 makes it clear that whether it has jurisdiction is to be tested as at the time of seisin as defined by article 16.\nAny other conclusion seems to me to be likely to lead to confusion.\nAlthough Mr Setright submitted that in both article 12.1(b) and article 12.3(b) the words at the time the court is seised identify the parties, I do not think that that is a convincing reading of the language.\nIt is much more natural to read the expression as requiring the acceptance of jurisdiction at the time the court is seised.\nAll the articles of the Regulation relate to the moment of seisin.\nThis seems to me to be implicit in articles 3, 6 and 7 and explicit in articles 8, 12, 13 and 14.\nMoreover, as Lord Collins demonstrates at paragraphs 57 and 58, the provenance of article 12 strongly supports this approach.\nThus the Commission proposal in relation to what became article 12(3) provided that the courts of a Member State would have jurisdiction where all holders of parental responsibility have accepted jurisdiction at the time the court is seised.\nThe Commissions Practice Guide is to the same effect.\nAlthough I quite understand that the point was not argued, it is I think of some note that this conclusion is consistent with a dictum of Lawrence Collins LJ in Bush v Bush [2008] EWCA Civ 865, [2008] 2 FLR 1437 at para 53.\nAs he puts it paragraph 60 above, the paradigm case for acceptance of jurisdiction would be actual agreement by the parents at the time proceedings were instituted.\nIn addition it seems to me that the words has been accepted support the same approach.\nThus, as I read them, both article 12.1(b) and 12.3(b) require that the jurisdiction of the courts has been accepted at the time the court is seised as defined in article 16.\nI respectfully disagree with Lady Hale at paragraph 27 that the expression has been accepted is more consistent with the possibility of later acceptance of jurisdiction.\nOn the contrary, it seems to me to support the proposition that the acceptance must be before the seisin.\nVarious other solutions have been suggested.\nThe Court of Appeal suggested that the parties can reach agreement at any time after seisin.\nThis might be months or years after the moment identified in article 16.\nI do not see how such an approach fits with articles 16 and 19.\nMr Setrights construction does not seem to me to be a convincing reading of the language.\nNor to my mind is that of Professor Rauscher quoted by Lady Hale at paragraph 29.\nThe expression at the time the court is seised appears not only in article 12 but also in article 8, where it surely relates to the time the court is seised as defined in article 16, and does not mean has been seised.\nFurther, if is seised means has been seised, it is not easy to see why the Court of Appeals approach, namely that it means during the whole period of seisin, is wrong.\nThe problem with it is that stated above, namely that it does not readily fit in with the approach of the Regulation to the court first seised.\nLady Hale suggests at paragraph 30 that article 16 fixes which proceedings are first in time for priority purposes but contains the possibility that apparent seisin may not mature into actual seisin unless the applicant effects service or lodges with the court.\nThe suggestion is that a similar approach might be taken to prorogation so that the apparent seisin when the application is lodged does not mature into actual seisin until the respondent is served and has an opportunity to indicate whether or not he accepts jurisdiction.\nIt is also suggested that that would be consistent with the English use of has been rather than was.\nFor my part, I find those suggestions difficult to accept.\nThe Regulation could no doubt have so provided but it did not.\nAs I see it, as stated above, the way article 16 works is that there is seisin on the date identified subject to a condition defeasant.\nThat is not a case of apparent seisin maturing into actual seisin but there being actual seisin, which would take priority over any subsequent seisin, unless there was no service or lodgement.\nThis would be known to the respondent immediately and the position would thus be clear immediately and, absent a failure of the kind expressly specified in article 16, the seisin would have priority over seisin in another jurisdiction before service or lodgement.\nI do not see how this can readily be applied to article 12.1(b) or article 12.3(b).\nOn the face of it the court would have no jurisdiction at the moment of seisin; yet the suggestion must I think involve the proposition that the court would have jurisdiction retrospectively if at some future moment the jurisdiction was unequivocally accepted.\nBy then another court might be seised and have jurisdiction as the court first seised.\nIs it really to be supposed that that other court would be required to decline jurisdiction under article 19 even though at the time it was seised no other court was seised? My answer to that question would be no.\nI appreciate that it is contemplated that the respondent would take a stance immediately and that the position would be much as occurs (or occurred) under, for example, article 23 of the Brussels Convention and article 24 of the Brussels I Regulation which are referred to by Lord Collins at paragraph 53.\nI also appreciate the force of the point that it is very odd for an unconditional appearance, which of course takes place after seisin, to be a ground of jurisdiction in, say, the Brussels I Regulation and not in the Brussels II Revised Regulation.\nHowever, in article 24 of Brussels I appearance is a free standing ground of jurisdiction, whereas there is no equivalent provision in the Brussels II Revised Regulation.\nI fully understand the concerns expressed by Lady Hale and Lord Collins (and indeed Professor Rauscher) that article 12 will or may be of limited value if it does not extend to post seisin acceptance or agreement.\nHowever, it seems to me that the concerns are somewhat overstated.\nAs I see it, the time for parties to decide in what jurisdiction to proceed in matters relating to parental responsibility is before issuing the relevant proceedings.\nIt is at that time that questions of jurisdiction should surely be considered, if only in order to decide where to issue the relevant process.\nIt seems to me to be desirable that parents considering proceedings should be advised that that is the time to make an appropriate agreement.\nI agree with Lord Collins that that is the paradigm case and it seems to me that the problem should be tackled at the outset rather than that proceedings should be started without jurisdiction in the hope that the other party (or parties) will agree later or do something which could be construed as unequivocal acceptance of jurisdiction.\nThe concerns expressed can I think be resolved in this way.\nIf an express agreement to jurisdiction is made or there is an unequivocal acceptance of jurisdiction after the court is seised and, by that time, proceedings have been commenced in a court in another Member State and that court has become seised, article 19 will operate to give exclusive jurisdiction to that second court.\nThis is on the basis that at the time the first court was seised it did not have jurisdiction and there is nothing in the Regulation to provide for retrospective seisin; so that for the purposes of the Regulation the court first seised is the second court.\nThe parties legitimate interests are however protected by article 15, which gives the court having jurisdiction as to the substance of the matter a power to transfer all or part of the case to a court of another Member State if it concludes that such a court is in a Member State with which the child has a particular connection and that it would be better placed to hear the case or part of it.\nIf, on the other hand, there is no court of another Member State that has jurisdiction under the Regulation, I can at present see no reason why the applicant should not issue fresh proceedings and rely upon the agreement or unequivocal acceptance in those proceedings to satisfy article 12.3(b).\nIn this way the court will have jurisdiction at the time of seisin, which to my mind is what the Regulation intended.\nAs I see it, in this way the concerns expressed by the Court of Appeal, Lady Hale, Lord Collins and others can be allayed.\nIn particular in a case of this kind, where there is no other Member State which could have jurisdiction, the court in which the respondent has unequivocally accepted jurisdiction will have jurisdiction, albeit in proceedings commenced thereafter.\nI appreciate that these are all questions for decision in another case.\nI express provisional views upon them in the hope that they may help to resolve potential issues in the future without the delay inevitably involved in a reference to the European Court of Justice.\nIn the meantime, I agree that the appeal in this case should be allowed.\n","output":"This appeal concerns whether an English court has jurisdiction to determine the future level of contact between a child and his mother where the child does not habitually reside in an EU Member State.\nUnder article 12.3 of Council Regulation (EC) No 2201\/2003 (Brussels II Revised) parties are able to opt in to the jurisdiction of an EU court which would not otherwise have jurisdiction to determine a childs future.\nThis applies where: (a) the child has a substantial connection with that Member State; and (b) the jurisdiction of the courts has been expressly accepted or otherwise in an unequivocal manner by all the parties to the proceedings at the time the court is seised, and the exercise of jurisdiction is in the best interests of the child.\nIn this case the child had been resident in Pakistan since 2004, although both he and his divorced parents are British citizens and his parents live here.\nBoth the High Court and the Court of Appeal held that an English court had no jurisdiction.\nThe mother appealed.\nThe Supreme Court had two issues to decide: firstly, whether article 12 extended to cases where a child lived in a non EU member state; and secondly, if it did, whether the parties in this case had accepted jurisdiction in accordance with the criteria set out in article 12.3(b).\nThe Supreme Court unanimously allows the appeal and declares that the courts of England and Wales have jurisdiction in this case.\nThe Supreme Court holds that article 12 of Brussels II Revised applies to a child who is lawfully resident outside the European Union.\nIn this case it was clear that the criteria of article 12.3 were satisfied and therefore that the parties had opted in to this jurisdiction.\nLady Hale gave the leading judgment.\nThere was a difference of opinion between the Justices on the precise meaning of article 12.3(b) but it was not necessary to decide this issue in order to decide the case.(Paragraphs [17], [35], [45])\nOn the first issue, if parents opt in to the jurisdiction of an EU court under article 12.3, that court can exercise jurisdiction even if the child does not lawfully reside within the territory of a an EU Member State.\nLady Hale reached this conclusion using ordinary principles of construction, concluding that nothing in article 12 limits jurisdiction to children who reside in an EU Member State.\nThis was confirmed by the conclusion that the term third State in other parts of the Regulation (notably articles 12.4 and 61) means a state outside the EU.\nThis is supported by the Practice Guide to the Regulation, as well as other sources emanating from the EU. [17] [20] The Pakistan Protocol (referred to by the Court of Appeal), in which the judiciaries of Pakistan and\nEngland agreed it will generally be best for jurisdiction to be exercised in the country of the childs habitual residence, was not directly applicable.\nIn any event such an agreement between judges could not affect the proper interpretation of Brussels II Revised. [41] [44] On the second issue, the criteria under article 12.3 were clearly satisfied in this case.\nFirstly, under 12.3(a), the substantial connection was satisfied by the fact the childs parents are habitually resident in the UK and they and the child are British citizens. [21] Secondly, jurisdiction had been expressly and unequivocally accepted by the parties under 12.3(b), both before and after proceedings commenced.\nIn particular, the father had accepted jurisdiction by undertaking to bring the child back here if required to do so by the Court. [33] [34] Finally, the exercise of jurisdiction was in the best interests of the child given the presumption in article 12.4 that where a child is resident in certain non EU States it will be in his best interests for jurisdiction to be exercised under this article.\nIt was also relevant that the childs guardian in the High Court considered that the childs future was best decided in this country. [37] [38] The Justices expressed different views on the meaning of the words in article 12.3(b) requiring express or unequivocal acceptance by all of the parties to the proceedings at the time the court is seised.\nDid this mean before, when or after the relevant proceedings were begun? It was also unclear whether these words describe the time at which parties have accepted jurisdiction or, as argued on behalf of the interveners Reunite, describe the parties whose acceptance is required.\nThe Justices do not express a concluded view as it was not necessary to do so in order to decide this appeal.\nIn this case all the parties had given unequivocal acceptance both before and after the proceedings had begun.\nThe diversity of views indicates that the interpretation is not acte clair and if a case arises where the issue has to be decided it may have to be the subject of a reference to the European Court of Justice under articles 68 and 234 of the EC Treaty. (Lady Hale at paragraphs [23] [32]; Lord Collins at [51] [64]; Lord Kerr at [66] [74]; Lord Clarke at [75] [92])\n","id":48}
{"input":"The appellants are insurance companies, whose business includes the writing of employers liability insurance policies.\nThey undertake to indemnify the employer in respect of any liability incurred by it for harm or injury arising out of the employers negligence.\nThey have brought these proceedings to challenge the lawfulness of an Act of the Scottish Parliament which was passed on 11 March 2009, received the Royal Assent on 17 April 2009 and came into force on 17 June 2009.\nIt is the Damages (Asbestos related Conditions) (Scotland) Act 2009 (the 2009 Act) which provides that asymptomatic pleural plaques, pleural thickening and asbestosis shall constitute, and shall be treated as always having constituted, actionable harm for the purposes of an action of damages for personal injury.\nIt is no secret that the purpose of the 2009 Act was to reverse the decision of the House of Lords in Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] AC 281 (Rothwell).\nIn that case it was held that, as pleural plaques caused no symptoms, did not increase susceptibility to other asbestos related diseases or shorten life expectancy, their mere presence in the claimants lungs did not constitute an injury which was capable of giving rise to a claim for damages.\nIt was anticipated that, while that decision was not binding on the Scottish courts, it would almost certainly be followed in Scotland as there is no material difference between the law of England and Wales and Scots law on this branch of the law.\nIn Wright v Stoddard International plc (No 2) [2007] CSOH 173, 2008 Rep LR 37 Lord Uist applied the decision in Rothwell, although on the facts he would not have awarded damages anyway: see para 161.\nThe appellants claim that reversing that decision will expose them to claims under their indemnity insurance policies amounting to millions of pounds annually and perhaps several billions of pounds in total.\nThey seek declarator that the 2009 Act is unlawful and its reduction.\nThe first and second respondents are, respectively, the Lord Advocate representing the Scottish Ministers and the Advocate General for Scotland representing the United Kingdom government.\nThe third to tenth respondents are individuals who have been diagnosed with pleural plaques caused by negligent exposure to asbestos.\nThey have each raised, or intend to raise, actions of damages seeking reparation for the loss, injury and damage which they claim to have sustained as a result of their employers negligence.\nThe defenders to their actions include, or will include, private undertakings, nationalised industries and public bodies at the level of both local and central government.\nThese respondents claim that they will be financially disadvantaged if the appellants attack on the 2009 Act were to be successful, as they would be deprived of the benefit of the declaration in the Act that pleural plaques constitute harm which, for the purposes of an action of damages, is actionable.\nOn 8 May 2009 they were allowed by the Lord Ordinary (Lord Uist) to enter the process as individuals who were directly affected by the issues raised under and in terms of rule 58.8(2) of the Rules of the Court of Session 1994.\nOn 8 January 2010, after a debate that took place over periods totalling 22 days, the Lord Ordinary (Lord Emslie) held that the appellants had locus standi to bring these proceedings, that the wording of Rule of Court 58.8(2) was wide enough to cover the position of the third to tenth respondents but that the appellants had failed in their various challenges to the 2009 Act and their petition must be dismissed: [2010] CSOH 2, 2010 SLT 179.\nThe appellants reclaimed.\nOn 12 April 2011, after a hearing which lasted 8 days, the First Division (the Lord President (Hamilton), Lord Eassie and Lord Hardie) allowed the reclaiming motion to the extent of repelling the answers for the third to tenth respondents on the ground that they did not have a title and interest to be convened as respondents under rule 58.8(2), but quoad ultra refused the reclaiming motion: [2011] CSIH 31, 2011 SLT 439.\nThe appellants have now appealed to this court and the Lord Advocate and the third to tenth respondents have cross appealed.\nThe Attorney General for Northern Ireland, the Northern Ireland Department of Finance and Personnel and Friends of the Earth Scotland were given permission to intervene in writing.\nThe First Minister of Wales was given permission to intervene both in writing and orally and the Counsel General for Wales (Mr Theodore Huckle QC) made submissions on his behalf.\nBackground\nAs the Lord Ordinary explained (2010 SLT 179, paras 2 4), pleural plaques are physical changes in the pleura.\nThey can be detected radiologically as areas of fibrous tissue by x rays and CT scans.\nThey are caused by occupational exposure to asbestos and, in common with other asbestos related conditions, they tend to develop after a long latency period of 20 years or more.\nIn most cases they have no discernible effect on an individuals day to day physical health or well being.\nThey are asymptomatic, causing no pain or discomfort.\nThey produce no disability or impairment of function, nor are they externally disfiguring.\nBut it was common ground in Rothwell that they do indicate that the quantity of asbestos fibres in the lung is significant: see Lord Rodger of Earlsferry, para 78.\nWhile they do not in themselves threaten or lead to other asbestos induced conditions, their presence may indicate a cumulative level of asbestos exposure at which there is an increased risk of mesothelioma or other asbestos related disorders.\nIn that respect they are said to function as a marker for that increased risk.\nIndividuals who have been diagnosed with pleural plaques are liable to become alarmed and anxious for the future.\nIn some cases this may bring to mind the suffering and perhaps death of friends and colleagues from asbestos related diseases.\nTheir enjoyment and quality of life may be severely reduced by the associated anxiety.\nIt would, as Lord Rodger of Earlsferry said in Rothwell, para 90, make no sense, if the plaques themselves are not a condition for which the law will intervene to give damages because it is not serious enough to require its intervention, for the law to give damages for anxiety associated with plaques.\nFurthermore, the anxiety is not about any risk to health caused by the plaques themselves.\nRather, it is because these individuals are worried that they may develop asbestosis or mesothelioma as a result of the accumulation of fibres in their lungs.\nTo give them a claim for damages for this would be to give them a claim for something that the plaques themselves did not cause.\nSo the mere risk that they may develop asbestosis or mesothelioma in the future will not give them a claim for damages.\nFor them to recover damages for the associated anxiety, the asbestos related pleural plaques themselves must be actionable.\nClaims for damages in negligence for pleural plaques began to emerge in the 1980s.\nIn three cases, all of which were decided at first instance in England, the judges found in the claimants favour: Church v Ministry of Defence (1984) 134 NLJ 623, Peter Pain J; Sykes v Ministry of Defence The Times, 23 March 1984, Otton J; and Patterson v Ministry of Defence [1987] CLY 1194, Simon Brown J.\nThe claimants in these cases had all been exposed to asbestos while working in naval dockyards.\nIn some cases it was indicated that pleural plaques did not give rise to a cause of action: Morrison v Central Electricity Generating Board, 15 March 1984; Shuttleton v Duncan Stewart & Co Ltd 1996 SLT 517.\nBut damages were awarded in Gibson v McAndrew Wormald & Co Ltd 1998 SLT 562 and Nicol v Scottish Power plc 1998 SLT 822.\nAnd the general practice of employers or their liability insurers during this period was to concede that pleural plaques were an actionable injury and to settle claims without admission of liability.\nThe appellants say that this was because both the number and value of such claims were low.\nInsurance by employers against their liability for personal injury to their employees has been compulsory since 1 January 1972, when the Employers Liability (Compulsory Insurance) Act 1969 came into force.\nIn terms of section 1(1) every employer must insure, and maintain insurance, against liability for bodily injury or disease sustained by its employees and arising out of and in the course of their employment in the employers business.\nBut section 3 of that Act exempts a number of public employers from the requirement to carry such insurance.\nThese include any body corporate established by or under any enactment for the carrying on of any industry or part of an industry, any undertaking under national ownership or control and a council in Scotland constituted under section 2 of the Local Government etc (Scotland) Act 1994.\nEmployers will, of course, have to meet any claims if the insurer has gone out of business or refuses to indemnify.\nBut in many cases resulting from exposure to asbestos the employer had gone out of business by the time the harmful outcome had manifested itself.\nFor practical purposes much of the cost of meeting claims for pleural plaques will fall on insurers.\nRegulation 2 of the Employers Liability (Compulsory Insurance) General Regulations 1971 (SI 1971\/1117) prohibits any condition in a policy of insurance issued or renewed in accordance with the requirements of the 1969 Act which provides that no liability shall arise under the policy, or that any such liability so arising shall cease, in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy.\nFrom about the mid 1990s the number and value of claims for pleural plaques began to increase sharply.\nFurthermore, by this time an increase in proportional mortality from lung cancer as milder cases of asbestosis survived long enough to develop a malignancy had led to a greater interest in the benign pleural diseases, including pleural thickening and pleural plaques: Parkes, Occupational Lung Disorders (1994), Brownes Introduction to his chapter on benign asbestos pleural disease.\nThe consensus of medical opinion was that pleural plaques were indeed benign.\nSo United Kingdom government departments which had succeeded to the liabilities of former nationalised industries, and later various parties including the leading insurers, decided to challenge the practice of settling these claims.\nTen test cases were selected for trial before Holland J. He found that pleural plaques were actionable: [2005] EWHC 88 (QB).\nIn seven of these cases the insurers appealed to the Court of Appeal, which reversed the decision of the trial judge: [2006] EWCA Civ 27, [2006] ICR 1458.\nFour of the claimants appealed to the House of Lords in Rothwell, but on 17 October 2007 their appeals were dismissed.\nIt was held that the mere presence of pleural plaques in the lungs was not actionable.\nThat decision was controversial and, as was to be expected, it was not well received by those with pleural plaques who had made, or were considering making, claims for damages.\nThis was especially so in those parts of the United Kingdom such as Clydebank where industries that exposed their employees to asbestos were or had been located and where asbestos related conditions were most frequently found.\nThere were demands for the law to be restored to what it had previously been thought to be.\nOn 25 October 2007 the First Minister advised the Scottish Parliament that the Scottish Government was considering its position.\nOn 1 November 2007 the Cabinet Secretary for Justice met representatives of the insurance industry to discuss the matter.\nThe issue was debated in the Scottish Parliament on 7 November 2007.\nOn the same day the Parliament was informed that the Cabinet Secretary for Justice had met representatives of Clydeside Action on Asbestos together with Frank Maguire of Thompsons Solicitors (who was acting for a number of persons seeking damages), and that the Scottish Governments intention was to consider a bill which had been drafted by Mr Maguires firm with a view to reversing Rothwell in Scotland.\nThe Scottish Governments intention to legislate to allow those with pleural plaques to continue to be able to raise an action for damages was confirmed by the Cabinet Secretary on 28 November 2007.\nThe legislation\nThe Bill which became the 2009 Act was prepared by Scottish parliamentary counsel.\nIt was introduced into the Scottish Parliament on 23 June 2008.\nA call was issued by the Justice Committee for the submission of written evidence by 25 August 2008.\nOral evidence was taken by the Committee on the general principles of the Bill on 2 and 9 September 2008.\nThe Stage 1 Report was published on 13 October 2008.\nIt was recommended that the Parliament agree to the general principles, which it did unanimously on 5 November 2008.\nFollowing consideration of proposed amendments to the Bill as passed at Stage 1, it passed the Justice Committee in unamended form at Stage 2 on 2 December 2008.\nIt was approved by the Scottish Parliament, subject to certain minor amendments, at Stage 3 on 11 March 2009, by a majority of 98 to 16.\nThe Bill received the Royal Assent on 17 April 2009.\nThe long title to the 2009 Act states that its purpose is to provide that certain asbestos related conditions are actionable personal injuries.\nThe Act itself is in these terms: 1.\nPleural plaques (1) Asbestos related pleural plaques are a personal injury which is not negligible. (2) Accordingly, they constitute actionable harm for the purposes of an action of damages for personal injuries. (3) Any rule of law the effect of which is that asbestos related pleural plaques do not constitute actionable harm ceases to apply to the extent it has that effect. (4) But nothing in this section otherwise affects any enactment or rule of law which determines whether and in what circumstances a person may be liable in damages in respect of personal injuries. 2.\nPleural thickening and asbestosis (1) For the avoidance of doubt, a condition mentioned in subsection (2) which has not caused and is not causing impairment of a persons physical condition is a personal injury which is not negligible. (2) Those conditions are (a) asbestos related pleural thickening; and (b) asbestosis. (3) Accordingly, such a condition constitutes actionable harm for the purposes of an action of damages for personal injuries. (4) Any rule of law the effect of which is that such a condition does not constitute actionable harm ceases to apply to the extent it has that effect. (5) But nothing in this section otherwise affects any enactment or rule of law which determines whether and in what circumstances a person may be liable in damages in respect of personal injuries. 3.\nLimitation of actions (1) This section applies to an action of damages for personal injuries (a) in which the damages claimed consist of or include damages in respect of (i) asbestos related pleural plaques; or (ii) a condition to which section 2 applies, and (b) which, in the case of an action commenced before the date this section comes into force, has not been determined by that date. (2) For the purposes of sections 17 and 18 of the Prescription and Limitation (Scotland) Act 1973 (c52) (limitation in respect of actions for personal injuries), the period beginning with 17 October 2007 and ending with the day on which this section comes into force is to be left out of account. 4.\nCommencement and retrospective effect (1) This Act (other than this subsection and section 5) comes into force on such day as the Scottish Ministers may, by order made by statutory instrument, appoint. (2) Sections 1 and 2 are to be treated for all purposes as having always had effect. (3) But those sections have no effect in relation to (a) a claim which is settled before the date on which subsection (2) comes into force (whether or not legal proceedings in relation to the claim have been commenced); or (b) legal proceedings which are determined before that date. 5.\nShort title and Crown application (1) This Act may be cited as the Damages (Asbestos related Conditions) (Scotland) Act 2009. (2) This Act binds the Crown.\nOn 29 October 2007 the UK Government indicated in the course of a debate in the House of Commons that, having given careful consideration to the judgment in Rothwell, it had decided that it would not be appropriate to legislate on the issue: Hansard (HC Debates) 29 October 2007, col 798w.\nIt confirmed that this was its position in a written answer on 10 December 2007: (HC Debates) 10 December, col 176w.\nOn 9 July 2008 the Ministry of Justice issued a consultation paper entitled Pleural Plaques (CP 14\/08), in which the options for increasing support, help and information to people with pleural plaques, for changing the law and for providing financial support were set out, the last two being by means of a no fault payment scheme.\nThe consultation period closed on 1 October 2008.\nOn 5 February 2010 the Damages (Asbestos related Conditions) Bill, which was designed to create parity of treatment between England and Wales and Scotland, received its second reading in the House of Lords: Hansard (HL Debates) 5 February 2010, cols 454 463.\nBut it did not have the support of the government and on 25 February 2010 the Ministry of Justice announced that, following the consultation, the law in England and Wales would not be amended but that it had been decided to introduce an extra statutory scheme by which payments of 5,000 would be made to persons who had begun but not resolved a pleural plaques compensation claim at the time of the decision in Rothwell: Hansard (HL Debates) 25 February 2010, cols 140 144w.\nThe Pleural Plaques Former Claimants Payment Scheme was launched on 2 August 2010.\nIt provides that applications under it must be received by 1 August 2011.\nOn 21 March 2011 the Northern Ireland Assembly passed a measure for Northern Ireland which in all material respects is in identical terms to the 2009 Act, the short title of which is the Damages (Asbestos related Conditions) Act: Northern Ireland Assembly Official Report 21 March, p 488.\nPrior to its receiving the Royal Assent the Attorney General for Northern Ireland referred the question whether the Bill was within the legislative competence of the Assembly to this court under section 11 of the Northern Ireland Act 1998.\nHe submitted that its provisions offended article 6 of the European Convention on Human Rights and\/or article 1 of Protocol 1 to the Convention and\/or article 14 read together with those articles.\nHe withdrew the reference before the hearing of this appeal could take place.\nThe Act received the Royal Assent on 21 June 2011 when sections 4(1) and 5 came into force.\nThe remainder of the Act will come into force on such date as the Department of Finance and Personnel shall appoint.\nNo proposals were drawn to the courts attention for similar legislation to be passed by the Welsh Assembly.\nBut, as the Counsel General explained, the First Minister of Wales has an interest in this appeal in so far as it is directed to questions about the legislative competence at common law of the Scottish Parliament.\nThe issues\nThe appellants challenge the validity of the 2009 Act on two bases: (1) that it is incompatible with their rights under article 1 of Protocol 1 to the Convention (A1 P1) and that it is in consequence outside the legislative competence of the Scottish Parliament by virtue of section 29(2)(d) of the Scotland Act 1998; (2) that it is open to judicial review on common law grounds as an unreasonable, irrational and arbitrary exercise of the legislative authority conferred by the Scotland Act 1998 on the Scottish Parliament.\nThere was a third basis, argued before the Lord Ordinary, that the 2009 Act was an interference by means of legislation with a current dispute and was thus incompatible with the appellants rights under article 6.\nBut this argument was rejected by the Lord Ordinary (2010 SLT 179, paras 161 179) and it was not renewed in the Inner House or before this court.\nThe Lord Advocate in his cross appeal submits that there is no relevant interference with the existing possessions of the appellants, and that in consequence they should not be found to have victim status for the purposes of article 34 of the Convention.\nIf this argument is sound the appellants will not be in a position to maintain their challenge to the 2009 Act on the ground that it is outwith the legislative competence of the Scottish Parliament because it is incompatible with their rights under A1 P1, as section 100(1) of the Scotland Act 1998 provides that the Act does not enable a person to rely on any of the Convention rights in any proceedings unless he would be a victim for the purposes of article 34 if proceedings in respect of the act in question were brought in the European Court of Human Rights.\nThe third to tenth respondents in their cross appeal submit that, as they are members of a class affected by the 2009 Act and have a legitimate interest to protect, they are persons directly affected by the issues raised within the meaning of rule 58.8(2) and that the Lord Ordinary was right to hold that they should be made parties to the proceedings.\nLegislative competence\nSection 29(1) of the Scotland Act 1998 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.\nSection 29(2)(d) of the Act provides that a provision is outside that competence so far as it is incompatible with any of the Convention rights.\nThose rights include the right protected by A1 P1, which provides: Every natural or legal person is entitled to the peaceful enjoyment of his possessions.\nNo 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.\nThe 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.\nAccording to the jurisprudence of the Strasbourg court, A1 P1 is in substance a guarantee of the right to property.\nIt comprises three distinct rules: see Sporrong and Lnnroth v Sweden (1982) 5 EHRR 35, para 61; The National & Provincial Building Society, The Leeds Permanent Building Society and The Yorkshire Building Society v United Kingdom (1997) 25 EHRR 127, para 78; Bck v Finland (2004) 40 EHRR 1184, para 52; Draon v France (2005) 42 EHRR 807, para 69.\nThe first is expressed in the first sentence of the first paragraph, and it is of a general nature.\nIt lays down the general principle of the peaceful enjoyment of property.\nThe second is expressed in the second sentence of the same paragraph.\nIt deals with deprivation of property, which it subjects to the conditions to which that sentence refers.\nLaw in that sentence is to be understood in the autonomous sense that it has throughout the Convention.\nTo be law for this purpose, the provision must be accessible, clearly expressed and not arbitrary.\nThe third is set out in the second paragraph.\nIt recognises that the Contracting States are entitled, among other things, to control the use of property in the general interest and to secure the payment of taxes or other contributions or penalties.\nThese rules are not distinct, in the sense of being unconnected: Bck v Finland (2004) 40 EHRR 1184, para 52.\nThe second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle set out in the first rule.\nSo I do not think that we need to concern ourselves as to whether the question that has been raised in this case is directed to the rule about deprivation which is set out in the second sentence of the first paragraph rather than the general principle referred to in the first sentence.\nWhichever it is, the interference must comply with the principle of lawfulness, and it must pursue a legitimate aim by means that are reasonably proportionate to the aim sought to be realised.\nThe questions that must be addressed are, therefore, (1) whether the appellants have been able to show that the effect of the 2009 Act is that they would be victims for the purposes of article 34 of the Convention, (2) if so, whether the interference with their possessions that its provisions represent pursues a legitimate aim and (3) if so, whether the means that have been chosen by the Scottish Parliament are reasonably proportionate to the aim sought to be realised. (a) do the appellants have victim status?\nMr Dewar QC for the Lord Advocate submitted that, in order to answer the question whether the appellants have victim status, it was necessary to understand the true nature of the possessions at stake and the nature and extent of any interference with these possessions.\nIn Kopeck v Slovakia (2004) 41 EHRR 944, para 35(c) the court said of the practice of the Convention institutions under A1 P1: An applicant can allege a violation of article 1 of Protocol 1 only in so far as the impugned decisions related to his possessions within the meaning of this provision.\nPossessions can be either existing possessions or assets, including claims, in respect of which the applicant can argue that he or she has at least a legitimate expectation of obtaining effective enjoyment of a property right.\nBy way of contrast, the hope of recognition of a property right which it has been impossible to exercise effectively cannot be considered a possession within the meaning of article 1 of Protocol 1, nor can a conditional claim which lapses as a result of the non fulfilment of the condition.\nBasing himself on this guidance, he submitted that the test was not satisfied.\nHe accepted that the expectation was that, where an insured interest was involved, the insurer would respond and provide the employer with the indemnity.\nBut the effect of the Act was indirect.\nThe contractual relationship between the employer and the insurer was quite separate from that between the employer and his employee.\nA person could not claim to be a victim unless he was directly affected.\nIn this case the Act did not take anything away from the employers or their insurers in that sense.\nAs the Lord Ordinary said (2010 SLT 179, para 195), it was not the Act which would cause the claimants claims to succeed but proof of all the legal and factual requisites for an award.\nSo its consequences are simply too remote from the legislation to qualify.\nThe judges of the First Division did not accept this argument, as it seemed to them to be clear that the appellants were within a class who might be directly affected by the 2009 Act: 2011 SLT 439, para 35.\nThis approach to the rule that, in order to claim to be a victim of a violation, a person must be directly affected by the impugned measure, is supported by the Strasbourg courts analysis in Burden v United Kingdom (2008) 47 EHRR 857, para 34 where, having referred to the rule in the previous paragraph, it said: It is, however, open to a person to contend that a law violates his rights, in the absence of an individual measure of implementation, if he is required either to modify his conduct or risk being prosecuted or if he is a member of a class of people who risk being directly affected by the legislation.\nThe court referred by way of example to Marckx v Belgium (1979) 2 EHRR 330, where the applicants were found to be directly affected by, and thus victims of, legislation which would limit the childs right to inherit property from her mother upon her mothers eventual death.\nOn the other hand in Willis v United Kingdom (2002) 35 EHRR 547 the risk of the applicant being refused a widows pension on grounds of sex at a future date was found to be hypothetical since it was not certain that she would otherwise fulfil the statutory conditions for the payment of the benefit on the relevant date.\nThe difference between a risk of being directly affected and a risk which is purely hypothetical is not easy to identify.\nBut in Burden the applicants were held to be directly affected by the legislation because they had established that, given their age, the wills they had made and the value of the property they owned, there was a real risk that in the not too distant future one of them would be required to pay substantial inheritance tax on the property inherited from the sister: para 35.\nSo the fact that the interference is not present or immediate but may not occur until some time in the future does not exclude the person from being a victim for the purposes of article 34.\nA persons financial resources, as in the case of the accumulated wealth of the Burden sisters or the property that Miss Marckx had it in mind to leave to her illegitimate daughter, are capable of being possessions within the meaning of A1 P1.\nHere the complaint is of the imposition of a liability to indemnify which had been removed by Rothwell.\nBut, as the court said in Burden, para 59, the amount of money that must be paid is a possession for the purposes of the article.\nThe question, then, is whether the consequences for the applicants of the 2009 Act are too remote or tenuous for them to be directly affected by it.\nThe answer to it must depend on what the Act was designed to achieve.\nAs its long title makes plain, its purpose was to reverse the decision that the House of Lords took in Rothwell by making asbestos related conditions, including pleural plaques, actionable.\nNo doubt, where the employers still exist, it is against the employers that their claims for damages will be directed.\nBut there is a risk that in practice the effect of the Employers Liability (Compulsory Insurance) Act 1969 is that the liability will fall upon the insurers.\nTheir liability cannot be dismissed as remote or hypothetical.\nThe claims that have already been brought, as well as those that will be brought before they are extinguished by the limitation period, are by people in whose lungs pleural plaques have actually been detected.\nThere is ample material in the record of the proceedings before the Scottish Parliament to show that it was the insurance industry that was expected, and intended, to bear the burden of meeting their claims.\nFor these reasons I would hold, in agreement with the Inner House, that the appellants are entitled to bring these proceedings as the effect of the 2009 Act is that they would be victims for the purposes of article 34 of the Convention if proceedings in respect of that Act were to be brought in the European Court of Human Rights.\nI would also hold that the amount of money that they would be required to pay to satisfy their obligations under the insurance policies is a possession for the purposes of A1 P1.\nIf it is to be held to be compatible with the appellants Convention right, the 2009 Act must be shown to be pursuing a legitimate aim and to be reasonably proportionate to the aim sought to be realised.\n(b) legitimate aim\nIn James v United Kingdom (1986) 8 EHRR 123, para 47 the Strasbourg court said that eliminating what are judged to be social injustices is an example of the functions of a modern legislature.\nThere is ample evidence that the Scottish Ministers considered that the consequences of the decision in Rothwell were unduly harsh for people with pleural plaques and that this was a social problem that the Scottish Parliament ought to address, and that this was how the matter was perceived in the Scottish Parliament.\nOn 13 December 2007 the Cabinet Secretary for Justice made a statement to the Parliament reporting on the decision to introduce a bill to reverse Rothwell, in the course of which he said: The effects of asbestos are a terrible legacy of Scotlands industrial past, and we should not turn our backs on those who have contributed to our nations wealth.\nWe have, therefore, acted quickly to reassure people who have been diagnosed with pleural plaques through being negligently exposed to asbestos that they will continue to be able to raise an action for damages.\nThe rationale for government intervention was set out in para 10 of a Partial Regulatory Impact Assessment on the proposed bill which was published by the Scottish Government on 6 February 2008, in which it was stated: Pleural plaques have been regarded as actionable for over twenty years.\nThey are part of the unintended and unwelcome consequences of our industrial heritage.\nThe HoL Judgment has raised serious concerns for people with pleural plaques.\nAlthough plaques are not in themselves harmful they do give rise to anxiety because they signify an increased risk of developing very serious illness as a result of exposure to asbestos.\nIn areas associated with Scotlands industrial past, people with pleural plaques are living alongside friends who worked beside them and are witnessing the terrible suffering of those who have contracted serious asbestos related conditions, including mesothelioma.\nThis causes them terrible anxiety that they will suffer the same fate.\nThe Scottish Government believes that people who have negligently been exposed to asbestos who are subsequently diagnosed with pleural plaques should continue to be able to raise an action for damages as has been the practice in Scotland for over twenty years.\nIt is clear from this explanation that the matter was seen as a social injustice which justified intervention by the legislature.\nAs was later to be pointed out in para 11 of the Explanatory Notes that accompanied the Bill when it was introduced on 23 June 2008, there was no accurate record of how many cases were being diagnosed each year in Scotland.\nBut the incidence of pleural plaques was thought to be rising, and it was estimated that up to half of those occupationally exposed to asbestos would have pleural plaques thirty years after first exposure.\nThe numbers of those likely to be involved, and the circumstances in which they had contracted this condition, were such that the issue was seen to be a legitimate one for legislation in the public interest.\nThe approach that the Strasbourg court takes to this matter was explained in James v United Kingdom, para 46, in which the court said: 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.\nUnder the system of protection established by the Convention, it is thus for the national authorities to make the initial assessment both of the existence of a problem of public concern warranting measures of deprivation of property and of the remedial action to be taken.\nHere, as in other fields to which the safeguards of the Convention extend, the national authorities accordingly enjoy a certain margin of appreciation.\nFurthermore, the notion of public interest is necessarily extensive.\nIn particular, as the Commission noted, the decision to enact laws expropriating property will commonly involve consideration of political, economic and social issues on which opinions within a democratic society may reasonably differ widely.\nThe Court, finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one, will respect the legislatures judgment as to what is in the public interest unless that judgment be manifestly without reasonable foundation.\nThis formula has been repeated in many cases since that date: see, for example, Broniowski v Poland (2004) 40 EHRR 495, para 149; Maurice v France (2005) 42 EHRR 885, para 84.\nIn Draon v France (2005) 42 EHRR 807, para 76 the court said that the notion of public interest is necessarily extensive as it will commonly involve consideration of political, economic and social issues.\nThe court will, it said, respect the legislatures judgment as to what is in the public interest unless that judgment is manifestly without reasonable foundation.\nAs I pointed out in R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326, 381, the doctrine by which a margin of appreciation is accorded to the national authorities is an essential part of the supervisory jurisdiction which is exercised over state conduct by the international court.\nIt is not available to the national courts when they are considering Convention issues arising within their own countries.\nBut in the hands of the national courts too the Convention should be seen as an expression of fundamental principles which will involve questions of balance between competing interests and issues of proportionality.\nI suggested that in some circumstances, such as where the issues involve questions of social or economic policy, the area in which these choices may arise is an area of discretionary judgment.\nIt is not so much an attitude of deference, more a matter of respecting, on democratic grounds, the considered opinion of the elected body by which these choices are made.\nCan it be said that the judgment of the Scottish Parliament that this was a matter of public interest on which it should legislate to remove what was regarded as a social injustice was without reasonable foundation or manifestly unreasonable? I do not think so.\nThere is no doubt that the negligence of employers whose activities were concentrated in socially disadvantaged areas such as Clydebank had exposed their workforce to asbestos and all the risks associated with it for many years.\nThe anxiety that is generated by a diagnosis of having developed pleural plaques is well documented and it had been the practice for over 20 years for such claims to be met, albeit without admission of liability.\nThe numbers of those involved, and the fact that many of them live in communities alongside people who are known to have developed very serious asbestos related illnesses, contributed to a situation which no responsible government could ignore.\nIt seems to me that the Scottish Parliament were entitled to regard their predicament as a social injustice, and that its judgment that asbestos related pleural plaques should be actionable cannot be dismissed as unreasonable.\n(c) proportionality\nIn Sporrong and Lnnroth v Sweden (1982) 5 EHRR 35, para 69 the Strasbourg court declared that, for the purposes of the rule contained in the first sentence of the first paragraph of A1 P1: the Court must determine whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights.\nThe search for this balance is inherent in the whole of the Convention and is also reflected in the structure of article 1.\nIn Pressos Compania Naviera SA v Belgium (1995) 21 EHRR 301, para 63, recalling this passage, the Commission said that that fair balance must be regarded as upset if the person concerned had to bear an individual and excessive burden.\nIn The National & Provincial Building Society, The Leeds Permanent Building Society and The Yorkshire Building Society v United Kingdom (1997) 25 EHRR 127, para 80 the court, again recalling what had been said in Sporrong, said that there must be a reasonable relationship of proportionality between the means employed and the aims pursued.\nIn Draon v France (2005) 42 EHRR 807, para 79 the court added these comments: Compensation terms under the relevant domestic legislation are material to the assessment whether the contested measure respects the requisite fair balance and, notably, whether it imposes a disproportionate burden on the applicants.\nIn this connection, the Court has already found that the taking of property without payment of an amount reasonably related to its value will normally constitute a disproportionate interference and a total lack of compensation can be considered justifiable under article 1 of Protocol 1 only in exceptional circumstances.\nOne of the features of the 2009 Act is that it declares that sections 1 and 2 are to be treated for all purposes as having always had effect: section 4(2).\nAlthough the reach of this provision is limited by sections 17 and 18 of the Prescription and Limitation (Scotland) Act 1973, the effect of the Act is that claims which under the law as declared by the House of Lords in Rothwell were always bound to fail because a diagnosis that a person had pleural plaques did not give rise to a cause of action as the anxiety to which it gave rise was not actionable were now to be capable of resulting in an award of damages.\nIts effect can be said to be retrospective in that the insurance policies which will be called upon to meet this liability were written when the law must, on the declaratory theory, be taken to have been as stated in Rothwell.\nClaims which on the law as it must be taken to have been at that time would have been bound to have been rejected are declared by the Act to be actionable.\nThe issue of retroactive effect was considered in Bck v Finland (2004) 40 EHRR 1184, para 68 where the court said: Turning to the retroactive effect of the 1993 Act, the Court notes that neither the Convention nor its Protocols preclude the legislature from interfering with existing contracts.\nThe Court considers that a special justification is required for such interference, but accepts that in the context of the 1993 Act there were special grounds of sufficient importance to warrant it.\nThe Court observes that in remedial social legislation and in particular in the field of debt adjustment, which is the subject of the present case, it must be open to the legislature to take measures affecting the further execution of previously concluded contracts in order to attain the aim of the policy adopted.\nThe question is whether the insurance industry which the appellants represent is being called upon to bear a disproportionate and excessive burden.\nThis is not, of course, something that arose incidentally, as an unforeseen or unlooked for consequence of declaring in the legislation that pleural plaques are to be treated for all purposes as being always actionable.\nOn the contrary, there were extensive discussions with the insurance industry while the effects of the Bill were being assessed.\nThe implications for insurers were described in paras 17, 18 and 29 of the Explanatory Notes that accompanied the Bill when it was introduced, and an updated reassessment of the financial implications was communicated to the Convener of the Justice Committee by the Minister for Community Safetys letter dated 25 February 2009.\nMoreover it is an inescapable consequence of the measure taken to deal with the demands of the general interest of the community that the burden which was to fall on the insurers could not be alleviated or compensated.\nThere are however two special features of this case which seem to me to show that the balance that was struck cannot be said to be disproportionate.\nThe first is that the claims which the Act makes possible will only succeed if it is shown that the exposure to asbestos was caused by the employers negligence.\nIndeed, the Act is conspicuously careful in its draftsmanship.\nIts effect is restricted to new claims and to claims that have been commenced but not yet determined.\nIt preserves all the other defences that may be open on the law or the facts, other than the single question whether the pleural plaques themselves are actionable.\nIt achieves what it has to achieve.\nBut it does no more than that.\nThe second special feature is that the business in which insurers are engaged and in pursuance of which they wrote the policies that will give rise to the obligation to indemnify is a commercial venture which is inextricably associated with risk.\nBecause they were long term policies there was inevitably a risk that circumstances, unseen at the date when they were written, might occur which would increase the burden of liability.\nPhrases such as bodily injury or disease are capable of expanding the meaning that they were originally thought to have as medical knowledge develops and circumstances change.\nDiseases that were previously unknown or rarely seen may become familiar and give rise to claims that had not at the outset been anticipated.\nThe effects of asbestos provide ample evidence of this phenomenon, as people began to live long enough after exposure to it to contract mesothelioma and other harmful asbestos related diseases.\nThe nature, number and value of claims were therefore always liable to develop in ways that were unpredictable.\nThe premium income that was expected to meet the claims that were foreseen at the outset may have no relationship, in the long term, to the burden that in fact materialises.\nHow best to provide for that eventuality is an art which takes the rough with the smooth and depends on the exercise of judgment and experience.\nSo the fact that the effect of the Act will be to increase the burden on the insurers, even to the extent that was anticipated, does not seem to me to carry much weight.\nIt might have been different if the law on the actionablity of pleural plaques had been settled by judicial decision when the policies were written.\nThe effect of the Act would have been to reverse the settled law after the date when the insurers committed themselves by their contract to indemnify.\nAs it is, the question whether they amounted to bodily injury or a disease remained open then and for many years afterwards.\nThe law itself might indeed have developed differently, as Lord Rodger observed in Rothwell, para 84 when he said that in theory it might have held that the claimants had suffered personal injury when there were sufficient irremovable fibres in their lungs to cause the heightened risk of asbestosis or mesothelioma.\nThe interference with the insurers possessions can therefore be seen to be within the area of risk with which they engaged when they undertook to indemnify the consequences of the employers negligence.\nFor these reasons I would hold that the interference with the appellants possessions by the 2009 Act pursued a legitimate aim and that the means chosen by the Scottish Parliament are reasonably proportionate to the aim sought to be realised.\nIt follows that the 2009 Act was not outside the legislative competence of the Parliament.\nThe common law grounds\nThe appellants case at common law is that the 2009 Act was the result of an unreasonable, irrational and arbitrary exercise of the legislative authority conferred by the Scotland Act 1998 on the Scottish Parliament.\nAlthough the Dean of Faculty did not abandon that argument in this court, he accepted that if his argument that the Act was incompatible with A1 P1 were to be rejected on the grounds that there was a legitimate aim and that its provisions were reasonably proportionate to the aim sought to be realised he could not succeed on this ground at common law.\nOn one view, very little more need be said about it.\nBut the question as to whether Acts of the Scottish Parliament and measures passed under devolved powers by the legislatures in Wales and Northern Ireland are amenable to judicial review, and if so on what grounds, is a matter of very great constitutional importance.\nIt goes to the root of the relationship between the democratically elected legislatures and the judiciary.\nAt issue is the part which the rule of law itself has to play in setting the boundaries of this relationship.\nI think therefore that the argument which this part of the appellants case raises cannot be dismissed so easily.\nThe issue can be broken down into its component parts in this way.\nFirst, there is the question whether measures passed by the devolved legislatures are amenable to judicial review, other than in the respects expressly provided for by the devolution statutes, at all.\nIf not, that will be the end of the argument.\nBut if they are open to judicial review on common law grounds at all, there is the question as to what these grounds are.\nAt the one extreme are the grounds that the appellants second plea in law encapsulates: that the legislation is unreasonable, irrational or arbitrary.\nAt the other is the proposition that judicial intervention is admissible only in the exceptional circumstances that Lord Steyn had in mind in R (Jackson) v Attorney General [2005] UKHL 56, [2006] 1 AC 262, para 102; see also my own speech at paras 104 107 and Baroness Hale of Richmonds observations at para 159.\nTo answer these questions in their proper context it is necessary to set out the background in a little more detail.\nAlthough I am conscious of the implications of what the court decides in this case for the other devolved legislatures, I shall concentrate on the position of the Scottish Parliament.\nAs was common ground before us, I consider that, while there are some differences of detail between the Scotland Act 1998 and the corresponding legislation for Wales and Northern Ireland, these differences do not matter for present purposes.\nThe essential nature of the legislatures that the legislation has created in each case is the same.\nThe starting point for an examination of the first question is the following proposition in West v Secretary of State for Scotland 1992 SC 385, 412 413: The Court of Session has power, in the exercise of its supervisory jurisdiction, to regulate the process by which decisions are taken by any person or body to whom a jurisdiction, power or authority has been delegated or entrusted by statute, agreement or any other instrument.\nDevolution is an exercise of its law making power by the United Kingdom Parliament at Westminster.\nIt is a process of delegation by which, among other things, a power to legislate in areas that have not been reserved to the United Kingdom Parliament may be exercised by the devolved legislatures.\nThe Scotland Act 1998 sets out the effect of the arrangement as it affects Scotland with admirable clarity.\nSection 1(1) of the Act declares: There shall be a Scottish Parliament.\nIts democratic legitimacy is enshrined in the provisions of section 1(2) and section 1(3), which provide for the election of those who are to serve as its members as constituency members and by a system of proportional representation chosen from the regional lists.\nSection 28(1) provides that the Parliament may make laws, to be known as Acts of the Scottish Parliament, and section 28(2) provides for them to receive the Royal Assent.\nSection 28(5) provides that the validity of an Act of the Scottish Parliament is not affected by any invalidity in the proceedings of the Parliament leading to its enactment.\nAlthough section 28(7) provides that that section shall not affect the power of the United Kingdom to make laws for Scotland, in practice the Scottish Parliament enjoys the same law making powers for Scotland as the Westminster Parliament except as provided expressly for in section 29 which, in certain closely defined respects, limits its legislative competence.\nSection 29 does not, however, bear to be a complete or comprehensive statement of limitations on the powers of the Parliament.\nThe Act as a whole has not adopted that approach: see Somerville v Scottish Ministers (HM Advocate General for Scotland intervening) [2007] UKHL 44, 2008 SC (HL) 45, [2007] 1 WLR 2734, para 28.\nThe carefully chosen language in which these provisions are expressed is not as important as the general message that the words convey.\nThe Scottish Parliament takes its place under our constitutional arrangements as a self standing democratically elected legislature.\nIts democratic mandate to make laws for the people of Scotland is beyond question.\nActs that the Scottish Parliament enacts which are within its legislative competence enjoy, in that respect, the highest legal authority.\nThe United Kingdom Parliament has vested in the Scottish Parliament the authority to make laws that are within its devolved competence.\nIt is nevertheless a body to which decision making powers have been delegated.\nAnd it does not enjoy the sovereignty of the Crown in Parliament that, as Lord Bingham said in Jackson, para 9, is the bedrock of the British constitution.\nSovereignty remains with the United Kingdom Parliament.\nThe Scottish Parliaments power to legislate is not unconstrained.\nIt cannot make or unmake any law it wishes.\nSection 29(1) declares 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.\nThen there is the role which has been conferred upon this court by the statute, if called upon to do so, to judge whether or not Acts of the Parliament are within its legislative competence: see section 33(1) and paragraphs 32 and 33 of Schedule 6, as amended by section 40 and paragraphs 96 and 106 of Schedule 9 to the Constitutional Reform Act 2005.\nThe question whether an Act of the Scottish Parliament is within the competence of the Scottish Parliament is also a devolution issue within the meaning of paragraph 1(a) of Schedule 6 to the Scotland Act in respect of which proceedings such as this may be brought in the Scottish courts.\nAgainst this background, as there is no provision in the Scotland Act which excludes this possibility, I think that it must follow that in principle Acts of the Scottish Parliament are amenable to the supervisory jurisdiction of the Court of Session at common law.\nThe much more important question is what the grounds are, if any, on which they may be subjected to review.\nThere is very little guidance as to how this question should be answered in the authorities.\nI do not think that we get much help from cases such as R v Secretary of the State for the Environment, Ex P Nottinghamshire County Council [1986] AC 240, R v Secretary of State for the Environment, Ex p Hammersmith and Fulham London Borough Council [1991] 1 AC 521 and Edinburgh District Council v Secretary of State for Scotland 1985 SC 261.\nThey were concerned with the exercise of delegated powers by ministers and, as the judges of the First Division said, 2011 SLT 439, para 83, none of them is directly in point in this case.\nAll I would take from them is that, even in these cases, a high threshold has been set.\nI also think that the situation that was considered in R (Asif Javed) v Secretary of State for the Home Department [2001] EWCA Civ 789, [2002] QB 129 which was concerned with a draft order which was laid by the Secretary of State and approved by both Houses of Parliament is so different from that which arises here that it can safely be left on one side.\nThe fact is that, as a challenge to primary legislation at common law was simply impossible while the only legislature was the sovereign Parliament of the United Kingdom at Westminster, we are in this case in uncharted territory.\nThe issue has to be addressed as one of principle.\nThe dominant characteristic of the Scottish Parliament is its firm rooting in the traditions of a universal democracy.\nIt draws its strength from the electorate.\nWhile the judges, who are not elected, are best placed to protect the rights of the individual, including those who are ignored or despised by the majority, the elected members of a legislature of this kind are best placed to judge what is in the countrys best interests as a whole.\nA sovereign Parliament is, according to the traditional view, immune from judicial scrutiny because it is protected by the principle of sovereignty.\nBut it shares with the devolved legislatures, which are not sovereign, the advantages that flow from the depth and width of the experience of its elected members and the mandate that has been given to them by the electorate.\nThis suggests that the judges should intervene, if at all, only in the most exceptional circumstances.\nAs Lord Bingham of Cornhill said in R (Countryside Alliance) v Attorney General [2007] UKHL 52, [2008] AC 719, para 45, the democratic process is liable to be subverted if, on a question of political or moral judgment, opponents of an Act achieve through the courts what they could not achieve through Parliament.\nThe question whether the principle of the sovereignty of the United Kingdom Parliament is absolute or may be subject to limitation in exceptional circumstances is still under discussion.\nFor Lord Bingham, writing extrajudicially, the principle is fundamental and in his opinion, as the judges did not by themselves establish the principle, it was not open to them to change it: The Rule of Law, p 167.\nLord Neuberger of Abbotsbury, in his Lord Alexander of Weedon lecture, Who are the masters Now? (6 April 2011), said at para 73 that, although the judges had a vital role to play in protecting individuals against the abuses and excess of an increasingly powerful executive, the judges could not go against the will of Parliament as expressed through a statute.\nLord Steyn on the other hand recalled at the outset of his speech in Jackson, para 71, the warning that Lord Hailsham of St Marylebone gave in The Dilemma of Democracy (1978), p 126 about the dominance of a government elected with a large majority over Parliament.\nThis process, he said, had continued and strengthened inexorably since Lord Hailsham warned of its dangers.\nThis was the context in which he said in para 102 that the Supreme Court might have to consider whether judicial review or the ordinary role of the courts was a constitutional fundamental which even a sovereign Parliament acting at the behest of a complaisant House of Commons could not abolish.\nWe do not need, in this case, to resolve the question how these conflicting views about the relationship between the rule of law and the sovereignty of the United Kingdom Parliament may be reconciled.\nThe fact that we are dealing here with a legislature that is not sovereign relieves us of that responsibility.\nIt also makes our task that much easier.\nIn our case the rule of law does not have to compete with the principle of sovereignty.\nAs I said in Jackson, para 107, the rule of law enforced by the courts is the ultimate controlling factor on which our constitution is based.\nI would take that to be, for the purposes of this case, the guiding principle.\nCan it be said, then, that Lord Steyns endorsement of Lord Hailshams warning about the dominance over Parliament of a government elected with a large majority has no bearing because such a thing could never happen in the devolved legislatures? I am not prepared to make that assumption.\nWe now have in Scotland a government which enjoys a large majority in the Scottish Parliament.\nIts party dominates the only chamber in that Parliament and the committees by which bills that are in progress are scrutinised.\nIt is not entirely unthinkable that a government which has that power may seek to use it to abolish judicial review or to diminish the role of the courts in protecting the interests of the individual.\nWhether this is likely to happen is not the point.\nIt is enough that it might conceivably do so.\nThe rule of law requires that the judges must retain the power to insist that legislation of that extreme kind is not law which the courts will recognise.\nAs for the appellants common law case, I would hold, in agreement with the judges in the Inner House (2011 SLT 439, para 88), that Acts of the Scottish Parliament are not subject to judicial review at common law on the grounds of irrationality, unreasonableness or arbitrariness.\nThis is not needed, as there is already a statutory limit on the Parliaments legislative competence if a provision is incompatible with any of the Convention rights: section 29(2)(d) of the Scotland Act 1998.\nBut it would also be quite wrong for the judges to substitute their views on these issues for the considered judgment of a democratically elected legislature unless authorised to do so, as in the case of the Convention rights, by the constitutional framework laid down by the United Kingdom Parliament.\nAre the 3rd to 10th respondents directly affected?\nRule 58.8(2) of the Rules of the Court of Session 1994, as amended by SSI 2000\/317, provides: Any person not specified in the first order made under rule 58.7 as a person on whom service requires to be made, and who is directly affected by any issue raised, may apply by motion for leave to enter the process; and if the motion is granted, the provisions of this Chapter shall apply to that person as they apply to a person specified in the first order.\nAn annotation to this rule in Greens Annotated Rules of the Court of Session printed in the Parliament House Book, vol 2, C 478\/4 states: The motion to enter the process should state the title and interest of the person.\nAlthough the phrase title and interest does not appear in rule 58.8(2), it is used in the form of petition for judicial review which is set out in Form 58.6.\nThat form, which is to be read together with Rule of Court 58.6(1), requires paragraph 1 of the petition to state the designation, title and interest of the petitioner.\nThe Lord Ordinary said that in his view the courts discretion under rule 58.8(2) is generous rather than restrictive, and that he could see no reason why the third to tenth respondents participation in these proceedings should be restricted: 2010 SLT 179, para 87.\nThe judges of the First Division accepted that the phrase any person who is directly affected by any issue raised in rule 58.8(2) comprehended a wide range of persons if it was considered in isolation.\nBut they said that its construction was constrained by the substantive law on title and interest: 2011 SLT 439, para 54.\nIn their view the amendment to rule 58.8(2) by SSI 2000\/317, and the introduction of rule 58.8A which made provision for public interest interventions, achieved a reasonable balance to respect the interests of all concerned.\nSo, before the third to tenth respondents could rely upon rule 58.8(2) to enter the process as parties, they had to demonstrate such a title and interest as would entitle them to do so: para 55.\nAs for the question whether any beneficiary, or potential beneficiary, of a general legislative measure had title to intervene as a responding party to counter any challenge to its validity, they said they had not been referred to any authority to support a positive answer to that proposition, and that there were important indications to the contrary.\nThey referred to D & J Nicol v Dundee Harbour Trustees 1915 SC (HL) 7, where the title of the pursuers to challenge the use of the ferries for excursions up the Tay was recognised as they were ratepayers but there was no suggestion that all other ratepayers could be convened as additional defenders to argue that the use of ferries for excursions was beneficial to their interests: para 56.\ndeclared: In D & J Nicol v Dundee Harbour Trustees at pp 12 13 Lord Dunedin By the law of Scotland a litigant, and in particular a pursuer, must always qualify title and interest.\nThough the phrase title to sue has been a heading under which cases have been collected from at least the time of Morisons Dictionary and Browns Synopsis, I am not aware that anyone of authority has risked a definition of what constitutes title to sue.\nI am not disposed to do so, but I think that it may fairly be said that for a person to have such title he must be a party (using the word in its widest sense) to some legal relation which gives him some right which the person against whom he raises the action either infringes or denies.\nAlthough he refrained from making any general pronouncement as to when there is title and when there is not (see p 17), he gave some examples.\nAt p 13 he said that the simplest case of all is where a person is the owner of something, which enabled him to have the right to sue in the vindication or defence of his property.\nNext in simplicity came contract, where the relation of contract gave the one party the right to insist on the fulfilment of the contract by the other.\nIt was argued in the Court of Session in Dundee Harbour Trustees that the pursuers had a title and interest to challenge the use of the ferries for excursions as rival traders.\nBut that contention was abandoned in the House of Lords by the pursuers counsel.\nLord Dunedin said at p 12 that he thought that he was right to do so: see also the Lord Chancellor (Haldane) at p 11.\nWhen a complainer can only say that he is a rival trader and nothing more, he qualifies an interest but not a title.\nThe Rule of Court 260B of the Rules of Court of Session 1965 which introduced the procedure for judicial review which is now to be found in Chapter 58 of the 1994 Rules was a procedural amendment only, which did not and could not alter the substantive law: West v Secretary of State for Scotland 1992 SC 385, 404.\nSo neither the nature nor the scope of the supervisory jurisdiction was altered by the introduction of the new rule.\nBut this does not mean that one cannot look at its nature and scope to decide what the substantive law is, and to see what it tells us about the test that should be applied to determine whether a person may bring proceedings of this kind and whether he may be permitted to enter the process as someone who is directly affected by the issues that are raised.\nThe Court said in West that the competency of an application for judicial review does not depend upon any distinction between public law and private law, and that it was not confined to those cases which have been accepted as amenable to judicial review in England: p 413.\nThat proposition was based on the review of the authorities that was undertaken in that case, and it remains true today.\nBut it would be wrong to take from it the idea that these proceedings have nothing to do with public law.\nOne of the benefits of the supervisory jurisdiction of decision taking in Scotland is that it is so wide ranging.\nIt is not confined to those cases which have been accepted as amenable to judicial review in England.\nIt extends from the field of private law on the one hand, as shown by cases such as Forbes v Underwood (1886) 13 R 465 in which the court exercised its jurisdiction to compel the performance of his duties by an arbiter under a private contract and McDonald v Burns 1940 SC 376 and St Johnstone Football Club Ltd v Scottish Football Association Ltd 1965 SLT 34 which could not be described as cases in the field of public law, to cases that undoubtedly lie within that field on the other.\nIn cases that lie within the private law sphere it will no doubt be appropriate to ask whether the petitioner has a title and interest to bring the proceedings in the sense indicated by Lord Dunedin.\nThe fact that a person upon whom a decision making function has been conferred by a private contract is amenable to the supervisory jurisdiction is not something that is likely to affect anyone other than the parties to the contract.\nIn that situation the application of the private law test as to whether a title and interest to bring and defend the proceedings has been demonstrated will be perfectly appropriate.\nBut it is hard to see the justification for applying that test which, as Lord Dunedins discussion in D & J Nicol v Dundee Harbour Trustees shows, is rooted in private law to proceedings which lie within the field of public law.\nIt was emphasised in West that the categories of what may amount to an excess or abuse of jurisdiction are not closed, and that they are capable of being adapted in accordance with the development of administrative law: p 413.\nTheir adaptation and development in the public interest risks being inhibited by a strict adherence to the private law requirement that title and interest must be shown before proceedings for judicial review may be brought or before a party who wishes to respond may enter the process.\nThe imbalance that exists between the way public interest issues may be dealt with in England and how they are still dealt with in Scotland can be seen from the very different view that was taken on either side of the Border of the standing of womens groups who objected to the visit to the United Kingdom of Mike Tyson, a convicted rapist, so that he could earn money here by appearing in the boxing ring.\nTheir attempts to bring proceedings for judicial review failed in both jurisdictions, but for quite different reasons.\nIn R v Secretary of State for the Home Department, Ex p Bindel [2001] Imm AR 1 Sullivan J held that Justice for Women did not have arguable grounds for interfering with the Secretary of States decision to grant Tyson a temporary visa to enter the country, not that they did not have a sufficient interest to bring the proceedings.\nBut in Rape Crisis Centre v Secretary of State for the Home Department 2000 SC 527 Lord Clarke applied Lord Dunedins dictum in D & J Nicol v Dundee Harbour Trustees 1915 SC (HL) 7, asking himself whether there was some legal relation which gave the petitioners some right which the person against whom they brought the proceedings either infringed or denied.\nHe held that the petitioners lacked the title to sue that was needed under Scots law to enable them to obtain a remedy, as the scope and function of the legislation under which the Secretary of State exercised his jurisdiction did not provide a legal nexus between him and the petitioners.\nHe said that they were in no different position from any other member of the public in that respect.\nBut he recognised at p 534 that, although Lord Dunedins dictum had stood the test of time, it was uttered in times well before the huge development of administrative law and judicial review that had taken place in recent decades.\nThe judges of the First Division, who were of course considering the position of the third to tenth respondents and not that of the petitioners, said that they were not referred to, and were not aware of, any authority to support the proposition that any beneficiary or potential beneficiary of a general legislative measure had a title to intervene as a responding party to counter an attack on its validity: 2011 SLT 439, para 56.\nThey referred to the decision in D & J Nicol v Dundee Harbour Trustees as an important indication to the contrary, and to the practical difficulty of identifying all those who might be benefited by an impugned measure.\nIn their view only the decision taker could appropriately expound the reasons for its decision, and nothing could be added to those reasons by benefited third parties.\nIn para 57 they said that to hold that these respondents were directly affected as beneficiaries of the 2009 Act would be to give an interpretation to the rule that went beyond matters of procedure and moved into the field of the substantive law of entitlement to defend.\nThe wording of the rule, if taken by itself, is plainly wide enough to cover the situation in which these respondents find themselves.\nThe positions of the appellants on the one hand and of the third to tenth respondents on the other as to the 2009 Act are, after all, really two sides of the same coin.\nAs the Lord Ordinary was surely right to point out, if these respondents as actual or potential pleural plaque claimants are not directly affected by its fate, it would be hard to regard the appellants as directly affected in that context either: 2010 SLT 179, para 87.\nI agree, of course, that the real issue that has to be addressed, if the third to tenth respondents are to succeed, is the substantive law to which the rule must be taken to give effect.\nBut the other points that the First Division made in para 56 of their opinion do not seem to me to answer the unfairness created by that paradox.\nAny practical difficulty in identifying all those who might be benefited by an impugned measure is answered by the point that the petitioner does not have to do this.\nIt is up to those who consider themselves to be in that position to make themselves known to the court.\nThe suggestion that only the decision taker could appropriately expound the reasons for its decision, and that nothing could be added to those reasons by benefited third parties, seems to run counter to the basic rule of natural justice that the other party to the argument has a right to be heard.\nAs for the substantive law, I think that the time has come to recognise that the private law rule that title and interest has to be shown has no place in applications to the courts supervisory jurisdiction that lie in the field of public law.\nThe word standing provides a more appropriate indication of the approach that should be adopted.\nI agree with Lord Reed (see para 170, below) that it cannot be based on the concept of rights, but must be based on the concept of interests.\nIt is worth noting that, as Friends of the Earth Scotland pointed out in their written intervention, in the 19th century Scots law was quite liberal in its approach to the question of standing in relation to what were said to be public wrongs.\nIn Torrie v Duke of Athol (1849) 12 D 328 three individuals sought declarator that a route through Glen Tilt was a public road and were permitted to do so although they were not seeking to vindicate any private right.\nIn Macfie v Blair and Scottish Rights of Way and Recreation Society Ltd (1884) 11 R 1094 the court sustained the Societys right to be sisted as a defender to the action in which it had no private right or interest but to seek to vindicate a public right whose promotion was one of its aims.\nAs Lord Clyde pointed out in Scottish Old Peoples Welfare Council, Petitioners 1987 SLT 179, 184 these and several other similar cases can be regarded as examples of an actio popularis.\nBut that does not seem to me to take anything away from the point that a person may have a sufficient interest to invoke the courts supervisory jurisdiction in the field of public law even although he cannot demonstrate that he has a title, based on some legal relation, to do so.\nLike Lord Dunedin in D & J Nicol v Dundee Harbour Trustees, I would not like to risk a definition of what constitutes standing in the public law context.\nBut I would hold that the words directly affected which appear in rule 58.8(2) capture the essence of what is to be looked for.\nOne must, of course, distinguish between the mere busybody, to whom Lord Fraser of Tullybelton referred in R v Inland Revenue Commissioners, Ex p National Federation of Self Employed and Small Businesses Ltd [1982] AC 617, 646, and the interest of the person affected by or having a reasonable concern in the matter to which the application related.\nThe inclusion of the word directly provides the necessary qualification to the word affected to enable the court to draw that distinction.\nA personal interest need not be shown if the individual is acting in the public interest and can genuinely say that the issue directly affects the section of the public that he seeks to represent.\nAs I consider that it is plain that the third to tenth respondents are directly affected by the appellants challenge to the 2009 Act, I would allow their cross appeal.\nConclusion\nFor these reasons and for the further reasons given by Lord Reed, I would dismiss the appeal and to that extent would affirm the interlocutor of the Inner House dated 12 April 2011.\nI would however, as I have just said, allow the cross appeal by the third to tenth respondents.\nI would set aside that part of the interlocutor of the Inner House in which the petitioners ninth plea in law was sustained and the answers for the third to tenth respondents were repelled.\nIn respect of those pleas in law I would restore the interlocutor of the Lord Ordinary dated 8 January 2010.\nLORD BROWN\nMany will have been disappointed by the unanimous decision of the House of Lords in Rothwell v Chemical & Insulating Co Ltd [2008] AC 281, fewer surprised.\nPleural plaques that neither cause symptoms nor increase susceptibility to other asbestos related conditions, were held not to constitute actionable damage for the purposes of a personal injury claim.\nOf course the existence of pleural plaques demonstrates that a persons lungs have been penetrated by asbestos fibres capable of causing various fatal diseases and naturally many who suffer them will be greatly worried on that account.\nIt is established law, however, that neither the risk of injury nor the apprehension of its happening are actionable.\nIn so far as a trilogy of first instance decisions in the mid 1980s had suggested the contrary one of them my own judgment in Patterson v Ministry of Defence [1987] CLY 1194, rejecting the contention that symptom free physiological change such as pleural plaques can alone constitute an actionable injury, but accepting that, taken together with the risk of future disease and anxiety, they do so (the so called theory of aggregation) they were wrong, as too was Smith LJs dissenting judgment in the Court of Appeal in Rothwell [2006] ICR 1458, itself substantially based on the aggregation theory.\nIn short, the answer to the question: is [a claimant with asymptomatic pleural plaques] appreciably worse off on account of having plaques? (the critical question identified by Lord Hoffmann in Rothwell at para 19), is no.\nOn all the medical evidence, he is no worse off than anyone else (a former workmate, say) who has experienced similar exposure to asbestos dust and logically, indeed, he has no greater reason (than such a former workmate) to worry about his future.\nDoubtless with these considerations in mind, the Westminster Government, following various attempts by private members to reverse the decision in Rothwell by legislation, introduced an extra statutory scheme, confined to those diagnosed with pleural plaques who had raised a claim for damages prior to 17 October 2007 (the date of the House of Lords decision in Rothwell), under which such claimants would receive a one off payment of 5,000 from government funds (upon application made prior to 1 August 2011).\nThe Scottish Parliament, however, and subsequently the Northern Ireland Assembly also, responded very differently to the decision in Rothwell, namely by legislating to reverse it.\nUnder this legislation, pleural plaques, notwithstanding that they are asymptomatic, are to be treated as having always constituted actionable harm so that all who suffer them, provided only they can establish the other elements of a cause of action, can claim against their erstwhile employers, claims for the most part to be met by the employers liability insurers.\nThe 2008 Regulatory Impact Assessment prepared prior to the Damages (Asbestos related Conditions) (Scotland) Act 2009 (the 2009 Act) suggested (at para 29) average settlement costs of 22,000 per case (based on 2003 4 figures), comprised of 8,000 compensation payment, 8,000 pursuers costs and 6,000 defenders costs.\nThe main differences, therefore, between the English (and Welsh) extra statutory scheme and the 2009 Act are: first, that the former is a no fault scheme, secondly, that the former is confined to claims made before the 2007 decision in Rothwell, and, thirdly, that the cost of the former (substantially less per case than the latter) is borne by government rather than designed to fall on the employers liability insurers.\nPut more broadly, the English scheme is intended at comparatively modest public expense to assuage the disappointment of those immediately affected by Rothwell; the Scottish legislation by contrast is calculated to create a new category of actionable bodily injury at enormous cost to insurers, estimated overall perhaps in billions of pounds.\nIt is, after all, difficult to suppose that the great majority of those Scottish workers who were exposed to asbestos in the course of their working lives will not now, albeit symptom free, consult solicitors and doctors so as to discover whether or not they have pleural plaques (or pleural thickening) with a view to claiming substantial damages damages essentially to compensate them for their anxiety as to the future (an anxiety in some cases actually precipitated, however illogically, by the very process of discovering these intrinsically harmless physiological changes).\nAnd sometimes, indeed, the worry experienced by those found to have these changes will then be accentuated still further by learning that they give rise to a substantial damages award which in itself suggests an obviously serious problem see Holland Js judgment at first instance in respect of Mr Quinn, one of the claimants in the Rothwell litigation: [2005] EWHC 88 (QB), [2005] PIQR P478, at para 22.\nThis is the essential context in which the present proceedings were brought: a claim by a number of insurance companies affected by the 2009 Act to challenge its lawfulness principally on the ground that it is incompatible with their property rights under article 1 of Protocol 1 (A1P1) to the Convention (albeit also on the common law ground of irrationality).\nWith regard to the claim under A1P1, it seems to me clear almost beyond argument that the appellants have victim status.\nTrue, their liability to claimants under the 2009 Act will only arise once all the elements of the relevant damages claims against the insured employers have been established and, true too, the appellants have expressly reserved their position as to whether liability under their various policies of insurance will actually then be engaged.\nBut nobody doubts that a very large number of claims will be established against employers and the clear underlying intention of the 2009 Act was that the cost of these claims should indeed fall on the insurers.\nThe latter point could hardly be more clearly illustrated than by a letter dated 28 November 2008 written by a government official in the course of the Bills preparation to Mr Maguire of Thompsons (the union solicitors promoting the Bill and assisting in its drafting): . [W]e are concerned that there is a risk that, if we specify on the face of the Bill that its provisions are for the purposes of the law of delict, defenders may seek to argue that there is no read across to other areas of the law, eg the interpretation of contracts.\nThis could place a significant barrier in the way of many potential claimants, if it were argued that it leaves pursuers with a delictual claim against an employer that is not covered by the employers insurance policy.\nIt is a pity that a meeting to discuss such issues could not take place before amendments were lodged on 25 November, especially as the process of disclosing our concerns to the Committee may also result in those concerns being drawn to the attention of those who may wish to utilise them in opposing claims for compensation, contrary to our intention and yours.\nOf course, we will endeavour to avoid that consequence so far as possible, but it is not entirely in our hands.\nThere is nothing further on this issue which I wish to add to Lord Hopes judgment on the point at paras 24 28 and Lord Reeds at paras 109 112 with which I wholly agree.\nIt follows that the critical questions arising on the A1P1 claim are, first, whether the 2009 Act pursues a legitimate aim and, secondly, whether the undoubted burden which it imposes on the appellants is reasonably proportionate to that aim.\nAt the heart of the appellants attack on the legitimacy and proportionality of this legislation lies the complaint that it is nakedly retrospective in its application.\nPut aside section 3 of the 2009 Act which is designed simply to ensure that no claim should be statute barred simply by virtue of the lapse of time between the decision in Rothwell and the coming into force of the Act twenty months later, ie whilst understandably in the light of Rothwell claimants would not be pursuing claims.\nAssuming that the Act is otherwise unobjectionable, no one could reasonably take exception to that provision a limitation holiday as Mr Aidan ONeill QC called it.\nRather the focus of the appellants argument is upon section 4(2) of the 2009 Act which, of course, stipulates that sections 1 and 2 of the Act which dictate that pleural plaques and other asymptomatic asbestos related conditions constitute actionable harm are to be treated for all purposes as having always had effect.\nIn other words, not merely is Rothwell being reversed in the sense that Parliament is providing that, in future, pleural plaques are to be regarded as constituting actionable harm.\nInstead Parliament is in effect providing that the legal position is to be as if the House of Lords in Rothwell had reached the opposite conclusion on the question before it a decision which then, of course, under the declaratory theory, would itself have had full retrospective effect.\nHad the House of Lords in Rothwell decided that asymptomatic pleural plaques of themselves constitute a non negligible personal injury and thus actionable damage decided in other words that in this particular context the common law should develop in this admittedly novel way the appellants would doubtless have deplored the decision but they could certainly not have questioned its legitimacy.\nNo doubt they would have resented the fact that, as a consequence of the decision, they would unexpectedly have had to pay out on claims resulting from the employees exposure to asbestos upwards of 20 years (quite likely up to 40 years) previously.\nBut they could no more have advanced an A1P1 challenge to this development of the law than they could have challenged the House of Lords decision some four years earlier in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22, [2003] 1 AC 32 to adopt a less stringent than the usual but for test for establishing the necessary causal connection between an employers negligence and a claimants condition in, most notably, mesothelioma cases.\nEmployers (and their liability insurers) necessarily take the risk of the common law developing in ways which may adversely affect them with regard to personal injury claims.\nWhy then, it may be asked, if the courts can adapt and develop (ie change) the law (albeit within well recognised constraining limits) to accord with what the judges consider to be the contemporary demands of justice, cannot Parliament with similar impunity change the law by legislation? After all, again in the broadly analogous context of mesothelioma claims, Parliament chose by section 3 of the Compensation Act 2006 (again, flatly contrary to the interests of the employers liability insurers and again, by section 16(3) of the Act, to be treated as having always had effect) to reverse the decision of the House of Lords in Barker v Corus UK Ltd [2006] 2 AC 572 (where the House had further developed the Fairchild principle but had limited the extent of any given defendants liability under that principle) on the issue of quantum.\nIt is not suggested that on that account insurers could successfully have had section 3 of the 2006 Act declared incompatible on A1P1 grounds.\nFor my part I have not found this an altogether easy question to answer.\nIt is not, I think, a sufficient answer merely to point to the declaratory theory of the common law the theory that judgments state what the law has always been, thereby on occasion correcting ex hypothesi erroneous earlier court decisions.\nIs the answer perhaps that judges are sworn to administer the law and the public must and do accept the law as the judges declare it to be but that legislation, where, as here, it retroactively interferes with what the judges have declared to be peoples property rights and is then challenged, has to be justified as legitimate and proportionate? If, as I believe, that essentially is the difference between these two ways in which peoples property rights may be adversely affected, it must surely be relevant, indeed highly relevant, to consider just how substantial a departure from the established legal position is being effected by the impugned legislation.\nWith these considerations in mind, I turn then to the particular circumstances of the present case.\nHow substantial a departure from the established common law position, one asks, is being effected by the 2009 Act? In one sense, of course, a very great departure indeed: Rothwell is being reversed.\nAnd it is being reversed in respect of pending claims (backed up claims as they were described in the Lord Ordinarys judgment at para 173) no less than future claims.\nI had, indeed, at one time wondered whether this undoubted, and deliberate, impact of the legislation upon pending claims might not of itself have vitiated the legislation by virtue of article 6 of the Convention, if not by reference to A1P1 itself see particularly the Zielinski v France (1999) 31 EHRR 532 line of Strasbourg authorities and Anna Jasiaks article, Changing the rules mid game.\nLegislative interference in specific pending cases: separation of powers and fair trial, Vienna Journal on International Constitutional Law, vol 4, Issue 1\/2010.\nThe Lord Ordinary, however, rejected the appellants complaint under article 6 (see paras 146 179 of his judgment) and the appellants have never thereafter sought to return to it understandably, I think, because a challenge of this nature must in reality stand or fall upon the effect of the legislation generally.\nIt would be absurd to strike down legislation like this (and, indeed, like section 3 of the Compensation Act 2006) merely because pending actions are included within its scope.\nAccordingly, instead of the respondents having to establish compelling grounds of the general interest (Zielinski at para 57), as is ordinarily required to justify legislation designed to influence the judicial determination of pre existing disputes (legislation which thus prima facie frustrates the administration of justice), they need demonstrate no more than that their claim to be acting in the public or general interest is not manifestly without reasonable justification (James v United Kingdom (1986) 8 EHRR 123, para 46, cited by Lord Hope at para 31).\nThis is, I need hardly add, a substantially easier test to satisfy.\nAs just stated, given that the 2009 Act is reversing Rothwell in respect of past claims no less than future ones all, indeed, save already determined claims its departure from the position established by Rothwell is in one sense extreme.\nBut its departure from the common law position as this was understood to be before the decision of the House of Lords in Rothwell is altogether less so.\nCertainly, as I suggested at the outset, the majority of those concerned with asbestos related claims are likely to have made a correct prediction of the eventual outcome of the litigation; the insurers would not have been expecting an adverse finding of liability.\nBut no one could sensibly have described it as a foregone conclusion and, as I also noted earlier, a number of judgments (including that of Smith LJ in the Court of Appeal in Rothwell itself) favoured a different result.\nIndeed, even in the House of Lords in Rothwell, Lord Rodger of Earlsferry said at para 84: The asbestos fibres cannot be removed from the claimants lungs.\nIn theory, the law might have held that the claimants had suffered personal injury when there were sufficient irremovable fibres in their lungs to cause the heightened risk of asbestosis or mesothelioma.\nBut the courts have not taken that line.\nThe clear inference is that the courts might have taken that line and would have been entitled to do so.\nParliament, therefore, cannot be regarded as having completely overturned a body of established law unambiguously supporting the appellants position so as to destroy what they could properly characterise as a legitimate expectation of being permanently immune from such claims.\nIt is not as if Parliament had declared, rather than that asymptomatic physical changes constitute actionable bodily harm, that any substantial proven exposure to asbestos fibres to an extent likely to result in their harmful ingestion should be thus actionable.\nAlthough the Dean of Faculty for the appellants suggested that realistically this is the effect of the 2009 Act pleural plaques themselves being intrinsically harmless and their real significance being their manifestation of substantial exposure to potentially lethal fibres the existence of demonstrable physical changes seems to me ultimately all important.\nBeguilingly though the appellants sought to characterise this legislation as no more than a labelling exercise, its description of asymptomatic pleural plaques as bodily injury being transparently designed to engage the employers liability insurance, the argument is in fact unsustainable.\nIt cannot be doubted that pleural plaques result from the ingestion of asbestos fibres and essentially what the legislation does is categorise these undoubted physical changes as actionable bodily injury.\nIt is this categorisation which falls to be contrasted with the common law position as earlier understood and, as I have already suggested, the contrast is really not that extreme.\nIt is essentially for these reasons, rather than because the appellants as insurers are in a business inevitably associated with risks and unpredictable events, that, in common with the other members of this Court, I am prepared, given the wide margin of appreciation properly accorded to a democratically elected body determining the public interest by reference, as here, to political, economic and social considerations, to regard this legislation (ill judged though many might regard it to be) as legitimate and proportionate and so immune from challenge under A1P1.\nHad the test been that of compelling grounds of public interest I should not have regarded it as satisfied.\nI am not, however, prepared to condemn this legislation as manifestly without reasonable justification.\nWith regard to the basis upon which legislation by the Scottish Parliament may be subject to common law review and the various other issues which arise for consideration on this appeal and cross appeal, there is nothing that I wish to add to the comprehensive judgments already given by Lord Hope and Lord Reed.\nI too would make the orders which they propose.\nLORD MANCE\nThere is very little to add to the comprehensive judgments given by Lord Hope and Lord Reed.\nI am in essential agreement with all their reasoning and conclusions, and make only a few observations on certain of the points arising.\nVictim status: I agree that the appellants have status to rely on the Convention rights within the meaning of section 7(7) of the Human Rights Act 1998, read with article 34 of the Convention.\nThe relevant Convention provision is article 1 of Protocol 1 (A1P1).\nAs Lord Hope (paras 21 22) and Lord Reed (paras 107 108) observe, it appears unlikely here to matter whether the present case engages the second sentence as well as the general principle contained in the first sentence of A1P1.\nI am like them satisfied that it engages the first sentence, and I would myself also think that it engages the second.\nWhether insurers position would in law be actually affected by the 2009 Act depends of course upon the future incidence of claims involving their insureds as well as the interpretation and application of the insurance policies issued to such insureds.\nBut it is sufficient for victim status under article 34 that there is a real risk that a persons Convention rights will be directly affected in the not too distant future: see e g Burden v United Kingdom (2008) 47 EHRR 857, para 35; Clayton and Tomlinson, The Law of Human Rights, 2nd ed (2009), paras 22.29 22.49.\nHere there is clearly such a risk.\nA, if not the, main target of the legislation was employers insurers, who (with their reinsurers) have borne the brunt of asbestos related claims over the last thirty or so years.\nThat is clear enough from the proceedings before the Scottish Parliament, as Lord Hope observes in para 27.\nIt is illustrated by the letter dated 5 December 2008 written by the Head of Damages and Succession of the Scottish Executives Civil Law Division to Mr Maguire of Thompsons, solicitors promoting the Bill which became the 2009 Act, expressing concern about the risk that any reference in the Bill to the law of delict could prevent a read across to other areas of law, e.g. the interpretation of insurance contracts.\nWhether and how far there may be such a read across is not a matter before the Supreme Court.\nThe only copy of an actual insurance policy before the Supreme Court is a Combined Legal Liability Insurance Policy issued by AXA Insurance UK plc to John Laing and Son Ltd of Page Street, London NW7 2ER through C E Heath & Co (London) Ltd for three years commencing 1 January 1977, covering the insured against all sums which the insured becomes legally liable to pay as damages in respect of bodily injury (including death or disease) sustained by an Employee arising out of and in the course of his employment or engagement by the Insured in the Business and caused within the Geographical Limits during the Period of Insurance.\nThe Geographical Limits were worldwide.\nThe respondents accepted that this policy is and others are likely to be subject to English, rather than Scottish, law.\nA Scottish Act will not on the face of it change the legal effect of an English insurance contract, even in Scotland.\nHowever, depending upon the particular policy language, the scope of the concept of bodily injury under a worldwide policy may respond to different conceptions of bodily injury in different parts of the world.\nHere, the question would be whether it would respond to a development or change, such as that introduced retrospectively by the 2009 Act, in the conception of bodily injury.\nI say no more about the answer, which may be elicited in another context or suit.\nSuffice it to say that insurers such as AXA have ample reason for direct concern about their forthcoming exposure.\nThe unreality of the objection to AXAs victim status is underlined by a consideration of the alternative.\nThat is that the (only) persons with victim status are employers.\nIt is perhaps curious that no employer has joined or been joined in these proceedings.\nBut in likelihood that underlines the reality, that the persons with real potential exposure are insurers.\nHowever, if the view were to be taken that insurers have no victim status, then employers clearly must have.\nThe 2009 Act could not be less vulnerable to challenge by them than it would be by insurers if insurers have victim status.\nRetrospectivity: The key to this issue is not in my view that insurance is a contract against risks.\nThere are always limits to the contingencies upon which insurers speculate, provided by the terms and conditions of the policy.\nFurther, insurers are normally entitled to expect that the liabilities, which their insured employers incur arising out of and in the course of [their] employment and which they insured under the specimen copy policy to which I have referred, will be liabilities capable of existing in law at the time of the occurrence during the relevant employment from which such liabilities arise.\nHence, the present challenge to the 2009 Act is based on the fact that it retrospectively converts into harm actionable in law physical changes which (it has been held in Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] AC 281) were not otherwise such, in the hope or expectation that the relevant policies will have to respond to that development.\nThe decision in Rothwell came decades after the relevant employment and insurance periods.\nBut it represents a decision as to what the common law is and in legal theory always was.\nThis is no mere incantation.\nIn the absence of any authoritative case law, responsible insurers can and will take a view as to the extent of their exposure, and conduct themselves accordingly.\nThey may, as here, be prepared to pay or accept limited claims for a limited period, without testing the legal position at an appellate level.\nBut there may come a time when, again as here, they test the position at the highest level.\nIt is an aspect of the rule of law that it is normally courts who determine what legal liabilities have from time to time been incurred as a result of past conduct, and that legislators leave that to courts.\nThere are however circumstances in which legislation with retrospective effect in respect of past conduct may be justified.\nOne example in the same area as the present is found in section 651(5), added to the Companies Act 1985 by the Companies Act 1989 to allow the restoration to the register of a company for up to 20 years.\nThe intended and actual effect was to reverse retrospectively insurers victory in Bradley v Eagle Star Insurance Co Ltd [1989] AC 957, where the House of Lords had held that it was impossible for Mrs Bradley to invoke the protection of the Third Party Rights against Insurers Act 1930 after her insured employer had not only become insolvent, but also been dissolved.\nThis victory conferred an uncovenanted windfall on liability insurers in precisely the circumstances in which they ought to have been in the front line of exposure.\nI recounted the story in Insolvency at Sea [1995] LMCLQ 34, 37.\nThe government was persuaded that retrospective legislation was justified.\nLord Templeman, who had dissented in the appellate committee, spoke twice to aid the legislative passage of the relevant clause in the Lords.\nA tribute should also be paid to the late Mr Robert Kiln of Kiln Underwriting Syndicate at Lloyds, well known liability underwriters, who had written to the government acknowledging the uncovenanted nature of the windfall.\nMrs Bradley was herself, I understand, able to pursue her claim.\nAnother potential example, unchallenged, is provided by section 3 of the Compensation Act 2006, reversing the decision of the House of Lords in Barker v Corus UK Ltd [2006] 2 AC 572 and so making all those exposing to asbestos persons subsequently contracting mesothelioma liable jointly and severally for the whole of the damage: see Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10; [2011] 2 WLR 523.\nSection 16 provided that: (3) Section 3 shall be treated as having always had effect. (4) But the section shall have no effect in relation to (a) a claim which is settled before 3 May 2006 (whether or not legal proceedings in relation to the claim have been instituted), or (b) legal proceedings which are determined before that date.\nThere were also specific provisions enabling the variation of settlements or determinations made on or after 3 May 2006 and before the date (25 July 2006) on which the Act was passed.\nThe key to the present appeal is that, when the relevant policies were issued and the relevant employment occurred, there was no certainty whatever how the law might treat claims for pleural plaques if and when they ever emerged.\nThe wave of asbestos related claims which hit the USA in the 1970s and the United Kingdom in the 1980s was itself very largely unforeseen by everyone, and claims for pleural plaques and questions about their impact on liability policies decades after expiry were far over the horizon.\nIt remained uncertain how the common law would treat such a phenomenon as pleural plaques, if and when this emerged as a source of potential claims, until the decision in Rothwell itself.\nIt was entirely possible to regard pleural plaques, when they emerged as a potential basis of claim, as an injury (see e g per Lord Hope, para 39 in Rothwell and cf per Lord Hoffmann, paras 8 9 discussing the symptomless, but none the less serious lung damage which was the subject of Cartledge v E Jopling & Sons Ltd [1963] AC 758).\nIt was possible to regard the bodily change that pleural plaques involve as constituting sufficient damage to give rise to a claim for personal injury, either by itself or when taken in conjunction with the anxiety resulting from knowledge of such plaques.\nA number of first instance courts had taken such a view, as did Holland J, as well as Smith LJ in the Court of Appeal, in Rothwell itself.\nInsurers cannot have been in any way certain of the position, and there is no suggestion that any insurer relied in any meaningful sense upon the common law position proving to be that which was ultimately established in Rothwell.\nIt is in these circumstances that the Scottish Parliament decided to enact the 2009 Act to replace the common law, as ultimately established by Rothwell, with a different, statutorily imposed result at which the common law might by itself always have arrived.\nNo doubt it was for financial reasons that the Scottish Parliament decided on this approach, rather than on an approach which would have imposed the resulting cost on Scottish taxpayers generally.\nOne can have reservations about a policy framed (as the Cabinet Secretary for Justice said on 13 December 2007) to avoid turning our backs on those who have contributed to the nations wealth, when those whose backs were intended to bear the resulting burden were not the nation at large to whose wealth the contribution had been made, but employers and insurers who had, on a proper understanding of the common law and the relevant policies, never contracted to bear such cost.\nHad the common law as established by Rothwell been clear when the relevant policies were written and the relevant employment occurred, or had it been possible for employers and\/or insurers to show that they had in the meantime relied to a meaningful extent upon the law being held to be as it was ultimately held in Rothwell, the position would have looked very different.\nBut under the circumstances as they are, I think that the Scottish Parliaments statutory intervention by the 2009 Act must on balance be regarded as legitimate, as within the scope of the judgment which it was entitled to make as to what was appropriate and as proportionate.\nI therefore agree that the appeal should be dismissed so far as it concerns compatibility of the 2009 Act with the Convention.\nCommon law review: All that I would add to what is said by Lord Hope and Lord Reed is that I question whether irrationality as a ground of review at common law is confined as closely to purpose as Lord Reed appears to regard it at the conclusion of his para 143.\nIn Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, Lord Diplock said of irrationality in the Wednesbury sense, that 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.\nThere can be decisions to take a familiar extreme example, a blatantly discriminatory decision directed at red headed people where, irrespective of any limitation on the purposes for which the decision maker might act, a court would regard what has been done as irrational, because of the way in which the decision operated.\nIf a devolved Parliament or Assembly were ever to enact such a measure, I would have thought it capable of challenge, if not under the Human Rights Convention, then as offending against fundamental rights or the rule of law, at the very core of which are principles of equality of treatment.\nLORD REED\nI gratefully adopt Lord Hopes account of the background to this appeal.\nThree important issues are raised.\nThe first is whether the Damages (Asbestos related Conditions) (Scotland) Act 2009 is incompatible with the Convention rights of insurers who are affected by it, as guaranteed by article 1 of the First Protocol to the European Convention for the Protection of Human Rights and Fundamental Freedoms (A1P1).\nIf so, it follows that the Act is outside the legislative competence of the Scottish Parliament, by virtue of section 29(2)(d) of the Scotland Act 1998, and is not law.\nThe significance of this issue is not confined to Scotland, since similar provisions are contained in the Damages (Asbestos related Conditions) Act (Northern Ireland) 2011.\nAccordingly, in addition to the submissions made on behalf of the appellants, the Lord Advocate representing the Scottish Ministers, and the third to tenth respondents, there were also written interventions on this issue by the Attorney General for Northern Ireland and the Northern Ireland Department of Finance and Personnel.\nThe second issue is of wider significance.\nIt is whether the 2009 Act is susceptible to review by the courts under the common law as an irrational exercise of legislative authority.\nSince such an issue could in principle arise in relation to any legislation enacted by any of the devolved legislatures, its constitutional importance is apparent.\nSubmissions were made on this issue not only on behalf of the appellants, the Lord Advocate, the Advocate General for Scotland representing the United Kingdom Government, and the third to tenth respondents, but also by the Counsel General for Wales on behalf of the First Minister of Wales.\nThe third issue is one of importance in Scottish public law.\nIt concerns the circumstances in which, in judicial review proceedings in Scotland, a person may be granted leave to take part in the proceedings as a person directly affected by any issue raised.\nThis issue arises in relation to the third to tenth respondents, who are individuals who have been diagnosed with pleural plaques, and whose cross appeal on this matter was supported by the Lord Advocate.\nThere was also a written intervention on this issue by Friends of the Earth Scotland.\nThe effect of the 2009 Act\nIn order to decide whether the 2009 Act constitutes an interference with the appellants possessions for the purposes of A1P1, it is necessary first to consider what the Act does.\nSection 1 provides: (1) Asbestos related pleural plaques are a personal injury which is not negligible. (2) Accordingly, they constitute actionable harm for the purposes of an action of damages for personal injuries. (3) Any rule of law the effect of which is that asbestos related pleural plaques do not constitute actionable harm ceases to apply to the extent it has that effect. (4) But nothing in this section otherwise affects any enactment or rule of law which determines whether and in what circumstances a person may be liable in damages in respect of personal injuries.\nThe effect of section 1 is to reverse, in relation to Scotland, the decision of the House of Lords in Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] AC 281 that asymptomatic pleural plaques do not constitute actionable harm.\nAlthough that was a decision in an English appeal, it was based on legal principles which are common to Scots and English law, and there can be no doubt that a Scottish case proceeding on the same factual findings would be decided, at common law, in the same way.\nThat position is altered by subsections (1) to (3), but only in respect of pleural plaques and not in respect of any other non harmful physiological changes.\nSubsection (4) preserves all other aspects of the law governing liability in damages for personal injuries.\nSection 2 is concerned with asymptomatic asbestos related pleural thickening and asbestosis.\nThese conditions resemble asymptomatic pleural plaques in that they do not cause impairment of a persons physical condition, but signify that the person has ingested asbestos fibres and is therefore at risk of serious disease.\nAs a result, although they are not harmful in themselves, their diagnosis is likely to result in considerable anxiety.\nSection 2 is in identical terms to section 1, mutatis mutandis, and removes the common law barrier to the actionability of such conditions while preserving all other aspects of the law governing liability.\nSection 3 is concerned with the law of limitation, and requires the period between the date when judgment was given in Rothwell and the date when the section came into force to be left out of account in the computation of time.\nThat section has to be read together with section 4(2), which provides that sections 1 and 2 are to be treated for all purposes as having always had effect.\nThus, whereas sections 1 and 2, if they stood alone, would create a cause of action as from the date when they came into force, the effect of section 4(2) is to deem them always to have had effect.\nThat has the consequence that causes of action may be deemed to have arisen before the date when sections 1 and 2 came into force, and may be time barred; but section 3 excludes from the computation of time the period between Rothwell and the date of entry into force of sections 1 and 2, during which the conditions in question were not actionable according to the law then in force.\nSection 4(2), by requiring sections 1 and 2 to be treated for all purposes as having always had effect, is also liable to affect the interpretation of contracts, including contracts of insurance, entered into before sections 1 and 2 came into force.\nFinally, it is relevant to note section 4(3), which excludes from the effect of sections 1 and 2 any claim which was settled before section 4(2) came into force, and any legal proceedings which were determined before that date.\nClaims which have been determined are therefore not affected by the Act.\nSince the Act renders pleural plaques (and the analogous conditions mentioned in section 2) actionable, it has the effect of rendering persons liable in damages in respect of pleural plaques sustained as a result of their fault.\nThe pleural plaques may have been sustained before or after the Act came into force.\nThe fault, on the other hand, will have occurred long before the pleural plaques were sustained, the lapse of time between exposure to asbestos and the development and diagnosis of pleural plaques being measured in decades.\nSince the use of asbestos in industry has been virtually eliminated in this country, almost all claims brought as a result of the Act will relate to fault which occurred long before the Act came into force.\nIn practice, the persons who are rendered liable in damages as a result of the Act are in most cases employers in industries, such as shipbuilding, in which asbestos was formerly used.\nMost such employers were at all material times insured against liability for bodily injury or disease sustained by their employees, such insurance being compulsory, for employers other than certain public bodies, in terms of the Employers Liability (Compulsory Insurance) Act 1969.\nThe 2009 Act may thus have the effect of rendering insurers liable to indemnify employers under policies of employers liability insurance, depending in any individual case upon the interpretation of the policy.\nFurthermore, where such an employer has become insolvent or has been wound up, its rights against the insurer in respect of the liability vest in the person to whom the liability was incurred, by virtue of the Third Parties (Rights against Insurers) Act 1930.\nSubsequent to the enactment of the 2009 Act, the Third Parties (Rights against Insurers) Act 2010 has in addition made provision for such a person to bring proceedings directly against the insurer, without having first established the liability of the insured.\nAs a result of this statutory framework, and the step in clauses normally included in the relevant policies of insurance, it is in reality insurers rather than the insured employers who generally respond to claims, negotiate settlements, conduct or compromise legal proceedings, and assume liability for the payment of any sums which may be found or agreed to be due.\nIn addition, it is not uncommon, in industries such as shipbuilding, for the former employers of persons exposed to asbestos to be in liquidation, or to have been struck off the Register of Companies.\nFor all these reasons, many if not most legal proceedings on behalf of former employees are in reality directed against the insurers.\nThe Rothwell case was itself litigated by insurers; and the 2009 Act is designed to deprive them of the fruits of their victory.\nArticle 1 of the First Protocol\nA1P1 in substance guarantees the right of property.\nIn its judgment in the case of Sporrong and Lnnroth v Sweden (1982) 5 EHRR 35, para 61, the European Court of Human Rights analysed A1P1 as comprising three distinct rules.\nThe first is a rule of a general nature, set out in the first sentence of the first paragraph, which enunciates the principle of the peaceful enjoyment of property (Every natural or legal person is entitled to the peaceful enjoyment of his possessions).\nThe second is the rule contained in the second sentence of the first paragraph, which covers deprivation of possessions and subjects it to certain conditions (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).\nThe third rule, stated in the second paragraph, is an explicit recognition that states are entitled, amongst other things, to control the use of property in accordance with the general interest.\nThe Strasbourg court also observed in its Sporrong and Lnnroth judgment that, before inquiring whether the first general rule has been complied with, it must determine whether the last two are applicable.\nThose observations were repeated by the court in its judgment in the case of James v United Kingdom (1986) 8 EHRR 123, para 37, where it added that the three rules are not distinct in the sense of being unconnected: the second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property, and should therefore be construed in the light of the general principle enunciated in the first rule.\nThese statements have been reiterated many times in the subsequent case law of the court.\nAssessment of whether there has been a violation of A1P1 thus involves consideration of whether a possession exists, whether there has been an interference with the possession, and, if so, the nature of the interference: whether, in particular, it constitutes a deprivation of the possession falling within the second rule, or a control on use falling within the third rule, or falls within the more general principle enunciated in the first rule.\nGiven that the second and third rules are only particular instances of interference with the right guaranteed by the first rule, however, the importance of classification should not be exaggerated.\nAlthough, where an interference is categorised as falling under the second or third rule, the Strasbourg court will usually consider the question of justification under reference to the language of those specific provisions of A1P1, the test is in substance the same, however the interference has been classified.\nIf an interference has been established, it is then necessary to consider whether it constitutes a violation.\nIt must be shown that the interference complies with the principle of lawfulness and pursues a legitimate aim by means that are reasonably proportionate to the aim sought to be achieved.\nThis final question focuses upon the question whether a fair balance has been struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights (Sporrong and Lnnroth, para 69).\nIn that regard, the Strasbourg court accepts that a margin of appreciation must be left to the national authorities.\nThe status of victim\nThe text of the guarantee makes clear that it can be relied upon by either a natural or a legal person, but in either case an application can be made to the Strasbourg court only by a person claiming to be the victim of a violation: article 34 of the Convention.\nThat requirement is reflected at a domestic level in section 7(7) of the Human Rights Act 1998, and also in section 100(1) of the Scotland Act, which provides that the Act does not enable a person (other than a law officer) to rely on any of the Convention rights in any proceedings unless he would be a victim for the purposes of article 34.\nIn reliance upon that provision, counsel for the Lord Advocate, and counsel for the third to tenth respondents, submitted that the appellants could not rely upon A1P1 in these proceedings, since they were not affected directly and personally by the 2009 Act so as to qualify as victims of an interference with their possessions.\nThis argument had two related aspects.\nThe first was that since any effect which the Act might have upon the appellants was consequential upon the effect which it had upon their insured, it followed that the true victim, if any, was the insured rather than the insurer.\nThe second aspect of the argument was that the effect, if any, of the 2009 Act upon the appellants depended in any event upon its application in individual cases.\nUnless and until a liability arising under the Act was established against an insured wrongdoer, and that liability was thereafter held to fall within the ambit of a policy of insurance written by an individual appellant, it could not be said that any of the appellants was affected by the Act.\nI find the argument unpersuasive.\nIt is necessary to bear in mind in the first place that the Convention is concerned with the reality of a situation rather than its formal appearance, so as to ensure that it guarantees rights that are practical and effective.\nThe interpretation of the concept of a victim is correspondingly broad: as the Strasbourg court has observed, an excessively formalistic interpretation of that concept would make protection of the rights guaranteed by the Convention ineffectual and illusory (Lizarraga v Spain (2004) 45 EHRR 1039, para 38).\nIt is also well established that a person can claim to be a victim of a violation of the Convention in the absence of an individual measure of implementation: as the Strasbourg court stated in Burden v United Kingdom (2008) 47 EHRR 857, para 34, it is open to a person to contend that a law violates his rights, in the absence of an individual measure of implementation, if he is a member of a class of people who risk being directly affected by it.\nIndividuals have been held to be victims by virtue of legal situations which, for example, permitted corporal punishment in schools (Campbell and Cosans v United Kingdom (1980) 3 EHRR 531, para 116), conferred on children born out of wedlock inheritance rights inferior to those enjoyed by children born in wedlock (Marckx v Belgium (1979) 2 EHRR 330, para 27), restricted the provision of information concerning abortion clinics (Open Door Counselling and Dublin Well Woman v Ireland (1992) 15 EHRR 244, para 44), or prevented sisters who lived together from enjoying the same exemption from inheritance tax as married or same sex couples (Burden v United Kingdom), even in the absence of the practical application to those individuals of the laws in question.\nOn the other hand, where a person is not at risk of a violation of a Convention right unless and until a particular decision is taken, for example as to deportation, the person cannot claim to be a victim unless and until such a decision is in fact made (Vijayanathan and Pusparajah v France (Application Nos 17550\/90 and 17825\/91) (unreported) 27 August 1992, para 46).\nIn the present case, it is clear that the 2009 Act will, as a matter of practical reality, affect insurers as a class, as it is intended to do.\nWhere employers were insured at the material time and the insurance policies now have to be interpreted as covering the conditions in question, the economic consequences of the Act will fall solely upon the insurers, and will not be secondary to economic consequences felt by their insured.\nFor that reason, the suggested analogy with the relationship between a company and its shareholders (under reference to such cases as Agrotexim v Greece (1995) 21 EHRR 250), or that between a mutual insurance company and its policyholders (under reference to the admissibility decision of the European Commission on Human Rights in Wasa Liv msesidigt v Sweden (Application No 13013\/87) (unreported) 14 December 1988), does not hold good.\nIn addition, if the insurers cannot challenge the Act in the present proceedings, it is uncertain whether there are any other proceedings in which their rights under A1P1 can be protected.\nIt is difficult to see how the A1P1 rights of an insurer could be asserted in proceedings brought under the Act against the insured, since the court would not be concerned in such proceedings with the effect upon a third party of an award of damages against the insured.\nThere may be a question whether the validity of the Act could be determined in any subsequent proceedings for indemnification brought against the insurer, where the issue would be the interpretation of the insurance policy.\nIn these circumstances, it would in my opinion be mistaken to deny the appellants the status of victims on the basis that they are not directly affected by the Act: so restrictive an interpretation of article 34 would run counter to the object of the Convention in general and article 34 in particular.\nInterference with possessions\nAs I have explained, the 2009 Act has the effect of imposing a liability in damages upon employers and others who wrongfully exposed individuals to asbestos, causing them to sustain one of the conditions mentioned in the Act.\nWhere the employer or other wrongdoer was insured, the Act consequently imposes a corresponding liability in indemnification upon the insurer, provided such liability is consistent with the interpretation of the contract of insurance which is applicable in any particular case.\nSubject to that proviso, therefore, the practical effect of the Act upon insurers is to alter the effect of insurance contracts by bringing within their scope conditions which were not previously covered.\nThe liabilities of the insurers under the relevant contracts are thereby increased.\nThe premiums payable under the relevant contracts cannot now be increased to reflect these liabilities, as the periods of cover expired long ago.\nThe question which arises is whether this situation constitutes an interference with possessions within the meaning of A1P1, and, if so, how the interference should be categorised by reference to the three rules identified by the Strasbourg court.\nThe concept of possessions has been interpreted by that court as including a wide range of economic interests and assets, but one paradigm example of a possession is a persons financial resources.\nThat is implicitly reflected in the recognition, in the second paragraph of A1P1, that the preceding provisions do not impair the states right to secure the payment of taxes or other contributions or penalties.\nIn the case of an insurance company, the fund out of which it meets claims must therefore constitute a possession within the meaning of the article.\nLegislation which has the object and effect of establishing a new category of claims, and which in consequence diminishes the fund, can accordingly be regarded as an interference with that possession.\nIt may be more difficult to categorise this interference in terms of the three rules identified by the Strasbourg court.\nIt is not entirely clear from the Strasbourg jurisprudence whether the exposure of an insurance company to additional contractual liabilities, and consequent costs, should be characterised as a deprivation of possessions or a control on their use, to be examined solely under the second or third rule.\nAs I have explained, however, those rules are only particular instances of interference with the right to peaceful enjoyment of property guaranteed by the general rule set out in the first sentence of A1P1.\nThe question which then arises is whether the interference with the appellants property rights is compatible with that general rule.\nI note that a similar approach was adopted by the Strasbourg court in the case of Bck v Finland (2004) 40 EHRR 1184, para 58, which also concerned legislation that affected pre existing contractual arrangements, with financial consequences for the applicant.\nThe lawfulness of the interference\nThe Strasbourg court has often said that the first and most important requirement of A1P1 is that any interference by a public authority with the peaceful enjoyment of possessions should be lawful (see, for example, Iatridis v Greece (1999) 30 EHRR 97, para 58).\nIn this context, as elsewhere in the Convention, the concept of law does not merely require the existence of some domestic law, but requires it to be compatible with the rule of law (see eg James v United Kingdom, para 67).\nIn reliance upon that principle, it was argued on behalf of the appellants that the 2009 Act was incompatible with the rule of law by reason of its retroactive effects, which were destructive of legal certainty.\nCounsel for the Lord Advocate stoutly denied that the Act was retroactive in its effects, but this appears to me to be an untenable position.\nBy rendering actionable conditions which have a latency period of twenty years or so, the Act has for the first time made employers (and possibly others) liable in damages for conduct in the past which has caused such conditions.\nFurthermore, by doing so, and a fortiori by deeming such conditions always to have constituted actionable damage, the Act is designed to render insurers liable to indemnify their insured in respect of liabilities for damage of a kind which, on a correct understanding of the law as it then stood (as subsequently established in Rothwell), was not actionable at the time when the relevant policies were written or during the period of cover.\nThese are retroactive effects: the legal consequences of what was done in the past will be governed not by the law in force at that time but by an Act passed many years later.\nThe concept of the rule of law is of fundamental importance to the Council of Europe, as appears from its Statute, in particular the Preamble and Article 3.\nIt is endorsed in the Preamble to the Convention, and the Strasbourg court has described it as being inherent in all the articles of the Convention (Malama v Greece, (Application No 43622\/98) (unreported) 1 March 2001, para 43).\nThe concept has been variously interpreted: most notably, in this country, by Lord Bingham (The Rule of Law, 2010).\nIt has also recently been considered by the European Commission for Democracy through Law, better known as the Venice Commission, which is the Council of Europes advisory body on constitutional matters.\nIts Report on the Rule of Law, adopted in March 2011, employed Lord Binghams definition of the rule of law: all persons and authorities within the state, whether public or private, should be bound by and entitled to the benefit of laws publicly made, taking effect (generally) in the future and publicly administered in the courts (para 36).\nThe Commission identified legal certainty as an aspect of the rule of law, and noted that legal certainty requires that the law be accessible and foreseeable in its effects.\nIt also observed: Legal certainty requires that legal rules are clear and precise, and aim at ensuring that situations and legal relationships remain foreseeable.\nRetroactivity also goes against the principle of legal certainty, at least in criminal law (article 7 ECHR), since legal subjects have to know the consequences of their behaviour; but also in civil and administrative law to the extent it negatively affects rights and legal interests (para 46).\nThe Strasbourg court has itself interpreted conformity to the rule of law as requiring, amongst other things, that the relevant domestic law must be adequately accessible and sufficiently precise to be foreseeable in its effects (Lithgow v United Kingdom (1986) 8 EHRR 329, para 110), and that it should not operate in an arbitrary manner (Hentrich v France (1994) 18 EHRR 440, para 42).\nThe criteria of accessibility and foreseeability are not absolute; nor is the prohibition of arbitrariness incompatible with the existence of discretion.\nThe court has often said that the effect of these requirements in a given situation depends upon the particular circumstances (see eg Sunday Times v United Kingdom (1979) 2 EHRR 245, para 49).\nIn the criminal sphere, the Convention allows only a limited scope for retroactive legislation: the principles encapsulated in the maxim nullum crimen sine lege, nulla poena sine lege are reflected in article 7.\nThe position is different in the civil sphere.\nChanges in the law, even if resulting from prospective legislation or judicial decisions, will frequently and properly affect legal relationships which were established before the changes occurred.\nChanges in family law, for example, are not applicable only to families which subsequently come into existence, but affect existing families, even although the changes may not have been foreseeable at the time when individuals married or had children.\nSimilarly, a person who buys a house, or a company that employs staff, cannot expect the law governing the rights and responsibilities of homeowners or employers to remain unchanged throughout the period of ownership or employment.\nThe same point could be made in respect of other types of right and obligation of a civil character.\nAs Lon Fuller observed in The Morality of Law (revised ed 1969), p 60: If every time a man relied on existing law in arranging his affairs, he were made secure against any change in legal rules, the whole body of our law would be ossified forever.\nA distinction might, however, be drawn between laws which alter prospectively the rights and obligations arising from pre existing legal relationships, and laws which alter such rights and obligations retrospectively.\nTo the extent that laws of the latter kind may undermine legal certainty more severely, they may be more difficult to justify, but there can be no doubt that justification for such laws sometimes exists.\nIt may exist, in particular, when the legislation has a remedial purpose.\nAs Fuller remarked, at p 53: It is when things go wrong that the retroactive statute often becomes indispensable as a curative measure; though the proper movement of law is forward in time, we sometimes have to stop and turn about to pick up the pieces.\nAs I shall explain, this point has also been noted by the Strasbourg court.\nIn particular, because judicial decisions normally operate retrospectively in accordance with the declaratory theory of adjudication, such decisions may upset existing expectations or arrangements, as Lord Nicholls of Birkenhead observed in In re Spectrum Plus Ltd [2005] UKHL 41, [2005] 2 AC 680, paras 6 to 8: from time to time court decisions on points of law represent a change in what until then the law in question was generally thought to be.\nThis happens most obviously when a court departs from, or an appellate court overrules, a previous decision on the same point of law A court ruling which changes the law from what it was previously thought to be operates retrospectively as well as prospectively People generally conduct their affairs on the basis of what they understand the law to be.\nThis retrospective effect of a change in the law of this nature can therefore have disruptive and seemingly unfair consequences.\nIn such circumstances, retrospective legislation which restores the position to what it was previously understood to be may not be incompatible with legal certainty or the rule of law.\nThe Strasbourg court has recognised that the fact that legislation in the civil sphere has retroactive effects does not necessarily mean that it is incompatible with the rule of law or the Convention.\nIn relation to A1P1, in particular, the court has considered retroactive effects in its assessment of proportionality rather than when considering the lawfulness of the interference, and has found such effects to be objectionable only in particular circumstances where they imposed an individual and excessive burden upon the applicant.\nIn the case of Mellacher v Austria (1989) 12 EHRR 391, for example, which concerned the introduction of rent controls that were applicable to existing leases, the court stated (para 51), in its consideration of proportionality, that in remedial social legislation, and in particular in the field of rent control, it must be open to the legislature to take measures affecting the further execution of previously concluded contracts in order to attain the aim of the policy adopted.\nIn the case of Zielinski v France (1999) 31 EHRR 532, which concerned a retrospective change in employment law and was brought under article 6(1), the court stated (para 57) that while in principle the legislature is not precluded in civil matters from adopting new retrospective provisions to regulate rights arising under existing laws, the principle of the rule of law and the notion of fair trial enshrined in article 6 preclude any interference by the legislature other than on compelling grounds of the general interest with the administration of justice designed to influence the judicial determination of a dispute.\nIn the case of Bck v Finland, which concerned legislation enabling courts to authorise arrangements under which a debtors pre existing obligations to his creditors were modified, the court stated (para 68) that neither the Convention nor its Protocols preclude the legislature from interfering with existing contracts.\nIn the present case, section 4(3) of the 2009 Act expressly excludes from the effect of sections 1 and 2 any claim which was settled before section 4(2) came into force, and any legal proceedings which were determined before that date.\nThe effect of the Act is therefore restricted to new claims, and outstanding claims which had not been disposed of.\nNo point is taken by the appellants in relation to the effect of the Act upon any pending proceedings.\nIn those circumstances, and having regard to the Strasbourg authorities which I have mentioned, the fact that the Act may alter the continuing effects of insurance contracts entered into in the past does not appear to me necessarily to offend against the rule of law as reflected in A1P1.\nWhether it renders the Act incompatible with A1P1 therefore turns upon an assessment of proportionality.\nI shall return to it in that context.\nThe aim of the interference\nAn interference with possessions requires to be justified as being necessary in the public or general interest.\nIn that regard, the Strasbourg court allows national authorities a wide margin of appreciation in implementing social and economic policies, and will respect their judgment as to what is in the public or general interest unless that judgment is manifestly without reasonable justification (James v United Kingdom, para 46).\nAt the domestic level, courts require to be similarly circumspect, since social and economic policies are properly a responsibility of the legislature, and policy making of this nature is amenable to judicial scrutiny only to a limited degree.\nIn the present case, the facts and policies underlying the Scottish Parliaments assessment that the provisions of the 2009 Act were necessary in the general interest are reasonably clear.\nPleural plaques, and the other conditions mentioned in the Act, are pathological changes in the body.\nAs Lord Hope observed in the Rothwell case, para 38, they may be described as a disease or an injury.\nAlthough they are not in themselves harmful to health, their presence signifies that the person has ingested asbestos fibres and is at appreciable risk of developing a serious disease and suffering a premature death.\nIn consequence, the diagnosis of those conditions can cause a great deal of worry.\nThe conditions are usually a consequence of fault on the part of employers, asbestos having long been known to be harmful to health.\nAsbestos related conditions are relatively prevalent in parts of Scotland where industries using asbestos were concentrated.\nFor a period of about 20 years prior to Rothwell, compensation was paid by insurers to persons who had sustained pleural plaques as a result of the fault of their employers.\nAgainst that background, the Scottish Parliament considered it appropriate, as a matter of social policy, to legislate to reverse the Rothwell decision, so as to ensure that compensation continued to be paid to persons in that position.\nIt cannot be said by a court that the Parliaments judgment that that was in the public interest was manifestly unreasonable.\nThe proportionality of the interference\nIn order for an interference with possessions to be compatible with A1P1, it must not only be lawful and in the general interest, but there must also be a reasonable relationship of proportionality between the means employed and the aim sought to be realised.\nThis involves an assessment of whether a fair balance has been struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights: the individual should not be required to bear an individual and excessive burden (James v United Kingdom, para 50).\nIn making that assessment at the international level, the Strasbourg court has allowed national authorities a wide margin of appreciation (see eg JA Pye (Oxford) Ltd v United Kingdom (2007) 46 EHRR 1093, para 75).\nIn the present case, emphasis was placed by counsel for the appellants upon the retroactive effects of the 2009 Act.\nInsurers would have to meet claims in respect of conditions which were not actionable at the time when the policies were written and were not in contemplation when the premiums were set.\nReference was made to Strasbourg cases concerned with legislation which extinguished pre existing claims which were the subject of pending proceedings, including Pressos Compania Naviera SA v Belgium (1995) 21 EHRR 301 and Draon v France (2005) 42 EHRR 807.\nThe imposition of a liability with retroactive effect was, it was suggested, the mirror image of such cases.\nIf the Scottish Parliament considered that there was a compelling reason for the payment of compensation, such compensation could be paid out of public funds, as under the Pleural Plaques Former Claimants Payment Scheme introduced in England and Wales, rather than the burden being placed on insurers.\nIt was pointed out that the insurers had not themselves been at fault, and it was argued that the fault of their insured did not in itself make it proportionate to require the insurers to indemnify them.\nThe assessment of proportionality requires careful consideration of the particular facts.\nConsidering the specific circumstances of this case, one aspect of importance is that, at the time when insurers entered into contracts of the type which are affected by this legislation, it could not have been predicted with confidence whether asymptomatic pleural plaques and other analogous conditions would be treated by the law as actionable or not.\nIt would be artificial to maintain that insurers provided insurance in the 1970s or 1980s on the basis of the law as it was subsequently established in Rothwell.\nEven at the time of the Rothwell case, its outcome could not have been predicted with certainty: the argument which was ultimately rejected by the House of Lords was sufficiently attractive to have persuaded a number of judges in the lower courts.\nA second relevant aspect is that pleural plaques were regarded as actionable for about 20 years prior to the decision in Rothwell.\nCourts awarded damages for them, and employers and their insurers settled many claims.\nInsurers treated such claims as one of the risks which they had underwritten.\nThe 2009 Act does not require them to do any more than that.\nIn that sense, it can be regarded as preserving the status quo which existed before a correct understanding of the legal position was established as a result of the Rothwell litigation.\nIt is of course true that the Scottish Parliament could have opted to compensate individuals affected by pleural plaques out of public funds rather than seeking to place a burden upon insurers.\nThe scheme operating in England and Wales, however, compensates only persons who had begun but not resolved a pleural plaques claim at the time of the Rothwell decision, and the compensation available is restricted to a payment of 5,000.\nThose limitations reflect an assessment that compensation should be paid out of public funds, and of how a fair balance should then be struck between the interests of those individuals who were affected by the Rothwell decision and the other demands on the public purse.\nThe fact that that assessment was made in England and Wales does not entail that the same assessment ought to have been made in Scotland; nor does the fact that a publicly funded scheme would avoid any burden being placed on insurers entail that a scheme which imposes such a burden is disproportionate.\nAs the Strasbourg court observed in James v United Kingdom, para 51, in relation to a similar argument: This amounts to reading a test of strict necessity into the article, an interpretation which the Court does not find warranted.\nThe availability of alternative solutions does not in itself render the leasehold reform legislation unjustified; it constitutes one factor, along with others, relevant for determining whether the means chosen could be regarded as reasonable and suited to achieving the legitimate aim being pursued, having regard to the need to strike a fair balance.\nProvided the legislature remained within these bounds, it is not for the Court to say whether the legislation represented the best solution for dealing with the problem or whether the legislative discretion should have been exercised in another way.\nThe concept of the margin of appreciation reflects a recognition on the part of the Strasbourg court that in certain circumstances, and to a certain extent, national authorities are better placed than an international court to determine the outcome of the process of balancing individual and community interests.\nAt the domestic level, the courts also recognise that, in certain circumstances, and to a certain extent, other public authorities are better placed to determine how those interests should be balanced.\nAlthough the courts must decide whether, in their judgment, the requirement of proportionality is satisfied, there is at the same time nothing in the Convention, or in the domestic legislation giving effect to Convention rights, which requires the courts to substitute their own views for those of other public authorities on all matters of policy, judgment and discretion.\nAs Lord Bingham of Cornhill observed in Brown v Stott 2001 SC (PC) 43, 58 59, [2003] 1 AC 681, 703: Judicial recognition and assertion of the human rights defined in the Convention is not a substitute for the processes of democratic government but a complement to them.\nWhile a national court does not accord the margin of appreciation recognised by the European court as a supra national court, it will give weight to the decisions of a representative legislature and a democratic government within the discretionary area of judgment accorded to those bodies.\nThe intensity of review involved in deciding whether the test of proportionality is met will depend on the particular circumstances.\nAs Lord Hope explained in R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326 at p 381, the relevant circumstances include whether, as in the present case, the issue lies within the field of social or economic policy.\nAs I have explained, it is at the stage of considering proportionality that the Strasbourg court has generally taken account of the retroactive effects of legislative changes.\nIn Bck v Finland, for example, the court stated (para 68) that neither the Convention nor its Protocols preclude the legislature from interfering with existing contracts; that a special justification was required for such interference; and that, in the circumstances of that case, there were special grounds of sufficient importance to warrant it.\nThe court attached importance, in that regard, to the nature of the legislation in question, observing that in remedial social legislation it must be open to the legislature to take measures affecting the further execution of previously concluded contracts in order to attain the aim of the policy adopted.\nThe court also attached significance to the fact that the applicant had, at the time of entering into the contract in question, accepted a risk of financial loss (para 62).\nOther Strasbourg cases, such as The National & Provincial Building Society, The Leeds Permanent Building Society and The Yorkshire Building Society v United Kingdom (1997) 25 EHRR 127 and OGIS Institut Stanislas, OGEC St Pie X et Blanche de Castille v France, (Application Nos 42219\/98 and 54563\/00) (unreported) May 2004, afford illustrations of situations where retrospective legislation designed to remedy a problem perceived as resulting from a judicial decision was held to be justified.\nThe present case also is concerned with remedial social legislation, the 2009 Act being designed to remedy the social problem perceived as resulting from the Rothwell decision: a problem which, if it were to be fully resolved by reversing that decision, so that insurers would continue to accept claims in respect of pleural plaques and related conditions as they had done for the previous twenty years, necessitated a remedy which altered the effect of existing contracts of insurance with retrospective effect.\nIn addition, as I have explained, that decision could not realistically be regarded as representing the basis upon which the contracts in question were entered into.\nIn the light of those specific circumstances, I have reached the conclusion that, notwithstanding its retroactive effects, the 2009 Act cannot be regarded as having failed to strike a reasonable balance between the rights of insurers under A1P1 and the general interest in ensuring that persons suffering from pleural plaques and related conditions should continue to receive compensation.\nIt follows that the challenge to the validity of the Act on the basis of A1P1 must be rejected.\nReview on common law grounds introduction\nThe appellants maintain in their pleadings that, in passing the 2009 Act, the Scottish Parliament acted in a manner which was unreasonable, irrational and arbitrary, and that the Act should therefore be quashed by the court.\nThe Lord Ordinary accepted that Acts of the Scottish Parliament were subject to judicial review on the ground of irrationality, but considered that the scope for review could be no wider, and might be narrower, than that permitted in respect of United Kingdom subordinate instruments carrying direct Parliamentary approval, as explained by Lord Bridge of Harwich in R v Secretary of State for the Environment, Ex p Hammersmith and Fulham London Borough Council [1991] 1 AC 521 at p 597: that is to say, an Act of the Scottish Parliament was not open to challenge on the ground of irrationality short of the extremes of bad faith, improper motive or manifest absurdity.\nHe added that even if he had taken a contrary view, he would not in any event have closed the door on the possibility that the courts might require to intervene in defence of the rule of law and the fundamental rights and liberties of the subject.\nThe judges of the First Division considered that review for irrationality was not apt in the context of the 2009 Act because the aspects of the Act whose rationality was challenged were essentially political questions which a court would not enter upon.\nThe court appears therefore to have considered that whether an Act of the Scottish Parliament could be judicially reviewed on the ground of irrationality would depend upon an assessment of the justiciability of the issue raised in the particular case.\nThey added that the court might well hold itself entitled to intervene in the event of a deliberate misuse of power, or if the Scottish Parliament were to take a measure of the kind contemplated by Lord Steyn in R (Jackson) v Attorney General [2005] UKHL 56, [2006] 1 AC 262, para 102.\nDiscussion\nThe power of the Scottish Parliament to make laws derives from section 28(1) of the Scotland Act, which provides: (1) Subject to section 29, the Parliament may make laws, to be known as Acts of the Scottish Parliament.\nSection 29, so far as material, and as amended by the Treaty of Lisbon (Changes in Terminology) Order 2011, provides: (1) An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament. (2) A provision is outside that competence so far as any of the following paragraphs apply (a) it would form part of the law of a country or territory other than Scotland, or confer or remove functions exercisable otherwise than in or as regards Scotland, (b) it relates to reserved matters, (c) it is in breach of the restrictions in Schedule 4, (d) it is incompatible with any of the Convention rights or with EU law, (e) it would remove the Lord Advocate from his position as head of the systems of criminal prosecution and investigation of deaths in Scotland.\nThe language of section 29 does not imply that the matters listed there are necessarily exhaustive of the grounds on which Acts of the Scottish Parliament may be challenged.\nIn Whaley v Lord Watson 2000 SC 340 Lord President Rodger, in rejecting the approach adopted by the Lord Ordinary in that case to the relationship between the courts and the Scottish Parliament, made the following observations at pp 348 349: The Lord Ordinary gives insufficient weight to the fundamental character of the Parliament as a body which however important its role has been created by statute and derives its powers from statute.\nAs such, it is a body which, like any other statutory body, must work within the scope of those powers.\nIf it does not do so, then in an appropriate case the court may be asked to intervene and will require to do so, in a manner permitted by the legislation.\nIn principle, therefore, the Parliament like any other body set up by law is subject to the law and to the courts which exist to uphold that law.\nSome of the arguments of counsel for the first respondent appeared to suggest that it was somehow inconsistent with the very idea of a parliament that it should be subject in this way to the law of the land and to the jurisdiction of the courts which uphold the law.\nI do not share that view.\nOn the contrary, if anything, it is the Westminster Parliament which is unusual in being respected as sovereign by the courts.\nAnd, now, of course, certain inroads have been made into even that sovereignty by the European Communities Act 1972.\nBy contrast, in many democracies throughout the Commonwealth, for example, even where the parliaments have been modelled in some respects on Westminster, they owe their existence and powers to statute and are in various ways subject to the law and to the courts which act to uphold the law.\nThe Scottish Parliament has simply joined that wider family of parliaments.\nAs the Lord Presidents remarks make clear, the Scottish Parliament is not a sovereign parliament in the sense that Westminster can be described as sovereign: its powers were conferred by an Act of Parliament, and those powers, being defined, are limited.\nIt is the function of the courts to interpret and apply those limits, and the Scottish Parliament is therefore subject to the jurisdiction of the courts.\nQuestions as to the limits of the powers of the Scottish Parliament, and as to the lawfulness of its Acts, may come before different courts in different ways.\nThey may, for example, be raised in the course of an appeal to the High Court of Justiciary, as in Martin v HM Advocate [2010] UKSC 10, 2010 SC (UKSC) 40, where a challenge was made to an Act of the Scottish Parliament in an appeal from the Sheriff Court.\nThey may be raised in the lower courts and referred to the Court of Session or the High Court of Justiciary under the provisions of Schedule 6 to the Scotland Act, as for example in A v Scottish Ministers [2001] UKPC D 5, 2002 SC (PC) 63, where the question arose in the course of civil proceedings in the Sheriff Court.\nThey may be raised by way of an application to the Court of Session for judicial review, as for example in Whaley v Lord Advocate [2007] UKHL 53, 2008 SC (HL) 107 and in the present case.\nThere can be no doubt that questions as to whether the Scottish Parliament has acted within its powers fall within the scope of the Court of Sessions supervisory jurisdiction, as defined in West v Secretary of State for Scotland 1992 SC 385 at pp 412 413: 1.\nThe Court of Session has power, in the exercise of its supervisory jurisdiction, to regulate the process by which decisions are taken by any person or body to whom a jurisdiction, power or authority has been delegated or entrusted by statute, agreement or any other instrument. 2.\nThe sole purpose for which the supervisory jurisdiction may be exercised is to ensure that the person or body does not exceed or abuse that jurisdiction, power or authority or fail to do what the jurisdiction, power or authority requires.\nIt cannot however be assumed that the grounds upon which the lawfulness of an Act of the Scottish Parliament may be reviewed include all, or any, of the grounds upon which the Court of Session may exercise its supervisory jurisdiction in other contexts.\nIn West v Secretary of State for Scotland, Lord President Hope referred at p 397 to: the distinction which must be made between the question of competency as to whether a decision is open to review by the Court of Session in the exercise of its supervisory jurisdiction, and the substantive grounds on which it may do so.\nThe extent of the supervisory jurisdiction is capable of a relatively precise definition, in which the essential principles can be expressed.\nBut the substantive grounds on which that jurisdiction may be exercised will of course vary from case to case.\nAnd they may be adapted to conform to the standards of decision taking as they are evolved from time to time by the common law.\nAs that dictum makes clear, the grounds of review must be related to the nature of the power whose exercise is under review.\nThe approach adopted by the parties and the interveners in their submissions in the present case, like that of the Lord Ordinary and the Inner House, focused primarily upon the question whether Acts of the Scottish Parliament should be classified as primary legislation, in which case it would follow (so ran the argument) that they were immune from challenge save in exceptional circumstances of the kind discussed in Jackson, or as falling into some intermediate category of their own, possessing certain characteristics of primary legislation but also certain characteristics of secondary legislation, in which case it would follow (so ran the argument) that they were subject to review on similar grounds to those applicable to secondary legislation.\nThis approach appears to me to involve a number of difficulties.\nIn the first place, classification of legislation as primary or secondary is not determinative of its susceptibility to judicial review.\nOrders in Council made under the Royal Prerogative, for example, are a form of primary legislation, but are subject to review (Council of the Civil Service Unions v Minister for the Civil Service [1985] AC 374; R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61, [2009] AC 453).\nSecondly, it has never been necessary to consider whether the immunity of Acts of the Westminster Parliament from judicial review is attributable only to the sovereignty of Parliament, or whether they would be immune from such review in any event for other reasons.\nThe question has arisen in the past in relation to overseas legislatures established by Parliament during the nineteenth century, but the context was not comparable to the devolution of legislative power within the United Kingdom, and the cases preceded modern developments in judicial review.\nClassification is, at best, an indirect way of approaching what seems to me to be the underlying question, which is the extent to which judicial review, having regard to its nature and purpose, can apply to the law making functions of a devolved legislature.\nI prefer to approach that question directly.\nJudicial review under the common law is based upon an understanding of the respective constitutional responsibilities of public authorities and the courts.\nThe constitutional function of the courts in the field of public law is to ensure, so far as they can, that public authorities respect the rule of law.\nThe courts therefore have the responsibility of ensuring that the public authority in question does not misuse its powers or exceed their limits.\nThe extent of the courts responsibility in relation to a particular exercise of power by a public authority necessarily depends upon the particular circumstances, including the nature of the public authority in question, the type of power being exercised, the process by which it is exercised, and the extent to which the powers of the authority have limits or purposes which the courts can identify and adjudicate upon.\nIf, for example, a public authoritys powers are so widely drawn that it is in principle free to decide for itself what considerations are relevant to its decision making, the courts cannot then review its decisions as having been based on irrelevant considerations or as having failed to have regard to relevant considerations, except to the limited extent to which any constraints on its freedom might be implied, for example in order to protect fundamental rights or the rule of law.\nEqually, if a public authoritys powers are such that it is free to decide for itself for what purposes they should be exercised, the courts cannot then review its decisions on the basis that the powers were used arbitrarily or for an improper purpose, except again to the limited extent to which any constraints might be implied.\nFurthermore, in relation to a public authority with such wide powers, the scope for applying irrationality as a ground of review is correspondingly limited, since that ground is predicated upon the courts ability to determine whether a given decision lies within the range of decisions which are open to a rational decision maker, proceeding upon a proper understanding of the purposes for which the power in question may be exercised and the circumstances which are relevant to its exercise.\nTo the extent that the decision maker can itself determine those purposes and circumstances, the range of decisions which are reasonably open to it is correspondingly widened, subject again to such fundamental constraints as may be implied.\nIn addition to being able to identify the limits and purposes of the powers in question, the courts must also be able to adjudicate upon them.\nIf the question which arises is not justiciable that is to say, is not suitable for the courts to decide, having regard to their constitutional function then it cannot be made the subject of judicial review.\nConsidering the Scottish Parliament in the light of these general observations, it is necessary to examine the extent to which its powers have limits or purposes which the courts can identify and adjudicate upon.\nAs in the case of any other statutory body, the court determines the scope of the powers of the Scottish Parliament by applying the principles of statutory interpretation to the relevant provisions, taking into account the nature and purpose of the statute under consideration.\nThe purpose of the Scotland Act, as stated in its long title, was the establishment of a Scottish Parliament and Administration and other changes in the government of Scotland.\nIt established a democratically elected legislature having the power to make laws, to be known as Acts of the Scottish Parliament.\nSuch laws require to be made following procedures designed to ensure democratic scrutiny, some aspects of which are prescribed by the Act.\nThey also require Royal Assent.\nThey can amend or repeal Acts of the United Kingdom Parliament so far as applying to Scotland.\nAs a result of the Scotland Act, there are thus two institutions with the power to make laws for Scotland: the Scottish Parliament and, as is recognised in section 28(7), the Parliament of the United Kingdom.\nThe Scottish Parliament is subordinate to the United Kingdom Parliament: its powers can be modified, extended or revoked by an Act of the United Kingdom Parliament.\nSince its powers are limited, it is also subject to the jurisdiction of the courts.\nWithin the limits set by section 29(2), however, its power to legislate is as ample as it could possibly be: there is no indication in the Scotland Act of any specific purposes which are to guide it in its law making or of any specific matters to which it is to have regard.\nEven if it might be said, at the highest level of generality, that the Scottish Parliaments powers had been conferred upon it for the purpose of the good government of Scotland, that would not limit its powers (R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2), paras 50 51 per Lord Hoffmann, paras 107 109 per Lord Rodger of Earlsferry, paras 128 130 per Lord Carswell).\nThe Act leaves it to the Scottish Parliament itself, as a democratically elected legislature, to determine its own policy goals.\nIt has to decide for itself the purposes for which its legislative powers should be used, and the political and other considerations which are relevant to its exercise of those powers.\nIn these circumstances, it appears to me that it must have been Parliaments intention, when it established the Scottish Parliament, that that institution should have plenary powers within the limits upon its legislative competence which were created by section 29(2).\nSince its powers are plenary, they do not require to be exercised for any specific purpose or with regard to any specific considerations.\nIt follows that grounds of review developed in relation to administrative bodies which have been given limited powers for identifiable purposes, and which are designed to prevent such bodies from exceeding their powers or using them for an improper purpose or being influenced by irrelevant considerations, generally have no purchase in such circumstances, and cannot be applied.\nAs a general rule, and subject to the qualification which I shall mention shortly, its decisions as to how to exercise its law making powers require no justification in law other than the will of the Parliament.\nIt is in principle accountable for the exercise of its powers, within the limits set by section 29(2), to the electorate rather than the courts.\nConsiderations of justiciability lead to the same conclusion.\nIn the present case, for example, counsel for the appellants argued before the First Division that the decision to pass the 2009 Act was irrational because it placed responsibility on private parties to pay compensation to individuals with a benign and asymptomatic condition.\nThe court responded, at para 88: But decisions of that kind the conferring of benefits on those who are perceived to be deserving and the manner of funding of such benefits are essentially political questions which, absent any infringement of a Convention right, a court cannot and should not enter upon.\nSimilarly in R v Secretary of State for the Environment, Ex p Nottinghamshire County Council [1986] AC 240, Lord Scarman commented at p 247 that matters of political judgment were not for the judges.\nLaw making by a democratically elected legislature is the paradigm of a political activity, and the reasonableness of the resultant decisions is inevitably a matter of political judgment.\nIn my opinion it would not be constitutionally appropriate for the courts to review such decisions on the ground of irrationality.\nSuch review would fail to recognise that courts and legislatures each have their own particular role to play in our constitution, and that each must be careful to respect the sphere of action of the other.\nThere remains the question whether the court possesses the power to intervene, in exceptional circumstances, on grounds other than those specified in section 29(2): as, for example, if it were shown that legislation offended against fundamental rights or the rule of law.\nIn their submissions, counsel for the Lord Advocate accepted that devolved legislation was subject to review on such grounds, which they categorised as constitutional review, in distinction from administrative review.\nFundamental rights and the rule of law are protected by section 29(2) of the Act, in so far as it preserves Convention rights.\nBut, as Lord Steyn pointed out in R (Anufrijeva) v Secretary of State for the Home Department [2003] UKHL 36, [2004] 1 AC 604, para 27: the Convention is not an exhaustive statement of fundamental rights under our system of law.\nLord Hoffmanns dictum (in Ex p Simms) applies to fundamental rights beyond the four corners of the Convention.\nThe question is therefore not of purely academic significance.\nAs I have said, the court determines the powers of the Scottish Parliament by applying the principles of statutory interpretation, taking into account the nature and purpose of the statute under consideration.\nOne familiar principle of statutory interpretation is the principle of legality explained by Lord Hoffmann in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115 at p 131, in the dictum to which Lord Steyn referred in the case of Anufrijeva: Fundamental rights cannot be overridden by general or ambiguous words.\nThis is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process.\nIn 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.\nIn 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.\nThe 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.\nAs Lord Browne Wilkinson stated in R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539 at p 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.\nLord Steyn said in the same case, at p 591: Unless there is the clearest provision to the contrary, Parliament must be presumed not to legislate contrary to the rule of law.\nThe nature and purpose of the Scotland Act appear to me to be consistent with the application of that principle.\nAs Lord Rodger of Earlsferry said in R v HM Advocate [2002] UKPC D 3, 2003 SC (PC) 21, para 16, the Scotland Act is a major constitutional measure which altered the government of the United Kingdom; and his Lordship observed that it would seem surprising if it failed to provide effective public law remedies, since that would mark it out from other constitutional documents.\nIn Robinson v Secretary of State for Northern Ireland [2002] UKHL 32, [2002] NI 390, para 11, Lord Bingham of Cornhill said of the Northern Ireland Act 1998 that its provisions should be interpreted bearing in mind the values which the constitutional provisions are intended to embody.\nThat is equally true of the Scotland Act.\nParliament did not legislate in a vacuum: it legislated for a liberal democracy founded on particular constitutional principles and traditions.\nThat being so, Parliament cannot be taken to have intended to establish a body which was free to abrogate fundamental rights or to violate the rule of law.\nThere is however no suggestion in the present case that the Scottish Parliament has acted in such a manner.\nThat being so, and review for irrationality being excluded, it follows that the challenge to the validity of the 2009 Act on common law grounds must be rejected.\nThe standing of the third to tenth respondents\nThe third to tenth respondents are individuals who have been diagnosed with pleural plaques caused by negligent exposure to asbestos and have actions for damages pending or in immediate contemplation.\nTheir cause of action is based upon the provisions of the 2009 Act.\nWhen the appellants application for judicial review of the 2009 Act was presented, it came before the court in the usual way for a first order specifying the persons upon whom it required to be served.\nThat order required service to be made upon the Scottish Ministers and the Advocate General for Scotland, but did not identify any other persons who might have an interest.\nThe third to tenth respondents then sought leave to enter the process in accordance with Rule of Court 58.8(2), which provides that any person not specified in the first order as a person on whom service requires to be made, and who is directly affected by any issue raised, may apply by motion for leave to enter the process.\nFollowing a contested hearing, leave was granted by Lord Uist.\nAnswers to the petition for judicial review were then lodged on behalf of the third to tenth respondents.\nThe appellants in turn amended their petition so as to add a plea that, the third to tenth respondents having no title or interest in the application, their answers should be repelled.\nAn argument in support of that plea was advanced before the Lord Ordinary, who concluded that it had no merit.\nThe plea was however upheld by the First Division.\nTheir conclusion, that persons who would be deprived of a cause of action if the petition succeeded were not directly affected by any issue raised, is paradoxical.\nIt might also be thought to be unfair: the appellants are entitled to challenge the legality of the 2009 Act because it may have the effect of requiring them to pay compensation to persons on whom it confers a cause of action, but those persons, who are liable to be deprived of their cause of action, are not permitted to be heard in response.\nIt is necessary to examine how the court arrived at this perplexing result.\nThe approach of the Inner House\nThe court acknowledged that the phrase any person who is directly affected by any issue raised comprehends a wide range of persons if read in isolation, but considered that its construction in the context of the rule of court was constrained by the substantive law on title and interest.\nA rule of court could not alter the substantive law, and therefore could not confer a title to sue or to defend on a person who did not otherwise have such a title.\nUnder reference to a dictum of Lord Dunedin in the case of D & J Nicol v Dundee Harbour Trustees 1915 SC (HL) 7, the court concluded that the third to tenth respondents had no title or interest to defend.\nThe court also referred to the cases of Zurich General Accident and Liability Insurance Co Ltd v Livingston 1938 SC 582 and Norwich Union Life Insurance Society v Tanap Investments UK Ltd 2000 SC 515.\nIn the Zurich General Accident case, the pursuers were an insurance company who brought proceedings against their insured for declarator that they were entitled to avoid her policy of motor insurance.\nPersons who had been injured as a result of an accident which had occurred while the defenders car was being driven by a third party applied to be sisted as additional defenders, on the basis that the avoidance of the policy would deprive them of their statutory right to recover from the insurers any award of damages which they might obtain against the driver.\nThey were held to be entitled to defend the proceedings, Lord Moncrieff commenting at p 590 that it seemed quite unanswerable that a person, whose statutory right may be taken away by a process of law, should, before his statutory right is taken away, be entitled to be heard as a proper defender against the conflicting claim.\nIn the Norwich Union case, the pursuers were creditors who held a security over property.\nFollowing the debtors insolvency and the sale of the property, they brought proceedings against the debtor in which they sought the rectification of agreements under which they had advanced money to the debtor, so as to bring them within the scope of their security.\nAnother creditor, who held a postponed security over the same property, sought to defend the proceedings on the basis that the rectification of the agreements would affect its own ranking.\nThe court held that the postponed creditor was entitled to defend the proceedings if the rectification sought would adversely affect it.\nIn the present case, the First Division distinguished these two cases as being cases where the person seeking to enter the process had an undisputed right which would be affected by the proceedings, whereas in the present case the validity of the legislation establishing the right was itself in issue.\nDiscussion\nIn considering the approach adopted by the Inner House, it is appropriate to begin by reminding oneself of the nature of an application to the supervisory jurisdiction of the court (in the context of public law: the following discussion is not concerned with applications made in relation to private bodies), and of how it differs from an ordinary action.\nPutting the matter broadly, in an ordinary action in private law the pursuer is seeking to vindicate his rights against the defender.\nThe right on which the action is founded constitutes his title to sue.\nIn proceedings of this kind, if a person who has not been convened as a defender wishes to be made an additional defender, that must be on the basis that his property or other rights are liable to be affected by the outcome.\nIn that sense, he must have a title to defend the proceedings.\nThat point is illustrated by the cases of Zurich General Accident and Norwich Union which were cited by the First Division.\nAn application to the supervisory jurisdiction, on the other hand, is not brought to vindicate a right vested in the applicant, but to request the court to supervise the actings of a public authority so as to ensure that it exercises its functions in accordance with the law.\nThe nature and implications of the distinction between these two types of procedure has become increasingly clear in modern times, as a result of three related developments.\nThe first of these was the establishment of judicial review as a distinct form of procedure.\nUntil 1985, the same forms of procedure were used in Scotland for applications to the supervisory jurisdiction as in other proceedings.\nIn practice, since the remedies commonly sought were the reduction of the decision challenged, or a declarator of the legal position, and those remedies could only be obtained in an ordinary action commenced by summons, that form of procedure was commonly used.\nReform was initiated by Lord Fraser of Tullybelton, who said in Brown v Hamilton District Council 1983 SC (HL) 1 at p 49 that it was for consideration whether there might not be advantages in developing special procedure in Scotland for dealing with questions in the public law area, comparable to the English prerogative orders; an observation which he repeated in Stevenson v Midlothian District Council 1983 SC (HL) 50 at p 59.\nShortly afterwards the Working Party on Procedure for Judicial Review of Administrative Action was set up under the chairmanship of Lord Dunpark.\nIts report recommended the establishment of a form of procedure for judicial review, initiated by petition.\nThat recommendation was implemented in 1985, when a new rule 260B was inserted into the Rules of Court 1965.\nSlightly amended, the provisions of that rule are now contained in Chapter 58 of the Rules of Court 1994.\nThe choice of a procedure initiated by petition rather than summons reflects the nature of an application to the supervisory jurisdiction.\nThe object of a summons is to enforce the pursuers legal right against a defender who resists it, or to protect a legal right which the defender is infringing.\nReflecting its nature, a summons is addressed to the defender and is served as of right.\nIf defences are not lodged within the time allowed, decree is normally granted as a matter of course.\nA petition, on the other hand, is an ex parte application addressed to the court, requesting it to exercise the jurisdiction invoked by the petitioner.\nIt can only be served on other persons if the court grants a warrant to do so.\nIn general, the petitioner is expected to seek a warrant for service on all persons who may have an interest in the matter, and a first order is then granted authorising such service, and allowing those persons, and any other persons having an interest, to lodge answers.\nIn the case of judicial review procedure, in particular, rule 58.6 provides a form of petition, set out in form 58.6, which requires the petitioner to state the identity of the respondent (who will be the public authority responsible for the act, decision or omission to be reviewed), and the identity of any persons having an interest, who are to be named in the schedule for service.\nEven if the petition is unopposed, it will not be granted unless the court is satisfied that it is appropriate for it to exercise the relevant power in the manner requested.\nThe fact that the application is made by petition is thus not a mere procedural technicality but reflects an aspect of applications to the supervisory jurisdiction which is of great practical significance: an applicant for judicial review, unlike the pursuer in an ordinary action, does not need to assert any right to a remedy.\nOne corollary is that the court can review a decision which does not affect the legal rights of the applicant in any way.\nAnother is that the court can apply grounds of review which require the decision to comply with standards which create no legal rights in the applicant.\nThe second important development was the decision in the case of West, which provided clarification of the nature of the supervisory jurisdiction, the need for which had become apparent following the introduction of rule 260B.\nThe opinion delivered by Lord President Hope made clear, in particular, the essential difference between the nature and purpose of the courts supervisory jurisdiction, on the one hand, and its jurisdiction to adjudicate on disputed questions of right, on the other.\nThe third development was a substantial growth in the number of applications to the supervisory jurisdiction following the introduction of the procedure for judicial review.\nThis has resulted in the development of public law as an area of practice and academic study.\nIn consequence, an area of the law which had previously been relatively neglected has become the subject of intensive consideration, and legal doctrine has been examined, criticised and refined.\nLong before these developments, the question of standing was considered in a variety of contexts which would now be regarded as falling within the area of public law, although they were not understood in that way at the time.\nOne context in which litigation arose in the nineteenth and early twentieth centuries concerned ultra vires actings by public corporations.\nThe case of D & J Nicol v Dundee Harbour Trustees was one such case.\nIt was decided by applying the ultra vires doctrine which had previously been developed in company law, and standing was confined to persons who were considered to be in an analogous position to shareholders.\nRemarks made in that case by Lord Dunedin have had an enduring influence.\nHe said, at pp 12 13: By the law of Scotland a litigant, and in particular a pursuer, must always qualify title and interest.\nThough the phrase title to sue has been a heading under which cases have been collected from at least the time of Morisons Dictionary and Browns Synopsis, I am not aware that anyone of authority has risked a definition of what constitutes title to sue.\nI am not disposed to do so, but I think it may fairly be said that for a person to have such title he must be a party (using the word in its widest sense) to some legal relation which gives him some right which the person against whom he raises the action either infringes or denies.\nLord Dunedin gave, as examples of the type of legal relation he had in mind, ownership, contract, trust and other fiduciary relationships.\nThe relationship between the harbour trustees and their ratepayers, who included the pursuers, was regarded as falling into the last of these categories.\nWhether the harbour trustees complied with their statutory duties was thus treated as an essentially private matter between them and their ratepayers, with which third parties had no concern unless their property or other rights were affected.\nLord Dunedin expressly disavowed the intention to formulate a definition, but his observations are valuable as a guide to title and interest to bring an ordinary action in private law.\nFor the reasons I have explained, they are inapposite in the context of applications to the supervisory jurisdiction.\nThat is reflected in the fact that there are other cases of that period concerned with the acts of public authorities, such as Rossi v Magistrates of Edinburgh (1904) 7F (HL) 85, which cannot readily be fitted into the two fold analysis which Lord Dunedin described.\nThe inaptness of that analysis as an approach to standing in the context of judicial review has however become clearer in more recent times.\nTwo cases illustrate the point.\nThe first is Wilson v Independent Broadcasting Authority 1979 SC 351, in which members of the public were held to be entitled to bring proceedings to prevent the Authority from putting out political broadcasts in breach of their statutory duty to ensure that the programmes broadcast by them maintained a proper balance.\nLord Ross said at pp 356 357 that he could see no reason in principle why an individual should not sue in order to prevent a breach by a public body of a duty owed by that body to the public, provided the individual could qualify an interest.\nThe second case is Scottish Old Peoples Welfare Council, Petitioners 1987 SLT 179, in which the organisation better known as Age Concern Scotland challenged guidance issued by the chief adjudication officer regarding social security payments for severe weather conditions.\nLord Clyde followed the case of Wilson and concluded that any member of the public, or an association such as the petitioners, was entitled to bring proceedings to enforce the proper administration of social security legislation, subject to demonstrating a sufficient interest.\nThe case is also noteworthy for Lord Clydes use of the expression locus standi.\nLord Clyde adopted the same approach, and the same terminology, in the subsequent case of Air 2000 Ltd v Secretary of State for Transport (No 2) 1990 SLT 335.\nThe expression locus standi, and its English equivalent, standing, were also used by Lord Clyde extra judicially in the relevant chapter of Clyde and Edwards, Judicial Review (2000), where the authors questioned at para 10.03 the appropriateness or helpfulness of a two fold analysis, in terms of title and interest, in the context of judicial review.\nIn the present case, the First Division cited the cases of Wilson v Independent Broadcasting Authority and Scottish Old Peoples Welfare Council, Petitioners when considering the standing of the appellants at common law to bring the present proceedings.\nThey concluded that there was no reason why a member of the public adversely affected by legislation passed by the Scottish Parliament could not challenge it, provided he or she had an interest to do so.\nAt the same time, the court also cited Lord Dunedins dictum in the Nicol case, and endeavoured to reconcile their decision with previous cases in which, on the basis of that dictum, a more restrictive approach to standing had been adopted.\nAs the Inner Houses discussion of the authorities demonstrates, the results of applying a test of title and interest in the context of public law have been unpredictable: in some cases, such as the Wilson case, it has been applied liberally, but in other cases it has been applied more restrictively.\nAs Professor A W Bradley commented in 1987, the resulting state of the law places an unnecessary pitfall in the way of voluntary organisations and other bodies that have a serious reason for seeking judicial scrutiny of the legality of government policies (Applications for Judicial Review the Scottish Model [1987] Public Law 313, 319).\nIn consequence, as was noted in the Report of the Scottish Civil Courts Review (2009), vol 2, p 27, public law issues arising in Scotland are sometimes litigated in the English courts, where the rules on standing are clearer and have been less restrictively applied.\nThese practical difficulties reflect the problem which, as I have explained, arises as a matter of principle if the courts approach to standing in judicial review is based upon the approach followed in ordinary actions under private law.\nThe approach to standing which was stated by Lord Dunedin in the Nicol case is appropriate to proceedings where the function of the courts is to protect legal rights: in that context, only those who maintain that their legal rights require protection have a good reason to use the procedures established in order for the courts to perform that function.\nThe essential function of the courts is however the preservation of the rule of law, which extends beyond the protection of individuals legal rights.\nAs Lord Hope, delivering the judgment of the court, said in Eba v Advocate General for Scotland (Public Law Project intervening) (Note) [2011] UKSC 29, 2011 SLT 768, [2011] 3 WLR 149, para 8: the rule of law is the basis on which the entire system of judicial review rests.\nWherever there is an excess or abuse of power or jurisdiction which has been conferred on a decision maker, the Court of Session has the power to correct it: West v Secretary of State for Scotland 1992 SC 385, 395.\nThis favours an unrestricted access to the process of judicial review where no other remedy is available.\nThere is thus a public interest involved in judicial review proceedings, whether or not private rights may also be affected.\nA public authority can violate the rule of law without infringing the rights of any individual: if, for example, the duty which it fails to perform is not owed to any specific person, or the powers which it exceeds do not trespass upon property or other private rights.\nA rights based approach to standing is therefore incompatible with the performance of the courts function of preserving the rule of law, so far as that function requires the court to go beyond the protection of private rights: in particular, so far as it requires the courts to exercise a supervisory jurisdiction.\nThe exercise of that jurisdiction necessarily requires a different approach to standing.\nFor the reasons I have explained, such an approach cannot be based upon the concept of rights, and must instead be based upon the concept of interests.\nA requirement that the applicant demonstrate an interest in the matter complained of will not however operate satisfactorily if it is applied in the same way in all contexts.\nIn some contexts, it is appropriate to require an applicant for judicial review to demonstrate that he has a particular interest in the matter complained of: the type of interest which is relevant, and therefore required in order to have standing, will depend upon the particular context.\nIn other situations, such as where the excess or misuse of power affects the public generally, insistence upon a particular interest could prevent the matter being brought before the court, and that in turn might disable the court from performing its function to protect the rule of law.\nI say might, because the protection of the rule of law does not require that every allegation of unlawful conduct by a public authority must be examined by a court, any more than it requires that every allegation of criminal conduct must be prosecuted.\nEven in a context of that kind, there must be considerations which lead the court to treat the applicant as having an interest which is sufficient to justify his bringing the application before the court.\nWhat is to be regarded as sufficient interest to justify a particular applicants bringing a particular application before the court, and thus as conferring standing, depends therefore upon the context, and in particular upon what will best serve the purposes of judicial review in that context.\nThe supervisory jurisdiction has developed almost entirely through judicial decisions.\nOne of the responsibilities of the courts is to ensure its continuing development, on an incremental basis, so as to meet the needs of the time.\nIn my opinion, the time has come when it should be recognised by the courts that Lord Dunedins dictum pre dates the modern development of public law, that it is rooted in private law concepts which are not relevant in the context of applications to the supervisory jurisdiction, and that its continuing influence in that context has had a damaging effect on the development of public law in Scotland.\nThis unsatisfactory situation should not be allowed to persist.\nThe time has also come when the courts should cease to use the inappropriate terminology of title and interest in relation to such applications, and should refer instead to standing, based upon a sufficient interest.\nConsidering specifically the question of standing to take part in judicial review proceedings other than as the applicant or the respondent, it follows from the nature of such proceedings, as I have explained, that standing should depend upon demonstrating a sufficient interest in the issues raised by the application.\nThat approach was reflected in the terms of rule 260B, when the procedure for judicial review was introduced in 1985.\nAs under the present Rule 58.6, the applicant was required to identify persons having an interest and to seek a first order for service upon those persons.\nAny such person was then entitled to lodge answers to the petition.\nParagraph (14), which was the predecessor of the current rule 58.8(2), provided that any person not specified in the first order as a person upon whom service required to be made might enrol a motion for leave to enter the process.\nSince paragraph (14) referred to any person, its scope was not explicitly restricted by reference to any criterion of standing, but it was interpreted as being intended to enable persons with an interest in the issues raised by the application to take part in the proceedings.\nIn Sutherland District Council v Secretary of State for Scotland (unreported) 23 December 1987, Lord Clyde said: Paragraph (14) envisages that interested parties may be permitted to enter the process more freely than in the case of an ordinary action and so enable the parties and the court to have the benefit in appropriate cases of the submissions of other interested parties.\nThe contrast drawn by Lord Clyde between standing to participate in judicial review proceedings and standing in an ordinary action is consistent with the approach which I have explained in the present case.\nParagraph (14) was considered again in Casey v Edinburgh Airport Ltd (unreported) 23 February 1989, a decision of Lord Morison.\nThe case concerned a challenge to decisions taken by the airport authority, under a bye law, to refuse permits to the applicant taxi operators.\nDuring the hearing, the applicants sought to challenge the validity of the bye law itself.\nLord Morison refused to consider such a challenge in the absence of intimation to the taxi operators who had been granted permits under the contested bye law.\nHe said: No intimation of the petition has been made to these persons, since in its present form it does not affect their interest It seems to me to be clear that the argument sought to be presented by the petitioners cannot be determined in the absence of intimation to other taxi operators who have an interest to uphold the validity of the permission granted to them.\nI note that in the present case the judges of the First Division stated, at para 56 of their opinion, that it had never been suggested, in cases in which the validity of a bye law was challenged, that those who might benefit from it should be called for their interest, and that that was an important indication that a beneficiary of a general legislative measure had no title to counter a challenge to its validity.\nThe court had not been referred to the case of Casey.\nAs I have explained, the provisions of rule 260B were repeated in Chapter 58 of the current Rules of Court when they were introduced in 1994.\nThe terms of paragraph (14), in particular, were repeated in rule 58.8(2).\nThat rule was amended by the Act of Sederunt (Rules of the Court of Session Amendment No 5) (Public Interest Intervention in Judicial Review) 2000 (SSI 2000\/317), which came into force on 2 October 2000, at the same time as the Human Rights Act.\nIts purpose, as appears from its title, was to provide for public interest intervention in judicial review cases.\nWith that aim in mind, a new rule 58.8A was introduced, which enabled an application for leave to intervene to be made on the basis that an issue in the proceedings raised a matter of public interest which the applicant wished to address.\nThe introduction of that procedure made it necessary to amend rule 58.8(2) so as to clarify whether, in any particular case, the appropriate procedure for a person to adopt was an application for leave to enter the process, under rule 58.8(2), or an application to intervene, under rule 58.8A.\nAccordingly, rule 58.8(2) was amended so that any person became any person who is directly affected by any issue raised, and rule 58.8A was restricted to a person to whom rule 58.8(2) does not apply.\nThe Act of Sederunt was not intended to make it more difficult for interested parties to take part in judicial review proceedings: on the contrary, the intention was to liberalise access by introducing an additional procedure for public interest intervention.\nIn those circumstances, the insertion into rule 58.8(2) of the stipulation that the person must be directly affected by any issue raised should be understood as reflecting the pre existing requirement that the person must have a sufficient interest.\nAgainst that background, it appears to me that rule 58.8(2), in requiring that a person wishing to enter the process must be directly affected by any issue raised, did not purport to innovate upon the substantive law, but reflected it.\nIn the circumstances of the present case, that requirement was satisfied by the third to tenth respondents.\nConclusion\nFor these reasons and those given by Lord Hope, with which I respectfully agree, I would dismiss the appeal, allow the cross appeal by the third to tenth respondents, and make the order which Lord Hope proposes.\nLORD KERR, LORD CLARKE AND LORD DYSON\nFor the reasons given by Lord Hope and Lord Reed, with which we agree, we too would dismiss the appeal and allow the cross appeal.\n","output":"The appellants are insurance companies which have undertaken to indemnify employers against liability for negligence.\nThey sought to challenge the lawfulness of an Act of the Scottish Parliament (the Damages (Asbestos related Conditions) (Scotland) Act 2009, the 2009 Act) which provides that asbestos related pleural plaques and certain other asbestos related conditions constitute personal injury which is actionable under Scots law.\nPleural plaques are physical changes in the tissue which lines the lungs and the chest wall.\nThey do not actuate or contribute to potentially fatal conditions such as lung cancer, mesothelioma or asbestosis, but their existence evidences significant previous exposure to asbestos, which of itself represents an increased risk of contracting such diseases.\nThe purpose of the 2009 Act was to reverse the decision of the House of Lords in Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 29.\nIn that case it was decided that the mere presence of pleural plaques did not constitute injury which could gave rise to a claim for damages.\nThe appellants challenge the validity of the Act on two bases: 1. that it is incompatible under article 1 of Protocol 1 (A1 P1) of the European Convention on Human Rights (the Convention) and therefore is outside the legislative competence of the Scottish Parliament under the Scotland Act 1998; and 2. that it is open to judicial review as an unreasonable, irrational and arbitrary exercise of the legislative authority of the Scottish Parliament.\nThe first and second respondents represent the Scottish Ministers and the United Kingdom government respectively.\nThe third to tenth respondents are individuals who have been diagnosed with pleural plaques.\nThese respondents have cross appealed a court finding which held that they did not have title and interest to be parties to the case.\nThe Supreme Court dismisses the appeal and allows the cross appeal by the third to tenth respondents.\nThe leading judgments were given by Lord Hope and Lord Reed, with whom the other justices agreed.\nThe Court holds that the appellants are entitled to bring these proceedings under the Convention as the effect of the 2009 Act is that they would be victims for the purposes of article 34 and that the\namount of money the appellants would be required to pay is a possession for the purposes of A1 P1 [28], [112 114].\nTherefore in order for the 2009 Act to comply with A1 P1, it must be shown that the Act is pursuing a legitimate aim and is reasonably proportionate to the aim pursued.\nIn issues involving questions of social policy, which this is, the Court should respect the judgment of the elected body as to what is in the public interest unless that judgement is manifestly without reasonable foundation [31] [32].\nIt cannot be said that the judgement of the Scottish Parliament was without reasonable foundation [33], [125].\nTherefore the Court accepts that the Act pursues a legitimate aim [41], [125].\nIt also considers that the means chosen are reasonably proportionate to the aim sought to be realised [41], [134].\nThe balance is correctly struck, first because the claims will only succeed if the asbestos exposure was caused by the employers negligence [37].\nSecond, the appellants obligation to indemnify inevitably entailed a risk that unforeseen circumstances would increase the burden of liability [38].\nAnd third, because the Act can be seen as preserving the status quo prior to Rothwell [129].\nIt follows that the 2009 Act was not outside the legislative competence of the Scottish Parliament.\nNor can it be said that the 2009 Act was a result of an unreasonable, irrational and arbitrary exercise of the legislative authority [42].\nThe Court finds that in principle Acts of the Scottish Parliament are subject to judicial review but not on the grounds of irrationality, unreasonableness or arbitrariness.\nThe guiding principle is to be found in the rule of law.\nThis is the ultimate controlling factor, and the courts must insist that it is respected by legislation that the Parliament enacts.\nBut it would be wrong for the judges to substitute their views as to what is rational or reasonable for the considered judgment of the democratically elected legislature [47], [51] [52], [148] and [153].\nAs to whether the third to tenth respondents are entitled to be parties, the test of standing, rather than the private law rule that title and interest has to be shown, is a more appropriate approach in judicial review proceedings [62], [171].\nThe third to tenth respondents have standing as they are directly affected by the appellants challenge to the 2009 Act [63] [64] and [175].\n","id":49}
{"input":"Each of the appellants has been committed for trial at the Crown Court on charges of false accounting.\nI shall refer to them as the defendants.\nThe charges relate to claims in respect of parliamentary expenses and are alleged to have been committed when each defendant was a serving member of the House of Commons.\nA fourth defendant, Lord Hanningfield, who is a member of the House of Lords, faces similar charges.\nEach defendant and Lord Hanningfield is facing a separate trial but each of them has raised an important point of law.\nEach claims that criminal proceedings cannot be brought against him because they infringe parliamentary privilege.\nA single preparatory hearing pursuant to section 29 of the Criminal Procedure and Investigations Act 1996 was held to consider this point in relation to all four defendants.\nOn 11 June 2010 Saunders J, sitting in Southwark Crown Court, ruled against the four defendants.\nAll four appealed to the Court of Appeal.\nOn 30 July 2010 that court, Lord Judge CJ, Lord Neuberger MR and Sir Anthony May, President of the Queens Bench Division, dismissed their appeal.\nOn 14 September 2010 the court certified that the appeal had raised a point of law of general public importance, refused permission to appeal to this court and granted a representation order for one leading counsel, one junior counsel and one solicitor to represent the four defendants jointly in the event of an application to this court for permission to appeal and any consequent appeal.\nThe defendants, but not Lord Hanningfield, sought permission to appeal.\nLord Hanningfield sought permission to intervene.\nPermission was granted to him to intervene in writing for the limited purpose of drawing attention to any distinction between expenses schemes and privileges in the two Houses of Parliament.\nAt the opening of the hearing the court granted permission to appeal.\nOn 10 November the court ordered that each of the three appeals be dismissed, for reasons to be delivered in due course.\nThese are my reasons.\nThe charges\nEach of the defendants has been charged with false accounting contrary to section 17(1)(b) of the Theft Act 1968, which provides in so far as material: False accounting (1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another, (b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular; he shall, on conviction on indictment, be liable to imprisonment for a term not exceeding seven years. (2) For purposes of this section a person who makes or concurs in making in an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document.\nMr Morley is charged with making use of monthly expenses claim forms for additional costs allowance which, initially, claimed as mortgage interest sums which were in part repayments of capital and, latterly, made claims for repayment of mortgage interest after the mortgage had been repaid.\nMr Chaytor is charged with making use of an expenses claim form for incidental expenses provision in relation to two invoices relating to the supply of IT services when no such services had been supplied.\nHe is further charged with making use of expenses claim forms for additional costs allowance in respect of payments of monthly rent when such payments had never been made.\nMr Devine is charged with making use of expenses claim forms for additional costs allowance and personal additional accommodation expenditure in respect of invoices relating to cleaning and maintenance services when no such services had been supplied.\nHe is further charged with submitting expenses claim forms in respect of communications allowance and supporting invoices in respect of the supply of stationery when no such stationery had been supplied.\nThe claim forms which form the subject matter of all charges were submitted to the Fees Office of the House of Commons.\nForm ACA2 in respect of additional costs allowance contains a declaration, signed by the Member in the following form: I confirm that I incurred these costs wholly, exclusively and necessarily to enable me to stay overnight away from my only or main home for the purpose of performing my duties a Member of Parliament.\nThe issues of fact in each case would seem to be whether the expenses claimed were incurred and not the purpose for which they were incurred.\nEntitlement to and administration of allowances\nThe entitlement of Members of Parliament to claim certain expenses dates back to 1911, but the system under which the claims with which the present appeals are concerned was introduced in 1971 and the circumstances in which such allowances and expenses may be claimed are determined by Resolutions of the House.\nOn 29 January 2004 the House passed a Standing Order establishing the House of Commons Members Estimate Committee (the Estimate Committee), which is chaired by the Speaker.\nOne of the functions of this Committee is to report to the House from time to time on the provisions of the Resolutions of the House relating to expenditure charged to the Estimate for the House of Commons: Members, as codified and modified by the Committee.\nIn effect the House itself is responsible for the overall scheme of allowances and the Estimate Committee is responsible for the detail.\nThe House of Commons (Administration) Act 1978 created the House of Commons Commission (the Commission) consisting of the Speaker, the Leader of the House, a Member nominated by the Leader of the Opposition and three other Members, not being Ministers, appointed by the House.\nUnder Schedule 1 to this Act the Commission is a body corporate.\nThe primary functions of the Commission are to appoint the staff in the House Departments, to determine their numbers, and to determine their remuneration and other terms and conditions of service (section 2).\nThe various House Departments include the Department of Finance and Administration.\nThis is divided into three main offices.\nOne of these is the Fees Office.\nUntil recently this performed the functions of receiving claim forms for allowances and expenses, which might be submitted in person or by post, considering the claims and making payments in relation to claims that appeared to be properly made.\nThe claim to privilege\nThe defendants contend that the Crown Court has no jurisdiction to try them in respect of these charges on the ground that this would infringe parliamentary privilege.\nThis claim to privilege has two bases.\nThe first is article 9 of the Bill of Rights 1689 (article 9).\nThis provides: That the Freedome of Speech and Debates or Proceedings in Parlyament ought not to be impeached or questioned in any Court or Place out of Parlyament.\nThe defendants further rely on privilege that has its origin before 1689 and which is wider than, and embraces, article 9.\nThis has customarily been described as the exclusive cognisance of Parliament but has also been described in argument as exclusive jurisdiction.\nI shall use the former description.\nWho decides the issue?\nIn the 17th and 18th centuries there was a dispute between the courts and the\nHouse of Commons, often acrimonious, as to who was the final arbiter of the scope of parliamentary privilege.\nThis dispute was largely resolved in the course of the 19th century.\nIn Stockdale v Hansard (1839) 9 Ad & E 1 at pp 147 148 Lord Denman CJ said of the argument that the House of Commons was a separate Court with exclusive jurisdiction over the extent of its privileges: Where the subject matter falls within their jurisdiction, no doubt we cannot question their judgment; but we are now enquiring whether the subject matter does fall within the jurisdiction of the House of Commons.\nIt is contended that they can bring it within their jurisdiction by declaring it so.\nTo this claim, as arising from their privileges, I have already stated my answer: it is perfectly clear that none of these Courts could give themselves jurisdiction by adjudging that they enjoy it.\nIt is now accepted in Parliament that the courts are not bound by any views expressed by parliamentary committees, by the Speaker or by the House of Commons itself as to the scope of parliamentary privilege.\nOn 4 March 2010 the Clerk of the Parliaments wrote to the solicitor acting for Lord Hanningfield a letter that had received the approval of the Committee for Privileges.\nThis stated: Article 9 limits the application of parliamentary privilege to proceedings in Parliament.\nThe decision as to what constitutes a proceeding in Parliament, and therefore what is or is not admissible as evidence, is ultimately a matter for the court, not the House.\nThis statement was correct.\nIt applies as much to the House of Commons as to the House of Lords, and to an issue as to the scope of the exclusive cognisance of Parliament as it does to an issue as to the application of article 9.\nAlthough the extent of parliamentary privilege is ultimately a matter for the court, it is one on which the court will pay careful regard to any views expressed in Parliament by either House or by bodies or individuals in a position to speak on the matter with authority.\nIn Stockdale v Hansard at p 157 Lord Denman CJ commented: The authority to which the Attorney General last appealed is one to which particular attention is due: I mean the report of the committee appointed by the late House of Commons to examine the subject albeit that the comments that he went on to make suggest that in the event the report did not carry the weight that he had suggested that it deserved.\nBoth Saunders J and the Court of Appeal attached weight to views expressed or to be implied within Parliament both as to the scope of parliamentary privilege in general and as to whether such privilege attaches on the facts of these appeals.\nThe decision of Saunders J\nSaunders J referred at para 19 to concessions made by the prosecution which narrowed the issues.\nThe first was that the scheme for the payment of expenses as prescribed by resolution of the Houses of Parliament was covered by privilege either under article 9 or as part of the exclusive jurisdiction of the House.\nThis meant that the High Court would have no power judicially to review the scheme.\nThe second was that the administration of the scheme by officials in the Fees Office under the supervision of a committee was also covered by parliamentary privilege.\nSaunders J expressed reservations about this concession, but treated it as correctly made.\nThe third was: While an instinctive reaction might be that, while honest claims are covered by privilege, dishonest ones are not, the prosecution accept that, if the submission of forms by an MP is covered by privilege then dishonest claims are also covered.\nThat is because, in order to prove dishonesty, the prosecution would have to question the document, which is not permitted if it is covered by privilege.\nSaunders J held that he was satisfied that this concession was properly made.\nIt is not altogether easy to reconcile this with an earlier finding at para 18 that in the context of criminal charges parliamentary privilege should be narrowly construed, but I understand that what he meant was that, because it has the effect of ousting criminal jurisdiction, parliamentary privilege should be narrowly construed.\nAt para 6 Saunders J also recorded an area of ground common to all, or nearly all, counsel.\nPrivilege did not attach to criminal conduct within the House which was not connected to the activities of the House.\nSuch conduct could be described as ordinary criminal conduct.\nThis covered such criminal offences as an assault in the corridors of the House, theft of another Members money, or a sexual offence, none of which related to parliamentary activity or proceedings in Parliament.\nAddressing the exclusive jurisdiction of Parliament, Saunders J held that the submission of a claim form fell to be distinguished from the subsequent processing of the form.\nEven if the latter was covered by privilege, the former was not.\nPrivilege covered actions which were part of the collective processes of Parliament.\nClaiming expenses was not such an action.\nIt was a voluntary individual activity for the benefit of the individual and not of direct benefit to Parliament.\nSo far as article 9 was concerned, Saunders J considered that this essentially protected freedom of speech in Parliament.\nThe protection extended to some actions that were incidental to exercising that freedom of speech, making a claim for expenses could not properly be said to be one of them.\nAccordingly the privilege claimed was not made out.\nThe decision of the Court of Appeal\nIn the Court of Appeal the Crown withdrew its concession that the administration of the allowances and expenses scheme by officials in the Fees Office under the supervision of a committee was covered by parliamentary privilege.\nAt para 69 the Court of Appeal approached this withdrawal with caution, commenting: The issue in these appeals is not whether the actions of officials in allowing the defendants expenses claims is or may be privileged, but whether in submitting their claims, and making the allegedly false statements contained in them to the officials, the defendants were taking part in proceedings in Parliament, within the ambit of article 9 and privilege, as explained in the relevant authorities.\nThe Court of Appeal attached considerable weight to indications from within Parliament that the defendants claims were not covered by privilege, to which I shall return in due course, but went on to consider arguments advanced on behalf of the defendants.\nAt paras 74 and 75 the court rejected the submission that making a statement to officials in the Fees Office could be equated with making a statement to the House or to a parliamentary committee: A claim for expenses is not submitted to any other member of the House, nor even to the Speaker or Lord Speaker or to his or her office: it is submitted to an official in the Fees Office, and although that official is appointed by and is an agent of the House, he is not officiating in connection with the business carried on within the Chamber or within a committee.\nHe is merely carrying out an administrative task, albeit one mandated by the relevant House, and one subject to the detailed rules approved by that House.\nThe Court of Appeal went on to develop the theme that claiming expenses had nothing to do with the essential, or core, functions of a Member of Parliament.\nIn doing so, however, the court repeatedly considered this question in relation to the presenting of dishonest claims for expenses: In truth, it is impossible to see how subjecting dishonest claims for expenses to criminal investigation would offend against the rationale for parliamentary privilege (para 76).\nIt would therefore be curious if privilege were to apply to the member who defrauded the Fees Office by submitting a false claim for expenses (para 77). the decision to set up, and the terms of the system could not be subject to the courts jurisdiction.\nBe that as it may, it does not then follow that the dishonest operation of this system by individual members is excluded from it (para 78). on the basis that the implementation of the scheme might constitute a proceeding in Parliament, it does not follow as a matter of logic, convenience or principle, that the dishonest actions by a member when making his claim should be immune from criminal prosecution (para 78).\nIt can confidently be stated that parliamentary privilege or immunity from criminal prosecution has never ever attached to ordinary criminal activities by members of Parliament (para 81).\nThe stark reality is that the defendants are alleged to have taken advantage of the allowances scheme designed to enable them to perform their important public duties as members of Parliament to commit crimes of dishonesty to which parliamentary immunity or privilege does not, has never, and, we believe, never would attach.\nIf the allegations are proved, and we emphasise, if they are proved, then those against whom they are proved will have committed ordinary crimes.\nEven stretching language to its limits we are unable to envisage how dishonest claims by members of Parliament for their expenses or allowances begin to involve the legislative or core functions of the relevant House, or the proper performance of their important public duties (para 82).\nCounsel for the defendants submitted that claiming expenses was part of a scheme that was covered by privilege in that the payment of expenses was necessary to enable, or for the purpose of enabling, Parliament to perform its core or essential parliamentary business, to which article 9 related.\nThis was the whole object of the system of allowances.\nMore particularly, counsel submitted that the Court of Appeal had erred in principle in examining this issue on the premise that the claims for expenses were dishonest.\nPrivilege from criminal prosecution would be nugatory if it did not apply to criminal conduct.\nI consider that there was force in this criticism.\nThe concept of an ordinary crime, the origin of which I shall identify in due course, is only of value in the present context where it describes an act which has no connection with the conduct of parliamentary business, as counsel rightly agreed see para 18 above.\nMaking claims for parliamentary allowances does not fall into this category.\nSuch claims form part of the business of Parliament, giving that phrase a broad meaning.\nThe issue is whether business of this nature amounts to proceedings in Parliament, within the meaning of article 9, or is otherwise privileged from scrutiny in the criminal courts because it falls within the exclusive cognisance or jurisdiction of Parliament.\nIt is not appropriate to approach that question on the premise that the claims are dishonest.\nArticle 9\nI propose to start by considering article 9, because the issues in relation to article 9 are relatively narrow and clear cut, compared to those that arise in relation to the exclusive cognisance of Parliament.\nJurisprudence\nMuch of the jurisprudence in relation to article 9 relates to what constitutes impeaching or questioning proceedings in Parliament most notably Pepper v Hart [1993] AC 593.\nThe meaning of those words is not in issue in the present case and so I shall not refer to authority dealing with that question.\nWhat is at issue is the reach of the phrase proceedings in Parliament.\nThe Bill of Rights 1689 reflected the attitude of Parliament, after the Restoration, to events in the reign of Charles I, and in particular the acceptance by the Court of Kings Bench that parliamentary privilege did not protect against seditious comments in the Chamber R v Eliot, Holles and Valentine (1629) 3 St Tr 293 336.\nThe primary object of the article was unquestionably to protect freedom of speech in the House of Commons.\nThe question is, having regard to that primary object, how far the term proceedings in Parliament extends to actions that advance or are ancillary to proceedings in the Houses.\nErskine May, Parliamentary Practice, 23rd ed (2004), summarises the position as follows at pp 110 111: The term proceedings in Parliament has received judicial attention, (not all of it in the United Kingdom) but comprehensive lines of decision have not emerged and indeed it has been concluded that an exhaustive definition could not be achieved.\nNevertheless, a broad description is not difficult to arrive at.\nThe primary meaning of proceedings, as a technical parliamentary term, which it had at least as early as the seventeenth century, is some formal action, usually a decision, taken by the House in its collective capacity.\nThis is naturally extended to the forms of business in which the House takes action, and the whole process, the principal part of which is debate, by which it reaches a decision.\nAn individual Member takes part in a proceeding usually by speech, but also by various recognized forms of formal action, such as voting, giving notice of a motion, or presenting a petition or report from a committee, most of such actions being time saving substitutes for speaking.\nOne of the problems when considering the scope of article 9 is that decisions on parliamentary privilege frequently make no mention of the Bill of Rights.\nThat is true of Bradlaugh v Gossett (1884) 12 QBD 271.\nThe plaintiff, Bradlaugh, had been elected to the House of Commons.\nHe required the Speaker to call him to the table to take the oath and the Speaker declined to do so and the House resolved that the Serjeant at Arms should exclude Bradlaugh from the House.\nBradlaugh then sought an injunction restraining the Serjeant at Arms from complying with the resolution.\nThe court refused the injunction.\nLord Coleridge CJ held, at p 275: What is said or done within the walls of Parliament cannot be inquired into in a court of lawThe jurisdiction of the Houses over their own members, their right to impose discipline within their walls, is absolute and exclusive.\nStephen J was less categorical.\nHe held, at p 278: I think that the House of Commons is not subject to the control of Her Majestys Courts in its administration of that part of the statute law which has relation to its own internal proceedings, and that the use of such actual force as may be necessary to carry into effect such a resolution as the one before us is justifiable.\nThese statements do not distinguish between the narrow privilege under article 9 and the broader exclusive cognisance of Parliament.\nMore pertinent are some comments made by Stephen J as to what was not covered by privilege.\nAt p 283 he stated: The only force which comes in question in this case is such force as any private man might employ to prevent a trespass on his own land.\nI know of no authority for the proposition that an ordinary crime committed in the House of Commons would be withdrawn from the ordinary course of criminal justice.\nStephen J pointed out at p 284 that, while Elliot established that nothing said in Parliament by a member as such could be treated as an offence by the ordinary courts, the House of Lords had carefully avoided deciding the question whether the Court of Kings Bench could try a Member for an assault on the Speaker in the House.\nHis was a cogent statement of opinion that parliamentary privilege, including that conferred by article 9, will not preclude a criminal prosecution in respect of the conduct of a Member merely because it has taken place within the House of Commons.\nWhile Pepper v Hart was concerned with the circumstances in which reference could be made to proceedings in Parliament, Lord Browne Wilkinson made the following comment on the object of article 9, at p 638: Article 9 is a provision of the highest constitutional importance and should not be narrowly construed.\nIt ensures the ability of democratically elected Members of Parliament to discuss what they will (freedom of debate) and to say what they will (freedom of speech)In my judgment, the plain meaning of article 9, viewed against the historical background in which it was enacted, was to ensure that Members of Parliament were not subjected to any penalty, civil or criminal, for what they said and were able, contrary to the previous assertions of the Stuart monarchy, to discuss what they, as opposed to the monarch, chose to have discussed.\nLord Browne Wilkinson made a similar observation when giving the judgment of the Judicial Committee of the Privy Council in Prebble v Television New Zealand Ltd [1995] 1 AC 321 at p 334.\nThese observations are of limited assistance when considering the extent to which article 9 applies to actions that are incidental or in some way connected to proceedings on the floor of either House or in parliamentary committee.\nThe suggestion that article 9 should not be narrowly construed conflicted with an observation of Viscount Radcliffe when giving the advice of the Judicial Committee of the Privy Council in Attorney General of Ceylon v de Livera [1963] AC 103 at p 120.\nSection 14 of the Bribery Act of Ceylon made it an offence to offer an inducement or reward to a member of the House of Representatives for doing or forbearing to do any act in his capacity as such member.\nThe issue was the scope of those words.\nViscount Radcliffe drew an analogy with article 9.\nHe said: What has come under inquiry on several occasions is the extent of the privilege of a member of the House and the complementary question, what is a proceeding in Parliament? This is not the same question as that now before the Board, and there is no doubt that the proper meaning of the words proceedings in Parliament is influenced by the context in which they appear in article 9 of the Bill of Rights (1 Wm & M, Sess 2, c 2); but the answer given to that somewhat more limited question depends upon a very similar consideration, in what circumstances and in what situations is a member of the House exercising his real or essential function as a member? For, given the proper anxiety of the House to confine its own or its members privileges to the minimum infringement of the liberties of others, it is important to see that those privileges do not cover activities that are not squarely within a members true function.\nAlleged bribery of members in respect of their participation in the proceedings on the floor of one of the Houses of Parliament or in committee has raised the question of whether the connection between the act of bribery outside Parliament and the undoubted proceedings in Parliament to which the bribe relates renders the former subject to article 9 or similar privilege.\nIn Ex p Wason (1869) LR 4 QB 573 the issue was whether a prosecution would lie against three persons, two of whom were members of the House of Lords, for conspiring to deceive the House.\nThe court held that it would not.\nCockburn CJ held at p 576: It is clear that statements made by members of either House of Parliament in their places in the House, though they might be untrue to their knowledge, could not be made the foundation of civil or criminal proceedings, however injurious they might be to the interest of a third person.\nAnd a conspiracy to make such statements would not make the persons guilty of it amenable to the criminal law.\nBlackburn and Lush JJ agreed.\nLush J ended his short judgment with the following statement: I am clearly of opinion that we ought not to allow it to be doubted for a moment that the motives or intentions of members of either House cannot be inquired into by criminal proceedings with respect to anything they may do or say in the House.\nIt is not clear whether the reasoning of the court was that the act of conspiring was itself subject to privilege or that, as the object of the conspiracy was not an indictable offence, no indictment could lie for the conspiracy itself.\nEx p Wason was distinguished by the Supreme Court of Ontario in R v Bunting (1885) 7 OR 524, where it was held that a conspiracy to bring about a change in the Government of Ontario by bribing members of the Legislative Assembly to vote against the Government was an indictable offence at common law committed at the time of the conspiracy itself and within the jurisdiction of the ordinary courts.\nEx p Wason has also been cited by the Supreme Court of the United States in the context of considering the ambit of the Speech or Debate clause in article 1, section 6 of the Constitution.\nThis provides that for any speech or debate in either House, Senators or Representatives shall not be questioned in any other place see United States v Johnson (1966) 383 US 169 and United States v Brewster (1972) 408 US 501.\nEach case involved an allegation of bribery to purchase support in proceedings in the House.\nIn the latter case Burger CJ gave the opinion of the court.\nAt p 518 he commented: The very fact of the supremacy of Parliament as Englands highest tribunal explains the long tradition precluding trial for official misconduct of a member in any other and lesser tribunal.\nThis is not an accurate summary either of parliamentary privilege in this jurisdiction or of the reason for it, but the issue of interpretation facing the Supreme Court mirrors that raised by article 9 and some of the reasoning in Brewster is relevant to consideration of the scope of that article.\nAt p 524 Burger CJ commented: As we noted at the outset, the purpose of the Speech or Debate Clause is to protect the individual legislator, not simply for his own sake, but to preserve the independence and thereby the integrity of the legislative process.\nBut financial abuses by way of bribes, perhaps even more than Executive power, would gravely undermine legislative integrity and defeat the right of the public to honest representation.\nDepriving the Executive of the power to investigate and prosecute and the Judiciary of the power to punish bribery of Members of Congress is unlikely to enhance legislative independence.\nBurger CJ went on to hold that prosecution for bribery did not infringe the Speech and Debate clause because there was no need to show that the defendant in fact fulfilled the alleged illegal bargain.\nIt was the acceptance of the bribe that constituted the offence.\nBrennan J, with whom Douglas J joined, delivered a powerful dissent.\nHe held that one count actually charged that the defendant committed the act for which the bribe was paid, so that the defendants conduct in the House would have to be investigated.\nOther counts, which merely charged receipt of the bribe, put in question the defendants motive for the legislative acts which followed, even if those acts did not have to be considered by the court.\nSimilar reasoning to that of Brennan J led the Supreme Court of India to hold that Members of Parliament were protected by privilege from prosecution for bribery in respect of voting in parliamentary proceedings: Rao v State (1998) 1 SCJ 529.\nIn 1992 a prosecution was brought against a Member of Parliament, Mr Harry Greenway, for the common law offence of bribery to use his position as a Member of Parliament to further the interests of a company in his constituency.\nHe applied to have the indictment quashed on the ground, inter alia, that the prosecution was precluded by parliamentary privilege.\nBuckley J dismissed the application [1998] PL 357.\nHe referred with approval to comments of Lord Salmon in debate in the House of Lords (Hansard (HL Debates), 6 December 1976, col 631).\nLord Salmon had chaired a Royal Commission on Standards of Conduct in Public Life and the debate was on its Report, Cmnd 6524 (1976).\nThe passages cited by Buckley J were: To my mind equality before the law is one of the pillars of freedom.\nTo say that immunity from criminal proceedings against anyone who tries to bribe a Member of Parliament and any Member of Parliament who accepts the bribe, stems from the Bill of Rights is possibly a serious mistake.\nNow this [the Bill of Rights] is a charter for freedom of speech in the House.\nIt is not a charter for corruption.\nTo my mind, the Bill of Rights, for which no one has more respect than I have, has no more to do with the topic which we are discussing than the Merchandise Marks Act.\nThe crime of corruption is complete when the bribe is offered or given or solicited and taken.\nBuckley J made the following comments (pp 361 362,363): It is important to note that which Lord Salmon pointed out, namely, that corruption is complete when the bribe is offered or given, solicited or [sic] taken.\nIf, as is alleged here, a bribe is given and taken by a member of Parliament, to use his position dishonestly, that is to favour the briber as opposed to acting independently and on the merits, the crime is complete.\nIt owes nothing to any speech, debate or proceedings in Parliament.\nProof of the element of corruption in the transaction is another and quite separate consideration.\nPrivilege might well prevent any inquiry by a court into Parliamentary debates or proceedings.\nHowever, it is not a necessary ingredient of the crime that the bribe worked.\nA jury will usually be asked to infer corruption from the nature of and circumstances in which the gift was given.\nI cannot see that article 9 in any way prevents that That a Member of Parliament against whom there is a prima facie case of corruption should be immune from prosecution in the courts of law is to my mind an unacceptable proposition at the present time.\nI do not believe it to be the law.\nThe Committee of Privileges is not well equipped to conduct an enquiry into such a case, nor is it an appropriate or experienced body to pass sentence.\nUnless it is to be assumed that it would be prejudiced in his favour, I cannot see that it would be in the Members own interest for the matter to be dealt with by the Committee.\nThe courts and legislature have over the years built up a formidable body of law and codes of practice to achieve fair treatment of suspects and persons ultimately charged and brought to trial.\nAgain, unless it is to be assumed that his peers would lean in his favour, why should a Member be deprived of a jury and an experienced judge to consider his guilt or innocence and, if appropriate, sentence? Why should the public be similarly deprived?\nThese decisions in relation to bribery lend support for a narrow construction of article 9.\nIf Greenway was rightly decided it leads inexorably to the conclusion that submitting claims for expenses falls outside the definition of proceedings in Parliament in article 9.\nThe nexus between bribes intended to influence what is said and proceedings in the House is much closer than the link between submitting a claim for expenses and taking part in such proceedings.\nIndeed, it is the closeness of the former nexus that raises a question as to whether Greenway was correctly decided.\nThe dissent in Brewster is food for thought.\nAccusing a Member of Parliament of taking bribes in exchange for statements to be made in the House will necessarily raise an inference that any statements that were subsequently made were corruptly motivated, even if this forms no part of the criminal inquiry.\nThe same point can, however, be made where a Member of Parliament affirms outside the House a statement made in the House.\nSuch an affirmation can found a claim in defamation.\nThis may well involve a challenge to the good faith of the defendant in affirming the statement, which will inferentially challenge his good faith in making the original statement.\nLord Bingham dealt with this point when giving the advice of the Judicial Committee of the Privy Council in Buchanan v Jennings (Attorney General of New Zealand intervening) [2005] 1 AC 115, at para 13: It is common ground in this appeal that statements made outside Parliament are not protected by absolute privilege even if they simply repeat what was said therein.\nThat proposition, established by R v Abingdon (1794) 1 Esp 226 and R v Creevey (1813) 1 M & S 273 was more recently applied by the High Court of Ontario in Stopforth v Goyer (1978) 87 DLR (3d) 373 and the Supreme Court of the United States in Hutchinson v Proxmire (1979) 443 US 111, 126 et seq.\nIn such a case there will inevitably be an inquiry at the trial into the honesty of what the defendant had said, and if the defendants extra parliamentary statement is found to have been untrue or dishonest the same conclusion would ordinarily, although not always, apply to the parliamentary statement also.\nBut such an inquiry and such a conclusion are not precluded by article 9, because the plaintiff is founding his claim on the extra parliamentary publication and not the parliamentary publication.\nLord Bingham went on to hold that it made no difference that, in that case, the repetition of what had been said in Parliament was merely by reference.\nAt para 17 Lord Bingham tested this conclusion for compliance with the principle underlying the absolute privilege accorded to parliamentary statements, namely the right of Members of Parliament to speak their minds in Parliament without any risk of incurring liability as a result.\nHe concluded that liability for repeating outside Parliament what had been said within did not conflict with this principle.\nThe jurisprudence to which I have referred is sparse and does not bear directly on the facts of these appeals.\nIt supports the proposition, however, that the principal matter to which article 9 is directed is freedom of speech and debate in the Houses of Parliament and in parliamentary committees.\nThis is where the core or essential business of Parliament takes place.\nIn considering whether actions outside the Houses and committees fall within parliamentary proceedings because of their connection to them, it is necessary to consider the nature of that connection and whether, if such actions do not enjoy privilege, this is likely to impact adversely on the core or essential business of Parliament.\nIf this approach is adopted, the submission of claim forms for allowances and expenses does not qualify for the protection of privilege.\nScrutiny of claims by the courts will have no adverse impact on the core or essential business of Parliament, it will not inhibit debate or freedom of speech.\nIndeed it will not inhibit any of the varied activities in which Members of Parliament indulge that bear in one way or another on their parliamentary duties.\nThe only thing that it will inhibit is the making of dishonest claims.\nSome reliance was placed by the defendants on the terms of section 13 of the Defamation Act 1996, which are as follows: 13.\nEvidence concerning proceedings in Parliament (1) Where the conduct of a person in or in relation to proceedings in Parliament is in issue in defamation proceedings, he may waive for the purposes of those proceedings, so far as concerns him, the protection of any enactment or rule of law which prevents proceedings in Parliament being impeached or questioned in any court or place out of Parliament. (2) Where a person waives that protection (a) any such enactment or rule of law shall not apply to prevent evidence being given, questions being asked or statements, submissions, comments or findings being made about his conduct, and (b) none of those things shall be regarded as infringing the privilege of either House of Parliament. (3) The waiver by one person of that protection does not affect its operation in relation to another person who has not waived it. (4) Nothing in this section affects any enactment or rule of law so far as it protects a person (including a person who has waived the protection referred to above) from legal liability for words spoken or things done in the course of, or for the purposes of or incidental to, any proceedings in Parliament. (5) Without prejudice to the generality of subsection (4), that subsection applies to (a) the giving of evidence before either House or a committee; (b) the presentation or submission of a document to either House or a committee; (c) the preparation of a document for the purposes of or incidental to the transacting of any such business; (d) the formulation, making or publication of a document, including a report, by or pursuant to an order to either House or a committee; and (e) any communication with the Parliamentary Commissioner for Standards or any person having functions in connection with the registration of members interests.\nIn this subsection a committee means a committee of either House or a joint committee of both Houses of Parliament.\nReliance was placed on the reference in subsection (4) to protection from legal liability for words spoken or things done for the purposes of or incidental to, any proceedings in Parliament and in subsection (5)(b) to the presentation or submission of a document to either House or a committee.\nI do not consider that these provisions advance the defendants case.\nSection 13 is not capable of extending the ambit of article 9.\nSubsection (4) cannot found a submission that any words spoken or things done that are incidental to proceedings in Parliament have automatically to be treated as part of those proceedings.\nThe reference to submission of a document to either House or a committee envisages the submission of documents for the purpose of the deliberations of the House or committee in question.\nNo comparison can be drawn between this and the presentation of claims for allowances or expenses to the Fees Office.\nThe views of Parliament\nI now turn to views expressed in Parliament as to the ambit of article 9.\nOnce again it is not always easy to differentiate between comments that bear on this narrow privilege as opposed to the broader exclusive cognisance of Parliament.\nThe report of the Select Committee on the Official Secrets Acts 1938 1939 (the 1939 Report) included the following: 2.\nThe privilege to which Your Committee were directed by the order of reference to have due regard is that usually referred to as the privilege of freedom of speech.\nThis privilege is declared by the Bill of Rights in the following terms: That the freedom of speech and debates or proceedings in parliament ought not to be impeached or questioned in any court or place out of parliament. 3.\nThe article in the Bill of Rights is not necessarily an exhaustive definition of the cognate privileges.\nBut even assuming that it is, the privilege is not confined to words spoken in debate or to spoken words, but extends to all proceedings in parliament.\nWhile the term proceedings in parliament has never been construed by the courts, it covers both the asking of a question and the giving written notice of such question, and includes everything said or done by a member in the exercise of his functions as a member in a committee of either House, as well as everything said or done in either House in the transaction of parliamentary business. 4.\nThe privilege of freedom of speech being confined to words spoken or things done in the course of parliamentary proceedings, words spoken or things done by a member beyond the walls of parliament will generally not be protected.\nCases may, however, easily be imagined of communications between one member and another, or between a member and a minister, so closely related to some matter pending in, or expected to be brought before, the House, that though they do not take place in the chamber or a committee room they form part of the business of the House, as, for example, where a member sends to a minister the draft of a question he is thinking of putting down or shows it to another member with a view to obtaining advice as to the propriety of putting it down or as to the manner in which it should be framed.\nIt is noteworthy that the Committee envisaged the need for a close relationship of communications outside the House to business within it in order to attract privilege.\nThe conclusion of the Committee was later agreed by the House CJ (1938 39) 480.\nThe Joint Committee on the Publication of Proceedings in Parliament in its Second Report in 1970 HL 109, HC 261 recommended that proceedings in Parliament should be defined by statute, and offered the following definition at para 27: (1) For the purpose of the defence of absolute privilege in an action or prosecution for defamation the expression proceedings in Parliament shall without prejudice to the generality thereof include a) all things said done or written by a Member or by any officer of either House of Parliament or by any person ordered or authorised to attend before such House, in or in the presence of such House and in the course of a sitting of such House, and for the purpose of the business being or about to be transacted, wherever such sitting may be held and whether or not it be held in the presence of strangers to such House: provided that for the purpose aforesaid the expression House shall be deemed to include any Committee sub Committee or other group or body of members or members and officers of either House of Parliament appointed by or with the authority of such House for the purpose of carrying out any of the functions of or of representing such House; and b) all things said done or written between Members or between Members and officers of either House of Parliament or between Members and Ministers of the Crown for the purpose of enabling any Member or any such officer to carry out his functions as such provided that publication thereof be no wider than is reasonably necessary for that purpose. (2) In this section Member means a Member of either House of Parliament; and officer of either House of Parliament means any person not being a Member whose duties require him from time to time to participate in proceedings in Parliament as herein defined.\nNo effect was given to this recommendation.\nThe Joint Committee on Parliamentary Privilege Report of 1999 HL 43 1; HC214 1 (the 1999 Report) gave detailed consideration to article 9.\nAt para 12 it commented: Freedom of speech is central to Parliaments role.\nMembers must be able to speak and criticise without fear of penalty.\nThis is fundamental to the effective working of Parliament, and is achieved by the primary parliamentary privilege: the absolute protection of proceedings in Parliament guaranteed by article 9 of the Bill of Rights 1689.\nMembers are not exposed to any civil or criminal liabilities in respect of what they say or do in the course of proceedings in Parliament.\nThere is no comprehensive definition of the term proceedings in Parliament, although it has often been recommended there should be.\nProceedings are broadly interpreted to mean what is said or done in the formal proceedings of either House or the committees of either House together with conversations, letters and other documentation directly connected with those proceedings.\nAt para 103 the Committee expressed the view that Members correspondence did not form part of parliamentary proceedings: Article 9 protects parliamentary proceedings: activities which are recognisably part of the formal collegiate activities of Parliament.\nThe Committee did not recommend the extension of parliamentary privilege to cover Members correspondence.\nIt commented at para 110: There is another consideration.\nArticle 9 provides an altogether exceptional degree of protection, as discussed above.\nIn principle this exceptional protection should remain confined to the core activities of Parliament, unless a pressing need is shown for an extension.\nEach House has agreed a set of rules and guidance governing the conduct expected of its members.\nThe Parliamentary Commissioner for Standards is appointed to monitor the operation of the Code of Conduct of Members of the House of Commons and to advise the Committee on Standards and Privileges on the interpretation of the code.\nIn 15 December 2002 the Mail on Sunday published an article alleging that Mr Michael Trend MP had improperly submitted claims in respect of additional costs allowance in respect of a London home which he did not occupy.\nThe Commissioner for Standards submitted a memorandum on the matter which concluded that Mr Trend had claimed additional costs allowance in breach of the rules relating to that allowance.\nIn a post script under the heading The Criminal Law he commented: The decision whether Mr Trend or any other Member who may be shown to have wrongly claimed parliamentary allowances should face a criminal prosecution is one for the police and prosecuting authorities, not for me.\nAs the briefing note on the law on obtaining by deception at Annex C makes clear, there are a number of ingredients to the offence which would have to be proved if a prosecution were to succeed; achieving this would not necessarily be easy.\nHowever, the point that needs to be made here is that claiming an allowance is not a proceeding in Parliament and the provisions of parliamentary privilege do not apply.\nMembers of Parliament are no less subject to the criminal law in this respect than anyone else.\nThey must have its provisions in mind at all times like anyone else, and decisions about whether it should be invoked against them must be taken applying the same tests as would be applied to any other citizen.\nOn 8 February 2010 the Speaker made a statement to the House about the application of the sub judice rule in relation to the prosecutions of the three defendants, in the following terms.\nI wish to make a statement to the House about the application of the sub judice rule.\nOnce criminal proceedings are active by a charge having been made, cases before the courts shall not be referred to in any motion, debate or question.\nThe House will be aware that charges have been made against three Members of the House and that therefore the sub judice rule applies to their cases.\nThe matter is therefore before the courts, and the House and Members would not wish to interfere with the judicial process, risk affecting the fairness of a criminal trial or, furthermore, prevent such a trial taking place.\nThe last sentence does not suggest that the Speaker had any concern that the trials of the defendants might constitute a breach of the privilege enjoyed by Parliament.\nIt is possible that the Speaker had already received orally the advice of the Clerk of the House that was conveyed to him in writing on the following day.\nThis included the following paragraph: In order to make the case that privilege applies to claims it would be necessary to establish that they are indeed transactions of business of the House or one of its Committees.\nAlthough I accept that the ACA scheme arises from Resolutions of the House, the proposition that all actions or claims under it are proceedings, seems to me to be unsustainable.\nThe House agrees to many things by Resolution for example to build a new building but that does not mean that all activities in connection with its erection are proceedings.\nProceedings must imply, in the words of the Joint Committee on Parliamentary Privilege, formal collegiate activities of Parliament rather than merely the consequences of decisions that either House has taken.\nIt also seems to me to be pertinent to the consideration of claims under the ACA scheme being protected that throughout the Houses involvement in Freedom of Information cases in respect of publication of claims and expenses, the House has never sought an exemption under section 34 of the Act which covers matters deemed to infringe parliamentary privilege.\nNone of these expressions of Parliamentary views lends support to the suggestion that submitting claims for allowances and expenses constitutes proceedings in Parliament for the purposes of article 9.\nOn the contrary they all suggest, either expressly or by implication, that the submission of such claims falls outside the protection of that article.\nThe recovery of allowances and expenses to defray the costs involved in attending Parliament, or travelling on Parliamentary business, has no closer nexus with proceedings in Parliament than incurring those expenses.\nThe question was asked rhetorically of what the position would be if Members had to go before the Estimate Committee, or even the House, to ask for their expenses.\nIt was submitted on behalf of the defendants that in that event their claims would constitute proceedings in Parliament and be protected by privilege, and that the same was true of claims made to the Fees Office as that office was acting on behalf of the House in receiving and considering the claim forms.\nThe answer is that the submission and consideration of allowances and expenses claims is essentially a matter of administration, properly to be performed by officials, and that it would be absurd for this exercise to be performed by a committee or by the House.\nThere are good reasons of policy for giving article 9 a narrow ambit that restricts it to the important purpose for which it was enacted freedom for Parliament to conduct its legislative and deliberative business without interference from the Crown or the Crowns judges.\nThe protection of article 9 is absolute.\nIt is capable of variation by primary legislation, but not capable of waiver, even by Parliamentary resolution.\nIts effect where it applies is to prevent those injured by civil wrongdoing from obtaining redress and to prevent the prosecution of Members for conduct which is criminal.\nAs to the latter, Parliament has no criminal jurisdiction.\nIt has limited penal powers to treat criminal conduct as contempt.\nThese once included imprisonment for a limited period.\nAs to this Lord Denman CJ commented at p 114 in Stockdale v Hansard: The privilege of committing for contempt is inherent in every deliberative body invested with authority by the Constitution.\nBut, however flagrant the contempt, the House of Commons can only commit till the close of the existing session.\nTheir privilege to commit is not better known than this limitation of it.\nThough the party should deserve the severest penalties, yet, his offences being committed the day before a prorogation, if the House ordered his imprisonment but for a week, every Court in Westminster Hall and every Judge of all the Courts would be bound to discharge him by habeas corpus.\nImprisonment has not been imposed in recent times and the same is true of the theoretical power to fine.\nNor is it clear that Parliament is in a position to satisfy all the requirements of article 6 which apply when imposing penal sanctions see Demicoli v Malta (1991) 14 EHRR 47.\nThus precedent, the views of Parliament and policy all point in the same direction.\nSubmitting claims for allowances and expenses does not form part of, nor is it incidental to, the core or essential business of Parliament, which consists of collective deliberation and decision making.\nThe submission of claims is an activity which is an incident of the administration of Parliament; it is not part of the proceedings in Parliament.\nI am satisfied that Saunders J and the Court of Appeal were right to reject the defendants reliance on article 9.\nExclusive cognisance\nThis phrase describes areas where the courts have ruled that any issues should be left to be resolved by Parliament rather than determined judicially.\nExclusive cognisance refers not simply to Parliament, but to the exclusive right of each House to manage its own affairs without interference from the other or from outside Parliament.\nThe boundaries of exclusive cognisance result from accord between the two Houses and the courts as to what falls within the exclusive province of the former.\nUnlike the absolute privilege imposed by article 9, exclusive cognisance can be waived or relinquished by Parliament.\nThus in 1980 Parliament agreed to a resolution which permitted reference to be made in court to certain Parliamentary papers which, up to then, had been subject to a claim of exclusive cognisance see Erskine May at p 105.\nThe areas subject to exclusive cognisance have very significantly changed, in part as a result of primary legislation.\nThe exclusive cognisance of Parliament was originally based on the premise that the High Court of Parliament had its own peculiar law which was not known to the courts.\nThe 17th edition (1814) of Blackstones Commentaries on the Laws of England observed at pp 158 159: It will be sufficient to observe, that the whole of the law and custom of parliament has its original from this one maxim; that whatever matter arises concerning either house of parliament, ought to be examined, discussed, and adjudged in that house to which it relates and not elsewhere.\nIn Stockdale v Hansard at p 118 Denman CJ said of all internal proceedings\nof the House of Commons: With respect to them, I freely admit that the Courts have no right to interfere, nor, perhaps, any regular means of obtaining information.\nI have already cited at paras 29 and 30 passages from the judgments of Lord Coleridge CJ and Stephen J in Bradlaugh v Gossett which are relevant in the present context.\nIt is, of course, always open to Parliament by legislation to provide for the courts to encroach on matters falling within its exclusive cognisance, or even on article 9 privilege, as did the Parliamentary Elections Act 1695, the Parliamentary Oaths Act 1866, the Perjury Act 1911, and the Defamation Act 1996 see Erskine May at p 115.\nThese statutes expressly address matters that were previously subject to privilege under article 9, or the exclusive cognisance of Parliament.\nWhere a statute does not specifically address matters that are subject to privilege, it is in theory necessary as a matter of statutory interpretation to decide a number of overlapping questions.\nDoes the statute apply within the precincts of the Palace of Westminster? If it does, does it apply in areas that were previously within the exclusive cognisance of Parliament? If so, does the statute override the privilege imposed by article 9? In practice there are not many examples of these questions being considered, either within Parliament or by the courts.\nIf Parliament accepts that a statute applies within an area that previously fell within its exclusive cognisance, then Parliament will, in effect, have waived any claim to privilege.\nThe 1939 Report is an example of Parliament considering whether privilege was overridden by statute.\nIn two cases the courts considered the application of the Licensing Acts within the precincts of the Palace of Westminster.\nIn Williamson v Norris [1899] 1 QB 7 Lord Russell of Killowen CJ considered a submission that the Houses of Parliament, in the regulation of their internal arrangements as to the sale of liquor, were entirely outside the control of the law as to licensing.\nHe stated that he was very far from being satisfied that this proposition was correct, but decided the case on another point.\nIn R v Graham Campbell, Ex p Herbert [1935] 1 KB 594 Mr A P Herbert had laid two informations at Bow Street Police Station for summonses against fifteen named Members of Parliament, who were members of the Kitchen Committee of the House of Commons and the manager of the Refreshment Department of the House alleging the unlawful sale of alcohol without a licence contrary to the Licensing (Consolidation) Act 1910.\nThe Chief Metropolitan Magistrate held that the Members of Parliament were not susceptible to the jurisdiction of the court because they were protected by the privileges of the House.\nOn application for orders in the nature of mandamus, Lord Hewart CJ upheld the decision and the reasoning of the magistrate.\nOnly as an afterthought did he express the view that the majority of the provisions of the 1910 Act were inapplicable to the House of Commons.\nAvory and Swift JJ agreed, albeit that Avory J devoted most of his judgment to the question of whether the Act on its true construction applied to the House of Commons.\nThe Joint Committee on Parliamentary Privilege Report HL paper 43 1, HC 214 1 (1998 99) (the 1999 Report) states at para 15 that since this case Acts of Parliament have been taken not to apply within the precincts of either House in the absence of express provision that they should apply and that the legislation that has been taken not to apply includes the Health and Safety at Work etc Act 1974 and the Data Protection Acts 1984 and 1998 but that in practice Parliament voluntarily abides by some of these statutory provisions.\nThe 1999 Report returns to this topic under the heading Right of each House to administer its internal affairs within its precincts.\nIt comments at para 240 that each House has the right to administer its internal affairs within the parliamentary precincts.\nIt continues at para 241: In one important respect this heading of privilege is unsatisfactory.\nInternal affairs and equivalent phrases are loose and potentially extremely wide in their scope.\nOn one interpretation they embrace, at one edge of the spectrum, the arrangement of parliamentary business and also, at the other extreme, the provision of basic supplies and services such as stationery and cleaning.\nThis latter extreme would be going too far if it were to mean, for example, that a dispute over the supply of photocopy paper or dismissal of a cleaner could not be decided by a court or industrial tribunal in the ordinary way.\nHere, as elsewhere the purpose of parliamentary privilege is to ensure that Parliament can discharge its functions as a legislative and deliberative assembly without let or hindrance.\nThis heading of privilege best serves Parliament if not carried to extreme lengths.\nA little later the Report considers the dividing line between matters that fall within this type of parliamentary privilege and those which fall outside it.\nThis lies at the heart of these appeals and merits quotation in full: 246 Putting aside the activities of individuals, there is a need to distinguish between activities of the House which call for protection under this head of privilege and those which do not.\nThe Palace of Westminster is a large building; it requires considerable maintenance; it provides an extensive range of services for members; it employs and caters for a large number of staff and visitors.\nThese services require staff and supplies and contractors.\nFor the most part, and rightly so, these services are not treated as protected by privilege.\nIt is difficult to see any good reason why claims for breach of contract relating to catering or building services, for example, should be excluded from the jurisdiction of the courts, or why a person who sustains personal injury within the precincts of Parliament should not be able to mount a claim for damages for negligence.\nThis has been formally recognised in the Parliamentary Corporate Bodies Act 1992.\nUnder this Act each House established a corporate officer who can sign contracts on behalf of the House and sue or be sued. 247 The dividing line between privileged and non privileged activities of each House is not easy to define.\nPerhaps the nearest approach to a definition is that the areas in which the courts ought not to intervene extend beyond proceedings in Parliament, but the privileged areas must be so closely and directly connected with proceedings in Parliament that intervention by the courts would be inconsistent with Parliaments sovereignty as a legislative and deliberative assembly.\nOne example is the Speakers decision on which facilities within the precincts of the House should be available to members who refuse to take the oath or affirmation of allegiance.\nAnother example might be steps taken by the library of either House to keep members informed upon matters of significant political interest.\nSuch steps, if authorised by the presiding officer of the House, would properly be within the scope of the principle and not amenable to orders of the court. 248 It follows that management functions relating to the provision of services in either House are only exceptionally subject to privilege.\nIn particular, the activities of the House of Commons Commission, a statutory body appointed under the House of Commons (Administration) Act 1978, are not generally subject to privilege, nor are the management and administration of the House departments.\nThe boundary is not tidy.\nOccasionally management in both Houses may deal with matters directly related to proceedings which come within the scope of article 9.\nFor example, the members pension fund of the House of Commons is regulated partly by resolutions of the House.\nSo too are members salaries and the appointment of additional members of the House of Commons Commission under section 1(2)(d) of the House of Commons (Administration) Act.\nThese resolutions and orders are proceedings in Parliament, but their implementation is not.\nThe foundation of the modern system of administration of the House of Commons is the House of Commons (Administration) Act.\nThis established the Commission and gave it corporate status, so that it is capable of suing and being sued.\nIn 1992 each House took full responsibility for managing its own internal administration, which included responsibility for the maintenance of the structure of the Palace of Westminster see Erskine May p 233.\nIn that year, as the 1999 Report explains, the Parliamentary Corporate Bodies Act was passed a necessary practical step to facilitate the bringing of actions in contract and tort arising out of the internal administration of the House.\nThis has rendered easier, and implicitly contemplates, inroads into areas that previously fell within the exclusive cognisance of the House.\nStatutory inroads have been made by express provisions of the Employment Act 1990, the Trade Union Reform and Employment Rights Act 1993 and the Employment Rights Act 1996 see Erskine May at pp 115 to 116.\nSo far as actions in contract and tort are concerned arising out of the internal administration of the House the courts are unlikely to accept the submission, in the unlikely event that it is advanced, that their jurisdiction is precluded because of the exclusive cognisance of the House.\nThe reasoning of Judge Russell, sitting in the Industrial Court in Bear v State of South Australia (1981) 48 SAIR 604 is likely to be followed.\nDifferent considerations apply to claims for judicial review in relation to the conduct by each House of its internal affairs.\nThe courts will respect the right of each House to reach its own decision in relation to the conduct of its affairs.\nTwo examples will illustrate this.\nIn Re McGuinnesss Application [1997] NI 359 the applicant sought to challenge by judicial review the decision of the Speaker that those who had not complied with the requirements of the Parliamentary Oaths Act 1866 would be denied certain of the facilities of the House.\nKerr J dismissed his application.\nHe held at p 6 : I am quite satisfied that, whether it qualifies as a proceeding in Parliament or not, the Speakers action lies squarely within the realm of internal arrangements of the House of Commons and is not amenable to judicial review.\nIn R v Parliamentary Commissioner for Standards, Ex p Al Fayed [1998] 1 WLR 669 the Parliamentary Commissioner for Standards had published a report relating to a complaint by the applicant against a Member of Parliament.\nThe applicant sought permission to challenge this by judicial review.\nThe application was refused by Sedley J and renewed before the Court of Appeal.\nLord Woolf MR gave a judgment with which the other members of the court agreed dismissing the application.\nHe said, at p 673: The focus of the Parliamentary Commissioner for Standards is on the propriety of the workings and the activities of those engaged within Parliament.\nHe is one of the means by which the select committee set up by the House carries out its functions, which are accepted to be part of the proceedings of the House.\nThis being the role of the Parliamentary Commissioner for Standards, it would be inappropriate for this court to use its supervisory powers to control what the Parliamentary Commissioner for Standards does in relation to an investigation of this sort.\nThe responsibility for supervising the Parliamentary Commissioner for Standards is placed by Parliament, through its standing orders, on the Committee of Standards and Privileges of the House, and it is for that body to perform that role and not the courts.\nIn summary, extensive inroads have been made into areas that previously fell within the exclusive cognisance of Parliament.\nFollowing Ex p Herbert there appears to have been a presumption in Parliament that statutes do not apply to activities within the Palace of Westminster unless they expressly provide to the contrary.\nThat presumption is open to question.\nIn 1984 three Law Lords, Lord Diplock, Lord Scarman and Lord Bridge of Harwich, on the Committee for Privileges expressed the view that sections 2 6 of the Mental Health Act 1983 applied to members of the House of Lords, although the Act did not expressly so state.\nCrime and Parliament\nI have considered the encroachment by the laws of contract and tort on areas that previously fell within the exclusive cognisance of Parliament and pointed out the distinction that must be drawn between such claims and applications for judicial review.\nI now come to consider the position where an act is committed which, absent any question of parliamentary privilege, would constitute a crime falling within the jurisdiction of the criminal courts.\nParliament has never challenged, in general, the application of criminal law within the precincts of Parliament and has accepted that the mere fact that a crime has been committed within these precincts is no bar to the jurisdiction of the criminal courts.\nIn May 1812 John Bellingham was indicted, tried and convicted of the murder of the Prime Minister, Spencer Percival, at the entrance to the lobby of the House of Commons.\nBellingham was not a Member of Parliament, but it would have made no difference had he been.\nWhere a crime is committed within the House of Commons, this may well also constitute a contempt of Parliament.\nThe courts and Parliament have different, overlapping, jurisdictions.\nThe House can take disciplinary proceedings for contempt and a court can try the offender for the crime.\nWhere a prosecution is brought Parliament will suspend any disciplinary proceedings.\nConversely, if a Member of Parliament were disciplined by the House, consideration would be given by the Crown Prosecution Service as to whether a prosecution would be in the public interest.\nIn 1988 Mr Ron Brown MP damaged the mace in the course of a heated debate and declined to apologise.\nThe House exercised its penal powers in relation to both the damage to the mace and the lack of respect for the authority of the Chair.\nThe Director of Public Prosecutions subsequently halted an attempt to bring a private prosecution.\nErskine May records at pp 162 163 that in cases of breach of privilege which are also offences at law, where the punishment which the Commons has power to inflict would not be adequate to the offence, or where for any other reason the House has thought proceeding at law necessary, either as a substitute for, or in addition to, its own proceedings, the Attorney General has been directed to prosecute the offender.\nIt is of note that in two of the cases cited the Attorney General was directed to prosecute witnesses to parliamentary committees for wilful and corrupt perjury CJ (1860) 258 and CJ (1866) 239.\nNo instance is cited beyond the 19th century and a footnote records that on two occasions in the 1970s the House authorities informally invited the police to consider prosecuting those responsible for gross misbehaviour in the gallery.\nThus the House does not assert an exclusive jurisdiction to deal with criminal conduct, even where this relates to or interferes with proceedings in committee or in the House.\nWhere it is considered appropriate the police will be invited to intervene with a view to prosecution in the courts.\nFurthermore, criminal proceedings are unlikely to be possible without the cooperation of Parliament.\nBefore a prosecution can take place it is necessary to investigate the facts and obtain evidence.\nThe powers of the police in respect of these activities are contained in the Police and Criminal Evidence Act 1984.\nI am not aware that any court has had to consider the extent to which, if at all, the provisions of this Act apply within the Palace of Westminster.\nWhat occurs is that Parliament permits the police to carry out their investigations within the precincts.\nI shall give some examples of this cooperation which are of particular relevance in the context of these appeals.\nOn 3 April 2008 a meeting took place between the Chairman of the Committee on Standards and Privileges, the Parliamentary Commissioner for Standards and the Commissioner of Police of the Metropolis.\nFollowing this an agreed statement was released: All parties agreed that, other than in the limited context of participation in proceedings in Parliament, Members of Parliament are in no different position in respect of alleged criminal behaviour than any other person.\nThe Chairman reiterated the Committees belief in the general principle that criminal proceedings against Members, where these are considered appropriate, should take precedence over the Houses own disciplinary proceedings.\nThe meeting discussed how the respective parties might coordinate their activities to ensure the effective delivery of this principle.\nWhere the Metropolitan Police receive information which suggests a Member of Parliament may have committed a criminal offence, they will take the decision on whether to institute inquiries on their own initiative, on the same basis as they would in any other case, and without regard to whether the same information had formed any part of a complaint to the Parliamentary Commissioner.\nThe Metropolitan Police undertook to inform the Parliamentary Commissioner in the normal course of events if they were considering initiating criminal inquiries into a Member, with a view to establishing whether the alleged conduct was also the subject of a complaint under the Code.\nThe Parliamentary Commissioner confirmed that he had regard, where appropriate, to the possibility of criminal behaviour when investigating complaints he received against Members of Parliament.\nHe would continue the practice in specific cases of liaising with the Metropolitan Police or other relevant force whenever he considered it appropriate to do so, initiating the process at the earliest opportunity.\nAll parties welcomed this.\nIf at any point in his investigation of a complaint, the Parliamentary Commissioner considers that there are sufficient grounds to justify reporting the matter to the police for them to consider a criminal inquiry, he confirmed that he would submit a recommendation to that effect to the Committee on Standards and Privileges who would decide whether such a report should be made.\nWhere this was done, the Chairman confirmed that the Committee would normally expect the Parliamentary Commissioner to suspend his inquiries until the question of possible criminal proceedings had been resolved.\nThe Parliamentary Commissioner and the Committee would follow similar procedures if informed by the police that they are considering initiating criminal inquiries into a matter which was also the subject of a complaint.\nThe Chairman also confirmed that if in the course of the Committees consideration of the outcome of the Commissioners investigation of a complaint it concluded that there were sufficient grounds to justify a report to the police, it would normally expect to advise the House accordingly, and defer reporting substantively on the complaint until the question of possible criminal proceedings had been resolved.\nOn 27 November 2008 the offices of the Conservative front bencher, Mr Damian Green, were searched by the police without a warrant.\nOn 8 December 2008 the Speaker issued a protocol setting out future procedures where the police sought to execute a search warrant in the House, the most material part of which provides as follows: 1.\nResponsibility for controlling access to the precincts of the House has been vested by the House in me.\nIt is no part of my duties as Speaker to impede the proper administration of justice, but it is of equal concern that the work of the House and of its Members is not necessarily hindered. 2.\nThe precincts of Parliament are not a haven from the law.\nA criminal offence committed within the precincts is no different from an offence committed outside and is a matter for the courts.\nIt is long established that a Member may be arrested within the precincts. 3.\nIn cases where the police wish to search within Parliament, a warrant must be obtained and any decision relating to the execution of that warrant must be referred to me.\nIn all cases where any Officer or other member of the staff of the House is made aware that a warrant is to be sought the Clerk of the House, Speakers Counsel, the Speakers Secretary and the Serjeant at Arms must be informed.\nNo Officer or other member of the staff of the House may undertake any duty of confidentiality which has the purpose or effect of preventing or impeding communication with these Officers. 4.\nI will consider any warrant and will take advice on it from senior officials.\nAs well as satisfying myself as to the formal validity of the warrant, I will consider the precision with which it specifies the material being sought, its relevance to the charge brought and the possibility that the material might be found elsewhere.\nI reserve the right to seek advice of the Attorney General and Solicitor General. 5.\nI will require a record to be provided of what has been seized, and I may wish to attach conditions to the police handling of any parliamentary material discovered in a search until such time as any issue of privilege has been resolved.\nOn 30 September 2010 Mr Andrew Gibson, a budget officer in the Fees Office, was sentenced to 9 months imprisonment after pleading guilty to three counts of obtaining money transfers by deception.\nHe had drawn up false invoices in the names of three former Members of Parliament.\nIt is reasonable to assume that this prosecution was brought with the assistance of the House authorities.\nThe court was provided with information that on 12 October 2010 the Standards and Privileges Committee agreed that the Parliamentary Commissioner for Standards should report to the Metropolitan Police Service the conduct of Mr Denis MacShane MP in relation to claims for expenses.\nAccording to the procedures agreed between the Committee, the Commissioner and the Metropolitan Police an inquiry by the Commissioner into a complaint against Mr MacShane was suspended until the question of possible criminal proceedings was resolved.\nIn the course of the hearing of these appeals the court was informed that, with the consent of the defendants, the Fees Office had provided the prosecution with documentation in relation to the defendants claims for allowances and expenses.\nConclusions\nParliament by legislation and by administrative changes has to a large extent relinquished any claim to have exclusive cognisance of the administrative business of the two Houses.\nDecisions in relation to matters of administration are taken by parliamentary committees and it has been common ground before the Court that these decisions are protected by privilege from attack in the courts.\nThe 1999 Report distinguishes, however, between such decisions and their implementation, expressing the view that the latter is not subject to privilege.\nI consider that view to be correct.\nWhere the House becomes aware of the possibility that criminal offences may have been committed by a Member in relation to the administration of the business of Parliament in circumstances that fall outside the absolute privilege conferred by article 9, the considerations of policy to which I have referred at para 61 above require that the House should be able to refer the matter to the police for consideration of criminal proceedings, or to cooperate with the police in an inquiry into the relevant facts.\nThat is what the House has done in relation to the proceedings brought against the three defendants.\nThe area of activity to which these prosecutions relate is administrative.\nThe payment of allowances and expenses had until recently been entrusted to the Fees Office by the Commission, a body set up for the purposes of administration see paras 9 to 11 above.\nThese administrative tasks are now performed by the Independent Parliamentary Standards Authority, set up under the Parliamentary Standards Act 2009.\nThe House has asserted a disciplinary jurisdiction over claims that have been made for allowances and expenses and, to that end, the Members Estimate Committee set up a review of such claims under Sir Thomas Legg.\nThe House has not, however, asserted exclusive cognisance, or jurisdiction, in respect of such claims.\nOn the contrary, on 20 July 2009 the Committee excluded from the claims referred to Sir Thomas any that were under investigation by the police.\nEven if the House were not co operating with the prosecuting authorities in these cases, I do not consider that the court would be prevented from exercising jurisdiction on the ground that they relate to matters within the exclusive cognisance of Parliament.\nIf an applicant sought to attack by judicial review the scheme under which allowances and expenses are paid the court would no doubt refuse the application on the ground that this was a matter for the House.\nExamination of the manner in which the scheme is being implemented is not, however, a matter exclusively for Parliament.\nIt was not suggested that Members have a contractual entitlement to allowances and expenses, but if they were to have such contractual rights, I see no reason why they should not sue for them.\nIf a question were raised as to whether allowances and expenses were taxable, the court would be entitled to examine the circumstances in which they were paid.\nEqually there is no bar in principle to the Crown Court considering whether the claims made by the defendants were fraudulent.\nThis is not to exclude the possibility that, in the course of a criminal prosecution, issues might arise involving areas of inquiry precluded by parliamentary privilege, although that seems unlikely having regard to the particulars of the charges in the cases before us.\nFor these reasons I am satisfied that neither article 9 nor the exclusive cognisance of the House of Commons poses any bar to the jurisdiction of the Crown Court to try these defendants.\nThat is why I decided that each appeal should be dismissed.\nLORD RODGER\nThe appellants are three former Members of Parliament who are charged with false accounting, contrary to section 17(1)(b) of the Theft Act 1968 (the Theft Act).\nThe first count on the indictment against Mr Morley, for example, is in these terms: STATEMENT OF OFFENCE False accounting, contrary to section 17(1)(b) of the Theft Act 1968.\nPARTICULARS OF OFFENCE ELLIOT MORLEY, between 1 April 2004 and 28 February 2006, dishonestly, with a view to gain for himself or with intent to cause loss to another, in furnishing information for the purpose of making allowance claims, produced or made use of documents required for an accounting purpose, namely 19 Form ACA2 claim forms, which to his knowledge were or may have been misleading, false or deceptive in a material particular, in that they stated he was paying 800 per month in mortgage interest, when in fact he was paying a lesser amount.\nThe appellants have not suggested that the indictments do not disclose an offence under English law or that the counts are otherwise defective.\nThe argument which has eventually brought these appeals to this Court arises out of an aspect of the indictments which does not emerge immediately, even from the particulars of the offences: at the relevant time Mr Morley and the other appellants were MPs.\nThe reference to Form ACA2 is, however, a reference to a form which MPs used for submitting claims for allowances to the Fees Office of the House of Commons.\nWhen submitting such claims MPs had to sign a declaration to the effect that they had incurred the costs in question wholly, exclusively and necessarily to enable [them] to stay overnight away from [their] only or main home for the purpose of performing [their] duties as a Member of Parliament.\nThe argument for the appellants is that the counts refer to the submission of claims by MPs to an office of the House of Commons and that, in these circumstances, a prosecution is precluded by parliamentary privilege, by reference either to article 9 of the Bill of Rights or to the exclusive jurisdiction of Parliament to regulate its own affairs.\nAs it existed at the relevant time, the system for payment of Members allowances had been created by, and continued to rest solely on, Resolutions of the House of Commons.\nA request for the necessary funds to pay the allowances was included in the Members Estimate which was laid by the Treasury each year as part of the Governments Main Supply Estimates.\nThe Members Estimate Committee was responsible for oversight of the expenditure on the allowances.\nThe Committee on Members Allowances advised the Members Estimate Committee on this matter.\nIn his role as Accounting Officer, the Clerk of the House of Commons was responsible for compiling the necessary accounts and was accountable to the House for the money spent.\nThe Members Estimate Audit Committee advised the Clerk of the House in this connexion.\nThe various allowances available to Members were set out in the Green Book, on which the Committee on Members Allowances advised the Speaker, the Members Estimate Committee and the Leader of the House.\nMoreover, if any question arose as to the application of the rules in the Green Book, a Member could refer it to the Committee on Members Allowances, from which there was an appeal to the Members Estimate Committee.\nThe administration of the system of allowances (including payment of the allowances) was handled by an office, usually referred to as the Fees Office, within the Operations Directorate.\nIf the Fees Office refused a Members claim to an allowance, the Member could appeal to the Committee on Members Allowances and from there to the Members Estimate Committee.\nA further point to notice about the indictments is that the particulars of the offences do not specify where the MPs are alleged to have been when they submitted the claims.\nFor all we know, they could have completed the forms at home, whether in England or in Scotland, and sent them in by post.\nEqually, they could have completed the forms while in the House of Commons and have submitted them in person to the Fees Office.\nIt does not matter since, on either view, the misleading information would have been furnished to the Fees Office of the House.\nBut, to test the point taken by the appellants, it is best to assume that the allegation is that they completed the forms in the House of Commons and submitted them in person.\nSo all stages of the alleged offence would have taken place within the precincts of the House of Commons.\nThe Theft Act extends to England and Wales.\nIn other words, it forms part of the law of England and Wales.\nThe Houses of Parliament and their dpendances are in England and so the criminal law of England applies to what is done there.\nThe most famous illustration of this elementary point is, perhaps, the murder of the Prime Minister, Mr Spencer Percival, in the lobby of the House of Commons in 1812.\nJohn Bellingham was arrested, prosecuted, tried for murder at the Old Bailey, convicted and executed all according to the common law of England.\nIf the assassin had been a fellow MP, then by the law of England he too would have committed murder.\nThe same would have applied if the MP had assassinated the Prime Minister in the chamber of the House of Commons.\nLess dramatically, if a Member of Parliament were to steal money from a fellow Members wallet in a room in the House of Commons or from the till in the Members Dining Room, he would commit theft under section 1 of the Theft Act.\nSimilarly, if a Member intentionally damaged one of the statues of former Prime Ministers in the lobby of the House of Commons, he would commit criminal damage under section 1 of the Criminal Damage Act 1971.\nEqually to come to the present cases if a Member of Parliament dishonestly, with a view to gain for himself, submitted a claim form which to his knowledge was false in a material particular, the law of England would apply.\nThe Member would commit an offence under section 17(1) of the Theft Act, even if he completed the form in the House of Commons and submitted it in person to the Fees Office.\nAs already noted, the appellants say, however, that their prosecution in the Crown Court for this offence is precluded by parliamentary privilege, by reference either to article 9 of the Bill of Rights or to the exclusive jurisdiction of Parliament to regulate its own affairs.\nAn invocation of parliamentary privilege is apt to dazzle lawyers and judges outside Parliament.\nIn Wellesley v Duke of Beaufort (1831) 2 Russ & M 639, 660, Lord Brougham LC warned courts of justice against acceding to claims of privilege the instant they hear that once magical word pronounced.\nA few years later, in Stockdale v Hansard (1839) 9 Ad & E 1, 112, Lord Denman CJ remarked that the privileges are well known, it seems, to the two Houses, and to every Member of them, as long as he continues a Member; but the knowledge is as incommunicable as the privileges to all beyond that pale.\nHappily, it is unnecessary on this occasion to penetrate too deeply into these mysteries if mysteries they be.\nThe appellants formulation of their argument might seem to suggest that article 9 of the Bill of Rights deals with matters that would not necessarily fall within the exclusive jurisdiction of Parliament to regulate its own affairs.\nA moments reflection shows, however, that, unless a matter did fall within the exclusive jurisdiction of Parliament with the result that it did not fall within the legitimate jurisdiction of the ordinary courts of the land, whether civil or criminal, or of any other body article 9 could not itself legitimately purport to exclude all consideration of the matter outside Parliament.\nIn other words, article 9 cannot be intended to apply to any matter for which Parliament cannot validly claim the privilege of exclusive cognizance.\nIndeed, as the distinguished Clerk of the House of Commons, Sir Gilbert Campion (later Lord Campion), pointed out in his Memorandum to the Select Committee on the Official Secrets Acts in 1939, the relevant words in the Preamble to the Bill of Rights make this clear: Whereas the late King James the Second by the Assistance of diverse evill Councellors Judges and Ministers imployed by him did endeavour to subvert and extirpate the Protestant Religion and the Lawes and Liberties of this Kingdome By Prosecutions in the Court of Kings Bench for Matters and Causes cognizable onely in Parlyament and by diverse other Arbitrary and Illegall Courses And thereupon the said Lords Spirituall and Temporall and Commons pursuant to their respective Letters and Elections being now assembled in a full and free Representative of this Nation takeing into their most serious Consideration the best meanes for attaining the Ends aforesaid Doe in the first place (as their Auncestors in like Case have usually done) for the Vindicating and Asserting their auntient Rights and Liberties, Declare (Emphasis added).\nSir Gilbert added: The mischief the statute was intended to remedy was therefore the drawing into examination in inferior courts of matters cognizable only in Parliament.\nSee the Committees Report, p 24.\nTherefore, even though the appellants put their case by reference to both article 9 and the exclusive jurisdiction of the House of Commons, in truth there is really only one basic question: does the matter for which the appellants are being prosecuted in the Crown Court fall within the exclusive jurisdiction or cognizance of Parliament or, more particularly, of the House of Commons? If so, then the appellants must prevail; if not, neither article 9 of the Bill of Rights nor any other doctrine gives them a right to have the prosecution stopped on the ground of parliamentary privilege.\nThe expression, the High Court of Parliament, makes the point that Parliament has a certain power of judicature as do the two Houses in their separate capacities.\nIn exercising this jurisdiction the Houses apply the law and custom of Parliament (lex et consuetudo parliamenti).\nCf Kielley v Carson (1843) 4 Moo PC 63, 89, per Parke B.\nThe present case concerns the House of Commons.\nSince about the time of Floyds Case (1621) the Commons have accepted that they have no power to punish except for a contempt of their House: F W Maitland, The Constitutional History of England (1908), p 245.\nObviously, therefore, the House neither has, nor claims to have, any power to try anyone for an offence under English criminal law.\nIf, for example, someone steals money within the precincts of the House of Commons, the House cannot try him for the contravention of the Theft Act: only the ordinary courts can do that.\nSo, when Mr Andrew Gibson, a budget officer in the Fees Office, obtained the transfer of money by submitting false invoices to the Office in the names of three former MPs, he was prosecuted for a contravention of section 15A of the Theft Act and pleaded guilty at Southwark Crown Court, where he was sentenced to nine months imprisonment on 30 September 2010.\nIn such cases the most that the House itself could do would be to treat the conduct as a contempt of the House and, in the exercise of its power of judicature, punish the offender, not for the criminal offence, but for his contempt of the House.\nOf course, the power to treat conduct as contempt of the House is potentially open to abuse and it was in fact abused in the past, to restrain and punish a wide variety of acts to which MPs happened to take exception.\nIn Wellesley v Duke of Beaufort (1831) 2 Russ & M 639, 658 660, Lord Brougham LC denounced past abuses.\nA catalogue of examples is attached to the report of the speech of counsel for the plaintiff in Stockdale v Hansard (1839) 9 Ad & E 1, 12 13.\nIt is not suggested that such abuses would readily occur nowadays.\nOn the contrary, todays House of Commons is unlikely to use its power to take proceedings for contempt against a thief or fraudster operating within its precincts if only because the police and the ordinary criminal law and courts are much better adapted to dealing with such cases.\nIn former times, when the House rightly considered that a matter could be better dealt with by the ordinary courts than by the House under its contempt jurisdiction, it either ordered the Attorney General to institute criminal proceedings in the appropriate court or presented an address to the Sovereign, asking for such proceedings to be commenced.\nSee the examples in the Second Report from the Select Committee appointed to consider of the Proceedings had, and to be had, in respect of the several papers signed Francis Burdett, 15 June 1810, in J Hatsell, Precedents of Proceedings in the House of Commons vol 1, 2nd ed (1818), pp 294 295 and 302 303; and in Erskine May, Parliamentary Practice, 23rd ed (2004), p 163 n 1.\nToday, the House authorities would presumably contact the police and leave the matter in their hands.\nIn Mr Gibsons case, for example, Scotland Yard was called in as a result of information uncovered in the course of Sir Thomas Leggs investigation of MPs expenses.\nTherefore the mere fact that the House could treat a matter as one of contempt does not mean that the House must do so.\nOn the contrary, if the conduct in question would also constitute an offence under the ordinary criminal law of England, then the individual can be prosecuted in the criminal courts in the usual way.\nThe jurisdiction of the House to deal with the matter as one of contempt overlaps with the jurisdiction of the ordinary courts to deal with it as a criminal offence.\nIn short, the matter does not fall within the exclusive cognizance of Parliament.\nThe examples I have given concerned offenders, hypothetical and actual, who were not Members of Parliament.\nBut, in principle, the same must apply to MPs who commit an ordinary crime, such as theft.\nAdmittedly, it is possible to find passages in the authorities which are so widely stated that they might seem to imply that even an ordinary crime committed by a Member of Parliament within the precincts of the House of Commons would fall within the exclusive cognizance of the House.\nFor example, in his Commentaries on the Laws of England, 17th ed (1814), vol 1, Bk 1, chap 2, pp 158 159, under reference to Cokes Institutes, Blackstone says that the whole of the law and custom of parliament has its original from this one maxim: that whatever matter arises concerning either house of parliament, ought to be examined, discussed, and adjudged in that house to which it relates, and not elsewhere.\nSimilarly, in Stockdale v Hansard (1839) 9 Ad & E 1, 114, referring to the two Houses of Parliament, Lord Denman CJ says that whatever be done within the walls of either assembly must pass without question in any other place.\nThese very generalised statements have, however, to be seen in the context of the actual practice of the House.\nDespite their wide terms, as pointed out in para 107 above, it was, for example, the practice of the House of Commons to direct the Attorney General to prosecute someone who was alleged to have committed perjury when giving evidence to a committee of the House: James Welsh (1860) CJ 258; Henry Chambers (1866) CJ 239.\nMore particularly, however, for centuries the House of Commons has not claimed the privilege of exclusive cognizance of conduct which constitutes an ordinary crime even when committed by a Member of Parliament within the precincts of the House.\nIn this context the expression ordinary crime occurs in the judgment of Stephen J in Bradlaugh v Gossett (1884) 12 QBD 271, 283, where he said: I know of no authority for the proposition that an ordinary crime committed in the House of Commons would be withdrawn from the ordinary course of criminal justice.\nAlthough his use of the expression has been criticised, Stephen J was clearly drawing a distinction between an ordinary crime (such as theft) and a crime (such as sedition) which a Member of Parliament committed by saying something in the exercise of his freedom of speech in the House.\nWhat the Member said in the House would fall within the exclusive cognizance of the House and would be protected by article 9 of the Bill of Rights.\nThe House of Commons alone could consider the matter and decide what sanction, if any, should be applied to the MP.\nSo he could not be prosecuted for the crime in the ordinary courts and, if any attempt were made to prosecute him, the House would intervene to stop the prosecution in order to protect the privilege of freedom of speech and debate of the House itself and, simultaneously, the particular Members exercise of that privilege.\nIn expressing the view that a Member of Parliament could be prosecuted for an ordinary crime committed in the House of Commons, Stephen J referred to the case of Sir John Elliot (1629) 3 St Tr 293.\nIn 1629 Sir John Elliot and two others were prosecuted in the Kings Bench for uttering seditious words in the House of Commons and for laying violent hands on the Speaker.\nThe defendants took a plea to the jurisdiction of the court because these offences are supposed to be done in parliament, and ought not to be punished in this court, or in any other, but in parliament.\nThe court overruled the plea and the defendants were convicted.\nIn 1667, after the Civil War and the Restoration, a report of the trial was published and came to the notice of the House of Commons: (1629) Cro Car 181.\nThe House resolved that the judgment had been illegal and against the freedom and privilege of Parliament.\nA conference was arranged with the House of Lords.\nMr John Vaughan (later Sir John Vaughan, the Chief Justice of the Common Pleas) spoke on behalf of the Commons.\nHe argued, at col 317, that the judges had craftily dealt with the allegations of seditious speech and of violence to the Speaker together: So that perhaps whatsoever was criminal in the actions might serve for a justification of their rule, and might make it seem in time to become a precedent, and a ruled case against the Liberty of Speech in Parliament, which they durst not singly and bare faced have done.\nMr Vaughan went on to say, at col 318: [I]t is very possible the Plea of those worthy persons, Denzil Hollis, Sir John Elliot, and the rest, was not sufficient to the jurisdiction of the court, if you take in their criminal actions altogether; but, as to the words spoken in parliament, the court could have no jurisdiction while this act of 4 Hen 8 is in force, which extends to all members that then were (or ever should be,) as well as Strode; and was a public general law, though made upon a private and a particular occasion.\nOn a writ of error at the instance of Denzil Hollis (by now, Lord Hollis), the House of Lords held, at cols 333 334, that the original judgment should be reversed.\nIt can be inferred from the Report by the Chief Justice (Sir John Kellynge), at col 332, that the House criticised the original decision on essentially the same basis as had been advanced by Mr Vaughan, viz, that the judges had treated the allegation of seditious words and the allegation of violence to the Speaker together.\nIn the Chief Justices view, the allegations should have been considered separately since, even if an allegation of violent trespass to the person could or should perhaps (forte) be heard and decided in the Kings Bench, nevertheless whatever is said and published in the House of Commons by a serving Member of the House should not be heard or decided anywhere else than in Parliament.\nAlthough, as Stephen J noted in Bradlaugh v Gossett (1884) 12 QBD 271, 284, the House of Lords was careful not to express a concluded view on the matter, the indication that the charge relating to the violence to the Speaker could have been tried in the Kings Bench is pretty clear.\nIndeed, it was under reference to this case that Maitland was able to say, We may take it to be law that an ordinary crime, such as theft committed by a Member in the House, might be punished in the ordinary courts in the ordinary way: Constitutional History of England, p 321.\nMoreover, the simple fact is that, since 1667, the House has never claimed a privilege of exclusive cognizance in a case where a Member has committed an ordinary crime in the House or its precincts.\nThe Attorney General (Sir Thomas Inskip KC) drew attention to this in his argument in R v Graham Campbell, Ex p Herbert [1935] 1 KB 594, 597 598.\nHe submitted that it showed that there was nothing to bar a prosecution in such a case: Coke was expressing an opinion in support of the view now contended for when he said that the exercise of the power of judicature of the House of Commons was best understood by reading the judgments and records of Parliament at large, . and the book of the clerk of the House of Commons, which is a record . : see Institutes, Part IV, c 1, Of Judicature.\nAdmittedly, a person committing an ordinary felony or misdemeanour, even on the very steps of the Speakers chair, would not be protected by the privilege of the House, but would be amenable to the jurisdiction of the criminal courts.\nThat, however, is merely because the House has never claimed the right to adjudicate on such matters.\nAdapting the words of Coke, there is no record of such a privilege having been exercised, and it can, therefore, be taken not to exist.\nThat remains the position to this day.\nI have therefore no doubt that, if the offences with which the appellants are charged are to be regarded as ordinary crimes, then even assuming that they are alleged to have been committed entirely within the precincts of the House the appellants can be prosecuted in the Crown Court.\nThe only question, therefore, is whether there is any aspect of the offences which takes them out of the category of ordinary crime and into the narrower category of conduct in respect of which the House would claim a privilege of exclusive cognizance.\nIn theory, even though the allegations are of false accounting, that could be the position.\nIn Ex p Wason (1869) LR 4 QB 573, for example, an information alleged that three members of the House of Lords had entered into a conspiracy.\nConspiracy is, in itself, an ordinary crime.\nBut it was held that a charge of conspiracy to make statements which the members of the House knew to be untrue, in order to frustrate a petition to the House, was not cognizable by the criminal law since it concerned statements to be made, or actually made, in the House.\nThat was considered to take the alleged conspiracy into an area of conduct which would be cognizable only by the House of Lords itself.\nIn the present cases the charges arise out of claims for allowances that the appellants are alleged to have submitted to the Fees Office.\nAs explained at paras 96 97 above, at the time, the system for claiming and paying allowances rested on Resolutions of the House and was supervised by the Members Estimate Committee, with the assistance of the Committee on Members Allowances.\nIt was very much a matter over which the House exercised exclusive control, except in relation to the laying of the relevant estimate.\nMoreover, a system of allowances can rightly be seen as providing a necessary support to Members in carrying out all their parliamentary activities, including their core activities.\nIt is therefore quite possible that the rules of the system would have fallen within the area for which the House would claim exclusive cognizance.\nAnd it may be that the same could have been said of decisions by the Fees Office and, on appeal, by the supervising Committees, as to a particular claim by a Member for payment of an allowance.\nA challenge to any of these matters in the ordinary courts by a Member or by anyone else might well have called into question decisions taken by Committees of the House, or on their behalf, on a matter which was intended to be under the exclusive control and cognizance of the House and its Committees.\nObviously, the offences which the appellants are alleged to have committed could not have been committed if the House of Commons had not established and operated the system for payment of Members allowances.\nBut it is equally true that a hypothetical Member could not steal from the till in the Members Dining Room if the Administration Committee did not consider that the Dining Room should continue to operate and to provide a service to Members.\nThe Dining Room merely provides the setting for the theft, however.\nPrima facie, therefore, a charge against a Member of theft from the till would not call into question any decision of that Committee or of the House in relation to the Dining Room or other refreshment services.\nSo the alleged conduct would not, in my view, fall within the area for which the House would claim the privilege of exclusive cognizance.\nA theft of that kind would be an ordinary crime which could be prosecuted in the ordinary courts.\nDoubtless, the House could also treat it as a contempt of the House, but this would be in the exercise of an overlapping, not an exclusive, jurisdiction.\nSimilarly, in the present case, the appellants alleged conduct could well be regarded as an affront to the system of Members allowances established by the House and, so, as a contempt of the House, which the House could punish in the exercise of its power of judicature.\nBut even though the alleged offences presuppose the existence of the allowances system, nothing in the particulars in the indictments indicates, or even suggests, that the prosecution of the charges would raise any issue as to decisions of the House or of its Committees, or of any officers or employees acting on their behalf, as to the system or its operation.\nNor would the prosecution touch on any other core activities of Members of the House which the privilege of exclusive cognizance exists to protect their right, for example, to debate, to speak, to vote, to give notice of a motion, to present a petition, to serve on a committee, and to present a report to the House.\nIn short, there is nothing in the allegations against the appellants which relates in any way to the legislative or deliberative processes of the House of Commons or of its Members, however widely construed.\nThe charges against the appellants are simply charges that they have committed the ordinary crime of false accounting in circumstances where, it so happens, the allegedly misleading information was furnished to the Fees Office of the House of Commons.\nThe allowances system merely provides the setting for the alleged offences, which are ordinary crimes.\nTherefore they can be prosecuted in the Crown Court.\nAgain, the potential jurisdiction of the House in contempt is an overlapping, not an exclusive, jurisdiction.\nThe very fact that the House authorities co operated with the police in the investigations which led to the charges against the appellants suggests, at least, that the House authorities do not see the allegations as falling into the category in respect of which the House would claim the privilege of exclusive cognizance.\nThe fact that the Speaker has not intervened to assert the privilege points in the same direction.\nIf the privilege of the House to exercise exclusive cognizance in cases of this kind had previously been established, then the appellants might have been able to assert that privilege, even if the House authorities had chosen not to: Wellesley v Duke of Beaufort (1831) 2 Russ & M 639, 655, per Lord Brougham LC.\nIt is unnecessary to express a view on this point, however, since the position in the present cases is different: the appellants are claiming a privilege which the House has not asserted in the past in these circumstances and which it has not asserted on this occasion.\nThe Court is entitled to notice, and to draw an inference from, that clamant silence.\nI am accordingly satisfied that the prosecution does not infringe article 9 of the Bill of Rights by impeaching or questioning the freedom of speech, the freedom of debates or the freedom of proceedings of the House or of its Members.\nI am equally satisfied that the prosecution is not precluded on any other basis relating to the Commons privilege of exclusive cognizance.\nOf course, the Court can judge the situation only as it stands at present.\nIf the trial goes ahead, it may turn out that, contrary to expectations, some issue arises which is said to touch on the core activities of MPs or of the House itself.\nIf that were actually so, the proceedings might be trespassing on an area for which the House would claim exclusive cognizance and to which article 9 would apply.\nIn that event the Speaker or the House authorities might seek to intervene.\nIt would be up to the presiding judge, with the assistance of counsel, to decide what should be done.\nIn the meantime, however, there is nothing on the face of the indictments which would justify this Court in preventing the appellants trial from proceeding.\nFor these reasons, which I understand to coincide in substance with those advanced by Lord Phillips, I favoured dismissing the appeals.\nLORD HOPE, LADY HALE, LORD BROWN, LORD MANCE, LORD\nCOLLINS, LORD KERR\nWe have read the judgments of Lord Phillips and Lord Rodger.\nWe agree with them and for the reasons they give we too considered that these appeals should be dismissed.\nLORD CLARKE\nMy reasons for agreeing that these appeals should be dismissed were those given by Lord Phillips and, subject to what follows, by Lord Rodger.\nI add a few words of my own limited to the second type of privilege relied upon, which is known as exclusive cognisance.\nIt is to my mind plain from Lord Phillips analysis of this principle that it is a privilege which belongs to Parliament and not to individual members.\nThis is I think clear from the fact that, unlike the privilege provided for in article 9 of the Bill of Rights, Parliament can waive or relinquish it.\nIt seems to me to follow logically from that conclusion that it is for Parliament, and not the individual member to rely upon it.\nIn his paras 79 to 83 Lord Phillips has demonstrated that Parliament has never asserted the privilege in cases of the kind at present before the court.\nHe then gives examples based on these and similar cases in recent times at paras 84 to 88.\nIn the light of the practice of Parliament over many years he then concludes in paras 89 to 92 that Parliament has never asserted the privilege in such cases and, subject to the possibility of an Act of Parliament conferring such a privilege, that it is not now open to it to do so.\nI agree with him that it follows that it is not open to the appellants to do so.\nEven if it were open to Parliament to rely upon the privilege in cases of this type, since Parliament has the right to waive or relinquish the right to do so, I do not think that an individual member could rely upon the privilege if Parliament has waived or relinquished the right in the particular case.\nIt appears to me that, on the basis of the facts stated by Lord Phillips between paras 84 to 91, Parliament has waived or relinquished any right it might otherwise have had to claim the privilege.\nHaving referred the investigation of allegations such as those made against the appellants to the police with a view to possible prosecution and having co operated with the police, I do not see how Parliament could now assert the exclusive cognisance relied upon.\nIn these circumstances it seems to me that it is not open to the appellants as individual members to do so.\nI recognise that this conclusion may be inconsistent with the statement made by Lord Brougham LC in Wellesley v Duke of Beaufort (1831) 2 Russ & M 639 at 655, which is referred to by Lord Rodger at para 124 above.\nLord Broughams statement, which did not form part of the judgment and was no more than a view expressed in the course of the argument, was in these terms: If a Court of Law or of Equity, upon due deliberation, entertains an opinion that a Member of either House of Parliament has privilege of Parliament, that Court is, in my judgment, bound to give him the benefit of his privilege, and to give it him with all its incidents, even although the House to which he belongs abandons it as a claim of right; for a Court knows nothing judicially of what takes place in Parliament till what is there done becomes an Act of the Legislature.\nThat principle may apply to the article 9 privilege but I do not think that it can apply to the exclusive cognisance privilege.\nIt is inconsistent with Lord Phillips conclusion at para 63 above that exclusive cognisance can be waived or relinquished by Parliament.\nBased on p 105 of the 23rd edition of Erskine May on Parliamentary Practice, Lord Phillips refers to a 1980 resolution which permitted reference to be made in court to certain Parliamentary papers which had up to then been subject to a claim for exclusive cognisance.\nIt appears to me to follow from those statements that, where Parliament has waived or relinquished the privilege in respect of a particular matter, no individual member can rely upon it.\nIn so far as Lord Brougham expressed a different view, I would not accept it.\nThe reason he gives sounds odd to modern ears.\nI do not think that it can properly be said today that a court knows nothing judicially of what takes place in Parliament till what is there done becomes an Act of the Legislature.\nIn these circumstances I would not accept that Lord Broughams statement, which was after all only made arguendo, is correct today.\n","output":"These appeals concern whether the criminal courts are prevented from trying certain former Members of Parliament on charges relating to expenses claims on the basis that the proceedings would infringe parliamentary privilege.\nThe three Appellants, Mr Morley, Mr Chaytor and Mr Devine have been committed for trial in the Crown Court on charges of false accounting, contrary to section 17(1)(b) of the Theft Act 1968.\nThe charges relate to claims for parliamentary expenses and are alleged to have been committed when each Appellant was a serving member of the House of Commons.\nThe claims concerned mortgage payments, IT services, rent for accommodation, cleaning and maintenance services, and the supply of stationery.\nA fourth defendant, Lord Hanningfield, who is a member of the House of Lords, faces similar charges.\nThe system for payment of Members of Parliaments allowances and expenses, as it existed at the relevant time, was created by Resolutions of the House of Commons and overseen by the Members Estimate Committee.\nThe Fees Office received and considered claim forms and made payments in relation to claims.\nThe claim forms which are the subject matter of all the charges were submitted to the Fees Office and contained a declaration, signed by the Member, confirming that the costs were incurred exclusively for the purpose of performing duties as a Member of Parliament.\nEach Appellant is facing a separate trial but all have raised a common point of law, namely that criminal proceedings cannot be brought because they would infringe parliamentary privilege.\nThe claim to privilege has two bases.\nThe first is Article 9 of the Bill of Rights 1689, which provides: That the Freedome of Speech and Debates or Proceedings in Parlyament ought not to be impeached or questioned in any Court or Place out of Parlyament.\nThe second is described alternatively as the exclusive cognisance or exclusive jurisdiction of Parliament and refers to the right of each House to manage its own affairs without interference from the other or from outside Parliament.\nIt is a privilege which is wider than, and embraces, Article 9.\nA single preparatory hearing was held to consider the point of law.\nThe judge ruled against the Appellants and Lord Hanningfield, and the Court of Appeal upheld that decision.\nThe Appellants appealed to the Supreme Court.\nLord Hanningfield did not appeal but was granted permission to intervene on a limited basis.\nOn 10 November 2010 the Supreme Court ordered that each of the three appeals be dismissed, with reasons to follow.\nThe Court now delivers those reasons.\nThe Supreme Court unanimously dismisses the appeals.\nLord Phillips (President) and Lord Rodger give the lead judgments.\nThe Court holds that neither Article 9 nor the exclusive jurisdiction of the House of Commons poses any bar to the jurisdiction of the Crown Court to try the Appellants.\nThe issue under Article 9 was whether making claims for parliamentary expenses fell within the phrase proceedings in Parliament.\nThe Court held that conduct of a Member is not privileged merely because it occurs within the House of Commons.\nThe principal matter to which Article 9 is directed is freedom of speech and debate in the Houses of Parliament and parliamentary committees.\nIn considering whether actions outside the Houses and committees fall within parliamentary proceedings because of their connection to them, it is necessary to consider the nature of that connection and whether, if such actions do not enjoy privilege, this is likely to impact adversely on the core or essential business of Parliament.\nOn this basis, submission of expenses claims does not qualify for the protection of privilege.\nScrutiny of claims by the courts will not inhibit freedom of speech or debate.\nThe only thing that it will inhibit is the making of dishonest claims: [48].\nParliament has expressed the same conclusion and although the extent of parliamentary privilege is ultimately a matter for the courts, it is one on which the courts will pay careful regard to the views of Parliament: [16]; [59].\nThere are also good policy reasons for giving Article 9 a narrow ambit, namely that its protection is absolute and, where it applies, it denies redress to those injured by civil wrongdoing and prevents Members being prosecuted for conduct which is criminal, despite the fact that Parliament has only limited penal powers of its own: [61].\nOn the exclusive jurisdiction issue, Parliament has to a large extent relinquished any claim to have exclusive jurisdiction over the administrative business of the two Houses.\nNor does Parliament assert an exclusive jurisdiction to deal with criminal conduct within the walls of Parliament, even where it relates to or interferes with proceedings in committee or the Houses.\nThe courts and Parliament have different, overlapping, jurisdictions.\nParliament can hear proceedings for contempt of Parliament and a court can try the offender for the crime.\nThe area of activity to which the present prosecutions relate is administrative: it concerns the implementation of the expenses scheme, not the decisions of parliamentary committees in respect of the scheme itself.\nThe expenses scheme merely provides the setting for the alleged offences and there is nothing in the allegations against the Appellants which relates to the core activities of Parliament, namely the legislative and deliberative processes, however widely construed.\nThe House of Commons has asserted a disciplinary jurisdiction over expenses claims and has set up a review of such claims under Sir Thomas Legg.\nIt has not, however, asserted exclusive jurisdiction.\nOn the contrary, it has co operated with the police investigation and excluded from the claims referred to Sir Thomas Legg any that are under investigation by the police: [89] [92]; [122] [123].\nFor these reasons, the Court held that the prosecutions neither infringed Article 9 nor impinged upon the exclusive jurisdiction of Parliament.\n","id":50}
{"input":"The appeals relate to the proper interpretation of paragraph 49 of the National Planning Policy Framework (NPPF), which is in these terms: Housing applications should be considered in the context of the presumption in favour of sustainable development.\nRelevant policies for the supply of housing should not be considered up to date if the local planning authority cannot demonstrate a five year supply of deliverable housing sites.\nThe Court of Appeal observed that the interpretation of this paragraph had been considered by the Administrative Court on seven separate occasions between October 2013 and April 2015 with varying results.\nThe court had been urged by all counsel to bring much needed clarity to the meaning of the policy.\nNotwithstanding the clarification provided by the impressive judgment of the court (given by Lindblom LJ), controversy remains.\nThe appeals provide the opportunity for this court not only to consider the narrow issues of interpretation of para 49, but to look more broadly at issues concerning the legal status of the NPPF and its relationship with the statutory development plan.\nBoth appeals relate to applications for housing development, one at Yoxford in the administrative area of the Suffolk Coastal District Council (the Yoxford site), and the other near Willaston in the area of Cheshire East Borough Council (the Willaston site).\nIn the first the councils refusal of permission was upheld by the inspector on appeal, but his refusal was quashed in the High Court (Supperstone J), and that decision was confirmed by the Court of Appeal.\nIn the second, the council failed to determine the application, and the appeal was allowed by the inspector.\nThe councils challenge succeeded in the High Court (Lang J), but that decision was reversed by the Court of Appeal, the judgment of the court being given by Lindblom LJ.\nBoth councils appeal to this court.\nThe statutory provisions\nThe relevant statutory provisions are found in the Town and Country Planning Act 1990 (the 1990 Act) and the Planning and Compulsory Purchase Act 2004 (the 2004 Act).\nPlan making\nPart 2 of the 2004 Act deals with local development.\nEach local planning authority in England is required to keep under review the matters which may be expected to affect the development of their area or the planning of its development (2004 Act section 13), and to prepare a local development scheme, which (inter alia) specifies the local development documents which are to be development plan documents (section 15).\nThe authoritys local development documents must (taken as a whole) set out the authoritys policies (however expressed) relating to the development and use of land in their area (section 17).\nLocal development documents are defined by regulations made under section 17(7).\nIn short they are documents which contain statements as to the development and use of land which the authority wishes to encourage, the allocation of sites for particular types of development, and development management and site allocations policies intended to guide determination of planning applications.\nTogether they comprise the development plan or local plan for the area (Town and Country Planning (Local Planning) (England) Regulations (SI 2012\/767) regulations 5 and 6).\nIn preparing such documents, the authority must have regard (inter alia) to national policies and advice contained in guidance issued by the Secretary of State (section 19(2)).\nEvery development plan document must be submitted to the Secretary of State for independent examination, one of the purposes being to determine whether it complies with the relevant statutory requirements, including section 19 (section 20(1)(5)(a)).\nThe Secretary of State may, if he thinks that a local development document is unsatisfactory, direct the local planning authority to modify the document (section 21).\nSection 39 gives statutory force to the concept of sustainable development (undefined).\nAny person or body exercising any function under Part 2 in relation to local development documents must exercise it with the objective of contributing to the achievement of sustainable development, and for that purpose must have regard to national policies and advice contained in guidance issued by the Secretary of State An adopted plan may be challenged on legal grounds by application to the High Court made within six weeks of the date of adoption, but not otherwise (section 113).\nSchedule 8 contained transitional provisions providing generally for a transitional period of three years, after which the plans produced under the previous system ceased to have effect subject to the power of the Secretary of State to save specified policies by direction.\nPlanning applications\ntaken into account in the handling of planning applications: Provision is made in the 1990 and 2004 Acts for the development plan to be 1990 Act section 70(2) In dealing with such an application the authority shall have regard to (a) material to the application, (b) material to the application, and (c) any local finance considerations, so far as the provisions of the development plan, so far as any other material considerations. 2004 Act section 38(6) 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.\nUnlike the development plan provisions, these sections contain no specific requirement to have regard to national policy statements issued by the Secretary of State, although it is common ground that such policy statements may where relevant amount to material considerations.\nThe principle that the decision maker should have regard to the development plan so far as material and any other material considerations has been part of the planning law since the Town and Country Planning Act 1947.\nThe additional weight given to the development plan by section 38(6) reproduces the effect of a provision first seen in the Planning and Compensation Act 1991 section 54A.\nIn City of Edinburgh Council v Secretary of State for Scotland [1997] 1 WLR 1447, the equivalent provision (section 18A of the Town and Country Planning (Scotland) Act 1972) was described by Lord Hope (p 1450B) as designed to enhance the status of the development plan in the exercise of the planning authoritys judgment.\nLord Clyde spoke of it as creating a presumption that the development plan is to govern the decision, subject to material considerations, as for example where a particular policy in the plan can be seen to be outdated and superseded by more recent guidance.\nHowever, the section had not touched the well established distinction between the respective roles of the decision maker and the court: It has introduced a requirement with which the decision maker must comply, namely the recognition of the priority to be given to the development plan.\nIt has thus introduced a potential ground on which the decision maker could be faulted were he to fail to give effect to that requirement.\nBut beyond that it still leaves the assessment of the facts and the weighing of the considerations in the hands of the decision maker (p 1458)\nAn appeal against a refusal of planning permission lies to the Secretary of State, who is subject to the same duty in respect of the development plan (1990 Act sections 78, 79(4)).\nRegulations under section 79(6) and Schedule 6 now provide for most categories of appeals, including those here in issue, to be determined, not by the Secretary of State, but by an appointed person (normally referred to as a planning inspector).\nThe decision on appeal may be challenged on legal grounds in the High Court (section 288).\nThe National Planning Policy Framework\nThe Framework (or NPPF) was published on 27 March 2012.\nOne purpose, in the words of the foreword, was to (replace) over a thousand pages of national policy with around 50, written simply and clearly, thus allowing people and communities back into planning.\nThe Introduction explains its status under the planning law: Planning law requires that applications for planning permission must be determined in accordance with the development plan, unless material considerations indicate otherwise.\nThe National Planning Policy Framework must be taken into account in the preparation of local and neighbourhood plans, and is a material consideration in planning decisions.\nNPPF is divided into three main parts: Achieving sustainable development (paragraphs 6 to 149), Plan making (paragraphs 150 to 185) and Decision taking (paragraphs 186 to 207).\nParagraph 7 refers to the three dimensions to sustainable development: economic, social and environmental.\nParagraph 11 begins a group of paragraphs under the heading the presumption in favour of sustainable development.\nParagraph 12 makes clear that the NPPF does not change the statutory status of the development plan as the starting point for decision making.\nParagraph 13 describes the NPPF as guidance for local planning authorities and decision takers both in drawing up plans and as a material consideration in determining applications.\nParagraph 14, which is important in the present appeals, deals with the presumption in favour of sustainable development, which is said to be at the heart of the NPPF and which should be seen as a golden thread running through both plan making and decision taking.\nIt continues: For plan making this means that: local planning authorities should positively seek opportunities to meet the development needs of their area; Local Plans should meet objectively assessed needs, with sufficient flexibility to adapt to rapid change, unless: any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole; or specific policies development should be restricted. this Framework indicate in For decision taking this means: approving development proposals that accord with the development plan without delay; and where the development plan is absent, silent or relevant policies are out of date, granting permission unless: any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole; or specific policies development should be restricted. this Framework indicate in We were told that the penultimate point (any adverse impacts ) is referred to by practitioners as the tilted balance.\nI am content for convenience to adopt that rubric.\nFootnote 9 (in the same terms for both parts) gives examples of the specific policies referred to: For example, those policies relating to sites protected under the Birds and Habitats Directives (see paragraph 119) and\/or designated as Sites of Special Scientific Interest; land designated as Green Belt, Local Green Space, an Area of Outstanding Natural Beauty, Heritage Coast or within a National Park (or the Broads Authority); designated heritage assets; and locations at risk of flooding or coastal erosion.\nThese are said to be examples.\nThus the list is not exhaustive.\nFurther, although the footnote refers in terms only to policies in the Framework itself, it is clear in my view that the list is to be read as including the related development plan policies.\nParagraph 14 cannot, and is clearly not intended to, detract from the priority given by statute to the development plan, as emphasised in the preceding paragraphs.\nIndeed, some of the references only make sense on that basis.\nFor example, the reference to Local Green Space needs to be read with paragraph 76 dealing with that subject, which envisages local communities being able through local and neighbourhood plans to identify for special protection green areas of particular importance to them, and so rule out new development other than in very special\ncircumstances\nSection 6 (paragraphs 47 to 55) is entitled Delivering a wide choice of high quality homes.\nParagraph 47 states the primary objective of the section: To boost significantly the supply of housing, local planning authorities should: use their evidence base to ensure that their Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area, as far as is consistent with the policies set out in [the NPPF], including identifying key sites which are critical to the delivery of the housing strategy over the plan period; identify and update annually a supply of specific deliverable sites sufficient to provide five years worth of housing against their housing requirements with an additional buffer of 5% to ensure choice and competition in the market for land. ; identify a supply of specific, developable sites or broad locations for growth, for years six to ten and, where possible, for years 11 15; for market and affordable housing, illustrate the expected rate of housing delivery through a housing trajectory for the plan period and set out a housing implementation strategy for the full range of housing describing how they will maintain delivery of a five year supply of housing land to meet their housing target; and set out their own approach to housing density to reflect local circumstances.\nThis group of provisions provides the context for paragraph 49, central to these appeals and quoted at the beginning of this judgment; and in particular for the advice that relevant policies for the supply of housing should not be considered up to date, unless the authority can demonstrate a five year supply of deliverable housing sites.\nSection 12 is headed Conserving and enhancing the historic environment (paragraphs 126 to 141).\nIt includes policies for designated and non designated heritage assets, as defined in the glossary.\nThe former cover such assets as World Heritage Sites, Scheduled Monuments and others designated under relevant legislation.\nA non designated asset is one identified as having a degree of significance meriting consideration in planning decisions because of its heritage interest.\nParagraph 135 states: The effect of an application on the significance of a non designated heritage asset should be taken into account in determining the application.\nIn weighing applications that affect directly or indirectly non designated heritage assets, a balanced judgment will be required having regard to the scale of any harm or loss and the significance of the heritage asset.\nSignificance in this context is defined by the glossary in Annex 2 as meaning the value of a heritage asset to this and future generations because of its heritage interest, which may be derived not only from a heritage assets physical presence, but also from its setting.\nAnnex 1 (Implementation) states that policies in the Framework are material considerations which local planning authorities should take into account from the day of its publication (paragraph 212); and that, where necessary, plans, should be revised as quickly as possible to take account of the policies through a partial review or by preparing a new plan (paragraph 213).\nHowever, it also provides that for a transitional period of a year decision takers may continue to give full weight to relevant policies adopted since 2004, even if there is a limited degree of conflict with this Framework (paragraph 214); but that thereafter due weight should be given to relevant policies in existing plans according to their degree of consistency with this framework (the closer the policies in the plan to the policies in [the NPPF], the greater the weight that may be given). (paragraph 215)\nNPPF Legal status and Interpretation\nThe court heard some discussion about the source of the Secretary of States power to issue national policy guidance of this kind.\nThe agreed Statement of Facts quoted without comment a statement by Laws LJ (R (West Berkshire District Council) v Secretary of State for Communities and Local Government [2016] EWCA Civ 441; [2016] 1 WLR 3923, para 12) that the Secretary of States power to formulate and adopt national planning policy is not given by statute, but is an exercise of the Crowns common law powers conferred by the royal prerogative.\nIn the event, following a query from the court, this explanation was not supported by any of the parties at the hearing.\nInstead it was suggested that his powers derived, expressly or by implication, from the planning Acts which give him overall responsibility for oversight of the planning system (see R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295, paras 140 143 per Lord Clyde).\nThis is reflected both in specific requirements (such as in section 19(2) of the 2004 Act relating to plan preparation) and more generally in his power to intervene in many aspects of the planning process, including (by way of call in) the determination of appeals.\nIn my view this is clearly correct.\nThe modern system of town and country planning is the creature of statute (see Pioneer Aggregates (UK) Ltd v Secretary of State for the Environment [1985] AC 132, 140 141).\nEven if there had been a pre existing prerogative power relating to the same subject matter, it would have been superseded (see R (Miller) v Secretary of State for Exiting the European Union (Birnie intervening) [2017] 2 WLR 583, para 48). (It may be of interest to note that the great Case of Proclamations (1610) 12 Co Rep 74, which was one of the earliest judicial affirmations of the limits of the prerogative (see Miller para 44) was in one sense a planning case; the court rejected the proposition that the King by his proclamation may prohibit new buildings in and about London .)\nAlthough planning inspectors, as persons appointed by the Secretary of State to determine appeals, are not acting as his delegates in any legal sense, but are required to exercise their own independent judgement, they are doing so within the framework of national policy as set by government.\nIt is important, however, in assessing the effect of the Framework, not to overstate the scope of this policy making role.\nThe Framework itself makes clear that as respects the determination of planning applications (by contrast with plan making in which it has statutory recognition), it is no more than guidance and as such a material consideration for the purposes of section 70(2) of the 1990 Act (see R (Cala Homes (South) Ltd) v Secretary of State for Communities and Local Government [2011] EWHC 97 (Admin); [2011] 1 P & CR 22, para 50 per Lindblom J).\nIt cannot, and does not purport to, displace the primacy given by the statute and policy to the statutory development plan.\nIt must be exercised consistently with, and not so as to displace or distort, the statutory scheme.\nLaw and policy\nThe correct approach to the interpretation of a statutory development plan was discussed by this court in Tesco Stores Ltd v Dundee City Council (ASDA Stores Ltd intervening) [2012] UKSC 13; 2012 SLT 739.\nLord Reed rejected a submission that the meaning of the development plan was a matter to be determined solely by the planning authority, subject to rationality.\nHe said: The development plan is a carefully drafted and considered statement of policy, published in order to inform the public of the approach which will be followed by planning authorities in decision making unless there is good reason to depart from it.\nHe added, however, that such statements should not be construed as if they were statutory or contractual provisions: It is intended to guide the behaviour of developers and planning authorities.\nAs in other areas of administrative law, the policies which it sets out are designed to secure consistency and direction in the exercise of discretionary powers, while allowing a measure of flexibility to be retained.\nThose considerations point away from the view that the meaning of the plan is in principle a matter which each planning authority is entitled to determine from time to time as it pleases, within the limits of rationality.\nOn the contrary, these considerations suggest that in principle, in this area of public administration as in others policy statements should be interpreted objectively in accordance with the language used, read as always in its proper context. (para 18) 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.\nAs 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.\nIn 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.\nSuch matters fall within the jurisdiction of planning authorities, and their exercise of their judgment can only be challenged on the ground that it is irrational or perverse (Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759, 780 per Lord Hoffmann) (para 19)\nIn the present appeal these statements were rightly taken as the starting point for consideration of the issues in the case.\nIt was also common ground that policies in the Framework should be approached in the same way as those in a development plan.\nHowever, some concerns were expressed by the experienced counsel before us about the over legalisation of the planning process, as illustrated by the proliferation of case law on paragraph 49 itself (see paras 27ff below).\nThis is particularly unfortunate for what was intended as a simplification of national policy guidance, designed for the lay reader.\nSome further comment from this court may therefore be appropriate.\nIn the first place, it is important that the role of the court is not overstated.\nLord Reeds application of the principles in the particular case (para 18) needs to be read in the context of the relatively specific policy there under consideration.\nPolicy 45 of the local plan provided that new retail developments outside locations already identified in the plan would only be acceptable in accordance with five defined criteria, one of which depended on the absence of any suitable site within or linked to the existing centres (para 5).\nThe short point was the meaning of the word suitable (para 13): suitable for the development proposed by the applicant, or for meeting the retail deficiencies in the area? It was that question which Lord Reed identified as one of textual interpretation, logically prior to the exercise of planning judgment (para 21).\nAs he recognised (see para 19), some policies in the development plan may be expressed in much broader terms, and may not require, nor lend themselves to, the same level of legal analysis.\nIt must be remembered that, whether in a development plan or in a non statutory statement such as the NPPF, these are statements of policy, not statutory texts, and must be read in that light.\nEven where there are disputes over interpretation, they may well not be determinative of the outcome. (As will appear, the present can be seen as such a case.) Furthermore, the courts should respect the expertise of the specialist planning inspectors, and start at least from the presumption that they will have understood the policy framework correctly.\nWith the support and guidance of the Planning Inspectorate, they have primary responsibility for resolving disputes between planning authorities, developers and others, over the practical application of the policies, national or local.\nAs I observed in the Court of Appeal (Wychavon District Council v Secretary of State for Communities and Local Government [2008] EWCA Civ 692; [2009] PTSR 19, para 43) their position is in some ways analogous to that of expert tribunals, in respect of which the courts have cautioned against undue intervention by the courts in policy judgments within their areas of specialist competence (see Secretary of State for the Home Department v AH (Sudan) [2007] UKHL 49; [2008] 1 AC 678, para 30 per Lady Hale.)\nRecourse to the courts may sometimes be needed to resolve distinct issues of law, or to ensure consistency of interpretation in relation to specific policies, as in the Tesco case.\nIn that exercise the specialist judges of the Planning Court have an important role.\nHowever, the judges are entitled to look to applicants, seeking to rely on matters of planning policy in applications to quash planning decisions (at local or appellate level), to distinguish clearly between issues of interpretation of policy, appropriate for judicial analysis, and issues of judgement in the application of that policy; and not to elide the two.\nThe two appeals\nEvolving judicial guidance\nTo understand the reasoning of the two inspectors in the instant cases, it is necessary to set it in the context of the evolving High Court jurisprudence.\nThe decisions in the two appeals were given in July and August 2014 respectively, after inquiries which ended in both cases in June.\nIt is not entirely clear what information was available to the inspectors as to the current state of the High Court jurisprudence on this topic.\nThe Yoxford inspector referred only to William Davis v Secretary of State for Communities and Local Government [2013] EWHC 3058 (Admin) (Lang J, 11 October 2013).\nThis seems to have been the first case in which this issue had arisen.\nOne of the grounds of refusal was based on a policy E20 the effect of which was generally to exclude development in a so called green wedge area defined on the proposals map.\nLang J recorded an argument for the developer that the policy should have been regarded as a relevant policy for the supply of housing under paragraph 49 because the restriction on development potentially affects housing development.\nThe judge rejected this argument summarily, saying policy E20 does not relate to the supply of housing and therefore is not covered by paragraph 49 (her emphasis).\nBy the time the two inquiries in the present case ended (June 2014), and at the time of the decisions, it seems that the most recent judicial guidance then available on the interpretation of paragraph 49 was that of Ouseley J in South Northamptonshire Council v Secretary of State for Communities and Local Government and Barwood Land [2014] EWHC 573 (Admin) (10 March 2014) (the Barwood Land case).\nOuseley J favoured a wider reading which examines the degree to which a particular policy generally affects housing numbers, distribution and location in a significant manner.\nHe thought that the language could not sensibly be given a very narrow meaning because This would mean that policies for the provision of housing which were regarded as out of date, nonetheless would be given weight, indirectly but effectively through the operation of their counterpart provisions in policies restrictive of where development should go He contrasted general policies, such as those protecting the countryside, with policies designed to protect specific areas or features such as gaps between settlements, the particular character of villages or a specific landscape designation, all of which could sensibly exist regardless of the distribution and location of housing or other development.\nAt that time, it seems to have been assumed that if a policy were deemed to be out of date under paragraph 49, it was in practice to be given minimal weight, in effect disapplied (see eg Cotswold District Council v Secretary of State for Communities and Local Government [2013] EWHC 3719 (Admin), para 72 per Lewis J).\nIn other words, it was treated for the purposes of paragraph 14 as non policy, in the same way as if the development plan were absent or silent.\nOn that view, it was clearly important to establish which policies were or were not to be treated as out of date in that sense.\nLater cases (after the date of the present decisions) introduced a greater degree of flexibility, by suggesting that paragraph 14 did not take away the ordinary discretion of the decision maker to determine the weight to be given even to an out of date policy; depending, for example, on the extent of the shortfall and the prospect of development coming forward to make it up (see eg Crane v Secretary of State for Communities and Local Government [2015] EWHC 425 (Admin), para 71 per Lindblom J).\nAs will be seen, this idea was further developed in Lindblom LJs judgment in the present case.\nThe Yoxford site\nIn September 2013 Suffolk Coastal District Council refused planning permission for a development of 26 houses on land at Old High Road in Yoxford.\nThe applicant, Hopkins Homes Ltd (Hopkins), appealed to an inspector appointed by the Secretary of State.\nHe dismissed the appeal in a decision letter dated 15 July 2014, following an inquiry which began in February and ended in June 2014.\nThe statutory development plan for the area comprised the Suffolk Coastal District Local Plan (SCDLP) adopted in July 2013, and certain saved policies from the previous local plan (the old Local Plan) adopted in December 1994.\nChapter 3 SCDLP set out a number of strategic policies, including: i) Under the heading Housing, Policy SP2 (Housing numbers and Distribution) proposed as its core strategy to make provision for 7,900 new homes across the district in the period 2010 2027.\nIn addition, an early review to be commenced by 2015 was to identify the full, objectively assessed housing needs for the district, with proposals to ensure that these were met so far as consistent with the NPPF.\nA table showed the proposed locations across the district to make up the total of 7,900 homes. ii) Under the heading The Spatial Strategy, Policy SP19 (Settlement Policy) identified Yoxford as one of a number of Key Service Centres, which provide an extensive range of specified facilities, and where modest estate scale development may be appropriate within the defined physical limits (under policy SP27 Key and Local Service Centres).\nOutside these settlements (under policy SP 29 The Countryside) there was to be no development other than in special circumstances. iii) The commentary to SP19 (para 4.05) explained that physical limits boundaries or village envelopes would be drawn up for the larger settlements, but that these limits are a policy tool and that where allocations are proposed outside the envelopes, the envelopes would be redrawn to include them.\nIn his report on the examination of the draft SCDLP, the inspector had commented on the adequacy of the housing provision (paras 31 51).\nHe had noted how the proposed figure of 7,590 homes fell short of what was later agreed to be the requirement for the plan period of 11,000 extra homes.\nHe had considered whether to suspend the examination to enable the council to assess the options.\nHe decided not to do so, recognising that there were other sites which might come forward to boost supply, and the advantages of enabling these to be considered in the context of an up to date suite of local development management policies that are consistent\nwith the Framework\nThe saved policies from the old plan included: AP4 (Parks and gardens of historic or landscape interest) The District Council will encourage the preservation and\/or enhancement of parks and gardens of historic and landscape interest and their surroundings.\nPlanning permission for any proposed development will not be granted if it would have a materially adverse impact on their character, features or immediate setting.\nAP13 (Special Landscape Areas) The valleys and tributaries of (named rivers) and the Parks and Gardens of Historic or Landscape Interest are designated as Special Landscape Areas and shown on the Proposals Map.\nThe District Council will ensure that no development will take place which would be to the material detriment of, or materially detract from, the special landscape quality.\nThe appeal site formed part of an area of Historic Parkland (related to an 18th century house known as Grove Park) identified by the council in its Supplementary Planning Guidance 6 Historic Parks and Gardens (SPG) dated December 1995.\nIn his decision letter on the planning appeal, the inspector identified the main issues as including: consideration of a five years supply of housing land, the principle of development outside the defined village, and the effects of the proposal on the local historic parkland and landscape (para 4).\nHe referred to paragraphs 14 and 49 of the NPPF, which he approached on the basis that it was very unlikely that a five years supply of housing land could now be demonstrated (paras 5 6).\nThere had been a debate before him whether the recent adoption of the local plan meant that its policies are automatically up to date, but he read the comments of the examining Inspector on the need for an early review of housing delivery as indicating the advantages of considering development in the light of other up to date policies, whilst accepting that pending the review relevant policies for the supply of housing may be considered not to be up to date (para 7).\nHe then considered which policies were relevant policies for the supply of housing within the meaning of paragraph 49 (paras 8 9).\nPolicy SP2 which sets out housing provision for the District was one such policy and cannot be considered as up to date.\nPolicy SP15 relating to landscape and townscape and not specifically to the supply of housing was not a relevant policy and so is up to date.\nFor the same reason, policy SP19, which set the settlement hierarchy and showed percentages of total proposed housing for broad categories of settlements, but did not suggest figures or percentages for individual settlements, was also seen as up to date; as was SP27, which related specifically to Key and Local Service Centres, and sought, among other things, to reinforce their individual character.\nOf the saved policy AP4 he noted a degree of conflict with paragraph 215 of the Framework due to the absence of a balancing judgement in Policy AP4, but thought its broad aim consistent with the aims of the Framework.\nHe said: these matters reduce the weight that I attach to Policy AP4, although I shall attach some weight to it.\nSimilarly, he thought Policy AP13 consistent with the aims of the Framework to recognise the intrinsic quality of the countryside and promote policies for the conservation and enhancement of the natural environment (para 10).\nIn relation to the proposal for development outside the defined village limits, he observed that the appeal site was outside the physical limits boundary as defined in the very recently adopted Local Plan.\nHe regarded the policy directing development to within the physical limits of the settlement to be in accordance with one of the core principles of the Framework, recognising the intrinsic character and beauty of the countryside.\nOn this aspect he concluded: I consider that the appeal site occupies an important position adjacent to the settlement, where Old High Road marks the end of the village and the start to the open countryside.\nThe proposed development would be unacceptable in principle, contrary to the provisions of Policies SP27 and SP29 and contrary to one of the core principles of the Framework. (paras 13 14)\nAs to its location within a historic parkland, he discussed the quality of the landscape and the impact of the proposal, and concluded: 20.\nIn relation to the built character and layout of Yoxford and its setting, Old High Road forms a strong and definite boundary to the built development of the village here.\nI do not agree that the proposal forms an appropriate development site in this respect, but would be seen as an ad hoc expansion across what would otherwise be seen as the village\/countryside boundary and the development site would not be contained to the west by any existing logical boundary. 21.\nIn respect of these matters, the historic parkland forms a non designated heritage asset, as defined in the Framework and I conclude that the proposal would have an unacceptable effect on the significance of this asset.\nIn relation to local policies, I find that the proposal would be in conflict with the aims of\nPolicies AP4 and AP13 of the old Local Plan\nFinally, under the heading The planning balance, he acknowledged the advantage that the proposal would bring additional homes, including some affordable, within a District where the supply of homes is a concern, but said: However, I have found significant conflict with policies in the recently adopted Local Plan.\nI have also found conflict with some saved policies of the old Local Plan and I have sought to balance these negative aspects of the proposal against its benefits.\nIn doing so, I consider that the unacceptable effects of the development are not outweighed by any benefits and means that it cannot be considered as a sustainable form of development, taking account of its three dimensions as set out at paragraph 7 of the Framework.\nTherefore, the proposal conflicts with the aims of the Framework. (paras 31 32)\nHopkins challenged the decision in the High Court on the grounds that the inspector had misdirected himself in three respects: in short, as to the interpretation of NPPF paragraph 49; as to the status of the limits boundary to Yoxford; and as to the status of Policy AP4.\nThe Secretary of State conceded that the inspector had misapplied the policy in paragraph 49.\nSupperstone J referred to the approach of Ouseley J in the Barwood Land case, with which he agreed, preferring it to that of Lang J in the William Davis case.\nHe accepted the submission for Hopkins that the inspector had erred in thinking that paragraph 49 only applied to policies dealing with the positive provision of housing, with the result that his decision had to be quashed (paras 33, 38 41).\nHe held in addition that this inspector had wrongly proceeded on the basis that the village boundary had been defined in the recent local plan, rather than in the earlier plan (para 46); and that he had failed properly to assess the significance of the heritage asset as required by paragraph 135 of the Framework (para 53).\nOn 30 January 2015 Supperstone J quashed the decision.\nThe councils appeal to the Court of Appeal failed.\nIt now appeals to this court.\nThe Willaston site\nThe Crewe and Nantwich Replacement Local Plan, adopted on 17 February 2005 (the adopted RLP) sought to address the development needs of the Crewe and Nantwich area for the period from 1996 to 2011.\nUnder the 2004 Act, it should have been replaced by a Local Development Framework by 2008.\nThis did not happen.\nAs a consequence, the policies were saved by the Secretary of State by Direction (dated 14 February 2008).\nCrewe is identified as a location for new housing growth in the emerging Local Plan, which is the subject of an ongoing examination in public and subject to objections, as are some of the proposed housing allocations.\nAt the time of the public inquiry in June 2014, the emerging Local Plan was understood to be over two years from being adopted.\nRichborough Estates Partnership LLP (Richborough) in August 2013 applied to Cheshire East Borough Council for permission for a development of up to 170 houses on land north of Moorfields in Willaston.\nThe council having failed to determine the application within the prescribed period, Richborough appealed.\nWillaston is a settlement within the defined urban area of Crewe, but for the most part is physically separate from the town.\nAs a consequence there is open land between Willaston and the main built up area of Crewe, within which open land the appeal site lies.\nNE.2, NE.4, and RES.5: In the appeal Cheshire East relied on the adopted RLP, in particular policies i) Policy NE.2 (Open Countryside) seeks to protect the open countryside from new build development for its own sake, permitting only a very limited amount of small scale development mainly for agricultural, forestry or recreational purposes. ii) Policy NE.4 (Green Gap) relates to areas of open land around Crewe (including the area of the appeal site) identified as needing additional protection in order to maintain the definition and separation of existing communities.\nThe policy provides that permission will not be granted for new development, including housing, save for limited exceptions.\nIt has the same inner boundary as NE.2. iii) Policy RES.5 (Housing in the open countryside) permits only very limited forms of residential development in the open countryside, such as agricultural workers dwellings.\nIn his decision letter dated 1 August 2014 the inspector allowed the appeal and granted planning permission for up to 146 dwellings.\nHe concluded that Cheshire East was unable to demonstrate the minimum five year supply of housing land required under paragraph 47 of the NPFF.\nThe council appears to have accepted at the inquiry that policy NE.2 was a policy for the supply of housing.\nThe inspector thought that the same considerations applied to the other two policies relied on by the council, all of which were therefore relevant policies within paragraph 49, although he acknowledged that policy NE.4 also performed strategic functions in maintaining the separation and definition of settlements and in landscape protection.\nHe noted also that two of the housing sites in the emerging local plan were in designated green gaps, which led him to give policy NE.4 reduced weight (paras 31 35).\nHe concluded on this aspect (para 94): 94.\nI have concluded that there is not a demonstrable five year supply of deliverable housing sites (issue (i)).\nIn the light of that, the weight of policies in the extant RLP relevant to the supply of housing is reduced (issue (ii)).\nThat applies in particular to policies NE.2, NE.4 and RES.5 in so far as their extent derives from settlement boundaries that in turn reflect out of date housing requirements, though policy NE.4 also has a wider purpose in maintaining gaps between settlements.\nHe considered the application of the Green Gap policy, concluding that there would be no significant harm to the wider functions of the gap in maintaining the definition and separation of these two settlements (para 95).\nHis overall conclusion was as follows: 101.\nI conclude that the proposed development would be sustainable overall, and that the adverse effects of it would not significantly and demonstrably outweigh the benefits when assessed against the policies in the Framework as a whole.\nThere are no specific policies in the NPPF that indicate that this development should be restricted.\nIn such circumstances, and where relevant development plan policies are out of date, the NPPF indicates that permission should be granted unless material considerations indicate otherwise.\nThere are no further material considerations that do so.\nThe councils challenge succeeded before Lang J, who quashed the inspectors decision by an order dated 25 February 2015.\nIn short, she concluded that the inspector had erred in treating policy NE.4 as a relevant policy under paragraph 49, and in seeking to divide the policy, so as to apply it in part only (para 63).\nRichboroughs appeal was allowed by the Court of Appeal with the result that the permission was restored.\nThe council appeals to this court.\nThe Court of Appeals interpretation\nGiving the judgment of the court, Lindblom LJ referred to the relevant parts of the NPPF and (at para 21) the three competing interpretations of paragraph 49: i) Narrow: limited to policies dealing only with the numbers and distribution of new housing, and excluding any other policies of the development plan dealing generally with the disposition or restriction of new development in the authoritys area. ii) Wider: including both policies providing positively for the supply of new housing and other policies, or counterpart policies, whose effect is to restrain the supply by restricting housing development in certain parts of the authoritys area. iii) Intermediate: as under (ii), but excluding policies designed to protect specific areas or features, such as gaps between settlements, the particular character of villages or a specific landscape designation (as suggested by Ouseley J in the Barwood Land case).\nHe discussed the connection between paragraph 49 and the presumption in favour of sustainable development in paragraph 14, which lay in the concept of relevant policies being not up to date under paragraph 49, and therefore out of date for the purposes of paragraph 14 (para 30).\nHe explained the courts reasons for preferring the wider view of paragraph 49.\nHe read the words for the supply of housing as meaning affecting the supply of housing, which he regarded as not only the literal interpretation of the policy, but the only interpretation consistent with the obvious purpose of the policy when read in its context.\nHe continued: 33.\nOur interpretation of the policy does not confine the concept of policies for the supply of housing merely to policies in the development plan that provide positively for the delivery of new housing in terms of numbers and distribution or the allocation of sites.\nIt recognizes that the concept extends to plan policies whose effect is to influence the supply of housing land by restricting the locations where new housing may be developed including, for example, policies for the Green Belt, policies for the general protection of the countryside, policies for conserving the landscape of Areas of Outstanding Natural Beauty and National Parks, policies for the conservation of wildlife or cultural heritage, and various policies whose purpose is to protect the local environment in one way or another by preventing or limiting development.\nIt reflects the reality that policies may serve to form the supply of housing land either by creating it or by constraining it that policies of both kinds make the supply what it is. (para 33)\nThe court rejected the narrow interpretation, advocated by the councils, which it thought plainly wrong: It is both unrealistic and inconsistent with the context in which the policy takes its place.\nIt ignores the fact that in every development plan there will be policies that complement or support each other.\nSome will promote development of one type or another in a particular location, or by allocating sites for particular land uses, including the development of housing.\nOthers will reinforce the policies of promotion or the site allocations by restricting development in parts of the plan area, either in a general way for example, by preventing development in the countryside or outside defined settlement boundaries or with a more specific planning purpose such as protecting the character of the landscape or maintaining the separation between settlements. (para 34)\nWhether a particular policy of a plan was a relevant policy in that sense was a matter for the decision maker, not the court (para 45).\nFurthermore 46.\nWe must emphasize here that the policies in paragraphs 14 and 49 of the NPPF do not make out of date policies for the supply of housing irrelevant in the determination of a planning application or appeal.\nNor do they prescribe how much weight should be given to such policies in the decision.\nWeight is, as ever, a matter for the decision maker Neither of those paragraphs of the NPPF says that a development plan policy for the supply of housing that is out of date should be given no weight, or minimal weight, or, indeed, any specific amount of weight.\nThey do not say that such a policy should\nsimply be ignored or disapplied\nIn relation to the Yoxford site, the court agreed with Supperstone J that the inspector had wrongly applied the erroneous narrow interpretation.\nPolicies SP 19, 27 and 29, were all relevant policies in that they all affect the supply of housing land in a real way by restraining it (paras 51 52).\nThe court also agreed with the judge that the inspector had been mistaken in assuming that the physical limits of the village had been established in the 2013 plan (para 58); and also that he had misapplied paragraph 135 relating to heritage assets (para 65).\nIn that respect there could be no criticism of his treatment of the impact of the development on the local landscape, but what was lacking was a distinct and clearly reasoned assessment of the effect the development would have upon the significance of the parkland as a heritage asset, and, crucially, the balanced judgment called for by paragraph 135, having regard to the scale of any harm or loss and the significance of the heritage asset. (para 65)\nIn respect of the Willaston site, the court disagreed with Lang Js conclusion that policy NE.4 was not a relevant policy for the supply of housing.\nThe inspector had made no error of law in that respect, and his decision should be restored (paras 69 71).\nDiscussion\nInterpretation of paragraph 14\nThe argument, here and below, has concentrated on the meaning of paragraph 49, rather than paragraph 14 and the interaction between the two.\nHowever, since the primary purpose of paragraph 49 is simply to act as a trigger to the operation of the tilted balance under paragraph 14, it is important to understand how that is intended to work in practice.\nThe general effect is reasonably clear.\nIn the absence of relevant or up to date development plan policies, the balance is tilted in favour of the grant of permission, except where the benefits are significantly and demonstrably outweighed by the adverse effects, or where specific policies indicate otherwise. (See also the helpful discussion by Lindblom J in Bloor Homes East Midlands Ltd v Secretary of State for Communities and Local Government [2014] EWHC 754 (Admin), paras 42ff)\nIt has to be borne in mind also that paragraph 14 is not concerned solely with housing policy.\nIt needs to work for other forms of development covered by the development plan, for example employment or transport.\nThus, for example, there may be a relevant policy for the supply of employment land, but it may become out of date, perhaps because of the arrival of a major new source of employment in the area.\nWhether that is so, and with what consequence, is a matter of planning judgement, unrelated of course to paragraph 49 which deals only with housing supply.\nThis may in turn have an effect on other related policies, for example for transport.\nThe pressure for new land may mean in turn that other competing policies will need to be given less weight in accordance with the tilted balance.\nBut again that is a matter of pure planning judgement, not dependent on issues of legal interpretation.\nIf that is the right reading of paragraph 14 in general, it should also apply to housing policies deemed out of date under paragraph 49, which must accordingly be read in that light.\nIt also shows why it is not necessary to label other policies as out of date merely in order to determine the weight to be given to them under paragraph 14.\nAs the Court of Appeal recognised, that will remain a matter of planning judgement for the decision maker.\nRestrictive policies in the development plan (specific or not) are relevant, but their weight will need to be judged against the needs for development of different kinds (and housing in particular), subject where applicable to the tilted balance.\nParagraph 49\nUnaided by the legal arguments, I would have regarded the meaning of paragraph 49 itself, taken in context, as reasonably clear, and not susceptible to much legal analysis.\nIt comes within a group of paragraphs dealing with delivery of housing.\nThe context is given by paragraph 47 which sets the objective of boosting the supply of housing.\nIn that context the words policies for the supply of housing appear to do no more than indicate the category of policies with which we are concerned, in other words housing supply policies.\nThe word for simply indicates the purpose of the policies in question, so distinguishing them from other familiar categories, such as policies for the supply of employment land, or for the protection of the countryside.\nI do not see any justification for substituting the word affecting, which has a different emphasis.\nIt is true that other groups of policies, positive or restrictive, may interact with the housing policies, and so affect their operation.\nBut that does not make them policies for the supply of housing in the ordinary sense of that expression.\nIn so far as the paragraph 47 objectives are not met by the housing supply policies as they stand, it is quite natural to describe those policies as out of date to that extent.\nAs already discussed, other categories of policies, for example those for employment land or transport, may also be found to be out of date for other reasons, so as to trigger the paragraph 14 presumption.\nThe only difference is that in those cases there is no equivalent test to that of the five year supply for housing.\nIn neither case is there any reason to treat the shortfall in the particular policies as rendering out of date other parts of the plan which serve a different purpose.\nThis may be regarded as adopting the narrow meaning, contrary to the conclusion of the Court of Appeal.\nHowever, this should not be seen as leading, as the lower courts seem to have thought, to the need for a legalistic exercise to decide whether individual policies do or do not come within the expression.\nThe important question is not how to define individual policies, but whether the result is a five year supply in accordance with the objectives set by paragraph 47.\nIf there is a failure in that respect, it matters not whether the failure is because of the inadequacies of the policies specifically concerned with housing provision, or because of the over restrictive nature of other non housing policies.\nThe shortfall is enough to trigger the operation of the second part of paragraph 14.\nAs the Court of Appeal recognised, it is that paragraph, not paragraph 49, which provides the substantive advice by reference to which the development plan policies and other material considerations relevant to the application are expected to be assessed.\nThe Court of Appeal was therefore right to look for an approach which shifted the emphasis to the exercise of planning judgement under paragraph 14.\nHowever, it was wrong, with respect, to think that to do so it was necessary to adopt a reading of paragraph 49 which not only changes its language, but in doing so creates a form of non statutory fiction.\nOn that reading, a non housing policy which may objectively be entirely up to date, in the sense of being recently adopted and in itself consistent with the Framework, may have to be treated as notionally out of date solely for the purpose of the operation of paragraph 14.\nThere is nothing in the statute which enables the Secretary of State to create such a fiction, nor to distort what would otherwise be the ordinary consideration of the policies in the statutory development plan; nor is there anything in the NPPF which suggests an intention to do so.\nSuch an approach seems particularly inappropriate as applied to fundamental policies like those in relation to the Green Belt or Areas of Outstanding Natural Beauty.\nNo one would naturally describe a recently approved Green Belt policy in a local plan as out of date, merely because the housing policies in another part of the plan fail to meet the NPPF objectives.\nNor does it serve any purpose to do so, given that it is to be brought back into paragraph 14 as a specific policy under footnote 9.\nIt is not out of date, but the weight to be given to it alongside other material considerations, within the balance set by paragraph 14, remains a matter for the decision maker in accordance with ordinary principles.\nThe two appeals\nAgainst this background I can deal relatively shortly with the two individual appeals.\nOn both I arrive ultimately at the same conclusion as the Court of Appeal.\nIt is convenient to begin with the Willaston appeal, where the issues are relatively straightforward.\nOn any view, quite apart from paragraph 49, the current statutory development plan was out of date, in that its period extended only to 2011.\nOn my understanding of paragraph 49, the council and the inspector both erred in treating policy NE.2 (Countryside) as a policy for the supply of housing.\nBut that did not detract materially from the force of his reasoning (see the summary in paras 44 45 above).\nHe was clearly entitled to conclude that the weight to be given to the restrictive policies was reduced to the extent that they derived from settlement boundaries that in turn reflect out of date housing requirements (para 94).\nHe recognised that policy NE.4 had a more specific purpose in maintaining the gap between settlements, but he considered that the proposal would not cause significant harm in this context (para 95).\nHis final conclusion (para 101) reflected the language of paragraph 14 (the tilted balance).\nThere is no reason to question the validity of the permission.\nThe Yoxford appeal provides an interesting contrast, in that there was an up to date development plan, adopted in the previous year; but its housing supply policies failed to meet the objectives set by paragraph 47 of the NPPF.\nThe inspector rightly recognised that they should be regarded as out of date for the purposes of paragraph 14.\nAt the same time, it provides a useful illustration of the unreality of attempting to distinguish between policies for the supply of housing and policies for other purposes.\nHad it mattered, I would have been inclined to place in the housing category policy SP2, the principal policy for housing allocations.\nSP 19 (settlement policy) would be more difficult to place, since, though not specifically related to housing, it was seen (as the commentary indicated) as a planning tool designed to differentiate between developed areas and the countryside.\nUnderstandably, in the light of the judicial guidance then available to him, the inspector thought it necessary to make the distinction, and to reflect it in the planning balance.\nHe categorised both SP 19 and SP 27 as non housing policies, and for that reason to be regarded as up to date (see para 35 above).\nUnder the Court of Appeals interpretation this was an erroneous approach, because each of these policies affected the supply of housing, and should have been considered out of date for that reason.\nOn my preferred approach his categorisation was not so much erroneous in itself, as inappropriate and unnecessary.\nIt only gave rise to an error in law in so far as it may have distorted his approach to the application of paragraph 14.\nAs to that I agree with the courts below that his approach (through no fault of his own) was open to criticism.\nHaving found that the settlement policy was up to date, and that the boundary had been approved in the recent plan, he seems to have attached particular weight to the fact that it had been defined in the very recently adopted Local Plan (para 37 above).\nI would not criticise him for failing to record that it had been carried forward from the previous plan.\nIn some circumstances that could be a sign of robustness in the policy.\nBut in this case it was clear from the plan itself that the settlement boundary was, to an extent at least, no more than the counterpart of the housing policies, and that, under the paragraph 14 balance, its weight might need to be reduced if the housing objectives were to be fulfilled.\nHe should not have allowed its supposed status as an up to date policy under paragraph 49 to give it added weight.\nIt is true that he also considered the merits of the site (quite apart from the plan) as providing a strong and definite boundary to the village (para 20).\nBut I am not persuaded that this is sufficient to make it clear that the decision would have been the same in any event.\nI do not, however, agree with the Court of Appeals criticisms of his treatment of the Heritage Asset policy.\nParagraph 10 of his letter (summarised at para 36 above) is in my view a faithful application of the guidance in paragraph 215 of the Framework.\nThat does not, and could not, suggest that even saved development plan policies are simply replaced by the policies in the Framework.\nWhat it does is to indicate that the weight to be given to the saved policies should be assessed by reference to their degree of consistency with the Framework.\nThat is what the inspector did.\nHaving done so he was entitled to be guided by the policies as stated in the saved plans, and not treat them as replaced by paragraph 135.\nIn any event, in so far as there needs to be a balanced judgement, which the Court of Appeal regarded as crucial (para 65), that seems to me provided by the last section of his letter, headed appropriately the planning balance.\nOverall the letter seems to me an admirably clear and carefully constructed appraisal of the relevant planning issues, in the light of the judicial guidance then available.\nIt is with some reluctance therefore that I feel bound to agree with the Court of Appeal that the decision must be quashed, albeit on narrower grounds.\nThe result, is that the order of Supperstone J will be affirmed, and the planning appeal will fall to be re determined.\nConclusion\nFor these reasons I would dismiss both appeals.\nLORD GILL: (with whom Lord Neuberger, Lord Clarke and Lord Hodge agree)\nI agree with Lord Carnwaths conclusions on the decision that is appealed against and with his views as to the disposal of these appeals.\nI only add some comments on the approach that should be taken in the application of the National Planning Policy Framework (the Framework) in planning applications for housing development.\nThese appeals raise a question as to the respective roles of the courts and of the planning authorities and the inspectors in relation to guidance of this kind; and a specific question of interpretation arising from paragraph 49 of the Framework.\nIn Tesco Stores Ltd v Dundee City Council, (ASDA Stores Ltd intervening) ([2012] UKSC 13) Lord Reed considered the former question in relation to development plan policies.\nHe expressed the view, as a general principle of administrative law, that policy statements should be interpreted objectively in accordance with the language used, read as always in its proper context (at para 18).\nThe proper context, in my view, is provided by the over riding objectives of the development plan and the specific objectives to which the policy statement in question is directed.\nTaking a similar approach to that of Lord Reed, I consider that it is the proper role of the courts to interpret a policy where the meaning of it is contested, while that of the planning authority is to apply the policy to the facts of the individual case.\nIn my opinion, the same distinction falls to be made in relation to guidance documents such as the Framework.\nIn both cases the issue of interpretation is the same.\nIt is about the meaning of words.\nThat is a question for the courts.\nThe application of the guidance, as so interpreted, to the individual case is exclusively a planning judgment for the planning authority and the inspectors.\nThe guidance given by the Framework is not to be interpreted as if it were a statute.\nIts purpose is to express general principles on which decision makers are to proceed in pursuit of sustainable development (paras 6 10) and to apply those principles by more specific prescriptions such as those that are in issue in these appeals.\nIn my view, such prescriptions must always be interpreted in the overall context of the guidance document.\nThat context involves the broad purpose of the guidance and the particular planning problems to which it is directed.\nWhere the guidance relates to decision making in planning applications, it must be interpreted in all cases in the context of section 70(2) of the Town and Country Planning Act 1990 and section 38(6) of the Planning and Compulsory Purchase Act 2004, to which the guidance is subordinate.\nWhile the Secretary of State must observe these statutory requirements, he may reasonably and appropriately give guidance to decision makers who have to apply them where the planning system is failing to satisfy an unmet need.\nHe may do so by highlighting material considerations to which greater or less weight may be given with the over riding objective of the guidance in mind.\nIt is common ground that such guidance constitutes a material consideration (Framework, para 2).\nIn relation to housing, the objective of the Framework is clear.\nSection 6, Delivering a wide choice of high quality homes, deals with the national problem of the unmet demand for housing.\nThe purpose of paragraph 47 is to boost significantly the supply of housing.\nTo that end it requires planning authorities (a) to ensure inter alia that plans meet the full, objectively assessed needs for market and affordable housing in the housing market area, as far as is consistent with the policies set out in the Framework, including the identification of key sites that are critical to the delivery of the housing strategy over the plan period; (b) to identify and update annually a supply of specific deliverable sites sufficient to provide five years worth of housing against their housing requirements, with an additional buffer of 5% to ensure choice and competition in the market for the land; and (c) in the longer term to identify a supply of specific, developable sites or broad locations for growth for years six to ten and, where possible, for years 11 15.\nThe importance that the guidance places on boosting the supply of housing is further demonstrated in the same paragraph by the requirements that for market and affordable housing planning authorities should illustrate the expected rate of housing delivery through a housing trajectory for the plan period and set out a housing implementation strategy for the full range of housing, describing how they will maintain delivery of a five years supply of housing land to meet their housing target; and that they should set out their own approach to housing density to reflect local circumstances.\nThe message to planning authorities is unmistakeable.\nThese requirements, and the insistence on the provision of deliverable sites sufficient to provide the five years worth of housing, reflect the futility of authorities relying in development plans on the allocation of sites that have no realistic prospect of being developed within the five year period.\nAmong the obvious constraints on housing development are development plan policies for the preservation of the greenbelt, and environmental and amenity policies and designations such as those referred to in footnote 9 of paragraph 14.\nThe rigid enforcement of such policies may prevent a planning authority from meeting its requirement to provide a five years supply.\nThis is the background to the interpretation of paragraph 49.\nThe paragraph applies where the planning authority has failed to demonstrate a five years supply of deliverable sites and is therefore failing properly to contribute to the national housing requirement.\nIn my view, paragraph 49 derives its content from paragraph 47 and must be applied in decision making by reference to the general prescriptions of paragraph 14.\nTo some extent the issue in these cases has been obscured by the doctrinal controversy which has preoccupied the courts hitherto between the narrow and the wider interpretation of the words relevant policies for the supply of housing.\nI think that the controversy results from too narrow a focus on the wording of that paragraph.\nI agree with the view taken by Lindblom LJ in his lucid judgement that the task of the court is not to try to reconcile the various first instance judgments on the point, but to interpret the policy of paragraph 49 correctly (at para 23).\nIn interpreting that paragraph, in my opinion, the court must read it in the policy context to which I have referred, having in view the planning objective that the Framework seeks to achieve.\nI regret to say that I do not agree with the interpretation of the words relevant policies for the supply of housing that Lindblom LJ has favoured.\nIn my view, the straightforward interpretation is that these words refer to the policies by which acceptable housing sites are to be identified and the five years supply target is to be achieved.\nThat is the narrow view.\nThe real issue is what follows from that.\nIf a planning authority that was in default of the requirement of a five years supply were to continue to apply its environmental and amenity policies with full rigour, the objective of the Framework could be frustrated.\nThe purpose of paragraph 49 is to indicate a way in which the lack of a five years supply of sites can be put right.\nIt is reasonable for the guidance to suggest that in such cases the development plan policies for the supply of housing, however recent they may be, should not be considered as being up to date.\nIf the policies for the supply of housing are not to be considered as being up to date, they retain their statutory force, but the focus shifts to other material considerations.\nThat is the point at which the wider view of the development plan policies has to be taken.\nParagraph 49 merely prescribes how the relevant policies for the supply of housing are to be treated where the planning authority has failed to deliver the supply.\nThe decision maker must next turn to the general provisions in the second branch of paragraph 14.\nThat takes as the starting point the presumption in favour of sustainable development, that being the golden thread that runs through the Framework in respect of both the drafting of plans and the making of decisions on individual applications.\nThe decision maker should therefore be disposed to grant the application unless the presumption can be displaced.\nIt can be displaced on only two grounds both of which involve a planning judgment that is critically dependent on the facts.\nThe first is that the adverse impacts of a grant of permission, such as encroachment on the greenbelt, will significantly and demonstrably outweigh the benefits of the proposal.\nWhether the adverse impacts of a grant of permission will have that effect is a matter to be assessed against the policies in the Framework, taken as a whole.\nThat clearly implies that the assessment is not confined to environmental or amenity considerations.\nThe second ground is that specific policies in the Framework, such as those described in footnote 9 to the paragraph, indicate that development should be restricted.\nFrom the terms of footnote 9 it is reasonably clear that the reference to specific policies in the Framework cannot mean only policies originating in the Framework itself.\nIt must also mean the development plan policies to which the Framework refers.\nGreen belt policies are an obvious example.\nAlthough my interpretation of the guidance differs from that of the Court of Appeal, I have come to the same conclusions in relation to the disposal of these cases.\nI agree with Lord Carnwath that in the Willaston decision, notwithstanding an erroneous interpretation of policy NE.2 as being a policy for the supply of housing, the Inspector got the substance of the matter right and accurately applied paragraph 14.\nI agree too with Lord Carnwath, for the reasons that he gives (at para 68), that in the Yoxford decision the Inspector made a material, but understandable, error.\nI would therefore dismiss both appeals.\n","output":"These appeals relate to the proper interpretation of paragraph 49 of the National Planning Policy Framework (NPPF), as well as the NPPFs relationship with the statutory development plan.\nPart 2 of the Planning and Compulsory Purchase Act 2004 requires local planning authorities to prepare a development plan.\nIn preparing local development documents authorities must have regard to national policies and advice issued by the Secretary of State, pursuant to section 19(2).\nSection 38(6) of the 2004 Act and section 70(2) of the Town and Country Planning Act 1990 provide for the development plan to be taken into account in the handling of planning applications.\nThe NPPF was published on 27 March 2012.\nParagraph 14 of the Framework deals with the presumption in favour of sustainable development, and includes the tilted balance provision: that where the development plan is silent or policies out of date, permission should be granted unless any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole.\nParagraph 49 adds that: Relevant policies for the supply of housing should not be considered up to date if the local planning authority cannot demonstrate a five year supply of deliverable housing sites.\nIn Suffolk Coastal the council refused planning permission for a development of 26 houses in Yoxford, upheld by the inspector on appeal.\nThe inspector considered which local policies were relevant policies for the supply of housing within the meaning of paragraph 49 of the NPPF.\nThe High Court held that he had erred in thinking that paragraph 49 only applied to policies dealing with the positive provision of housing and so quashed his refusal.\nIts decision was confirmed by the Court of Appeal.\nIn Richborough Estates the council failed to determine the application, and Richborough Estates appeal was allowed by the inspector.\nThe council succeeded in the High Court on the basis that the inspector erred in treating one of the local policies as a relevant policy under paragraph 49 and in seeking to divide the policy, so as to apply it in part only.\nThat decision was reversed by the Court of Appeal.\nThe Supreme Court unanimously dismisses both councils appeals.\nLord Carnwath gives the lead judgment, with which Lord Neuberger, Lord Clarke and Lord Hodge agree.\nLord Gill gives a concurring judgment, with which Lord Neuberger, Lord Clarke and Lord Hodge agree.\nThe Secretary of States power to issue national policy guidance such as the NPPF derives, expressly or by implication, from the planning Acts which give him overall responsibility for oversight of the\nplanning system.\nThis is reflected both in specific requirements and more generally in his power to intervene in many aspects of the planning process [19 20].\nThe policy making role should not, however, be overstated: the NPPF itself makes clear that in respect of the determination of planning applications (by contrast with plan making) it is not more than guidance for the purposes of section 70(2) of the 1990 Act.\nIt does not displace the primacy of the statutory development plan [21].\nThe correct approach to the interpretation of a statutory development plan was discussed by the Supreme Court in Tesco Stores Ltd v Dundee City Council [2012] UKSC 13 [23].\nIt is important that the role of the court is not overstated: in Tesco Stores Lord Reed identified the interpretation of the word suitable as the short point to determine, and further recognised that some policies in the development plan may be expressed in broader terms and not require the same level of legal analysis [24].\nThese are statements of policy whether in a development plan or in a non statutory statement such as the NPPF and must be read in that light; they are not statutory texts [74].\nLord Gill adds that the NPPF expresses general principles applied by more specific prescriptions.\nThese must always be interpreted in the overall context of the guidance document [75].\nFurthermore, the courts should respect the expertise of the specialist planning inspectors, and start at least from the presumption that they will have understood the policy framework correctly.\nTheir position is in some ways analogous to that of expert tribunals, in respect of which the courts have cautioned against undue intervention by the courts in policy judgments within their areas of specialist competence [25].\nRecourse to the courts may sometimes be needed to resolve distinct issues of law, or to ensure consistency of interpretation in relation to specific policies.\nHowever, it is important to distinguish clearly between issues of interpretation of policy, appropriate for judicial analysis, and issues of judgement in the application of that policy [26].\nLord Gill describes the proper role of the courts as interpreting a policy or the NPPF where its meaning is contested, while that of the planning authority is to apply the policy or guidance to the facts of the individual case [72, 73].\nThe primary purpose of paragraph 49 of the NPPF is simply to act as a trigger to the operation of the tilted balance under paragraph 14 [54].\nParagraph 14 unlike paragraph 49 is not concerned solely with housing policy and needs to work for other forms of development covered by the development plan.\nFor example, whether a relevant policy for the supply of employment land becomes out of date is a matter of planning judgment [55].\nHousing policies deemed out of date under paragraph 49 must also be read in that light and it is not necessary to label other policies as out of date merely in order to determine the weight to be given to them under paragraph 14 [56].\nParagraph 49 appears in a group of paragraphs dealing with the delivery of housing, with paragraph 47 providing the objective of boosting the housing supply [76, 80].\nIn that context the words policies for the supply of housing indicate the category of policies with which we are concerned: the word for simply indicates the purpose of the policies in question.\nThere is no justification for substituting the word affecting which has a different emphasis [57, 82].\nAlthough this can be regarded as adopting the narrow meaning, it should not be seen as leading to the need for a legalistic exercise to decide whether individual policies do or do not come within the expression.\nThe important question is not how to define the individual policies, but whether the result is a five year supply in accordance with the objectives set by paragraph 47 [59].\nOn both appeals the Supreme Court reaches the same result as the Court of Appeal [62, 86]: in Richborough Estates the inspector erred in treating policy NE.2 as a policy for the supply of housing under paragraph 49, but that did not detract materially from the force of his reasoning [63].\nIn Suffolk Coastal the inspectors approach was open to criticism because his categorisation of SP 19 and SP 27 was inappropriate and unnecessary, rather than erroneous as the Court of Appeal held.\nIt nevertheless gave rise to an error of law insofar as it may have distorted his approach to paragraph 14 [65, 68].\n","id":51}
{"input":"Biometric data such as DNA samples, DNA profiles and fingerprints is of enormous value in the detection of crime.\nIt sometimes enables the police to solve crimes of considerable antiquity.\nThere can be no doubt that a national database containing the data of the entire population would lead to the conviction of persons who would otherwise escape justice.\nBut such a database would be controversial.\nIt is not permitted by our law.\nParliament has, however, allowed the taking and retention of data from certain persons.\nThe questions raised by these appeals are whose data may be retained and for how long.\noriginally enacted, provided: Section 64 of the Police and Criminal Evidence Act 1984 (PACE), as (1) If (a) fingerprints or samples are taken from a person in connection with the investigation of an offence; and (b) he is cleared of that offence, they must be destroyed as soon as is practicable after the conclusion of the proceedings. (3) If (a) fingerprints or samples are taken from a person in connection with the investigation of an offence; and (b) that person is not suspected of having committed the offence, they must be destroyed as soon as they have fulfilled the purpose for which they were taken.\nSection 64(1A) of PACE was enacted by section 82 of the Criminal Justice\nand Police Act 2001.\nIt is still in force.\nIt provides: (1A) Where(a) fingerprints, impressions of footwear or samples are taken from a person in connection with the investigation of an offence, and (b) subsection (3) below does not require them to be destroyed, the fingerprints, impressions of footwear or samples may be retained after they have fulfilled the purposes for which they were taken but shall not be used by any person except for purposes related to the prevention or detection of crime, the investigation of an offence, the conduct of a prosecution or the identification of a deceased person or of the person from whom a body part came.\nIt will be seen at once that section 64(1A) does not specify any time limit for the retention of the data or any procedure to regulate its destruction.\nThese are matters which are addressed in guidelines issued by the Association of Chief Police Officers (the ACPO guidelines) entitled Exceptional Case Procedure for Removal of DNA, Fingerprints and PNC Records and published on 16 March 2006.\nSo far as is material, these provide: it is important that national consistency is achieved when considering the removal of such records.\nChief Officers have the discretion to authorise the deletion of any specific data entry on the [Police National Database] owned by them.\nThey are also responsible for the authorisation of the destruction of DNA and fingerprints associated with that specific entry.\nIt is suggested that this discretion should only be exercised in exceptional cases.\nExceptional cases will by definition be rare.\nThey might include cases where the original arrest or sampling was found to be unlawful.\nAdditionally, where it is established beyond doubt that no offence existed, that might, having regard to all the circumstances, be viewed as an exceptional circumstance.\nIn R (S) v Chief Constable of the South Yorkshire Police and R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 (Marper UK) the claimants sought judicial review of the retention by the police of their fingerprints and DNA samples on the grounds inter alia that it was incompatible with article 8 of the European Convention on Human Rights (ECHR).\nThe majority of the House of Lords held that the retention did not constitute an interference with the claimants article 8 rights, but they unanimously held that any interference was justified under article 8(2).\nThe ECtHR disagreed: see its decision in S and Marper v United Kingdom (2008) 48 EHRR 1169 (Marper ECtHR).\nIn considering whether retention of data in accordance with the ACPO guidelines was proportionate and struck a fair balance between the competing public and private interests, the court said at para 119: In this respect, the Court is struck by the blanket and indiscriminate nature of the power of retention in England and Wales.\nThe material may be retained irrespective of the nature or gravity of the offence with which the individual was originally suspected or of the age of the suspected offender; fingerprints and samples may be takenand retainedfrom a person of any age, arrested in connection with a recordable offence, which includes minor or non imprisonable offences.\nThe retention is not time limited; the material is retained indefinitely whatever the nature or seriousness of the offence of which the person was suspected.\nMoreover, there exist only limited possibilities for an acquitted individual to have the data removed from the nationwide database or the materials destroyed; in particular, there is no provision for independent review of the justification for the retention according to defined criteria, including such factors as the seriousness of the offence, previous arrests, the strength of the suspicion against the person and any other special circumstances.\nThe court concluded at para 125: that the blanket and indiscriminate nature of the powers of retention of the fingerprints, cellular samples and DNA profiles of persons suspected but not convicted of offences, as applied in the case of the present applicants, fails to strike a fair balance between the competing public and private interests and that the respondent State has overstepped any acceptable margin of appreciation in this regard.\nAccordingly, the retention at issue constitutes a disproportionate interference with the applicants right to respect for private life and cannot be regarded as necessary in a democratic society.\nOn 16 December 2008, the Secretary of the State for the Home Department announced the Governments preliminary response to the ECtHR decision.\nThe data of children under the age of 10 would be removed from the database immediately and the Government would issue a White Paper and consult on bringing greater flexibility and fairness into the system by stepping down some individuals over timea differentiated approach, possibly based on age, or on risk, or on the nature of the offences involved.\nThe White Paper, Keeping the Right People on the DNA Database, was published on 7 May 2009.\nIt contained a series of proposals for the retention of data, the details of which are immaterial for present purposes.\nOn 28 July 2009, ACPOs Director of Information wrote to all chief constables (including the respondent Commissioner) saying that the final draft for publication of new guidelines was not expected to take effect until 2010 and that until that time the current retention policy on fingerprints and DNA remains unchanged.\nOn 11 November 2009, after the consultation period had ended, the Secretary of State made a written ministerial statement outlining a revised set of proposals.\nAgain, the details are not material.\nIt was decided to include these proposals in the Crime and Security Act 2010 (the 2010 Act) which had its first reading on 19 November 2009.\nThe 2010 Act received the Royal Assent on 8 April 2010, but the relevant provisions (sections 14, 22 and 23) have not been brought into effect.\nSection 23 provides that the Secretary of State must make arrangements for a National DNA Database Strategy Board (Database Board) to oversee the operation of the National DNA Database (section 23(1)); the Database Board must issue guidance about the immediate destruction of DNA samples and DNA profiles which are or may be retained under PACE (section 23(2)); and any chief officer of a police force in England and Wales must act in accordance with any such guidance issued (section 23(3)).\nThe Coalition Government stated in the Queens Speech on 25 May 2010 that it intended to seek amendment of the 2010 Act by bringing forward legislative proposals (in Chapter 1 of Part 1 of the Protection of Freedoms Bill) along the lines of the Scottish system.\nThis system permits retention of data for no more than three years if the person is suspected (but not convicted) of certain sexual or violent offences, and permits an application to be made to a Sheriff by a Chief Constable for an extension of that period (for a further period of not more than two years, although successive applications may be made): see sections 18 and 18A of the Criminal Procedure (Scotland) Act 1995, as inserted by sections 83(2) and 104 of the Police, Public Order and Criminal Justice (Scotland) Act 2006.\nGC and C issued proceedings for judicial review of the retention of their data on the grounds that, in the light of Marper ECtHR, its retention was incompatible with their article 8 rights.\nRecognising that there was an irreconcilable conflict between Marper UK and Marper ECtHR and that the former decision was binding on it, the Divisional Court (Moses LJ and Wyn Williams J) dismissed both judicial review challenges on 16 July 2010 and in both cases granted a certificate pursuant to section 12 of the Administration of Justice Act 1969 that the cases were appropriate for a leapfrog appeal to the Supreme Court.\nThe facts of these two cases can be stated briefly.\nOn 20 December 2007, GC was arrested on suspicion of common assault on his girlfriend.\nHe denied the offence.\nA DNA sample, fingerprints and photographs were taken after his arrest.\nOn the same day, he was released on police bail without charge.\nBefore the return date of 21 February 2008, he was informed that no further action would be taken.\nOn 23 March 2009, GCs solicitors requested the destruction of the DNA sample, DNA profile and fingerprints.\nThe Commissioner refused to do so on the grounds that there were no exceptional circumstances within the meaning of the ACPO guidelines.\nOn 17 March 2009, C was arrested on suspicion of rape, harassment and fraud.\nHis fingerprints and a DNA sample were taken.\nHe denied the allegations saying that they had been fabricated by his ex girlfriend and members of her family.\nNo further action was taken by the police in respect of the harassment and fraud allegations.\nOn 18 March 2009, he was charged with rape.\nOn 5 May 2009 at Woolwich Crown Court, the prosecution offered no evidence and C was acquitted.\nC requested the destruction of the data and its deletion from the police database.\nOn 12 November and again on 2 February 2010, the Commissioner informed C that his case was not being treated as exceptional within the meaning of the ACPO guidelines and his request was refused.\nThe issue\nIt is common ground that, in the light of Marper ECtHR, the indefinite retention of the appellants data is an interference with their rights to respect for private life protected by article 8 of the ECHR which, for the reasons given by the ECtHR, is not justified under article 8(2).\nIt is agreed that Marper UK cannot stand.\nThe issue that arises on these appeals is what remedy the court should grant in these circumstances.\nOn behalf of C, Mr Fordham QC submits that the court should grant a declaration under section 8(1) of the Human Rights Act 1998 (HRA) that the retention of Cs biometric data is unlawful.\nSection 8(1) provides that In relation to any act (or proposed act) of a public authority which the court finds is (or would be) unlawful, it may grant such relief or remedy, or make such order, within its powers as it considers just and appropriate.\nHe seeks no other relief.\nOn behalf of GC, Mr Cragg seeks an order quashing the ACPO guidelines and a reconsideration of the retention of GCs data within 28 days.\nThe primary submission of Lord Pannick QC (on behalf of the Commissioner of Police of the Metropolis) is that the correct remedy is to grant a declaration of incompatibility under section 4 of the HRA.\nThe primary submission of Mr Eadie QC (on behalf of the Secretary of State) is that, although there is no fundamental objection to a declaration of incompatibility, it is not necessary to grant one.\nThe arguments in support of a declaration of incompatibility\nSection 6 of the HRA provides: (1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right. (2) Subsection (1) does not apply to an act if (a) as the result of one or more provisions of primary legislation, the authority could not have acted differently; or (b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions.\nIn summary, Lord Pannick and Mr Eadie say that it is not possible to read or give effect to section 64(1A) of PACE in a way which is consistent with Marper ECtHR.\nThey accept that section 64(1A) confers a discretionary power on the police to retain the data obtained from a suspect in connection with the investigation of an offence.\nThat is why they concede that section 6(2)(a) of the HRA is not in play.\nBut they say that it is a power which, save in exceptional circumstances, must be exercised so as to retain the data indefinitely in all cases.\nSection 64(1A) cannot, therefore, be read or given effect so as to permit the power to be exercised proportionately in the way described in Marper ECtHR.\nThe hands of the police are tied by section 64(1A) and that position is faithfully reflected in the ACPO guidelines.\nTwo arguments are advanced in support of this submission.\nThe first (and principal) argument is that to interpret section 64(1A) as requiring police authorities to comply with article 8 would defeat the statutory purpose of establishing a scheme for the protection of the public interest free from the limits and protections required by article 8.\nIt would rewrite the statutory provision in a manner inconsistent with a fundamental feature of the legislative scheme which is that, instead of being destroyed, data taken from all suspects shall be retained indefinitely.\nIt is this feature of the scheme which leads Lord Rodger to invoke authorities such as Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997.\nParliament intended that the discretion conferred by section 64(1A) should be exercised to promote the statutory policy and object that data taken from all suspects in connection with the investigation of an offence should be retained indefinitely.\nAccordingly, any exercise of the discretion conferred by section 64(1A) which does not meet this statutory policy and object would frustrate the intention of Parliament.\nThe second argument is that the nature of the changes to the ACPO guidelines that would be required in order to make them compatible with the ECHR is such that, for reasons of institutional competence and democratic accountability, these should be left to Parliament to make.\nThe choice of compatible scheme involves a difficult and sensitive balancing of the interests of the general community against the rights of the individual and a number of different schemes would be compatible.\nNeither the police nor the court (in the event of a judicial review challenge to the scheme devised by the police) is equipped to make the necessary policy choices.\nThus, for example, only Parliament is constitutionally and institutionally competent to decide whether to adopt the Scottish model in preference to the 2010 Act model.\nDiscussion\nThe first argument\nThis argument is based on the premise that it was the intention of Parliament that, save in exceptional cases, the data taken from all suspects in connection with the investigation of an offence should be retained indefinitely.\nIt goes without saying that, if that premise is correct, section 64(1A) of PACE can only be interpreted as conferring a discretion which must be exercised so as to give effect to that intention.\nThe conclusion necessarily follows from the premise.\nOn that hypothesis, a purposive interpretation of the statute inevitably leads to the conclusion that the first argument is correct.\nBut I do not accept the premise.\nIt is uncontroversial that Parliament intended (i) to abrogate section 64(1) of PACE and remove the obligation to destroy data as soon as practicable after the conclusion of the proceedings if the suspect is cleared of the offence; (ii) to create a scheme for the retention of the data taken from a suspect, whether or not he is cleared of the offence and whether or not he is even prosecuted; and (iii) that the data was to be retained so that it might be used for purposes related to the prevention or detection of crime, the investigation of an offence, the conduct of a prosecution or the identification of a deceased person or of the person from whom a body part came (to use the language of section 64(1A)).\nI shall refer to these purposes as the statutory purposes.\nIt is also clear that, in order to promote the statutory purposes, Parliament must have intended that an extended, even a greatly extended, database should be created.\nBut in my view that is as far as it goes.\nTo argue from the premise that Parliament intended that a greatly extended database should be created to the conclusion that it intended that, save in exceptional circumstances, the data should be retained indefinitely in all cases is a non sequitur.\nParliament did not prescribe the essential elements of the scheme by which the statutory purposes were to be promoted.\nThat task was entrusted to the police, no doubt with the assistance of the Secretary of State.\nIf it had been intended to require a scheme whose essential elements included an obligation that, save in exceptional circumstances, the data lawfully obtained from all suspects should be retained indefinitely, that could easily have been expressly stated in the statute.\nIf that had been intended, surely section 64(1A) would have said in terms that, save in exceptional circumstances, the fingerprints and samples taken shall in every case be retained indefinitely after they have fulfilled the purpose for which they were taken.\nThis would have been the obvious way of expressing that intention.\nThe grant of an apparently unfettered discretion (signalled by the unqualified use of the word may) was certainly not the obvious way of expressing that intention.\nThe natural meaning of the word may is permissive, not mandatory.\nAs I have said, it is clear that Parliament intended to get rid of the requirement to destroy data after it has served its immediate purpose and to permit the retention of data in order to fulfil the statutory purposes.\nBut the statute is silent as to how the statutory purposes are to be fulfilled.\nThere is no reason to suppose that Parliament must have intended that this should be achieved in a disproportionate way so as to be incompatible with the ECHR.\nLord Rodger suggests that Mr Fordhams argument entails the proposition that under section 64(1A) the police were free to do what they liked and that the subsection contains nothing to delimit the exercise of their discretion.\nI agree that, if this is the effect of Mr Fordhams argument, it would cast doubt as to its correctness.\nBut section 64(1A) clearly delimits the exercise of the discretion.\nIt must be exercised to enable the data to be used for the statutory purposes.\nI would add that the discretion must be exercised in a way which is proportionate and rationally connected to the achievement of these purposes.\nThus, for example, the police could not exercise the power to retain the data only of those suspected of minor offences; or only of serious offences of a particular type; or only of suspects of a certain age or gender; or only for a short period.\nBut it is possible to exercise the discretion in a rational and proportionate manner which respects and fulfils the statutory purpose and does not involve the indefinite retention of data taken from all suspects, regardless of their age and the nature of the alleged offence.\nThe Commissioner and the Secretary of State assert that a fundamental feature (possibly the fundamental feature) of section 64(1A) is that data should be retained for use from all suspects indefinitely.\nBut, although expressed in different words, this is the same as the premise argument that I have already rejected.\nFor the reasons I have given for rejecting that argument, it is not possible to extract this fundamental feature from the statute, whether one looks at its language alone or in the context of the mischief which it was intended to cure.\nIn my view, the fundamental feature of section 64(1A) is that it gives the police the power to retain and use data from suspects for the stated statutory purposes of preventing crime, investigation of offences and the conduct of prosecutions.\nBut that does not justify a blanket or disproportionate practice.\nNeither indefinite retention nor indiscriminate retention can properly be said to be fundamental features of section 64(1A).\nAs I have said, following the judgment of the ECtHR the Secretary of State for the Home Department took steps to take the DNA of children under the age of 10 off the database.\nIf the meaning of section 64(1A) is that, save in exceptional cases, there is a duty to retain samples taken from all suspects indefinitely, then surely this amendment to the ACPO guidelines was ultra vires section 64(1A).\nThat is not, however, suggested by Lord Pannick or Mr Eadie.\nIt seems to me that, once it is accepted that section 64(1A) permits a scheme which does not insist on the indefinite retention of data in all cases, then the extreme position advocated by the Commissioner and the Secretary of State cannot be maintained.\nSo what did Parliament intend if it was not a scheme of indefinite retention in all cases? The obvious answer is a proportionate scheme which gives effect to the statutory purposes and is compatible with the ECHR.\nThe fact that it is possible to create a number of different schemes all of which would meet these criteria does not matter.\nSection 64(1A) gives a power.\nPowers can often be lawfully exercised in different ways.\nThe Commissioner and the Secretary of State seek support for the first argument from two sources.\nThe first is the Explanatory Notes to the 2001 Act which explained at para 210: An additional measure has been included to allow all fingerprints and DNA samples lawfully taken from suspects during the course of an investigation to be retained and used for the purposes of prevention and detection of crime and the prosecution of offences.\nThis arises from the decisions of the Court of Appeal (Criminal Division) in R v Weir and R v B (Attorney General's Reference No 3\/199) May 2000.\nThese raised the issue of whether the law relating to the retention and use of DNA samples on acquittal should be changed.\nIn these two cases compelling DNA evidence that linked one suspect to a rape and the other to a murder could not be used and neither could be convicted.\nThis was because at the time the matches were made both defendants had either been acquitted or a decision made not to proceed with the offences for which the DNA profiles were taken.\nCurrently section 64 of PACE specifies that where a person is not prosecuted or is acquitted of the offence the sample must be destroyed and the information derived from it can not be used.\nThe subsequent decision of the House of Lords overturned the ruling of the Court of Appeal.\nThe House of Lords ruled that where a DNA sample fell to be destroyed but had not been, although section 64 of PACE prohibited its use in the investigation of any other offence, it did not make evidence obtained as a failure to comply with that prohibition inadmissible, but left it to the discretion of the trial judge.\nThe Act removes the requirement of destruction and provides that fingerprints and samples lawfully taken on suspicion of involvement in an offence or under the Terrorism Act can be used in the investigation of other offences.\nThis new measure will bring the provisions of PACE for dealing with fingerprint and DNA evidence in line with other forms of evidence.\nBut this does not advance matters.\nIt shows that Parliament intended to remove the requirement of destruction of data and that fingerprints and samples lawfully taken on suspicion of involvement in an offence . can be used in the investigation of other offences.\nBut that sheds no light on whether it was intended that there should be a policy of blanket indefinite retention.\nThe Commissioner and the Secretary of State draw attention to the words an additional measure has been included to allow all [data]to be retained (emphasis added).\nBut in my view this is an insufficient foundation on which to base a conclusion that the true meaning of section 64(1A) is that, save in exceptional circumstances, biometric data must be retained indefinitely in all cases.\nEven if all means all data taken from all suspects, the Explanatory Notes do not say that data must be retained in all cases, still less do they say anything about how long the data must or may be kept.\nThere is no indication in the Notes that Parliament intended all material to be kept indefinitely even if it was not necessary to do so in an individual case within the meaning of article 8(2) of the ECHR.\nThe second source is certain passages in speeches of the House of Lords in Marper UK.\nThe issue there was whether section 64(1A) and the ACPO guidelines were compatible with article 8 and 14 of the ECHR: see para 6 of the speech of Lord Steyn.\nAt para 2, Lord Steyn said: But as a matter of policy it is a high priority that police forces should expand the use of such evidence where possible and practicable.\nBut that is a statement at a high level of generality.\nLord Steyn was not purporting to define the statutory purpose with any precision.\nAt para 39 Lord Steyn addressed the submission on behalf of the appellants that the legislative aim (of assisting in the investigation of crimes in the future) could be achieved by less intrusive means.\nHe considered the conclusion of Sedley LJ in the Court of Appeal that the degree of suspicion should be considered in individual cases before a decision was made whether or not to retain the data.\nHe rejected this suggestion saying: this would not confer the benefits of a greatly expanded database and would involve the police in interminable and invidious disputes (subject to judicial review of individual decisions) about offences of which the individual had been acquitted.\nI have already accepted that Parliament intended that the exercise of the section 64(1A) power should lead to a greatly expanded database and that Lord Steyn was rejecting the idea that the scheme contemplated by section 64(1A) should involve assessment of the degree of suspicion on a case by case basis.\nBut he was not saying that, subject to exceptional circumstances, section 64(1A) required the introduction of a scheme under which the data taken from all suspects would be retained indefinitely, since any other interpretation would undermine the statutory purpose.\nAt para 78, Lady Hale said that the whole community (as well as the individuals whose samples are collected) benefits from there being as large a database as it is possible to have.\nThe present system is designed to allow the collection of as many samples as possible and to retain as much as possible of what it has.\nThat is undoubtedly true.\nBut the system included the ACPO guidelines.\nIt was, therefore, not contentious that the system was designed to catch and retain as many samples as possible.\nMoreover, leaving ECHR issues aside, section 64(1A) does allow the collection and retention of as many samples as possible.\nLady Hale was not, however, saying that section 64(1A) required the collection and retention of as many samples as possible.\nSimilarly, at para 88 Lord Brown said that the benefits of the larger database brought about by the now impugned amendment to PACE were manifest.\nThe more complete the database, the better the chance of detecting criminals and of deterring future crime.\nBut here too, Lord Brown was not considering the question whether section 64(1A) conferred a power which, save in exceptional circumstances, could only be exercised by requiring the retention of the data taken from all suspects indefinitely.\nThe question whether, leaving ECHR issues aside, section 64(1A) required the retention of the data taken from all suspects indefinitely was not in issue in Marper UK.\nThe focus of the argument in Marper UK was on whether section 64(1A) and the ACPO guidelines were compatible with the ECHR.\nIn particular, it was on whether article 8(1) was engaged and whether the ACPO scheme was justified under article 8(2).\nThe context of the observations relied on to support the first argument was the practice of the police, save in exceptional cases, to retain all data indefinitely.\nThere was no debate on whether, if article 8(1) was engaged and the ACPO guidelines could not be justified under article 8(2), section 64(1A) could be read and given effect in a way compatible with the ECHR.\nSo I reject the submission that Marper UK provides support for the submission that underpins the first argument, namely that it was the intention of Parliament that, save in exceptional cases, the data of all suspects should be retained indefinitely.\nIn my view, section 64(1A) permits a policy which (i) is less far reaching than the ACPO guidelines; (ii) is compatible with article 8 of the ECHR; and (iii) nevertheless, promotes the statutory purposes.\nThose purposes can be achieved by a proportionate scheme.\nIt is possible to read and give effect to section 64(1A) in a way which is compatible with the ECHR and section 6(2)(b) of the HRA cannot be invoked to defeat the claim that the ACPO guidelines are unlawful by reason of section 6(1) of the HRA.\nFor the reasons that I have given, to interpret section 64(1A) compatibly with article 8 does not impermissibly cross the line where, to use the words of Lord Bingham in Sheldrake v Director of Public Prosecutions [2005] 1 AC 264, para 28, it would be incompatible with the underlying thrust of the legislation, or would not go with the grain of it, or would call for legislative deliberation, or would change the substance of a provision completely, or would remove its pith and substance, or would violate a cardinal principle of the legislation.\nThis conclusion is consistent with the decision in R (L) v Commissioner of Police of the Metropolis [2010] 1 AC 410.\nThe claimant was employed by an agency providing staff for schools.\nThe agency required her to apply under section 115(1) of the Police Act 1997 for an enhanced criminal record certificate giving the prescribed details of every relevant matter relating to her which was recorded in central records, since she was a prospective employee who was being considered for a position involving regularly being involved with persons under the age of 18.\nSection 115(7) provided that, before issuing a certificate, the Secretary of State shall request the chief police officer of every relevant police force to provide any information which, in the chief officers opinion (a) might be relevant for the purpose described in the statement under subsection (2), and (b) ought to be included in the certificate.\nThe Commissioner of Police of the Metropolis disclosed certain information about the claimant which was included in the certificate.\nShe sought judicial review of the decision to disclose the information on the ground that her article 8 rights had been violated.\nOn behalf of the Secretary of State, it was submitted that the words any information and ought to be included in section 115(7) showed that Parliament intended widespread disclosure of relevant material and a narrow exception.\nThis interpretation was supported by the protective purpose of the legislation: see p 416G.\nThat was the practice under the relevant police guidelines.\nIt is true that there was no issue in that case about section 6(2) of the HRA.\nThat is why the analogy cannot be pressed too far.\nBut in essence it was being argued in the context of article 8(2) of the ECHR that it was a fundamental feature of the Police Act 1997 that all relevant information could (and should) be disclosed in a criminal record certificate, since anything less would defeat the fundamental protective purpose of the statute.\nThese submissions are similar to those advanced in the present case.\nBut they were rejected.\nDespite the protective purpose of the legislation and the use of the word any, at para 44, Lord Hope said that the words ought to be included should be read and given effect in a way that was compatible with the applicants article 8 rights.\nAt para 81, Lord Neuberger MR adopted a broad interpretation of section 115(7)(b) and said that, in deciding whether the information ought to be included, there would be a number of different, sometimes competing, factors to weigh up.\nFor all these reasons, I would reject the first argument advanced on behalf of the Commissioner and the Secretary of State.\nThe second argument\nThe second argument is that Parliament could not have intended to entrust the creation of a detailed scheme pursuant to section 64(1A) to the police (with or without the assistance of the Secretary of State) subject only to the judicial review jurisdiction of the court.\nIt is said that the creation of guidelines for the exercise of the section 64(1A) power is a matter for Parliament alone and that it could not have been intended that section 64(1A) should grant a broad discretion to the police such as is contended for by Mr Fordham.\nThis is because the context involves high policy, balancing the public interest in the effective detection, prosecution and prevention of crime against individual freedoms.\nIt is a matter of political controversy, as evidenced by the different policy solutions of the previous and present Government.\nThere are choices to be made between a variety of compatible legislative schemes.\nThese choices are for Parliament alone.\nThe police are in no position, constitutionally or institutionally, to choose between them.\nIt is important to note the scope of this argument.\nIt is not that Parliament could not have granted the police a discretionary power to retain data otherwise than on a blanket indefinite basis.\nIf it had wished to grant such a power to the police, Parliament obviously could have done so.\nRather, the argument is that the constitutional and institutional limits on the competence of the police are such that Parliament could not have intended to grant such a power to them.\nI cannot accept this argument.\nNo question of constitutional competence arises here.\nParliament is entitled to give the police the power to create a scheme.\nNo doubt it would have envisaged that a national scheme would be produced such as the ACPO guidelines.\nThe Secretary of State is accountable to Parliament for the scheme so that the democratic principle is preserved.\nThere are circumstances in which institutional competence is a factor in the courts deciding the extent to which it should pay deference to a decision of the executive and allow a discretionary area of judgment.\nBut we are not concerned with the courts judicial review jurisdiction in the present context.\nWe are concerned with a question of statutory interpretation.\nThere is no reason in principle why the police (together with the Secretary of State) should be less well equipped than Parliament to create guidelines for the exercise of the section 64(1A) power.\nIn creating a proportionate scheme, they have to strike a balance.\nThat is inherent in any exercise of this kind, whether it is performed by the executive or Parliament.\nThe police guidelines that were in play in L were not the product of work by Parliament.\nPolicy and guidance documents of this kind, often in areas of acute sensitivity, are frequently created by the executive.\nProvided that they fulfil the purposes of the enabling statute, they are valid and enforceable.\nIn my view, the fact that difficult decisions would have to be made in producing guidelines for the exercise of the section 64(1A) power is not a sufficient reason for concluding that Parliament could not have intended to give the power to produce them to the police and the Secretary of State.\nWhat relief, if any, should be granted?\nThe Biometric Data\nIn deciding what relief to grant, it is important to have regard to the present state of play.\nAs previously stated, Chapter 1 of Part 1 of the Protection of Freedoms Bill includes proposals along the lines of the Scottish model.\nThe history of the varying responses to Marper ECtHR shows that it is not certain that it will be enacted.\nBut we were told by Mr Eadie that it is the present intention of the Government to bring the legislation into force later this year.\nIn shaping the appropriate relief in the present case, I consider that it is right to proceed on the basis that this is likely to happen, although not certain to do so.\nIn these circumstances, in my view it is appropriate to grant a declaration that the present ACPO guidelines (amended as they have been to exclude children under the age of 10), are unlawful because, as clearly demonstrated by Marper ECtHR, they are incompatible with the ECHR.\nIt is important that, in such an important and sensitive area as the retention of biometric data by the police, the court reflects its decision by making a formal order to declare what it considers to be the true legal position.\nBut it is not necessary to go further.\nSection 8(1) of the HRA gives the court a wide discretion to grant such relief or remedy within its powers as it considers just and appropriate.\nSince Parliament is already seised of the matter, it is neither just nor appropriate to make an order requiring a change in the legislative scheme within a specific period.\nThe ECtHR has recently decided that, where one of its judgments raises issues of general public importance and sensitivity, in respect of which the national authorities enjoy a discretionary area of judgment, it may be appropriate to leave the national legislature a reasonable period of time to address those issues: see Greens and MT v United Kingdom (Application Nos 60041\/08 and 60054\/08) (ECtHR, 23 November 2010) at paras 113 115.\nThis is an obviously sensible approach.\nThe legislature must be allowed a reasonable time in which to produce a lawful solution to a difficult problem.\nNor would it be just or appropriate to make an order for the destruction of data which it is possible (to put it no higher) it will be lawful to retain under the scheme which Parliament produces.\nIn these circumstances, the only order that should be made is to grant a declaration that the present ACPO guidelines (as amended) are unlawful.\nIf Parliament does not produce revised guidelines within a reasonable time, then the appellants will be able to seek judicial review of the continuing retention of their data under the unlawful ACPO guidelines and their claims will be likely to succeed.\nThe Photographs of GC\nMr Cragg raises a discrete issue about the photographs that were taken of GC when he was arrested.\nSection 64A of PACE confers a power to take, use and retain photographs of arrested persons who are not subsequently convicted of the offence for which they were arrested.\nIn the application for judicial review, the issue of whether the retention of the photographs violated GCs article 8 rights was mentioned in what Moses LJ described as a passing reference in the claim form and in paragraph 20 of the grounds.\nAt para 43, Moses LJ said: the issues of justification for their retention cannot now properly be considered where the Commissioner has had no opportunity to give evidence as to justification.\nLord Pannick submits that, in view of the manner in which the issue was raised in the Divisional Court, the consequent absence of any evidence as to justification and the absence of any substantive judgment on the issue from the Divisional Court, the Supreme Court should express no opinion on this part of the appeal, but leave the matter to be determined if and when the point is properly raised in another case.\nI accept these submissions.\nI should also mention that Mr Fordham raises a discrete point about information held on the Police National Computer about C.\nThis was the subject of two agreed issues which were dealt with by the Divisional Court at paras 24 26 and 46 47 of the judgment of Moses LJ.\nIt is common ground that the retention of this information raises no separate issues from those raised by the retention of Cs DNA material and his fingerprints.\nConclusion\nFor the reasons that I have given, I would allow the appeals and grant a declaration that the present ACPO guidelines are unlawful because they are incompatible with article 8 of the ECHR.\nI would grant no other relief.\nI agree with the judgment of Lord Dyson.\nI have, however, a little that\nLORD PHILLIPS\nwould add to his reasoning.\nSection 3 of the Human Rights Act 1998 (the HRA) requires this Court, in so far as it is possible to do so, to interpret legislation in a way which is compatible with Convention rights.\nSometimes this results in the Court according to a statutory provision a meaning that conflicts with the natural meaning of a statutory provision see Ghaidan v Godin Mendoza [2004] UKHL 30; [2004] 2 AC 557.\nIn summarising the effect of that decision in Sheldrake v Director of Public Prosecutions [2004] UKHL 43; [2005] 1 AC 264, para 28 Lord Bingham of Cornhill stated that the interpretative obligation under section 3 was very strong and far reaching and might require the court to depart from the legislative intention of Parliament.\nThis is not a case where the HRA requires the Court to accord to a statutory provision a meaning which it does not naturally bear.\nThere is no difficulty in giving section 64(1A) of PACE, set out in para 3 of Lord Dysons judgment (section 64(1A)), an interpretation which is compatible with article 8 of the Convention, as interpreted by the Strasbourg Court in S and Marper v United Kingdom (2008) 48 EHRR 1169.\nThe section gives a discretionary power to the police to retain samples taken from a person in connection with the investigation of an offence.\nSection 3 of the HRA imposes a duty on the police, as a public authority, in so far as it is possible to do so, to give effect to the power conferred on them in a way which is compatible with Convention rights.\nThere is nothing in the wording of section 64(1A), giving it its natural meaning, which either requires or permits the police to exercise the power conferred on them in a manner which is incompatible with article 8.\nIn order to hold that section 64(1A) is incompatible with the Convention it is thus necessary to identify some matter, extrinsic to the wording of the section itself, that compels one to interpret the section as either requiring or permitting the police to exercise the power conferred on them in a manner incompatible with article 8.\nSuch a matter needs to be extraordinarily cogent in order to overcome the effect of section 3 of the HRA.\nI have not been able to identify any such matter.\nIn R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] UKHL 39; [2004] 1 WLR 2196 the House of Lords held, wrongly as the Strasbourg Court was to rule, that in so far as section 64(1A) interfered with article 8 rights the interference was justified under article 8(2).\nIn so far as Parliament considered the matter when enacting section 64(1A) it is likely to have taken the same view.\nParliament may well have considered that the Convention did not require any restriction to be placed on the exercise of the power conferred by section 64 (1A).\nIt does not follow, however, that Parliament must be presumed to have intended that, if the Convention did require the power to be exercised subject to constraints, the police should none the less be required, or permitted, to disregard those constraints.\nThe effect of section 64(1A) was to reverse the requirement of the previous section 64 of PACE that fingerprints and samples should be destroyed when a suspect was cleared of an offence.\nThe purpose of this reversal was plainly that the police should be permitted to establish a database of such material obtained from those suspected of criminal activity.\nI see no basis for concluding, however, that Parliament intended that the establishment and maintenance of this database should be untrammelled by any requirements that might be imposed by the Convention.\nWhile those requirements limit the circumstances in which material can be retained by application of the familiar test of proportionality, they do not prohibit the maintenance of a database that satisfies that test.\nHad Parliament foreseen that the Convention required restrictions on the power conferred by section 64(1A) the likelihood is that Parliament, guided by the executive, would itself have wished to define those restrictions rather than leaving them to be determined by executive action.\nThat can be deduced from the fact that Parliaments reaction to Strasbourgs ruling in S and Marper (2008) 48 EHRR 1169 was to pass amending legislation and that the present Government intends to introduce an amending Bill.\nI do not consider, however, that it follows from this that one must interpret section 64(1A) as requiring the police to exercise the power conferred by that section in a manner which infringes the requirements of the Convention, or even as permitting the police to disregard those requirements.\nFor these additional reasons I can see no warrant for making a declaration of incompatibility, convenient though this might be, and concur in the order proposed by Lord Dyson.\nLADY HALE\nWhether and in what circumstances the police should be able to keep the DNA samples and profiles, fingerprints and photographs of people who have been arrested but not convicted is a deeply controversial question.\nThe Government is promoting the Protection of Freedoms Bill which will adopt in England and Wales the present system in Scotland.\nThis allows retention only for a limited period and in respect of certain crimes.\nIt reflects a strong popular sentiment that the police should not be keeping such sensitive material relating to innocent people, even if they are only allowed to use it for purposes related to the prevention or detection of crime, the investigation of an offence, the conduct of a prosecution (Police and Criminal Evidence Act 1984, section 64(1A), as substituted by the Criminal Justice and Police Act 2001, section 82).\nIf the popular press is any guide to public opinion, the decision of the European Court of Human Rights in S and Marper v United Kingdom (2008) 48 EHRR 1169 is one which captures the public mood in Britain much more successfully than many of its other decisions.\nAmong the arguments marshalled against retaining the data are these: (a) The agencies of the state cannot be trusted to use such information only for the permitted purposes, nor can the state be trusted not to enlarge those purposes in future.\nDNA samples, in particular, might be put to many more controversial uses should the state feel so inclined. (b) Serious bodies have cast doubt upon the usefulness of retaining it even for the permitted purposes.\nBoth the Human Genetics Commission (Nothing to hide, nothing to fear? Balancing individual rights and the public interest in the governance and use of the national DNA Database, November 2009) and the Nuffield Council on Bioethics (The forensic use of bioinformation: ethical issues, September 2007) suggest that the value of casting the net so wide has not yet been proved. (c) The Equality and Human Rights Commission argue, in their intervention in this case, that the premise on which such data are kept, that people who are arrested are more likely than the general population to be involved in future offending, is unsustainable. (d) Liberty point out, in their intervention, that certain sections of the population, in particular men and people from the black and minority ethnic communities, run a disproportionate risk of arrest and therefore of having their data taken and kept.\nThis is a detriment with a discriminatory impact. (e) The detriment is the stigma, certainly felt and possibly perceived by others, involved in having ones data on the database.\nThis stigma, together with wider concerns about potential misuse, is sufficient to outweigh the benefits in the detection and prosecution of crime.\nAmong the arguments marshalled in favour of retaining the data are these: (a) Those of a more trusting nature find it difficult to imagine that there is a serious risk that the agencies of the state will indeed misuse this information for more sinister purposes.\nThe risk would in any event be much reduced if DNA samples were destroyed and only profiles, fingerprints and photographs retained. (b) As to their usefulness, the Chief Constable of the West Midlands gave evidence on 22 March 2011 to the House of Commons Public Bill Committee hearing on the Protection of Freedoms Bill that between 2 and 3 per cent of the 36,000 hits on the database would be lost if the proposals in the Bill became law.\nThese may only be a small proportion of the total, but among the 1000 or so crimes which would not be solved some would be very serious. (c) It is not clear that the underlying premise is indeed that people who have been arrested but not charged or convicted are more likely than the general population to commit crimes.\nAfter all, the Act also allows the police to keep data they have collected from people who have never been arrested, provided that they consent.\nThe reality is that arrest gives the police the opportunity compulsorily to collect the data: it is not the reason why they do so. (d) The discriminatory impact of disproportionate arrest rates among male and black and minority ethnic members of the population could as logically be addressed by compiling a national database of everyone, rather than by restricting it to people involved in the criminal justice system.\nThere is now a proliferation of national databases holding data on large sections of the population which data can be put to far more detrimental uses than this. (e) Any stigma felt or perceived is irrational, at least if the information is used for its permitted purposes.\nA person who might otherwise have been among the usual suspects arrested for a crime may be eliminated before he even gets to the police station.\nA person who is rightly arrested, prosecuted and convicted because a match is found does not deserve our sympathy.\nWe should be concentrating on the quality of the scientific evidence as to sampling and matching rather than on the feelings of those whose samples have been kept.\nThe feelings of the victims of crime are at least as important as the feelings of the criminals.\nThey too have a human right to have their physical and mental integrity protected by the law, and it is in this context that DNA evidence, in particular, has proved most useful.\nWe are not called upon to resolve that debate in this case.\nIt is common ground that the decision of the House of Lords in R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 (Marper UK) cannot stand in the light of the decision of the European Court of Human Rights in S and Marper v United Kingdom (2008) 48 EHRR 1169.\nThe only question is what we should do about it in this case.\nThis is, as I understand it, a question governed by legal principle and the Human Rights Act 1998 and not by our particular preferences for how the United Kingdom should solve the problem.\nThere are three broad options open to the court: (i) We could decide, in the light of the individual facts of the cases before us, whether the retention of data in each case is compatible with the appellants Convention rights.\nIf it is not, we could make declarations to that effect and even mandatory orders for the deletion and destruction of the data involved. (ii) We could declare that the current ACPO guidelines, approved in Marper UK, are unlawful, without determining what would be lawful in the cases before us. (iii) We could declare that section 64(1A) of PACE is incompatible with the Convention rights, thus leaving the current guidelines in place and everything done under them lawful until Parliament enacts a replacement either by primary legislation or under the fast track remedial procedure laid down in section 10 of the Human Rights Act.\nThe choice between (i) or (ii), on the one hand, and (iii), on the other hand, depends upon the difficult and important question (see Lord Mance in Doherty v Birmingham City Council [2008] UKHL 57, [2009] 1 AC 367, para 141) of the meaning and scope of section 6(2)(b) of the Human Rights Act.\nThis, rather than the policy debate outlined above, is the important issue in this case.\nIf it is resolved in favour of (i) or (ii) and against (iii), then the choice between (i) and (ii) depends upon what the court considers a just and appropriate remedy under section 8(1) of the 1998 Act.\nI should say at once that on both issues I agree with the conclusions reached by Lord Dyson.\nUnder section 6(1) of the Act, it is unlawful for a public authority to act in a way which is incompatible with a Convention right.\nBut the sovereignty of Parliament requires that exceptions be made for certain things which are done pursuant to an Act of the United Kingdom Parliament.\nAs the annotations to the Act (by Peter Duffy QC and Paul Stanley) in Current Law Statutes explain, the exceptions are all designed to prevent section 6 being used to circumvent the general principle of the Act embodied in sections 3(2)(b) and 4(6)(a), that incompatible primary legislation shall remain fully effective unless and until repealed or modified.\nIn that event, the most that the court can do is make a declaration under section 4(2) that the Act is incompatible and leave it to Parliament to decide what, if anything, to do about it.\nIt follows, however, that the exceptions must be read along with section 3(1).\nSection 3(1) requires that So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights.\nThis obligation is laid upon everyone, not just upon the courts.\nTwo exceptions to the general rule in section 6(1) are provided by section 6(2).\nSection 6(2)(a) has presented little difficulty: it provides that subsection (1) does not apply if as the result of one or more provisions of primary legislation, the authority could not have acted differently.\nThis covers situations where the public authority was required by an incompatible Act of Parliament to do as it did (or perhaps where it had a choice between various courses of action, each of which was incompatible with the Convention rights).\nAlthough section 6(2)(a) does not say so, it must be read subject to section 3(1).\nSo both the public authority and the courts, in deciding whether or not the authority could have acted differently, will have first to decide whether the Act of Parliament can be read or given effect in a way which is compatible rather than incompatible with the Convention rights.\nIf the Act can be read compatibly, then it follows that the authority could have acted differently and will have no defence if it has acted incompatibly.\nSection 6(2)(b) makes the link with section 3(1) explicit, but has caused much more difficulty in practice.\nIt provides that section 6(1) does not apply to an act (or failure to act) if in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions.\nSo the first question is always whether the primary legislation can be read or given effect in a compatible way.\nIf it can, that is an end of the matter: see Manchester City Council v Pinnock [2010] UKSC 45, [2010] 3 WLR 1441, paras 93 to 103.\nIn that case, both the provision requiring the court to make a possession order in respect of a demoted tenancy and the provision empowering the local authority to seek one could be read and given effect in a compatible way.\nThis bears out the prediction by Beatson and others, in Human Rights: Judicial Protection in the United Kingdom (2008), para 6 23, that cases where legislation cannot be read down under section 3 are likely to be rare.\nHowever, if the legislation cannot be so read or given effect, the second question is whether the public authority was acting so as to give effect to or enforce it.\nAs to this, it is possible to detect some differences of opinion among the judges.\nSome have taken the view that the fact that there may be choices involved in whether or not to give effect to or enforce the incompatible provision makes no difference: the authority was acting so as to give effect to or enforce it.\nOthers, most notably Lord Mance in Doherty, would draw a distinction between the court, which might have no choice but to give effect to an incompatible provision, and the public authority bringing the proceedings, which could choose whether or not to do so and should be guided by Convention values when making its decisions.\nFortunately, we do not have to resolve that debate.\nThis case is about the first question: can section 64(1A) be read and given effect compatibly with the Convention rights? In my view it clearly can.\nThis is for two principal reasons.\nThe first relates to the requirement to read that is, interpret statutory language compatibly with the Convention rights.\nIn this case, to say that section 64(1A) cannot be so read involves reading may be retained as must be retained, save in exceptional circumstances.\nThis would be doing the reverse of what section 3(1) requires.\nIn other words, it would be reading into words which can be read compatibly with the Convention rights a meaning which is incompatible with those rights.\nIt would be giving the broad discretion provided in section 64(1A) an unnatural or strained meaning to require it to be given effect in an incompatible way.\nThat view is reinforced by the fact that it was the clear intention of Parliament to legislate compatibly rather than incompatibly with the Convention rights.\nSection 64(1A) was introduced into PACE by section 82 of the Criminal Justice and Police Act 2001.\nWhen the Bill which became that Act was introduced into Parliament, it was prefaced by the ministerial statement required by section 19(1)(a) of the Human Rights Act.\nThe Home Secretary, Mr Straw, stated that In my view the provisions of the Criminal Justice and Police Bill are compatible with the Convention rights.\nHe was not alone in that view.\nAfter all, the House of Lords in Marper UK unanimously took the view that section 64(1A) was compatible with the Convention rights.\nBut this does not suggest to me that Parliaments intention was that the apparent discretion which it conferred should inevitably be read incompatibly with the Convention rights should that view later prove to be unfounded.\nQuite the reverse.\nThe second relates to the requirement in section 3(1) that legislation be given effect compatibly with the Convention rights.\nAs Lord Rodger emphasised in Ghaidan v Godin Mendoza [2004] UKHL 30, [2004] 2 AC 557, para 107, section 3(1) contains not one, but two, obligations.\nIn retrospect, that is what the Court of Appeal had in mind in the case which became In re S (Minors) (Care Order: Implementation of Care Plan) [2002] UKHL 10, [2002] 2 AC 291: that the courts power to make a care order giving the local authority enhanced (that is, determinative) parental responsibility for a child should be given effect in such a way as to prevent the local authority exercising that responsibility incompatibly with the Convention rights of either the child or his parents.\nAlso in retrospect, one can see that the proper remedy for incompatible actions by the local authority is a free standing action under section 7(1)(a) of the Human Rights Act, rather than by the care court adopting powers which contradicted the cardinal principle of the separation of powers between court and local authority in care proceedings.\nIn re S is the strongest case in favour of the position adopted by the Chief Constable and the Secretary of State in this case.\nThey have to argue that, despite ostensibly giving the police a discretion, the cardinal principle was, not that data may be kept, but that they must be kept.\nThe ACPO guidelines could say only one thing.\nFurther, they must argue that that principle is so fundamental to the legislative purpose that only Parliament can modify it if it turns out that those guidelines are incompatible with the Convention rights.\nI can readily accept that it may be desirable for Parliament rather than the Association of Chief Police Officers to put something in its place.\nBut I cannot see how it was possible for the discretion conferred by section 64(1A) to be exercised in accordance with ACPO guidelines when it was first enacted but it is not possible for it to be so exercised now.\nIn other words, if it was possible to read and give effect to section 64(1A) by means of ACPO guidelines when it was first enacted, it must be possible to do so now.\nAnd ACPO as a public authority has to act compatibly with the Convention rights.\nFor these reasons, therefore, section 64(1A) is not incompatible with the Convention rights and cannot be so declared.\nHowever, the need for a consistent national approach must be relevant to the choice between remedy (i) and remedy (ii).\nThe court is empowered by section 8(1) to grant such relief or remedy in relation to an unlawful act as it considers just and appropriate.\nThere would be nothing to stop ACPO promulgating some new and Convention compliant guidelines.\nNow that Marper UK has been overruled, they clearly should set about doing so unless Parliament does it for them within a reasonably short time.\nBut I certainly accept that the system will not work if different police forces adopt different policies.\nSo it would not be appropriate (such a flexible word) for this court to make mandatory decisions in individual cases unless and until it becomes clear that neither ACPO or Parliament is prepared to make the difficult choices involved.\nI therefore agree that we should declare the current guidelines unlawful but grant no further relief.\nLORD JUDGE\nI agree with the reasoning and conclusions of the majority of the members of the Court.\nIn deference to the contrary views I shall add some brief words of my own.\nThe insertion of section 64(1A) in the Police and Criminal Evidence Act 1984 (the 1984 Act) by section 82 of the Criminal Justice and Police Act 2001 resulted in the promulgation of the Retention Guidelines for Nominal Records on the Police National Computer (the ACPO Guidelines) 2006.\nThereafter in England and Wales the retention of biometric data (DNA samples) was governed by these guidelines which derived their authority from section 64(1A).\nThe judicial examination of these provisions in England and Wales culminated in a decision of the House of Lords in R (S and Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 that the retention of DNA samples did not constitute an interference with the rights granted by article 8 of the European Convention of Human Rights, or if it did, that the interference was modest and proportionate.\nThe Grand Chamber of the European Court of Human Rights disagreed, and concluded that the system created by the ACPO Guidelines constituted an interference with article 8 rights. (S v United Kingdom (2008) 48 EHRR 1169).\nTaking account of the decision and applying its reasoning we are all agreed that the decision of the House of Lords should no longer be treated as authoritative.\nTherefore these appeals must be allowed.\nThe forensic battle is directed at the consequences which should now flow.\nThe starting point is the reasoning of the Grand Chamber which identified the way in which different member states addressed the retention issue, and acknowledged that even following acquittal, it was permissible, subject to specific limitations within the domestic arrangements, for DNA samples to be retained.\nWhat however was required of any arrangements for retention was an approach which discriminated between different kinds of cases and for the application of strictly defined storage periods for data, even in more serious cases.\nAttention was drawn to the position in Scotland where the legislative arrangements permitted the retention of the DNA of unconvicted individuals, limited in the case of adults to those charged with violent or sexual offences and even then, for three years only, with the possibility of an extension for a further two years with judicial agreement.\nThese arrangements were not criticised.\nIndeed the court acknowledged that the retention of DNA profiles represented the legitimate purpose of assisting in the identification of future offenders.\nIn short the existence of the legislative provisions for the retention of DNA samples was endorsed, but criticism was directed at the blanket and indiscriminate nature of the power of retention found in the ACPO Guidelines.\nAccordingly nothing in the judgment of the Court leads to the conclusion that a different, less all encompassing scheme deriving its authority from section 64(1A) would contravene article 8, or that the law in relation to DNA samples should revert to the former wide ranging prohibition against the retention of samples of any kind which was the striking feature of section 64 of the 1984 Act as originally enacted.\nRather the judgement confirmed that legislative arrangements may provide for the retention of the DNA samples of those acquitted of criminal offences.\nThat is what section 64(1A), reversing the provisions of section 64, permits.\nIn these circumstances it was open to ACPO to reconsider and amend the guidelines (as indeed, at least in part, it did) in the light of the decision of the European Court, and it would be open to ACPO to do so in the light of the decision of this court.\nSection 64(1A) does not preclude an amendment to the Guidelines which addresses the criticisms.\nIn other words, although the process of further amendment to the arrangements for the retention of DNA samples in England and Wales has been and continues to be addressed through legislation, this was not and is not the only way to provide for the protection of article 8 rights against the current scheme for their indiscriminate retention.\nIn my judgment section 64(1A) is Convention compliant, whereas the ACPO Guidelines in their present form are not.\nAccordingly, the retention of the DNA samples of these appellants was unlawful, but a declaration of incompatibility would be inappropriate.\nLORD KERR\nLord Rodger and Lord Brown in powerfully reasoned judgments, which I initially found persuasive, have concluded that section 64(1A) of the Police and Criminal Evidence Act 1984 (PACE) had as its purpose the institution of a scheme for the indefinite retention of biometric data taken from all suspects (with very limited exceptions) in connection with the investigation of offences.\nOn that account they found that, despite the seemingly permissive language of the subsection, the Association of Chief Police Officers (ACPO), to whom the task of drawing up guidelines for the implementation of section 64(1A) had been entrusted, were obliged to ensure that, instead of being destroyed as previously required by section 64(1) of PACE, samples taken from suspects would be retained indefinitely and so remain available to the police on the national DNA database.\nIf indefinite retention of data was indeed section 64(1A)s unmistakable purpose, I would have readily agreed that the discretion that samples may be retained after they have fulfilled the purposes for which they were taken would have to be exercised so as to give effect to that intention.\nThat, as Lord Rodger has said, would be the inevitable consequence of the application of the principle for which Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 is the seminal authority: that a discretion conferred with the intention that it should be used to promote the policy and objects of the Act can only be validly exercised in a manner that will advance that policy and those objects.\nMore pertinently, the discretion may not be exercised in a way that would frustrate the legislations objectives.\nEverything therefore depends on what one decides is the true intention or purpose of the legislation.\nThis is not as easy a question to answer as the simple formulation, what was the purpose of the legislation, suggests.\nAs Lord Brown has pointed out in para 145 of his judgment, the search for the purpose of a particular item of legislation may have to follow a number of avenues and may require consideration of several aspects of the enactment what is the grain of the legislation, what its underlying thrust etc.\nAn important factor in the conclusion on this critical question which Lord Rodger has identified is the fact that Parliament clearly saw the need for retreat from the position that had hitherto obtained under section 64(1) and (3) of PACE as originally enacted.\nThose subsections were in these terms: (1) If (a) fingerprints or samples are taken from a person in connection with the investigation of an offence; and (b) he is cleared of that offence, they must be destroyed as soon as is practicable after the conclusion of the proceedings. (3) If (a) fingerprints or samples are taken from a person in connection with the investigation of an offence; and (b) that person is not suspected of having committed the offence, they must be destroyed as soon as they have fulfilled the purpose for which they were taken.\nAs Lord Rodger has pointed out, the decision of the House of Lords in Attorney Generals Reference (No 3 of 1999) [2001] 2 AC 91 brought to the attention of the public and Parliament the effect of these provisions.\nPotentially useful evidence was not being used for reasons that, as Lord Steyn put it, were contrary to good sense (p 118).\nNo doubt reaction to the experience in that case contributed to Parliaments decision to enact section 64(1A) but did it, as Lord Rodger has concluded, lead to Parliaments resolve that samples taken from suspects would be retained indefinitely and so remain available to the police on the national DNA database? In my judgment, and largely for the reasons given by Lord Dyson, it did not.\nIn the first place, if that was Parliaments intention it chose a curious way to achieve it.\nA simple, unambiguous provision to that effect would not have been difficult to devise.\nAnd if the purpose of the legislation was to obtain a blanket, universally applied (apart from exceptional cases) policy, why would Parliament have left the practicalities of implementing the policy to ACPO? The drafting of the provision at a level of generality surely suggests that Parliament intended a measure of flexibility to be a feature of its application.\nThis is unsurprising.\nThe history of evolving knowledge as to the use to which DNA evidence could be put provided the clearest possible reasons not to adopt over prescriptive rules that might impede its full exploitation in circumstances unforeseen at the time of their enactment.\nJust as it was judged, in retrospect, to be unwise to have an immutable requirement to destroy all samples from certain categories of suspects and defendants, so also it would be unwise to substitute that obligation with a blanket requirement to retain all samples.\nVarious members of the Appellate Committee of the House of Lords in R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 described the benefits that can flow from the maintenance of an expanded database for DNA samples and I am in respectful agreement with all that Lord Steyn, Lady Hale and Lord Brown had to say on this subject in that case.\nBut I do not consider that it necessarily follows that an inflexible policy requiring retention of virtually every sample taken from suspects and defendants is needed in order to have a viable and worthwhile resource.\nWhatever view one takes of the competing policy arguments on this issue, however, it is, to my mind, quite clear that Parliament did not intend that this was the only way in which the legislation could be implemented.\nNot only does section 64(1A) use the permissive may in relation to the retention of samples but subsection (3) is retained in its original state, albeit that it may now be disapplied in a variety of circumstances outlined in section 64(3AA) to (3AD).\nThis seems to me clearly to indicate recognition that there should be limits on the retention of samples but, not surprisingly, Parliament did not attempt to forecast comprehensively what those limits should be.\nThe structure of the new section 64 is strongly suggestive of an intention to devise a scheme that would respond to developments in this field, not least any view that might be taken as to the human rights implications that might come to be recognised.\nAs Lord Dyson has put it, Parliaments intention must be taken to have been to create a proportionate scheme which is compatible with ECHR.\nThere is nothing to impel the conclusion that Parliament intended that the scheme could not adapt to whatever the compatibility requirements were found to be.\nOn the contrary, there is every reason to suppose that Parliament intended that the scheme could be adapted to meet those requirements as and when they became apparent.\nWhat the Commissioner and the Secretary of States argument resolves to is that, in interpreting section 64, we should recognise that an underlying, not expressly articulated, purpose was that the samples had to be retained indefinitely, regardless of the circumstances in which they were taken or of the circumstances of the individual from whom they had been taken.\nThere is nothing in the language of the section itself that compels such an exclusive interpretation.\nIndeed, as Lord Phillips has pointed out, acceptance of this argument would involve reading more into section 64(1A) than its ordinary language conveys.\nACPOs guidelines were an essential complement to the statutory scheme.\nThose guidelines have been altered (in relation to children under 10) as a result of the decision of the Grand Chamber in S and Marper v United Kingdom (2008) 48 EHRR 1169.\nThere is no lawful impediment to ACPO devising and implementing guidelines that take full account of the other features which Strasbourg has decreed are necessary for the operation of the scheme to be Convention compliant.\nClassifications (as to which categories of offences or individuals should require retention of samples) and long stop provisions (as to the period that they should be retained) are well within the institutional reach of ACPO.\nSo also are the circumstances in which exceptions to the guidelines can be permitted.\nACPO chose the exceptionality criteria.\nThey may equally change those criteria.\nAnd because there is no legal impediment in them doing so, then under section 6 of HRA, they or Parliament must.\nSection 6(2)(b) can only come into play if ACPO cannot act.\nIf it can, then it must.\nBecause Parliamentary change is imminent, however, and because significant policy issues need to be considered, it is not unreasonable to leave this to Parliament.\nI therefore agree with the order proposed by Lord Dyson.\nI also agree with all that Lord Dyson has had to say on the argument that Parliament could not have intended to entrust the creation of a detailed scheme pursuant to section 64(1A) to the police subject only to the judicial review jurisdiction of the court.\nAs he has said, the scope of the argument is confined.\nIt is to the effect that, although it could have done so if it had considered it appropriate, Parliament must be taken not to have intended to grant such a power because of the constitutional and institutional limits on the competence of the police.\nBut Parliament does not appear to have felt such qualms in giving the initial responsibility for the devising of guidelines to ACPO and, as Lord Dyson has pointed out, no question of constitutional competence arises.\nFinally, I agree with Lord Dysons conclusion on the discrete issue of GCs photographs.\nDISSENTING JUDGMENTS ON THE APPROPRIATE RELIEF\nLORD RODGER\nIn September 1984 Sir Alec Jeffreys made his ground breaking discovery of DNA fingerprints.\nA few weeks later, on 31 October, the Police and Criminal Evidence Act 1984 (PACE) was enacted.\nWithin a few years Sir Alecs discovery was being used routinely in the criminal courts in this country.\nSection 64(1) of PACE, as originally enacted in ignorance of this major development that lay just ahead, provided: If (a) fingerprints or samples are taken from a person in connection with the investigation of an offence; and (b) he is cleared of that offence, they must be destroyed as soon as is practicable after the conclusion of the proceedings.\nIn January 1997 an unidentified intruder raped and assaulted a woman in her home in London.\nSwabs were taken from her and were found to contain semen.\nA DNA profile was obtained from the semen and placed on the national DNA database.\nIn January 1998 a man was arrested for an unrelated offence of burglary.\nA saliva sample was taken from him and a DNA profile was derived from it.\nIn August of the same year the man was acquitted of the burglary and, by virtue of section 64(1) of PACE, his sample should have been destroyed.\nIn fact, however, his profile was left on the DNA database and in October a match was made between this profile and the DNA profile derived from the semen in the swabs taken from the woman who had been raped in January 1997.\nThe man was arrested and a DNA profile was obtained from a hair plucked from him.\nAs was to be expected, this profile also matched the DNA derived from the semen.\nAt his trial for the rape the judge held, however, that, since the material which had led to his identification should have been destroyed as required by section 64(1), the evidence relating to the profile from the plucked hair was not admissible.\nThe man was acquitted.\nThe Attorney General referred the matter to the Court of Appeal who agreed with the judge but referred the point to the House of Lords.\nIn Attorney Generals Reference (No 3 of 1999) [2001] 2 AC 91 the House reversed the Court of Appeal.\nThe speech of Lord Steyn, with which the other members of the appellate committee agreed, was notable for his observation, at p 118, that the austere interpretation of the Court of Appeal produced results which were contrary to good sense.\nFor present purposes, that case is important because it alerted the public and politicians to the fact that the obligation under section 64(1) of PACE to destroy samples if the suspect was acquitted meant that evidence which might lead to the detection and prosecution of the perpetrators of other crimes would be lost.\nJust a few weeks after their Lordships decision, in the course of the second reading debate on the Criminal Justice and Police Bill, the Home Secretary introduced Part IV of the Bill which, he explained, was designed, inter alia, to amend section 64(1) of PACE to prevent evidence being lost in this way.\nThe Home Secretary referred to Lord Steyns speech as demonstrating the need for the change: Hansard (HC Debates), 29 January 2001, col 42.\nThis history shows beyond doubt that Parliaments purpose in enacting section 82 of the Criminal Justice and Police Act 2001, which inserted section 64(1A) into PACE, was to ensure that, in future, instead of being destroyed, samples taken from suspects would be retained indefinitely and so remain available to the police on the national DNA database.\nThis would protect the public by facilitating the detection and prosecution of the perpetrators of crimes.\nSection 64(1A) provides: (1A) Where (a) fingerprints, impressions of footwear or samples are taken from a person in connection with the investigation of an offence, and (b) subsection (3) below does not require them to be destroyed, the fingerprints, impressions of footwear or samples may be retained after they have fulfilled the purposes for which they were taken but shall not be used by any person except for purposes related to the prevention or detection of crime, the investigation of an offence, the conduct of a prosecution or the identification of a deceased person or of the person from whom a body part came.\nAfter this provision came into force, in accordance with guidelines from the Association of Chief Police Officers (ACPO) the police proceeded to retain data indefinitely and so to build up their DNA database of samples and profiles obtained from people who had been suspected of crimes, even if they had not been prosecuted or had been acquitted.\nIn due course in two appeals to the House of Lords this system was challenged as being in violation of the suspects article 8 Convention rights: R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196.\nIn the leading speech Lord Steyn said, at p 2198E F, para 2, that as a matter of policy it is a high priority that police forces should expand the use of [DNA] evidence where possible and practicable.\nHe went on to refer to public disquiet that the obligation to destroy samples under the unamended section 64(1) of PACE had sometimes enabled defendants who had in all likelihood committed grave crimes to walk free.\nBaroness Hale of Richmond observed, at p 2219G H, para 78, that The present system is designed to allow the collection of as many samples as possible and to retain as much as possible of what it has.\nThe benefit to the aims of accurate and efficient law enforcement is thereby enhanced.\nIn the light of such considerations the House of Lords held unanimously that the system did not violate the appellants article 8 Convention rights.\nTo Strasbourg, however, the matter appeared differently.\nIn S v United Kingdom (2008) 48 EHRR 1169 the Grand Chamber first held unanimously and contrary to the majority view in the House of Lords that the English system did indeed involve an interference with suspects article 8 rights.\nThen, when considering the proportionality of that interference, the court observed, at pp 1200 1201, para 119: In this respect, the Court is struck by the blanket and indiscriminate nature of the power of retention in England and Wales.\nThe material may be retained irrespective of the nature or gravity of the offence with which the individual was originally suspected or of the age of the suspected offender; fingerprints and samples may be taken and retained from a person of any age, arrested in connection with a recordable offence, which includes minor or non imprisonable offences.\nThe retention is not time limited; the material is retained indefinitely whatever the nature or seriousness of the offence of which the person was suspected.\nMoreover, there exist only limited possibilities for an acquitted individual to have the data removed from the nationwide database or the materials destroyed; in particular, there is no provision for independent review of the justification for the retention according to defined criteria, including such factors as the seriousness of the offence, previous arrests, the strength of the suspicion against the person and any other special circumstances.\nThe court went on to conclude, at p 1202, para 125: that the blanket and indiscriminate nature of the powers of retention of the fingerprints, cellular samples and DNA profiles of persons suspected but not convicted of offences, as applied in the case of the present applicants, fails to strike a fair balance between the competing public and private interests and that the respondent State has overstepped any acceptable margin of appreciation in this regard.\nAccordingly, the retention at issue constitutes a disproportionate interference with the applicants right to respect for private life and cannot be regarded as necessary in a democratic society.\nIn response to the European Courts judgment the last Parliament passed the Crime and Security Act 2010, section 14 of which was designed to amend section 64 of PACE with a view to establishing a regime for the retention and destruction of DNA material and profiles that would be compatible with article 8 as interpreted by the European Court.\nThe new Government, which came into office in May 2010, decided, however, not to commence this legislation Instead, in Chapter 1 of Part 1 of the Protection of Freedoms Bill, it has put fresh legislative proposals, along similar lines to the legislation in Scotland, before Parliament.\nThere were indications in the European Courts judgment that a system along those lines would indeed be compatible with article 8.\nAs in the earlier legislation, the complex proposals include provision for a National DNA Database Strategy Board to oversee the operation of the DNA database.\nObviously, in the light of the European Courts judgment the indefinite retention of the data relating to the appellants under the existing system is incompatible with their article 8 rights.\nThe decision of the House of Lords to the contrary in R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 must accordingly be overruled.\nThat is accepted by the respondent, the Metropolitan Police Commissioner, and by the Home Secretary, who has intervened in the proceedings.\nWhere the Commissioner and the Home Secretary part company with the appellants is as to the order, if any, which the court should pronounce in these circumstances.\nIn effect, for the appellant C Mr Fordham QC argued that section 64(1A) is worded (may be retained) so as to give the Commissioner and chief constables an open discretion as to whether data should be retained and, if so, for how long and subject to what conditions.\nThe position was therefore quite straightforward.\nBy virtue of section 6(1) of the Human Rights Act 1998 the Commissioner and chief constables were obliged to exercise that discretion so as to establish and maintain a system for the retention of samples and data that would comply with suspects article 8 Convention rights as they are now to be interpreted in the light of the decision of the European Court.\nIt was unlawful for them not to do so.\nMr Fordham indicated that he would be content for the court to pronounce a declaration to this effect, without making any order for the removal of the data relating to his client.\nWhile adopting the bulk of Mr Fordhams submissions, on behalf of the appellant GC, Mr Cragg asked the court to go further and indicate that in his case the position should be put right within 28 days.\nMr Fordhams argument is, of course, unanswerable if he is right to say that the crucial words (may be retained) in section 64(1A) confer a wide indeed open discretion on the Commissioner and the chief constables whose forces retain the samples and data that make up the national DNA database.\nIf that is correct, then, even though, when section 64(1A) came into force, ACPO issued guidelines requiring that subject to a narrow exception all the DNA samples and data relating to suspects should be retained indefinitely, the Association could with equal propriety have issued completely different guidelines which would have resulted in a system that did not provide for the indefinite retention of the samples and data.\nOn that interpretation, any credit for the creation of the present DNA database is to be accorded to ACPO for choosing, of its own freewill, to issue the guidelines which it did.\nMore particularly, since ACPO had been, and still was, free to adopt other completely different guidelines, ACPO could now issue fresh guidelines which would produce a system that was compatible with the European Courts judgment.\nThe key question, therefore, is whether Mr Fordhams construction of section 64(1A) as conferring this wide discretion on the police is correct.\nOn behalf of the Commissioner Lord Pannick QC argued that it is not.\nHe drew attention to the context, which I have already described, in which Parliament enacted section 64(1A).\nThis showed that Parliament had set out to cure the mischief that the original version of section 64(1) of PACE meant that suspects samples and data were removed from the database even although as Attorney Generals Reference (No 3 of 1999) demonstrated the retention of that material could potentially result in the detection and prosecution of serious criminals.\nParliament plainly intended that in future this material should be retained on the DNA database indefinitely.\nIn other words, under section 64(1A) the police had to retain it indefinitely.\nMr Fordham said, rhetorically, that, if this were correct, then the Home Secretary could have brought proceedings against the police if they had failed to retain the material indefinitely.\nAccepting the challenge, Mr Eadie QC said that, while the matter would probably have been sorted out in a different way, if necessary, such proceedings could indeed have been brought.\nIt is useful to notice just how far reaching Mr Fordhams argument is: essentially, under section 64(1A) the police were free to do what they liked.\nOn his approach the provision contained nothing to delimit the exercise of their discretion.\nWhen listening to his argument, at times I felt that unconsciously, of course he was intent on pulling down one of the most important bulwarks which our predecessors so painstakingly erected against arbitrary acts of the executive.\nIn Car Owners Mutual Insurance Co Ltd v Treasurer of the Commonwealth of Australia [1970] AC 527, 537E F, Lord Wilberforce observed that in a statutory framework it is impossible to conceive of a discretion not controlled by any standard or consideration stated, or to be elicited from, the terms of the Act.\nHe was, of course, reflecting the thinking in Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 where Lord Reid had said, at p 1030B D, that Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act, the policy and objects of the Act must be determined by construing the Act as a whole and construction is always a matter of law for the court.\nFollowing that classic authority, in my view the power which was conferred on the police by section 64(1A) had to be exercised in accord with the policy and objects of that enactment.\nAs I have explained, the policy and objects of Parliament in enacting section 64(1A) were plainly that DNA samples and data derived from suspects should be retained indefinitely so that a large and expanding database should be available to aid the detection and prosecution of the perpetrators of crimes.\nThe police were therefore bound to exercise the power given to them by section 64(1A) in order to promote that policy and those objects.\nThis meant, in effect, that, subject to possible very narrow exceptions (e g, those suspected of a crime which turned out not to be a crime at all), the police had to retain on their database the samples and profiles of all suspects.\nIn short, the police were under a duty to do so.\nBy a slightly different route this analysis reaches the same result as the older well known line of authority to the effect that, on the proper construction of a statute as a whole and in its context, it can sometimes be seen that a power granted to, say, an official, court or other body in the public interest must be regarded as having been coupled with an implied duty on the recipient to exercise the power in the circumstances envisaged for its exercise.\nSee, for instance, Julius v Lord Bishop of Oxford (1880) 5 App Cas 214; Attorney General v Antigua Times Ltd [1976] AC 16, 33F G, per Lord Fraser of Tullybelton.\nIn my view, therefore, given the policy and objects of the enactment, before the decision of the European Court the police could not have exercised their power under section 64(1A) by choosing to retain samples and data for, say, only three years (or any other period deliberately not prescribed in the legislation) and then destroying them.\nSimilarly, given the policy and objects of the enactment, the police could not have exercised the power to detain material indefinitely by choosing to delete material from those against whom, in their view, suspicion fell below some arbitrary level not recognised in the legislation.\nAny such exercise of their power would have defeated, rather than promoted, the policy of the enactment and would therefore have been unlawful.\nIn the light of the European Courts decision, it can now be seen that the policy and objects of section 64(1A), to create a virtually comprehensive and expanding database of DNA profiles from suspects, violate the article 8 Convention rights of unconvicted suspects.\nGiven that the Protection of Freedoms Bill has been introduced into Parliament, there is good reason to believe that legislation will be passed in the foreseeable future to establish a new system.\nThe question in the present proceedings is whether in the meantime, by virtue of section 3(1) of the HRA or otherwise, the police must read and give effect to section 64(1A) in a way that is compatible with article 8 as interpreted by the European Court and whether they act unlawfully if they do not.\nSince I reject Mr Fordhams argument that section 64(1A) gives the police an open discretion as to what to do, I also reject his further, seductive, argument that, having regard to section 6(1) of the HRA, they can and should simply exercise that discretion in such a way as to establish a lawful system that meets the requirements of the Strasbourg court for example, by choosing to retain samples and data for only three years, subject, perhaps, to a power in an independent body to extend the period for some further defined period (as under the Scottish legislation), or by only retaining the material from those suspected of certain classes of crimes, or by only retaining the material from those against whom there is a high degree of suspicion etc.\nAll of those suggested steps would have been inconsistent with the policy and objects of section 64(1A) as originally enacted.\nSo they could only be adopted now, in order to comply with the European Courts decision, if section 3(1) of the HRA makes that not only possible but indeed obligatory.\nSection 3 provides: (1) So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights. (2) This section (a) applies to primary legislation and subordinate legislation whenever enacted; (b) does not affect the validity, continuing operation or enforcement of any incompatible primary legislation; and (c) does not affect the validity, continuing operation or enforcement of any incompatible subordinate legislation if (disregarding any possibility of revocation) primary legislation prevents removal of the incompatibility.\nThe opening phrase in subsection (1) shows that there are limits to the duty which it imposes.\nThe words of Lord Nicholls of Birkenhead in In Re S (Minors) (Care Order: Implementation of Care Plan) [2002] 2 AC 291, 313, para 40, are a useful guide to where those limits lie: For present purposes it is sufficient to say that a meaning which departs substantially from a fundamental feature of an Act of Parliament is likely to have crossed the boundary between interpretation and amendment.\nThis is especially so where the departure has important practical repercussions which the court is not equipped to evaluate.\nIn such a case the overall contextual setting may leave no scope for rendering the statutory provision Convention compliant by legitimate use of the process of interpretation.\nMr Fordham submitted that the fundamental feature of section 64(1A) was the retention of the material for the purposes of creating a DNA database, not the indefinite retention of the material with a view to establishing a virtually comprehensive database of DNA material from suspects.\nIn my view that submission is unrealistic.\nThe truth is that Parliament wanted to eliminate the danger, which existed under the pre existing legislation, that valuable evidence would be lost and potential prosecutions of the guilty based on the latest science would be jeopardised if material had to be removed from the database.\nProviding for the material to be retained on the database indefinitely was therefore the fundamental feature of the amending legislation which inserted section 64(1A) into PACE.\nThat being so, section 3(1) of the HRA does not oblige or permit the courts or the police to read or give effect to section 64(1A) in a way that departs substantially from that fundamental feature.\nAnd it is quite obvious that any reading of section 64(1A) which would be apt to obviate the defects identified in the existing system by the European Court would depart very substantially indeed from that fundamental feature of the provision would, indeed, contradict it.\nIt is therefore nothing to the point that, from a linguistic point of view, the provision might easily be read as though it said that samples may be retained, consistently with the suspects article 8 Convention rights.\nThe hypothetical additional words, though few in number, would have the effect, and would be intended to have the effect, of altering the provision so as, say, to limit the samples and data that were to be retained and the time for which they could be retained, and to impose a duty to remove them after that time and so to negate the defining feature of the legislation.\nIn other words, the court would have crossed the line from interpreting to amending the legislation.\nAmending section 64(1A) in that way is something which only Parliament can do.\nParliament showed itself willing to pass amending legislation in the Crime and Security Act 2010.\nThe fact that the new Government decided not to commence that legislation, but chose to introduce a Bill providing for a different scheme shows that there is a range of possible ways to bring the system into line with the requirements of article 8 and room for doubt about which is the best policy to adopt.\nThis court is in no position to weigh the competing practical advantages and disadvantages of the possible solutions.\nThese are further features which confirm that the necessary changes require legislation and cannot be made by any legitimate interpretation, however extensive, under section 3(1): In Re S (Minors) (Care Order: Implementation of Care Plan) [2002] 2 AC 291, 313, para 40, per Lord Nicholls.\nSection 64(1A) is therefore incompatible with suspects article 8 Convention rights and cannot be made compatible under section 3(1) of the HRA.\nSection 3(2)(b) ensures that in these circumstances the continuing operation of section 64(1A) is unaffected.\nSection 6(1) and (2) provide: (1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right. (2) Subsection (1) does not apply to an act if (a) as the result of one or more provisions of primary legislation, the authority could not have acted differently; or (b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions.\nLike sections 3(2) and 4(6), section 6(2) is concerned to preserve the primacy and legitimacy of primary legislation.\nSee Aston Cantlow and Wilmcote with Billesley Parochial Church Council v Wallbank [2004] 1 AC 546, 556 557, para 19, per Lord Nicholls, cited with approval by Lord Hoffmann in R (Hooper) v Secretary of State for Work and Pensions [2005] 1 WLR 1681, 1696, para 51.\nIf that is correct and section 3(1) of the HRA cannot be invoked in the present case, then section 64(1A) continues to operate, and Parliament intends it to operate, in the same way as when enacted.\nIt therefore falls to be interpreted and applied just as when enacted.\nIt is accepted that section 6(2)(a) applies to cases where the legislation, which cannot be read compatibly with Convention rights, imposed a duty on a public authority to act in one particular way the authority could not have acted differently.\nIt follows, of course as Lord Hoffmann remarked in Hooper [2005] 1 WLR 1681, 1696, para 49 that, by contrast, section 6(2)(b) assumes that the public authority could have acted differently but nevertheless excludes liability if it was giving effect to a statutory provision which cannot be read as Convention compliant in accordance with section 3.\nSince the Convention non compliant provision continues to operate, any public authority which is exercising a power conferred by it must continue do so in a way that promotes the object and purposes for which the provision confers the power and these are, ex hypothesi, incompatible with Convention rights.\nAs Lord Hoffmann noted, section 6(2)(b) assumes, however, that under the relevant legislation the public authority could have acted in more than one way.\nFor example, it might be that a public authority could have adopted either of two schemes, A and B, both of which would have promoted the policy and objects of the legislation.\nSo it cannot be said that, when it chose to adopt scheme A, the public authority could not have acted differently.\nNevertheless, since, when it adopted scheme A, the authority was promoting the policy and objects of the primary legislation and so was acting to give effect to the legislation, section 6(2)(b) disapplies section 6(1) and ensures that the authority was acting lawfully.\nIn this way the primacy and legitimacy of the provision of primary legislation are preserved.\nFor all the reasons which I have set out, in the present case, in substance the police could really not have acted differently: in order to promote the object and purposes of section 64(1A) of PACE, they had to retain all the samples which they did, indefinitely.\nIf that is so, then what the police did, and continue to do, falls within section 6(2)(a) and is accordingly lawful.\nEven if one assumes, however, that, while promoting the policy and objects of the legislation, the police could, for example, have recognised a slightly wider exception and so created a slightly different system, that does not matter.\nThe same goes if, while promoting the policy and objects of the legislation, the police could have chosen not to recognise even the very narrow exception which they did and could have decided to retain the samples and data relating to absolutely all suspects.\nIn either event, even though the police could have done something (slightly) different, by doing what they actually did and are still doing, they were acting and are continuing to act so as to give effect to section 64(1A).\nSection 6(2)(b) of the HRA accordingly applies and so the police have at all times acted, and continue to act, lawfully.\nIn these circumstances section 64(1A) is incompatible with suspects article 8 Convention rights.\nEven though Parliament and the Government have the matter under review, I consider that the better course is for this court to grant a declaration of incompatibility in terms of section 4(2) of the HRA.\nCf Bellinger v Bellinger [2003] 2 AC 467, 482, para 55, per Lord Nicholls.\nI would accordingly allow the appeals to the extent of making a declaration that section 64(1A) of the Police and Criminal Evidence Act 1984 is incompatible with the article 8 Convention rights of suspects.\nLORD BROWN\nOn 4 December 2008 the Grand Chamber of the ECtHR in S v UK (2008) 48 EHRR 1169 condemned on article 8 grounds the scheme for the indefinite retention of biometric data adopted in England and Wales pursuant to section 64(1A) of the Police and Criminal Evidence Act 1984 (PACE).\nThe critical issue for decision on these appeals is whether, following that decision and pending the enactment by Government of a fresh legislative scheme compatible with article 8, the police have been acting unlawfully in continuing to operate the indefinite retention scheme.\nThat in turn depends upon whether section 64(1A) can or cannot be read or given effect in a way which is compatible with the Convention rights within the meaning of section 6(2)(b) of the Human Rights Act 1998 (the HRA).\nBefore turning to address this issue it is necessary to sketch out something of the background to the appeal and the circumstances in which the point now arises for decision.\nThese appellants are two amongst the 850,000 odd unconvicted persons whose profiles are kept on the national DNA database, their fingerprints and samples having been taken from them when they were arrested as suspects (from 2003, whether or not they were actually charged).\nThis database has built up following Parliaments introduction on 11 May 2001 of section 64(1A) of PACE in substitution for the original section 64(1) which had required the destruction of a suspects fingerprints and samples as soon as practicable after he was cleared.\nSection 64(1A) provides so far as is material: Where . fingerprints, impressions of footwear or samples are taken from a person in connection with the investigation of an offence . [they] may be retained after they have fulfilled the purposes for which they were taken but shall not be used by any person except for purposes related to the prevention or detection of crime, the investigation of an offence, the conduct of a prosecution or the identification of a deceased person or of the person from whom a body part came.\nIn 2004 this change in the law was unsuccessfully challenged, principally on article 8 grounds, all the way up to the House of Lords, by two complainants: S, an eleven year old boy with no previous convictions who had been acquitted of attempted robbery, and Mr Marper, a man of 38, also of good character, whose case was discontinued following his arrest on the charge of harassing his partner: R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196.\nLady Hale alone amongst the Appellate Committee thought that the retention and storage of DNA profiles constituted an interference with the claimants rights under article 8.\nBut each member of the Committee, Lady Hale included, was quite clear that, even if it did, it was readily justifiable under article 8(2).\nLord Steyn described such evidence as having the inestimable value of cogency and objectivity (para 1) and said that as a matter of policy it is a high priority that police forces should expand the use of such evidence where possible and practicable (para 2).\nAt para 3 he observed that: It can play a significant role in the elimination of the innocent, the correction of miscarriages of justice and the detection of the guilty.\nAt para 36 Lord Steyn dealt with a submission that retention is not in accordance with law (on the basis that a law which confers a discretion must indicate the scope of that discretion: Silver v United Kingdom (1983) 5 EHRR 347, 372, para 88): The discretion involved in the power to retain fingerprints and samples makes allowance for exceptional circumstances, eg where an undertaking to destroy the fingerprints or sample was given or where they should not have been taken in the first place, as revealed by subsequent malicious prosecution proceedings.\nAt para 38 Lord Steyn observed that the expansion of the database by the retention confers enormous advantages in the fight against serious crime and at para 39 he remarked upon the benefits of a greatly extended database.\nLord Rodger and Lord Carswell agreed with Lord Steyn.\nLady Hale agreed that retention and storage of DNA samples and profiles was readily justifiable for the reasons given by Lord Steyn and myself.\nShe added: The whole community, as well as the individuals whose samples are collected, benefits from there being as large a database as it is possible to have.\nThe present system is designed to allow the collection of as many samples as possible and to retain as much as possible of what it has.\nThe benefit to the aims of accurate and efficient law enforcement is thereby enhanced. (para 78) I myself suggested (para 88): that the benefits of the larger database . are so manifest . that the cause of human rights generally (including the better protection of society against the scourge of crime which dreadfully afflicts the lives of so many of its victims) would inevitably be better served by the databases expansion than by its proposed contraction.\nThe more complete the database, the better the chance of detecting criminals, both those guilty of crimes past and those whose crimes are yet to be committed.\nThe better chance too of deterring from future crime those whose profiles are already on the database.\nAnd I pointed out too that: The larger the database, the less call there will be to round up the usual suspects.\nInstead, those amongst the usual suspects who are innocent will at once be exonerated.\nThese views notwithstanding, the Grand Chamber in Strasbourg, as already indicated, on the application of the same complainants, some four years later unanimously condemned the scheme as unjustifiable under article 8.\nIt is sufficient for present purposes to quote just three paragraphs from the Courts lengthy judgment: 119 . the Court is struck by the blanket and indiscriminate nature of the power of retention in England and Wales.\nThe material may be retained irrespective of the nature or gravity of the offence with which the individual was originally suspected or of the age of the suspected offender; fingerprints and samples may be taken and retained from a person of any age, arrested in connection with a recordable offence, which includes minor or non imprisonable offences.\nThe retention is not time limited; the material is retained indefinitely, whatever the nature or seriousness of the offence of which the person was suspected.\nMoreover, there exist only limited possibilities for an acquitted individual to have the data removed from the nationwide database or the materials destroyed; in particular, there is no provision for independent review of the justification for the retention according to defined criteria, including such factors as the seriousness of the offence, previous arrests, the strength of the suspicion against the person and any other special circumstances. 125 In conclusion, the Court finds that the blanket and indiscriminate nature of the powers of retention of the fingerprints, cellular samples and DNA profiles of persons suspected but not convicted of offences, as applied in the case of the present applicants, fails to strike a fair balance between the competing public and private interests and that the respondent State has overstepped any acceptable margin of appreciation in this regard. 134 .\nIn accordance with article 46 of the Convention, it will be for the respondent State to implement, under the supervision of the Committee of Ministers, appropriate general and\/or individual measures to fulfil its obligations to secure the rights of the applicants and other persons in their position to respect for their private life.\nBefore turning to the circumstances in which these particular appellants had their fingerprints and samples taken and the precise nature of the argument they advance on this appeal, it is convenient first to indicate something of the response to the Grand Chambers judgment, on the part both of the Government and of the police.\nSo far as the Government was concerned, the then Home Secretary in a Press Release on 16 December 2008 indicated that the Home Office would institute a consultation process but that meantime: The DNA of children under ten the age of criminal responsibility should no longer be held on the database.\nThere are around 70 such cases [we are told that there were in fact 96], and we will take immediate steps to take them off. (S and Mr Marpers data was also removed.)\nOn 7 May 2009 the Home Office published a White Paper, Keeping the Right People on the DNA Database, setting out certain key proposals for the future and inviting views upon them.\nThe White Paper also considered what should happen to the 850,000 odd profiles already on the national DNA database.\nOn 28 July 2009 ACPOs Director of Information wrote to all Chief Constables indicating that new guidelines were not expected to take effect until 2010 and that: Until that time, the current retention policy on fingerprints and DNA remains unchanged.\nACPO strongly advise that decisions to remove records should not be based on proposed changes.\nIt is therefore vitally important that any applications for removals of records should be considered against current legislation and the Retention Guidelines Exceptional Case Procedure .\nThose Guidelines, which have remained essentially the same since section 64(1A) was introduced, provide: Chief Officers have the discretion to authorise the deletion of any specific data entry on the PNC owned by them.\nThey are also responsible for the authorisation of the destruction of DNA and fingerprints associated with that specific entry.\nIt is suggested that this discretion should only be exercised in exceptional cases .\nExceptional cases will by definition be rare.\nThey might include cases where the original arrest or sampling was found to be unlawful.\nAdditionally, where it is established beyond doubt that no offence existed, that might, having regard to all the circumstances, be viewed as an exceptional circumstance.\nOn 11 November 2009, following the consultation period, the Home Secretary made a written Ministerial statement outlining a revised set of proposals for the retention of fingerprints and DNA data (Hansard (HC Debates), 11 November 2009, col 25WS).\nIt was originally intended to implement these by way of order making powers under the Policing and Crime Act 2009 but, following strong opposition to the introduction of a new scheme by secondary rather than primary legislation, the proposed new scheme was included in the Crime and Security Act 2010, introduced in the House of Commons on 19 November 2009 and receiving Royal Assent on 8 April 2010.\nFollowing a change of government in May 2010, however, rather than bringing the Crime and Security Act into force, the incoming government instead announced its proposal for new legislation designed essentially to mirror the Scottish system and this finally, by the Protection of Freedoms Bill 2011, introduced in the House of Commons as recently as 11 February 2011, it has now set in train.\nFor reasons which will shortly become clear, it is unnecessary for the purposes of this judgment to indicate anything of the detailed nature of the various proposals which at one time or another have been considered for enactment in substitution for the existing scheme so as to achieve compatibility with article 8 pursuant to the Grand Chamber judgment.\nIt is sufficient to indicate that a wide range of differing schemes have been canvassed and considered and that arriving at the preferred solution has inevitably involved complex and sensitive choices.\nIt is similarly unnecessary to describe in any detail the facts of these appellants cases and the following brief summary will suffice.\nGC is 41.\nOn 20 December 2007, following his girlfriends complaint that he had assaulted her (albeit without causing her injury), he voluntarily attended the police station and was arrested on suspicion of common assault.\nHe strongly denied the allegation, explaining rather that he had been defending himself against attack by her.\nFollowing the taking of DNA samples, fingerprints and a photograph, GC was released on police bail without charge.\nBefore 21 February 2008, when he was due to surrender to his bail, GC was told that no further action would be taken against him.\nGCs fingerprints (but not DNA) had in fact been taken previously and retained in connection with a firearms offence for which he had been sentenced at the Central Criminal Court on 18 February 1992 to seven years imprisonment.\nC is 34, a man of good character.\nOn 17 March 2009 he was arrested on suspicion of rape, harassment and fraud following allegations made the previous day by a former girlfriend and members of her family, allegations which C strenuously denied.\nThe same day, Cs fingerprints and DNA samples were taken.\nAlthough no further action was taken in relation to the alleged harassment and fraud, on 18 March 2009 C was charged with rape.\nOn 5 May 2009, however, the prosecution offered no evidence on the rape charge and C was accordingly acquitted.\nBoth appellants, through solicitors, applied to the respondent Police Commissioner to have their fingerprints and DNA data deleted from police records GC on 23 March 2009, C on 19 August 2009 (in each case, of course, after the Grand Chambers decision in S v UK).\nConsistently with ACPOs guidelines, however, both applications were refused.\nThe appellants then issued judicial review proceedings, GC on 11 December 2009, C on 9 February 2010.\nThe applications were heard together by the Divisional Court (Moses LJ and Wyn Williams J) on 15 July 2010 and on 16 July 2010 were dismissed, the Divisional Court correctly holding itself bound by the decision of the House of Lords in S and Marper v Chief Constable of the South Yorkshire Police (the subsequent Grand Chamber decision notwithstanding).\nThe Divisional Court did, however, certify a point of law of general importance and, with the consent of all parties, granted a certificate pursuant to section 12 of the Administration of Justice Act 1969, thus enabling the matter to proceed directly to this court.\nBefore this court, Mr Fordham QC for C and Mr Cragg for GC both submit that, in the light of the Grand Chambers judgment, the earlier decision of the House of Lords can no longer stand and the existing scheme must now be recognised to be unlawful so much, indeed, is clear and conceded.\nPursuant to section 6 of the HRA, their argument then continues, the police must now therefore cease retaining their data incompatibly with their article 8 rights.\nInstead, they submit, the police must take account of the various criticisms made by the Grand Chamber of the existing scheme, must devise a new, compatible scheme, and must then deal with these appellants requests (and any other outstanding or future requests) for the removal of information from the national DNA database this, indeed, in GCs case, within 28 days, contends Mr Cragg.\nNot so, submit Lord Pannick QC for the Metropolitan Police Commissioner and Mr Eadie QC for the Home Secretary (properly joined in the proceedings as an interested party).\nIt is, they submit, for the government, not for the police, to devise and enact a new scheme; the police meantime have no alternative but to continue operating the existing scheme pursuant to section 64(1A) of PACE.\nTheir case is founded on section 6(2)(b) of the HRA which, they argue, disapplies section 6(1) and thus relieves the police of liability for continuing to operate what the Grand Chamber has ruled to be (in international law) an unlawful scheme.\nThe most the appellants are entitled to is a declaration of incompatibility pursuant to section 4 of the HRA.\nAs I indicated at the outset, this is the critical issue in the appeal and plainly it centres upon the proper understanding of, and interplay between, sections 3, 4 and 6 of the HRA which (as to their most material parts) I now set out: 3(1) So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights. 4(2) If the court is satisfied that [a provision of primary legislation] is incompatible with a Convention right, it may make a declaration of that incompatibility. 6(1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right. 6(2) Subsection (1) does not apply to an act if (a) as the result of one or more provisions of primary legislation, the authority could not have acted differently; or (b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions.\nThe precise symmetry between section 3(1) and section 6(2)(b) will at once be noted: each invites consideration of whether legislation can be read or given effect in a way which is [Convention] compatible section 3 indicating what must be done if this is possible, section 6(2)(b) indicating the consequence (the disapplication of section 6(1)) if it is not.\nAt first blush the respondents argument appears distinctly unpromising.\nSection 64(1A) is, after all, couched in terms that appear to confer on the police an open discretion: samples may be retained.\nOn the face of it, therefore, the police appear to be in a position to act compatibly with the article 8 rights of those whose samples have been taken and this, indeed, even without resort to section 3.\nBut suppose there were some doubt about this, why would that not fall to be resolved by the interpretative imperative of section 3? How can it be appropriate, in the face of such a strong statutory direction, to place upon section 64(1A) a construction which denies the police the ability to exercise their data retention power compatibly? I confess to having come only comparatively late to the conclusion that, difficult though the respondents argument initially appears, it is in fact correct.\nSection 6(2)(b) has long been recognised to give rise to difficulty at the margins see, for example, the judgments respectively of Lord Hope, Lord Walker and Lord Mance in Doherty v Birmingham City Council [2009] AC 367.\nClearly, as Lord Hoffmann observed in R (Hooper) v Secretary of State for Work and Pensions [2005] 1 WLR 1681, 1696, para 49, section 6(2)(b) assumes that the public authority could have acted differently but nevertheless excludes liability if it was giving effect to a statutory provision which cannot be read as Convention compliant in accordance with section 3.\nThis, as was pointed out, was in contradistinction to section 6(2)(a) which applies when a public authority could not have acted differently when, in other words, the authority has been compelled by primary legislation to act in a way ex hypothesi incompatible with Convention rights.\nSuperficially, of course, the very assumption that a public authority could have acted differently appears to postulate that the power in question could therefore have been exercised compatibly with Convention rights.\nPlainly, however, section 3 notwithstanding, it cannot follow that the power must therefore in all cases be exercised compatibly else section 6(2)(b) could never come into play.\nA simple illustration of section 6(2)(b) in operation is, of course, where primary legislation confers a power on a public authority and where a decision to exercise that power (or, as the case may be, not to exercise it) would in every case inevitably give rise to an incompatibility.\nR v Kansal (No 2) [2002] 2 AC 69 was just such a case and in such situations it can readily be understood why section 6(2)(b) applies.\nOtherwise, instead of giving effect to a provision conferring a power, the public authority would have to treat the provision (in cases where not to exercise it would give rise to incompatibility) as if it imposed a duty or, in cases where any exercise of the power would give rise to incompatibility (as in Kansal (No 2) itself), would have to abstain from ever exercising the power.\nIn either instance, it is obvious, Parliaments will would be thwarted.\nI would take this opportunity to resile from what I myself said in the latter part of para 118 of my own judgment in Hooper.\nI was surely right to say in the first part of that paragraph: Plainly it is not the case that section 6(2)(b) applies whenever a statutory discretion falls to be exercised in a particular way to ensure compliance with a Convention right.\nThis occurs in a host of different situations and, so far as I am aware, no one has ever suggested that, had the discretion not been exercised compatibly, the public authority would nevertheless have been protected against a domestic law claim by the section 6(2)(b) defence on the basis that otherwise a power would be turned into a duty.\nI was, however, wrong to suggest that the situation would be no different if to secure Convention compliance the statutory discretion had to be exercised in every case.\nIt now seems to me that the underlying question in all these cases indeed, the determinative question in every case lying between the two extremes I have thus far dealt with is: what essentially was Parliament intent on achieving by this legislation? Is it or is it not something which could realistically be achieved consistently with the observance of Convention rights? If it is, then it must be so construed and applied.\nIf, however, it is not, then section 6(2)(b) will apply: the legislation will be incompatible, a declaration of incompatibility may be made, and the public authority will be immune from liability.\nIn short, the question to be asked in deciding whether section 6(2)(b) applies is essentially the same question as is more usually asked under section 3 when deciding whether or not, by a strained construction of apparently incompatible legislation, it is possible to read and give effect to it compatibly with Convention rights.\nWould such a construction depart substantially from a fundamental feature of the legislation? Would it be inconsistent with the underlying thrust of the legislation? Would it go with the grain of the legislation? Would it violate a cardinal principle of the legislation? Would it remove its pith and substance? Would it create an entirely different scheme? The Court must not cross the boundary from interpretation into legislation.\nAll these familiar concepts and phrases are to be found in the well known cases on section 3 but their importance has hitherto not perhaps been fully recognised in the context also of section 6(2)(b).\nIt is time to return to section 64(1A) of PACE and in the light of these considerations to ask whether realistically it could be construed for all the world as if, in enacting it, the government was leaving it to individual police forces or even to ACPO acting on their joint behalf to decide upon just what sort of scheme should be implemented for the future retention of biometric data.\nIs it really suggested that the police could and should then (in 2001) of their own volition have decided that, instead of retaining data indefinitely, they would retain it for only, say, one year or five years, or different periods in different cases and so forth? And if this was not open to them in 2001, how then could it become so merely because of the Grand Chambers condemnation of the indefinite scheme some years later? As Lord Nicholls observed in Ghaidan v Godin Mendoza [2004] 2 AC 557, 572, para 33, when indicating the limits of the courts section 3 powers: There may be several ways of making a provision Convention compliant, and the choice may involve issues calling for legislative deliberation. It is difficult to think of any case in which that objection to a section 3 construction applies more obviously than here.\nLord Steyn reflected the same objection in the same case (para 49): Interpretation could not provide a substitute scheme.\nIt is surely plain that legislative deliberation was required here.\nDNA retention can only sensibly operate on a national basis and section 64(1A), properly understood, in my judgment not merely authorised but required precisely the sort of scheme for the indefinite retention of biometric data that the House of Lords came to describe (and, indeed, so enthusiastically to support, in my case unrepentingly) in S and Marper.\nRealistically it was just not possible to construe the section differently, least of all as authorising the police to create for themselves a fundamentally different scheme which would achieve compatibility with the requirements of article 8 as subsequently identified by the Grand Chamber.\nOf course, some degree of latitude was given to the police as to how precisely the retention scheme was to operate.\nBut this was essentially to decide what narrow categories should be excluded from its scope cases of the sort described by Lord Steyn at para 36 of S and Marper (see para 125 above) and, indeed, in the ACPO Guidelines (see para 129 above).\nThe discretion could not sensibly be construed as extending to the basic nature of the scheme: whether retention should be indefinite or time limited.\nThat section 64(1A) was intended to introduce a database for the indefinite retention of DNA samples is surely clear from the very circumstances in which this legislative change was brought about the deeply disturbing circumstances in which a violent rapist and a brutal murderer had both gone free because of the unsatisfactory existing scheme see Attorney Generals Reference (No 3 of 1999) [2001] 2 AC 91 and In re British Broadcasting Corporation [2010] 1 AC 145 and, indeed, to my mind clear also from the speeches in the House in S and Marper to which I have already referred.\nOne of the specific issues before the House in S and Marper was, it should be noted: (4) if the retention of fingerprints and DNA profiles and\/or samples is an unjustified interference with the appellants Convention rights, whether it would be possible to give section 64(1A) a Convention compatible interpretation under section 3 of the 1998 Act (Lord Steyns judgment at para 17) an issue, of course, as Lord Steyn observed at para 57, that in the event fell away.\nIn short, the argument before the House assumed that section 64(1A) called for the indefinite retention of data and that, if this was incompatible with article 8, the appellants then needed to resort to section 3 of HRA for their requests for data removal to succeed.\nThe appellants here submit that, following the Grand Chamber judgment, it was open to the police to adjust their data retention policy to meet the newly recognised requirements of article 8 in just the same way as they were required by this court in R (L) v Commissioner of Police of the Metropolis [2010] 1 AC 410 on article 8 grounds to adjust their previous approach to the disclosure of information for the purposes of enhanced criminal record certificates (ECRCs) pursuant to section 115(7) of the Police Act 1997.\nIn my judgment, however, the two situations are entirely different: in L all that the courts decision required of the police was that in future they give no less weight to the statutory requirement that in their opinion the information ought to be included in the certificate than the requirement that they think it might be relevant (and in borderline cases give the prospective employee an opportunity to say why the information ought not to be disclosed).\nThere was no requirement whatever for fresh policy choices to be made let alone legislative deliberation or democratic accountability.\nRather the court was well able to decide the limited adjustment that needed to be made.\nContrast the position in the present case.\nThe Grand Chamber, in para 134 of its judgment (see para 126 above), can hardly have been expecting the police, rather than the Government, to implement the newly required measures under the supervision of the Committee of Ministers.\nCorrespondingly, the States reaction to the Grand Chambers judgment was that it was plainly for Government, not the police, to devise and implement a new and Convention compliant scheme.\nIt was, indeed, the Home Office rather than the police who decided that children under ten should be removed from the database (see para 127 above).\nNo less significantly, the perceived need for a fully legitimate parliamentary solution to the problem was manifested by the political insistence upon the new scheme being introduced by primary and not merely secondary legislation.\nIf this was not appropriate by secondary legislation, how much less so by revised ACPO guidelines.\nEven if it is suggested that section 64(1A) does not preclude ACPO from now amending their Guidelines to address the Grand Chambers criticisms in S v UK, that with respect is not a sufficient answer to the section 6(2)(b) defence.\nAs I have said (para 143 above), the section 6(2)(b) defence necessarily postulates that the public authority could act differently.\nThe critical question is whether they could do so consistently with the essential scheme and thrust of the legislation and a good test of that, I would suggest, is to ask whether it can really be said to be their duty to do so and to be unlawful and wrong for them not to do so.\nThe whole purpose of section 6(2)(b) is to safeguard a public authority from liability (and, indeed, from misplaced criticism) in circumstances where in truth it is acting (as for my part I have no doubt that the police are acting here) perfectly properly.\nIt follows from all this that, in common with Lord Rodger, with whose judgment on the section 6 issue I respectfully agree, I would hold that it is not unlawful (under domestic law) for the respondent police commissioner to continue to hold the appellants data on the national DNA database.\nAs to whether this Court should now make a declaration of incompatibility in respect of section 64(1A) I hold no strong view.\nNowhere is this identified as an issue before us and frankly I find it difficult to see any possible need or use for it in the present circumstances.\nBut if others think it desirable, I would be quite content with that.\nI would add that, even had I concluded that the police could now act compatibly with article 8 under section 64(1A), I should certainly not have thought it just and appropriate within the meaning of section 8 of the HRA to require them to change their existing practice pending the introduction of a new legislative data retention scheme.\nIt may be, indeed, that the strength of this reaction to the respondents fall back argument under section 8, on true analysis, reinforces the correctness of my primary conclusion on the section 6 issue: quite simply it would be wrong for the police to change their approach to section 64(1A) before Parliament so dictates and this court cannot properly direct them to do so.\nIf anyone is to be criticised for the failure of the existing database to meet the States obligations under article 8, it is surely the Government, not the police.\nIn my judgment they have a section 6(2)(b) defence to these claims.\n","output":"Section 64 of the Police and Criminal Evidence Act 1984 (PACE) required the destruction of samples or fingerprints taken from a person in connection with the investigation of an offence if he was cleared of that offence.\nSection 64(1A) of PACE, enacted by section 82 of the Justice and Police Act 2001 (the 2001 Act), replaced that statutory obligation to destroy data with a discretion.\nSection 64(1A) provides that samples taken in connection with the investigation of an offence may be retained after they have fulfilled the purposes for which they were taken.\nSection 64(1A) was supplemented by guidelines issued by the Association of Chief Police Officers (ACPO).\nThese guidelines provided that data should be destroyed only in exceptional cases.\nThe polices retention policy was challenged in R (S) v Chief Constable of the South Yorkshire Police and R (Marper) v Chief Constable of South Yorkshire Police [2004] 1 WLR 2196 (Marper UK).\nThe claimants argued that the retention by the police of their finger prints and DNA samples was incompatible with article 8 of the European Convention on Human Rights (the ECHR).\nThe majority of the House of Lords held that retention did not constitute an interference with the claimants article 8 rights and they held unanimously that in any event any such interference was justified under article 8(2).\nHowever, in 2008, the European Court of Human Rights (ECtHR) disagreed: see S and Marper v United Kingdom (2008) 48 EHRR 50 (Marper ECtHR).\nIt found the indefinite retention of data to be an interference which was not justified under Article 8(2).\nThe Governments immediate response was to remove children under the age of 10 from the database.\nThey then opened a consultation period to consider the appropriate legislative reform.\nThis resulted in legislation which, following the change of government in May 2010, was not brought into force.\nThe Coalition Government is promoting new legislation to take account of the ECtHRs judgment.\nIn December 2007, GC was arrested on suspicion of common assault on his girlfriend.\nHe denied the offence.\nA DNA sample, fingerprints and photographs were taken after his arrest.\nOn the same day he was released on police bail without charge and was subsequently informed that no further action would be taken.\nIn March 2009, C was arrested on suspicion of rape, harassment and fraud.\nHis finger prints and a DNA sample were taken.\nHe denied the allegations.\nHe was charged in respect of the rape allegation but no further action was taken in respect of the harassment and fraud allegations.\nIn the Woolwich Crown Court in May 2009, the prosecution offered no evidence and C was acquitted.\nIn both cases, the appellants requested the destruction of the data taken.\nTheir requests were refused as there were no exceptional circumstances within the meaning of the ACPO guidelines.\nThe appellants issued proceedings for judicial review of the retention of their data on grounds that, in light of Marper\nECtHR, its retention was incompatible with their article 8 rights.\nIn the circumstances, the Divisional Court (Moses LJ and Wyn Williams J) dismissed the applications for judicial review and granted a certificate that the cases were appropriate for a leapfrog appeal to the Supreme Court: [2010] EWHC 2225 (Admin).\nThe Supreme Court, by a majority, allows the appeals (Lords Rodger and Brown dissenting).\nLord Dyson gives the lead judgment.\nThe majority grant a declaration that the present ACPO guidelines are unlawful because they are incompatible with article 8 of the ECHR.\nThey grant no other relief.\nInterpretation of section 64(1A) of PACE It is common ground that Marper UK should be overruled.\nIt is also agreed that in light of Marper ECtHR, the indefinite retention of the appellants data under the current retention policy is a breach of article 8 ECHR.\nThe only issue in these appeals, therefore, is what the court should do about that in the present circumstances.\nSection 3 of the Human Rights Act 1998 (HRA) requires the court, insofar as it is possible to do so, to interpret legislation in a way which is compatible with Convention rights.\nIt is uncontroversial that the statutory purpose of section 64(1A) was to remove the requirement to destroy data after it had served its immediate purpose so as to create a greatly extended database.\nThe extended database was to facilitate the prevention of crime, the investigation of offences and the conduct of prosecutions.\nHowever, this does not mean that Parliament intended that, save in exceptional circumstances, the data should be retained indefinitely.\nRather, Parliament conferred a discretion on the police to retain data.\nThe natural meaning of the word may in section 64(1A) is permissive not mandatory.\nThere is no reason to suppose that Parliament must have intended its statutory purpose to be achieved in a disproportionate way so as to be incompatible with article 8: [23] [24], [88] [89].\nThe police were entrusted with setting out the precise means of achieving the statutory purpose: [26].\nThere is no reason in principle why the police, with the input of the Secretary of State, should be less well equipped than Parliament to create guidelines for the exercise of this power: [40] [44].\nAccordingly, it is possible to read section 64(1A) in a way which is compatible with article 8 ECHR as interpreted in Marper ECtHR.\nA declaration of incompatibility is not appropriate and section 6(2)(b) of the HRA is not engaged: [35], [55], [69].\nLords Rodger and Brown dissent.\nThey would have dismissed the appeals.\nIn their view, the history shows that Parliament's purpose in enacting section 64(1A) was to ensure that in future samples taken from suspects would be retained indefinitely: [94] [97].\nTherefore, the police had no choice but to retain the data: [108] [109].\nIn their view, it is not possible to interpret section 64(1A) in accordance with section 3 HRA: [115], [146] [147].\nHowever, since the police could not have acted differently in substance, what they did and what they continue to do, falls within section 6(2)(a) or section 6(2)(b) HRA and is lawful: [119].\nAppropriate relief The present intention of the government is to bring the new legislation into force later this year.\nIn these circumstances, in relation to biometric data it is sufficient to grant a declaration under section 8(1) HRA that the present ACPO guidelines are unlawful because they are incompatible with the ECHR.\nWhere Parliament is seised of the matter, it is not appropriate to make an order requiring a change in the legislative scheme within a specific period or an order requiring destruction of data: [45] [49], [73], [91] [92].\nIt is, however, open to ACPO to reconsider and amend the guidelines in the interim: [73], [81], [90].\nLord Rodger would have preferred to grant a declaration of incompatibility under section 4 HRA: [121].\nIn relation to the photographs of GC, in view of the manner in which the issue was raised in the Divisional Court and the consequent lack of any substantive judgment, the Supreme Court expresses no opinion on this part of the appeal: [50] [51].\n","id":52}
{"input":"The appeals now before the Supreme Court in Belhaj and Boudchar v Straw and Ministry of Defence v Rahmatullah concern the alleged complicity of United Kingdom authorities and officials in various torts, allegedly committed by various other states in various overseas jurisdictions.\nThe torts alleged include unlawful detention and rendition, torture or cruel and inhuman treatment and assault.\nThe defences include in both appeals state immunity and the doctrine of foreign act of state.\nThe case of Rahmatullah also raises for consideration the inter relationship of these concepts with article 6 of the European Convention on Human Rights.\nThe meticulous but differing analyses of the Court of Appeal (Lord Dyson MR and Sharp and Lloyd Jones LJJ) in Belhaj and Leggatt J in Rahmatullah underline the difficulties.\nThe Supreme Court has nonetheless benefitted greatly from their analyses, as well as that of a previous Court of Appeal (Rix, Longmore and Davis LJJ) in Yukos Capital Sarl v OJSC Rosneft Oil Co (No 2) [2012] EWCA Civ 855; [2014] QB 458 (Yukos v Rosneft).\nThe issues come before the courts by way of challenges under CPR rule 11.1 to the existence or exercise by the court of jurisdiction over the appellants (the defendants in the proceedings), combined with applications for dismissal of the relevant claims under CPR rule 3.1.\nThe issues have, necessarily, to be determined by reference to allegations contained in the respondents (the claimants) pleadings which have not been investigated or tested.\nOne of the appellants objections to their adjudication is indeed that it is impermissible or inappropriate for a domestic court to investigate allegations of the type advanced.\nThe claimants allegations\nBoth cases originate with events in February\/March 2004.\nIn Belhaj, Mr Belhaj, a Libyan national and opponent of Colonel Gaddafi, and his wife, Mrs Boudchar, a Moroccan national, attempted (under, it seems likely, other names) to take a commercial flight from Beijing to London, but were instead and for whatever reason deported by the Chinese authorities to Kuala Lumpur.\nThere they were detained.\nMI6 is alleged to have become aware of their detention and on 1 March 2004 to have sent the Libyan intelligence services a facsimile reporting their whereabouts.\nThis is said to have led to a plan being developed to render them against their will to Libya.\nThereafter, they allege, they were unlawfully detained first by Malaysian officials in Kuala Lumpur and then by Thai officials and United States agents in Bangkok, before being put on board a US airplane which took them to Libya.\nThere they were further detained, in the case of Mrs Boudchar until 21 June 2004, in the case of Mr Belhaj until 23 March 2010.\nMr Belhaj and Mrs Boudchar allege that the United Kingdom procured this detention in all these places by common design with the Libyan and US authorities.\nThey allege that they suffered mistreatment amounting to torture at the hands of US agents in Bangkok and in the airplane and at the hands of Libyan officials in Libya.\nThey allege that the United Kingdom by common design arranged, assisted and encouraged [their] unlawful rendition to Libya.\nThey rely in this connection upon a letter dated 18 March 2004 alleged to have been written by the second appellant, Sir Mark Allen, allegedly a senior official of the Secret Intelligence Service (SIS) to Mr Moussa Koussa, Head of the Libyan External Security Organisation.\nThe letter congratulated Mr Moussa Koussa on the safe arrival of [Mr Belhaj].\nIt said that This was the least we could do for you and for Libya to demonstrate the remarkable relationship we have built over recent years.\nIt indicated that British intelligence had led to Mr Belhajs transfer to Libya, although the British services did not pay for the air cargo.\nMr Belhaj and Mrs Boudchar further allege that the United Kingdom conspired in, assisted and acquiesced in torture, inhumane and degrading treatment, batteries and assaults inflicted upon [them] by the US and Libyan authorities.\nAgain, it should be stressed that these are allegations, based inter alia on alleged awareness of the risks of torture of detainees in United States and\/or Libyan hands.\nIt is also pleaded that the renditions took place as part of a co ordinated strategy designed to secure diplomatic and intelligence advantages from Colonel Gaddafi.\nThe claims are framed as claims for false imprisonment, trespass to the person, conspiracy to injure or to use unlawful means, misfeasance in public office and negligence.\nThey are brought against Mr Jack Straw as Foreign Secretary, Sir Mark Allen, the SIS, the Security Service, the Attorney General, the Foreign and Commonwealth Office and the Home Office, all of whom are the appellants in Belhaj.\nThe first and second appellants, Mr Straw and Sir Mark Allen, state that the Official Secrets Act makes it impossible for them to advance any positive case in response to the allegations against them.\nThe remaining appellants state that it is the position of Her Majestys Government that it would be damaging to the public interest for them to plead to such allegations.\nUpholding Simon J on the point, the Court of Appeal held, and it is now accepted, that all the claims depend upon proof that torts such as those alleged existed under the laws of the places where they were allegedly committed (subject only to any countervailing considerations of, in particular, public policy under section 14 of the Private International Law (Miscellaneous Provisions) Act 1995).\nThe issues now before the Court relate to all the claims, save for three negligence claims which are independent of the alleged facilitation of and acquiescence in rendition to and detention in Libya and which arise from alleged failure by the appellants to take protective steps after they became aware that Mr Belhaj and Mrs Boudchar were in Libya.\nIn Rahmatullah, Mr Rahmatullah, a Pakistani citizen, was on 28 February 2004 detained by British forces in Iraq on suspicion of being a member of Lashkar e Taiba, a proscribed organisation with links to Al Qaeda.\nThe UK and the USA were at the time occupying forces in Iraq, where there was a situation of international armed conflict.\nShortly after his original detention, within a matter of days at most, Mr Rahmatullah was transferred into the custody of US forces, and by the end of March 2004 they had transferred him to Bagram Airbase in Afghanistan, where he was detained for over ten years without charge or trial, until released on 15 May 2014.\nHe alleges that he was subjected to severe mistreatment in both British and United States detention.\nHis claims are put under the like heads to Mr Belhajs and Mrs Boudchars, with assault and torture as additions.\nAgain, the claims allege in various terms that the relevant appellants acted in concert or combination with the United States authorities, or assisted, encouraged or were complicit in relation to the alleged unlawful detention and mistreatment by the United States authorities.\nAgain, the tenor of the allegations is that the United States authorities were the actors, even if they were being encouraged or engaged, procured, or utilised by the appellants to do as they allegedly did.\nLeggatt J regarded the claims relating to Mr Rahmatullahs detention by British forces and transfer into the custody of US forces as barred by the defence of Crown act of state, assuming that arrest and detention were authorised pursuant to lawful United Kingdom policy.\nThe appeal from that aspect of his judgment was joined with the appeal in Mohammed (Serdar) v Ministry of Defence [2015] EWCA Civ 843; [2016] 2 WLR 247.\nThe Court of Appeal allowed the appeal on the basis that Crown act of state is a nuanced defence, applicable only where there are compelling considerations of public policy which require the court to deny a claim founded on an act of the Executive performed abroad (para 359), with the result that there must be a trial on the facts on the issue of Crown act of state.\nIn its separate judgment of todays date from that decision of the Court of Appeal, the Supreme Court restores (though for different reasons) Leggatt Js conclusions that Crown act of state is in principle available in respect of the United Kingdoms detention and transfer to US custody of Mr Rahmatullah.\nThe issues now before the Supreme Court relate solely to Mr Rahmatullahs claims in tort in respect of alleged acts or omissions of US personnel while he was in US detention.\nThe claims are brought against the Ministry of Defence and the Foreign and Commonwealth Office, both of which are the appellants in Rahmatullah.\nThe appellants case in both proceedings is that the issues now before the Supreme Court are inadmissible or non justiciable on their merits by reason of principles governing state immunity and\/or foreign act of state.\nMore specifically, the appellants submit that the claims are based on conduct where the prime actors were foreign state officials, and they either implead the foreign states or would require the English courts to adjudicate upon foreign acts of state.\nI use the phrase foreign act of state loosely at this point to cover various bases on which it is submitted that the English court cannot or should not adjudicate upon proceedings against the United Kingdom, its authorities or officials when the proceedings would also involve adjudicating upon the conduct of a foreign state, even though state immunity is not established on the part of the United Kingdom and the relevant foreign state is not impleaded in the proceedings.\nThe appellants submit that the principles governing foreign act of state dovetail naturally with those governing state immunity, and that underpinning both are conceptions of mutual international respect and comity.\nThat said, there are, as will appear, also differences, not least that state immunity is firmly based on customary international law, whereas foreign act of state in most if not all of its strands has been developed doctrinally in domestic law.\nState immunity qualifies the jurisdiction of domestic courts.\nForeign act of state in one sense requires a domestic court to accept without challenge the validity of certain foreign state acts, but in another sense it is a broader principle of non justiciability, whereby the domestic court must simply declare itself incompetent to adjudicate.\nThe difficulties which exist in separating or aligning these strands are considerable.\nI note at this point that the appellants do not suggest that the tortious claims against them which are in issue on these appeals can or do attract a defence of Crown act of state.\nThe leading authorities on Crown act of state are now Nissan v Attorney General [1970] AC 179 and the Supreme Courts separate judgment, delivered today in the cases of Rahmatullah and Serdar Mohammed (para 6 above).\nIn Nissan, Lord Pearson said (at p 237F G) that: it is necessary to consider what is meant by the expression act of state, even if it is not expedient to attempt a definition.\nIt is an exercise of sovereign power.\nObvious examples are making war and peace, making treaties with foreign sovereigns, and annexations and cessations of territory.\nApart from these obvious examples, an act of state must be something exceptional.\nAny ordinary governmental act is cognisable by an ordinary court of law (municipal not international): if a subject alleges that the governmental act was wrongful and claims damages or other relief in respect of it, his claim will be entertained and heard and determined by the court.\nNissan concerned the Crowns occupation of a hotel while assisting to maintain peace under an agreement made between the United Kingdom and Cyprus.\nThe doctrine of Crown act of state was held not to bar a claim for compensation.\nLord Morris said (at p 217D) that the acts in question in that case (of feeding and housing troops in the hotel) were far removed from the category of transactions which by reason of being a part of or in performance of an agreement between states are withdrawn from the jurisdiction of the municipal courts.\nAnd Lord Wilberforce indicated (pp 235H 236A) that between the acts complained of and the pleaded agreement with the Government of Cyprus, the link was altogether too tenuous for the Crown to be able to invoke Crown act of state if accepted as sufficient to attract the description of act of state it would cover with immunity an endless and indefinite series of acts, judged by the officers in command of the troops to be necessary, or desirable, in their interest.\nOn the other hand, in our concurrently delivered judgment, we have accepted that the doctrine of Crown act of state is available in respect of the United Kingdoms detention and transfer to United States custody of Mr Rahmatullah.\nIn these circumstances, two questions arise as to how that fits with the absence of any suggestion that Crown act of state is or could be a defence in respect of the United Kingdoms alleged involvement in the wrongful detention, combined with mistreatment, by various foreign states of Mr Belhaj, Mrs Boudchar and Mr Rahmatullah.\nFirst, one can understand why there is no plea of Crown act of state in respect of the allegations of severe mistreatment inflicted on the various respondents by various foreign state authorities.\nFurther, in the cases of Mr Belhaj and Mrs Boudchar, the allegations of wrongful detention and mistreatment might well be regarded as inseparable.\nHowever, in the case of Mr Rahmatullah, the appellants deny the allegations of mistreatment, while admitting that he remained in United States custody for more than ten years.\nThere has been no plea of Crown act of state in respect of any period of this detention, which is not necessarily linked with any mistreatment.\nIf Crown act of state is available, as the court holds, in respect of detention by the United Kingdom, then one might have thought that it would logically be available in respect of detention by a third state in respect of which the Crown is alleged to have been complicit.\nThe explanation may, however, lie in the length of the period of Mr Rahmatullahs detention and the considerations that he was never charged or tried, was deprived of any access to a lawyer for the first six years and was unable to speak freely for the remainder of the period.\nA plea of Crown act of state in respect of detention of this nature might well have been considered unrealistic.\nSecond, however, this leaves a tension between, on the one hand, apparent recognition that the nature of the acts is not such as to justify a plea of Crown act of state in respect of the United Kingdoms alleged complicity in such acts and, on the other hand, the case now advanced that the alleged involvement of other states in such acts precludes any claim against the United Kingdom in respect of them on the grounds of foreign act of state.\nAs I have said in my separate concurrent judgment (para 4), it is likely to be easier to establish that a domestic court should abstain from adjudicating on the basis of Crown act of state than on the basis of foreign act of state.\nSummary of conclusions\nFor the reasons which I shall set out, I have reached the following conclusions: State immunity (paras 12 to 31): (i) The appellants pleas of state immunity fail because the various foreign states (Malaysia, Thailand, the United States and Libya) are not impleaded, and their legal position is not affected, either directly or indirectly by the claims in tort advanced by the respondents solely against the appellants: para 31.\nForeign act of state (paras 32 to107): (ii) The concept of foreign act of state needs to be disaggregated, or broken down, and approached at a more particular level of enquiry: para 34. (iii) Three types of foreign act of state can be identified under current English authority: a) The first is the rule of private international law, whereby a foreign states legislation will normally be recognised and treated as valid, so far as it affects movable or immovable property within the foreign states jurisdiction: para 35. b) The second is that a domestic court will not normally question the validity of any sovereign act in respect of property within the foreign states jurisdiction, at least in times of civil disorder: para 38. c) The third is that a domestic court will treat as non justiciable or, to use language perhaps less open to misinterpretation, abstain or refrain from adjudicating upon or questioning certain categories of sovereign act by a foreign state abroad, even if they occur outside the foreign states jurisdiction: para 40. (iv) The appellants case, to the effect that the second and\/or third types should be expanded or combined so as to cover all sovereign (jure imperii) acts by a foreign state anywhere abroad outside the jurisdiction of the domestic court whose jurisdiction is in issue, should be rejected: a) To the extent that it exists at all, the second type of foreign act of state is and should be limited to acts relating to property within the jurisdiction of the foreign state: para 74 to 78. b) If (contrary to a), the second type were to be viewed as covering acts directed against the person, it would be subject to a public policy exception, which would enable at least the allegations of complicity in torture, unlawful detention, enforced rendition and disappearance made in these cases to be pursued in the English courts: para 80. c) The third type of foreign act of state is not limited territorially.\nWhether an issue is non justiciable falls to be considered on a case by case basis.\nConsiderations both of separation of powers and of the sovereign nature of foreign state or inter state activities may lead to a conclusion that an issue is non justiciable in a domestic court: paras 90 to 95.\nBut in deciding whether an issue is non justiciable, English law will have regard to the extent to which the fundamental rights of liberty, access to justice and freedom from torture are engaged by the issues raised: paras 98 and 101. d) I see little attraction in and no basis for accepting a yet further doctrine whereby United Kingdom courts might be precluded from investigating acts of a foreign state, if the Foreign Office communicated to it the Governments view that this would embarrass the United Kingdom in its international relations (though I accept that consequences for international relations may feed into the question of justiciability or abstention under the third type of foreign act of state): para 41. e) In the present case, the circumstances as they are presently before the Supreme Court do not lead to a conclusion that the issues are non justiciable in a domestic court: paras 96 to 105. f) Had a contrary conclusion been reached, the result would have been that, although the relevant foreign states could, at least in theory, have been sued within their own jurisdictions for the torts alleged to have been directly committed by their own officers, the appellants could not have been sued anywhere for their alleged complicity in such torts, since they would be entitled to invoke state immunity in any foreign jurisdiction: para 102.\nMiscellaneous points (paras 108 to 110): (v) It is unnecessary to reach any final determination of the respondents case: a) that, in so far as what is alleged amounts to complicity in torture, the United Nations Convention against Torture (Treaty Series No 107 (1991)) obliges states to provide a universal civil remedy in respect of torture wherever committed in the world, at least when (allegedly) committed by or with the connivance of United Kingdom citizens, and that any otherwise applicable type of foreign act of state should be modified accordingly.\nIt suffices to say that I would as at present advised see no basis for differing from the rejection of this argument in Jones v Ministry of the Interior of the Kingdom of Saudi Arabia (Secretary of State for Constitution Affairs intervening) (Jones v Saudi Arabia) [2006] UKHL 26; [2007] 1 AC 270. b) that article 6 of the Convention rights scheduled to the Human Rights Act 1998 is engaged by and renders impermissible in the present circumstances any reliance by the appellants on either state immunity or foreign act of state.\nAgain, this would face a difficulty raised by the House of Lords conclusions in Holland v Lampen Wolfe [2000] 1 WLR 1573 and Jones v Saudi Arabia, paras 14 and 64, that article 6 is not engaged by a plea of state immunity.\nThe European Court of Human Rights has reached a contrary conclusion (see eg Al Adsani v United Kingdom (2001) 34 EHRR 11; Sabeh El Leil v France (2011) 54 EHRR 14), and it would have been necessary to consider this disagreement.\nForeign act of state, on the other hand, operates, even under the case law of the European Court of Human Rights, as a substantive bar to liability or adjudication (see Roche v United Kingdom (2005) 42 EHRR 30; Markovic v Italy (2006) 44 EHRR 52), and so would not, if applicable, engage article 6.\nFurther, even if article 6 were engaged, the question would then have arisen whether it rendered impermissible any reliance on either state immunity or foreign act of state.\nBut, since I would hold that the appellants cannot rely on either in any event, it is unnecessary to go further into this.\nConclusion: (vi) These conclusions lead to the conclusion that the appellants are not entitled to rely on state immunity or the doctrine of foreign act of state to defeat the present proceedings, and the appeals must accordingly be dismissed and the cases proceed to trial.\nThe detailed reasoning supporting them follows.\nState immunity\nState immunity is, as indicated, a principle of customary international law recognised at common law, but now provided for by the State Immunity Act 1978.\nThe International Court of Justice has described state immunity as occupying an important place in international law and international relations and as deriving from the principle of sovereign equality of states, which, as article 2, para 1 of the United Nations Charter makes clear, is one of the fundamental principles of the international legal order: Jurisdictional Immunities of the State, Germany v Italy, judgment of 3 February 2012 [2012] ICJ Rep, p 99.\nThe absolute independence of every sovereign authority and the international comity which induces every sovereign state to respect the independence and dignity of every other sovereign state were similarly identified as the bases of state immunity by Brett LJ in the seminal common law case of The Parlement Belge (1880) 5 PD 197, 214 215.\nSection 1 of the 1978 Act provides: General immunity from jurisdiction. (1) A state is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part of this Act. (2) A court shall give effect to the immunity conferred by this section even though the state does not appear in the proceedings in question.\nThe Act specifies various exceptions to state immunity, including, but not limited to, submission to the jurisdiction (section 2), commercial contracts and contracts to be performed in the United Kingdom (section 3), personal injuries and damage to property (section 5) and ownership, possession and use of property (section 6).\nSections 5 and 6 read: 5.\nPersonal injuries and damage to property.\nA state is not immune as respects proceedings in respect of (a) death or personal injury; or (b) damage to or loss of tangible property, caused by an act or omission in the United Kingdom. 6.\nOwnership, possession and use of property. (1) A State is not immune as respects proceedings relating to any interest of the state in, or its possession or use (a) of, immovable property in the United Kingdom; or (b) in, or its possession or use of, any such property. any obligation of the state arising out of its interest (2) A state is not immune as respects proceedings relating to any interest of the state in movable or immovable property, being an interest arising by way of succession, gift or bona vacantia. (3) The fact that a state has or claims an interest in any property shall not preclude any court from exercising in respect of it any jurisdiction relating to the estates of deceased persons or persons of unsound mind or to insolvency, the winding up of companies or the administration of trusts. (4) A court may entertain proceedings against a person other than a State notwithstanding that the proceedings relate to property (a) which is in the possession or control of a state; or (b) in which a state claims an interest, if the state would not have been immune had the proceedings been brought against it or, in a case within para (b) above, if the claim is neither admitted nor supported by prima facie evidence.\nIt follows that state immunity is a personal immunity, ratione personae, possessed by the state in respect of its sovereign activities (acta jure imperii) so far as these do not fall within any of the exceptions.\nWhen state immunity exists, the nature and gravity of the alleged misconduct are irrelevant.\nEven the admitted illegality of the acts complained of does not alter the characterisation of those acts as acta jure imperii: Jurisdictional Immunities, para 60; see also Jones v Saudi Arabia [2007] 1 AC 270, where the House rejected the argument that torture or some other contravention of a jus cogens cannot attract immunity rationae materiae because it cannot be an official act: per Lord Hoffmann at para 85.\nThe classification does not appear in the 1978 Act, but the situations in which state immunity applies are commonly described as involving either direct or indirect impleading of the state.\nA state is (directly) impleaded by legal proceedings taken against it without its consent: Cia Naviera Vascongado v SS Cristina (The Cristina) [1938] AC 485, 490, per Lord Atkin.\nLord Atkin also identified a second situation of immunity in which, even though the state may not be a party, the proceedings relate to state property.\nIn so far as the state is put in a position where it must either forego or appear to defend its property interest, this situation can readily be described as one of indirect impleading: see eg The Parlement Belge (1880) 5 PD 197, 217 219, where the Court of Appeal did just that.\nOn the other hand, immunity exists, as will appear, in some situations where a states property interests are affected in ways which it may not be so natural to identify as indirect impleading, and these are sometimes therefore treated separately: see eg United States of America v Dollfus Mieg et Cie SA [1952] AC 582, where Lord Porter at pp 612 and 614 referred to an action impleading the two governments or affecting their rights and to the foreign governments being implicated or their rights invaded, while Lord Radcliffe in contrast at p 616 treated it as a suit which might affect a sovereigns interest in property under the head of proceedings which amount in one way or another to a suit against the sovereign; and see recently in Canada Khadr v The Queen 2014 FC 1001, para 35 per Mosley J.\nThe appellants submit that the immunity is wide enough to cover cases such as the present where it is integral to the claims made that foreign states or their officials must be proved to have acted contrary to their own laws, before any claim against the United Kingdom authorities and individuals sued can get off the ground.\nThe respondents submit the contrary, on the basis that nothing in the present proceedings can or would involve any form of judgment against, or in any way affect any legal interests of, the relevant foreign states or their officials.\nSome uncertainty exists about the appropriate classification of the undoubted immunity which exists in relation to proceedings directed against state officials for acts done in their official capacity, in circumstances where the state itself would if sued have had state immunity.\nThat immunity is firmly established: see Propend Finance Pty v Sing (1997) 111 ILR 611 and Jones v Saudi Arabia, cited above.\nBut the two leading speeches in Jones v Saudi Arabia, with both of which all other members of the House expressed their agreement, explain it on differing bases.\nLord Bingham in para 31 said: It is, however, clear that a civil action against individual torturers based on acts of official torture does indirectly implead the state since their acts are attributable to it.\nWere these claims against the individual defendants to proceed and be upheld, the interests of the Kingdom would be obviously affected, even though it is not a named party.\nIn contrast, Lord Hoffmann at para 69 said that: state in section 1(1) of the [State Immunity Act] and government, which the term state is said by section 14(1)(b) to include, must be construed to include any individual representative of the state acting in that capacity, as it is by article 2(1)(b)(iv) of the Immunity Convention.\nThe official acting in that capacity is entitled to the same immunity as the state itself.\nIt is unnecessary to consider which of these two formulations may be preferable, although Lord Hoffmanns should not be misunderstood as suggesting that a state official possesses his own personal immunity which he can waive.\nHis immunity depends upon the states, and can only be waived by the state.\nThe immunity in respect of acts done in the course of their office extends to state officials ratione materiae even after they have left office (as well as to heads of state, who enjoy an additional immunity ratione personae while in office): see eg R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 3) [2000] 1 AC 147, 202G H, 269F and 281C G, per Lords Browne Wilkinson, Millett and Phillips, citing Hatch v Baez (1876) 7 Hun 596.\nWhatever classification be adopted, the property cases are instructive as to the boundaries of state immunity.\nThey originate in the context of admiralty proceedings in rem: see eg The Parlement Belge, an action in rem against a mail ship belonging to the King of the Belgians in his public capacity, and The Cristina itself.\nIn the light of modern understanding of the nature of an action in rem, it might be argued that such an action involves from the outset direct impleading: see Republic of India v India Steamship Co Ltd (The Indian Grace) [1997] UKHL 40; [1998] AC 878.\nBe that as it may be, the House in The Cristina approved a number of previous authorities indicating that a state might be impleaded by proceedings against a vessel of which it had de facto possession, or such rights of direction and control, without possession, as arise from requisitioning (referring to The Broadmayne [1916] P 64), when those proceedings would, if successful result in an order of the court affecting that possession or those other rights: see United States of America v Dollfus Mieg et Cie SA [1952] AC 582, 617, per Lord Radcliffe.\nUnited States of America v Dollfus Mieg et Cie SA was concerned with property, but in a very different context.\nThe Bank of England held for safe custody 64 numbered bars of gold which had in 1944 been forcibly and wrongfully removed by German troops from a French bank holding them on behalf of Dollfus Mieg.\nThe bars were recovered from Germany by Allied forces and lodged with the Bank of England, to be held to the order of a Tripartite Commission for the Restitution of Monetary Gold established by the American, British and French governments to deal on their behalf with gold taken from Germany.\nThe Commission was no more than three sovereigns joined in a particular relation: p 615, per Lord Radcliffe.\nThe Bank of England by mistake sold 13 of the bars, retaining 51.\nDollfus Mieg claimed delivery up alternatively damages against the Bank of England.\nThe action was stayed at the instance of the United States and France as regards the 51 bars, on the basis that the claim indirectly impleaded the three states as bailors in respect of their immediate possessory rights as against the Bank.\nIt was allowed to continue as regards the 13 bars, on the basis that the Bank had terminated any bailment by their sale.\nLord Radcliffe faced squarely the problem that title was what was in issue, saying: But certainly a special difficulty begins when he [the sovereign] is not actually named but the suit is one which may result in a judgment or order that will affect his interest in some piece of property.\nEven to say that much begs one important question, for it assumes that he has a valid interest in that property: whereas a stay of proceedings on the ground of immunity has normally to be granted or refused at a stage in the action when interests are claimed but not established, and indeed to require him to establish his interest before the court (which may involve the courts denial of his claim) is to do the very thing which the general principle requires that our courts should not do.\nLord Radcliffe resolved the problem by reference to the three states possessory rights as bailors of the goods to the Bank of England, concluding at pp 618 619 that: The property of a sovereign state, which is an abstraction, must be in the physical possession of some actual person, and I do not see any distinction of substance in a matter of this kind between the possession of a servant of the state and the possession of its bailee when the bailment is of such a nature as that of the bank in this case.\nIndeed, I think that the Commissions possession and control of the gold bars in the hands of the bank amounted to a form of property more substantial than that which HM Government acquired by requisitioning the Broadmayne.\nThe suit began as a claim in detinue.\nThat means that the court was going to be asked or at any rate could be asked to make an order upon the bank to hand over the bars to the plaintiffs.\nSuch an order would unquestionably interfere with the Commissions possession of them and compel the Commission, if they wished to recover possession, to come to court and try to get them back from the plaintiffs.\nI cannot feel any doubt that such a suit offends against the principle of sovereign immunity.\nIn short, the Commission would no longer be entitled to look to the Bank as bailees, but would have as owners to establish title by proceedings against Dollfus Mieg.\nAddressing an argument that Dollfus Mieg could avoid the problem by limiting itself to a claim in conversion for damages, Lord Radcliffe found the point one of considerable difficulty, but in the end concluded that a claim on this basis was also precluded by state immunity: when I consider the real nature of a claim for damages for conversion I come to the same conclusion.\nSubject to the payment of costs and special damages (if there are any) an action for damages for conversion can always be stayed if the defendant offers to hand over the property in dispute.\nIn that sense a suit for damages for conversion is an attempt to use the courts process to interfere with the existing possession of the chattel the title to which is in dispute.\nIf the defendant continues to resist and damages are awarded against him he may keep the chattel and pay the damages; but if he does he becomes entitled, if he is a bailee, to set up the plaintiffs title to the goods, which he has thus paid for, against his own bailor.\nIn other words the courts judgment in the personal action against him would materially affect the existing right of his bailor in respect of the possession and disposal of the chattel.\nThe result of a judgment in damages has thus some analogy to a sale by the court of a chattel which is in the possession or under the requisition of a foreign sovereign: if the sale cannot be ordered in the one case because to order it would be to use the courts process against the sovereign, then the judgment cannot be rendered in the other.\nAgain, the Commission would no longer be able to look to the Bank of England as simple bailees, but would face the issue that the Bank now stood, at least in theory, in the same position as Dollfus Mieg.\nIt seems clear that Lord Radcliffe viewed the facts in Dollfus Mieg as close to the outer parameters of state immunity.\nUltimately, the decision focused on the existence of a bailment, and on the second order consequences for the three States and the Bank of Englands legal positions as bailors and bailee if Dollfus Miegs claim could be pursued and was successful.\nFive years later the House confirmed in Rahimtoola v Nizam of Hyderabad [1958] AC 379 that a similar position applied where the issue was title to a chose in action, consisting of monies transferred without authority from an account of the Nizam and his government at the Westminster Bank Ltd to an account opened by that bank in the name of Mr Rahimtoola, the High Commissioner for Pakistan, in his capacity (as the House held) as agent for the state of Pakistan.\nThe Nizams suit was barred by state immunity.\nViscount Simonds put the matter as follows at p 395: A suit by a third party, the Nizam, is calculated and intended to interfere with the title of Rahimtoola and his principals, the Government of Pakistan, and with their possession or control of their property.\nIt can only be maintained if the Government of Pakistan take a course which their sovereign dignity entitles them to reject and descend into the arena.\nThe appellants argue on the present appeals that state immunity was recognised as existing in Rahimtoola, although the State of Pakistan would not have been bound by a judgment in proceedings involving a third party.\nBut that was not how Viscount Simonds saw the matter unsurprisingly since Mr Rahimtoola was acting in his official capacity and proceedings against him therefore involved, on their face, state property.\nThe special treatment in section 6(4) of the State Immunity Act 1978 of claims against third parties in respect of property cases also suggests that such cases represent a particular head of immunity, based on a states possession or control of or claim to some (legal) interest in the property in question.\nHowever, the appellants rely upon the United Nations Convention on Jurisdictional Immunities of States and Their Property (2004) as being based on a broader conception of interests, which, they submit, should inform the domestic understanding of indirect impleading.\nArticles 5 and 6 provide: Article 5 State immunity A state enjoys immunity, in respect of itself and its property, from the jurisdiction of the courts of another state subject to the provisions of the present Convention.\nArticle 6 Modalities for giving effect to state immunity 1.\nA state shall give effect to state immunity under article 5 by refraining from exercising jurisdiction in a proceeding before its courts against another state and to that end shall ensure that its courts determine on their own initiative that the immunity of that other state under article 5 is respected.\nA proceeding before a court of a state shall be considered to have been instituted against another state if that other state: a. is named as a party to that proceeding; or b. is not named as a party to the proceeding but the proceeding in effect seeks to affect the property, rights, interests or activities of that other state.\nBy article 2(1)(b), State is defined in broad terms, as meaning: (i) the State and its various organs of government; (ii) constituent units of a federal State or political subdivisions of the State, which are entitled to perform acts in the exercise of sovereign authority, and are acting in that capacity; (iii) agencies or instrumentalities of the State or other entities, to the extent that they are entitled to perform and are actually performing acts in the exercise of sovereign authority of the State; and (iv) representatives of the State acting in that capacity.\nThe appellants rely on the words interests or activities in article 6(2)(b) which, they submit, indicate that state immunity should be understood as extending beyond claims affecting property or other rights.\nThe Convention is not yet in force, lacking a sufficient number of ratifications, including any from the United Kingdom.\nBut in Jones v Saudi Arabia, at para 26, Lord Bingham referred to the Convention as being, [d]espite its embryonic status, the most authoritative statement available on the current international understanding of the limits of state immunity in civil cases, going on to say that the absence of a torture or jus cogens exception [in it was] wholly inimical to the claimants contention.\nThis was a statement made expressly about the limits of state immunity in the context of an issue whether the legal liability of a state official for torture fell outside the scope of such immunity.\nThat was a fundamental question which the Convention, however embryonic, could be expected to cover.\nTo attach equivalent relevance to the use in a Convention with no binding international status of the ambiguous terminology of article 6(2)(b) is to take Lord Binghams words out of context.\nThe appellants reliance on the further passage in Lord Binghams speech quoted at para 17 above, with its adoption of the word interests is open to the same objection.\nThe appellants note that the International Court of Justice has referred to the adoption of the Convention (see eg Jurisdictional Immunities, paras 77 and 89).\nAgain, this was in the context of the issue, very different from the present, whether state immunity was subject to any exception in the case of violations of human rights, the law of armed conflict or jus cogens.\nThe drafting history locates article 6 firmly in the context of the case law concerning the arrest of vessels, such as The Parlement Belge, and property in which states claim an interest, such as Dollfus Mieg: see eg the Report of the International Law Commission (Yearbook 1991, Vol II, (2), pp 23 25).\nThe Report also explains the focus of article 6 as avoiding the exercise of State jurisdiction in a way which would put any foreign sovereign in the position of having to choose between being deprived of property or otherwise submitting to the jurisdiction; and it explains the words to affect as having been introduced to replace the prior draft wording to bear the consequences of a determination by the court which may affect, in order to avoid unduly broad interpretations of article 6(2)(b).\nEven so, concerns were expressed at the drafting stage by both Australia and the United States about the potential width of article 6(2)(b): see the Report of the Secretary General of the United Nations A\/47\/326 of 4 August 1992.\nBut academic commentators have concluded that any uncertainty in its scope should be addressed by recognising that interests should be limited to a claim for which there is some legal foundation and not merely to some political or moral concern of the State in the proceedings: Fox and Webb, The Law of State Immunity, 3rd ed (2015 revision), p 307; and OKeefe, Tams (eds), The United Nations Convention on Jurisdictional Immunities of States and Their Property (2013), pp 110 111, indicating that some specifically legal effect should be required as distinct from a social, economic or political effect.\nReliance was also placed by the appellants on two decisions of the International Court of Justice, the first the Case of The Monetary Gold removed from Rome in 1943 (judgment of 15 June 1954) ICJ Reports 1954, P19 and the second the Case concerning East Timor (Portugal v Australia) (judgment of 30 June 1995) ICJ Reports 1995, P90.\nIn Monetary Gold an arbitrator had held that certain gold removed from Rome by the Germans had belonged to Albania, but France, the United Kingdom and the United States agreed that it would be delivered up to the United Kingdom in partial settlement of the International Courts judgment of 15 December 1949 against Albania in the Corfu Channel case [1949] ICJ Rep, p 244, unless either Albania or Italy applied to establish a claim.\nAlbania did not so apply.\nItaly did, but objected to the courts jurisdiction in the absence of Albania.\nThe court held that, since Italys claim would involve determining the legal position as between Albania and Italy, it could not adjudicate without Albanias consent.\nIt said, inter alia, that Albanias legal interests would not only be affected by a decision, but would form the subject matter of the decision (p 32).\nAddressing an argument that, as a third party, Albania would not under the courts rules be bound, the court responded: This rule, however, rests on the assumption that the court is at least able to render a binding decision.\nWhere, as in the present case, the vital issue to be settled concerns the international responsibility of a third state, the court cannot, without the consent of that third state, give a decision on that issue binding upon any state, either the third state, or any of the parties before it.\nThe case is distinct from the present.\nThe International Court was, above all and as in the domestic case of Dollfus Mieg, being asked to determine the immediate destination of specific property.\nIn the courts below, Leggatt J at para 78 distinguished East Timor and the Court of Appeal at para 42 distinguished Monetary Gold as cases about international jurisdiction, required in the case of the International Court to be based upon consent, in contrast with which domestic courts exercise compulsory jurisdiction over those within their reach.\nThat is correct as far as it goes, but states domestic jurisdiction also depends on consent in contexts where state immunity otherwise exists.\nThe situation is therefore nuanced.\nNevertheless, Monetary Gold is not about state immunity, and does not on its facts assist on the issue now before the court, even by way of analogy.\nThe same applies to the East Timor case.\nBy United Nations Resolution 1514 of 15 December 1960, East Timor was under Portuguese administration as a non self governing territory.\nFollowing internal disturbances in 1975, the Portuguese authorities withdrew to an island, and the armed forces of Indonesia intervened, after which the Portuguese withdrew entirely.\nIn 1978 Australia recognised the fact that East Timor was part of Indonesia but not the means by which this was brought about, and in 1989 Australia negotiated a Treaty with Indonesia, to create a Zone of Cooperation in an area between the Indonesian Province of East Timor and Northern Australia.\nPortugal claimed that, in entering into this Treaty, Australia had acted unlawfully and in violation of the obligation to respect the status both of Portugal as the administering power and of East Timor as an area under such administration.\nThe court accepted the erga omnes character of this obligation, but declined jurisdiction to rule on the lawfulness of Australias conduct, when any judgment would imply an evaluation of the lawfulness of the conduct of another State [viz Indonesia] which is not a party to the case (p 102).\nIt stressed that, as in Monetary Gold, Indonesias rights and obligations would constitute the very subject matter of such a judgment made in the absence of that partys consent, contrary to the well established principle that the Court can only exercise jurisdiction over a state with its consent.\nThe subject matter of any judgment would have been, in essence, whether Portugal or Indonesia had the right to administer, and so enter into treaties relating to, East Timor, an issue about territorial title.\nThe present appeals involve no issues of proprietary or possessory title.\nAll that can be said is that establishing the appellants liability in tort would involve establishing that various foreign states through their officials were the prime actors in respect of the alleged torts.\nBut, unlike the position in Dollfus Mieg, that would have no second order legal consequences for the relationship between the respondents and the foreign states in question or their officials.\nNone of the above domestic and international cases carries the concept of interests so far as to cover any reputational or like disadvantage that could result to foreign states or their officials from findings as between the appellants and respondents.\nOn the contrary, the pains which the House of Lords took in Dollfus Mieg and Rahimtoola to identify a potential legal effect of the litigation on the relevant state rights point against any broader conception of interest.\nSome consequences of the appellants case are also worthy of note.\nThe present proceedings in which they are sued as ancillary parties would be incapable of being maintained in this jurisdiction against them or against the states (Malaysia, Thailand, Libya and the United States) alleged to be primarily responsible for the physical conduct complained of by the respondents.\nEach such other state would, on conventional principles governing state immunity, be capable of being pursued in its own courts in respect of the particular conduct complained of in its case.\nBut the claims could also not be pursued against the appellants in the courts of any of such other states, since the appellants would there enjoy state immunity against any direct impleading.\nThe appellants case on state immunity in this jurisdiction would preclude suit against them anywhere.\nFor the reasons given, I consider that the issues now before the Supreme Court do not attract state immunity, because the legal position of the foreign states, the conduct of whose officials is alleged to have been tortious in the places where such conduct occurred, will not be affected in any legal sense by proceedings to which they are not party.\nThe decisions reached by the Court of Appeal in Belhaj and by Leggatt J in Rahmatullah were correct and the appeals should be dismissed on the issue of state immunity.\nThe starting point of the appellants case is that adjudication of the issues now before the court in favour of the claimants would necessarily involve a finding by the English courts that foreign states had acted illegally under the laws of the places where the conduct complained of occurred.\nWith regard to Mr Belhajs and Mrs Boudchars alleged detention and mistreatment, that would mean in Kuala Lumpur by Malaysian officials, in Bangkok by Thai officials as well as United States officials, in the airplane by United States officials and in Libya by Libyan and United States officials.\nWith regard to Mr Rahmatullahs detention and alleged mistreatment, that would mean by Foreign act of state United States officials in Iraq and Afghanistan.\nSo much can be accepted as the premise to what follows.\nIn the opening words of his introduction to the chapter entitled The Foreign Act of State in his book Foreign Affairs in English Courts (1986), Dr Francis Mann wrote that: Public policy dominates one of the most difficult and most perplexing topics which, in the field of foreign affairs, may face the municipal judge in England: the doctrine of the foreign act of State displays in every respect such uncertainty and confusion and rests on so slippery a basis that its application becomes a matter of speculation.\nIn Yukos v Rosneft the Court of Appeal suggested (para 115) that, in view of the limitations on foreign act of state recognised in the case law: The important thing is to recognise that increasingly in the modern world the doctrine is being defined, like a silhouette, by its limitations, rather than to regard it as occupying the whole ground save to the extent that an exception can be imposed.\nLeggatt J observed (para 134) that, when a rule is said to be defined by its absence, there is reason to wonder whether there is in fact such a rule.\nThat aphorism goes too far.\nAs Dr Francis Mann has suggested, quoting Cardozo J (Mann, Conflict of Laws and Public Law [1971] 1 Recueil des Cours 107, pp 148 149, 151 156 and Foreign Affairs in English Courts (1986) p 164), what is required is to approach the concept of foreign act of state at a more particular level of enquiry, by enunciating principles rather than maxims which, starting as devices to liberate thought, often end by enslaving it.\nOr, to adopt a phrase from Professor Campbell McLachlans Foreign Relations Law (CUP, 2014), para 12.129, what is required is a much more fine grained approach disaggregating the general category in order to achieve the specialization of the principle in its application to particular classes of case.\nHappily, there is a very substantial measure of common ground within the Supreme Court about the broad framework or structure of the relevant principles.\nAddressing briefly at this point such differences as there are between Lord Sumption and myself, Lord Sumption in para 227 distinguishes between (i) cases concerned with the applicability or examinability of foreign municipal legislation within a states own territory (which he calls municipal law act of state) and (ii) cases concerning the transactions of foreign states (which he calls international law act of state).\nThis distinction corresponds generally with the distinction which I have identified in para 11(iii) above between the first type of foreign act of state (which I consider is better viewed as a rule of private international law, a view with which Lord Sumption expresses sympathy in the first four sentences of his para 229) and the third type of foreign act of state (which I describe as a rule of non justiciability or judicial abstention).\nWhat Lord Sumption does in para 228 is enlarge the first of his two categories, to embrace the second potential type of foreign act of state identified in para 11(iii) above), that is executive acts by a foreign state within its own territory.\nApart from differences in the terminology we prefer, the differences between us lie in the ambit assigned to the second and third type of foreign act of state.\nLord Sumption includes within the second acts against the person as well as property, and he gives the third type of foreign act of state (non justiciability or judicial abstention, or in his terminology international law act of state) a wider scope than I do, but then cuts that back by a domestic public policy qualification drawing inter alia on the international law concept of jus cogens.\nVI Three types of foreign act of state\nThree types of foreign act of state are in my opinion identifiable under current English authority.\nFirst, there is a well established rule of private international law, according to which a foreign states legislation will be recognised and normally accepted as valid, in so far as it affects property, whether movable or immovable, situated within that state when the legislation takes effect: Dicey, Morris and Collins, The Conflict of Laws, 15th ed (2012), rule 137; and see Carr v Fracis Times & Co [1902] AC 176 (seizure of ammunition by British officers in Muscat under the authority of a proclamation of the absolute ruler, the Sultan of Muscat, whose word was law), Luther v Sagor [1921] 23 KB 532 (seizure by decree of Russian revolutionaries later recognised as the government), Princess Paley Olga v Weisz [1929] 1 KB 718 (seizure by similar decrees) and Williams & Humbert Ltd v W & H Trade Marks (Jersey) Ltd [1986] AC 368 (compulsory purchase of shares in Spain).\nMovable and immovable property is thus subject to a territorial principle.\nSo too is domestic trade mark protection based on a reputation acquired domestically, which cannot therefore be affected by foreign legislation: Lecouturier v Rey [1910] AC 262, cited by Warrington LJ in Luther v Sagor, pp 548 549.\nUnder familiar conflict of laws principles, different connecting factors govern the recognition of foreign state legislation in other spheres.\nFor example, foreign legislation affecting contractual rights will be recognised if enacted by the state whose law governs the contract: Dicey, Morris and Collins, op cit, rule 227(1); and see eg In re Helbert Wagg & Co Ltds Claim [1956] Ch 323 and Adams v National Bank of Greece and Athens [1961] AC 255.\nAnd, if one moves away from state legislation to adjudication by state courts, yet further connecting factors govern the recognition of foreign judgments.\nLeaving aside treaty arrangements and the European regime of the Brussels Regulation and Lugano Convention, the recognition of foreign judgments depends upon the foreign court having had jurisdiction in the limited international sense recognised by English courts and examined in Dicey, Morris & Collins, op cit, rules 43 to 47.\nHowever recognition will, exceptionally, be refused, when recognition would conflict with a fundamental principle of domestic public policy.\nThe classic authorities in respect of legislation affecting property or contracts are Oppenheimer v Cattermole [1976] AC 249 (non recognition of Nazi laws discriminating against Jews) and Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] UKHL 19; [2002] 2 AC 883 (non recognition of an Iraqi law confiscating the Kuwait Airways fleet, which was in Iraq, and giving it to Iraqi Airways in undeniable breach of Security Council Resolutions).\nSimilarly, recognition may be denied to foreign judgments where this would be contrary to public policy: Dicey, Morris & Collins, rule 51; see also Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7; [2012] 1 WLR 1804 (Altimo) and Yukos Capital Sarl v OJSC Rosneft Oil Co (No 2) [2014] QB 458.\nSecond, it has been held that a rule exists whereby an English court will not question a foreign governmental act in respect of property situated within the jurisdiction of the foreign government in question.\nThe Court of Appeal in Princess Paley Olga upheld the judgment against the claimant Princess on this (its third) ground, as well as two others in the case, stating that: This court will not inquire into the legality of acts done by a foreign Government against its own subjects in respect of property situate in its own territory (per Russell LJ at p 736) See also per Scrutton LJ at pp 723 724 and Sankey LJ at pp 726 730.\nSimilar reasoning, derived from United States authority including Oetjen v Central Leather Co (1918) 246 US 297 (para 51 below), had appeared in AOAM v James Sagor & Co [1920] 3 KB 532, in particular in the judgment of Warrington LJ at p 549.\nThe issue there was however whether to recognise a confiscatory decree, which was treated by the other members of the court simply as Russian legislation.\nOther direct authority on this type of foreign act of state is limited, though there are some general dicta wide enough to embrace it as well as the third type of foreign act of state: see eg Lord Sumners statement in Johnstone v Pedlar [1921] 2 AC 262, 290 that Municipal Courts do not take it upon themselves to review of the dealings of State with State or of Sovereign with Sovereign.\nThey do not control the acts of a foreign state done within its own territory, in the execution of sovereign powers, so as to criticise their legality or to require their justification; See also Lord Wilberforces dicta in Buttes Gas, to which reference is made in para 59 below.\nThe existence of this second type of act of state has not in fact been challenged on this appeal.\nHowever, assuming (as I am prepared for present purposes to do without deciding) that it exists, it will be necessary to examine more closely its scope and rationale.\nIt may be regarded, like the first type of act of state, as a rule of private international law though this can hardly be in a literal conflicts of laws sense since the effect of the relevant act is determined not by law, but regardless of law.\nPerram J called it in Habib v Commonwealth [2010] FCAFC 12; (2010) 265 ALR 50 at paras 38 and 43 a super choice of law rule.\nIn these circumstances, it can, so far as it exists, just as well be understood as a special rule of abstention: witness Scrutton LJs reference to an act of state into the validity of which this Court would not enquire in Princess Paley Olga v Weisz [1929] 1 KB 718, 723 724.\nIn Empresa Exportadora de Azucar v Industria Azucarera Nacional SA (The Playa Larga and Marble Islands) [1983] 2 Lloyds Rep 171, the Court of Appeal was concerned with unlawful conduct involving theft by Cuban sellers of one cargo of sugar, property in which had already passed to the buyers, and non delivery of a second combined with trickery whereby the intended buyers were nonetheless induced to pay its price.\nThe first cargo was on a vessel which was discharging at its Chilean discharge port, when the vessel was withdrawn by the sellers.\nThe second cargo was on the high seas en route to Chile when withdrawn.\nThe Court rejected any defence of foreign act of state for a series of reasons, primarily because there was no such plea and no proof that the acts were acts of the Chilean government, but secondarily also because, if they were, there seems no compelling reason for judicial restraint or abstention in a case where it is clear that the acts relied on were carried out outside the sovereigns own territory.\nWhether that reasoning was correct in respect of the second type of foreign act of state arises for consideration on these appeals.\nWhether any like doctrine extends to sovereign acts in respect of persons, rather than property, also requires determination.\nThird, it is established at the highest level that there are issues which domestic courts should treat as non justiciable or should abstain from addressing.\nThe Court of Appeal in Yukos v Rosneft understood this principle as not so much a separate principle as a more general and fundamental principle, which had to a large extent subsumed [the first and second types of act of state] as the paradigm restatement of that principle (paras 48 and 66).\nThat, in my view, plays into the problem identified by Dr Mann and Professor McLachlan (see para 33 above).\nIt blurs the distinctions between different types of foreign act of state to which I have referred in para 11 above.\nIt impedes the important task of identifying the scope and characteristics of each type of foreign act of state.\nThe Court of Appeal in Yukos v Rosneft suggested at para 65 that the third type might be allied with a yet further doctrine, precluding United Kingdom courts from investigating any acts of a foreign state when and if the Foreign Office communicated the Governments view that such investigation would embarrass the United Kingdom in its international relations.\nI see little attraction in and no basis for giving the Government so blanket a power over court proceedings, although I accept and recognise that the consequences for foreign relations can well be an element feeding into the question of justiciability.\nI consider in paras 100 to 102 below the reliance placed by the appellants on adverse effects of these proceedings on international relations.\nButtes Gas and Oil Co v Hammer (No 3) [1982] AC 888 is the leading English authority on the third type.\nIt was recently considered by this Court in dicta in Shergill v Khaira [2014] UKSC 33; [2015] AC 359.\nIn Buttes Gas, the claimant Buttes Gas sued Dr Hammer and Occidental Oil Company for slander, eliciting a counterclaim for an alleged conspiracy between Buttes Gas, the Ruler of Sharjah and others to cheat and defraud, and to procure the British government and others to act unlawfully to the detriment of, Dr Hammer and Occidental Oil.\nThe counterclaim related to oil exploration rights off the island of Abu Musa in the Persian Gulf, and raised a whole series of boundary and other international and inter state law issues, set out by Lord Wilberforce on p 937 of the report.\nThe claimant applied to strike out the counterclaim.\nLord Wilberforce, giving the sole reasoned speech concluded at p 938A C: It would not be difficult to elaborate on these considerations, or to perceive other important inter state issues and\/or issues of international law which would face the court.\nThey have only to be stated to compel the conclusion that these are not issues upon which a municipal court can pass.\nLeaving aside all possibility of embarrassment in our foreign relations (which it can be said not to have been drawn to the attention of the court by the executive) there are to follow the Fifth Circuit Court of Appeals no judicial or manageable standards by which to judge these issues, or to adopt another phrase (from a passage not quoted), the court would be in a judicial no mans land: the court would be asked to review transactions in which four sovereign states were involved, which they had brought to a precarious settlement, after diplomacy and the use of force, and to say that at least part of these were unlawful under international law.\nI would just add, in answer to one of the respondents arguments, that it is not to be assumed that these matters have now passed into history, so that they now can be examined with safe detachment.\nHaving concluded that the counterclaim was non justiciable, the House noted the injustice which could follow if the claim alone proceeded.\nIn the event, the House was able, without more, to take advantage of the claimants offer to submit to a stay of the claim as a term of dismissal of the counterclaim.\nIn Shergill v Khaira [2015] AC 359 this Court referred to the third type of foreign act of state under the head of non justiciability which it said (para 41) refers to a case where an issue is said to be inherently unsuitable for judicial determination by reason only of its subject matter (even though it would otherwise be within the English courts jurisdiction under, for example, the Brussels Regulation and Lugano Convention or the rules of court).\nThe court went on (paras 41 43) to say that such cases generally fall into one of two categories: (i) The first was where the issue was beyond the constitutional competence assigned to the courts under our conception of the separation of powers, of which the paradigm cases are the non justiciability of certain transactions of foreign states and of proceedings in Parliament.\nThe distinctive feature of such cases was that once the forbidden area is identified, the court may not adjudicate on the matters within it, even if it is necessary to do so in order to decide some other issue which is itself unquestionably justiciable.\nButtes Gas falls into this category. (ii) The second category was of cases not involving private legal rights or obligations or reviewable matters of public policy, and included issues of international law which engage no private right of the claimant or reviewable question of public law.\nSuch issues were not justiciable in the abstract, but must nevertheless be resolved if their resolution is necessary in order to decide some other issue which is in itself justiciable.\nExamples of this second category, where no private right or reviewable question of public law was engaged, are Nabob of the Carnatic v East India Co (1793) 2 Ves Jun 56, where the Nabob was seeking to sue for an account due under an international treaty, and JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, where the House of Lords stated that it is axiomatic that municipal courts have not and cannot have the competence to adjudicate upon or to enforce the rights arising out of transactions entered into by independent sovereign states between themselves on the plane of international law (p 499F G per Lord Oliver of Aylmerton).\nThe appellants propose a different categorisation, pursuing a theme pointed up by Rix LJ in Yukos v Rosneft (No 2) and by the Court of Appeal in Belhaj.\nAccording to this categorisation, a domestic court will not adjudicate upon any sovereign or jure imperii act committed by a foreign state anywhere abroad.\nAnalytically, this can be viewed either as expanding the scope of the second type of foreign act of state and treating the third type as a particular instance, or (following Rix LJ) as expanding the scope of the third type to subsume and treat as non justiciable not merely special circumstances comparable with, even if not identical to, those involved in Buttes Gas, but any sovereign or jure imperii act committed by a foreign state anywhere outside the domestic jurisdiction invoked in the relevant proceedings.\nWhichever view is taken, there is a tension between the proposed categorisation, on the one hand, and Lord Wilberforces cautious references to the second and third types of foreign act of state in Buttes Gas, followed up by Rix LJs emphasis in Yukos v Rosneft (No 2) on the limited, or silhouette like, nature of the doctrine, to which reference has already been made: para 33 above.\nThe appellants categorisation would lead to a dramatic expansion of the scope of foreign governmental act of state as a bar to domestic adjudication against defendants otherwise amenable to the English jurisdiction.\nWhatever typology be adopted, the appellants submit that both cases now before the Supreme Court fall into one or both of the second and third types of foreign act of state, properly understood, and that, in so far as they fall within the third type, they belong within the first sub category.\nThe second type, they submit, should be understood as covering acts relating to the person as well as property.\nOn this basis, the second type would cover, at least, the governmental acts of Malaysian, Thai and Libyan officials within their own jurisdictions.\nThe acts of United States officials on United States aircraft in Belhaj or in Iraq where the United States was an occupying power or Afghanistan where it was present by consent should, the appellants submit, likewise be regarded as occurring within United States jurisdiction.\nBut, in any event, they submit that the second type should not be limited territorially, any more than the third.\nAs to the third type, the issues before the Court concern alleged or actual detention and interrogation allegedly agreed between, and involving transfers of the relevant individuals between, states in the context of arrangements made for political or security reasons.\nThis category cannot, the appellants submit, be limited territorially.\nVII Analysis of the case law\n(i) Carr v Fracis Times & Co\nCarr v Fracis Times & Co falls squarely within the first type of foreign act of state.\nThe seizure of ammunition was lawful because the Sultan of Muscat was an absolute ruler whose word and proclamation were law in that state.\nThe only possible hint of the second type of act of state appears in a dictum near the end of the Earl of Halsbury LCs speech, saying that the lawfulness of what happened rests, and must rest, upon the authority of the sovereign of Muscat; and it appears to me that any other decision would be open to very serious questions of policy if, in every case where the lord of a country has declared what the law of his own country is, it were open to an English tribunal to enter into the question and to determine, as against him, what was the law of his country.\nThe judgment can, on the other hand, also be read as positively emphasising the significance of establishing a legal base for an act such as expropriation.\nThe same may be said of the earlier authority of Dobree v Napier (1836) 2 Bing (NC) 781, where (it appears from the fourth declaration) a vessel supplying the revolutionary Don Miguel of Portugal was seized in the Portuguese port of St Martinho by Sir Charles Napier as admiral in the service of the Queen of Portugal lawfully under Portuguese law (p 796). (Today, the action against Sir Charles Napier would also be expected to fail on grounds of sovereign immunity, wherever the seizure took place.\nThe fact that the seizure occurred in the context of a civil war might also bring into play the third type of act of state.)\n(ii) The United States authorities\nIn relation to the first and second types of foreign act of state, the Court of Appeal in Luther v Sagor and Princess Paley Olga drew heavily on United States authority, particularly Underhill v Hernandez 168 US 250 (1896) and Oetjen v Central Leather Co 246 US 297 (1918).\nAs with Luther v Sagor and Princess Paley Olga, these were cases concerning the acts of revolutionaries who were ultimately successful and became recognised governments.\nIt is, as Dr Mann wrote in The Sacrosanctity of the Foreign Act of State in Studies in International Law (1973), referring to Williams v Bruffy 96 US 176 (1877) and other authority, well established that recognition has retroactive effect.\nBut one difference between the issues in the two United States and the two English cases appears to have passed unmarked in the latter.\nIn both the United States cases, the issue considered by the court was not whether state conduct fell to be regarded as lawful or valid though unlawful under ordinary domestic law.\nIt was whether state conduct should be regarded as unlawful because it was contrary to international law governing armed conflict.\nAdmittedly, in Underhill v Hernandez the plaintiffs case appears to have been that the law of nations was under the Constitution of Venezuela to be enforced in cases of civil war and the defendant was ready to assume that international law was part of the law of the land where any question arises which is properly the subject of its jurisdiction (plaintiffs brief pp 27 28 and defendants brief p 29).\nBut reliance in a domestic court on the law of war to establish the wrongfulness of a revolutionary governmental act is self evidently more ambitious than reliance on unlawfulness under ordinary domestic law.\nA precursor of Underhill v Hernandez is Hatch v Baez (1876) 7 Hun 596, where the claimant sought to sue a former president of the Dominican Republic, now resident in New York, for injuries allegedly suffered as a result of acts done by the former president as president.\nGilbert Js judgment contains a sentence in terms echoed in later case law: We think that, by the universal comity of nations and the established rules of international law, the courts of one country are bound to abstain from sitting in judgment on the acts of another government done within its own territory.\nBut, for the rest and on its facts, Hatch v Baez can be seen as a clear case of sovereign immunity, enjoyed, and not so far as appears waived, by the Dominican Republic, as well as a case dating (like the Duke of Brunswicks case, which Gilbert J cited) from a time when the strands of state immunity and foreign act of state were not distinctly separated.\nSimilarly, one would today expect the claim in Underhill v Hernandez to have been met by a plea of state immunity.\nIn Underhill v Hernandez, Underhill, a US citizen, had constructed a waterworks in Bolivar for the government which was eventually overthrown by revolutionary forces, one of whose generals was Hernandez.\nAfter Hernandez had captured Bolivar, Underhill sought to leave.\nHernandez refused the request and confined Underhill to his house, in order to coerce Underhill into continuing to operate his waterworks and repair works for the benefit of the revolutionary forces.\nUnderhills claim for damages was dismissed.\nIn Underhill v Hernandez Fuller CJ opened his judgment with another broad statement along the same lines as Gilbert Js (p 252): Every sovereign State is bound to respect the independence of every other sovereign State, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory.\nRedress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.\nThroughout much of the rest of his short judgment the focus was on the existence of civil war, and it is relevant to note that he went on (p 254): The decisions cited on plaintiff's behalf are not in point.\nCases respecting arrests by military authority in the absence of the prevalence of war; or the validity of contracts between individuals entered into in aid of insurrection; or the right of revolutionary bodies to vex the commerce of the world on its common highway without incurring the penalties denounced on piracy; and the like, do not involve the questions presented here. (italics added)\nThe words which I have italicised open the possibility that the ratio of Underhill v Hernandez may be limited to state detention in war time situations.\nThe recognition in that context by United States courts of what was effectively a right to detain would not necessarily have been a radical step, in view of international humanitarian legal considerations subsequently enshrined in the Geneva Conventions of 1949.\nFor example, the Fourth Convention relative to the Protection of Civilian Persons in Time of War entitles civilians to leave the territory unless their departure is contrary to the interests of the State (article 35) and authorises the confinement to residence of a civilian if necessary for security reasons (articles 42 and 78).\nHernandezs acts were, in the light of his success, the acts of the government of Venezuela (p 254).\nTrue, this was a civil war, but article 3 of the Third Convention itself contemplates that the parties to a non international armed conflict will endeavour to agree to bring its other provisions into force.\nIt is, at the least, an open question what the attitude of the Supreme Court would have been to a case such as the present where there is no suggestion of any war, international or civil, to serve as the context for the detention or rendition.\nIn Oetjen, animal hides were seized and sold to satisfy a monetary assessment to support the revolution, and there was an issue of title between an assignee from the original owner and a person deriving his claim to title from the purchaser from the revolutionary forces.\nThis was resolved by application of Fuller CJs opening words, with the unsurprising conclusion that the assignee of the former owner failed in its claim.\nSubsequent consideration of these and other similar cases by the United States Supreme Court in Ricaud v American Metal Co Ltd 246 US 304 and Banco Nacional de Cuba v Sabbatino 376 US 398 (1964) evidences a shift in their rationalisation.\nLike Oetjen, Sabbatino concerned competing claims to property (sugar) which had been disposed of in two inconsistent directions as a result of its revolutionary expropriation.\nThe Court cited with approval (p 418) reasoning from Ricaud to the effect that act of state: does not deprive the courts of jurisdiction once acquired over a case.\nIt requires only that, when it is made to appear that the foreign government has acted in a given way on the subject matter of the litigation, the details of such action or the merit of the result cannot be questioned but must be accepted by our courts as a rule for their decision.\nDiscussing the conceptual basis for this rule of decision, the court went on (pp 421 422): We do not believe that this doctrine is compelled either by the inherent nature of sovereign authority, as some of the earlier decisions seem to imply, see Underhill, supra; American Banana, supra; Oetjen, supra, at 303, or by some principle of international law.\nThat international law does not require application of the doctrine is evidenced by the practice of nations.\nMost of the countries rendering decisions on the subject fail to follow the rule rigidly If international law does not prescribe use of the doctrine, neither does it forbid application of the rule even if it is claimed that the act of state in question violated international law.\nA footnote to the second sentence recorded that a doctrine in similar terms had been articulated in England in Luther v Sagor and Princess Paley Olga, with which the US Supreme Court compared Anglo Iranian Oil Co v Jaffrate (The Rose Mary) [1953] 1 WLR 246, [1953] Intl L Rep 316 (Aden Sup.\nCt) as endorsing an exception to the doctrine if the foreign act violated international law.\nThe Supreme Court cannot have been informed of Upjohn Js disapproval of that general exception in In re Helbert Wagg & Co Ltds Claim [1956] 1 Ch 323, 346 349.\nThe footnote went on to observe that Civil law countries, however, which apply the rule make exceptions for acts contrary to their sense of public order.\nThe Court explained its own view of act of state as follows (p 423): The act of state doctrine does, however, have constitutional underpinnings.\nIt arises out of the basic relationships between branches of government in a system of separation of powers.\nIt concerns the competency of dissimilar institutions to make and implement particular kinds of decisions in the area of international relations.\nThe doctrine as formulated in past decisions expresses the strong sense of the Judicial Branch that its engagement in the task of passing on the validity of foreign acts of state may hinder rather than further this countrys pursuit of goals both for itself and for the community of nations as a whole in the international sphere.\nSubsequent to Sabbatino, Congress passed the Hickenlooper amendment, providing that no United States court should in future decline, on the ground of the act of state doctrine, to give effect to the principles of international law, including the principles of compensation, except in any case where the President determined application of that doctrine to be required by the foreign policy interests of the United States.\nAt least at this point, therefore, United States law departed significantly from any principle in English common law.\nStill more recently, the Supreme Court in WS Kirkpatrick & Co Inc v Environmental Tectonics Corpn, International (1990) 493 US 400 endorsed the basis of the doctrine explained in Sabbatino (p 404), underlining that it is not some vague doctrine of abstention but a principle of decision binding on federal and state courts alike.\nIt endorsed the statement in Ricaud that the act within its own boundaries of one sovereign state becomes a rule of decision for the courts of this country (p 406).\nHowever, it went on: Act of state issues only arise when a court must decide that is, when the outcome of the case turns upon the effect of official action by a foreign sovereign.\nThe issues in Kirkpatrick were held not to turn upon the effect of official action by a foreign sovereign (p 406).\nAn unsuccessful under bidder sued the successful bidder for a Nigerian construction contract under United States anti racketeering statutes, on the basis that the contract had been won by bribing officials of the Nigerian Government.\nAlthough it was clear that the bribery would have been illegal under Nigerian law, the court held that Regardless of what the courts factual findings may suggest as to the legality of the Nigerian contract, its legality is simply not a question to be decided in the present suit, and there is thus no occasion to apply the rule of decision that the act of state doctrine requires.\nThe Supreme Court also addressed instructively the relationship between the considerations underlying the doctrine of foreign act of state and its application: Petitioners insist, however, that the policies underlying our act of state cases international comity, respect for the sovereignty of foreign nations on their own territory, and the avoidance of embarrassment to the Executive Branch in its conduct of foreign relations are implicated in the present case because, as the District Court found, a determination that Nigerian officials demanded and accepted a bribe would impugn or question the nobility of a foreign nations motivations, and would result in embarrassment to the sovereign or constitute interference in the conduct of foreign policy of the United States.\nThese urgings are deceptively similar to what we said in Sabbatino, where we observed that sometimes, even though the validity of the act of a foreign sovereign within its own territory is called into question, the policies underlying the act of state doctrine may not justify its application.\nWe suggested that a sort of balancing approach could be applied the balance shifting against application of the doctrine, for example, if the government that committed the challenged act of state is no longer in existence. 376 US, at 428.\nBut what is appropriate in order to avoid unquestioning judicial acceptance of the acts of foreign sovereigns is not similarly appropriate for the quite opposite purpose of expanding judicial incapacities where such acts are not directly (or even indirectly) involved.\nIt is one thing to suggest, as we have, that the policies underlying the act of state doctrine should be considered in deciding whether, despite the doctrines technical availability, it should nonetheless not be invoked; it is something quite different to suggest that those underlying policies are a doctrine unto themselves, justifying expansion of the act of state doctrine (or, as the United States puts it, unspecified related principles of abstention) into new and uncharted fields.\nThis passage bears out an earlier observation by Lord Wilberforce in Buttes Gas (p 934C) that United States courts have moved towards a flexible use of the doctrine [of act of state] on a case to case basis: see para 57 below.\n(iii) Buttes Gas v Hammer\nThe reasoning and nuances of United States law have not been constant and are not necessarily transposable to English law.\nThis was also expressly recognised by Lord Wilberforce in Buttes Gas at p 936F G.\nHowever, he drew support from reasoning in the United States case law for his conclusion that there was room for a principle, in suitable cases, of judicial restraint or abstention: p 934C, and see pp 936H 937A.\nAfter noting the statement in Sabbatino that international law does not require application of the doctrine of act of state, he went on (p 934): Granted this, and granted also, as the respondents argue, that United States courts have moved towards a flexible use of the doctrine on a case to case basis, there is room for a principle, in suitable cases, of judicial restraint or abstention.\nLord Wilberforce then examined where this approach had led the United States courts in litigation on the very same situation as that before the House.\nHe quoted in extenso from a letter written by the Legal Adviser to the US Department of State, discounting any suggestion that issues relating to disputed territorial jurisdiction should be analysed by reference to the so called Act of State doctrine which is traditionally limited to governmental action within the territory of the respective state, and arguing that judicial self restraint rather follows from the general notion that national courts should not assume the functions of arbiters of territorial conflicts between third powers even in the context of a dispute between private parties (p 936B C).\nIn essence, this was the argument that Lord Wilberforce accepted.\nHe summarised the approach he took in relation to the United States case law as follows (pp 936F 937A): The constitutional position and the relationship between the executive and the judiciary in the United States is neither identical with our own nor in itself constant.\nMoreover, the passages which I have cited lay emphasis upon the foreign relations aspect of the matter which appeared important to the United States at the time.\nThese matters I have no wish to overlook or minimise.\nI appreciate also Mr Littmans argument that no indication has been given that Her Majestys Government would be embarrassed by the court entering upon these issues.\nBut, the ultimate question what issues are capable, and what are incapable, of judicial determination must be answered in closely similar terms in whatever country they arise, depending, as they must, upon an appreciation of the nature and limits of the judicial function.\nThis has clearly received the consideration of the United States courts.\nWhen the judicial approach to an identical problem between the same parties has been spelt out with such articulation in a country, one not only so closely akin to ours in legal approach, the fabric of whose legal doctrine in this area is so closely interwoven with ours, but that to which all the parties before us belong, spelt out moreover in convincing language and reasoning, we should be unwise not to take the benefit of it.\nThis led on pp 937 938 to Lord Wilberforces summary of the complex inter state issues and to his conclusion, based on a principle of judicial abstention and non justiciability, set out in para 42 above.\nLord Wilberforces treatment earlier in his speech of foreign act of state in the more limited senses of the first and second types is instructive.\nSpeaking of the category of cases exemplified by Carr v Fracis Times & Co, Luther v Sagor and Princess Paley Olga, he described them (p 931A B) as: cases which are concerned with the applicability of foreign municipal legislation within its own territory, and with the examinability of such legislation often, but not invariably, arising in cases of confiscation of property.\nHe said that Mr Littman (counsel for Dr Hammer and Occidental) had given the House a valuable analysis of such cases , suggesting that these are cases within the area of the conflict of laws, concerned essentially with the choice of the proper law to be applied.\nWithout more, Lord Wilberforce then simply identified two suggested limitations, one that foreign legislation can be called in question where it is seen to be contrary to international law or to public policy, the other that foreign legislation is only recognised territorially ie within the limits of the authority of the state concerned.\nHe dismissed their relevance not by questioning the existence of the suggested limitations, but on the contrary on the basis, as to the first, that It is one thing to assert that effect will not be given, to a foreign municipal law or executive act if it is contrary to public policy, or to international law (cf In re Helbert Wagg & Co Ltds Claim [1956] Ch 323) and quite another to claim that the courts may examine the validity, under international law, or some doctrine of public policy, of an act or acts operating in the area of transactions between states. and, as to the second, that The second argument seems to me to be no more valid.\nTo attack the decree of 1969\/70 extending Sharjahs territorial waters, ie its territory, upon the ground that the decree is extra territorial seems to me to be circular or at least question begging.\nThere is here, in the reference to an executive act, a possible passing reference, though no more, to the second type of foreign act of state.\nLord Wilberforce did not regard this as covering the circumstances before him, because he went on to make clear that he did not regard the case against justiciability of the instant dispute as validated by the rule [ie the rule governing the second type of foreign act of state] itself and that any conclusion in favour of non justiciability would have to be upon some wider principle: p 931F.\nA further reference to the first and\/or second types of foreign act of state appears in Lord Wilberforces reference at p 934B to Sabbatino as a case of act of state in the normal meaning, viz, action taken by a foreign sovereign state within its own territory.\nIn Sabbatino, the United States courts had declined to determine whether the Cuban expropriation decree complied with the requirements of Cuban law: 376 US 398 (1964); 416 FN 17.\nWhat is clear, therefore, is that Lord Wilberforces reliance on reasoning in the United States authorities of Underhill v Hernandez, Oetjen and Sabbatino as well as on the judgments delivered in the United States in parallel litigation between Buttes Gas and Occidental led on his analysis not to an expanded principle of the second type I have identified; rather, it led to a principle of self restraint or abstention in suitable cases (p 934C), which he described as inherent in the very nature of the judicial process and which constitutes the third type of foreign act of state.\nSimilarly, Lord Wilberforce treated the older English cases of Blad v Bamfield (1674) 3 Swans 603 607 (App) 607 and Duke of Brunswick v King of Hanover (1844) 6 Beav 1; (1848) 2 HL Cas 1 as precursors of these United States cases.\nIndeed, he referred (p 933C D) to Underhill v Hernandez (933C D) as following the Duke of Brunswicks case, which, although not mentioned expressly by Fuller CJ, had been referred to in the Circuit Court of Appeals and certainly finds echoes in Fuller CJs language in Underhill v Hernandez.\nBlad v Bamfield is sometimes treated, on the basis of the report of the first hearing of the case (p 603), as a claim by English traders, Bamfield and others, against Peter Blad, a Dane, for wrongful seizure of their goods in Iceland for allegedly fishing contrary to letters patent granted to the defendant by the King of Denmark, as ruler of Iceland.\nBlad sought an injunction to restrain the proceedings.\nBamfield and others claim was seen by the Privy Council at that point as a question of private injury which would depend upon Danish law, for whatever was law in Denmark, would be law in England in this case but if the wrong were done without colour of authority, it was fit to be questioned (p 604).\nOn that basis, the claim was at Lord Nottingham LCs instance allowed to proceed, and the case stood over.\nHowever, a different picture emerges from the report of the second hearing before Lord Nottingham a year later in chancery.\nIt then became clear, first, that the claim relates to a trespass done upon the high sea (p 605), and second that the very manner of the defence [to the injunction] offered by [Bamfield and others] had made it directly a case of state; for they insist upon the articles of peace to justify their commerce, which is of vast consequence to the public; for every misinterpretation of an article may be the unhappy occasion of a war; and if it had been known at Board that this would have been the main part of their case, doubtless the Council would not have suffered it to depend in Westminster Hall.\nOn that basis, Lord Nottingham decreed a permanent stay since it would be monstrous and absurd to send it to a trial at law, where either the court must pretend to judge of the validity of the kings letters patent in Denmark, or of the exposition and meaning of the articles of peace; or that a common jury should try whether the English have a right to trade in Iceland, is monstrous and absurd.\nThe House in Buttes Gas understandably saw this reasoning as an early precursor of a concept of non justiciability.\nThe actual decision can also be seen as an example of the second category of case identified in Shergill v Khaira [2015] AC 359, paras 41 42, in so far as Bamfield was attempting to derive private rights from an unincorporated treaty (see para 43(ii) above), and perhaps also as an example of the second type of act of state, if and so far as Bamfield was attempting to challenge the validity of the kings letters patent in Denmark, granted in favour of Blad for the sole trade of Iceland.\nIn Duke of Brunswick, the King of Hanover was sued for sovereign acts in respect of which it is clear that he had sovereign immunity (once the submission was rejected that he was acting in his private capacity as an English subject).\nBut, drawing directly on words used by Lord Cottenham LC, Lord Wilberforce saw the case also as recognising a general principle of restraint or immunity ratione materiae, to the effect that the courts in England will not adjudicate or sit in judgment upon acts done abroad by virtue of sovereign authority (p 932E F).\nAt p 932F G, he identified this point in Lord Cottenhams further words: It is true, the bill states that the instrument was contrary to the laws of Hanover and Brunswick, but, notwithstanding that it is so stated, still if it is a sovereign act, then, whether it be according to law or not according to law, we cannot inquire into it.\nLord Wilberforce thus derived from his examination of the Duke of Brunswicks case support, no doubt by reference to the issue in dispute, for a principle of non justiciability by the English courts of a certain class of sovereign acts (p 933C).\nLord Wilberforce viewed the relevant acts in that case as having been performed within the territory of the sovereign concerned (p 933B).\nBut he did not suggest that this limited the principle of self restraint, and the decision in Buttes Gas itself indicates that there can be no such absolute limitation.\nLord Wilberforces view as to where the acts were committed is in fact questionable.\nThe plea was that the King of Hanover had, after succeeding HM William IV in 1837, taken possession of the Dukes personal property in Brunswick and elsewhere (p 5).\nFurther, the instrument directly challenged by the claim, under which the King of Hanover claimed to be the lawful guardian of the Dukes personal property, was signed by HM William IV at St Jamess on 6 February 1833 and by the claimants brother in Brunswick on 14 March 1833.\nThe Lord Chancellor also observed (pp 19 21) that the challenge to that instrument was itself a challenge to acts of persons claiming to have the right so to act by virtue of their sovereign authority.\nThat referred to authority claimed under a decree of the Germanic Diet of Confederation, which was established by the Treaty of Vienna 1815 and sat in Frankfurt under Austrian presidency.\nThe Diet had on 2 September 1830 purported to depose the Duke and declare that the throne of Brunswick had passed to his brother.\nAs the Lord Chancellor said, whether the constitution of Germany authorized it or not, is a question we have no power to interfere with, or to inquire into.\nThe case can be seen on this basis as falling, like Buttes Gas itself, into the first category in Shergill v Khaira, ie as non justiciable or requiring judicial abstention.\nVIII Application of the first and second types of foreign act of state\nThe appellants can gain no assistance from the first type of act of state.\nThat depends upon establishing the legality of what occurred in the relevant foreign state.\nThey do however invoke the second type of foreign act of state, or the generalised doctrine which they submit underlies this and the third type of foreign act of state.\nLeaving aside for the moment any issue as to whether the second type of act of state or any such generalised doctrine can cover acts against the person or acts committed outside the jurisdiction of the state committing them, it is convenient to deal at the outset with the respondents submission that the respondents are not inviting the English court to adjudicate upon the validity of the conduct of the foreign states allegedly involved, but are only asking the court to find that such conduct occurred as a matter of fact.\nThe respondents rely in this context on the United States authorities of Kirkpatrick and Sharon v Time, Inc 599 F Supp 538, 546 (SDNY 1984).\nBut in my view validity in the Kirkpatrick sense encompasses legality.\nTo that extent, I do not agree with one part of the reasoning of Perram J in The Federal Court of Australia in Habib v Commonwealth of Australia [2010] FCAFC 12; (2010) 265 ALR 50, at para 44.\nOn these appeals the respondents cases on the issues before the Supreme Court depend upon showing illegal conduct by the various States allegedly implicated as well as by the appellants as accomplices.\nI turn therefore to consider the second type of foreign act of state.\nThis has direct support at Court of Appeal level: para 38 above.\nBut other support for it in English law is noticeably limited, and it is in my opinion unnecessary on this appeal for this Court to reach or endorse a conclusion that it exists in any form at all.\nRule 137 of Dicey, Morris and Collins makes no reference to it, but, on the contrary, reads: A governmental act affecting any private proprietary right in any movable or immovable thing will be recognised as valid and effective in England if the act was valid by the law of the country where the thing was situated (lex situs) at the moment when the act takes effect, and not otherwise.\nThe qualifications if the act was valid by the law of the country and the final phrase and not otherwise confine the scope of rule 137 to the first type of foreign act of state.\nThey might, by themselves, be read as inconsistent with the existence of any second type of foreign act of state.\nBut rule 3 in Dicey, Morris and Collins is in terms which it is possible to read widely enough to cover the second type of foreign act of state.\nIt reads: English courts have no jurisdiction to entertain an action: (1) For the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign state; or (2) founded upon an act of state.\nThe commentary to rule 3 in Dicey, Morris and Collins approves the suggestion made by Lord Keith of Avonholm in Government of India v Taylor [1955] AC 491, 511, that enforcement of claims of the sort identified would amount to an extension of the sovereign power which imposed the taxes or law, or as an assertion of sovereign authority by one state within the territory of another.\nOn that basis, sub rule (2) may be seen inversely as a recognition of the sovereign authority of a foreign state within its own foreign jurisdiction.\nBut a potential problem about such a reading is that it equates sovereignty with executive activity.\nIn states subject to the rule of law, a states sovereignty may be manifest through its legislative, executive or judicial branches acting within their respective spheres.\nAny excess of executive power will or may be expected to be corrected by the judicial arm.\nA rule of recognition which treats any executive act by the government of a foreign state as valid, irrespective of its legality under the law of the foreign state (and logically, it would seem, irrespective of whether the seizure was being challenged before the domestic courts of the state in question), could mean ignoring, rather than giving effect to, the way in which a states sovereignty is expressed.\nThe position is different in successful revolutionary or totalitarian situations, where the acts in question will in practice never be challenged.\nIt is probably unsurprising that the cases relied upon as showing the second kind of foreign act of state are typically concerned with revolutionary situations or totalitarian states of this kind.\nThe commentary in Dicey, Morris and Collins goes on to indicate that sub rule (2) covers both Crown act of state and foreign act of state.\nIn relation to Crown act of state, Dicey, Morris and Collins makes clear that it contemplates acts against person as well as property.\nIn relation to foreign act of state, the text is less specific.\nAt para 5 047 Dicey picks up the citation from Underhill v Hernandez quoted in para 49 above and its deployment in Luther v Sagor and in Princess Paley Olga and then focuses on cases of property seizure: Thus the executive seizure of property by a foreign sovereign within its territory will not give rise to an action in tort in England, either on the basis of this general principle, or because the act was lawful by the law of the place where it was committed.\nNor can a former owner challenge title to property acquired from a foreign government which had been confiscated within its own territory, again either on the basis of the general principle or on the basis of the rule that the validity of a confiscatory transfer of title depends on the lex situs.\nIn discussing these cases in Foreign Affairs in English Courts (1986) p 179, Dr Francis Mann also says pertinently in my view that it is clear in English law that the doctrine of act of state is limited to action taken by a foreign state within its own territory or, perhaps one should say, in respect of property situate in its territory. (italics added for emphasis) In its judgment in Sabbatino, the United States Supreme Court laid some stress on the fact that it was limiting itself to a property context.\nIt said at p 428: Therefore, rather than laying down or reaffirming an inflexible and all encompassing rule in this case, we decide only that the Judicial Branch will not examine the validity of a taking of property within its own territory by a foreign sovereign government, extant and recognized by this country at the time of suit, in the absence of a treaty or other unambiguous agreement regarding controlling legal principles, even if the complaint alleges that the taking violates customary international law.\nThe Court went on to underline what is special about property when addressing the suggested violation of customary international law at p 433: Another serious consequence of the exception pressed by respondents would be to render uncertain titles in foreign commerce, with the possible consequence of altering the flow of international trade.\nIf the attitude of the United States courts were unclear, one buying expropriated goods would not know if he could safely import them into this country.\nEven were takings known to be invalid, one would have difficulty determining after goods had changed hands several times whether the particular articles in question were the product of an ineffective state act.\nAs I have already observed, the United States authorities of Hatch v Baez and Underhill v Hernandez, which might on their facts be taken to be authorities extending the second type of foreign act of state to acts affecting persons as well as property, were both cases which could and would now be seen as involving a straightforward defence of state immunity.\nLooking elsewhere abroad for assistance on this aspect, German law treats foreign confiscatory acts of state as falling outside normal conflicts principles and subject to special rules.\nBased on the territorial principle (Territorialittsprinzip) such foreign confiscatory acts fall to be recognised, so long as the confiscated property was at the time of its confiscation within the jurisdiction of the confiscating state.\nThis is subject only to considerations of ordre public, according to which the Rechtsnorm (legal norm or rule) of another state will not be applied, if it leads to a result inconsistent with fundamental principles of international law, as opposed to purely domestic constitutional provisions, regarding confiscation.\nThe following two cases illustrate the position.\nFirst, in a judgment with wide significance delivered on 23 April 1991, the principles stated in the previous paragraph were held by the German Federal Constitutional Court (Bundesverfassungsgericht or BVerfG) to be consistent with fundamental principles of the German Federal Constitution (Grundgesetz).\nThe issue was the constitutionality of provisions in the Agreement dated 15 June 1990 and Treaty of 31 August 1990 (incorporating such Agreement) between the Federal Republic and the German Democratic Republic (DDR) providing for the reunification of Germany.\nThese provided that confiscations of property effected in the years 1945 to 1949 (the period of Russian occupation before the founding of the DDR) by virtue of the law governing such occupation or act of state were not to be reversed.\nThe Constitutional Court at paras 132 133 explained the principles of what it described as German international confiscation law in the terms identified in para 67 above.\nIt made clear that these principles applied, even if such a confiscation would (for lack of compensation or any other reason) be illegitimate in a domestic context.\nIt regarded the Territorialittsprinzip governing international confiscatory measures as internationally recognised, and, on this basis, it accepted that the confiscatory measures effected in the DDR without compensation both in the immediate post war period by Russian occupying forces and later during the years 1945 1949 with a view to the establishment of a new socialist order were constitutional in terms of the Federal German Constitution.\nSecond, in an impressively reasoned judgment of 7 January 2005 (1 W 78\/04), the Hanseatisches Oberlandesgericht Hamburg elaborated the conceptual basis of the same principles.\nThe claim was by a Zimbabwean farmer, whose harvest had allegedly been illegally expropriated by state officials.\nHe claimed elements of that harvest which he alleged had, as a result of a chain of sales, arrived in Hamburg harbour.\nThe Hamburg Court of Appeal rejected the claim, holding inter alia, in translation (para 7): In the context of worldwide trade, goods arrive daily in Germany from across the whole world for the purpose of further processing, onward sale or end use.\nNot a few come from states, which do not provide the legal protection which is among the fundamental principles of German law.\nIt is demanding too much of the domestic jurisdiction to give it the task, in the case of a foreign act of state taking place abroad, of offering the legal protection which the foreign state is not ready to provide its own citizens, simply because a chain of sales leads through Germany.\nConduct contrary to international law falls to be addressed in other ways, such as through political influence, through the conclusion of treaties between individual states and through the development of the protective legal system of international tribunals.\nI note in parenthesis that the Hamburg Court recognised that, in certain situations, this principle might have to give way to considerations of ordre public, if the application of the foreign norm led to a result which was inconsistent with fundamental principles of German law (para 6).\nBut it made clear that, for this to be the case, the subject matter would have to involve a substantial German connection, which did not exist in a case of Zimbabwean expropriation.\nWhile the principle applied in this case parallels the second type of foreign act of state in a property context, there does not appear to be any authority accepting a similar principle of foreign act of state in German law outside a property context.\nTwo authorities suggest that it is no bar to a claim against the German Federal Republic that it involves determining the lawfulness under international law of the conduct of a third state or an international organisation outside the jurisdiction of any such third state: see the judgments in the Vavarin Bridge case, of the Oberlandesgericht Kln: Az 7 U 8\/04, (28.07.2005) paras 73 to 74 (decided on different grounds on appeal to the Bundesgerichtshof (the BGH or German Supreme Court): III ZR 190\/05) and in separate proceedings before the BVerfG (the Federal Constitutional Court): 2 BvR 2660\/06; 2 BvR 487\/07; and the judgment in the Kunduz Road Tankers case of the Oberlandesgericht Kln: Az 7 U 4\/14 (30.04.2015).\nBoth the Vavarin Bridge and the Kunduz Road Tankers cases were however concerned with activities of the German armed forces outside Germany (in respectively Kosovo and Afghanistan).\nSo they fall outside the scope of the second type of foreign act of state, as I have defined this, and are better read as authority indicating that a need to adjudicate upon the conduct of a foreign state was not seen in the German courts as a basis for any abstention on the lines of the third type of foreign act of state.\nFor completeness, both cases are also of interest as indicating the existence under German law of a doctrine along the lines of Crown act of state.\nThus in the Vavarin Bridge case, the BVerfG acknowledged that certain foreign and defence policy decisions were non justiciable under German law, but confined these within narrow limits by reference to the high complexity or particular dynamics of the relevant material and the difficulty of implementing any decision with regard to it under domestic law: section IV, para 3(aa); and in the Kunduz Road Tankers case the German Supreme Court, overruling the Oberlandesgericht, has recently held, firstly, that an individual foreign victim has no international law right to pursue in a domestic court a claim for alleged violation of international humanitarian law (the law of armed conflict) by the state of that domestic court rather, any remedy in international law lay through invoking the protection of his own state and, secondly, that such a victim also has no claim under German domestic law; in the latter connection, the BGH said that the responsibility of state officers under para 839 of the Brgerliches Gesetzbuch (the BGB or German civil code) for intentionally or negligently causing harm to third parties could not be extended to injuries caused by the armed intervention of German forces since this was essentially an international law matter and any such extension would impact on the area of German foreign policy: II ZR 140\/15 (06.10.2016).\nLord Sumption refers briefly in para 201 of his judgment to dicta in French and Dutch authority as suggesting a principle very similar to his view of the English act of state doctrine.\nIt is, however, necessary to put such authority in context.\nAll but one of the French cases cited by Lord Sumption were property cases falling within the first or second type of foreign act of state (and the one possible exception, considered in para 72(vi) below, is inconsistent with established United Kingdom case law).\nThus: (i) In Socit Cementos Rezola v Larrasquitu et tat espanol (Cour dappel de Poitiers) [1938] Sirey Rec Gen iii, 68, the issue before the French courts was whether to recognise the requisitioning by the Republican Government of Spain of a vessel registered in Spain but evidently outside the Spanish jurisdiction at the time of her requisition.\nIn accordance with the Spanish decree ordering the requisition, notice had been placed in the vessels register by the Spanish consul at Bordeaux.\nThe French Court of Appeal accepted the requisition as effective, thereby, in effect, applying a rule whereby the transfer of merchant vessels depends not on their physical situs, but on the legal position under the law of their registry: compare Dicey, Morris & Collins, The Conflict of Laws (15th ed) para 22E 057 for a discussion of the common law position.\nIt is worth noting that the Poitiers Court of Appeal referred to the requisitioning as an exercise of full sovereignty by the Spanish state qui na port aucune atteinte lordre public de ltat franais.\nThe inference is that there could be some circumstances in which a foreign act of state of this nature might be refused recognition, as being contrary to the public policy of the forum state. (ii) This inference is supported by a decision of the Cour de cassation, Companie Algrienne de Transit et dAffrtement Serres et Pilaire (la SATA) v Socit Nationale des Transport Routiers (la SNTR) (10 mars 1979 (No de pourvoi: 77 13943), in which the Chambre commerciale refused to recognise un acte de puissance public of the State of Algeria, transferring the property of SATA to SNTR, because it constituted expropriation by a foreign state without payment of appropriate compensation (une dpossession opre par un tat tranger sans quune indemnit quitable ait t pralablement verse). (For a sharp critique of this decision, advocating an approach to property cases similar in fact to the German, see a note by Paul Lagarde in Revue critique de droit international priv 1981, pp 527 525.) (iii) Martin v Bank of Spain [1952] ILR 202 involved a refusal by the Bank of Spain as agent of the Spanish state to issue in Spain new notes in exchange for old notes which were no longer legal tender.\nIn holding that the acts in question were, even apart from the principle of immunity, public acts which are not subject to judicial control in France, the Cour de cassation was doing no more, at most, than recognise the second type of act of state, that is the right of a state to deal with property within its own jurisdiction. (iv) Similarly, in poux Reynolds v Ministre des Affaires trangres (1965) 47 ILR 53, the Tribunal de Grande Instance de la Seine was being asked by a buildings former owners to adjudicate upon the validity of a confiscation of property by the Hungarian State, and its subsequent assignment to the French Legation in Hungary said to have taken place under an international agreement.\nAgain, the confiscation falls directly within the second type of act of state.\nThe court also said that the French courts were not competent to interpret the provisions of the international agreement (which it was said did not cover the assignment to the French Legation), but, in the light of the confiscation, the claimants can have had no sustainable rights in any event. (v) Bank Indonesia v Senembah Maatschappij and Twentsche Bank (1959) 30 ILR 28 is another case regarding seizure by the Indonesian State in Indonesia of property which was then, apparently, put into the hand of Bank Indonesia acting in a private law capacity, not as a state organ.\nIt was therefore within the second type of act of state.\nThe case is also of particular interest for the Court of Appeal of Amsterdams statement that the Act of State doctrine relied on by the Bank Indonesia was not a generally accepted rule of international law, and did not apply when the relevant measures were in conflict with international law.\nOn that basis, although the court said that as a rule, a court will not, and should not, sit in judgment on the lawfulness of acts jure imperii performed by, or on behalf of, a foreign Government, this rule must be subject to an exception when the acts in question can be deemed to be in flagrant conflict with international law.\nThis, the Court went on to hold, they were, because they were unmistakably discriminatory and also because they were being used as a means to exert pressure in a political dispute over Netherlands New Guinea. (vi) The Cour de cassation concluded in the case of Ramirez Sanchez Illich, alias Carlos (ECLI:FR:CCASS: 1995:CR06093) that Carloss arrest in Khartoum by Sudan authorities with a view to his return to France for trial constituted an act of sovereignty and that domestic jurisdictions were incompetent to adjudicate upon the conditions under which such authorities had effected such arrest and handed Carlos over to French police in Khartoum to be transported back to France for trial without any arrest warrant or legal procedures.\nFrench civil law and common law therefore diverge in this area: see para 73(v) below.\nThus it can be said that, even in relation to property, the general picture is that French and Netherlands case law is not unqualified in accepting the validity of foreign acts of state.\nThat the second type of foreign act of state is, assuming that it exists, subject to significant limitations under English law has become increasingly clear over recent years.\nThe Court of Appeal was on any view correct in Yukos v Rosneft to identify the importance of these limitations.\nThus: (i) The second type of foreign act of state is, by definition, limited to sovereign or jure imperii acts, excluding in other words commercial or other private acts. (ii) It has been held inapplicable to judicial acts, even though such acts can engage the states responsibility in human rights or international law: Yukos v Rosneft, paras 73 91, citing Altimo (above).\nIn Altimo, the Privy Council held (para 101) that: The true position is that there is no rule that the English court (or Manx court) will not examine the question whether the foreign court or the foreign court system is corrupt or lacking in independence.\nThe rule is that considerations of international comity will militate against any such finding in the absence of cogent evidence.\nOn that basis, the Court of Appeal in Yukos v Rosneft held justiciable the issue whether judicial acts had been part of a campaign waged by the Russian state for political reasons against the Yukos group and its former CEO (para 29), where it was alleged that the courts were in a position of systematic dependency on the dictates or interference of the domestic government (para 90).\nAnother possible explanation of these cases is, however, that they do not illustrate an exception from the second type of foreign act of state, but reflect the public policy exception to the recognition of foreign judicial acts which exists as a matter of conflicts of law in respect of the first type of foreign act of state: see para 37 above.\nIn an English (or English law based) court, it is not surprising if public policy has a fairly expansive role in relation to foreign judicial acts.\nIf one believes in justice, it is on the basis that all courts will or should subscribe to and exhibit similar standards of independence, objectivity and due process to those with which English courts identify.\nGiven the evidence, a domestic court should be able to detect, and it would be surprising if it were obliged to overlook, accept or endorse, any significant shortfall in this respect. (iii) The English courts are entitled to determine whether a foreign law is legal, for example under the local constitution; the foreign law will not be regarded as an act of state which cannot be challenged: Buck v Attorney General [1965] Ch 745, 770; Al Jedda v Secretary of State for Defence [2010] EWCA Civ 758, [2011] QB 773, para 74, per Arden LJ and para 189 per Lord Dyson MR; and see McLachlan, Foreign Relations Law, para 12 129; Dicey, Morris and Collins para 5 048. (iv) Acts of officials granting or registering intellectual property rights have been held to be outside any doctrine of foreign act of state: Lucasfilm Ltd v Ainsworth [2011] UKSC 39; [2012] 1 AC 208. (v) In a criminal law context, English courts have had no hesitation (a) about investigating and adjudicating upon the wrongful detention and rendition of individuals by foreign states in conjunction with United Kingdom authorities, in breach of a foreign law.\nIn R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42, the House held that kidnapping and abduction from South Africa of a person wanted for trial in England in violations of international law and of the laws of another state [ie South Africa] required recognition by the court in order to uphold the rule of law, with the result that the trial was stayed: see eg pages 62G, 67G and 73G.\nIn R v Mullen [2000] QB 520, the Court of Appeal Criminal Division followed Ex p Bennett, setting aside the conviction of Mr Mullen, who had been deported from Zimbabwe to the United Kingdom as a result of a plan concocted between the United Kingdom and Zimbabwean authorities which involved breaching Zimbabwean extradition law.\nThe Australian High Court decision in Moti v The Queen [2011] HCA 50, 245 CLR 456, discussed in para 82 below, has adopted the same approach after expressly considering and rejecting a Crown submission that foreign act of state precluded its adoption. (b) Lord Sumption suggests (para 246) that Mullen, Bennett and Moti can all be explained on the basis that any unlawfulness in the conduct of the foreign officials was incidental, that the unlawfulness of the Australian officials conduct was enough to justify staying the proceedings against Mr Moti and that the unlawfulness of the acts of their foreign collaborators was irrelevant.\nThis in my opinion misreads all three cases; it inverts their significance.\nIt was an essential step in the reasoning of each that the foreign officials (the primary actors in the illegal deportation in each case) had acted illegally.\nFar from being incidental or irrelevant, the foreign officials illegal conduct was in each case the key to the scheme of deportation.\nWithout it, there would have been no illegal deportation at all.\nIf the second type of foreign act of state had any application to personal wrongs of this nature, investigation and condemnation of the British authorities conduct should have been precluded on the grounds that the direct actors in the illegality were foreign state officials, acting within their own territory, whose conduct was immune from investigation or criticism.\nIn neither of the first two cases did anyone conceive of such an argument, and in the third, where it was raised, it was categorically, and rightly, dismissed.\nIn so far as the present appeals relate to alleged complicity by British officials in illegal conduct by foreign officials within their own foreign jurisdictions, they present exact parallels in a civil context to these three deportation cases in a criminal context.\nIt is no answer to this that, on a hypothesis contrary to the actual facts, the British or Australian authorities in these cases might (possibly) have been able to kidnap the wanted individuals from the foreign jurisdictions by themselves without the relevant local authorities involvement.\nThe doctrine of foreign act of state must depend on the actual facts, not on inapplicable counter factuals.\nIndeed, if counter factuals of this nature were relevant at all, they could presumably also be advanced in the current cases of Belhaj and Rahmatullah.\nAll this suggests caution in todays world about recognising the application of the second type of foreign act of state in areas where it has hitherto had no discernible domestic role.\nThe recognition by the Court of Appeal in (in particular) Princess Paley Olga of the second type of foreign act of state was not challenged on the present appeal, and I am, as I have said, content for present purposes to proceed on that basis, because of the special characteristics of property, and the special considerations applying to it, in particular the need for security of title and of international trade.\nSimilar characteristics and considerations do not apply to individuals who have been the victim of personal torts, and who can found jurisdiction against a relevant non state actor outside the territory of any foreign state also implicated in the tortious acts.\nRecognising title to property is different from refusing to inquire into the justification for the infliction of personal injury.\nThe second type of foreign act of state can and should, in my view, be limited as a matter of principle to sovereign acts seizing or affecting (i) property which is (ii) within the jurisdiction of the state in question at the time when the act takes effect.\nIt is for the common law to define to what extent, if at all, it is prepared to refrain from adjudicating upon an issue involving a foreign states conduct, when the foreign state is not impleaded and the actual defendant has him or itself no immunity.\nI see no reason in this context to go any further than I have indicated by giving the doctrine any wider effect.\nIn the United States, as I have noted, Hatch v Baez was and Underhill v Hernandez could have been, and would today certainly be, resolved by reference to state immunity.\nWhether, even in the United States, the reasoning in Underhill v Hernandez should be limited to contexts where a plea of state immunity would also be possible, or, as may even be (see paras 49 and 50 above), to situations of detention by the military in times of war, is unnecessary for decision here.\nOn any view, movable property presents special considerations because of its marketability, as all the decided cases on movables (Oetjen, Luther v Sagor, Princess Paley Olga and Sabbatino) illustrate.\nPersonal injury or detention does not present these considerations.\nCrown act of state also presents different considerations, since the Crown cannot claim state immunity in its own courts.\nIn contrast, any proceedings against a foreign state or its officials in the English courts will be barred by state immunity.\nIt is only in particular situations, like the present, that foreign act of state of the second type could conceivably be relevant.\nI see no reason to extend the doctrine (assuming the second type to exist at all) to cover such situations.\nOn the contrary, to do so would, once again, be on the face of it to render the appellants immune from suit both in their own jurisdiction and anywhere else, while leaving the foreign states at least vulnerable to suit in their own jurisdictions.\nThe appellants submit in response to this last point that foreign act of state would cease to be an objection to English proceedings against the appellants as secondary parties, if and when the respondents had successfully established the relevant facts and the liability of each of the relevant foreign states by proceedings in those states domestic courts.\nIt is true that General Assembly Resolution 56\/83 on Responsibility of States for internationally wrongful acts deals in turn with a state which breaches an international obligation (articles 12 15), before dealing with the responsibility of a state in connection with the act of another state.\nIn the latter connection, it addresses situations of aid or assistance (article 16), direction and control (article 17) and coercion (article 18).\nA rgime which insisted on the actual actor being sued first would attach jurisdictional significance to a factor which would not normally have this significance and which might distort the natural course of events: a state aiding or assisting, and certainly a state procuring, directing, controlling or coercing, might be the more culpable party and natural target than the actual actor.\nThere could also be two main actors, or it could be uncertain which state was a main actor and which a secondary participant; eg in the present case, take for example the alleged wrongful rendition from Malaysia by collaboration between Malaysian and United States authorities.\nSo it could be uncertain which should be sued first.\nIt would on any view be optimistic to view the proposed course as a light task.\nIt would make recourse against the appellants dependent upon the operation, in the present case, of up to four separate foreign court systems.\nIn their joint intervention before the Supreme Court, the International Commission of Jurists, JUSTICE, Amnesty International and Redress (the NGO Interveners) make the point that No rendition to torture case against US officials has, to the knowledge of the NGO Interveners, ever succeeded in a US court since September 11.\nSuch actions are commonly blocked by various other US doctrines to which the appellants refer in their written case, in particular the political questions doctrine and the state secrets doctrine.\nAs Professor Jonathan Hafetz has observed [in Recapitualising Federal Courts in the War on Terror, St Louis University Law Journal, Vol 56, 2012, p 21]: Federal courts have repeatedly dismissed actions by noncitizens against US officials seeking damages for arbitrary detention, torture, and other mistreatments.\nThe dismissals, which rest on various grounds, including the state secrets privilege, Bivens special factors, and qualified immunity, typically cite the twin concerns of separation of powers and limited judicial capacity as reasons for denying litigants a federal forum.\nThe decisions portray federal courts as unable to provide remedies for\neven the most egregious rights violations\nIn the upshot, therefore, in relation to the second type of foreign act of state, I consider that Leggatt J was correct in paras 115 and 177 of his judgment in Rahmatullah to treat the traditional foreign act of state doctrine, by which I understand he meant to cover the first and second types of foreign act of state, as limited to acts done within the foreign states jurisdiction as well as subject to a potential public policy exception.\nBut Leggatt J was, in my view, on less certain ground in so far as he held that the second type of act of state could not apply to acts of the United States in Iraq and Afghanistan, because these were not acts done within US territory where the laws of the United States applied.\nHe did not address, and may not have been asked to address, the basis on which the United States was present in those countries.\nIn the case of Iraq, it was, together with the United Kingdom, an occupying power acting pursuant to Security Council Resolution 1483 (2003) dated 22 May 2003.\nAs such, it had the duty under article 43 of the Geneva Convention IV dated 18 October 1907 to respect unless absolutely prevented, the laws in force in the country.\nNonetheless, it was the relevant state power, and it is certainly arguable that, within the ambit of the second type of foreign act of state, its acts should be recognised.\nAs to Afghanistan, the United States was present there by consent of the Afghan Transitional Authority as part of the International Security Assistance Force: see Security Council Resolution 1510 (2003) dated 13 October 2003.\nNo doubt, it had considerable powers, but it appears much less possible to argue that its acts in that capacity should be regarded as within the ambit of the second type of foreign act of state.\nWhatever answer is given to these points, however, I would reach the same conclusion as Leggatt J with regard to the second type of act of state, on the basis that (assuming it to exist at all) it is and should be confined to acts affecting property.\nThe second type of foreign act of state therefore has no application in Rahmatullah.\nSimilar reasoning applies in Belhaj, with regard to any reliance on the second type of foreign act of state.\nThe claims are all for physical detention or rendition or mistreatment and so, I would hold, outside the second type.\nThose for mistreatment by the United States officials in Thailand and (if such mistreatment be alleged there, which is unclear) Libya also relate to conduct on any view outside United States jurisdiction.\nIn contrast, those for mistreatment on a United States airplane in transit between Thailand and Libya, at least while over areas like the high seas not under the sovereignty of any state, can and should be probably regarded as occurring within United States jurisdiction, assuming the aircraft to have been registered there: see Dicey, Morris and Collins, rule 129 exception 2 and compare also the (Chicago) Convention on International Civil Aviation, article 17.\nThe Court of Appeal in Belhaj dealt with the issues before it on a different basis, by recognising a public policy exception unrestricted by any need for the facts relied upon to be indisputable or undisputed.\nHad I regarded the second type of foreign act of state as applicable to personal wrongs, I would have concluded that the Court of Appeal was right in Belhaj to recognise such an exception or, as I would prefer to see it, qualification.\nLord Wilberforce in Buttes Gas recognised in general terms that public policy could constitute a valid basis for refusal to recognise a foreign act of state of either the first or second type: see the quotation from his speech cited in para 59 above.\nThe appellants submit that to recognise such an exception or qualification, when its application would involve investigating disputed facts, goes beyond anything contemplated or decided in the Kuwait Airways case.\nI do not accept that submission.\nIn Kuwait Airways, Iraqi Airways was raising a conventional defence by relying on the Iraqi law by which the Kuwait Airways fleet, then in Iraq, was transferred to it.\nTo take itself outside the scope of the first type of foreign act of state, Kuwait Airways had in response to invoke the public policy exception, by relying on matters happening at an international level and involving hostilities between states and the reactions and resolutions of the Security Council.\nThat response raised immediate problems of justiciability, which could however be overcome by pointing to the clarity, indisputability and seriousness of the violations of the United Nations Charter and Security Council Resolutions.\nUnless a claim for detention or mistreatment by United Kingdom officers in conjunction with foreign state authorities can be regarded as non justiciable within the third type of foreign act of state, no such considerations arise.\nWere it (contrary to my view) necessary to identify the scope of such a qualification, it would at least be as extensive as that discussed later in this judgment in the context of non justiciability or judicial abstention.\nThe Court of Appeal in Belhaj found (in paras 96 102) assistance and support for its conclusion in the Federal Court of Australia decision in Habib v Commonwealth [2010] FCACA 12; (2010) 265 ALR 50.\nIt saw this, rightly in my view, as based on two distinct lines of reasoning.\nOne, not directly relevant here, was the Australian constitutional position, which was viewed as requiring a remedy.\nThe other was a more general conclusion regarding the scope of the second type of foreign act of state.\nThe Federal Court treated this type as potentially applicable to claims relating to person as well as property.\nThe claim was that Australian officials had aided, abetted and counselled torture of an Australian citizen by foreign officials while he was detained in Pakistan, Egypt and Afghanistan and in Guantanamo Bay.\nContrary to the appellants case, the relevant facts were neither clear nor accepted: see eg paras 58 67 per Perram J and para 110 per Jagot J. Black CJ saw public policy as an answer to any defence of act of state in relation to the claim (paras 7 and 13).\nPerram J saw the defence of foreign act of state being advanced as a rule of validity (not a rule of abstention or deference), and therefore as one on which a human rights exception might be hung: see paras 43 and 45.\nJagot J accepted that there was a public policy exception, and explicitly rejected any distinction between known and alleged violations, as without support in the authorities or in principle.\nShe added that there were legal parameters in international and Australian law enabling judicial determination of the claims and meaning that this was no judicial no mans land: paras 107 110.\nThe case is also of particular interest, because the claim was, as it is in the issues now before the Supreme Court, for secondary responsibility arising from alleged aid, abetting or counselling by Commonwealth officials in relation to conduct allegedly committed by foreign officials.\nThe Australian High Court returned to this theme in Moti v The Queen 245 CLR 456 in a context which has resonance in the present appeals.\nMr Moti claimed that he had been deported by officials of the Solomon Islands Government from the Solomon Islands to Australia, where he was wanted for trial.\nThe deportation occurred after the High Commissioner had issued a travel document for Mr Moti and visas for the Solomon Islands officials who were to accompany him on the aircraft bound for Australia, knowing that Solomon Islands law was going to be breached by deporting Mr Moti on the same day without giving him a seven day opportunity to challenge deportation.\nThe majority judgment, given by French CJ for six out of the seven members of the High Court, held that there was no general and universally applicable rule that Australian courts may not be required (or do not have or may not exercise jurisdiction) to form a view about the lawfulness of conduct that occurred outside Australia by reference to foreign law (para 50) and that Here, the question of the lawfulness of the appellants removal from Solomon Islands, although effected by the Solomon Islands Government, was a preliminary to the decision whether a stay should be granted.\nThe primary judge was not right to conclude that [i]t is not for this court to express an opinion on these decisions made by the Solomon Islands government.\nThe appellants submit that this decision falls within the Kirkpatrick exception, as a case where all that mattered was the facts about what happened in the Solomon Islands, not whether these facts involved illegality.\nI reject that analysis, basically for reasons already given in para 73(v)(b) above.\nIt was critical to establish that there was illegality under Solomon Islands law, with which the Australian High Commissioner had at the least gone along.\nIn the present appeals, the issue whether there was illegal conduct by foreign state officials under their own laws is also a preliminary to a decision on whether the appellants arranged, assisted or encouraged or otherwise connived or joined in such conduct, but that is no reason for an English court to refuse to determine it.\nThere remains the question what considerations could as a matter of public policy require the English court to investigate and adjudicate upon an issue if and to the extent that this would otherwise be impermissible on the ground that it constituted a foreign act of state of the second type.\nIn the property context, to which I consider the second type of foreign act of state should be confined, the relevant considerations are likely to be extreme.\nIn Luther v Sagor the Court of Appeal rejected roundly submissions that the confiscatory decree was so immoral and so contrary to the principles of justice recognised in the United Kingdom that no attention should be paid to it.\nIn relation to the second type of foreign act of state, considered in Princess Paley Olga, the arbitrariness of a governmental seizure of property without any legislative footing was even more evident.\nOn the other hand, the Hamburg Court of Appeal case mentioned in para 69 above and the Amsterdam Court of Appeal case of Bank Indonesia v Senembah Maatschappij and Twentsche Bank (1959) 30 ILR 28, mentioned in para 72(v) above, both suggest that, even in relation to property, there may be some public policy limits in terms of arbitrariness and discrimination to the foreign state acts which a domestic court should recognise.\nOn the hypothesis, contrary to my conclusion, that the second type of foreign act of state should be seen as extending to sovereign acts against the person, the case for recognising some public policy limits would seem, if anything, even stronger.\nHowever, since I do not consider that the second type of foreign act of state has any application to sovereign conduct against the person within the relevant foreign state, it is unnecessary and I think undesirable on these appeals to attempt to be more specific about the circumstances in which public policy could and should entitle a domestic court to adjudicate upon any such conduct.\nFor these reasons, I do not consider that the issues now before the Supreme Court fall within the second type of foreign act of state, assuming this to exist in any form, or that it should not proceed to trial for that reason.\nIX Application of third type of foreign act of state\nIn the light of the above, the critical issue becomes the scope of the third type of foreign act of state.\nOn this, the Courts below adopted different approaches.\nThe Court of Appeal in Belhaj, paras 53 55, drawing on the analysis of the Court of Appeal in Yukos v Rosneft (No 2), paras 66 67, approached foreign act of state as an over arching principle of non justiciability, subject to limitations.\nIt saw it as founded on the principle of sovereign equality of states identified in the Duke of Brunswicks case (see para 63 above) and by Fuller CJs statement in Underhill v Hernandez (para 49 above).\nIt coupled this with considerations of comity, with the caveat that this should not be confused with the avoidance of embarrassment (para 66).\nThe Court of Appeal noted correctly (paras 65 66) that both these bases for an over arching principle of non justiciability had been cited, with approval, by Lord Wilberforce in Buttes Gas.\nIt did not accept that this Courts judgment in Shergill v Khaira should be read as suggesting that the third type of act of state is limited to situations of lack of judicial competence arising from the principle of separation of powers (para 67).\nThe critical limitation identified by the Court of Appeal in Belhaj at paras 83 87 and 114 (and in Yukos v Rosneft at para 69) was the public policy limitation identified in Oppenheimer v Cattermole and the Kuwait Airways case.\nThose were both cases involving the first type of foreign act of state the requirement under ordinary conflicts principles for domestic recognition of foreign legislation affecting movable or immovable property within the foreign jurisdiction: see, in relation to Kuwait Airways, para 80 above.\nAs explained in para 80 above, the third type of foreign act of state only arose for consideration in Kuwait Airways, because the public policy, on which Kuwait Airways relied in response to prevent the recognition of the Iraqi law, concerned inter state hostilities and the Security Councils intervention under Chapter VII of the UN Charter.\nThe clarity and seriousness of the breaches of international law involved enabled the House to conclude that Kuwait Airways response was justiciable.\nThe facts in Belhaj are in dispute.\nThey are neither indisputable nor obvious.\nOn its approach to foreign act of state and to the Kuwait Airways case, the Court of Appeal in Belhaj saw itself as faced with an exception to the foreign act of state doctrine, which had hitherto only been recognised in cases of indisputable and obvious violations of fundamental rights, and which would need to be understood in a wider sense if the claims by Mr Belhaj and Mrs Boudchar were to proceed.\nIt concluded that the limitation was indeed to be understood more widely, drawing on various considerations set out at paras 114 121.\nThey were, in summary, that (i) international law has moved from regulating state to state conduct, to regulating human rights for the benefit of individuals, (ii) the allegations in Belhaj are of particularly grave violations of human rights, (iii) the respondents are either current or former officials of state in the United Kingdom or government departments or agencies, whose conduct would not normally be exempt from an investigation, in which there is a compelling public interest, and who are only suggested to be exempt because of the alleged involvement of other states and their officials, (iv) there is no lack of judicial or manageable standards, (v) unless the English courts exercise jurisdiction, the allegations will never be subject to judicial investigation and (vi) the risk of displeasing allies or offending other states cannot outweigh the need to exercise jurisdiction.\nLeggatt J in contrast understood the third type of foreign act of state as a principle of non justiciability limited to cases where the issues were genuinely political in one of the two senses mentioned in Shergill v Khaira.\nI understand by this that he meant that either (i) the court was being asked to adjudicate upon the legality of decisions and acts of sovereign states on the international political stage governed by power politics, or in relation to which there were no manageable or judicial standards, or (ii) the court was being asked to adjudicate in the abstract on international legal issues without there being any domestic foothold in the form of a relevant enforceable legal right requiring this to be done.\nHe held that neither was the case: paras 141 and 163.\nIn my view, Leggatt J was correct in Rahmatullah to approach the claims on the basis that the question is whether the principle of non justiciability constituting the third type of foreign act of state applies at all, rather than whether any exception to it exists or should be grafted onto it.\nThe third type of foreign act of state is a principle of non justiciability or abstention.\nThe Court of Appeal explained the principle as founded on the sovereign equality of states and comity.\nThere is force in the appellants submission that, if this is the basis of the principle and if it is otherwise engaged by the issues or subject matter, then a public policy exception to its application is difficult to rationalise.\nThe graver the alleged violations by foreign state officials, the greater would then be the infringement of the principles of sovereign equality of states and comity if domestic courts were to investigate and adjudicate upon the allegations.\nFor this reason, I prefer to put the focus on the ambit of the third type of foreign act of state.\nHowever, I agree with Lord Sumption (para 248) that this difference between us cannot be critical.\nWhat matters is how one defines the ambit or any exceptions.\nIt is clear from Buttes Gas that the application of the third type of foreign act of state is fact and issue sensitive; it needs to be considered on a case by case basis in the light of the issues involved.\nThere is, in this context, no reason why the third type of foreign act of state should be limited territorially.\nFurther, in Buttes Gas the House was concerned with a highly unusual situation, and I accept the appellants submission that it does not follow that the principle is limited to analogous situations.\nIn particular, Lord Wilberforces reference to an absence of judicial or manageable standards (para 42 above) was directed very specifically to the circumstances before him.\nIf and when it is the case that there are no judicial or manageable standards by which to determine an issue, then the case will no doubt be non justiciable.\nBut an absence of such standards should not be seen as a generalised or exclusive test.\nIn Shergill v Khaira, the Supreme Court was concerned with a very different factual situation to the present and it did not have the benefit of the extensive citation of authority and submissions which we have had on the present appeals.\nThe categorisation advanced in paras 41 43 of the Supreme Courts judgment in that case was deliberately not exhaustive (vide, the word generally), and neither were the examples given of cases within the two identified sub categories intended to be exhaustive.\nAs to the Court of Appeals conclusion (paras 67 68) that this Courts judgment in Shergill v Khaira should not be understood as limiting the third type of act of state to situations of lack of judicial competence arising from the separation of powers, I agree that lack of judicial competence is not a helpful qualification.\nJudicial abstention is in contrast a helpful term, and preferable in my view to non justiciability.\nThis third type of act of state (described explicitly by Lord Sumption as international law act of state) has on any view a broad international basis.\nThis was, in Shergill v Khaira, identified briefly by the reference in para 40 to the dispute in Buttes Gas as trespassing on the proper province of the executive, as the organ of the state charged with the conduct of foreign relations, and developed more fully in para 42 in Shergill v Khaira.\nConsiderations of separation of powers and of the sovereign nature of foreign sovereign or inter state activities may both lead to a conclusion that an issue is non justiciable in a domestic court.\nThe problem is to identify more precisely in relation to what issues and when such adjudication is inappropriate.\nThe appellants submit that Leggatt J took too large a view of the issues properly justiciable in a domestic court.\nIn particular, having held that there were judicial and manageable standards to resolve the issues in Rahmahtullah, and dismissed in this context any difficulties which might arise if the United States did not cooperate with evidence or documents, he considered that justiciability depended upon whether examination of the acts of United States officials was necessary in order to decide a question of domestic legal right: paras 153 and 163.\nIn short he circumscribed the circumstances capable of being embraced by the first sub category, and too readily assumed that, because a claim of right was made, the case fell within the second sub category, in Shergill v Khaira (see para 43 above).\nIn this connection, Leggatt J also treated the previous Court of Appeal decision in R (Noor Khan) v Secretary of State for Foreign and Commonwealth Affairs [2014] 1 WLR 872 as falling within the second sub category, and explained the Court of Appeals refusal there to grant relief on the basis that no claim of right was involved.\nThe claimant in Noor Khan was seeking no more than a public declaration that a GCHQ officer or other Crown agent who passes locational intelligence to an agent of the US may commit an offence of encouraging or assisting in a crime under sections 44 46 of the Serious Crime Act 2007 (para 150).\nThe claimant in Noor Khan was the son of a tribal elder killed in a US drone strike in Pakistan pursuant, allegedly, to locational intelligence supplied by GCHQ to the CIA.\nHe maintained that there could be no defence of combat immunity to a charge of murder: GCHQ and CIA officials were not members of the US and UK armed forces and could not be combatants, there was no armed conflict in Pakistan and Al Qaeda was too incoherent and sporadic in its actions for it to be shown that there was an armed conflict even in Afghanistan.\nIn any event, if there was an armed conflict, it was non international in nature.\nLeggatt J explained this case as one where the claimant was not claiming that he had any legal right which the defendant had violated.\nThe relief sought was, in effect, an advisory opinion on the criminal law.\nThe case, he said, fell therefore into the second sub category identified in Shergill v Khaira (para 43 above).\nIt would seem to follow from this and from para 163 of Leggatt Js judgment that, if the claimant had had some substantive claim (eg for damages in his fathers or his own right), the claim would, in Leggatt Js view, have been justiciable.\nIn my opinion, that is unlikely to be correct, though it is unnecessary to reach any firm conclusions in this area.\nNoor Khan was a very particular case: it proceeded on an assumption that, under sections 44 46 of the Serious Crime Act 2007, the liability of UK nationals should be determined not by reference to whether the United States agents whose conduct was said to have been assisted by UK nationals were actually guilty of any offence within the jurisdiction of the UK courts, but by considering whether the conduct so assisted would have constituted an offence within the jurisdiction of the UK courts, if committed by a UK national.\nLord Dyson MR, giving the sole reasoned judgment, regarded the claim as non justiciable, because, quoting (at paras 34 and 35) from and agreeing with Moses LJs analysis below: The proposition, even if it is right, that a person may be guilty of secondary liability for murder under sections 44 46, although the principal could not, is no answer to the fundamental objection to Lord Dyson went on to say (para 37): the grant of a declaration: that it involves, and would be regarded around the world as an exorbitant arrogation of adjudicative power in relation to the legality and acceptability of another sovereign power.\nEven if the argument focused on the status of the attacks in North Waziristan (international armed conflict, armed conflict not of an international nature, pre emptive self defence) for the purposes of considering whether the United Kingdom employee might have a defence of combatant immunity, it would give the impression that this court was presuming to judge the activities of the United States.\nIn my view, a finding by our court that the notional UK operator of a drone bomb which caused a death was guilty of murder would inevitably be understood (and rightly understood) by the US as a condemnation of the US.\nIn reality, it would be understood as a finding that (i) the US official who operated the drone was guilty of murder and (ii) the US policy of using drone bombs in Pakistan and other countries was unlawful.\nThe fact that our courts have no jurisdiction to make findings on either of these issues is beside the point.\nWhat matters is that the findings would be understood by the US authorities as critical of them.\nAlthough the findings would have no legal effect, they would be seen as a serious condemnation of the US by a court of this country.\nIn substance, therefore, Lord Dyson saw the issue as one of the lawfulness of the use of drones and as non justiciable, because its resolution would depend upon determining whether there was an armed conflict in Pakistan and\/or Afghanistan, whether any such conflict was international or non international in nature and what rights of action or self defence existed.\nAll those are issues on which the policy and judgment of the executive and armed forces might be expected to prevail: compare the Court of Appeal Criminal Divisions provisional view to that effect in R v Gul (Mohammed) [2012] 1 WLR 3432, paras 20 to 23. (The decision in Gul was upheld on grounds not referring to this point at [2014] UKSC 64; [2014] AC 1260).\nIt is true that the common law develops and responds to changing times and attitudes, and that a sharp division between the domestic and international legal sphere is less visible today than in the past.\nThe case of Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 is an example of this development.\nI also note encouragement given by distinguished international lawyers in article 2 of the Institut de Droit internationals resolution The Activities of National Judges and the International Relations of their State (Milan, 1993), to the effect that: National courts, when called upon to adjudicate a question relating to the exercise of political power, should not decline competence on the basis of the political nature of the question if such exercise of power is subject to a rule of international law.\nSome matters are however better addressed at the international legal level, rather than in domestic courts.\nIn civil as well as common law, it appears unsurprising under present conditions that domestic courts should treat acts of government consisting of an act of war or of alleged self defence at the international level as non justiciable and should abstain from adjudicating upon them: see the concurrently issued judgment in the cases of Rahmatullah and Serdar Mohammed to which reference is made in paras 6 and 8 above; see also para 71 above and the remarks of the majority and of Judge Costa in his concurring judgment in Markovic v Italy (2006) 44 EHRR 52, paras 113 116.\nWhether, at least apart from the special statutory provisions in Noor Khan, there might also have been issues of non justiciability under the principle of Crown act of state does not require further examination here.\nHowever, even if Leggatt J took too limited a view in this respect of the circumstances in which domestic courts should exercise self restraint and abstain, I have little difficulty with the result he reached on the facts as alleged and assumed for present purposes before him.\nWhat is alleged in Rahmatullah is wrongful detention combined with severe mistreatment over a period of years by United States authorities, in circumstances for which the United Kingdom is alleged to have secondary responsibility.\nWhether that case can be made out will depend on identifying the relevant laws in force at the relevant times, whether they be the domestic laws in force in Iraq and Afghanistan or international law, as well as upon investigation of the relevant facts.\nApart from the mere fact that the primary actor was the United States, I do not on present material see a basis for concluding that the issues will involve sovereign, international or inter state considerations of such a nature that a domestic court cannot or should not appropriately adjudicate upon them.\nThe mere fact that Mr Rahmatullah was handed over to the United States under an agreement cannot, I think, suffice to make the claims for alleged wrongful detention combined with severe mistreatment by the United States non justiciable in respect of either the United States primary, or the United Kingdoms ancillary, involvement.\nI would accept that detention overseas as a matter of considered policy during or in consequence of an armed conflict and to prevent further participation in an insurgency could in some circumstances constitute a foreign act of state, just as it may constitute Crown act of state when undertaken by the United Kingdom: see our concurrent judgment in Rahmatullah and Serdar Mohammed.\nBut here we are concerned, in Belhaj, with allegations of apparently arbitrary rendition with a view to forcible handing over to an arbitrary ruler and, in Rahmatullah, with allegations of what again appears to have been arbitrary detention without any of the usual forms of legal or procedural protection accompanied by severe mistreatment.\nEven if one could say that such treatment reflects some policy of the various foreign states involved, or indeed of the United Kingdom, it goes far beyond any conduct previously recognised as requiring judicial abstention.\nThere is certainly also no lack of judicial and manageable standards by which to judge it.\nThe critical point in my view is the nature and seriousness of the misconduct alleged in both cases before the Supreme Court, at however high a level it may have been authorised.\nAct of state is and remains essentially a domestic law doctrine, and it is English law which sets its limits.\nEnglish law recognises the existence of fundamental rights, some long standing, others more recently developed.\nAmong the most long standing and fundamental are those represented in Magna Carta 1225, article 29, which reads: No free man shall be taken, or imprisoned, or dispossessed, of his Liberties, , or be outlawed, or exiled, or in any way destroyed; nor will we condemn him, nor will we commit him to prison, excepting by the legal judgment of his peers, or by the laws of the land.\nTo none will we sell, to none will we deny, to none will we delay right or justice.\nFurther, torture has long been regarded as abhorrent by English law: see eg A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221, para 11, per Lord Bingham, and individuals are unquestionably entitled to be free of deliberate physical mistreatment while in the custody of state authorities.\nSovereign states who without justification and without permitting access to justice detain or mistreat individuals in the course or in relation to their conduct of foreign relations or affairs have sovereign immunity in foreign domestic courts.\nBut I see no reason why English law should refrain from scrutinising their conduct in the course of adjudicating upon claims against other parties involved who enjoy no such immunity here, where the alleged conduct involves almost indefinite detention, combined with deprivation of any form of access to justice and, for good measure, torture or persistent ill treatment of an individual.\nThis is consistent with the reasoning in R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs [2002] EWCA Civ 1598, where, in the context of a claim judicially to review the Secretary of State for alleged inaction in respect of the plight of a British citizen detained in Guantanamo, the Court of Appeal said that where fundamental human rights are in play, the courts of this country will not abstain from reviewing the legitimacy of the actions of a foreign sovereign state (para 53) and that it was not possible to approach this claim for judicial review other than on the basis that, in apparent contravention of fundamental principles recognised by both jurisdictions and by international law, Mr Abbasi is at present arbitrarily detained in a legal black hole (para 64).\nThese observations are together sufficient to support a conclusion that Mr Rahmatullahs claims against the Ministry of Defence and the Foreign and Commonwealth Office are not, as presented, barred by reason of the doctrine of foreign act of state.\nI recognise of course that the whole factual position may appear differently if and when the case is tried on the basis of actual, rather than assumed facts.\nThere will or may then be evidence as to what actually happened and what really motivated those holding and treating Mr Rahmatullah.\nI also recognise, as Leggatt J did, that there may be practical evidential difficulties in disputing the accounts of what happened to Mr Rahmatullah in US custody.\nThat assumes that the United States will not cooperate with information and evidence.\nBut, even if the United States do not cooperate, evidential difficulties of this nature are, I think, far from what was in mind in Buttes Gas or any other of the relevant authorities and are not a basis for concluding that a claim is non justiciable.\nTurning to Belhaj, on the assumed facts, this appeal too cannot in my view be regarded as raising any issues of a sovereign, international or inter state nature upon which a domestic court cannot or should not appropriately adjudicate.\nSimon J at first instance concluded with hesitation that there were no clear and incontrovertible standards for deciding both whether the actions of the Chinese state were unlawful by the standards of Chinese law (para 146) and whether the conduct of US authorities outside the United States was unlawful (para 150).\nThe respondents have since made clear that they do not rely on any act or conduct committed by or in conjunction with the Chinese authorities.\nA hint of the underlying reasons why the United Kingdom may have been willing to supply information to Libya about Mr Belhaj is present in the alleged letter reference to demonstrating the remarkable relationship we have built over the years, and the respondents themselves add to this an allegation that the renditions took place as part of a co ordinated strategy designed to secure diplomatic and intelligence advantages from Colonel Gaddafi.\nAs to this, there is, as I have noted (paras 8 to 10 above) no suggestion that general foreign policy advantages of this nature could justify a plea of Crown act of state.\nAny attempt to rely on them to support a plea of foreign act of state in respect of the present claims against the United Kingdom for collaboration or connivance in the alleged false imprisonment, rendition from one country to another or mistreatment of individuals such as Mr Belhaj and Mrs Boudchar would at once meet the difficulty that the United Kingdom would be advancing its own breaches of the fundamental rights of those individuals.\nThe letter reference and the respondents allegation do not therefore represent any basis for regarding the claims as non justiciable.\nEssentially, what is relied upon by the appellants is the fact that they were not, while various foreign states were, the prime actors in the alleged false imprisonment, rendition or mistreatment.\nBearing in mind the nature and seriousness of the infringements of individual fundamental rights involved, this constitutes no basis for a domestic court to abstain or refrain from adjudicating upon the claims made.\nI note, once again, that a contrary conclusion would have meant that the claims against the appellants could not be pursued anywhere in the world, in contrast with the claims against the alleged prime actors.\nIn circumstances, where the alleged letter might, on one reading, suggest that one or more of the appellants in Belhaj was aware that the intelligence supplied to Libya about Mr Belhaj would be used to effect his rendition to Libya, even though the United Kingdom did not actually pay for the air cargo, a distinction between those primarily and secondarily responsible may also prove to be unpersuasive.\nA similar point applies in Rahmatullah where some of the pleaded allegations appear to assert that, even though United States authorities were the actors, the prime instigator was the appellants.\nAgain, the evidential difficulties on which Mr James Eadie QC relied, on the basis that cooperation is unlikely to be forthcoming from the Malaysian, Thai, Libyan and United States authorities or their states, cannot in my view make the claims against the appellants non justiciable or require judicial abstention.\nSome reliance has been placed in both sets of proceedings on evidence about the effect on international relations of investigation in English courts of the issues which they raise.\nThe appellants have relied in both sets of proceedings on evidence from Dr Laurie Bristow, a senior diplomat, currently National Security Director in the Foreign and Commonwealth Office.\nHe considered it highly unlikely that the foreign states involved would supply evidence to enable the appellants to defend themselves.\nHe reminded the court of the policy of successive governments to neither confirm nor deny allegations in relation to the intelligence services.\nAlthough he had not consulted any of the relevant foreign governments, he considered that there was a real risk that the trial of the proposed proceedings would cause serious harm to, and that findings of the nature sought in respect of United States officials would have a seriously damaging impact on, the United Kingdoms relationship with the United States, and could well lead to a restriction of the unparalleled access and the historic intelligence sharing relationship and national security cooperation which the United Kingdom currently enjoys.\nHe accepted that, given the change in regime in Libya, it is unlikely that the findings sought in respect of Libya would damage relations with Libya, but considered that the allegations in respect of Malaysia and Thailand were highly politically sensitive, and that findings would probably be interpreted as interference or give rise to a strongly negative reaction.\nIn Rahmatullah this evidence was countered by the respondent with evidence from a former US diplomat Mr Thomas Pickering, and a former US government official adviser, then director of American Studies at the Department of Politics and International Studies at Cambridge University who expressed the firm belief that adjudicating on Mr Rahmatullahs case was highly unlikely to cause damage to the relations or national security cooperation between the US and UK and that to assert that the US would be offended was to misunderstand the value the United States places on the rule of law and an unbiased and open judicial system.\nLeggatt J in Rahmatullah thought it wrong for a court to become involved in attempting to resolve this sort of issue, and declined to attach weight to the evidence.\nSimon J in Belhaj reached with hesitation his conclusion that foreign act of state applied in reliance both on his view (with which I have already expressed disagreement) that there were no clear and incontrovertible standards for deciding whether United States officials had acted unlawfully and on the fact that there is incontestable evidence that such an inquiry would be damaging to the national interest (para 150).\nThe Court of Appeal noted that, although deference to executive suggestion as to the likely consequences for foreign relations may well be suited to the very different constitutional arrangements in the United States, it has played no part in the development of the act of state doctrine in this jurisdiction, and that in Buttes Gas Lord Wilberforce expressly left aside all possibility of embarrassment in our foreign relations in coming to the conclusion that the issues raised were not justiciable.\nAs to this last point, however, Lord Wilberforce did this at pp 936G and 938A B, expressly noting by way of explanation that no indication of any embarrassment had been drawn to the Houses attention by Her Majestys Government.\nThe inference is, if anything, that it might have been a relevant factor, had it been shown.\nThe courts are placed in a difficult situation when asked to feed into a judgment about justiciability an assessment of the likely prejudice to the United Kingdoms good relations and security interests with a foreign state, if serious allegations of misconduct involving misconduct by that foreign state are ventilated in the English courts.\nSuch an assessment might also be easier to take into account if the issue was whether a prima facie defence of foreign act of state of the second type was outweighed by public policy considerations, rather than where, as here, the issue is whether a foreign act of state of the third type has been shown, making the case non justiciable.\nThat said, I would not exclude the relevance to justiciability of a clear governmental indication as to real and likely damage to United Kingdom foreign policy or security interests.\nBut little emphasis was in fact placed before the Supreme Court on such considerations as a relevant, still less a decisive factor.\nViewing the appeals together, it can also be seen that Dr Bristows forcefully expressed views are not unchallenged.\nFinally, as Dr Bristow recognised, the governmental position in Libya has changed radically, even if not very happily.\nOne might even also add that a different administration holds office in the United States.\nOn the present appeals, I do not consider that the evidence available can lead to a conclusion that the cases should be regarded as non justiciable or require judicial abstention.\nLord Sumption takes a more general view of the third type of foreign act of state (non justiciability or abstention or, in his terminology, international law act of state).\nBut in paras 249 280 he argues in favour of the recognition in English domestic law of a public policy qualification.\nHe finds it helpful in this connection to consider the scope of certain international law rules with jus cogens force, though he does not suggest that domestic public policy in all cases necessarily reflects or corresponds with international law rules having jus cogens force: see para 257.\nOn this basis, he concludes that, so far as the allegations made in these proceedings amount to allegations of complicity in torture or of arbitrary detention without any legal ground or recourse to the courts, including enforced disappearance and rendition, a domestic court should not abstain from adjudicating upon them.\nNot every unlawful detention would, in his view, fall into this category, and nor would the allegations made of other cruel, inhuman or degrading treatment, but the position on the facts is not at this stage clear to the point where any of the allegations made should be struck out (see paras 278 280).\nSuch difference in approach as there is between Lord Sumption and myself in this area makes no difference to the outcome of these appeals, and seems unlikely to make much if any difference to the outcome of any trial.\nBut I prefer to analyse the qualifications to the concept of foreign act of state by reference to individual rights recognised as fundamental by English statute and common law, rather than to tie them too closely to the concept of jus cogens: (i) The analogy of jus cogens would suggest that a domestic court would be able to adjudicate upon an allegation that its national government connived in a serious violation of the claimants rights by a foreign government, but would be required to abstain from adjudicating upon a less serious violation, such as mere unlawful detention or cruel or inhuman treatment not amounting to torture. (ii) Jus cogens is a developing concept notoriously difficult to define, and capable of giving rise to considerable argument.\nOppenheims International Law (9th ed) (1995) Vol 1, para 2 said: Such a category of rules of ius cogens is a comparatively recent development and there is no general agreement as to which rules have this character, citing a wealth of authority in a footnote.\nBrownlies Principles of International Law (8th ed) (2000) notes that during the 1960s scholarly opinion came to support the view that there can exist overriding norms of international law, referred to as peremptory norms (ius cogens), identified in article 53 of the Vienna Convention on the Law of Treaties as comprising any norm accepted and recognized by the international community of States as a whole as a norm from which no derogation is permitted and which can be modified only by a subsequent norm of general international law having the same character.\nBrownlies Principles says that The least controversial of this class are the prohibition of the use of force in article 2(4) of the [United Nations] charter, of genocide, of crimes against humanity (including systematic forms of racial discrimination), and the rules prohibiting trade in slaves.\nIt goes on to cite the International Law Commissions synopsis in Fragmentation of International Law: Difficulties arising from the Diversification and Expansion of International Law (A\/CN.4\/L.702, 18 July 2006), which lists the prohibition of aggression, slavery and the slave trade, genocide, racial discrimination apartheid and torture, as well as basic rules of international humanitarian law applicable in armed conflict, and the right to self determination.\nSimilarly, Harris and Sivakumarans Cases and Materials on International Law (8th ed) (2015), para 2 033 footnote 68, gives the prohibitions on the use of armed force, torture and genocide as prime examples of jus cogens rules.\nThe Report of the United Nations Working Group on Arbitrary Detention, A\/HRC\/22\/44, 24 December 2012), to which Lord Sumption refers in paras 269 271 is clearly a most valuable and important soft law pronouncement, which is likely to influence the development of generally accepted and recognised norms.\nBut the scope for argument about the precise parameters of even such norms as the Working Group suggests in this area is evident from a full reading of para 38, reading: The Working Group regards cases of deprivation of liberty as arbitrary under customary international law in cases where: (a) When it is clearly impossible to invoke any legal basis justifying the deprivation of liberty; (b) the deprivation of liberty results from the exercise of the rights or freedoms guaranteed by articles 7, 13, 14, 18, 19, 20 and 21 of the Universal Declaration of Human Rights; (c) The total or partial non observance of the international norms relating to the right to a fair trial established in the Universal Declaration of Human Rights and in the relevant international instruments is of such gravity as to give the deprivation of liberty an arbitrary character; (d) Asylum seekers, immigrants or refugees are subjected to prolonged administrative custody without the possibility of administrative or judicial review of remedy; (e) The deprivation of liberty constitutes a violation of the international law for reasons of discrimination based on birth; national, ethnic or social origin; language; religion; economic condition; political or other opinion; gender; sexual orientation; disability or other status, and which aims towards or can result in ignoring the equality of human rights. (iii) If violation of a jus cogens were a primary test of whether a domestic court could adjudicate upon an issue which was otherwise non justiciable and upon which it would otherwise have to abstain from adjudicating, central areas of abstention identified by Lord Sumption would become potentially amenable to adjudication.\nThe prohibition on the use of armed force and on aggression are core examples of jus cogens.\nYet these are, rightly as would be my present view, treated by Lord Sumption himself as giving rise to core examples of issues upon which domestic courts should refrain from adjudicating: see eg Lord Sumptions paras 223 224, with references to Noor Khan; and see paras 93 95 above. (iv) If, as Lord Sumption indicates is his view (para 257), not every violation of a peremptory norm of international law is an exception to the foreign act of state doctrine, then it is not clear how one determines when or why ius cogens is an appropriate basis for any exception in any particular case. (v) Ultimately, in an area of judicial abstention, a case by case approach, along lines to which Lord Wilberforce referred, is in my opinion always likely to be necessary.\nNothing I have said should be taken to mean that the existence of relevant jus cogens principles may not be a stimulus to considering whether judicial abstention is really called for in a particular situation.\nBut the doctrine of abstention rests on underlying principles relating to the role of a domestic judge and the existence of alternative means of redress at an international level, which make it difficult to tie too closely to particular rules of international law, however basic and binding at that level.\nX Miscellaneous points\nIt follows from my above conclusions that it is unnecessary to reach any final determination upon the respondents case that, in so far as what is alleged amounts to complicity in torture, the United Nations Convention against Torture (Treaty Series No 107 (1991)) obliges states to provide a universal civil remedy in respect of torture wherever committed in the world, at least when (allegedly) committed by or with the connivance of United Kingdom citizens such as the appellants, and that any otherwise applicable type of foreign act of state should be modified to enable this.\nThe argument turns on the scope of article 14 of the Convention.\nAs the Court of Appeal observed, Lord Bingham in Jones v Saudi Arabia, para 25, expressed the clear conclusion, after looking at the drafting history and other background material, that this article does not provide for universal civil jurisdiction, and that it requires a private right of action for damages only for acts of torture committed in territory under the jurisdiction of the forum state.\nAs at present advised, I see no basis for reaching a contrary conclusion, or indeed for treating the concept of jurisdiction in this context in an expanded sense, such as the European Court of Human Rights has been prepared to attach to it in the specific context of article 1 of the European Convention on Human Rights.\nBut it is unnecessary to express any concluded view on this, any more than it was for the Court of Appeal to do so.\nAnother point which can strictly remain undecided is whether article 6 of the Convention rights scheduled to the Human Rights Act 1998 is engaged by and renders impermissible in the present circumstances any reliance by the appellants on either state immunity or foreign act of state.\nAs regards state immunity, Mr Belhaj and Mrs Boudchar would have faced the initial difficulty of trying to persuade the Supreme Court in the light of the European Court of Human Rights judgments in Al Adsani v United Kingdom (2001) 34 EHRR 11 and Jones v United Kingdom (2014) 59 EHRR 1 to overrule Holland v Lampen Wolfe [2000] 1 WLR 1573, in which a majority of the House of Lords held that article 6 is not even engaged by a plea of state immunity: see also Jones v Saudi Arabia at paras 14 and 64 per Lord Bingham and Lord Hoffmann.\nAs regards foreign act of state, the question would have been whether for similar reasons article 6 was or was not engaged.\nForeign act of state, on the other hand, operates, even under the case law of the European Court of Human Rights, as a substantive bar to liability or adjudication: see Roche v United Kingdom (2005) 42 EHRR 30; Markovic v Italy (2006) 44 EHRR 52).\nOn this basis, foreign act of state, even if it had been otherwise applicable, would not engage article 6.\nIn either case, if article 6 was engaged, the question would then have arisen whether it rendered impermissible any reliance on either state immunity or foreign act of state.\nBut, in view of what I have already decided, it is unnecessary to go further into this.\nXI Overall Conclusion\nAs indicated in para 11(vi) above, it follows from the reasoning and conclusions on the issues of state immunity and foreign act of state set out above, that the appeals in both Belhaj and Rahmatullah should in principle be dismissed although by reasoning differing in some significant respects from that of both courts below thus enabling both sets of claims to be further pursued.\nThe Supreme Court will however invite written submissions as to the precise form of order and of any declarations that may be appropriate as well as on costs within 28 days of the handing down of this judgment.\nLORD NEUBERGER: (with whom Lord Wilson agrees)\nIntroductory\nThese two appeals involve allegations that the defendants, in their capacity as officials or emanations of the executive arm of the government of the United Kingdom, facilitated the claimants unlawful detention, and ill treatment (and, in the cases of Mr Belhaj and Mrs Boudchar, their kidnapping and rendition), and should pay the claimants compensation accordingly.\nMr Belhaj and Mrs Boudchar allege that the defendants assisted United States and Libyan officials in their unlawful kidnapping and detention, their unlawful rendition (accompanied by ill treatment), and their subsequent incarceration and torture in Libya.\nMr Rahmatullah alleges that, following his capture by UK troops in Iraq (and his unlawful detention and ill treatment), he was handed over to US officials pursuant to a memorandum of understanding (MoU) between the UK and US Governments, and that US officials then unlawfully detained him for ten years and ill treated and tortured him, and that the defendants facilitated that detention, ill treatment and torture.\nAs the two claims are against UK government officials and entities, and not against any foreign government officials or entities, there is no question of any relief being sought other than against domestic defendants.\nNonetheless, various points of principle have been raised by those defendants as to why the claims cannot or should not be entertained by the courts of England and Wales.\nThose points of principle must be determined on the assumption that the facts as pleaded by the claimants are true.\nThe points to be determined at this stage are whether the defendants can rely on (a) the doctrine of state immunity or (b) the doctrine of foreign act of state, as defences to the claims.\nSo far as the doctrine of state immunity is concerned, I agree that it cannot assist the defendants for the reasons given by Lord Mance in paras 12 31 above and by Lord Sumption in paras 181 197 below.\nThere is nothing that I can usefully add to their impressive analyses of this issue.\nThe doctrine of foreign act of state (the Doctrine) raises more troubling issues.\nThe nature of the Doctrine\nIn summary terms, the Doctrine amounts to this, that the courts of the United Kingdom will not readily adjudicate upon the lawfulness or validity of sovereign acts of foreign states, and it applies to claims which, while not made against the foreign state concerned, involve an allegation that a foreign state has acted unlawfully.\nIn so far as it is relied on in these proceedings, the Doctrine is purely one of domestic common law, and it has all the advantages and disadvantages of a principle that has been developed on a case by case basis by judges over the centuries.\nThus, while it is pragmatic and adaptable to changing norms (as Lord Wilberforce pointed out in Blathwayt v Baron Cawley [1976] AC 397, 426), it is a principle whose precise scope is not always easy to identify.\nAnother problem of relying on what was said in most of the earlier cases which have been cited to us in relation to the Doctrine is that the legal basis for a judicial decision that a claim could or would not be resolved by a court was not expanded on in any detail, and was not characterised by an expression such as act of state at least as a term of article Many of the judgments do not distinguish between what are now treated as three separate doctrines, namely Crown act of state, foreign act of state, and state immunity.\nThe rules identified in the cases\nIt appears to me that the domestic cases, to which we have been referred, suggest that there may be four possible rules which have been treated as aspects of the Doctrine, although there is a strong argument for saying that the first rule is not part of the Doctrine at all, or at least is a free standing aspect of the Doctrine effectively franked by international law.\nThe first rule is that the courts of this country will recognise, and will not question, the effect of a foreign states legislation or other laws in relation to any acts which take place or take effect within the territory of that state.\nThe second rule is that the courts of this country will recognise, and will not question, the effect of an act of a foreign states executive in relation to any acts which take place or take effect within the territory of that state.\nThe third rule has more than one component, but each component involves issues which are inappropriate for the courts of the United Kingdom to resolve because they involve a challenge to the lawfulness of the act of a foreign state which is of such a nature that a municipal judge cannot or ought not rule on it.\nThus, the courts of this country will not interpret or question dealings between sovereign states; [o]bvious examples are making war and peace, making treaties with foreign sovereigns, and annexations and cessions of territory per Lord Pearson in Nissan v Attorney General [1970] AC 179, 237.\nNissan was a case concerned with Crown act of state, which is, of course, a different doctrine and is considered in Rahmatullah v Ministry of Defence 2017 UKSC 1, but the remark is none the less equally apposite to the foreign act of state doctrine.\nSimilarly, the courts of this country will not, as a matter of judicial policy, determine the legality of acts of a foreign government in the conduct of foreign affairs.\nIt is also part of this third rule that international treaties and conventions, which have not become incorporated into domestic law by the legislature, cannot be the source of domestic rights or duties and will not be interpreted by our courts.\nThis third rule is justified on the ground that domestic courts should not normally determine issues which are only really appropriate for diplomatic or similar channels (see Shergill v Khaira [2015] AC 359, paras 40 and 42).\nA possible fourth rule was described by Rix LJ in a judgment on behalf of the Court of Appeal in Yukos Capital SARL v OJSC Rosneft Oil Co (No 2) [2014] QB 458, para 65, as being that the courts will not investigate acts of a foreign state where such an investigation would embarrass the government of our own country: but that this doctrine only arises as a result of a communication from our own Foreign Office.\nThe cases where the rules have been applied\nThe first rule appears to me to be well established and supported by a number of cases, at least in relation to property.\nIt was applied in Duke of Brunswick v King of Hanover (1848) 2 HLC 1, where Lord Cottenham LC rejected a challenge to the validity of a Hanoverian bill deposing and replacing the Duke of Brunswick, on the ground that a foreign sovereign cannot be made responsible here for an act done in his sovereign character in his own country.\nIt was also relied on in Carr v Fracis Times & Co [1902] AC 176, where seizure of ammunition within Muscat territorial waters was effected by a British officer pursuant to a proclamation issued by the Sultan of Muscat, and the validity of the proclamation could not be challenged as, per Lord Halsbury LC at p 179, the Sultans authority there [sc Muscat] is supreme, and what he says is law for the purpose of governing all acts which take place within his territory.\nAnother example of the first rule is Aksionairnoye Obschestvo AM Luther v James Sagor & Co [1921] 3 KB 532, where at p 549 Warrington LJ said that the English courts could not ignore and override legislative and executive acts of the Government of Russia and its agents affecting the title to property in that country (and see Bankes LJ to the same effect at p 545).\nThe first rule was also applied in Princess Paley Olga v Weisz [1929] 1 KB 718 see Scrutton LJs first two reasons at pp 722 723, reflected also in the judgments of Sankey and Russell LJJ at pp 730 732 and 732 736 respectively).\nThe first rule was also invoked in Buttes Gas and Oil Co v Hammer (Nos 2 and 3) [1982] AC 888, 937, where Lord Wilberforce said that an inquiry into the motives of the then ruler of Sharjah in making [a] decree was non justiciable, because the decree applied within the territory of Sharjah.\nThe second rule also has significant judicial support, but again only in relation to property.\nThus, it appears to have been applied in Blad v Bamfield (1673) 3 Swans 604, in the light of Lord Nottinghams point that the validity of the Kings letters patent in Denmark was non justiciable in English courts (emphasis added).\nAnother example is Dobree v Napier (1836) 2 Bing NC 781, where Tindal CJ stated that no one can dispute the right of the Queen of Portugal to appoint in her own dominions the defendant as her officer to seize a vessel which is afterwards condemned as a prize (emphasis added).\nThe second rule was also relied on in Luther v Sagor (in the passages in the judgments of Warrington and Bankes LJJ cited above), and in Princess Paley Olga (see Scrutton LJs third reason at pp 722 724, reflected in the judgments of Sankey and Russell LJJ at pp 726 730 and 736 respectively).\nThe third rule has been applied in a number of cases, again in relation to property.\nExamples of the third rule involving transactions between states include Blad in the light of Lord Nottinghams view that a trial about the exposition and meaning of the articles of peace between two states would be monstrous and absurd.\nIt also was applied in Nabob of the Carnatic v East India Co (1793) 2 Ves Jun 56, which was expressly treated as a case of mutual treaty between persons acting as states independent of each other so that it consequently not a subject of private, municipal jurisdiction.\nThe third rule is also apparent from Lord Kingsdowns dictum in Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 13 Moo PCC 22 (a decision based on Crown act of state) that [t]he transactions of independent States between each other are governed by other laws than those which Municipal Courts administer.\nThat point was repeated by Lord Halsbury LC in Cook v Sprigg [1899] AC 572.\nMost of the issues held to be such that the court would not adjudicate upon them in Buttes Gas by Lord Wilberforce at pp 937 938 seem to me to be examples of the third rule eg what was the boundary of the continental shelf between (i) Sharjah and UAQ, (ii) Abu Musa and UAQ, (iii) Iran and both Emirates.\nAs the Court of Appeal said in Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883, para 287, at the heart of the dispute in that case was a boundary dispute between states which made it impossible to say what the territorial limitations of those states were.\nAnd, as it was put in this Court in Shergill, para 40, the dispute arose out of the way in which the four states concerned had settled the issue of international law by a mixture of diplomacy, political pressure and force.\nA more recent example of the application of the third rule, and this time in relation to injury to the person, is in R (Noor Khan) v Secretary of State for Foreign Affairs [2014] 1 WLR 872, where the Court of Appeal refused the applicant permission to seek judicial review of the provision of information by the UK intelligence services to the US government to assist it in targeting drone strikes in Pakistan.\nThe argument was that the provision of information for this purpose was unlawful, as it involved requiring GCHQ officers to encourage and\/or assist the commission of murder (para 7).\nAt para 29 Lord Dyson MR, giving the judgment of the Court of Appeal, said that the court will also usually not sit in judgment on the acts of a sovereign state as a matter of discretion.\nIn expressing that view, he was following some remarks of Simon Brown LJ in R (Campaign for Nuclear Disarmament) v Prime Minister of the United Kingdom (2002) 126 ILR 727, para 47(ii).\nAs to the supposed fourth rule, it derives support from the United States, whose jurisprudence was said by Lord Wilberforce to be helpful in Buttes Gas at pp 936 937.\nAfter initially suggesting in Oetjen v Central Leather Co 246 US 297, 303 304 (1918) that the Doctrine was based on the highest considerations of international comity and expediency, the US Supreme Court preferred to explain it by reference to the strong sense of the Judicial Branch that its engagement in the task of passing on the validity of foreign acts of state may hinder the conduct of foreign affairs per Harlan J in Banco Nacional de Cuba v Sabbatino 376 US 398, 423 (1964), cited with apparent approval by Scalia J in WS Kirkpatrick & Co Inc v Environmental Tectonics Corpn, International 493 US 400, 406 (1990).\nThere is little authority to support the notion that the fourth rule is part of the law of this country, save that, as discussed in the Court of Appeals judgment in Kuwait Airways, paras 340 350, there are certain areas (such as the recognition of foreign governments, and the extent of a foreign governments territory) in which a certificate from the Foreign Office is regarded by the courts of this country as conclusive see Luther v Sagor.\nBut that is rather a different point.\nHowever, there is a trace of the fourth rule in the Court of Appeals reasoning that the application in Noor Khan was not to be entertained because, if it succeeded, it would be understood as a finding that (i) the US official who operated the drone was guilty of murder and (ii) the US policy of using drone bombs in Pakistan and other countries was unlawful, which would be seen as a serious condemnation of the US by a court of this country (para 37).\nIf the fourth rule exists, which I doubt (see para 150 below), it would require exceptional circumstances before it could be invoked.\nDecisions of foreign courts\nWhile other jurisdictions may have developed analogous principles to some or all of the four rules, it seems to me that courts in this jurisdiction should exercise great caution before relying on, let alone adopting, the reasoning of foreign courts in connection with the Doctrine.\nDecisions of courts in states with a civil law system and with a coherent written constitution seem to me to be as likely to mislead as to help when it comes to analysing the boundaries of a common law rule developed on a case by case basis over the years.\nHowever, I accept that any practical explanation by a court for or against judicial abstention is worth considering.\nIn this case, for example, Lord Mance and Lord Sumption have referred to decisions of courts in France, the Netherlands and Germany.\nIn each of those three countries, the courts appear to have developed some legal rules in this area which, while differing from each other (not much in the cases of France and the Netherlands), are, unsurprisingly, comprehensible and principled.\nDeciding which of those rules would be most appropriate for the courts of this country seems an unnecessarily cumbersome way, and indeed an unnecessarily constraining way, of resolving the question we have to decide.\nWhile they were cited with approval in this jurisdiction (most notably by Bankes, Warrington and Scrutton LJJ in Luther v Sagor at pp 541 542, 550 551 and 557, by Scrutton and Sankey LJJ in Princess Paley Olga at pp 724 725 and 728 729 and by Lord Wilberforce in Buttes Gas at pp 933 937), decisions of courts of the United States, which have purported to adopt the Doctrine as initially developed in this jurisdiction, appear to me to be of very limited assistance.\nThis is for three reasons.\nFirst, the constitutional arrangements and conventions in the USA are very different from those in the UK.\nSecondly, much of the reasoning in the cases where act of state was first referred to as a principle (Hatch v Baez (1876) 7 Hun 596 and Underhill v Hernandez 168 US 250 (1897)) was really directed to the different doctrine of state immunity.\nAnd, thirdly, the justification for the doctrine of act of state has been recast by the US Supreme Court as summarised in para 131 above, which ties in very well with the first reason.\nThe validity of the first rule in relation to property and property rights\nThere is no doubt but the first rule exists and is good law in relation to property (whether immovable, movable, or intellectual) situated within the territory of that state concerned.\nSovereignty, which founds the basis of the Doctrine, denotes the legal competence which a state enjoys in respect of its territory (Brownlies Principles of Public International Law, 8th ed, (2012), p 211), and there is no more fundamental competence than the power to make laws.\nThere is no doubt, however, that the first rule only applies to acts which take effect within the territory of the state concerned see eg Peer International Corpn v Termidor Music Publishers Ltd [2004] Ch 212.\nThe validity of the second rule in relation to property and property rights\nI find aspects of the second rule in relation to property and property rights more problematical.\nIn so far as the executive act of a state confiscating or transferring property, or controlling or confiscating property rights, within its territory is lawful, or (which may amount to the same thing) not unlawful, according to the law of that territory, I accept that the rule is valid and well established.\nHowever, in so far as the executive act is unlawful according to the law of the territory concerned, I am not convinced, at least in terms of principle, why it should not be treated as unlawful by a court in the United Kingdom.\nIndeed, if it were not so treated, there would appear something of a conflict with the first rule.\nNone the less, I accept that there are dicta which can be fairly said to support the existence of the rule even where the act is unlawful by the laws of the state concerned (see para 127 above).\nHowever, I am not persuaded that there is any judicial decision in this jurisdiction whose ratio is based on the proposition that the second rule applies to a case where the states executive act was unlawful by the laws of the state concerned.\nThus, the Duke of Brunswick, Carr v Fracis, Luther v Sagor and Princess Paley Olga cases all involved acts which were apparently lawful according to the laws of the state concerned (being pursuant to a bill or decree), and there is no suggestion of unlawfulness in relation to the acts in Blad or Dobree.\nSimilarly, there is nothing to suggest that, when Lord Wilberforce suggested in Buttes Gas at p 931 that an act of state extended to a foreign municipal law or executive act, he intended to refer to an executive act which was unlawful by the laws of the state concerned, let alone, where the act took place in the territory of another state, by the laws of that state.\nAt best, therefore, there are simply some obiter dicta which support the notion that the second rule can apply to executive acts which are unlawful by the laws of the state concerned.\nThere is support for the notion that the second rule does not apply to executive acts which are not lawful by the laws of the state concerned in Dicey, Morris and Collins on The Conflict of Laws, (15th ed (2012)) which at p 1380 sets out Rule 137 in these terms: A governmental act affecting any private proprietary right in any movable or immovable thing will be recognised as valid and effective in England if the act was valid by the law of the country where the thing was situated (lex situs) at the moment when the act takes effect, and not otherwise.\nFurther, it does not appear to me that the common law regards it as inappropriate for an English court to decide whether a foreign states executive action infringed the law of that state, at least where that is not the purpose of the proceedings.\nSupport for that view is to be found in the judgment of Diplock LJ in Buck v Attorney General [1965] Ch 745, 770, and of Arden and Elias LJJ in Al Jedda v Secretary of State for Defence [2011] QB 773; [2010] EWCA Civ 758 at paras 74 and 189 respectively.\nHowever, I am unconvinced that cases such as R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42 assist on this point.\nIn that case, the assumed facts (which subsequently turned out to be inaccurate: see 1995 SLT 510) were that the applicant had been kidnapped and brought to this country from South Africa in a joint exercise involving the police of the UK and of South Africa.\nAccordingly, even if the second rule would otherwise have applied, the courts of this country had jurisdiction to rule on the apparent unlawfulness of the applicants treatment because of the public policy exception (considered in paras [153ff] below).\nHaving said that, there is pragmatic attraction in the argument that an executive act within the state, even if unlawful by the laws of that state, should be treated as effective in the interest of certainty and clarity, at least in so far as it relates to property and property rights.\nIn relation to immovable property within the jurisdiction of the state concerned, there appear to be good practical reasons for a foreign court recognising what may amount to a de facto, albeit unlawful, transfer of, or other exercise of power over, such property.\nSo far as movable property or other property rights are concerned, if by an executive, but unlawful act, the state confiscates such property within its territory, the same point applies so long as the property remains within the territory of that state.\nAnd there is practical sense, at any rate at first sight, if when the property is transferred to another territory following a sale or other transfer by the state, the transferee is treated as the lawful owner by the law of the other territory.\nHowever, there are potential difficulties: if the original confiscation was unlawful under the laws of the originating state, and the courts of that state were so to hold, or even should so hold, it is by no means obvious to me that it would be, or have been, appropriate for the courts of the subsequent state to treat, or have treated, the confiscation as valid.\nThe question whether the second rule exists in relation to executive acts which interfere with property or property rights within the jurisdiction of the state concerned, and which are unlawful by the laws of that state, is not a point which needs to be decided on the present appeal.\nProperty rights do not come into this appeal, and no doubt for that very reason, the point was not debated very fully before us.\nAccordingly, it seems to me that it is right to keep the point open.\nThe validity of the third rule in relation to property and property rights\nThere is no doubt as to the existence of the third rule in relation to property and property rights.\nWhere the Doctrine applies, it serves to defeat what would otherwise be a perfectly valid private law claim, and, where it does not apply, the court is not required to make any finding which is binding on a foreign state.\nAccordingly, it seems to me that there is force in the argument that, bearing in mind the importance which both the common law and the Human Rights Convention attach to the right of access to the courts, judges should not be enthusiastic in declining to determine a claim under the third rule.\nOn the other hand, even following the growth of judicial review and the enactment of the Human Rights Act 1998, judges should be wary of accepting an invitation to determine an issue which is, on analysis, not appropriate for judicial assessment.\nI believe that this is reflected in observations of Lord Pearson in Nissan.\nImmediately after the passage quoted in para 123 above, he said Apart from these obvious examples, an act of state must be something exceptional.\nAny ordinary governmental act is cognisable by an ordinary court of law (municipal not international): if a subject alleges that the governmental act was wrongful and claims damages or other relief in respect of it, his claim will be entertained and heard and determined by the court.\nA little later, he explained that where the Doctrine applied the court does not come to any decision as to the rightness or wrongness of the act complained of: the decision is that because it was an act of state the court has no jurisdiction to entertain a claim in respect of it, and added that [t]his is a very unusual situation and strong evidence is required to prove that it exists in a particular case.\nIn Yukos v Rosneft, para 66, Rix LJ suggested that Lord Wilberforces principle of non justiciability has to a large extent subsumed [the act of state Doctrine] as the paradigm restatement of that principle.\nIf the foreign act of state principle is treated as including what I have called the first and second rules, then I do not agree.\nThe third rule is based on judicial self restraint and is, at least in part, concerned with arrangements between states and is not limited to acts within the territory of the state in question, whereas the first and second rules are of a more hard edged nature and are almost always concerned with acts of a single state, normally within its own territory.\nHaving said that, I accept that it will not always be easy to decide whether a particular claim is potentially subject to the second or third rule.\nThe third rule may be engaged by unilateral sovereign acts (eg annexation of another state) but, in practice, it almost always only will apply to actions involving more than one state (as indeed does annexation).\nHowever, the fact that more than one sovereign state is involved in an action does not by any means justify the view that the third rule, rather than the second, is potentially engaged.\nThe fact that the executives of two different states are involved in a particular action does not, in my view at any rate, automatically mean that the third rule is engaged.\nIn my view, the third rule will normally involve some sort of comparatively formal, relatively high level arrangement, but, bearing in mind the nature of the third rule, it would be unwise to be too prescriptive about its ambit.\nThe validity of the fourth rule\nAs already mentioned, there will be issues on which the position adopted by the executive, almost always the Foreign Office, will be conclusive so far as the courts are concerned for instance, the recognition of a foreign state, also the territorial limits of a foreign state and whether a state of war exists.\nHowever, apart from those types of cases, the fourth rule has no clear basis in any judicial decisions in this jurisdiction, although, at least on one reading, the Court of Appeal in R (Khan) v Secretary of State for Foreign and Commonwealth Affairs [2014] 1 WLR 872 seem to have accepted that it existed.\nIf a member of the executive was to say formally to a court that the judicial determination of an issue raised in certain legal proceedings could embarrass the Governments relations with another state, I do not consider that the court could be bound to refuse to determine that issue.\nThat would involve the executive dictating to the judiciary, which would be quite unacceptable at least in the absence of clear legislative sanction.\nHowever, there is a more powerful argument for saying that such a statement should be a factor which the court should be entitled to take into account when deciding whether to refuse to determine an issue.\nSome indirect support for such an argument is to be found in In re Westinghouse Electric Corpn Uranium Contract Litigation MDL Docket No 235 [1978] AC 547, 616 617 and 639 640, and in Adams v Adams [1971] P 188, 198.\nAgain, it is a point which does not have to be decided in this case, and was not argued.\nIn fairness to the defendants, there was some evidence to support such an argument, but it was answered in some detail, and in any event it was, rightly in my view, not pressed on their behalf in relation to the application of the Doctrine in these two cases.\nCharacterisation of the Doctrine:\nHaving discussed the four possible rules which may be said to fall under the umbrella of the Doctrine, it is appropriate briefly to identify the characterisation of the various rules.\nI agree with Lord Mance that the first rule is a general principle of private international law.\nThe rule was characterised by Upjohn J in In re Helbert Wagg & Co Ltds Claim [1956] Ch 323, 344 345 as: the elementary proposition that it is part of the law of England, and of most nations, that in general every civilized state must be recognized as having power to legislate in respect of movables situate within that state and in respect of contracts governed by the law of that state, and that such legislation must be recognized by other states as valid and effectual to alter title to such movables. (Emphasis added) To the extent that it exists, the second rule also seems to me to be a general principle, and, at least to some extent, it may be close to being a general principle of private international law.\nThe third rule is based on judicial self restraint, in that it applies to issues which judges decide that they should abstain from resolving, as discussed by Lord Mance in paras 40 45 and by Lord Sumption in paras 234 239 and 244.\nIt is purely based on common law, and therefore has no international law basis, although, as discussed below, its application (unsurprisingly) can be heavily influenced by international law.\nI turn now to discuss the limitations of, and exceptions to, the Doctrine.\nThe cases establish that there are limitations and exceptions, each of which apply to some or all of these three or four rules.\nMany of those limitations and exceptions were fully examined by the Court of Appeal in Yukos v Rosneft, paras 68 to 115.\nBut only three are relevant for present purposes.\nLimits and exceptions to the Doctrine: Public Policy\nIt is well established that the first rule, namely that the effect of a foreign states legislation within the territory of that state will not be questioned, is subject to an exception that such legislation will not be recognised if it is inconsistent with what are currently regarded as fundamental principles of public policy see Oppenheimer v Cattermole [1976] AC 249, 277 278, per Lord Cross of Chelsea.\nThis exception also applies where the legislation in question is a serious violation of international law see Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883, para 29, per Lord Nicholls of Birkenhead.\nThe circumstances in which this exception to the Doctrine should apply appear to me to depend ultimately on domestic law considerations, although generally accepted norms of international law are plainly capable of playing a decisive role.\nIn his opinion in Kuwait Airways, paras 28 and 29, Lord Nicholls emphasised the need to recognise and adhere to standards of conduct set by international law and held that recognition of the fundamental breach of international law manifested by the Iraqi decree in that case would be manifestly contrary to the public policy of English law, like the Nazi German confiscatory decree in Oppenheimer.\nHowever, there is nothing in what Lord Nicholls said which suggests that it is only breaches of international law norms which would justify disapplication of the Doctrine.\nOn the contrary: his reference to the public policy of English law supports the notion that the issue is ultimately to be judged by domestic rule of law considerations.\nThe point is also apparent from the opinion of Lord Hope.\nAt para 139, he said that the public policy exception is not limited to cases where there is a grave infringement of human rights, but is founded upon the public policy of this country plainly a domestic standard.\nThe exception to the Doctrine based on public policy has only been considered by the courts in relation to the first of the four rules set out above.\nHowever, I cannot see grounds for saying that it does not apply similarly to the second rule, executive acts within the territory of the state concerned.\nAs to the third rule, dealings between states, (as well as the fourth rule if it exists) it appears to me that in many types of case this exception may be applicable, but in some it may not.\nIn the course of its judgment in R (Abbasi) v Secretary of State for Foreign & Commonwealth Affairs and Secretary of State for the Home Department [2003] UKHRR 76, the Court of Appeal effectively suggested that the exception could be applied to the third rule.\nIn paras 32 and 33, they said that the English court will not adjudicate upon the legality of a foreign States transactions in the sphere of international relations in the exercise of sovereign authority, but that this was subject to exceptions, as Oppenheimer and Kuwait Airways demonstrated.\nThe Court was accordingly prepared to hold that the detention of a UK citizen in Guantanamo Bay subject to indefinite detention in territory over which the United States has exclusive control with no opportunity to challenge the legitimacy of his detention before any court or tribunal was unlawful, despite his detention being an act of state on the part of the US see paras 64, 66 and 107. (It is fair to add that, although expressed as if it involved transactions in the field of international relations, it is arguable that the issue before the Court of Appeal in Abbasi was not in fact concerned with the third rule, but the second).\nLimits and exceptions to the Doctrine: Injury to the person\nNone of the English cases discussed so far (save Noor Khan [2014] 1 WLR 872) involved alleged wrongs or acts in relation to the person, as opposed to alleged wrongs or acts in relation to property.\nAs to that, it appears to me to be a very powerful argument for saying that the first rule must apply equally to injuries to the person as it applies to the taking of property.\nThe notion that English courts will respect a sovereign states right to legislate as it sees fit in relation to the taking of property within its territory (subject always to the exception of legislation which conflicts with public policy) appears to me to be based on the principle that the law in a given territory should generally be treated as being that laid down by the legislature of that territory.\nIn other words, it is either based on, or at least is close to, the choice of law, or proper law, principle which applies in private law conflict cases.\nThat seems to derive support from what Lord Wilberforce said in Buttes Gas at p 931, and indeed from the reasoning of Lord Bingham in R (Al Jedda) v Secretary of State for Defence (JUSTICE intervening) [2008] AC 332, paras 40 43, approving the reasoning and decision of the Court of Appeal at [2007] QB 621, paras 105 107.\nAssuming that the second rule can apply to executive acts in relation to property which are unlawful by the laws of the state in which it occurred, I am unconvinced that it would apply in such a case in so far as the act resulted in injuries to the person.\nIn no English case has it been held, or even suggested, that an executive act, unlawful by the laws of the state in which it occurred, can be subject to the Doctrine in a case where the cause of action is personal injury or death.\nAs discussed in paras 143 144 above, there is a serious practical argument in favour of the second rule applying to unlawful executive acts in so far as they relate to interference with property and property rights, but that argument does not apply to personal harm whether physical or mental.\nBearing in mind that (i) the Doctrine is not concerned with claims against a foreign state, (ii) there is no good practical reason for the second rule to apply to cases of unlawfully causing harm to the person, (iii) there are no judicial decisions or even judicial observations where it has been held so to apply, and (iv) there will be cases of personal harm where the third rule can be invoked, I consider that we should hold that the second rule does not apply to cases where a foreign state executive has caused physical or mental harm to a claimant through an act in the territory of that state which was unlawful under the laws of that state.\nFurther, such recent authority as there is in this jurisdiction tends to support a limited interpretation of the second rule.\nIn Lucasfilm Ltd v Ainsworth [2012] 1 AC 208, para 86, Lord Walker and Lord Collins said that in England the foreign act of state doctrine has not been applied to any acts other than foreign legislation or governmental acts of officials such as requisition, and so refused to apply it to the grant of a patent.\nThe notion that the second rule only applies to executive acts in relation to property within the jurisdiction of the state concerned is also supported by the editors of Dicey, Morris and Collins in the passage cited in para 139 above.\nIn a case where neither the first nor the third rule applies, it seems to me that there is force in the point that, as a matter of elementary justice, if a member of the executive of a foreign state injures a claimant physically in the territory of that state, and the injury was not authorised by the law of that state, a third party who is properly sued in this country on the ground that he was in some way also responsible for the injury should not normally be allowed to rely on the Doctrine as a defence. (I say normally, because, as already indicated, there will be occasions where the third rule may apply).\nIn other words, the onus seems to me to be very much on those who wish to justify the extension of the second rule to unlawful acts which cause physical or mental damage, and I can see no good reason for doing so.\nLimits and exceptions to the Doctrine: Territoriality\nSo far as the cases are concerned, the first, second and third rules have only been applied in relation to acts within the territory of the state concerned.\nI find it hard to see how it could be argued that the first rule, which is concerned with legislation, could apply to acts which take effect in a location outside the territory of the state concerned.\nThe same applies to the second rule, which is concerned with executive acts.\nThe older cases indicate that both rules are based on sovereign power, and, as mentioned in para 136 above, the nature of sovereign power is that it is limited to territory over which the power exists.\nFurther, a location outside the relevant territory would be in the territory of another state, and normal principles, including the first rule, would indicate that the laws of that other state will normally apply.\nIt is therefore hard to see how the law of the state which committed the act could apply so far as the first rule is concerned.\nAs to the second rule, in the absence of any judicial decision to the contrary, I cannot see any good reason why, if the act in question was unlawful pursuant to the laws of the location in which it occurred, the act of state doctrine should assist a defendant simply because the act was carried out by the executive of another state.\nThe position with regard to territoriality seems to me to be less clear so far as the third rule is concerned.\nAs Rix LJ observed in Yukos at para 49, [i]t is not entirely clear from what Lord Wilberforce actually said in Buttes Gas whether what I have called the third rule is confined to what transpires territorially within a foreign sovereign state.\nHowever, I also agree with Rix LJ that, at least in some circumstances it could do so, as it is inherent in the nature of the rule that it may apply to actions outside the territory of the state concerned.\nThe application of these principles to these cases\nMr Belhaj and Mrs Boudchar contend that the defendants assisted US officials to kidnap, detain and torture them in Malaysia and Thailand, and to take them to Libya, in order for them to be detained and tortured there by Libyan officials.\nIt is not suggested (at least at this stage of the proceedings) that the alleged detention, kidnapping and torture in Malaysia or Thailand or the alleged rendition to Libya were lawful in Malay or Thai law, or that the alleged rendition was lawful in US law, or that the subsequent detention and torture in Libya were lawful in Libyan law.\nThey were executive actions by members of the executive of the governments of the US and Libya, and it appears, to some extent, members of the executive of the governments of Malaysia and of Thailand.\nIn my view, at least on the evidence available so far, and in agreement with Lord Mance and Lord Sumption, the acts complained of by Mr Belhaj and Mrs Boudchar do not fall within the third rule.\nThere is no suggestion that there was some sort of formal or high level agreement or treaty between any of the states involved which governed the cooperation between the executives of the various countries concerned.\nAs already mentioned, the mere fact that officials of more than one country cooperate to carry out an operation does not mean that the third rule can be invoked if that operation is said to give rise to a claim in domestic law.\nIt would be positively inimical to the rule of law if it were otherwise.\nHaving said that, even if the third rule otherwise applied, I would still hold that this was a case where, assuming that the claimants were detained, kidnapped and tortured as they allege, the public policy exception would apply.\nIn that connection, Lord Sumptions impressive analysis of the relevant international law is important in the present context because I consider that any treatment which amounts to a breach of jus cogens or peremptory norms would almost always fall within the public policy exception.\nHowever, as explained above, because the Doctrine is domestic in nature, and in agreement with Lord Mance and Lord Sumption, I do not consider that it is necessary for a claimant to establish that the treatment of which he complains crosses the international law hurdle before he can defeat a contention that the third rule applies.\nGiven that the third rule does not apply, I consider that it is clear that the Doctrine cannot be relied on as against Mr Belhaj and Mrs Boudchar, and the first rule plainly does not apply.\nAs to the second rule, I consider that it cannot be relied on because (i) the alleged wrong doing involves harm to individuals and not property, and (ii) the public policy exception would anyway apply, as it would in relation to the third rule.\nThe position of Mr Rahmatullah is arguably a little more nuanced.\nAlthough I accept that there is an argument to the contrary, at the moment it does not seem to me that his treatment by the US authorities should be treated as having taken place within the US jurisdiction, because it was within the Afghan jurisdiction.\nQuite apart from this, Mr Rahmatullahs allegations involve physical and mental harm.\nAccordingly, for each of those two reasons, the second rule is not engaged.\nHowever, because the defendants were apparently acting pursuant to the MoU between the UK and US governments, there is an argument that, unlike in the case of Mr Belhaj and Mrs Boudchar, the third rule is engaged.\nI was initially inclined to think that that argument may be a good one.\nHowever, I have come to the conclusion that the third rule does not apply in relation to Mr Rahmatullah.\nAs Lord Mance says, the existence and terms of the MoU do not bear on the allegations which are of complicity in unlawful detention and ill treatment.\nIn any event, even if that is wrong and the third rule was engaged, I consider that Mr Rahmatullah could rely on the public policy exception, essentially for the reasons given by Lord Sumption.\nTo be held without charge or trial for ten years, particularly when coupled with significant mistreatment (even if it did not amount to torture) is sufficient to take Mr Rahmatullahs case into the public policy exception, bearing in mind the severity and flagrancy of the alleged interference with his rights, and the length of time for which it allegedly lasted.\nConclusion\nAccordingly, I would dismiss the defendants appeals in so far as they contend that the courts below held that their defences of state immunity and foreign act of state in each of the two actions must be rejected.\nLADY HALE AND LORD CLARKE:\nWe agree with the reasoning and conclusion in the judgment of Lord Neuberger.\nThe defences of state immunity and foreign act of state do not apply at all in the two cases before us.\nThis is also the conclusion reached by Lord Mance for essentially the same reasons.\nIt is not necessary for us to express a view on other issues which do not strictly arise for decision in these cases.\nLORD SUMPTION: (with whom Lord Hughes agrees)\nIntroduction\nThese appeals raise questions of some constitutional importance concerning the ambit of the act of state rule.\nThey arise from allegations that British officials were complicit in acts of foreign states constituting civil wrongs and in some cases crimes and breaches of international law.\nYunus Rahmatullah is a national of Pakistan.\nHe was detained in Baghdad in February 2004 by British forces, on suspicion of being a member of Lashkar e Taiba, a terrorist organisation based in Pakistan with links to Al Qaeda.\nAt the time of his detention, the United Kingdom and the United States were occupying powers in Iraq.\nBritish forces were part of a multinational force responsible for the security and stabilisation of the country under Resolution 1511\/2002 of the Security Council of the United Nations.\nThey were deployed primarily in a designated area of south eastern Iraq, but Mr Rahmatullah was detained outside that area in a sector under the control of the United States.\nAccordingly, on the day after his detention he was transferred to United States custody under the terms of a Memorandum of Understanding concerning the custody of detainees, which had been agreed between the two occupying powers.\nThe United States removed him shortly afterwards to Bagram airbase in Afghanistan, where he was detained for more than ten years without charge or trial, before he was finally released in May 2014.\nMr Rahmatullah alleges that while in the custody of British and American forces he was subjected to torture and other serious mistreatment.\nThe present appeal is not concerned with any mistreatment that may have occurred while Mr Rahmatullah was in British custody.\nIt is concerned only with his case that the United Kingdom is responsible for the acts of United States personnel during the period when he was in their custody.\nHe claims damages from the British government on the ground (i) that his treatment by US personnel was part of a common design or concerted course of action between Britain and the United States, (ii) that United States personnel were in the relevant respects agents of the United Kingdom, and (iii) that the United Kingdom knew or should have known that if delivered into the custody of United States forces he was liable to be unlawfully rendered to other countries, and unlawfully detained, tortured and otherwise mistreated.\nWe are told that Rahmatullah is representative of many hundreds of claims in the High Court in which the same legal issues arise.\nMr Belhaj is a Libyan national.\nIn 2004 he was the leader of the Libyan Islamic Fighting Group, an organisation opposed to the government of Colonel Gaddafi, which is alleged to have been a terrorist organisation at the relevant time.\nHe led an attempted uprising against the Gaddafi regime in 1998, and fled the country when it was suppressed.\nMrs Boudchar, his wife, is a Moroccan national.\nIn February 2004 Mr Belhaj and Mrs Boudchar were living in China but wished to come to the United Kingdom to claim asylum.\nThey allege that Chinese officials detained them at Beijing airport as they were about to board a flight to London, and later put them on a flight to Kuala Lumpur in Malaysia.\nThere, they were held for two weeks by the Malaysian authorities.\nThey were then allowed to leave for the United Kingdom but were required to go via Bangkok.\nOn 7 March 2004 they were put on a commercial flight to London via Bangkok.\nAt Bangkok they were taken off the aircraft by Thai officials and delivered to agents of the United States.\nAt some time in the next two days they were flown to Libya in a US registered aircraft said to have been owned by a CIA front company.\nIn Libya, they were taken to Tajoura prison.\nMrs Boudchar was released in June 2004 after being held there for rather more than three months.\nMr Belhaj was held successively at Tajoura and Abu Salim prisons for six years before being released in March 2010.\nIt is alleged that they were tortured and subjected to other serious mistreatment by US officials in Bangkok and in the aircraft carrying them to Libya, and by Libyan officials in Libya.\nThe claimants at one stage relied upon mistreatment by the Chinese authorities, but they no longer do so.\nThe present proceedings are brought in support of a claim for damages against a number of departments and officials of the British government who are said to have been complicit in what happened to them.\nThe defendants include the intelligence services, the departments of state responsible for them, the then Foreign Secretary Mr Straw, and Sir Mark Allen, who is said to have been a senior official of the Secret Intelligence Service.\nThe case against them is that the SIS, having learned that Mr Belhaj and Mrs Boudchar were being detained in Malaysia, passed the information to the Libyan intelligence services and assisted the rendition flight with transit facilities at the British owned but American operated base at Diego Garcia in the Indian Ocean.\nIt is not alleged that British officials were directly involved in the rendition, torture or mistreatment of the claimants.\nBut it is said that they enabled it to happen, knowing of the risk that the defendants would be unlawfully detained, tortured and otherwise mistreated by the Americans and the Libyans.\nIt is also alleged that British officials took advantage of Mr Belhajs detention in Libya by interrogating him there at least twice.\nThe defendants, it is said, thereby incurred liability in tort.\nBoth claims were pleaded by reference to English law.\nBut it is now common ground that any liability in tort is governed by the law of the countries where they occurred, ie successively Malaysia, Thailand and Libya, and (in respect of what happened outside those countries on a US registered aircraft), the United States.\nIt is important to draw attention to the limited character of the issues presently before the Court.\nThe allegations of fact summarised in the two preceding paragraphs are taken from the pleadings.\nThey are no more than allegations.\nNone of them has been proved.\nThe present appeals are concerned with the question whether they would give rise to a cause of action if they were true.\nThat turns on three issues: (i) whether the claims against the British government and its officials indirectly implead Malaysia, Thailand, Libya and the United States, so as to be barred by state immunity; (ii) whether the tortious acts alleged are non justiciable or non actionable as acts of state of those countries; and (iii) if the claim is barred or non justiciable as a matter of domestic law, whether that is consistent with article 6 of the European Convention on Human Rights.\nIn Belhaj, Simon J held that there was no state immunity but that the claims were barred as being based on foreign acts of state.\nHe rejected the argument that this outcome was inconsistent with article 6 of the Convention.\nThe Court of Appeal affirmed the judgment on state immunity and accepted that the act of state doctrine was engaged.\nBut it allowed the appeal on the ground that the act of state doctrine was subject to (i) a limitation to acts of state occurring within the jurisdiction of the state in question, and (ii) an exception on the ground of public policy for grave violations of human rights.\nIn Rahmatullah, Leggatt J also rejected the argument based on state immunity.\nHe, however, took a more radical approach to the foreign act of state doctrine, holding that it was not engaged at all.\nHe then made a leap frog order with a view to enabling the case to be considered by this court together with Belhaj.\nState Immunity\nState immunity is a rule of customary international law which requires states to accord each other immunity from the jurisdiction of their domestic courts in respect of their sovereign acts (acts jure imperii).\nIn Jurisdictional Immunities of the State (Germany v Italy, Greece intervening) [2012] ICJ Rep 99, the International Court of Justice held that the rule derived from the principle of the sovereign equality of states, which was one of the fundamental principles of the international legal order (para 57).\nIn the United Kingdom, effect was given to the rule of international law by the common law for some three centuries before it became statutory with the enactment of the State Immunity Act 1978.\nSection 1(1) of that Act provides that a state is immune from the jurisdiction of the courts except in cases specified by the Act.\nFor this purpose, a state includes the sovereign or other head of state in his public capacity, the government of that state and any department of that government: see section 14(1).\nThe same immunity is conferred on a separate entity, in respect of anything which it does in the exercise of sovereign authority, if the circumstances are such that a state would have been immune: section 14(2).\nThe statutory exceptions are for proceedings relating to private, as opposed to sovereign or public acts.\nThey relate broadly to commercial transactions, and other transactions in which a state engages otherwise than in the exercise of sovereign authority: sections 3 11.\nAll of these exceptions depend for their application on the nature or subject matter of the action.\nTo that extent it may be described as a subject matter immunity.\nBut the basic rule, subject to the exceptions, is that state immunity is a personal immunity from the exercise of jurisdiction, which depends upon the identity of the person sued.\nAs a matter of both international and domestic law, the categorisation of an act as sovereign depends on its character, not its purpose or underlying motive: see Playa Larga (Owners of Cargo lately laden on board) v I Congreso del Partido (Owners) [1983] AC 244, 262 267 (Lord Wilberforce), where the national and international authorities are reviewed.\nLord Wilberforce formulated the test as follows, at p 267: in considering under the restrictive theory whether state immunity should be granted or not, the court must consider the whole context in which the claim against the state is made, with a view to deciding whether the relevant act(s) upon which the claim is based, should, in that context, be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the state has chosen to engage, or whether the relevant act(s) should be considered as having been done outside that area, and within the sphere of governmental or sovereign activity.\nBy this standard there can be no real doubt that the acts alleged against the relevant foreign governments in these cases were sovereign acts, whether they were lawful or not.\nIf Malaysia, Thailand, Libya and the United States had been sued, they would have been immune.\nHowever, they have not been sued.\nOnly the government and agents of the United Kingdom have been.\nThey accept that state immunity is not available to them, but none the less invoke it on the basis that the issues engage the interests of the other states.\nTheir argument is based on the very limited categories of cases in which state immunity may apply notwithstanding that the relevant foreign state is not itself a party.\nTwo such categories are well established in English law.\nThe first, which does not arise in these appeals, is the case of a civil claim against an employee or other agent of a state in respect of acts which are attributable in international law to that state.\nIn Jones v Ministry of the Interior of the Kingdom of Saudi Arabia (Secretary of State for Constitutional Affairs intervening) [2007] 1 AC 270, the House of Lords held that the agent was entitled to immunity on the same basis as his principal.\nThis is because so far as the agents of a state act in their public capacities, they are identified with the state in international law, so that references in the Act to a state must be construed to include any individual representative of the state acting in that capacity: para 69 (Lord Hoffmann), cf para 10 (Lord Bingham).\nThe second case comprises actions in which a state, without being a party, is said to be indirectly impleaded because some relevant interest of that state is directly engaged.\nIn England, the only cases in which a foreign state has been held to be indirectly impleaded in this way are those involving the assertion of some right over property of that state situated within the jurisdiction of the English courts.\nThe paradigm case of indirect impleader, and the earliest to be considered by the English courts, is an Admiralty action in rem against a state owned ship.\nDuring the period when the United Kingdom applied the absolute doctrine of state immunity it was established that an action in rem against a state owned ship was barred by state immunity.\nThe principle, adapted to reflect the restricted doctrine of state immunity, is now embodied in section 10 of the State Immunity Act.\nThe reason is that an action in rem is in reality an action against the ships owner, although the owner is not named.\nThus the action may be brought only if at the time when the cause of action arose the owner would have been liable in personam; in current practice it may be brought against a ship in respect of a liability arising in connection with another ship under the same ownership.\nA defendant who appears to the writ in rem thereby becomes liable in personam even if he would not otherwise have been.\nIn The Parlement Belge (1880) 5 PD 197, Brett LJ, delivering the judgment of the court, said at pp 218 219: In a claim made in respect of a collision the property is not treated as the delinquent per se.\nThough the ship has been in collision and has caused injury by reason of the negligence or want of skill of those in charge of her, yet she cannot be made the means of compensation if those in charge of her were not the servants of her then owner, as if she was in charge of a compulsory pilot.\nThis is conclusive to shew that the liability to compensate must be fixed not merely on the property but also on the owner through the property.\nIf so, the owner is at least indirectly impleaded to answer to, that is to say, to be affected by, the judgment of the court To implead an independent sovereign in such a way is to call upon him to sacrifice either his property or his independence.\nTo place him in that position is a breach of the principle upon which his immunity from jurisdiction rests.\nWe think that he cannot be so indirectly impleaded, any more than he could be directly impleaded.\nThe case is, upon this consideration of it, brought within the general rule that a sovereign authority cannot be personally impleaded in any court.\nAlthough the expression indirect impleader has passed into common usage, the truth is that proceedings in rem against property are a form of direct impleader, as Lord Wright pointed out in The Cristina [1938] AC 485, at p 505.\nThe principle that a state is impleaded by proceedings against its property is, however, based on more than the technicalities of Admiralty procedure.\nIt reflects the broader rule that if the relief claimed would directly affect a foreign states interest in property, it makes no difference whether the action is framed in rem or in personam, and no difference whether it is brought against the state or someone else who is in possession or control of the property.\nIn United States of America v Dollfus Mieg et Cie SA [1952] AC 582, gold bars had been looted by German troops in 1944 from a French bank which was holding them for Dollfus Mieg & Cie.\nThey were recovered by allied forces in Germany and lodged with the Bank of England by a Tripartite Commission comprising the governments of Britain, France and the United States to await the Commissions decision upon their ultimate disposal.\nAccordingly the allied governments had no beneficial interest in the gold but an immediate right to possession as against the Bank.\nDollfus Mieg brought a personal action against the Bank, claiming delivery of the bars still in its possession or damages for the Banks act in converting the bars by refusing delivery.\nThe House of Lords held that the action against the Bank for specific delivery of the gold was barred by state immunity.\nEarl Jowitt considered (p 604) that the two foreign states were neither directly nor indirectly impleaded, but that state immunity should be extended to apply to actions against a states bailee.\nHe did not expand on the reasons for that extension, but appears to have regarded it as a principle sui generis rather than an illustration of some broader rule.\nIt is, however, clear that this was not the view taken by his colleagues.\nLord Porter pointed out (p 612) that chattels and other personal property must necessarily be held by states through servants or agents and that bailees were on the same footing as agents.\nIn other words, the Bank was to be identified with the three governments so far as it acted as their bailee.\nLord Oaksey (p 614) agreed with Lord Porter.\nLord Tucker (pp 621 622) took the same view.\nLord Radcliffe, whose analysis is the most complete, approved the statement in the then current edition of Diceys Conflict of Laws that any action or proceeding against the property of [a foreign sovereign] is an action or proceeding against such person (p 616).\nIn his view the merit of the rule thus stated was that it does make it clear that the property of a sovereign enjoys no immunity in legal proceedings except in so far as those proceedings amount in one way or another to a suit against a sovereign.\nThis left unresolved the alternative claim against the Bank in its own right for damages for conversion.\nLord Radcliffe rejected that claim also, on the ground that upon discharging any liability for conversion, the Bank would become entitled to set up the plaintiffs title against his bailor.\nIn other words the courts judgment would materially affect the existing right of his bailor in respect of the possession and disposal of the chattel: pp 619 620.\nSimilar issues arose in Rahimtoola v Nizam of Hyderabad [1958] AC 379.\nThe Nizam sued the former High Commissioner of Pakistan in the United Kingdom, who had received a sum of money paid out of the Nizams account by a signatory during the Indian invasion of Hyderabad.\nIt was held that the action was barred.\nThe critical point was the capacity in which the High Commissioner had acted.\nThe Court of Appeal had decided that no question of state immunity arose because the High Commissioner was only an agent of the state of Pakistan.\nIn the House of Lords that decision was reversed, but there are some differences in the reasoning of the appellate committee.\nIn my view, the correct analysis was that of Viscount Simonds, who thought that as an agent of Pakistan for the purpose of receiving the money, the High Commissioner was in the relevant respect to be identified with Pakistan.\nLike Lord Radcliffe in Dollfus Mieg, he approved the rule stated in Dicey (pp 393 394), observing: No doubt, if a defendant, by whatever name he is called, can be identified with the sovereign state, his task is easy: he need prove no more in order to stay the action against him.\nBut, as soon as it is proved that quoad the subject matter of the action the defendant is the agent of a sovereign state, that, in other words, the interests or property of the state are to be the subject of adjudication, the same result is reached.\nAccordingly, he treated an action to assert a proprietary right in assets under the control of a state as a mode of impleading that state.\nAddressing an argument that Pakistan held the money in trust for the Nizam or as money had and received to his use, he added at p 397 These are matters which directly concern the principal on whose behalf Rahimtoola received the money.\nThey cannot be determined without impleading him.\nTherefore they cannot be determined at all.\nThis principle is now implicitly reflected in section 6(4) of the State Immunity Act, which provides that a court may entertain proceedings against a person other than a state relating to property in the possession or control of a state, or in which a state claims an interest, if the state would not have been immune had the proceedings been brought against it.\nIn these cases, English and international law treated a claim against a states property as tantamount to a claim against the state.\nThe appellants argue that the true rationale of this rule is broader than this.\nIt is, they submit, that a state is to be treated as indirectly impleaded in any case where the issues would require the court to adjudicate on its legal rights or liabilities, albeit as between other parties.\nTwo matters in particular are urged in support of this argument.\nThe first is that it is said that an analogous principle is applied as a matter of international law by tribunals of international jurisdiction.\nThe second is that the extension for which they contend is recognised in the current draft convention adopted by the United Nations for codifying the international law of state immunity.\nIn both cases, the argument is that English law should conform to the principles of international law which underlie the domestic doctrine of state immunity.\nIn support of the first point, the appellants rely on two decisions of the International Court of Justice, Monetary Gold Removed from Rome (1954) ICJ Rep, p 19 and East Timor (Portugal v Australia) (1995) ICJ Rep, p 90.\nThe jurisdiction of the International Court over states is founded on their agreement to submit, either specifically in relation to a particular dispute or generally in relation to certain categories of dispute.\nIn both of these cases the Court declined to decide an issue as between the parties because it affected the rights of a non party state.\nMonetary Gold concerned a claim by the United Kingdom to apply Albanian gold stored at the Bank of England towards satisfaction of a judgment which it had previously obtained from the Court against Albania.\nA competing claim had been made by Italy to apply the same gold in satisfaction of its own claims against Albania.\nItaly, however, had no judgment.\nThe court declined to decide the issue as between the United Kingdom and Italy because it could not do so without deciding whether Italys claims against Albania were well founded, something that it could not do in litigation to which Albania was not a party.\nGiving its reasons at pp 32 33, the court observed: In the present case, Albanias legal interests would not only be affected by a decision, but would form the very subject matter of the decision.\nIt is true that, under article 59 of the Statute, the decision of the court in a given case only binds the parties to it and in respect of that particular case.\nThis rule, however, rests on the assumption that the court is at least able to render a binding decision.\nWhere, as in the present case, the vital issue to be settled concerns the international responsibility of a third state, the court cannot, without the consent of that third state, give a decision on that issue binding upon any state, either the third state, or any of the parties before it.\nEast Timor concerned a claim by Portugal that Australia had not been entitled to conclude a treaty with Indonesia relating to the exploitation of certain natural resources of East Timor, a Portuguese territory which had been occupied by Indonesia since 1975.\nIndonesia was not a party.\nThe Court applied the Monetary Gold principle.\nIt declined to entertain the dispute because it could not do so without adjudicating in the absence of Indonesia on the lawfulness of its occupation and its right to make treaties concerning the natural resources of East Timor.\nAs the Court pointed out in Monetary Gold (p 32), the underlying principle is that a court can only exercise jurisdiction over a state with its consent.\nBut the point about both of these cases was that the decision would have involved an exercise of jurisdiction over a non party state without its consent.\nThis was because the resolution of the dispute as between the parties might have conferred upon at least one of them an international right at the expense of the non party.\nIn Monetary Gold, the resolution of the issue in favour of Italy would have enabled Italy to satisfy its claim against Albanias gold, leaving Albania to satisfy the United Kingdoms judgment from other assets.\nIn East Timor, the resolution of the issue in favour of Portugal, by binding Australia, would have prevented Australia from implementing its treaty with Indonesia and Indonesia from concluding any other treaty with Australia in right of East Timor.\nBoth cases had two features which in combination account for the outcome.\nFirst, the rights or liabilities of the non party state were the very subject matter of the dispute between the parties.\nSecondly, although the judgment would have bound only the parties, each of the parties would have been bound to deal with the non party in accordance with it.\nEven on the assumption (and it is a large one) that the principle applied in these cases can readily be transposed to the domestic law plane, the mere fact that the rights or liabilities of the non party were in issue would not be enough.\nTurning to the appellants second argument, the United Nations Convention on Jurisdictional Immunities of States and their Property (2004) is an attempt to codify the international law of state immunity.\nIt was drafted by the International Law Commission of the United Nations between 1977 and 2004.\nThe final document was adopted by the General Assembly of the United Nations in December 2004.\nIt will enter into force when 30 states have ratified it.\nAs yet, however, it has been signed by only 31 states and ratified by only 19, not including the United Kingdom.\nNotwithstanding its uncertain status as a treaty, it has been regarded as an authoritative statement of customary international law.\nIn Jones v Ministry of the Interior of the Kingdom of Saudi Arabia, supra, at para 8, Lord Bingham endorsed the view expressed by Aikens J in AIG Capital Partners Inc v Republic of Kazakhstan [2006] 1 WLR 1420 (para 80) that the Convention powerfully demonstrates international thinking.\nArticle 1 of the Convention recites that it applies to the immunity of a state and its property from the jurisdiction of the courts of another state.\nArticle 6 of the Immunities Convention provides: 1.\nA State shall give effect to State immunity under article 5 by refraining from exercising jurisdiction in a proceeding before its courts against another State and to that end shall ensure that its courts determine on their own initiative that the immunity of that other State under article 5 is respected. 2.\nA proceeding before a court of a State shall be considered to have been instituted against another State if that other State: is named as a party to that proceeding; or (a) (b) is not named as a party to the proceeding but the proceeding in effect seeks to affect the property, rights, interests or activities of that other State.\nArticle 6(2)(b) incorporates the concept of indirect impleader.\nThe appellants rely for their case on the breadth of the concluding words of paragraph (2)(b), and notably the extension of the concept beyond a states property or rights, to its interests and activities.\nThere was an issue before us about how far these expressions can be said to represent the current consensus of nations.\nCertainly, comments in the course of the drafting suggest that some states considered the final words to be too broad.\nIt is, however, unnecessary to resolve this question, because the scope of the final words of article 6(2)(b) are plainly limited by their context.\nArticle 6(2)(b) is concerned only with cases where the proceedings seek to affect the property, rights, interests or activities of a state.\nIt is difficult to envisage a case where this would be true, unless it related to property within the jurisdiction of the domestic forum in which the foreign state had an interest, especially in the context of a Convention which is expressly concerned only with the immunity of the state eo nomine and its property (see article 1).\nAn examination of the travaux confirms this.\nThe most illuminating document is the International Law Commissions report to the General Assembly of 1991, which includes a commentary on article 6: see Yearbook of the International Law Commission, 1991, ii(2), 23 25.\nThis describes the genesis of article 6(2)(b) in domestic court decisions about state owned property.\nIt records that the word affect was used in order to avoid appearing to create too loose a relationship between the proceedings and their consequences.\nAnd the discussion of its meaning relates wholly to actions involving seizure or attachment of public properties or properties belonging to a foreign state or in its possession or control: see paras 11 13 of the commentary under article 6.\nThe essential point about the property cases is that they have the potential directly to affect the legal interests of states notwithstanding that they are not formally parties.\nIn the case of an action in rem, this is obvious.\nThe courts decision binds all the world.\nBut although perhaps less obvious it is equally true of an action in personam, where the court is asked to recognise an adverse title to property in someone else or award possession of property as of right to another.\nAs Lord Porter and Lord Radcliffe put it in Dollfus Mieg (pp 613, 616) the law cannot consistently with the immunity of states require a state to appear before a domestic court as the price of defending its legal interests.\nNone of this reasoning, however, applies in a case where the foreign state has no legal interest to defend because the courts decision in its absence cannot directly affect its legal interests.\nI would not altogether rule out the possibility that litigation between other parties might directly affect interests of a foreign state other than interests in property.\nBut, as I have observed, it is not easy to imagine such a case.\nThe appellants argument is in reality an attempt to transform a personal immunity of states into a broader subject matter immunity, ie, one which bars the judicial resolution of certain issues even where they cannot affect the existence or exercise of a states legal rights.\nNo decision in the present cases would affect any rights or liabilities of the four foreign states in whose alleged misdeeds the United Kingdom is said to have been complicit.\nThe foreign states are not parties.\nTheir property is not at risk.\nThe courts decision on the issues raised would not bind them.\nThe relief sought, namely declarations and damages against the United Kingdom, would have no impact on their legal rights, whether in form or substance, and would in no way constrict the exercise of those rights.\nIt follows that the claim to state immunity fails.\nAct of state: foundations\nIn Nissan v Attorney General [1970] AC 179, 211 212, Lord Reid observed: I think that a good deal of the trouble has been caused by using the loose phrase act of state without making clear what is meant.\nSometimes it seems to be used to denote any act of sovereign power or of high policy or any act done in the execution of a treaty.\nThat is a possible definition, but then it must be observed that there are many such acts which can be the subject of an action in court if they infringe the rights of British subjects.\nSometimes it seems to be used to denote acts which cannot be made the subject of inquiry in a British court.\nBut that does not tell us how to distinguish such acts: it is only a name for a class which has still to be defined.\nThe first task of a court dealing with a contention that the act of state doctrine applies is to clarify what is meant by an act of state, and what legal consequences follow from this categorisation.\nThe act of state doctrine comprises two principles.\nThe first can conveniently be called Crown act of state and does not arise in the present cases.\nIt is that in an action based on a tort committed abroad, it is in some circumstances a defence that it was done on the orders or with the subsequent approval of the Crown in the course of its relations with a foreign state.\nThe second, commonly called foreign act of state, is that the courts will not adjudicate upon the lawfulness or validity of certain sovereign acts of foreign states.\nFor this purpose a sovereign act means the same as it does in the law of state immunity.\nIt is an act done jure imperii, as opposed to a commercial transaction or other act of a private law character.\nThese are distinct principles, although they are based on certain common legal instincts.\nUnlike state immunity, act of state is not a personal but a subject matter immunity.\nIt proceeds from the same premise as state immunity, namely mutual respect for the equality of sovereign states.\nBut it is wholly the creation of the common law.\nAlthough international law requires states to respect the immunity of other states from their domestic jurisdiction, it does not require them to apply any particular limitation on their subject matter jurisdiction in litigation to which foreign states are not parties and in which they are not indirectly impleaded.\nThe foreign act of state doctrine is at best permitted by international law.\nIt is not based upon it: see Carreau & Marrella, Droit International, 11th ed (2012), 701; Weil, Le controle par les tribunaux nationaux de la licit des actes des gouvernements trangers, Annuaire franais de droit international, 23 (1977), 16, 30.\nThe policy which the foreign act of state doctrine reflects does, however, have partial analogues in the municipal law of a number of civil law jurisdictions, subject in some cases to extensive public policy exceptions.\nThe question has generally arisen in the context of foreign legislative expropriations.\nThese might have been recognised in other countries on the basis that the passing of property is governed by the lex situs.\nIn fact, however, they are recognised in some civil law countries on the basis that they are acts of state beyond challenge in the domestic courts of another country.\nThe French courts in particular have proceeded in these cases upon a principle based on a lack of competence or jurisdiction to rule on the legality of foreign acts of state, which is quite distinct from the corresponding principle (acte de gouvernement) relating to acts of the French government in the conduct of its foreign relations: see Larrasquitu et l'Etat Espagnol v Socit Cementos Rezola (Cour dAppel de Poitiers, 20 December 1937), (1938) 8 ILR 196 (the French jurisdiction is incompetent to consider the regularity of the act of a foreign sovereign, for that would be to judge that act); Martin v Banque d'Espagne (Cour de Cassation, 3 November 1952) (1952) ILR 202 (the acts in question, even apart from the principle of immunity from jurisdiction, were public acts which are not subject to judicial control in France); Epoux Reynolds v Ministre des Affaires Etrangres (Tribunal de Grande Instance de la Seine, 30 June 1965) (1965) 47 ILR 53 (a French court has no jurisdiction to adjudicate on the legality of that measure).\nThe principle is thus expressed in terms which are not confined to expropriation cases, and it has in fact been applied more widely, notably in a well known decision of the Cour de Cassation in a case involving the lawfulness of the act of a foreign state in deporting a criminal suspect to France: In re Illich Ramirez Sanchez (Cour de Cassation, 21 February 1995) ECLI:FR:CCASS:1995:CR06093).\nSo also the courts of the Netherlands: Petroservice & Credit Minier Franco Roumain v El Aguila (Ct App, The Hague, 4 December 1939), (1939) 11 ILR 17 (A Dutch Court is obliged to refrain from entering into an independent examination of the validity or invalidity of public acts of a foreign government); Bank Indonesia v Senembah Maatschappij and Twentsche Bank NV (1959) 30 ILR 28 (Court of Appeal of Amsterdam, 4 June 1959) (as a rule, a Court will not, and should not, sit in judgment on the lawfulness of acts jure imperii performed by, or on behalf of, a foreign Government, except in cases of flagrant conflict with international law).\nLike the French courts, the Dutch courts have applied the same principle in contexts other than expropriation, for example in addressing allegations of complicity by Dutch companies in the military operations of a foreign state: Republic of South Moluccas v Royal Packet Shipping Co (Amsterdam Court of Appeal, 8 February 1951) (1951) 17 ILR 150.\nGerman law, on the other hand, arrives at a similar result, by reference to a special rule based on the autonomy of states acting within their own territory: Unification Treaty Constitutionality Case, Bundesverfassungsgericht, judgment of 23 April 1991, 94 ILR 42.\nThe German courts appear to have rejected any more general principle limiting the subject matter jurisdiction of the courts over issues incidentally requiring a determination of the lawfulness or validity of a foreign states sovereign acts: Kunduz, Oberlandsgericht Kln, judgment of 30 April 2015, AZ 7 U 4\/14, para 17.\nIn none of these jurisdictions does the question appear to be governed by ordinary principles of the choice of law.\nDifferences between major civil law jurisdictions means that one cannot attach too much weight to the case law of any one of them.\nNone the less, I find the approach of the French and Dutch courts instructive.\nIt reflects a strong juridical instinct in two jurisdictions with a long standing engagement with international relations, which has an obvious relevance for the United Kingdom.\nIn England, the origin of the foreign act of state doctrine is commonly thought to be the decision of Lord Chancellor Nottingham in Blad v Bamfield (1673) 3 Swan 603; (1674) 3 Swan 604, although this view turns more on his expansive turns of phrase than on anything that he actually decided.\nThe dispute arose out of the volatile relations between England and Denmark in the second half of the 17th century.\nPeter Blad appears to have been the holder of a patent of monopoly from the King of Denmark to trade in Iceland, then a Danish possession.\nBamfield was an Englishman whose property was seized on the high seas in 1668 by the authority of the Danish Crown and forfeited by the Danish courts, on the ground that he had been fishing off Iceland in breach of the monopoly.\nSome years later, Blad made the mistake of visiting England.\nBamfield sued him at law, contending that the monopoly was illegal and invalid since it was contrary to a right to trade which had in practice been recognised by Denmark for 50 years before the seizure.\nBlad contended that he could not be liable because the seizure was an act of state.\nHe initially complained to the Privy Council on the ground that as an act of state it was susceptible of relief only by diplomatic means.\nLord Nottingham, who was sitting on the Council, stood up and said this was not a question of state, but of private injury, and suggested that the matter should properly be brought before the Court of Chancery.\nBut when the case came before him in chancery, Lord Nottingham changed his mind.\nThis was because Bamfield was now contending that reliance on the Danish letters patent was precluded by the terms of the Anglo Danish commercial treaty of 1670.\nThis, he said, made all the difference: it is very true that this cause was dismissed from the council board being not looked on there as a case of state, because for aught appeared to them, it might be a private injury, and unwarrantable, and so fit to be left to a legal discussion.\nBut now the very manner of the defence offered by the defendant had made it directly a case of state; for they insist upon the articles of peace to justify their commerce, which is of vast consequence to the public; for every misinterpretation of an article may be the unhappy occasion of a war.\nNottingham restrained Bamfields action at law on the ground that to send it to a trial at law, where either the court must pretend to judge of the validity of the Kings letters patent in Denmark or of the exposition and meaning of the articles of peace; or that a common jury should try whether the English have a right to trade in Iceland, is monstrous and absurd.\nWhat barred Bamfields case was his reliance on a treaty as invalidating a legal instrument of the Danish Crown relating to commercial operations in a Danish possession.\nIn a later age it would have been held that a treaty operated only on the plane of international law, and could not give rise to private rights in a citizen.\nBut Lord Nottinghams concern was a different one.\nHe was simply expressing the view, which was still commonly expressed long after his day, that a domestic court was incompetent to construe a treaty.\nNabob of the Carnatic v East India Co (1793) 2 Ves Jun 56 arose out of the East India Companys controversial relations with the Nabob at a stage when the courts had not yet learned to identify the East India Company with the British government.\nThe companys dealings with the Nabob are the subject of some of Edmund Burkes most famous Parliamentary orations.\nThe facts, in summary, were that the Company had assisted the Nabob, a sovereign ruler, in his wars against neighbouring princes.\nThe Nabob had thereby incurred large debts to them, secured on his public revenues and on part of his territory.\nThe Nabob alleged that they had taken more than he owed them, and sued for an account.\nThe company, although a private person in respect of its trading activities, was treated as a sovereign in relation to its operations as the ruler of a large part of India.\nThe commissioners discharging the office of Chancellor dismissed the claim (p 60): It is a case of mutual treaty between persons acting in that instance as states independent of each other; and the circumstance, that the East India Company are mere subjects with relation to this country, has nothing to do with that.\nThat treaty was entered into with them, not as subjects, but as a neighbouring independent state, and is the same, as if it was a treaty between two sovereigns; and consequently is not a subject of private, municipal, jurisdiction.\nDobree v Napier (1836) 2 Bing NC 781 marked an important development of the law.\nIt arose out of the civil wars of Portugal in the 1830s.\nThe plaintiffs steamship Lord of the Isles was captured on the high seas in 1833 while trying to run warlike stores through a blockade of the Portuguese coast maintained by warships loyal to Queen Maria II.\nThe ship was subsequently forfeited by a Portuguese prize court.\nThe Queens admiral happened to be a British subject, the adventurer Sir Charles Napier (not to be trusted except in the hour of danger), and upon his return home he was sued in the Kings Bench for trespass.\nTindal CJ dismissed the action.\nThe main reason was that the decree of the prize court was a judgment in rem and conclusive.\nBut he went on to reject an argument to the effect that having entered Portuguese service in breach of the Foreign Enlistment Act 1819, Napier was disabled from relying on the authority of the Queen of Portugal or the decision of her prize courts.\nHe did so on the ground that a breach of the Act could not render the acts of the Portuguese state justiciable: no one can dispute the right of the Queen of Portugal, to appoint in her own dominions, the defendant or any other person she may think proper to select, as her officer or servant, to seize a vessel which is afterwards condemned as a prize; or can deny, that the relation of lord and servant, de facto, subsists between the queen and the defendant Napier.\nFor the Queen of Portugal cannot be bound to take any notice of, much less owe any obedience to, the municipal laws of this country For as we hold that the authority of the Queen of Portugal to be a justification of the seizure as prize, there is as little doubt but that she might direct a neutral vessel to be seized when in the act of breaking a blockade by her established, which is the substance of the first special plea, or of supplying warlike stores to her enemies, which is the substance of the second. (pp 796 798) The decision on this last point was approved by the House of Lords in Carr v Fracis Times & Co [1902] AC 176.\nLord Halsbury LC analysed the case as follows, at pp 179 180: There, it was an act of state done by command of the Portuguese Crown and done by an English subject.\nIt was an a fortiori case; the act done by the English subject was an act which he was by English law prohibited from doing; to the plea that it was done by the authority of the Portuguese Crown, there was a replication that he was forbidden by the Foreign Enlistment Act to take that part in the proceedings which he was proved to have taken; nevertheless, the judgment of the Court held that that was a perfectly lawful proceeding, that it was an act of State, that it was authorized by the Portuguese Crown, and no action would lie in this country against an English subject who participated in it.\nThe essential point was that the blockade was, as a matter of international law, a sovereign act of Portugal in the conduct of its relations with the rest of the world, in particular those nations who might, or whose subjects might, seek to run the blockade in support of the Queen of Portugals domestic enemies.\nDuke of Brunswick v King of Hanover (1848) 2 HLC 1 marked another milestone in the development of this area of the law, not only in England but in the United States, where it would later serve as the point of departure for adoption of the foreign act of state doctrine into their law.\nThe background to this celebrated decision was a revolution in the German state of Brunswick which overthrew the government of the feckless and despotic Duke Charles in 1830.\nIn accordance with a power conferred on them by the Diet of the German Confederation, HM William IV of England, in his separate capacity as King of Hanover, and the deposed Dukes brother William, subsequently joined in two public instruments.\nThe first, of 1831, purported to depose Charles in favour of William.\nThe second, of 1833, purported to deprive him of his assets in Brunswick, France, England and elsewhere for his own protection and vest them in the Duke of Cambridge as guardian.\nIn 1843 Charles brought an action in Chancery against the current guardian, who was HM William IVs successor as King of Hanover, for an account of his dealings with the property on the footing that these transactions were contrary to the law of Hanover and void.\nThe bill was dismissed by Lord Langdale MR for want of equity.\nHis decision was affirmed on different grounds by the House of Lords.\nThe defendant was entitled to state immunity, and parts of the reasoning appear to be based on that ground.\nBut as Lord Wilberforce later observed in Buttes Gas & Oil Co v Hammer [1982] AC 888, 932E F, it also stands as authority for the foreign act of state doctrine, because the ground of the decision was that the decree of the Diet and the two public instruments could not be challenged in an English court.\nThe Lord Chancellor (Cottenham) said, at pp 21 22: If it were a private transaction , then the law on which the rights of individuals may depend might have been a matter of fact to be inquired into, and for the court to adjudicate upon, not as a matter of law, but as a matter of fact.\nIf it be a matter of sovereign authority, we cannot try the fact whether it be right or wrong: The allegation that it is contrary to the laws of Hanover, taken in conjunction with the allegation of the authority under which the defendant had acted, must be conceded to be an allegation, not that it was contrary to the existing laws as regulating the right of individuals, but that it was contrary to the laws and duties and rights and powers of a Sovereign exercising sovereign authority.\nIf that be so, it does not require another observation to shew, because it has not been doubted, that no court in this country can entertain questions to bring Sovereigns to account for their acts done in their sovereign capacities abroad.\nThe rest of the House agreed, Lord Campbell observing at p 26 that even if the Duke of Cambridge, who was not a sovereign, had been sued it would equally have been a matter of state, and at p 27 that the Court of Chancery I presume would not grant an injunction against the French Republic marching an army across the Rhine or the Alps.\nSecretary of State in Council of India v Kamachee Boye Sahaba (1859) 13 Moo PCC 22 was a case of Crown act of state.\nThe question at issue was the lawfulness of the annexation of the princely state of Tanjore by the East India Company on behalf of the British Crown.\nHowever, the Privy Council made no distinction between Crown and foreign act of state for this purpose.\nLord Kingsdown, delivering the advice of the Board, formulated the issue (p 77) as being whether the annexation was done under colour of legal right, in which case the existence of that right was a justiciable question, or as an exercise of power, an act not affecting to justify itself on grounds of municipal law, in which case it was an act of state.\nHolding that it was the latter, Lord Kingsdown said (p 86): Of the propriety or justice of that act, neither the court below\/or the Judicial Committee have the means of forming, or the right of expressing if they had formed, any opinion.\nIt may have been just or unjust, politic or impolitic, beneficial or injurious, taken as a whole, to those whose interests are affected.\nThese are considerations into which their Lordships cannot enter.\nIt is sufficient to say that, even if a wrong has been done, it is a wrong for which no municipal court of justice can afford a remedy.\nIn Cook v Sprigg [1899] AC 572 another case of colonial annexation, Lord Halsbury LC expressed the same principle in terms which would subsequently be taken up by Lord Wilberforce in Buttes Gas & Oil Co v Hammer [1982] AC 888, 933F G: It is a well established principle of law that the transactions of independent states between each other are governed by other laws than those which municipal courts administer.\nIn Carr v Fracis Times [1902] AC 176, the captain of HMS Lapwing, acting on the authority of the Sultan of Muscat, seized a cargo of ammunition within the territorial waters of Muscat.\nThe proclamation which authorised the seizure was lawful by the law of Muscat.\nThe case might have been decided on ordinary choice of law grounds.\nBut the Sultans proclamation was challenged on the ground that he had made it under a mistake as to the destination of the cargo.\nThis argument was rejected because, mistaken or not, the proclamation was an act of state.\nLord Halsbury LC said, at p 179: It is not an act as between person and person; it is an act of state which the Sultan says authoritatively is lawful; and I cannot doubt that under such circumstances the act done is an act which is done with complete authority and cannot be made the subject of an action here.\nHe went on to say (pp 179 80) that it made no difference that the seizure was carried out by a British naval officer.\nThis was the state of English authority at the time when the foreign act of state doctrine was considered by the courts of the United States in a number of decisions which have proved influential on both sides of the Atlantic.\nUnited States cases\nAlthough there are, as always, precursors in earlier dicta about related issues, the foreign act of state doctrine in the United States really begins with the decision of the Supreme Court of New York in Hatch v Baez 7 Hun 596 (1876).\nThe issue arose out of a coup d'tat in the Dominican Republic in 1868, which resulted in the deposition of the then President and his replacement by Buonaventura Baez.\nHatch, who was living at the time in Dominica, was believed to have supported the old regime.\nAs a result, he was arrested and imprisoned and his goods seized by Baezs soldiery.\nSome years later, after Baez had left office, he settled in New York and Hatch sued him there for trespass to his person and goods on the footing that these things had been done on his orders.\nBefore the New York Supreme Court, Baez admitted that the New York courts had jurisdiction over him, but pleaded act of state, relying on Duke of Brunswick v King of Hanover.\nThe court dismissed the claim.\nIt observed, at pp 599 600: We think that, by the universal comity of nations and the established rules of international law, the courts of one country are bound to abstain from sitting in judgment on the acts of another government done within its own territory.\nEach state is sovereign throughout its domain.\nThe acts of the defendant for which he is sued were done by him in the exercise of that part of the sovereignty of St Domingo which belongs to the executive department of that government.\nTo make him amenable to a foreign jurisdiction for such acts, would be a direct assault upon the sovereignty and independence of his country.\nThe only remedy for such wrongs must be sought through the intervention of the government of the person injured.\nThe issue first came before the Supreme Court in Underhill v Hernandez 168 US 250 (1897).\nThis case arose out of another civil war, in Venezuela.\nGeneral Hernandez had been the local commander of the revolutionary army which enabled Joaquin Crespo to seize power in 1892.\nCrespos government was subsequently recognised by the United States as the legitimate government of Venezuela.\nIn November 1893, Hernandez was arrested at a New York hotel and required to post a bond to secure damages for false imprisonment, assault and battery, claimed against him in a civil suit brought by Underhill, an American businessman who lived in Venezuela and owned a commercial waterworks in Bolivar.\nUnderhill alleged that Hernandez had refused him a passport to leave the city and had ordered him to be confined to his house, and that his soldiers had assaulted and abused him, all in order to force him to operate his waterworks in the interest of the new regime.\nThe New York judge directed a verdict for Hernandez, on the ground that he had been a military commander representing a de facto government in the prosecution of a war.\nThe case was then removed to the Federal Courts, and the judges decision was upheld by the Second Circuit Court of Appeals, on the ground that the acts of the defendant were the acts of the government of Venezuela, and as such, are not properly the subject of adjudication in the courts of another government.\nThe Supreme Court granted a petition to review the decision and upheld it.\nThe judgment of Chief Justice Fuller began (p 252) by rationalising the act of state doctrine on the same basis as the Supreme Court of New York in Hatch v Baez: Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory.\nRedress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.\nWhere a civil war prevails, that is, where the people of a country are divided into two hostile parties, who take up arms and oppose one another by military force, generally speaking foreign nations do not assume to judge of the merits of the quarrel.\nIt is clear that for the court the critical factor was the subsistence of armed hostilities.\nHernandez was a military commander representing the authority of the revolutionary party as a government, which afterwards succeeded and was recognized by the United States.\nIn both of these cases, state immunity might have been raised, on the footing that Baez was a former head of state and Hernandez had been acting as an agent of the (subsequently) recognised government of Venezuela.\nBut in both cases, the defendant submitted to the jurisdiction and the matter was dealt with after a trial.\nAny right to raise state immunity was therefore lost, and foreign act of state was the sole relevant ground of appeal.\nOn the other hand, in Oetjen v Central Leather Co 246 US 297 (1918), state immunity never could have been raised.\nThe case arose out of the Mexican civil war of the early 20th century.\nIn 1914, forces loyal to Venustiano Carranza occupied the town of Torreon and seized a large quantity of hides belonging to one Martinez.\nSubsequently, after the United States had recognised Carranzas government, Martinezs assignee sued a Texan company to whom the hides had been sold, alleging that the title of the original owner subsisted because the hides had been taken contrary to the Hague Convention respecting the Laws and Customs of War on Land (1907).\nThe court dismissed the suit.\nIt doubted whether the Convention applied to a civil war or whether it prohibited seizures in these circumstances.\nBut in order to provide guidance in similar cases, it preferred to base its decision on the fact that the seizure was an act of state.\nHaving held that the recognition of the Carranza government by the United States meant that it fell to be treated as the government of the state of Mexico, the Court continued at pp 303 304: The principle that the conduct of one independent government cannot be successfully questioned in the courts of another is as applicable to a case involving the title to property brought within the custody of a court, such as we have here, as it was held to be to the cases cited, in which claims for damages were based upon acts done in a foreign country, for it rests at last upon the highest considerations of international comity and expediency.\nTo permit the validity of the acts of one sovereign state to be re examined and perhaps condemned by the courts of another would very certainly imperil the amicable relations between governments and vex the peace of nations.\nIt is not necessary to consider, as the New Jersey court did, the validity of the levy of the contribution made by the Mexican commanding general, under rules of international law applicable to the situation, since the subject is not open to re examination by this or any other American court.\nThe remedy of the former owner, or of the purchaser from him, of the property in controversy, if either has any remedy, must be found in the courts of Mexico or through the diplomatic agencies of the political department of our Government.\nThese cases were decided at a time when the courts of the United States adopted an approach to foreign sovereign acts which was very similar to that adopted in England, and largely influenced by it.\nThey proceed on the footing that the act of state doctrine is based on the same concept as state immunity, viz the equality and autonomy of sovereign states.\nLike Lord Cottenham in Duke of Brunswick v King of Hanover, the US Supreme Court objected to the concept of a domestic court sitting in judgment upon the acts of another sovereign, even in his absence.\nMore recently, the US Supreme Court in Banco Nacional de Cuba v Sabbatino 376 US 398 (1964), has viewed the act of state doctrine primarily as an aspect of the constitutional separation of powers under the US Constitution and has closely associated it with the political question rule.\nThis has led it to attach greater significance to the views of the executive about the impact that different outcomes would have on US foreign policy, and to adopt a flexible approach to the act of state doctrine depending mainly on the degree of embarrassment that would be caused to the State Department in each case.\nThis development would not be consistent with the accepted principles governing the relations between the courts and the executive in England.\nEnglish law has continued to act on the original rationale of the US doctrine, and Underhill v Hernandez continues to be cited on this side of the Atlantic as a correct statement of the principle.\nEngland: the Russian Revolution cases\nJohnstone v Pedlar [1921] 2 AC 262 did not involve a foreign act of state.\nIt is the leading modern authority for the proposition that Crown act of state is not a plea available to a defendant in relation to acts done in the United Kingdom, even against aliens.\nBut in the course of distinguishing between Crown and foreign acts of state, Lord Sumner summarised the effect of the latter doctrine as follows, at p 290: Municipal Courts do not take it upon themselves to review the dealings of State with State or of Sovereign with Sovereign.\nThey do not control the acts of a foreign state done within its own territory, in the execution of sovereign powers, so as to criticise their legality or to require their justification.\nShortly after this statement was made, the principle stated was applied in a series of cases heard after the United Kingdoms recognition of the Soviet government, which arose from the confiscation of private property in Russia in the aftermath of the Russian Revolution.\nThese raised questions very similar to those which had been considered by the courts of the United States.\nIn Aksionernoye Obschestvo AM Luther v James Sagor & Co [1921] 3 KB 532, the stock of the plaintiffs timber mill had been confiscated by a decree of the Russian Republic in June 1918 and sold to the defendants, who subsequently imported it into England.\nThe plaintiffs sued them there for a declaration that the timber remained their property and damages for its conversion.\nThey contended that no effect should be given to the decree of June 1918 because (among other reasons) it was immoral.\nIn the Court of Appeal, all three judges rejected the argument that the decree was immoral.\nBankes LJ did so on straightforward choice of law grounds.\nThe passing of property was governed by the lex situs, and the decree was part of that law.\nNo question of its morality arose.\nBut Warrington and Scrutton LJJ rejected it on the ground the decree was an act of state.\nWarrington LJ thought (pp 548 549) that the decree was entitled to the respect due to the acts of an independent sovereign state, and added that the acts of an independent sovereign government in relation to property and persons within its jurisdiction cannot be questioned in the Courts of this country, citing Oetjen v Central Leather Co. Scrutton LJ thought (pp 558 559) that any criticism of the morality of the decree was the proper function of the executive, not the judiciary.\nIn Princess Paley Olga v Weisz [1929] 1 KB 718, the facts were similar except that the goods in question were works of art forcibly removed from the plaintiffs palace at Tsarskoye Selo.\nThe Court of Appeal again dismissed the claim.\nAll three members of the Court held that effect fell to be given to the decree as part of the lex situs.\nBut they also upheld a distinct argument that even if, as the plaintiff alleged, the decree did not justify the seizure, it was an act of state into the validity of which this Court would not inquire: see pp 723 724 (Scrutton LJ); cf pp 729 730 (Sankey LJ), and 723 724.\nScrutton LJ (pp 724 725) adopted the statement of principle in Oetjen v Central Leather Co on this point as corresponding to the law of England.\nButtes Gas\nIn Regazzoni v KC Sethia (1944) Ltd [1958] AC 301, a contract for the sale of jute was held to be unenforceable because it involved the shipment of the cargo from India in breach of an Indian prohibition of exports to South Africa.\nThe House of Lords rejected an argument that the Indian law should be disregarded on the ground that it was contrary to international law because it is a hostile act directed against a friendly state, and as such contrary to English public policy (see p 307).\nCommenting on this argument at pp 325 326, Lord Reid said: It was argued that this prohibition of exports to South Africa was a hostile act against a Commonwealth country with which we have close relations, that such a prohibition is contrary to international usage, and that we cannot recognize it without taking sides in the dispute between India and South Africa.\nMy Lords, it is quite impossible for a court in this country to set itself up as a judge of the rights and wrongs of a controversy between two friendly countries, we cannot judge the motives or the justifications of governments of other countries in these matters and, if we tried to do so, the consequences might seriously prejudice international relations.\nBy recognizing this Indian law so that an agreement which involves a breach of that law within Indian territory is unenforceable we express no opinion whatever, either favourable or adverse, as to the policy which caused its enactment.\nLord Keith of Avonholm, concurring, said at p 327: The English courts cannot be called on to adjudicate upon political issues between India and South Africa.\nRegazzoni v Sethia marked a return to concepts of non justiciability canvassed a century before in the colonial annexation cases.\nThe principal modern landmark in this area of the law is the important and much debated decision of the House of Lords in Buttes Gas & Oil Co v Hammer [1982] AC 888.\nThis was ostensibly an action for slander with a counterclaim for common law conspiracy to defraud.\nBut it was actually a dispute about the extent of the territorial waters of the emirate of Sharjah around the island of Abu Musa in the Persian Gulf.\nButtes Gas sued Dr Hammer and Occidental Petroleum for alleging in a press release that it had procured the Ruler of Sharjah to backdate a decree extending the territorial waters of the emirate.\nTheir object was said to be to obtain for themselves the benefit of oil bearing deposits in the extended area, at the expense of Occidental which claimed to hold a concession for the same area from the neighbouring Ruler of Umm al Qywain.\nOccidental alleged that the extension of Sharjahs territorial waters was contrary to international law, and counterclaimed damages for an alleged conspiracy to defraud them, to which the Ruler and the United Kingdom were parties.\nAccording to the counterclaim the United Kingdom, which was responsible for the foreign relations and defence of both emirates, intervened politically with the Ruler of Umm al Qywain to forbid Occidentals drilling operations there and deployed a warship to turn back the companys drilling platform.\nButtes applied to have the counterclaim struck out, principally on the ground that it was based on acts of state by the Ruler of Sharjah and the government of the United Kingdom.\nThe House struck out the proceedings.\nThe leading speech was delivered by Lord Wilberforce, with whom the rest of the Appellate Committee agreed.\nAfter rejecting the argument that the counterclaim was barred as being based on a claim to title to foreign land, and putting to one side the case law about Crown act of state, he continued, at p 931: A second version of act of state consists of those cases which are concerned with the applicability of foreign municipal legislation within its own territory, and with the examinability of such legislation often, but not invariably, arising in cases of confiscation of property.\nMr Littman gave us a valuable analysis of such cases as Carr v Fracis Times & Co [1902] AC 176; Aksionairnoye Obschestvo AM Luther v James Sagor & Co [1921] 3 KB 532 and Princess Paley Olga v Weisz [1929] 1 KB 718, suggesting that these are cases within the area of the conflict of laws, concerned essentially with the choice of the proper law to be applied.\nTwo points were taken as regards the applicability of this line of authority.\nFirst, it was said that foreign legislation can be called in question where it is seen to be contrary to international law or to public policy; the decree of 1969\/70 was so contrary.\nSecondly, it was contended that foreign legislation is only recognised territorially ie within the limits of the authority of the state concerned.\nIn my opinion these arguments do not help the respondents.\nAs to the first, it is true, as I have pointed out, that the attack on Sharjahs decree of 1969\/70 is not upon its validity under the law of Sharjah, but upon its efficacy in international law.\nBut this brings it at once into the area of international dispute.\nIt is one thing to assert that effect will not be given to a foreign municipal law or executive act if it is contrary to public policy or to international law (cf In re Helbert Wagg & Co Ltds Claim [1956] Ch 323) and quite another to claim that the courts may examine the validity, under international law or some doctrine of public policy, of an act or acts, operating in the area of transactions between states.\nThe second argument seems to me to be no more valid.\nTo attack the decree of 1969\/70 extending Sharjahs territorial waters, ie its territory, upon the ground that the decree is extra territorial seems to me to be circular or at least question begging.\nLord Wilberforce went on, at pp 931 932, to dismiss Occidentals counterclaim as raising matters which were non justiciable on wider grounds: the essential question is whether there exists in English law a more general principle that the courts will not adjudicate upon the transactions of foreign sovereign states.\nThough I would prefer to avoid argument on terminology, it seems desirable to consider this principle, if existing, not as a variety of act of state but one for judicial restraint or abstention.\nIn my opinion there is, and for long has been, such a general principle, starting in English law, adopted and generalised in the law of the United States of America which is effective and compelling in English courts.\nThis principle is not one of discretion, but is inherent in the very nature of the judicial process.\nLord Wilberforce regarded the general principle as being derived from a wider principle concerning the transactions of sovereign states, of which the cases about the expropriation of property under municipal law were no more than a part.\nWhile eschewing arguments about terminology, he appears in this passage to have regarded the general principle as something different from the act of state doctrine.\nIt is unquestionably different from the rule about the application to a sovereign act of the sovereigns municipal law, which was I think the only point that he was making.\nThere is much to be said for the view of Rix LJ, delivering the judgment of the Court of Appeal in Yukos Capital Sarl v OJSC Rosneft Oil Co (No 2) [2014] QB 458, para 66, that Lord Wilberforces principle of non justiciability has, on the whole, not come through as a doctrine separate from the act of state principle itself, but rather has to a large extent subsumed it as the paradigm restatement of that principle.\nIt would seem that, generally speaking, the doctrine is confined to acts of state.\nHowever, I do not believe, any more than Lord Wilberforce did, that anything is gained by arguments about labels.\nHe proceeded to make good his general principle by reference to the decisions in Blad v Bamfield and Duke of Brunswick v King of Hanover.\nThe latter case, which Lord Wilberforce regarded as still authoritative, has generally been cited both in England and the United States as turning on the act of state doctrine.\nLord Wilberforce regarded it as authority for the proposition that the courts will not adjudicate upon acts done abroad by virtue of sovereign authority.\nHe considered that it was the basis of the US Supreme Courts decisions in Underhill v Hernandez and Oetjen v Central Leather Co, the cases which provided the foundation for the act of state doctrine in the United States, and which he had cited with approval at pp 933 934.\nIn applying this wider principle to the particular facts before him, Lord Wilberforce emphasised (p 938) that the issue before the House turned on questions of international law arising between states: It would not be difficult to elaborate on these considerations, or to perceive other important inter state issues and for issues of international law which would face the court.\nThey have only to be stated to compel the conclusion that these are not issues upon which a municipal court can pass.\nLeaving aside all possibility of embarrassment in our foreign relations (which it can be said not to have been drawn to the attention of the court by the executive), there are no judicial or manageable standards by which to judge these issues, or to adopt another phrase (from a passage not quoted), the court would be in a judicial no mans land: the court would be asked to review transactions in which four sovereign states were involved, which they had brought to a precarious settlement, after diplomacy and the use of force, and to say that at least part of these were unlawful under international law.\nRecent decisions\nThe detailed application of the principle formulated by Lord Wilberforce in Buttes Gas has often been disputed but the principle itself has not.\nIt was restated by Lord Oliver in JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry (the Tin Council case) [1990] 2 AC 418, in a speech with which Lord Keith of Kinkel, Lord Brandon and Lord Griffiths agreed.\nRejecting an argument that the treaty creating the International Tin Council could give rise to justiciable private law rights, he held at p 499 that it was axiomatic that municipal courts have not and cannot have the competence to adjudicate upon or to enforce the rights arising out of transactions entered into by independent sovereign states between themselves on the plane of international law.\nIn R (Abbasi) v Secretary of State for Foreign Affairs [2002] EWCA Civ 1598; [2003] UKHRR 76 the Court of Appeal declined to decide that the detention of prisoners in Guantanamo Bay was contrary to the obligations of the Unites States under the 3rd Geneva Convention.\nAt para 32, the court accepted the following statement by Counsel of the general rule: It is well established that the English court will not adjudicate upon the legality of a foreign states transactions in the sphere of international relations in the exercise of sovereign authority, citing Buttes Gas and Oil v Hammer [1982] AC 888 at 932 (per Lord Wilberforce); Westland Helicopters Ltd v AOI [1995] QB 282.\nTo do so would involve a serious breach of comity: see Buck v Attorney General [1965] 1 Ch 745 at 770 771 (per Lord Diplock) and R v Secretary of State, Ex p British Council of Turkish Cypriot Associations 112 ILR 735 at 740 (per Sedley J). [Counsel] observed that the relief sought by the claimants was founded on the assertion that the United States government was acting unlawfully.\nFor the court to rule on that assertion would be contrary to comity and to the principle of state immunity.\nApart from the decisions in the present case, the most recent discussion of the principles underlying the foreign act of state doctrine is the decision of the Court of Appeal in R (Noor Khan) v Secretary of State for Foreign Affairs [2014] 1 WLR 872.\nThe case raised issues in some ways similar to the present ones.\nThe claimants father had been killed in Pakistan by a missile fired from an American drone.\nHe applied for judicial review of the decision of the Foreign Secretary to supply intelligence to the United States for use in targeting drone strikes and sought various declarations as to the lawfulness of supplying locational intelligence for this purpose.\nHis case was that an official passing intelligence in these circumstances committed an offence by encouraging or assisting an act by the American operators of the drone which would, if committed by a British subject, amount to murder, contrary to sections 44 to 46 of the Serious Crimes Act 2007.\nThe Court of Appeal dismissed the application on grounds of both principle and discretion.\nAddressing the point of principle, it adopted the following statement of Moses LJ in the Divisional Court as a correct statement of principle: It is necessary to explain why the courts would not even consider, let alone resolve, the question of the legality of United States drone strikes.\nThe principle was expressed by Fuller CJ in the United States Supreme Court in Underhill v Hernandez (1897) 168 US 250, 252: Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory.\nRedress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves (cited with approval in Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888, 933, and R v Jones (Margaret) [2007] 1 AC 136, 163).\nThe principle that the courts will not sit in judgment on the sovereign acts of a foreign state includes a prohibition against adjudication on the legality, validity or acceptability of such acts, either under domestic law or international law: Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883, 1080, para 24.\nThe rationale for this principle, is, in part, founded on the proposition that the attitude and approach of one country to the acts and conduct of another is a matter of high policy, crucially connected to the conduct of the relations between the two sovereign powers.\nTo examine and sit in judgment on the conduct of another state would imperil relations between the states: Buttes Gas case [1982] AC 888, 933.\nTurning to the question of discretion, the Court of Appeal accepted that arguably the offences created by sections 44 to 46 of the 2007 Act did not require a finding that the US operators of the drone had committed murder, but only a finding that they would have done so if they had been British citizens.\nHowever, they declined (paras 36 37) to determine the question because the public, especially in the United States, would be unlikely to make or understand that distinction: But none of this can disguise the fact that in reality the court will be asked to condemn the acts of the persons who operate the drone bombs.\nWhilst for the purposes of the 2007 Act these persons are to be treated as if they are UK nationals, everyone knows that this is a legal fiction devised by Parliament in order to found secondary liability under sections 44 to 46.\nIn reality, the persons who operate the drones are CIA officials and in doing so they are implementing the policy of the US Government.\nIn my view, a finding by our court that the notional UK operator of a drone bomb which caused a death was guilty of murder would inevitably be understood (and rightly understood) by the US as a condemnation of the US.\nIn reality, it would be understood as a finding that (i) the US official who operated the drone was guilty of murder and (ii) the US policy of using drone bombs in Pakistan and other countries was unlawful.\nThe fact that our courts have no jurisdiction to make findings on either of these issues is beside the point.\nWhat matters is that the findings would be understood by the US authorities as critical of them.\nAlthough the findings would have no legal effect, they would be seen as a serious condemnation of the US by a court of this country.\nRemedies by way of judicial review are of course discretionary.\nBut the only relevance of the discretion to this decision was that it enabled the court to ignore any difference that there might be between the legal analysis and the public perception, and to reject the claim on the ground that it would embarrass Anglo American relations, a consideration that would be irrelevant to a claim of right.\nFor present purposes, the point is that the claimants allegations involved a challenge to the lawfulness under English law of the acts of British officials, who were said to have incurred an accessory liability for murder by US forces.\nIf Mr Khan, instead of applying for judicial review, had claimed damages in tort for personal injury, in his own right or on behalf of his fathers estate, no discretion would have been involved.\nBut he would still have lost, on the point of principle identified by Moses LJ and approved in the Court of Appeal.\nIt should be noted that the principle stated by Moses LJ and approved by the Court of Appeal was founded on the rule formulated by Fuller CJ in Underhill v Hernandez.\nThe search for general principle\nThe English decisions have rarely tried to articulate the policy on which the foreign act of state doctrine is based and have never done so comprehensively.\nBut it is I think possible to discern two main considerations underlying the doctrine.\nThere is, first and foremost, what is commonly called comity but I would prefer to call an awareness that the courts of the United Kingdom are an organ of the United Kingdom.\nIn the eyes of other states, the United Kingdom is a unitary body.\nInternational law, as Lord Hoffmann observed in R v Lyons [2003] 1 AC 976 at para 40, does not normally take account of the internal distribution of powers within a state.\nLike any other organ of the United Kingdom, the courts must respect the sovereignty and autonomy of other states.\nThis marks the adoption by the common law of the same policy which underlies the doctrine of state immunity.\nSecondly, the act of state doctrine is influenced by the constitutional separation of powers, which assigns the conduct of foreign affairs to the executive.\nThis is why the court does not conduct its own examination of the sovereign status of a foreign state or government but treats the Secretary of States certificate as conclusive: Government of the Republic of Spain v SS Arantzazu Mendi [1939] AC 256, 264 (Lord Atkin).\nIt is why Lord Templeman graphically described the submissions of the claimants in the Tin Council case as involving a breach of the British constitution and an invasion by the judiciary of the functions of the Government and of Parliament: see p 476.\nTo that extent the rationale of the foreign act of state doctrine is similar to that of the corresponding doctrine applicable to acts of the Crown, as Elias LJ observed in Al Jedda v Secretary of State for Defence [2011] QB 773, paras 209 212.\nWhen one turns to the ambit of the doctrine, the first point to be made is that there are many cases involving the sovereign acts of states, whether British or foreign, in which the action fails, not on account of any immunity of the subject matter from judicial scrutiny, but because the acts in question are legally irrelevant.\nThey give rise to no rights as a matter of private law and no reviewable questions of public law.\nIt is on this ground that the court will not entertain an action to determine that Her Majestys government is acting or proposes to act in breach of international law in circumstances where no private law status, right or obligation depends on it: R (Campaign for Nuclear Disarmament) v Prime Minister [2001] EWHC 1777 (Admin); R (Al Haq) v Secretary of State for Foreign and Commonwealth Affairs [2009] EWHC 1910 (Admin).\nUnlike Mr Khan, who contended that his father had been killed as a result of breaches of English domestic law, the claimants had, as Cranston J put it in the latter case, at para 60, no domestic foothold; cf Shergill v Khaira [2015] AC 359 at para 43.\nBy comparison Mr Khan did have a domestic foothold.\nHe had standing to apply for judicial review, and he contended that his father had been killed because of a breach by British officials of English law, but the court declined to treat the matter as governed by ordinary principles of English law because of its subject matter.\nThe same is true of the present cases.\nThey are concerned with the effect of a foreign act of state in a case where private law rights are engaged, because the claimants rely on the acts of the relevant states as ordinary torts under the municipal law of the countries in which they were committed.\nThe question that we have to decide on this appeal is whether they can do so consistently with the law relating to foreign acts of state.\nAs Lord Wilberforce observed in Buttes Gas, at p 930F G, the main difficulty in identifying a principle underlying that law arises from the indiscriminate use of act of state to cover situations which are quite distinct and different in law.\nIt is always possible to break down the cases into different factual categories, and deconstruct the law into a fissiparous bundle of distinct rules.\nBut the process is apt to make it look more arbitrary and incoherent than it really is.\nI think that it is more productive to distinguish between the decisions according to the underlying principle that the court is applying.\nThe essential distinction which Lord Wilberforce was making in Buttes Gas was between (i) those cases which are concerned with the applicability of foreign municipal legislation within its own territory and with the examinability of such legislation (p 931A B), and (ii) cases concerning the transactions of sovereign states (p 931G H).\nThis distinction is supported by the case law extending over more than three centuries which I have reviewed above.\nIt is possible to extract two related principles from it.\nThe first is concerned with the application to a state of its own municipal law, and the second with the application of international law to that states dealings with other states.\nMunicipal law act of state\nThe first principle can conveniently be called municipal law act of state.\nIt comprises the two varieties of foreign act of state identified in the judgment of Lord Mance at paras 11(iii)(a) and (b) of his judgment, although he would limit it to legislative or executive acts against property.\nThe principle is that the English courts will not adjudicate on the lawfulness or validity of a states sovereign acts under its own law.\nMunicipal courts, as Lord Sumner put it in Johnstone v Pedlar [1921] 2 AC 262, 290, do not control the acts of a foreign State done within its own territory, in the execution of sovereign powers, so as to criticise their legality or to require their justification.\nIn Yukos Capital Sarl v OJSC Rosneft Oil Co (No 2), supra, at para 110, Rix LJ formulated the principle as involving a distinction between referring to acts of state (or proving them if their occurrence is disputed) as an existential matter, and on the other hand asking the court to inquire into them for the purpose of adjudicating upon their legal effectiveness, including for these purposes their legal effectiveness as recognised in the country of the forum.\nIt is the difference between citing a foreign statute (an act of state) for what it says (or even for what it is disputed as saying) on the one hand, something which of course happens all the time, and on the other hand challenging the effectiveness of that statute on the ground, for instance, that it was not properly enacted, or had been procured by corruption, or should not be recognised because it was unfair or expropriatory or discriminatory.\nMunicipal law act of state is by definition confined to sovereign acts done within the territory of the state concerned, since as a general rule neither public nor private international law recognises the application of a states municipal law beyond its own territory.\nIt has commonly been applied to legislative acts expropriating property: examples include Carr v Fracis Times, Luther v Sagor and the general principle which served as the starting point of the House of Lords in Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 (see paras 257 258 below).\nIn these cases, title will have passed under the lex situs and the expropriation will be recognised in England on ordinary choice of law grounds unless, exceptionally, its recognition would be contrary to public policy.\nIn this context, it is difficult to see that anything is added by calling the expropriation an act of state.\nHowever, the fact that the act of state doctrine and ordinary choice of law principles lead to the same result in the case of the legislative expropriations of property, does not entitle one to press the analogy any further.\nIn particular, it cannot follow that municipal law act of state is limited to legislative acts expropriating property.\nProperty is of course special for some purposes.\nIt is likely to be under the exclusive jurisdiction of the state where it is located.\nIt is marketable and may be tradeable internationally.\nIt gives rise to policies favouring certainty of title.\nConsiderations like these go some way to explaining why the lex situs of property is generally regarded as the law with the closest connection to an issue about title, and is for that reason designated as the proper law.\nBut it is difficult to see that they have any bearing on the very different problems with which the act of state doctrine is concerned.\nThe rules governing the choice of law are concerned with the law to be applied in determining an issue assumed to be justiciable, while the act of state doctrine in all its forms is concerned with the proper limits of the English courts right to determine certain kinds of issue at all.\nThus it is well established that municipal law act of state applies not just to legislative expropriations of property, but to expropriations by executive acts with no legal basis at all.\nExamples include Duke of Brunswick v King of Hanover and Princess Paley Olga v Weisz, and the United States decisions in Hatch v Baez, Underhill v Hernandez, and Oetjen v Central Leather Co. These transactions are recognised in England not because they are valid by the relevant foreign law, but because they are acts of state which an English court cannot question.\nStrictly speaking, on the footing that the decree authorising the seizure of Princess Paley Olgas palace did not extend to her chattels, the acts of the revolutionary authorities in seizing them were Russian law torts.\nBut once the revolutionary government was recognised by the United Kingdom, it would have been contrary to principle for an English court to say so.\nOnce it is accepted that executive acts may be acts of state, there is no rational reason why the principle should be limited to executive seizures of property, as opposed to injury to other interests equally protected by the municipal law of the place where they occurred.\nI can see no rational ground for distinguishing between the expropriation of property by executive act and its physical destruction by executive act, and no sensible basis on which the former is to be treated as an act of state and the latter not.\nFor the same reasons, I think that personal injury and other wrongs against the person inflicted by the agents of a foreign state are as much capable of being acts of state as the destruction or detention of property.\nNo such limitation applies to extraterritorial exercises of sovereign authority, whether by the British Crown or by a foreign state.\nNo such limitation was recognised by Lord Wilberforce in Buttes Gas, who included executive acts as potentially relevant acts of state (p 931D E).\nIn Hatch v Baez, the plaintiffs main complaint was that he had been imprisoned and assaulted.\nIn Underhill v Hernandez the plaintiff claimed to have been imprisoned and intimidated.\nThe decisions in these cases were in terms justified by reference to the act of state doctrine.\nState immunity not having been claimed, they could not have been decided on any other basis.\nOne might ask why an English court should shrink from determining the legality of the executive acts of a foreign state by its own municipal law, when it routinely adjudicates on foreign torts and foreign breaches of contract.\nThe answer is that the law distinguishes between exercises of sovereign authority and acts of a private law character.\nIt is fair to say that the decided cases on this point generally involved internal revolutions or civil wars leading to a breakdown of law of a kind which could ultimately be resolved only by force.\nOther countries implicitly recognise the outcome diplomatically with retrospective effect, and their courts follow suit.\nSimilar problems can arise in relation to the acts of totalitarian states where there may be no rule of law even in normal times.\nBut I do not think that the act of state doctrine can be limited to cases involving a general breakdown of civil society or states without law.\nQuite apart from the formidable definitional problems to which such an approach would give rise, the basis of the doctrine is not the absence of a relevant legal standard but the existence of recognised limits on the subject matter jurisdiction of the English courts.\nIt is this principle which applies to the alleged act of Malaysia in deporting Mr Belhaj and Mrs Boudchar, and Thailands act in detaining them and delivering them to the Americans.\nThey were domestic exercises of governmental authority by those two countries.\nSo was the detention and torture of Mr Belhaj and Mrs Boudchar by Libya in Libyan prisons.\nInternational law act of state\nThe second principle, which can conveniently be called international law act of state, corresponds to the variety of foreign act of state identified in the judgment of Lord Mance at para 11(iii)(c).\nIt is that the English courts will not adjudicate on the lawfulness of the extraterritorial acts of foreign states in their dealings with other states or the subjects of other states: see Blad v Bamfield, Nabob of the Carnatic v East India Co, Dobree v Napier, Secretary of State in Council of India v Kamachee Boye Sahaba, Cook v Sprigg, Buttes Gas & Oil Co v Hammer, R (Abbasi) v Secretary of State for Foreign Affairs, and R (Noor Khan) v Secretary of State for Foreign Affairs.\nThis is because once such acts are classified as acts of state, an English court regards them as being done on the plane of international law, and their lawfulness can be judged only by that law.\nIt is not for an English domestic court to apply international law to the relations between states, since it cannot give rise to private rights or obligations.\nNor may it subject the sovereign acts of a foreign state to its own rules of municipal law or (by the same token) to the municipal law of a third country.\nIn all of the cases cited, the claimant relied on a recognised private law cause of action, and pleaded facts which disclosed a justiciable claim of right.\nBut the private law cause of action failed because, once the cause of action was seen to depend on the dealings between sovereign states, the court declined to treat it as being governed by private law at all.\nAs Tindal CJ observed in Dobree v Napier, the English courts could not apply English law to the sovereign acts of the Queen of Portugal on the high seas.\nNor, on the same principle, could they have applied the municipal law of some third country.\nThis, as it seems to me, is as true of private law causes of action based on wrongs against the person (as in Hatch v Baez and Noor Khan) as it is of those based on wrongs against property (as in Dobree v Napier).\nIf a foreign state deploys force in international space or on the territory of another state, it would be extraordinary for an English court to treat these operations as mere private law torts giving rise to civil liabilities for personal injury, trespass, conversion, and the like.\nThis is not for reasons peculiar to armed conflict, which is no more than an ill defined extreme of inter state relations.\nThe rule is altogether more general, as was pointed out by Lord Wilberforce in Buttes Gas (p 931D E).\nOnce the acts alleged are such as to bring the issues into the area of international dispute the act of state doctrine is engaged.\nDicey, Morris & Collins on the Conflict of Laws, 15th ed (2012) write at para 5 049: The act of state doctrine has no application when it is clear that the relevant acts were done outside the sovereigns territory.\nThe authority cited for this statement is the decision of the Court of Appeal in Empresa Exportadora de Azucar v Industria Azucarera Nacional CA (The Playa Larga and the Marble Islands) [1983] 2 Lloyds Rep 171, 194.\nThe facts of that case were that a Cuban state owned trading enterprise had sold two cargoes of sugar for delivery at a Chilean port.\nPresident Allendes government in Chile was overthrown while one of the ships, the Playa Larga, was discharging at Valparaiso and the other, the Marble Islands, was on its way.\nBoth vessels were operated by another Cuban state enterprise.\nThe Cuban government arranged for the Playa Larga to leave Chile with part of its cargo still on board and for the Marble Islands to be diverted elsewhere.\nIn an arbitration under the contract of sale, the tribunal awarded the Chilean buyers damages for non delivery and conversion of the undelivered part of the cargo of the Playa Larga, together with the restitution of the purchase price of the cargo of the Marble Islands.\nAct of state was not raised before the arbitrators, but was said to be available on their findings of fact.\nIt was rejected by the judge and the Court of Appeal on the ground that it was not open to the sellers, and was in any event unsound because there was no act of state.\nThe claim arose from a commercial transaction, not a sovereign act: p 193.\nBut the court went on to deal briefly with other points, including the argument that the act of state doctrine was limited to acts done within the territory of the foreign state, which they accepted: p 194.\nFor this, they relied mainly on statements in Duke of Brunswick v King of Hanover, Underhill v Hernandez and Buttes Gas.\nIn my opinion the statement in Dicey, Morris & Collins is applicable to what I have called municipal law act of state but not to international law act of state.\nAs I have observed, where the issue is whether the legislative or executive acts of a foreign sovereign are valid or lawful under its own municipal law, a limit to the sovereigns territory follows as a matter of course from the rule itself.\nThis is because, with limited exceptions, generally governed by treaty, international law does not recognise the right of states to apply its domestic public laws extra territorially: France v Turkey (Affaire du Lotus) PCIJ, Series A, No 10, at pp 18 19.\nThis limitation is recognised in the municipal law of most states, and is a fundamental principle of English private international law: see Government of India v Taylor [1955] AC 491, 511 (Lord Keith of Avonholm); Ortiz v Attorney General of New Zealand [1984] AC 1, 21 (Lord Denning MR); Williams & Humbert Ltd v W & H Trade Marks (Jersey) Ltd [1986] AC 368, 428, 430 3; In re State of Norways Application [1990] AC 723, 808 (Lord Goff).\nAll of the judicial observations supporting the territorial limitation of the foreign act of state doctrine, including those on which the Court of Appeal relied in the Playa Larga, have been made in the context of challenges to the recognition of foreign municipal legislation or to the lawfulness of an executive act of state under the foreign states municipal law: see Duke of Brunswick v King of Hanover, supra, at 17; Hatch v Baez, supra, at p 599; Underhill v Hernandez, supra, at p 252; Buttes Gas, at p 931A B; WS.\nKirkpatrick & Co Inc v Environmental Tectonics Corporation International, 493 US 400 (1900) 400, 405; Kuwait Airways Corpn v Iraqi Airways Co (Nos 4&5), at para 135 (Lord Hope); A Ltd v B Bank [1997] FSR 165, at para 13.\nTurning to international law act of state, the position is different.\nWhere the question is the lawfulness of a states acts in its dealings with other states and their subjects, the act of state doctrine applies wherever the relevant act of the foreign state occurs (save, arguably, if it occurred in the United Kingdom: see A Ltd v B Bank [1997] FSR 165 at para 13).\nThe reason is, again, inherent in the principle itself.\nIt is not concerned with the lawfulness of the states acts under municipal systems of law whose operation, in the eyes of other states, is by definition territorial, but with acts whose lawfulness can be determined only by reference to international law, which has no territorial bounds.\nIn the nature of things a sovereign act done by a state in the course of its relations with other states will commonly occur outside its territorial jurisdiction.\nStates maintain embassies and military bases abroad.\nThey conduct military operations outside their own territory.\nThey engage in intelligence gathering.\nThey operate military ships and aircraft.\nAll of these are sovereign acts.\nThe paradigm cases are acts of force in international space or on the territory of another state.\nObvious examples, as Lord Pearson observed in Nissan v Attorney General [1970] AC 179, 237, are making war and peace, making treaties with foreign sovereigns, and annexations and cessions of territory.\nIn my opinion, subject to the important public policy exception to which I shall come, it is not open to an English court to apply the ordinary law of tort, whether English or foreign, to acts of this kind committed by foreign sovereign states.\nThus if, in the Playa Larga, the Cuban mode of prosecuting its dispute with General Pinochets government in Chile had been an act of state, it would have been contrary to principle for an English court to judge its lawfulness according to English (or any other) municipal law, whether it happened in Cuba, Chile or on the high seas.\nIn Dobree v Napier the relevant acts occurred on the high seas, but their inherently governmental character made it impossible to treat it as a tortious conversion of goods under English municipal law.\nIn Buttes Gas, it was impossible to know in whose territory they had occurred, since that begged the question at issue, but Lord Wilberforces wider principle was applied regardless of the answer to that question.\nThe Court of Appeal proceeded on the same basis in R (Noor Khan) v Secretary of State for Foreign and Commonwealth Affairs, where the relevant acts occurred in Pakistan.\nI think that they were right to do so.\nSubject to any public policy exception, it is this principle which applies to the acts alleged against United States officials in the present cases.\nIn Rahmatullah, they were exercises of governmental authority by the armed forces and officials of the United States, acting as an occupying power in Iraq and a mandatory power in Afghanistan.\nIn Belhaj, the claimants rendition from Thailand to Libya and their mistreatment in the process was also an exercise by the United States of governmental authority.\nIt involved the application of force by United States officials in the course of their governments campaign against international terrorism and in the conduct of their relations with Malaysia, Thailand and Libya.\nWhatever one may think of the lawfulness or morality of these acts, they were acts of state performed outside the territorial jurisdiction of the United States, which cannot be treated by an English court as mere private law torts, any more than drone strikes by US armed forces can.\nJuridical basis\nThe foreign act of state doctrine has commonly been described as a principle of non justiciability.\nThe label is unavoidable, but it is fundamentally unhelpful because it is applied to a number of quite different concepts which rest on different principles.\nOne, comparatively rare, case in which an issue may be non justiciable is that although it is legally relevant, the courts are incompetent to pronounce upon it or disabled by some rule of law from doing so.\nLeaving aside cases in which the issue is assigned to the executive or the legislature under our conception of the separation of powers, most cases of this kind involve issues which are not susceptible to the application of legal standards.\nThe most famous example is Buttes Gas, where Lord Wilberforce declined to resolve the issue because there were no judicial or manageable standards by which to do so.\nThe court was therefore incompetent to adjudicate upon it at all.\nAs this court pointed out in Shergill v Khaira [2015] AC 359 at para 40, this was because the issue was political.\nBut there is another sense in which an issue may be non justiciable, which is also illustrated by the facts of Buttes Gas.\nIt may be non justiciable because the English court ought not to adjudicate upon it even though it can, because it is not a matter which can properly be resolved by reference to the domestic law of the state.\nOccidentals contention in Buttes Gas was that the mixture of diplomacy and power politics by which the four states involved had eventually resolved the border dispute in a manner unsatisfactory to them, could be characterised as an unlawful conspiracy for the purposes of domestic law.\nAn unlawful conspiracy is in itself justiciable.\nIt is a recognised cause of action in English law.\nBut an English court could not adjudicate upon it because it was parasitic upon a finding that the foreign states involved had acted in breach of international law, being the only law relevant to their acts.\nThis too can fairly be called a principle of non justiciability, because its effect is that it is not the proper function of the English courts to resolve the issue.\nBut Buttes Gas has been widely misunderstood as suggesting that an absence of judicial or manageable standards is the juridical basis of the foreign act of state doctrine in all cases where it is applied to the transactions of sovereign states.\nIt is not.\nThe absence of judicial or manageable standards was simply the reason why the House declined to review the particular facts alleged in that case.\nIncidental unlawfulness\nThe act of state doctrine does not apply, in either form, simply by reason of the fact that the subject matter may incidentally disclose that a state has acted unlawfully.\nIt applies only where the invalidity or unlawfulness of the states sovereign acts is part of the very subject matter of the action in the sense that the issue cannot be resolved without determining it.\nThere is no real difference between the parties on this point, but it is worth emphasising none the less, for it is of some importance.\nSome such distinction is essential if the act of state doctrine is not to degenerate into a mere immunity against international embarrassment.\nThe principle is implicit in many of the English cases, but it can best be illustrated by the decision of the US Supreme Court in WS Kirkpatrick & Co Inc v Environmental Tectonics Corpn International, 493 US 400 (1990), which is also the case in which it was first clearly articulated.\nEnvironmental Tectonics had succeeded in a competitive tender for a construction contract with the government of Nigeria.\nThe plaintiff, an unsuccessful bidder, alleged that the company had bribed Nigerian government officials, and claimed damages under various US federal statutes.\nThe receipt of bribes was illegal under Nigerian law, but the Supreme Court held that the act of state doctrine did not apply because the legal implications of bribery in Nigerian law were not a necessary part of the plaintiffs case.\nHe had only to prove that the bribes had been paid, and that Environmental Tectonics had thereby committed an act unlawful under US law.\nThat the facts would incidentally disclose offences by the bribed officials was irrelevant.\nScalia J, delivering the judgment of the Court held (p 406) that act of state issues only arise when a court must decide that is, when the outcome of the case turns upon the effect of official action by a foreign sovereign.\nThere are many circumstances in which an English court may have occasion to express critical views about the public institutions of another country, without offending against the foreign act of state doctrine or any analogous rule of law.\nIn deportation and extradition cases, for example, it may be necessary to review the evidence disclosing that the person concerned would be tortured or otherwise ill treated by the authorities in the country to which he would be sent.\nIn forum non conveniens cases the court may have to conclude that in some countries the courts are corrupt or controlled by the state.\nWhen evidence is said to have been obtained by torture at the hands of officials of a foreign state, a court which is invited to exclude it cannot avoid investigating the allegation and upholding it if the evidence bears it out.\nI do not regard this as undermining the foreign act of state doctrine, because that doctrine proceeds on a different basis.\nThe foreign act of state doctrine has never been directed to the avoidance of embarrassment, either to foreign states or to the United Kingdom government in its dealings with them.\nBut neither is it concerned with incidental illegality.\nWhere an English court makes findings in a deportation case about, say, the use of torture in a foreign jurisdiction it is not concerned with its lawfulness or unlawfulness, either under the law of the foreign jurisdiction or in international law.\nIt is simply applying its own standards to an exercise of its own jurisdiction.\nIn the present cases the question whether the acts alleged against the relevant foreign states were unlawful is not incidental.\nIt is essential to the pleaded causes of action against the defendants in both actions.\nThis is because the various civil wrongs which are alleged to have caused damage to the claimants are not said to have been committed directly by the defendants.\nThey were committed by the foreign states.\nIf the conduct of the foreign states was lawful, it cannot be tortious for the defendants to have assisted in their commission.\nThe Court of Appeal analysed the various causes of action against the defendants in order to demonstrate that each of them depended on establishing that the conduct of the foreign states was unlawful.\nI think that their analysis is unanswerable.\nThe judgment of Leggatt J\nIn his judgment in Rahmatullah, Leggatt J accepted that there was a difference between cases which turned on the application to a states sovereign acts of its own municipal law, and cases concerning transactions between states.\nIndeed, he regarded them as juridically wholly distinct.\nBorrowing a concept from the decisions of the United States Supreme Court in Ricaud v American Metal Co Ltd 246 US 304 (1918) and WS Kirkpatrick & Co Inc v Environmental Tectonics Corpn International, 493 US 400 (1990), 406, he described what he called the traditional act of state doctrine as a rule of decision applicable to challenges to the lawfulness of an act of state under the states municipal law.\nBy this he meant that it requires the court to decide the case on the footing that the relevant acts of a foreign state were valid under its own law (para 123).\nBy comparison, in cases concerning the transactions of foreign sovereign states, the rule was one of judicial restraint or abstention.\nIt prevents a court from deciding or adjudicating upon a case on the ground that its subject matter is not suitable for judicial determination.\nHe regarded judicial restraint or abstention as being required only when there were no judicial or manageable standards, and that, he thought, could never be the case if a municipal law right was engaged.\nFor this last point, he relied mainly on the decision of this court in Shergill v Khaira [2015] AC 359.\nIt will be apparent from what I have already said that I cannot accept this analysis.\nIn the first place, I doubt whether the act of state doctrine, as applied to the sovereign acts of a foreign state, is helpfully described as a rule of decision.\nThe principle, at any rate in the English case law, is one of non justiciability.\nIt is that the court will decline to determine the lawfulness of an act of state, not that it will determine its lawfulness on some assumption about the content of the foreign law.\nSecondly, not all cases in which the foreign act of state doctrine is applied to transactions between states lack judicial or manageable standards for their decision.\nThe courts are, for example, perfectly competent to construe treaties, and regularly do so when municipal law rights depend on it: Republic of Ecuador v Occidental Exploration and Petroleum Co [2006] QB 432.\nAs Lord Wilberforce pointed out in Buttes Gas (p 926F), they are competent to determine the international boundaries of sovereign states and have done so without difficulty in proper cases.\nOn the facts of R (Noor Khan) v Secretary of State for Foreign Affairs, the courts would have been competent to apply English criminal law to the operators of drones over Pakistan.\nIf the courts, in appropriate cases, decline to do these things, it is usually not because of any lack of legal standards, but because it would be contrary to principle.\nShergill v Khaira was not an act of state case.\nThe question was whether the court could entertain a claim to enforce the trusts of a religious charity, if that would require it to decide religious issues.\nIt was argued that it could not do so, because such issues were non justiciable for want of judicial or manageable standards by which to assess them.\nLord Neuberger, Lord Sumption and Lord Hodge, in a joint judgment with which Lord Mance and Lord Clarke agreed, distinguished (para 41) between (i) rules of law such as state immunity which confer immunity from jurisdiction, or rules like the act of state doctrine which protected certain acts from challenge; and (ii) cases where an issue is said to be inherently unsuitable for judicial decision by reason only of its subject matter.\nWhere a legal right of the citizen or a reviewable question of public law arose, the case could not be regarded as inherently unsuitable for judicial decision.\nBut the case is not authority for the proposition that the application of the foreign act of state doctrine to transactions between states depends on the absence of any municipal law right, nor that it was coterminous with the class of cases in which there were no judicial or manageable standards.\nLeggatt Js analysis derives some support from the decision of the High Court of Australia in Moti v The Queen 245 CLR 456.\nThe facts of this case were somewhat similar to those of the English cases of R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42 and R v Mullen [2000] QB 520.\nIn these cases, it had been held that the involuntary deportation of an accused person from a foreign country by British officials to face trial in England, otherwise than by way of lawful extradition, was an abuse of process in English criminal proceedings.\nIn each case, the deportation had been carried out with the co operation of the police in the foreign country.\nWhat made this an abuse of process was the breach of the domestic law of the foreign country and of international law by the British prosecuting authorities or British officials acting in support of them: see Bennett, at pp 62G (Lord Griffiths), 67G (Lord Bridge); and Mullen, at p 535F.\nThe assumed facts suggested that the local police must also have acted in breach of their own law, but I cannot accept Lord Mances view that this was critical to the analysis.\nThe removal of the victim to the jurisdiction in which he was brought to trial would have been as much an abuse of process and for exactly the same reasons if the prosecutors had simply kidnapped him with no assistance from local officials.\nAny unlawfulness in the conduct of the foreign officials was incidental.\nThat was presumably why no point was taken on the foreign act of state doctrine in either of the English cases.\nMr Motis position was exactly the same.\nHe had been illegally deported from the Solomon Islands by a process in which Australian officials in the Islands were involved.\nHis case was that the criminal proceedings should be stayed because of what Australian officials did in connection with his deportation (para 9).\nOn this occasion the foreign act of state doctrine was raised.\nThe short answer to this would have been that the unlawfulness of the Australian officials conduct was enough to justify staying the proceedings against Mr Moti.\nThe unlawfulness of the acts of their foreign collaborators was incidental and irrelevant.\nBut in rejecting the argument, the Court adopted the view of Dr F A Mann, a long standing critic of the act of state doctrine, that there was no bar to adjudication of the lawfulness of a foreign governmental act if it was necessary to the resolution of an issue within the jurisdiction and competence of the forum: see paras 50 52.\nIn my view this was too wide and certainly wider than anything that was required for the decision of the case.\nThe proposition which the High Court of Australia accepted from Dr Mann is tantamount to the abolition of the foreign act of state doctrine.\nThis was indeed a consummation devoutly wished by that great scholar.\nHe regarded the whole doctrine as incoherent.\nProperly understood, I do not think that it is incoherent.\nWhat is clear, however, is that to arrive at the view held by Dr Mann it would be necessary to throw over a substantial body of jurisprudence, much of it recent and much of it not considered by the High Court of Australia, including Lord Wilberforces analysis in Buttes Gas.\nThe judgment of the Court of Appeal\nThe Court of Appeal took a different approach.\nThey considered that while the facts of Buttes Gas might be analysed in terms of lack of judicial competence the act of state doctrine was not limited to such situations, even as applied to the transactions of sovereign states.\nI agree with this.\nThe Court of Appeal accepted that the act of state doctrine was engaged by the claimants allegations in Belhaj, and that it barred the claim unless those allegations fell within one of the recognised exceptions to the doctrine.\nThe exceptions which they regarded as relevant were (i) an exception for cases where the unlawful character of the foreign states acts was merely incidental to the allegations; (ii) an exception for acts done outside the territory of the foreign state; and (iii) a public policy exception for violations of international law or fundamental human rights.\nThe Court of Appeal held that the second and third exceptions applied.\nI have already dealt with exception (i), which is uncontentious, and exception (ii), which I consider inapplicable to the kind of act of state relied upon here.\nThe critical point, to my mind, is exception (iii).\nViolations of international law or fundamental human rights\nThe Court of Appeal described this as an exception to the ordinary immunity of foreign acts of state.\nIt might equally have been described, as Lord Mance does, as a category of case to which the principle does not apply to begin with.\nThe difference, if there is one, does not seem to me to matter.\nWhat matters, on either analysis, is that the principle which underlies this category should be sufficiently clear to make the law coherent and as clear as is consistent with the difficulty of the subject.\nTo say of a rule of law or an exception to that rule that it is based on public policy does not mean that its application is discretionary according to the courts instinct about the value of the policy in each particular case.\nBut rules of judge made law are rarely absolute, and this one like any other falls to be reviewed as the underlying policy considerations change or become redundant, or as it encounters conflicting policy considerations which may not have arisen or had the same significance before.\nConceptions of public policy, as Lord Wilberforce observed in Blathwayt v Baron Cawley [1976] AC 397, 426, should move with the times and that widely accepted treaties and statutes may point the direction in which such conceptions, as applied by the courts, ought to move.\nThe acceptability of a foreign law must be judged by contemporary standards, Lord Nicholls added in adopting that statement in Kuwait Airways, at para 28.\nThe standards which public policy applies in cases with an international dimension have changed a great deal in the past half century.\nIn Hatch v Baez, Underhill v Hernandez and Oetjen v Central Leather Co the US Supreme Court declined to consider whether the arbitrary detention of the plaintiff and the expropriation of his property were breaches of international law.\nIn all three cases, this was said to be because any such breach would have been a matter for diplomatic resolution between the United States and the foreign states involved and not for domestic litigation.\nThe courts view on this point reflected the then state of customary international law, which recognised only limited obligations owed by states with regard to the treatment of aliens within their territory.\nThese were generally based on discrimination or denial of justice, as they had been since the middle ages.\nThey were not based on the acceptance of minimum standards for the content of a states municipal law.\nA comparison between the first edition of Oppenheims International Law (1905), paras 320 321, and the ninth edition (1992) edited by Sir Robert Jennings and Sir Arthur Watts, paras 404 405, 407, 409, will make the point.\nSince the Second World War there has been a considerable expansion of the range of matters with which international law is concerned, which now extends to many aspects of the relations between states on the one hand and their subjects or residents on the other.\nThe growing importance of the international protection of human rights is one aspect of this change, but not the only one.\nInternational law increasingly places limits on the permissible content of municipal law and on the means available to states for achieving even their legitimate policy objectives.\nAt the same time, the relationship between English law and international law has changed.\nIt used to be said that customary international law is part of the common law.\nThe sentiment dates back to Lord Mansfield in Triquet v Bath (1764) 3 Burr 1478, 1481 and Blackstones Commentaries, Bk IV, Chapter 5.\nThe classic example in their day was the recognition at common law of the immunities of states and diplomatic agents.\nAt a time when there was very little overlap between international and municipal law, the assumption of Mansfield and Blackstone had much to be said for it.\nToday it would be truer to say, as Lord Bingham was inclined to think in R v Jones (Margaret) [2007] 1 AC 136 (para 11), that international law is not a part of but is one of the sources of the common law.\nThe same view has been expressed by Professor Brierly, International Law in England (1935) 51 LQR 24, 31, and by the editors of Brownlies Public International Law, 8th ed (2012), 68.\nEnglish law has always held to the dualist theory of international law.\nIn principle, judges applying the common law are not at liberty to create, abrogate or modify municipal law rights or obligations in accordance with unincorporated norms derived from international law, whether customary or treaty based.\nBut, as Lord Bingham pointed out in R v Lyons [2003] 1 AC 976, at para 13, international law may none the less affect the interpretation of ambiguous statutory provisions, guide the exercise of judicial or executive discretions and influence the development of the common law.\nAlthough the courts are not bound, even in these contexts, to take account of international law, they are entitled to do so if it is appropriate and relevant: see, in the context of discretions R (Hurst) v London Northern District Coroner [2007] 2 AC 189, paras 53 59 (Lord Brown), and R (Wang Yam) v Central Criminal Court [2015] UKSC 76, at paras 35 36 (Lord Mance).\nIn those areas which depend on public policy, the content of that policy may be and in practice often is influenced by international law.\nThese observations are especially pertinent when public policies conflict, as they inevitably do when one seeks to fix limits to a principle of law such as the foreign act of state doctrine.\nThere is a danger that retaining the doctrine while recognising exceptions, will result either in the exception consuming the rule or in the rule becoming incoherent.\nThis concern lies behind the refusal of the US Supreme Court to treat a violation of international law as such as being an exception to the foreign act of state doctrine: see Banco Nacional de Cuba v Sabbatino, supra, at p 431.\nAny exception must be limited to violations of international law which can be distinguished on rational grounds from the rest.\nThis was the question with which the House of Lords had to contend in the milestone decisions in Oppenheimer v Cattermole [1976] AC 249 and Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883.\nThe question in Oppenheimer v Cattermole was whether the English courts should recognise a Nazi decree law of 1941 which deprived Jews of their German nationality and confiscated their property if they were ordinarily resident outside Germany at the date of the decree.\nIf regard was had to the decree, Mr Oppenheimer lost his German nationality upon its publication, with the result that his pension from the German Federal Republic did not qualify for exemption from income tax in the United Kingdom.\nThe basic rule, at any rate before the Universal Declaration of Human Rights (1948), was not in doubt.\nIn both public and private international law, each state was exclusively entitled to determine who its nationals were in accordance with its own law, subject to limits upon its right to impose its own nationality extra territorially.\nThe Court of Appeal had held that a relevant foreign law regulating nationality had to be recognised however inequitable, oppressive or objectionable it may be: [1973] Ch 264, 273 (Buckley LJ).\nThe House of Lords dismissed his appeal on other grounds, without finding it necessary to decide this point.\nBut Lord Cross, with whom Lord Hodson and Lord Salmon agreed, held that had the point arisen the decree would have been disregarded.\nHis analysis includes extensive reference to international law.\nBut the real ground of his decision was not that the decree was itself a violation of international law.\nIt was that the principle of international law which left each state free to determine who were its nationals could not require the courts of other states to recognise determinations repugnant to their own public policy.\nThat raised the question how effect could be given to English public policy.\nThe decree of 1941 could not be regarded as invalid under German law.\nNor could the subsistence of German nationality be determined according to some law other than German law.\nThe solution adopted by Lord Cross was that as a matter of English public policy a law of this sort constitutes so grave an infringement of human rights that the courts of this country ought to refuse to recognise it as a law at all (p 278).\nIn Kuwait Airways, the House of Lords went further than Lord Cross had done.\nIt held by a majority (Lord Scott dissenting) that in certain circumstances the municipal law of a state could be disregarded, even in its application to matters within its own territory and notwithstanding the act of state doctrine, on the ground that it constituted a sufficiently serious violation of international law.\nThe issue was whether an English court should recognise a decree law of the Iraqi government (Resolution 369) extinguishing the existence of Kuwait as an independent state and expropriating its assets, including aircraft belonging to Kuwait Airways Corporation which were then located in Iraq.\nIraqi law was the lex situs.\nAs such, it was the law designated by ordinary principles of private international law.\nThe argument (summarised by Lord Nicholls at para 24) was that it could not be disregarded as a violation of the law of nations consistently with the foreign act of state doctrine.\nThe violation itself was admitted, and in any event incontestable.\nResolution 369 was, in Lord Nicholls words, part and parcel of the Iraqi seizure of Kuwait.\nThe seizure had been a flagrant breach of article 2(4) of the United Nations Charter by which states renounce the threat or use of force as an instrument of international policy, a provision which as Lord Steyn (para 115) pointed out had the character of jus cogens.\nThe annexation and the seizure of the assets of Kuwaiti nationals had been specifically condemned by successive resolutions of the UN Security Council.\nFurther Security Council resolutions had called on all states to take all necessary measures to protect the assets of the legitimate government of Kuwait and its agencies and to refrain from any action that might be regarded as recognising the seizures.\nThese resolutions were binding in international law on all states, including the United Kingdom.\nThe House declined to give effect to Resolution 369.\nThe leading speech was delivered by Lord Nicholls.\nLord Steyn and Lord Hope agreed with Lord Nicholls, adding observations of their own on the exclusion of Resolution 369.\nLord Hoffmann also agreed, adding observations on another point.\nLord Nicholls starting point (para 16) was that the rejection of an otherwise applicable foreign law was justified in cases where its application would be wholly alien to fundamental requirements of justice as administered by an English court.\nIn particular (para 26) the rule that the transactions of sovereign states were not justiciable could not prevent the court from examining them in a case where, because the violation of international law was incontestable, the adjudication problems confronting the English court in the Buttes litigation do not arise.\nThat being so, the court was at liberty to refuse to recognise a foreign law which offended against English public policy.\nThe next question was whether it did.\nLord Nicholls regarded Resolution 369 as contrary to public policy for three related reasons, which are summarised at para 29 of his speech.\nFirst, it was a gross violation of established rules of international law of fundamental importance, as repugnant to English public policy as the Nazi decree considered in Oppenheimer v Cattermole.\nSecondly (for good measure), the enforcement or recognition of Resolution 369 would be contrary to the obligations of the United Kingdom under the UN Charter (para 29).\nThird, it would sit uneasily with the almost universal condemnation of Iraqs behaviour and with the military action, in which this country participated, taken against Iraq to compel its withdrawal from Kuwait.\nLord Steyn, while warning (para 114) that not every breach of international law will trigger the public policy exception, gave his own reasons in terms similar to Lord Nicholls.\nSo did Lord Hope.\nHe identified the relevant public policy as being that our courts should give effect to clearly established principles of international law (para 139).\nBut he thought it clear that very narrow limits must be placed on any exception to the act of state rule (para 138).\nHe concluded, at para 149: Respect for the act of state doctrine and the care that must be taken not to undermine it do not preclude this approach.\nThe facts are clear, and the declarations by the Security Council were universal and unequivocal.\nIf the court may have regard to grave infringements of human rights law on grounds of public policy, it ought not to decline to take account of the principles of international law when the act amounts as I would hold that it clearly does in this case to a flagrant breach of these principles.\nAs Lord Upjohn indicated in In re Claim by Helbert Wagg Co Ltd [1956] Ch 313, 334, public policy is determined by the conceptions of law, justice and morality as understood in the courts.\nI would hold that the effectiveness of Resolution 369 as vesting title in IAC to KACs aircraft is justiciable in these proceedings, and that such a flagrant international wrong should be deemed to be so grave a matter that it would be contrary to the public policy of this country to give effect to it.\nThe principle which the Appellate Committee applied in Kuwait Airways was that the English courts were not precluded from questioning the propriety or otherwise of a foreign legislative act and declining to recognise it, if it offended a fundamental requirement of justice as administered by an English court.\nIt is the same as the principle which allows an English court to decline to apply a rule of an otherwise applicable foreign law which is contrary to public policy: see, now, section 14(3)(a)(i) of the Private International Law (Miscellaneous Provisions) Act 1995.\nThis is a principle of English public policy.\nBut in an international context, it is informed by any relevant norms of international law binding on the United Kingdom as it was in Kuwait Airways.\nRecognition of the influence of international law does not mean that every rule of international law must be adopted as a principle of English public policy, even if it is acknowledged as a peremptory norm (jus cogens) at an international level.\nFor my part, I would adopt the cautious observations of Le Bel J, delivering the judgment of the Supreme Court of Canada in Kazemi Estate v Islamic Republic of Iran [2014] SCC 62; [2014] 3 SCR 176 at paras 150 151.\nThe issue before the court in that case was whether to recognise a public policy exception to state immunity in cases where this would conflict with the values protected by the Canadian Charter of Rights and Freedoms.\nLe Bel J pointed out that not all commitments in international agreements amount to principles of fundamental justice.\nTheir nature is very diverse.\nInternational law is ever changing.\nThe interaction between domestic and international law must be managed carefully in light of the principles governing what remains a dualist system of application of international law and a constitutional and parliamentary democracy.\nThe mere existence of an international obligation is not sufficient to establish a principle of fundamental justice.\nWere we to equate all the protections or commitments in international human rights documents with principles of fundamental justice, we might in effect be destroying Canadas dualist system of reception of international law and casting aside the principles of parliamentary sovereignty and democracy.\nThe role of international law in this field, as he went on to point out, is to influence the process by which judges identify a domestic principle as representing a sufficiently fundamental legal policy: 151.\nThat being said, I am prepared to accept that jus cogens norms can generally be equated with principles of fundamental justice and that they are particularly helpful to look to in the context of issues pertaining to international law.\nJust as principles of fundamental justice are the basic tenets of our legal system . , jus cogens norms are a higher form of customary international law.\nIn the same manner that principles of fundamental justice are principles upon which there is some consensus that they are vital or fundamental to our societal notion of justice, jus cogens norms are customs accepted and recognized by the international community of states from which no derogation is permitted\nTorture\nThe legal implications of torture in English and international law have been considered by the House of Lords on a number of occasions: R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 3) [2000] 1 AC 147, A v Secretary of State for the Home Department (No 2) [2006] 2 AC 221, Jones v Ministry of the Interior of the Kingdom of Saudi Arabia [2007] 1 AC 270.\nTorture is unconditionally prohibited by article 3 of the European Convention on Human Rights and by the UN Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1984).\nThe United Kingdom is a party to these instruments and has given effect to them by statute.\nThe prohibition has the status of jus cogens erga omnes.\nThat is to say that it is a peremptory norm of international law which gives rise to obligations owed by each state to all other states and from which no derogation can be justified by any countervailing public interest.\nIn the words of article 2.1 of the UN Torture Convention, no exceptional circumstances whatsoever, whether a state of war or a threat of war, internal political instability or any other public emergency, may be invoked as a justification of torture.\nIn A v Secretary of State for the Home Department (No 2), supra, at para 33, Lord Bingham, said: There can be few issues on which international legal opinion is more clear than on the condemnation of torture.\nOffenders have been recognised as the common enemies of mankind (Demjanjuk v Petrovsky (1985) 612 F Supp 544, 566, Lord Cooke of Thorndon has described the right not to be subjected to inhuman treatment as a right inherent in the concept of civilisation (Higgs v Minister of National Security [2000] 2 AC 228, 260), the Ninth Circuit Court of Appeals has described the right to be free from torture as fundamental and universal (Siderman de Blake v Argentina (1991) 965 F 2d 699, 717) and the UN Special Rapporteur On Torture (Mr Peter Koojimans) has said that If ever a phenomenon was outlawed unreservedly and unequivocally it is torture (Report of the Special Rapporteur on Torture, E\/CN 4\/1986\/15, para 3).\nIn Jones v Ministry of the Interior of the Kingdom of Saudi Arabia, the House of Lords held that notwithstanding the status of the prohibition of torture as jus cogens in international law, the United Kingdom was under no international law obligation to make a civil remedy available for torture committed outside its territorial jurisdiction.\nThere were two reasons for this.\nThe main reason was that as a matter of customary international law breach of a jus cogens norm does not itself require civil jurisdiction to be assumed by states.\nLord Bingham, with whom the rest of the Appellate Committee agreed, expressed this (para 24) in terms taken from the first edition of Fox, The Law of State Immunity: State immunity is a procedural rule going to the jurisdiction of a national court.\nIt does not go to substantive law; it does not contradict a prohibition contained in a jus cogens norm but merely diverts any breach of it to a different method of settlement.\nLord Hoffmann, concurring, said, at para 45: To produce a conflict with state immunity, it is therefore necessary to show that the prohibition on torture has generated an ancillary procedural rule which, by way of exception to state immunity, entitles or perhaps requires states to assume civil jurisdiction over other states in cases in which torture is alleged.\nSuch a rule may be desirable and, since international law changes, may have developed.\nBut it is not entailed by the prohibition of torture.\nLord Bingham and Lord Hoffmann went on to consider whether an obligation to make a civil remedy available could be derived from the Torture Convention.\nThey concluded that it could not.\nArticle 14 of the Torture Convention, which dealt with the states obligations in respect of civil remedies, dealt only with remedies for torture committed within the states territorial jurisdiction.\nThese conclusions have provoked some academic controversy and have been criticised by the respondents on these appeals.\nBut they were supported by the decision of the International Court of Justice in Democratic Republic of Congo v Belgium (case concerning arrest warrant of 11 April 2000) (2002) ICJ Rep 3, in which state immunity was held to be available in proceedings based on breach of another peremptory norm of international law, namely the prohibition of war crimes and crimes against humanity.\nMore recently, in Jurisdictional Immunities of the State (Germany v Italy, Greece Intervening) [2012] ICJ Rep 99, the International Court of Justice reaffirmed its decision in Arrest Warrant and held that Italy and Greece were in breach of customary international law in rejecting claims by Germany to state immunity in respect of massacres and deportations of civilians by German armed forces in Italy and Greece during the Second World War.\nThe Court specifically endorsed the decision of the House of Lords in Jones v Saudi Arabia: see paras 85, 87, 96.\nIn its reasoning, the International Court adopted the same distinction between procedure and substance as Lord Bingham at para 24 of his speech in that case: To the extent that it is argued that no rule which is not of the status of jus cogens may be applied if to do so would hinder the enforcement of a jus cogens rule, even in the absence of a direct conflict, the Court sees no basis for such a proposition.\nA jus cogens rule is one from which no derogation is permitted but the rules which determine the scope and extent of jurisdiction and when that jurisdiction may be exercised do not derogate from those substantive rules which possess jus cogens status, nor is there anything inherent in the concept of jus cogens which would require their modification or would displace their application. (para 95) Since that decision, the European Court of Human Rights in Jones v United Kingdom (2014) 59 EHRR 1, at para 198 and the Supreme Court of Canada in Kazemi Estate v Islamic Republic of Iran [2014] SCC 62; [2014] 3 SCR 176 at paras 102 105, 141 167, have both conducted a careful review of the international material and the decisions of national courts, and arrived at the same conclusion on this point as the House of Lords did in Jones.\nI do not propose to re examine that material once more, because the present question is not the correctness of the decision in Jones, but its relevance in the rather different context of the foreign act of state doctrine.\nIn Jones, the absence of any international law obligation to make a civil remedy available for torture abroad mattered.\nThis was because states unquestionably have an international law obligation to recognise the forensic immunity in their own courts of other states and their agents.\nThe International Court of Justice held as much in Arrest Warrant and again in Jurisdictional Immunities.\nThat international law obligation might have been displaced if there had been a countervailing international law obligation to provide a civil remedy for torture wherever committed.\nThe act of state doctrine, by comparison, does not reflect any obligation of states in international law.\nIt follows that an exception to it does not need to be based on a countervailing international law obligation in order to accord with principle.\nIt is enough that the proposed exception reflects a sufficiently fundamental rule of English public policy.\nIn my opinion, it would be contrary to the fundamental requirements of justice administered by an English court to apply the foreign act of state doctrine to an allegation of civil liability for complicity in acts of torture by foreign states.\nRespect for the autonomy of foreign sovereign states, which is the chief rationale of the foreign act of state doctrine, cannot extend to their involvement in torture, because each of them is bound erga omnes and along with the United Kingdom to renounce it as an instrument of national or international policy and to participate in its suppression.\nIn those circumstances, the only point of treating torture by foreign states as an act of state would be to exonerate the defendants from liability for complicity.\nThe defendants are not foreign states.\nNor are they the agents of foreign states.\nThey are or were at the relevant time officials and departments of the British government.\nThey would have no right of their own to claim immunity in English legal proceedings, whether ratione personae or ratione materiae.\nOn the other hand, they would be protected by state immunity in any other jurisdiction, with the result that unless answerable here they would be in the unique position of being immune everywhere in the world.\nTheir exoneration under the foreign act of state doctrine would serve no interest which it is the purpose of the doctrine to protect.\nThis is not a point which has arisen in any English case apart from R (Noor Khan) v Secretary of State for Foreign Affairs.\nBut it was considered by the Supreme Court of Canada in Omar Ahmed Khadr v Canada [2008] 2 SCR 125 and by the Federal Court of Australia in Habib v Commonwealth (2010) 265 ALR 50.\nKhadr was not a case of torture.\nThe plaintiff had been captured by US forces in Afghanistan and transferred to Guantanamo Bay.\nThe allegation was that Canadian officials had connived in his unlawful detention there by the United States government.\nThe Supreme Court of Canada held that the foreign act of state doctrine had no application for two reasons.\nFirst, the US Supreme Court in Rasul v Bush (2004) 542 US 466 had held that the indefinite detention without access to a court of persons captured in military operations was a violation of the Geneva Conventions: paras 21 24.\nThat constituted an admission by the United States and made a finding of violation uncontentious.\nThe court declined to consider what the position would have been in the absence of that decision.\nSecondly, the considerations of comity which underlay the foreign act of state doctrine cannot be used to justify Canadian participation in activities of a foreign state or its agents that are contrary to Canadas international obligations: para 18.This was because (i) Canada was itself party to the Geneva Convention, and under an international law obligation not to countenance the violations in question, and (ii) the right to apply for habeas corpus was a fundamental human right recognised by Canadian law also: paras 25 26.\nIn Habib, the plaintiff had been arrested in Pakistan and successively detained there, in Egypt and at Guantanamo Bay.\nThe allegation was that Australian officials aided and abetted officials of the various foreign states involved to torture him.\nJagot J, delivering the leading judgment in the Federal Court of Australia, held, at para 114, that the modern cases on the foreign act of state doctrine do not support a conclusion that the act of state doctrine prevents an Australian court from scrutinising the alleged acts of Australian officials overseas in breach of peremptory norms of international law to which effect has been given by Australian laws having extra territorial application.\nShe went on to point out that the public policy considerations which justified both the act of state doctrine and the exceptions to it had to be considered in a context where the prohibition on torture forms part of customary international law and those partners themselves are signatories to an international treaty denouncing torture.\nThe purpose of the foreign act of state doctrine is to preclude challenges to the legality or validity of the sovereign acts of foreign states.\nIt is not to protect English parties from liability for their role in it.\nIn itself, that would not prevent them from taking incidental advantage of the foreign act of state doctrine.\nIn R (Noor Khan) v Secretary of State for Foreign Affairs, British officials were entitled to take advantage of the doctrine in a case where they were said to have assisted in military action overseas by a foreign sovereign.\nI think that that decision was correct.\nBut torture is different.\nIt is by definition an act of a public official or a person acting in an official capacity: see article 1 of the Torture Convention.\nArticle 4 of the Convention requires the United Kingdom to criminalise not only torture (as defined) but acts constituting complicity in torture.\nArticle 5 requires the United Kingdom to establish criminal jurisdiction over offences referred to in article 4 wherever in the world they are committed, if they are committed by its nationals or by persons present in its territory.\nIt is no answer to these points to say that these treaty provisions are concerned with criminal law and jurisdiction.\nSo they are.\nBut the criminal law reflects the moral values of our society and may inform the content of its public policy.\nTorture is contrary to both a peremptory norm of international law and a fundamental value of domestic law.\nIndeed, it was contrary to domestic public policy in England long before the development of any peremptory norm of international law.\nIt derives its force chiefly from Englands long domestic tradition of abhorrence of torture, even in a period when it was commonplace in other jurisdictions.\nAs Lord Bingham observed in A v Secretary of State for the Home Department (No 2), supra, at para 12, the condemnation of torture is not simply an exclusionary rule of evidence.\nIt is more aptly categorised as a constitutional principle than as a rule of evidence: cf para 51.\nThe Secretary of State submits that unless the facts are undisputed or indisputable, as they were in Kuwait Airways, the foreign act of state doctrine precludes any examination of the facts.\nIn my view this submission fails to distinguish between two different inquiries: (i) an enquiry into the lawfulness or validity of the alleged act of state, and (ii) an inquiry into the question whether there is any factual foundation for applying the foreign act of state doctrine at all.\nWhenever the foreign act of state doctrine is invoked, the court must decide whether it applies.\nIf it cannot do it by reference to the pleadings or admissions, it must examine the evidence.\nThis may involve examining what the state has done, for example where there is an issue as to its responsibility for the acts of its alleged agents.\nThus in Underhill v Hernandez the application of the foreign act of state doctrine came before the Supreme Court on an appeal from the decision at a trial.\nThe trial court had made findings of fact about the responsibility of the government of Venezuela.\nThe Supreme Court relied on these findings (p 254) without any suggestion that in making them the lower court had been sitting in judgment on that government.\nThe same point could be made about Hatch v Baez and Oetjen v Central Leather Co. The need to establish a factual foundation for the application of the doctrine must equally apply where the issue concerns not the character of the act but the availability of an exception.\nI conclude that it would not be consistent with English public policy to apply the foreign act of state doctrine so as to prevent the court from determining the allegations of torture or assisting or conniving in torture made against these defendants.\nUnlawful detention, enforced disappearance and rendition\nArticle 9 of the Universal Declaration of Human Rights (1948) provides that no one shall be subjected to arbitrary arrest, detention or exile.\nThe prohibition of arbitrary detention gives rise to problems of definition far more complex than those associated with the prohibition of torture.\nTorture is always contrary to international law, but not all detention is arbitrary.\nOn the question what makes it arbitrary, there is as yet no clear consensus.\nThe editors of the American Law Institutes authoritative Restatement (3rd) of the Foreign Relations Law of the United States (1987) express the view that arbitrary detention violates customary international law if it is prolonged and practiced as state policy: see para 702(e) and Comment (h).\nMore recently, in December 2012, the UN Working Group on Arbitrary Detention, after canvassing states on the question what factors qualified detention as arbitrary in their domestic law, concluded that detention might be regarded as arbitrary in customary international law if it lacked any legal basis, but also in some circumstances even if it did have a legal basis, depending on the reason for the detention and in some cases on its duration: UN A\/HRC\/22\/44, at para 38.\nThese more or less speculative suggestions may indicate that the boundaries of arbitrary detention in international human rights law are not yet fixed.\nBut it is clear that the irreducible core of the international obligation, on which there is almost complete consensus, is that detention is unlawful if it is without any legal basis or recourse to the courts.\nThe consensus on that point is reflected in the terms of the International Covenant on Civil and Political Rights (1966), an expansion in treaty form of the Universal Declaration of 1948, which provides by article 9: 1.\nEveryone has the right to liberty and security of person.\nNo one shall be subjected to arbitrary arrest or detention.\nNo one shall be deprived of his liberty except on such grounds and in accordance with such procedures as are established by law. 3.\nAnyone arrested or detained on a criminal charge shall be brought promptly before a judge or other officer authorized by law to exercise judicial power and shall be entitled to trial within a reasonable time or to release 4.\nAnyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings before a court in order that that court may decide without delay on the lawfulness of his detention and order his release if the detention is not lawful. 5.\nAnyone who has been the victim of unlawful arrest or detention shall have an enforceable right to compensation.\nThe Covenant has been ratified by 167 states to date, including the United Kingdom, the United States, Thailand and Libya.\nMalaysia is one of a handful of states which are not a party, but it has declared that it adheres to its principles.\nThe UN Working Group regarded this irreducible core as jus cogens: loc cit, para 49.\nIn my opinion they were right to do so.\nIt is fair to say that article 4 of the Covenant does recognise a limited right to derogate from its terms in time of public emergency which threatens the life of the nation to the extent strictly required by the exigencies of the situation, with certain exceptions such as torture, arbitrary killing and slavery.\nThe existence of a right to derogate is normally regarded as inconsistent with the status of jus cogens: see article 53 of the Vienna Convention on the Law of Treaties.\nBut this difficulty is more apparent than real.\nAlthough expressed as a right of derogation, the exception for public emergencies corresponds to the general exception from state responsibility which international law recognises in cases where an act prohibited by international law is shown to be the only way for a state to safeguard an essential interest against a grave and imminent peril: see the International Law Commissions Draft Articles on Responsibility of States for Internationally Wrongful Acts, article 25, and the extensive review of judicial decisions and state practice cited in the associated commentary.\nFor this reason the UN Working Group considered that non derogability in an emergency was consistent with the prohibition being a peremptory norm: UN A\/HRC\/22\/44, at paras 50 51.\nThe same view is expressed in the Reporters Notes to para 702 of the American Restatement: see Note 11.\nThe significant point for present purposes is that the core prohibition in international law of detention without legal basis or recourse to the courts corresponds to a fundamental principle of English public policy.\nLike English laws rejection of torture it is an essential feature of our constitutional order.\nIt has traditionally been traced, at any rate since the time of Sir Edward Coke, to the 29th article of Magna Carta.\nCharles James Fox is not always a useful source of constitutional principle, but most lawyers would agree with his famous description of the writ of habeas corpus as the great palladium of the liberties of the subject.\nThe principle underlying the writ is that the availability of recourse to a court to test the legality of detention is the hallmark of its constitutionality.\nIndeed, although the position has in some respects been modified by statute, at common law the reach of the writ of habeas corpus has even been held to extend to anywhere in the world where a servant of the Crown or any other person amenable to the personal jurisdiction of the court has detained a person: Ex p Anderson (1861) 3 El & El 487.\nOr appears to be in a position to procure his production: Rahmatullah v Secretary of State for Defence [2013] AC 614.\nI turn to rendition and enforced disappearance, both of which are aggravated forms of arbitrary detention.\nRendition is an archaic expression which was once more or less synonymous with extradition.\nThe Oxford English Dictionary, in its Supplement for September 2006, defines extraordinary rendition as the seizure and transportation by authorities of a criminal suspect from one country to another without the formal process of extradition.\nSometimes used spec with reference to moving a terrorist suspect for interrogation in a country considered to have less rigorous regulations for the humane treatment of prisoners.\nI shall take it to have the meaning given to it by the Belhaj claimants in their Particulars of Claim, namely a euphemism commonly used since about 2001 to describe covert unlawful abduction organised and carried out by state agents, across international borders, for the purpose of unlawful detention, interrogation and\/or torture.\nThe context of Mr Rahmatullahs pleading shows that he is using it in the same sense.\nEnforced disappearance was described by Leggatt J in R (Al Saadoon) v Secretary of State for Defence [2015] EWHC 715 (Admin); [2015] 3 WLR 503, para 209, as a concept recognised in international law and a practice which is internationally condemned.\nIt involves detention outside the protection of the law where there is a refusal by the state to acknowledge the detention or disclose the fate of the person who has been detained.\nIts cruelty and vice lie in the facts that the disappeared person is completely isolated from the outside world and at the mercy of their captors and that the persons family is denied knowledge of what has happened to them.\nEnforced disappearance is a violation of article 5 of the European Human Rights Convention in the case of persons within the jurisdiction of a Convention state: Kurt v Turkey (1998) 27 EHRR 373.\nIn December 2006 the United Nations adopted a draft Convention for the Protection of all Persons from Enforced Disappearance, which seeks to provide more generally for enforced disappearance.\nThe Convention came into force in December 2010.\nIt has to date been signed by 94 states and ratified by 45.\nBut the parties do not include the United Kingdom, the United States, Malaysia or Libya.\nThailand is a signatory, but has not ratified.\nIn these circumstances I consider that the Convention has nothing to contribute to the issues on this appeal.\nHowever, even in the absence of specific rules of international law relating to rendition and enforced disappearance, a prohibition of these practices is necessarily comprised in the more general prohibition of arbitrary detention by other international instruments, notably article 9 of the International Covenant on Civil and Political Rights.\nThe UN Working Group on Arbitrary Detention was surely right to say (loc cit, para 60) that secret and\/or incommunicado detention constitutes the most heinous violation of the norm protecting the right to liberty of human beings under customary international law.\nThe arbitrariness is inherent in these forms of deprivation of liberty as the individual is left outside the cloak of any legal protection.\nLikewise, the European Court of Human Rights has had no difficulty in dealing with rendition cases within the jurisdiction of a Convention state under the broader heading of the right to liberty and security of the person protected by article 5: see El Masri v Macedonia (2013) 57 EHRR 25; Al Nashiri v Poland & Husayn v Poland (2015) 60 EHRR 16.\nHistorically, rendition is not a complete stranger to English practice.\nAs Lord Hope pointed out in A v Secretary of State for the Home Department (No 2) [2006] 2 AC 221, at paras 106 10, in the second half of the 17th century, persons accused of treason were occasionally deported by administrative decision to Scotland, where confessions could lawfully be extracted from them by torture.\nMore recently, administrative deportation of British subjects was practised by British colonial administrations: M Lobban, Habeas Corpus, Imperial Rendition and the Rule of Law, Current Legal Problems, (2015) 68, 27 84.\nBut renditions to Scotland were probably always contrary to the law of England, and colonial renditions were only ever accepted by the courts on the basis that the Crown had power to legislate for the colonies in a manner contrary to fundamental principles of English law: see R v Earl of Crewe, Ex p Sekgome [1910] 2 KB 576, 607, 609 610 (Vaughan Williams LJ), 615 617 (Farwell LJ), 627 629 (Kennedy LJ).\nThis digression into history serves mainly to show how much has changed as a result of the adoption of fundamental human rights by English law and, more broadly, its recognition of the broader implications of the rule of law.\nIn the rare modern instances of rendition to the United Kingdom by or with the complicity of British officials, the courts have not been willing to tolerate the consequences.\nThe difference, as Lord Griffiths put it in R v Horseferry Road Magistrates Court, Ex p Bennett, at p 62A, is that the judiciary accept a responsibility for the maintenance of the rule of law that embraces a willingness to oversee executive action and to refuse to countenance behaviour that threatens either basic human rights or the rule of law.\nIn my opinion the foreign act of state doctrine cannot be applied to the detention alleged to have been inflicted on these claimants by US and Libyan officials, for substantially the same reasons as it cannot be applied to the allegations of torture.\nThey exhibit the same combination of violation of peremptory norms of international law and inconsistency with principles of the administration of justice in England which have been regarded as fundamental since the 17th century.\nThe fact that if the pleaded allegations are correct the claimants were forcibly transported across international borders without any lawful process of extradition is a significant aggravating factor engaging the same considerations of public policy.\nThe position is less clear in relation to the relatively brief periods of detention said to have been inflicted on Mr Belhaj and Mrs Boudchar by the authorities in Malaysia and Thailand, in respect of which the pleaded allegations are thinner.\nBut there can be no justification for striking out that part of the Particulars of Claim in the absence of a trial of the facts.\nOther cruel, inhuman or degrading treatment\nThe Torture Convention applies to both torture and other cruel, inhuman or degrading treatment, but it distinguishes between them.\nArticle 1.1 of the Convention defines torture properly so called.\nArticle 2.2, which precludes derogations in any circumstances, applies only to torture as defined.\nThe international obligation of states in relation to other cruel, inhuman or degrading treatment is defined by article 16.\nIt is to prevent such acts within its jurisdiction.\nThe Convention also imposes on states the ancillary administrative and investigatory obligations laid down by articles 10, 11, 12 and 13 of the Convention.\nThe international obligation upon states to assume universal criminal jurisdiction over torture does not apply to the lesser forms of ill treatment.\nIn A v Secretary of State for the Home Department (No 2), supra, at para 53, Lord Bingham acknowledged the significance of these differences: Ill treatment falling short of torture may invite exclusion of evidence as adversely affecting the fairness of a proceeding under section 78 of the 1984 Act, where that section applies.\nBut I do not think the authorities on the Torture Convention justify the assimilation of these two kinds of abusive conduct.\nSpecial rules have always been thought to apply to torture, and for the present at least must continue to do so.\nIn these circumstances, it is difficult to regard the prohibition of ill treatment falling short of torture as jus cogens.\nNor does it engage the same fundamental considerations of English public policy which justify treating torture as an exception to the foreign act of state doctrine.\nThe practical consequences of this difference in cases like the present are, however, limited.\nLike torture, other cruel, inhuman or degrading treatment must by definition be committed or authorised by a public official: article 16.\nIt may fall short of torture, either because it is insufficiently severe or because it is not committed for one of the purposes specified in article 1 (obtaining information or a confession, punishment, intimidation, coercion, or other reasons based on discrimination).\nGiven the breadth of the definition of torture, which extends to any intentional infliction of severe pain and suffering, whether physical or mental, and the wide range of motives which may lead to ill treatment being classified as torture, the residual category of other cruel, inhuman or degrading treatment is in practice likely to be a very narrow one.\nArticle 6 of the European Convention on Human Rights\nThe conclusion that I have reached on the ambit of the exceptions to the act of state doctrine means that article 6 is only marginally relevant to the present appeals.\nIt could not apply to the detentions themselves.\nIt could apply only so far as the treatment of the claimants while they were detained amounted to cruel, inhuman or degrading treatment but fell short of torture.\nI will therefore deal with it briefly.\nArticle 6 might in principle apply so far as the application of the foreign act of state doctrine would constitute a denial of the claimants right to a court: Golder v United Kingdom (1975) 1 EHRR 524.\nThere are circumstances in which an immunity from liability or adjudication will engage article 6.\nIn these cases, it must be justified by reference to the legitimacy of the objective and the proportionality of the means.\nState immunity is a controversial but well established example in the jurisprudence of the Strasbourg Court: Fogarty v United Kingdom (2002) 34 EHRR 12; Al Adsani v United Kingdom (2002) 34 EHRR 11; Cudak v Lithuania (2010) 51 EHRR 15; Sabeh El Leil v France (2012) 54 EHRR 14.\nBut, except in rare cases where there are no judicial or manageable standards by which to determine an issue, the foreign act of state doctrine is not an immunity.\nIt is a rule of substantive law which operates as a limitation on the subject matter jurisdiction of the English court.\nIn Roche v United Kingdom (2005) 42 EHRR 30 the European Court of Human Rights held that the right to a court protected by article 6 was not engaged by a substantive rule of domestic law excluding liability, but only by a bar which was procedural in nature.\nThe most pertinent illustration is Markovic v Italy (2006) 44 EHRR 52.\nThe applicants in this case were relatives of persons who had been killed in the NATO air raid on Belgrade in 1999.\nThe raid was said to be an act of war in violation of international law.\nIt had been launched from bases in Italy.\nThe Corte de Cassazione had held that by a rule of substantive law the Italian courts had no jurisdiction over acts of war or indeed over any acts of the Italian state which were impugned on the sole ground that they violated international law.\nThe Strasbourg court applied the distinction between substance and procedure that they had formulated in Roche.\nThey agreed that the limitation on the jurisdiction of the Italian court was substantive.\nIt followed (para 114) that the decision of the Corte de Cassazione, does not amount to recognition of an immunity but is merely indicative of the extent of the courts powers of review of acts of foreign policy such as acts of war.\nTo the limited extent that the foreign act of state doctrine might apply in these cases, it does not in my opinion engage article 6.\nDisposition\nFor these reasons I would declare (i) that the claimants claims are not barred by state immunity, and (ii) that on the facts pleaded the claimants claims are not barred by the foreign act of state doctrine so far as they are based on allegations of complicity or participation in torture or in detention or rendition otherwise than by legal authority.\nI would affirm the decision of the Court of Appeal in Belhaj that no part of the claim is struck out.\n","output":"This judgment is one of a number given by the Supreme Court today on issues arising from alleged complicity of United Kingdom officials in allegedly tortious acts of the UK or other states overseas.\nMr Belhaj and his wife were detained in Kuala Lumpur in 2004.\nThe respondents allege that MI6 informed the Libyan authorities of their whereabouts, leading to them being rendered to Libya against their will.\nThey allege that they were unlawfully detained by Malaysian officials in Kuala Lumpur, Thai officials and US agents in Bangkok, and finally in Libya.\nThey allege that the United Kingdom arranged, assisted and encouraged their rendition, as well as conspired in and assisted torture, inhumane and degrading treatment inflicted on them by the US and Libyan authorities.\nMr Rahmatullah was detained by British forces in Iraq on 28 February 2004 on suspicion of being a member of the proscribed organisation Lashkar e Taiba.\nWithin a few days he was transferred into US custody.\nBy the end of March 2004 the US authorities had transferred him to Bagram Airbase in Afghanistan, where he was detained by such authorities without charge for over ten years.\nPart of his claim is that, in relation to this ten year period, British officials acted in combination with the US authorities and\/or assisted or encouraged his unlawful detention and mistreatment by the US authorities.\nRahmatullah is said to be representative of other claims currently before the High Court.\nThe issues before the Court are whether, assuming for present purposes that the allegations made are true, the claims of UK complicity for unlawful detention and mistreatment overseas at the hands of foreign state officials are properly triable in the English courts.\nThe appellants rely on the doctrines of state immunity and\/or foreign act of state.\nIn Belhaj the High Court held that there was no state immunity but that the claims were barred being based on foreign acts of state.\nThe Court of Appeal affirmed the decision on state immunity but held the doctrine of foreign act of state to be: (i) limited to acts occurring within the jurisdiction of the relevant foreign state; and (ii) subject to a public policy exception for grave human rights violations.\nIn Rahmatullah, the High Court held that neither doctrine applied.\nBoth cases come before the Court on appeal, in the case of Rahmatullah by leapfrog order.\nThe Supreme Court unanimously dismisses the Governments appeals.\nLord Mance gives the lead judgment.\nLord Neuberger gives a concurring judgment, with which Lord Wilson, Lady Hale and Lord Clarke agree.\nLord Sumption adds a further concurring judgment, with which Lord Hughes agrees.\nState immunity is based on the sovereign equality of states and international comity [12].\nThe appellants submit that state immunity covers (under the concept of indirect impleading) cases where it is integral to a claim against United Kingdom authorities to prove that foreign officials acted contrary to their own laws.\nThey rely on the concepts of interests or activities in Article 6(2)(b) of the 2004 UN Convention on Jurisdictional Immunities of States and Their Property [25].\nHowever, the Court concludes that none of those concepts covers reputational disadvantage that could be suffered by foreign states [29, 195].\nThe relevant foreign states will not be affected in any legal sense by proceedings to which they are not party.\nThe pleas of state immunity fail accordingly [31, 197].\nLord Mance identifies three types of foreign act of state rule recognised in current English authority, broadly also reflected in the judgment of Lord Neuberger.\nThe first is a rule of private international law, whereby a foreign states legislation will normally be recognised and treated as valid, so far as it affects movable or immovable property within that states jurisdiction [35, 135].\nThe second rule (taking, without necessarily endorsing current Court of Appeal authority) goes no further than to preclude a domestic court from questioning the validity of a foreign states sovereign act in respect of property within its jurisdiction, at least in times of civil disorder [38, 74 78].\nEven if this rule were, however, viewed as extending more generally to acts directed against the person, it would be subject to a public policy exception which would permit the allegations of complicity in torture, unlawful detention and enforced rendition in this case to be pursued in the English courts [80, 156].\nThirdly, a domestic court will treat as non justiciable or will refrain from adjudicating on or questioning certain categories of sovereign act by a foreign state abroad, even if outside the jurisdiction of that state [40, 123].\nWhether an issue is non justiciable under the third rule falls to be considered on a case by case basis, having regard to the separation of powers and the sovereign nature of activities [90 95].\nEnglish law will take into account whether issues of fundamental rights are engaged, including liberty, access to justice and freedom from torture [98, 101].\nThe international relations consequences of a court adjudicating on an issue may also feed into the assessment under the third rule [41].\nIn this case, the circumstances do not lead to a conclusion that the issues are non justiciable [96 105, 167 8].\nLord Neuberger underlines the limits of the foreign act of state doctrine.\nA public policy exception qualifies the first and (so far as it exists) second rules; and, if necessary, also the third rule [157].\nLord Sumption identifies in the case law two relevant principles: municipal law act of state corresponding generally with the first two rules of Lord Mances framework [228], and international law act of state corresponding generally with Lord Mances third rule.\nMunicipal act of state is confined to acts done within the territory of the relevant foreign state [229].\nInternational law act of state requires the English courts not to adjudicate on the lawfulness of the extraterritorial acts of foreign states in their dealings with other states or the subjects of other states, since these occur on the plane of international law [234].\nBut the doctrine does not apply simply because the subject matter may incidentally disclose that a state has acted unlawfully and it is subject to a further public policy exception, potentially applicable in cases of violations of jus cogens under international law (fundamental norms from which no derogation is permitted) and of fundamental human rights [248].\nIt is unnecessary to decide whether: a) the UN Convention against Torture requires any modification of the doctrine of foreign act of state to give a universal civil remedy for torture [11(v)(a), 108]; b) article 6 of the European Convention on Human Rights precludes reliance on state immunity or foreign act of state; or to say more than that the appellants would face difficulties on each point [11(v)(b), 281 4].\nIn the result, state immunity is no bar to the claims, and the appellants have not, on the assumed facts, shown any entitlement to rely on the doctrine of foreign act of state to defeat the present proceedings.\nThe appeals are dismissed and the cases may proceed to trial.\n","id":53}
{"input":"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.\nThere are five tiers, and for the purposes of this appeal the relevant tier is Tier 2 (General) Migrant.\nThe applicant migrant must be sponsored by an employer which is licensed to sponsor migrants.\nThe guidance relevant to the application makes it clear that his sponsor must be licensed by the Home Office.\nIt 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.\nThere is no discretion about this.\nThe PBS has been described as prescriptive (Kaur v Secretary of State for the Home Department [2015] EWCA Civ 13, para 41 per Burnett LJ).\nThe 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).\nMoreover, the Home Office has power to revoke a licence at any time.\nIn this case, Mr Pathan made his application and was sponsored by his employer, Submania Ltd (Submania).\nIt was his second application for Tier 2 leave.\nSubmania 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.\nThe 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.\nThe 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.\nThese, 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.\nProcedural 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.\nThe grounds on which such a challenge can succeed are generally limited to situations where the rule is irrational.\nMr Pathan sought an administrative review of the Secretary of States decision to reject his application, but the decision was maintained.\nHe then sought judicial review of that decision in the Upper Tribunal.\nMr 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.\nBoth the Upper Tribunal and the Court of Appeal dismissed Mr Pathans appeal.\nIn 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).\nThe Court of Appeal held that Mr Pathans appeal raised a question of substantive fairness.\nAs substantive fairness was not a free standing ground for judicial review, Mr Pathan would have to show irrationality.\nHe could not succeed on that ground because the rules for the PBS had been drafted for rational policy reasons.\nThe 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.\nIn 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.\nAs 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.\nIn those cases, the students leave is limited to any existing permission to stay that he has.\nOn this appeal, the Secretary of State does not ask this Court to overrule Patel but submits that the basis of the decision was unsound.\nFor the reasons set out below, I consider that it was a breach of the procedural\nduty 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.\nAll the members of the Court reach this conclusion and accordingly the appeal succeeds on that issue.\nI 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.\nLord Wilson has reached the same conclusion as appears from his judgment, with which as explained below I agree.\nLord Kerr and Lady Black in their joint judgment and Lord Briggs in his judgment take a different view.\nThey consider that the grant of an extension of time is a matter of substance and falls outside the duty of procedural fairness.\nOn that issue, the views of Lord Kerr, Lady Black and Lord Briggs as the majority prevail.\nWhy Mr Pathans Tier 2 application failed and the proceedings Mr Pathan then\ninitiated\nMr Pathan, his wife and son are Indian nationals living in the UK.\nThe ability of Mr Pathans family to remain in the UK is dependent on Mr Pathans success in the present appeal.\nMr 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.\nLTR was extended from 1 December 2010 to 30 April 2014.\nSubsequently, 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.\nSubmania held a sponsors licence and provided him with a valid CoS.\nOn 2 September 2015 Mr Pathan made an application for further LTR to enable him to continue working for Submania.\nThe Secretary of States evidence was that Mr Pathans application was put on hold whilst officials visited Submania to investigate whether the vacancy was genuine.\nOn 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.\nThis invalidated the CoS provided by Mr Pathan in his application for LTR.\nOn 7 June 2016 the Secretary of State, without previously informing Mr Pathan of the revocation, refused his application because his CoS was invalid.\nMr Pathans LTR would have expired on 15 October 2015 but for his application for further leave.\nIn 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.\nI will call this leave section 3C leave.\nWhen 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.\nAs explained, his LTR had by then expired.\nWhen 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.\nMr Pathan now seeks relief from this Court.\nRelevant rules and legislation\nThe relevant Immigration Rules are those in force at July 2016.\nThe 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.\nParagraph 245HD states: To qualify for leave to remain as a Tier 2 (General) Migrant an applicant must meet the requirements listed below.\nIf the applicant meets these requirements, leave to remain will be granted.\nIf the applicant does not meet these requirements, the application will be refused.\nIt sets out the requirements for leave to remain in this context.\nrequirements 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.\nAppendix 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.\nParagraph 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 .\nFrom February 2016, the curtailment of leave was dealt with by paragraphs 323 onwards.\nLeave 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)).\nAt all material times there was guidance in place for applicants.\nAt 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.\nThis 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.\nWhere your application relies on a Certificate of Sponsorship that has been either withdrawn or cancelled, your application will be refused.\nAs to the consequences of revocation of the sponsors licence, the version of the guidance dated 04\/16 stated:\n9 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.\nIn 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.\nIf they were complicit in any abuse of the immigration system, their leave will end (curtailed) with immediate effect. 19.\nThe equivalent passages in the version dated 04\/15 were in virtually identical terms.\nEvidence on behalf of the Secretary of State\nMr 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.\nThis 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.\nMr 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)\nHe 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.\nHowever, 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.\nMigrants 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.\nOn 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.\nBut 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).\nA Tier 2 applicant was in a different position.\nThey 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.\nUnder 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.\nIf 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.\nThere 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.\nThe 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.\nThe 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.\nTier 2 migrants are expected to know if their sponsor loses or is at risk of losing its licence.\nMr 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.\nIn 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.\nSome key arguments\nMr Michael Biggs appears for Mr Pathan.\nHis primary complaint is that the Court of Appeal was wrong to treat Mr Pathans claim as one of substantive unfairness.\nHe does not dispute the lawfulness of the licence revocation but contends that he should have been informed of it.\nHe 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.\nThe 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.\nThe licence revocation prevented him from continuing his employment.\nThe decision put him at risk of criminal liability and other restrictions as an overstayer.\nHis article 8 rights and those of his family were engaged.\nNotice of the licence revocation could have made a difference to the outcome of Mr Pathans LTR application.\nIf 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.\nMr 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.\nNo case says an application that is bound to fail must be given a second chance.\nWhat Mr Pathan seeks is a substantive benefit (a second chance) and so his complaint is not as to procedural fairness.\nThe Court of Appeal were correct and their decision should be upheld.\nDiscussion The complaint is procedural because establishing a procedural impropriety\nis a necessary first step\nThe judgment of the Court of Appeal hinges on its conclusion that Mr Pathans complaint was about substantive, and not procedural, fairness.\nIt is easy to see how this conclusion was reached.\nThe overall objective of Mr Pathan in bringing these proceedings is to obtain a 60 day curtailment (see para 10 above).\nThat 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.\nHowever, 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.\nWhat 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.\nRole of section 3C leave\nSection 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.\nSection 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).\nThe Secretary of States practice on timing is not entirely clear.\nIn the present case there was an interval of three months between the revocation of the sponsors licence and the rejection of Mr Pathans application.\nIt 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.\nBut 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.\nWhile 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.\nBecause 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.\nIt 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.\nMoreover, 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.\nThere is an element of substantive unfairness in the complaint\nIt 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.\nIf 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.\nIt is not the law that a procedural challenge can be made only if there is no challenge to a substantive provision.\nIn 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.\nThe power to demolish was for public benefit, and the statute did not require the board to give the houseowner the opportunity to make representations.\nNonetheless, 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.\nByles 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.\nHe says, The objection for want of notice can never be got over.\nThe laws of God and man both give the party an opportunity to make his defence, if he has any.\nI 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.\nAdam (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)\nIn 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.\nBy 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.\nIt is common ground that the rules of natural justice apply to decision makers in public law whether or not they are acting judicially.\nIn the Wandsworth case it was argued that the board, as successors to the commissioners for sewers, who were a judicial body, also acted judicially.\nI 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.\nThe line between procedure and substance\nGoing 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.\nIt 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.\nAs stated, both claims in Byles Js example arose out of the same substantive decision of expulsion from the Garden of Eden.\nThis confusing state of affairs also occurs in the common law.\nFor 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.\nOne 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.\nThe House of Lords held that the decision of the Secretary of State was unlawful because (among other matters) this was an irrelevant consideration.\nThe House also decided that it was contrary to the rules of natural justice for the Secretary of State to take these factors into account.\nThe decision should have been made only on the basis of relevant considerations.\nThat case is an example of how the same act of a public body can lead to claims of both procedural unfairness and unlawfulness.\nLord 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.\nThere are two separate substantive reasons why I conclude that the Home Secretarys decisions were unlawful.\nFirst, 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.\nHis legal premise was wrong: the two sentences are different.\nA 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.\nThe Home Secretary misunderstood his duty.\nThis misdirection by itself renders his decision unlawful.\nSecondly, 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.\nIn doing so the Home Secretary took into account in aggravation of the appropriate level of punishment legally irrelevant considerations.\nThis was a material defect in the reasoning of the Home Secretary.\nIt rendered his decisions unlawful.\nOn 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.\nThis point overlaps with my second substantive conclusion.\nIt 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)\nThe next section of this judgment develops the question of overlap.\nLine between procedural and substantive unfairness need not be rigid\nThe closely reasoned decision of the Court of Appeal in the present case drew a rigid line between procedural and substantive fairness.\nThis 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.\nAt 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.\nThe first ground I would call illegality, the second irrationality and the third procedural impropriety.\nThat is not to say that further development on a case by case basis may not in course of time add further grounds.\nI 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.\nBy 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.\nWhether 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.\nBy 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).\nIt 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.\nWhether 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.\nTo 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.\nIrrationality by now can stand upon its own feet as an accepted ground on which a decision may be attacked by judicial review.\nI 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.\nThis 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.\nBut the instant case is not concerned with the proceedings of an administrative tribunal at all.\nLord 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.\nIn my judgment, Mr Biggs is correct in his submission that there is a subset of procedural fairness.\nThis 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.\nLord Diplocks categorisation of grounds for judicial review is important and I do not suggest otherwise.\nBut 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.\nIn 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.\nI 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.\nExamples of procedural unfairness throwing light on this case\nOne 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.\nThat 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.\nIn 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.\nThe 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.\nThe 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.\nSedley LJ considered that rules could not stand where they were productive of irremediable procedural unfairness (para 48).\nThe Rules deprived the applicant of his right to be heard (para 49).\nThe 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).\nThe Rules in question were outside the rule making powers and the purpose for which those powers were given.\nMy 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.\nWall J agreed with Sedley LJ.\nThe breach of the common law principle of unfairness led to the rules being unlawful.\nA 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.\nSo too here.\nMr Pathans complaint is not peculiar to him.\nIt 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.\nThe complaint in this sort of case is about a systemic failure.\nThe 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.\nIn my judgment in this subset of procedural fairness, the challenge will inevitably engage the substantive rule as well as procedural unfairness.\nOnce 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.\nThere are many cases which apply the principle of procedural fairness.\nIn 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.\nUnderhill 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.\nThe 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?\nAnother 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).\nMr Al Fayed and his brother had applied to the Secretary of State for naturalisation as a British citizen.\nSection 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.\nThe Secretary of State made an announcement that the applications were especially difficult and sensitive.\nBoth applications were refused.\nIt 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.\nLord 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.\nThis 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.\nLord Woolf held: I appreciate there is also anxiety as to the administrative burden involved in giving notice of areas of concern.\nAdministrative 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.\nIn many cases which are less complex than that of the Fayeds the issues may be obvious.\nIf this is the position notice may well be superfluous because what the applicant needs to establish will be clear.\nIf this is the position notice may well not be required.\nHowever, 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)\nValues served by procedural fairness\nIn R (Osborn) v Parole Board [2014] AC 1115, Lord Reed considered the values served by the requirements about procedural fairness.\nHe mentioned three in particular.\nThe 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.\nI 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)\nLord Reeds second point is particularly relevant to this case.\nProcedural fairness promotes congruence between decision making and the law: The second value is the rule of law.\nProcedural 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)\nLord Reeds third value concerned cost.\nWhile 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.\nIn 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)\nProcedural fairness is thus an important matter.\nIt 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.\nSubstantive unfairness is not in itself a head of judicial review\nIn 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.\nSubstantive 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.\nNor is it made so by the addition of terms such as conspicuous or abuse of power.\nSuch language adds nothing to the ordinary principles of judicial review, notably in the present context irrationality and legitimate expectation.\nIt is by reference to those principles that cases such as the present must be judged.\nLord Sumption made a similar point at para 50 in that case.\nWhat does fairness require in this case?\nProcedural fairness is adaptable to the environment in which it is applied.\nProcedural unfairness does not entail that the decision maker must comply with a pre designed set of rules.\nAs 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.\nLord 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.\nThey are far too well known.\nFrom 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.\nThey 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.\nWhat 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.\nHere 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.\nWhere 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.\nThis 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.\nIn 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).\nThe 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.\nBoth periods could run together.\nBy 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.\nBut 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.\nThe decision as to the appropriate period will be a matter (subject to any judicial review) for the Secretary of State.\nIt 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.\nOnce 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.\nFairness does not require the Secretary of State to answer questions about that or keep the applicant informed.\nAverting 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.\nIt 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.\nThe applicant has a chance (which may be only a small chance) that he may find a new basis for applying for LTR.\nThere 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.\nLord Kerr and Lord Briggs conclude that the duty of fairness extends no further than giving Mr Pathan notice of the revocation.\nRespectfully, I do not share this view.\nAs 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.\nIn 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.\nThe duty to notify also includes the duty to take into consideration any representations made in response to notification. (footnotes omitted)\nThe first sentence of para 7 046 contrast with para 196 of the judgment of Lord Briggs in this matter.\nIn addition, De Smith references at the end of para 7 046 R v North Yorkshire County Council, Ex p M [1989] QB 411.\nThe local authority had failed to disclose to the childs guardian ad litem major changes in the circumstances of the child.\nEwbank J held that that the authority had both to notify the guardian of these circumstances and also to listen to the guardians views.\nFor that purpose, the guardian would have to have been given time to formulate views and submit them to the authority.\nThe 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.\nThere is no case law footnoted as supporting these examples, but the text clearly expresses the view of the learned editors.\nThere 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.\nSince 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.\nThere 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.\nThe PBS will remain a prescriptive scheme, and the requirements of fairness must take that into account.\nUnless the applicant can produce an alternative basis for LTR, his application will fail.\nUnder 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.\nThere 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.\nIn those circumstances, he already knows that the success of his application is in jeopardy.\nThere 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).\nSimilarly 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.\nWe are also only concerned with a person in the sponsors employment, who is seeking LTR in order to continue working for their sponsor.\nThe 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.\nThe 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.\nBut this somewhat overstates the position.\nOne 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.\nParagraph 245HD (set out above) states: If the applicant meets these requirements, leave to remain will be granted.\nSuccess in obtaining leave under the PBS, as its name suggests, involves earning sufficient points.\nI have already described the PBS as prescriptive: see para 1 above.\nBy 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.\nThe 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.\nAs explained, the applicant is then awarded points for meeting conditions.\nAs Burnett LJ put it in Kaur at [2015] EWCA Civ 13, para 41: 41.\nThe 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.\nIt does so at the expense of discretion, that is to say it is prescriptive.\nThe 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.\nIt was that important background which informed the decision in EK (Ivory Coast).\nI have considered with care the whole of the evidence of Mr Jackson.\nIn 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.\nMoreover, 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.\nThere 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.\nIt is after all knowledge which is peculiarly in the Secretary of States possession.\nThe 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.\nIt 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.\nIt is not really an answer to say that his leave had expired.\nHe would have been planning his affairs on the basis that he would be granted a new Tier 2 Migrant visa.\nHe is likely to have engaged the same sort of commitments as other migrant workers of the sponsor.\nMoreover, 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.\nWe are not concerned with a new applicant or an applicant for a new position.\nIt would not be reasonable to expect the Secretary of State to assume that such applicants would have commitments.\nLord 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.\nIn 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.\nThe 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.\nLikewise 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.\nHowever 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).\nThat is to confuse the duty with the courts discretion to determine the appropriate remedy.\nWhy the question is not one of substance\nSingh LJ held that the dispute is about whether the mandatory requirement for a valid CoS is lawful.\nSo 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.\nHis case is that the Secretary of State should have given him notice that his sponsors licence was revoked and time to deal with it.\nIn my judgment, and with respect, the distinction between procedure and substance does not justify recharacterising his complaint.\nLord Briggs also reaches the conclusion that the issue is one of substance by looking at the reality of the complaint.\nHe 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.\nMr Biggs has not sought to challenge either the substantive decision made by the Secretary of State, or the rationality of the rule.\nMoreover, leave was given for the procedural unfairness argument to be run.\nAs the Venables case [1998] AC 407 (see para 38 above) illustrates, where an applicant relies on procedural fairness, the court looks at the process.\nIt is true that if a decision has been taken and procedural unfairness is found, the decision will be set aside.\nThat may or may not show a defect in the rule.\nIn 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.\nIn 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.\nA defect in the decision making process is the hallmark of a procedural dispute.\nA substantive decision is the decision that determines the application, ie a decision on the merits.\nAs I see it, Mr Pathans case falls within, not beyond, the phrase used by Lord Briggs: the true boundaries of procedural fairness.\nQuestion whether rule irrational does not need to be decided\nHaving 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.\nThe aim of Tier 2 was to match a migrant to a particular vacancy.\nThe Tier 4 regime was different because the aim was to encourage foreign students to study in the UK.\nTier 4 applicants were given notice that their application would fail because the Secretary of State had revoked their sponsors licence.\nTier 2 applicants could always renew their application from abroad.\nIn that way they would avoid the risk of criminal liability as an overstayer.\nSingh LJ considered that the applicant is in a different position from a migrant who is already working for the sponsor.\nGiven that I have found that there was procedural unfairness to a person in Mr Pathans position, these points do not arise on this appeal.\nUnfairness in this case is not displaced by administrative review or the need not to impose burdens on the executive\nIn my judgment, it is not an answer to Mr Pathans challenge to say that his\nleave is extended during the administrative review period and for 14 days thereafter.\nIf 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.\nIf he makes a variation application before his section 3C leave expires, that application is then automatically merged with his previous application.\nMaking 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.\nIf the applicants section 3C leave comes to an end and no other leave has\nbeen put in his place, the applicant becomes an illegal overstayer.\nMr Biggs emphasised the hostile environment in which a migrant finds himself if he becomes an illegal overstayer.\nHe may be expelled and prevented from returning to the UK for ten years.\nMr Biggs submission to this court is essentially the same that he made in Balajigari, which Underhill LJ helpfully records as follows: 81.\nSecondly, 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.\nIt 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.\nAs 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.\nHe submitted that those consequences are bound to have a serious impact on a migrants private life irrespective of any removal action.\nThe Secretary of State recognises that a migrant worker needs 60 days to put his affair in order.\nIt cannot be fair to leave an applicant for LTR who is also working for his sponsor with a shorter period of time.\nThat 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.\nI 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.\nAs 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.\nFairness must take full account of this, but the resultant scheme must not sacrifice fairness in order to achieve efficiency.\nAs 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.\nBut 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.\nWhere revocation is not the result of the Secretary of States actions\nSingh 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.\nThe applicants application was for leave to remain as a Tier 2 migrant, and he received a CoS from his employer.\nUnfortunately, 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.\nThat has nothing to do with any duty on the respondent to hear the appellant before taking her decision.\nIn 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.\nIn 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.\nThe important point is that this is nothing to do with procedural fairness in the sense outlined above.\nIt is to do with whether a substantive requirement of the rules themselves needs to be complied with in making a relevant application.\nThe 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.\nIt was due to an error made by the officer of the sponsor company.\nLikewise, 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.\nAnother 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.\nMaking an application from abroad\nIn 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.\nBut that course of action may be unreal if the migrant has financial commitments through having already worked for the sponsor.\nIf the applicant went abroad and applied from another country, he would have to pay another fee.\nProcedural fairness does not of course apply any differently because of this.\nIf 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.\nShould this Court rule on the question whether the basis of the Upper Tribunals decision in Patel was unsound?\nAs 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.\nCoulson LJ also expressed his concerns about this decision.\nAs previously explained, this Court is not asked to overrule Patel.\nSingh LJs concerns arose from observations in Patel about equal treatment.\nWhat 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.\nOne 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.\nSingh LJ held that as the law stands equal treatment was not as a self standing head of unfairness.\nHowever, as I read the decision, the reference to equal treatment was only one basis for the decision.\nFairness in that case required 60 days to be given to all students of colleges whose licences the Secretary of State took steps to revoke.\nThe 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.\nIn the second half of para 23 and in para 24, the Upper Tribunal decided the case on the basis of fairness alone: 23.\nAlthough we accept that there is no such policy for refusal cases, fairness requires that such cases be treated in broadly the same way.\nThe applicant must be given an equal opportunity before refusal of application to amend it in the way we have described.\nThis was clearly not done in this case.\nThe Home Office knew that it had suspended the college in January 2010 but no one else did.\nThe 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.\nIt 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.\nMoreover, the Secretary of State in that case had accepted that there was procedural unfairness to that extent.\nFurthermore, 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.\nThat was a proper and sensible decision for the Secretary of State to take.\nIn 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.\nI 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.\nLord Wilsons judgment\nSince preparing this judgment, I have had the privilege of reading in draft the judgment of Lord Wilson, with which I completely agree.\nConclusion\nFor the reasons and to the extent summarised in para 6 above I would allow the appeal.\nLORD KERR AND LADY BLACK:\nMr 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).\nBefore 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.\nThis was so that he could be employed by a company known as Submania Ltd as a business development manager.\nThe period between March 2013 and October 2015 is known as the period of leave.\nBefore 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.\nThe application was made on the basis that he would retain his Tier 2 status.\nIt was made within the time allowed and it was in correct form.\nHis wife and child were named as dependants in the application.\nIt was supported by a certificate of sponsorship (CoS) issued by Submania.\nMr Pathans application was put on hold while a Sponsor Compliance Team of the Home Office investigated Submania.\nAs a result of their investigations, Submanias sponsor licence was suspended on 4 February 2016.\nThe licence was subsequently revoked on 7 March 2016.\nThis had the automatic effect of invalidating Mr Pathans CoS.\nAlthough, 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.\nMr Pathan was not informed of the revocation until 7 June 2016.\nHe was therefore unaware of the impact that the decision would have on his status until three months after it had been taken.\nMr Pathan applied for judicial review.\nThe 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.\nThe 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 .\nOn 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.\nIn 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.)\nThe difference in the two formulations is significant.\nAs 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.\nAnd the purpose of the time sought is no longer confined to obtaining an alternative sponsor.\nHis case can be seen to have two elements.\nThe primary case that he advances is that he should have been given notice of the revocation when that occurred.\nThe second element is that he should have had a reasonable period thereafter to rearrange his affairs in response to that.\nIf 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.\nThe possible advantages of early notification\nBy 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.\nBy 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.\nNone 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.\nBefore 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.\nAlthough 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.\nWhy would he? He simply did not know what lay ahead.\nBut 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.\nIf he had known that this was inevitable, Mr Pathan could have applied to vary the application.\nEven 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.\nSection 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.\nIf, therefore, the new application succeeds, it is tantamount to VA1 succeeding.\nThis 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.\nAs 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.\nWhether 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.\nA 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.\nBetween those two dates, all of the options adumbrated in para 100 above and explored in paras 113 and 114 below) would have become available.\nCrucially for present purposes, he would have become aware of the need to vary under section 3C.\nBy 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.\nApplying for administrative review is the only course.\nIt was not suggested by the respondent that it was necessary that the revocation and the rejection of the Tier 2 application take place concurrently.\nIndeed, Mr Pathans case demonstrates that it was not.\nIt 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.\nThe 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.\nUnderpinning 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.\nOne 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.\nHe had every reason to believe that his application would succeed.\nThe reason that it did not had nothing whatever to do with him.\nBut, failure in the application represented a calamitous upheaval for him and his family.\nTo 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.\nThat 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.\nThe duty to act fairly in these circumstances involves a duty not to deprive, not an obligation to create.\nIt 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.\nSuch an extension is a matter of substance.\nIn 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.\nThis does not confer a substantive benefit.\nIt may be properly characterised as a procedural duty to act fairly.\nIt is not a duty to bestow.\nIt is an obligation not to deprive.\nExpressed 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.\nThus, 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.\nIt 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.\nThese decisions are, naturally and conventionally, taken sequentially.\nTo compress them in order to reduce the time available in which to seek to avoid their impact would obviously be procedurally unfair.\nThat 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.\nExigencies, as yet unforeseen, may make such a convergence of decisions and their coincident communication unavoidable.\nIt 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.\nThat theoretical case has nothing to do with the present appeal, however.\nHere, 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.\nTrue 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.\nBut 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.\nIt might be suggested that this too would involve the imposition of a positive duty and the correlative conferral of a substantive benefit.\nIt does not.\nThis is information which he would have had to be given.\nA decision that it should have been communicated at the time that revocation occurred involves no more than the assertion of a fair procedure.\nA 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.\nOne 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.\nAnother was to apply for a variation of leave on the basis of a human rights claim.\nEven 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.\nHis 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.\nA 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.\nThe benefit of doing so would have been that he could have avoided the effect on him and his family of becoming overstayers.\nAcquiring the status of an overstayer carries a number of potentially serious adverse consequences.\nThe consequences of being an overstayer\nThere are two types of effect of becoming an overstayer: immediate and long term.\nIf 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.\nOverstaying also tips a person into the Home Offices hostile environment.\nSince July 2016 it has been illegal for an overstayer to be in employment.\nThat prohibition remains in place even after an overstayer has applied for a visa extension.\nIt persists until (and if) they are granted leave to remain.\nOverstayers may find it difficult to rent accommodation and may be prevented from driving.\nLong term consequences may be even more serious.\nThe 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.\nThis came into force on 24 November 2016.)\nIndividuals 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.\nThere 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.\nThe 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\nThe duty of procedural fairness: the issue of pointlessness\nWe should supplement what we have said already about the duty of procedural fairness by considering a particular question that arises in relation to it.\nWhen 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?\nBefore 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.\nWhere 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.\nThere 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.\nThus, 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.\nA 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.)\nPointlessness can have two dimensions.\nThe 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.\nSo, 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.\nThe second dimension is different.\nIt 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.\nIn other words, there was no other avenue which he or she could explore to avoid the impact of the adverse decision.\nWe 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.\nWe 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.\nBefore 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.\nIn Cinnamond the pointlessness argument was put starkly.\nLord Neubergers exposition of it in Bank Mellat (No 2) was more muted.\nThe 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.\nIn 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.\nAnd 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.\nRespect 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.\nAs 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.\nIt involves paying attention to a point of view and respecting the personality of the entity one is dealing with.\nAs such it embodies a crucial dignitarian idea respecting the dignity of those to whom the norms are applied as beings capable of explaining themselves.\nIn 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.\nOn 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.\nThese statements do not, of course, relate directly to Mr Pathans case.\nBut 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.\nIt 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.\nThe duty to inform him at the earliest reasonable opportunity that this effect was due to accrue seems to us to be obvious.\nNot 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.\nThis reinforces the need to inform him timeously.\nOf 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.\nAs Lord Briggs put it, the tight timetable is the consequence of the rules.\nBut the rules are not necessarily comprehensive of the duty to act in a procedurally fair way.\nThey do not inhibit release of information when that can be first provided.\nTrue 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.\nAt 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.\nThis approach they describe as the principle of open justice to which, they say, the common law has a strong commitment.\nThis 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.\nBut, 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.\nAt 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.\nAs 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.\nWe freely acknowledge that these observations were made with a different context in mind from that of the present case.\nThe decision to refuse Mr Pathans application was, in a sense, preordained by the Immigration Rules.\nBy contrast, Elliott and Varuhas were discussing circumstances where the decision was at large.\nThe outcome depended on a weighing of evidence.\nOne 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.\nBut, 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?\nDiscussion\nWe 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.\nThe duty to give notice is an accepted element of the duty to act fairly.\nThree months elapsed between Submanias sponsors licence being revoked and the refusal of Mr Pathans application.\nIt cannot be suggested that informing him promptly of the revocation of the licence when it had been cancelled would not have made a difference.\nThe options that would have become available to Mr Pathan have been discussed at paras 100 to 105 and 113 to 114 above.\nTo have the three months extra in which to explore those options that prompt notification would have afforded him would have made a difference.\nThat conclusion does not rest on any estimate of his likely success in pursuing any of the chances that opened up for him.\nNor does it depend on a view as to whether he would have sought to follow up on any of them.\nThe cornerstone here is procedural fairness.\nWhat 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.\nHe would then have known that his application in its current form was bound to fail.\nHe could then have tried to get a different sponsor.\nLord 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.\nThis is true.\nIt is also true that their failure was not due to the fact that Mr Pathan had become an overstayer.\nBut, simply because, in the event, the applications were unsuccessful, does not mean that the withholding of the information was fair.\nIt 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.\nTo 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.\nFurthermore, the fairness of withholding the information is not to be judged on an ex post facto basis.\nAt 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.\nBut, this is the time that the fairness of withholding the information falls to be judged.\nIf 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.\nQuite 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.\nTo deny him the greater opportunity to avoid those consequences was in itself unfair.\nAgain, that conclusion does not depend on any judgment as to whether he would have sought to avoid that outcome.\nWhether he would or not, to deprive him of the chance was unfair.\nWe have concluded, therefore, that the failure to inform Mr Pathan promptly of the revocation of Submanias licence constituted procedural unfairness.\nIt is not a species of the audi alteram partem rule in the classic meaning of that rubric.\nThis 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.\nRather, 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.\nThere is, however, no material difference between these two situations.\nFurthermore, 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.\nThe objective of the person affected is the same in both scenarios.\nIt is to avoid the adverse consequences of an unfavourable decision.\nWe must turn then to the debate as to whether the duty to act fairly by providing the information promptly is procedural or substantive.\nAt 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.\nWe acknowledge the force of this argument and its initial attractiveness.\nBut we cannot agree with it.\nA 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.\nLeaving 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.\nIf, 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.\nThe procedural duty to act fairly by giving the opportunity to make representations exists whether or not that opportunity is availed of.\nLikewise, in the case of the duty to provide relevant information promptly.\nIn 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.\nThis is what underpins the duty.\nIf the opportunity is taken and a different outcome is obtained, that can be regarded as a substantive benefit.\nBut it does not make the duty to inform or to allow representations to be made any less of a procedural duty.\nIt 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.\nBut why should this make a difference to the characterisation of the duty? Again, the notion of what is fair holds the key.\nIf 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.\nAnd in both cases, in our opinion, the duty is properly to be regarded as a procedural duty.\nThe 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.\nOnce the opportunity to make submissions or the chance to take different steps has been provided, the procedural duty has been fulfilled.\nTo deny the chance to make submissions or to fail to inform promptly involves breach of that duty.\nBy 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.\nEssentially, the procedural duty extended to the maintaining of a fair procedure.\nTelling Mr Pathan at the earliest reasonable opportunity that his sponsors licence had been cancelled preserved the fairness of that procedure.\nGiving 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.\nAs 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.\nConclusion\nWe 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.\nWe 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.\nPostscript\nWe 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.\nHere, 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.\nLORD BRIGGS: (dissenting)\nAlthough I broadly agree with Lord Kerrs and Lady Blacks analysis of this difficult case, I would nonetheless have dismissed this appeal.\nIt is best therefore that I set out my reasons in full.\nOverview\nIn 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.\nFor 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.\nBut his real grievance is not simply that he should have been informed more quickly than he was.\nRather 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.\nHe 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.\nMany 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.\nBut that is what the Rules provide for a person in his position.\nNo direct attack is made upon the Rules in these proceedings.\nBut 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.\nBut 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.\nApplicants 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.\nIt 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.\nEven 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.\nThere is therefore no basis upon which her not giving him time can be subjected to judicial review.\nThe 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.\nAnalysis\nIt is necessary to begin by dispelling some myths which have arisen from the way in which this appeal has been presented.\nThe 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.\nNor was the failure of his original Tier 2 application in substance brought about by something done by the Secretary of State.\nAn employing sponsor has to be licenced, and the continuation of its licence depends upon compliance with conditions.\nIn 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.\nRevocation followed as a matter of course, with unfortunate but inevitable consequences for all its sponsored employees, including Mr Pathan.\nAlthough 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.\nThe 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.\nNor 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.\nThe 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.\nIn principle, the sooner a Tier 2 application is determined (once the relevant examination of the facts has been completed) the better for all concerned.\nWhen 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.\nThe 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.\nThe 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.\nMr Pathan would have been taken just as much by surprise in either case and is in no different a predicament.\nNor did Mr Pathan have some legitimate expectation, the denial of which of itself entitles him to the courts assistance by way of judicial review.\nHe had been informed in writing that the success of his Tier 2 application depended, among other things, upon his sponsor maintaining its licenced status.\nHis immigration status as a Tier 2 migrant depended upon him continuing to be employed by his licenced sponsor.\nThe 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.\nA 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.\nMr 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.\nThus in fact he could and did make a further Tier 2 application after finding a new sponsored employer.\nHe could and did make two applications based on human rights grounds.\nFor complicated reasons none of these applications were adversely affected by his having become an overstayer by the time when he made them.\nThey all failed for other reasons.\nRather 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.\nThe 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.\nThe 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.\nFor reasons which follow, that is not procedural unfairness.\nThe Law Procedural Unfairness\nIn 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.\nThe 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.\nIn my judgment, and largely for the reasons given by Singh LJ in the Court of Appeal, it does not.\nI 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.\nThe 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.\nIf 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.\nIn 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.\nThe 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.\nIrrationality and Wednesbury unreasonableness are stern tests.\nThey are by no means satisfied merely because the court thinks that it would have reached a different decision.\nThe legitimate expectation principle has its own internal checks and balances.\nBy contrast, where procedural unfairness is alleged, the court is the final arbiter of what is, or is not, fair.\nThis is because a decision made by a process which is in fact procedurally unfair is for that very reason unlawful.\nThus 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.\nIn 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.\nIn 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.\nIn 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.\nThese 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.\nThat is not correct.\nThe 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.\nIts function is not merely to review the reasonableness of the decision makers judgment of what fairness required.\nProcedural unfairness is a modern title for a form of unlawfulness which used to be called breach of the rules of natural justice.\nThat 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.\nThe 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.\nFor 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.\nIt 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).\nThe 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.\nPresentation of a case need not, of course, necessarily be oral.\nThe 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.\nBut 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.\nThat was not itself a procedural ground at all, but a separate ground for review.\nIt was merely described as procedural as well.\nHere there is no attack on the lawfulness of the refusal of the original Tier 2 application.\nIn 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.\nIn 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.\nI 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)\nThe 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.\nMr 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.\nIt 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.\nIt was common ground before this Court that nothing he could have said could have affected the negative outcome of the original application.\nAudi alteram partem is usually relied upon as a means of challenging the decision made after the alleged departure from fair procedure.\nHere there is no such challenge.\nMr 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.\nNor does he complain about having been unable to make representations to the Secretary of State.\nRather 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.\nUsing 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.\nBut 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.\nOn 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.\nThat 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.\nI 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.\nIt 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.\nBuying time in that way is a common practice.\nFor 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.\nBut 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.\nIt is plain that this inaction by the Secretary of State did not amount to a breach of the audi alteram partem rule.\nMr Pathan was not seeking to be heard in support of his application, after being informed of the revocation of his licence.\nFurther submissions would have been pointless.\nThe 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.\nI have searched in vain for some other aspect of the rules of natural justice which might have assisted him, and none were suggested.\nRather, 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.\nThe 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.\nIn 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.\nThe 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.\nThe 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.\nIt 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.\nAt 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)\nIt is apparent that Blake J relied in combination on what he called common law fairness and the supposed principle of equal treatment.\nThe 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.\nIt 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.\nShorn of equal treatment, Blake Js reliance on common law fairness is not further developed by way of legal analysis.\nPerhaps 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.\nBlake 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.\nMr 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.\nI 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.\nSuch 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.\nWhether 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.\nIn 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.\nIt 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.\nIt applies equally to Tier 2 and Tier 4 applications, and to applications on human rights grounds.\nThus 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.\nSection 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).\nThe 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.\nParagraph 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.\nI will call it the deemed variation rule.\nThe 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.\nIt 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.\nThus 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.\nBut 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.\nThis is for two reasons.\nFirst, he has no time to complete the new application.\nBut secondly he will not have left the employment of his original sponsor, still less found a new one.\nAnd 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.\nIn 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.\nMr 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.\nNone 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.\nThe 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.\nAlthough 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.\nBut 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.\nIn 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.\nTime 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.\nIt 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.\nIt is just a way of getting a longer time as a lawful migrant than provided by the Rules, before becoming an overstayer.\nIt 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.\nIt is, at best, substance dressed up as procedure.\nTime 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.\nIf 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.\nTime 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.\nTo 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.\nIf 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.\nThe 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.\nThe latter would not generally require more than a working week.\nBoth 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).\nBut 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.\nThe 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.\nHowever, this does not mean that it was therefore procedurally unfair.\nIt 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.\nHis Tier 2 application was refused on 7 June 2016.\nHe had 14 days in which to mount an administrative review, which he did, in time.\nIt was refused on 7 July, whereupon he became an overstayer.\nBut 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.\nOn 3 August, within the period of grace, he made an application for leave to remain based on article 8.\nHe 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).\nThey 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.\nHe made a further article 8 application on 27 May 2017, again treated as a variation of his 3 August application.\nThat final article 8 application was refused on 11 October 2018 on grounds wholly unrelated to his being by then an overstayer.\nTwo factors clearly emerge from this factual description.\nThe 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.\nSecondly 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.\nEven if the Secretary of State conducted the administrative review within a single day it would still be 42 days.\nIn the present case Mr Pathan actually secured 58 days.\nIt 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.\nThe 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.\nI do not by that description mean thereby to belittle that adverse effect.\nBeing an overstayer has very serious consequences, although leaving is always an alternative to being an overstayer, and Mr Pathan was not an asylum seeker.\nBut the point is that they are consequences of substance rather than procedure.\nThe consequences of being an overstayer had no effect (procedural or otherwise) upon the outcome of his repeated applications for extended leave to remain.\nThey all failed for other reasons.\nThey 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).\nParliament 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.\nThe lawfulness of those Rules (however tough in their effect) is not challenged in these proceedings.\nFurthermore, 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.\nBut 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.\nAnd 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.\nThey 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.\nI 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.\nBut 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.\nDrawing 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.\nHe 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.\nIt remains to check whether this outcome falls within the general thrust of the authorities which address similar apparently hard cases arising under the PBS.\nWith 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.\nWhile a full analysis would be beyond the scope of this dissenting judgment, the following cases will serve as sufficient examples.\nFirst, the Rules impose very strict requirements on applicants in terms of documentary evidence.\nThus 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.\nSecondly 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.\nIn 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).\nThe 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.\nBut 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).\nIn my judgment both the Patel and Thakur cases were wrongly decided.\nThis 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.\nRevocation 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.\nIn 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.\nThe 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.\nBut 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.\nIt 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.\nThe question is whether she is obliged to do so, in the sense that any other decision would be irrational.\nThe Court of Appeal thought not, and I agree, for the reasons given by Singh LJ at para 71.\nIn 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.\nThose 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.\nRemedy\nI 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.\nThe question then arises whether, if so, that of itself rendered her decision, three months later, to refuse his Tier 2 application unlawful.\nMr Pathans claim is to have that decision set aside.\nIf 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.\nCritically, 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.\nIn 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.\nOn any view the opportunity to delay becoming an overstayer would have been a solid advantage of which he was deprived, on those assumed facts.\nBut 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.\nI have deliberately described that three months gap as a mere happenstance.\nMr 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.\nThat 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.\nIt 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.\nLike 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.\nBy 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.\nI 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.\nLORD WILSON: (partly dissenting) (with whom Lady Arden agrees)\nWe should with precision identify the issue raised on this appeal.\nThe issue is not whether Mr Pathan should have been notified of the revocation of Submanias licence.\nFor he was notified of it.\nIn 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.\nThe 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.\nThe issue is therefore not notification but what, for short, I will call prior notification.\nLike 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.\nSo there is a majority of four members of the court in favour of that conclusion.\nBut, 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.\nIn 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.\nIrrespective 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.\nA judgment qualifies as a dissenting judgment if it disagrees with any significant part of the actual order to be made by the majority.\nLord 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.\nIt follows that the judgments of Lady Arden and myself qualify as partly dissenting judgments.\nIn 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.\nLord Bridges reference to the procedure prescribed by the statute must include the procedure prescribed by a rule made pursuant to a statute.\nThere is no doubt that his statement of principle applies to the rules relating to the points based system in the law of immigration.\nIn 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\nconcerning the points based system\nSo in this context the duty of fairness at common law provides additions.\nIt 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.\nLord 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.\nI beg to differ.\nThere is no such legislative provision as requires the Secretary of State to determine an application for extension within a specified period.\nEqually 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.\nThere are of course numerous legislative provisions which address the consequences of the ultimate refusal of an application for extension.\nBut Mr Pathans assertion of a duty of prior notification does not relate to the period following refusal.\nNor, 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.\nIn 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.\nIn his application for extension Mr Talpada had furnished a Certificate of Sponsorship reference number which he had already furnished in a prior unsuccessful application.\nPara 77C(e) of the Immigration Rules provided that a reference number could not be re used in such circumstances.\nSo his second application was also refused.\nThe Court of Appeal dismissed his appeal against an order declining to grant him permission to apply for judicial review of the second refusal.\nThe 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.\nSingh LJ, however, chose to describe the requirement as substantive.\nHaving 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.\nIt is, he said, to do with whether a substantive requirement of the rules themselves needs to be complied with in making a relevant application.\nEvery observation of Singh LJ on a matter of public law commands particular respect.\nBut how helpful was it for him to have stamped Mr Talpadas complaint as one of substantive rather than procedural unfairness?\nIn 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.\nHe 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.\nBut 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?\nIn 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.\nLord Briggs there draws various distinctions between substance and procedure which, I confess, I find challenging.\nThen 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.\nI now suggest, with equal respect, that the matter is not one of substance.\nWhat, 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.\nUpon the negative determination of his request for administrative review of the decision to refuse his application, Mr Pathan at once became an overstayer.\nThe 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.\nIt 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.\nIt is in this light that a controversial part of Lord Briggs reasoning falls to be considered.\nIn 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.\nLord Briggs would be the last person knowingly to pile procedural unfairness on top of procedural unfairness.\nIt 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.\nThe Court of Appeal did not refer to the history.\nIt is not included in the agreed Statement of Facts and Issues.\nLord 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.\nSo 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?\nIn 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.\nMr 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.\nIn 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.\nThe Thakur and Patel cases have been regarded as good law for more than nine years.\nIn 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.\nIn 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.\nBut 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.\nIndeed, 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.\nIn 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.\nIndeed 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.\nFor, within a year of the later decision, the Secretary of State had reflected the effect of the decisions in her Policy Guidance.\nIt 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.\nMany 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.\nBut 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.\nFor my part, I consider that the decisions in the Thakur and Patel cases are correct.\nI also consider that they help to indicate the proper resolution of the present appeal.\nI 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.\nThere is, however, one factor which, so I acknowledge, increases the level of unfairness upon students in that situation.\nFor 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.\nBut that extra level of unfairness on students does not in my view eradicate the unfairness on employees.\nIf 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.\nLord Briggs concludes at para 197 above that Mr Pathans appeal should be dismissed.\nWe other four members of the court agree that it should be allowed.\nBut, as already explained, we do not agree about the basis on which it should be allowed.\nThe basis favoured in the joint judgment is a breach of a duty only of prompt notification.\nThe basis favoured by Lady Arden and myself is a breach of duties not only of prompt notification but also of prior notification.\nIt remains for me to address that difference.\nTo 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.\nThe law should not impose a duty nor confer a right if they are of no value.\nThe 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.\nIn the present case prompt notification would have afforded to Mr (f) Pathan three months extra in which to explore [his] options: para 132 above.\nWith 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).\nI 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.\nI am unaware of the evidence of the suggested practice.\nThe 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.\nI seek to unpack the reference to three months extra in the following\nIn 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.\nSo, 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.\nThis yields the three months to which they refer.\nBut 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.\nI can see no reason why she would have delayed her refusal to any extent at all.\nIf 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.\nHe 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.\nSo, instead of his becoming an overstayer on 7 July 2016, Mr Pathan would have become an overstayer on 7 April 2016.\nThe limited duty recognised in the joint judgment is therefore not just valueless to Mr Pathan: it is likely to be prejudicial to him.\nIt is a curious result of his forensic success.\nIn 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.\nThis 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.\n","output":"The Appellant made an application for leave to remain as a Tier 2 (General) Migrant in the UK.\nAt the time his application was made, it was supported by a valid certificate of sponsorship (CoS) from his employer, Submania Limited (Submania).\nHowever, the Home Office revoked Submanias sponsor licence while the application was outstanding.\nThe 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.\nThe 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.\nThe Appellant then applied for judicial review in the Upper Tribunal.\nThe 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.\nThe Appellant appealed to the Supreme Court.\nThe Supreme Court allows the appeal.\nThe 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.\nThe 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.\nLord Wilson and Lady Arden concluded that the law did impose this further duty on the Home Secretary.\nLord Briggs would have dismissed the appeal despite the Home Secretarys breach of the duty promptly to notify.\nIssue (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.\nLord 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).\nThey 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].\nLord 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].\nThe 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].\nNor 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].\nConsequently, the duty arose as a matter of procedural fairness.\nLord 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.\nHe 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].\nIssue (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.\nTo 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].\nThis would be a substantive duty, falling outside of the bounds of procedural fairness [108; 141].\nLord 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].\nHe reasons that, if time is sought to change or improve the underlying facts to make them more favourable, the issue is probably substantive [177].\nA grant of time to find new sponsored employment so as to qualify for Tier 2 leave to remain is therefore substantive [180].\nSo too is a grant of time to prepare for an orderly departure from the UK [178].\nFurthermore, 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].\nLord 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].\nEqually, 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].\nConsequently, the Home Secretarys failure to provide a grace period was not challengeable under that head of judicial review (nor any other) [187].\nIn separate judgments, Lady Arden and Lord Wilson disagree with the majority.\nLady Arden holds that the duty falls under procedural fairness because establishing a procedural impropriety is a necessary first step [27 28].\nThe 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].\nLady 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].\nRather, 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].\nShe 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].\nShe agrees with the judgment of Lord Wilson [92].\nLord Wilson agrees with Lady Arden.\nHe 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].\nHe queries how, without departure from ordinary meaning, the Appellants complaint could be described as not being procedural [208].\nFurthermore, 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].\nHe 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].\nConsequently, 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].\nHe therefore considers that procedural fairness requires both duties to be imposed.\n","id":54}
{"input":"The appeal arises in another case which involves the meaning of credit, the amount of credit and the charge for credit in the Consumer Credit Act 1974 (the Act).\nThe case for the appellant borrowers is that the respondent lender failed correctly to state the amount of credit in the loan agreement.\nIf that case is accepted, it follows that the loan agreement is wholly unenforceable under the Act.\nThis point was not taken before District Judge Gilham, who made a suspended order for possession on terms that the borrowers made the payments as and when due and paid off what were substantial arrears by monthly instalments.\nThe borrowers appealed to the Circuit Judge and were permitted to take the point that the agreement was unenforceable.\nThey succeeded before His Honour Judge Halbert on 27 April 2009, with the result that he ordered the discharge of the charge registered on the property.\nHowever, the Court of Appeal allowed the lenders appeal on 12 November 2009.\nThis appeal by the borrowers is brought with the permission of the Supreme Court.\nThe agreement\nThe borrowers are Mr and Mrs Walker.\nThey completed an application form for a loan from the lender, Southern Pacific Personal Loans Limited (SPPL).\nThe respondent is the successor in title to SPPL.\nThe parties signed a credit agreement which it is common ground is regulated by the Act.\nOn the front the agreement contains a number of boxes under the heading FINANCIAL MATTERS, some NOTES in smaller but legible print, some warnings in capital letters and the parties signatures.\nThe borrowers signed it on 26 March 2005 and SPPL signed it on 20 April 2005.\nOn the reverse there appear 46 LENDING CONDITIONS and some definitions.\nThe boxes are set out in this way: FINANCIAL MATTERS: A Loan B Payment Protection Insurance (Optional) C Amount of Credit (A+B) Single Joint 17500 Current Margin Rate at: Above LIBOR We may change the interest rate (see below) Single & Joint & Single Life Joint Life 0 17500 The rate of interest payable is\\: Repayment term: 9 % 13.98 % 180 months 244.46 D Broker Administration Fee 875 Monthly payment: We may change the Monthly Payment under the Terms and Conditions E Total Amount Financed (C+D) 18375 The APR applicable to the credit as shown in both A&B is 16 %\nThe NOTES make it clear that all the terms, including the LENDING CONDITIONS, form part of the agreement, and also include this: Payments You must repay the Amount of Credit together with any amounts financed under this Agreement with interest by making the Monthly Payments.\nClause 15 of the LENDING CONDITIONS provides: We will charge interest on the money you owe us (which includes the Loan, interest and Expenses) at the Interest Rate.\nThe issue\nThe issue in this appeal is whether the Amount of Credit is incorrectly stated in box C.\nThe borrowers case is that the true amount of credit was not 17,500 as stated in box C but 18,375, which is the amount stated in box E, where it is described as Total Amount Financed.\nIt is common ground that the amount of 875, which is described in box D as the Broker Administration Fee was advanced to the borrowers and that interest was payable on it at the same rate as on the sum of 17,500.\nThus the Total Amount Financed is shown as 17,500 plus 875, namely 18,375, and interest is shown to be payable at 13.98 per cent per annum on that total figure.\nIt is submitted on behalf of the borrowers that it follows from the fact that the total amount of the loan was 18,375 that the Amount of Credit was 18,375.\nIt is said that, applying the principle of truth in lending, it is wrong to describe the Amount of Credit as only 17,500 because SPPL lent the borrowers the total sum of 18,375 and charged interest on that total.\nSo expressed, that submission seems to us to have some attraction.\nHowever, it was rejected by the Court of Appeal in an admirably succinct judgment given by Mummery LJ, with whom Sullivan LJ and Owen J agreed.\nThe issue is whether the Court of Appeal was correct.\nAll depends upon the true construction of section 9 of the Act.\nThe Act and the Regulations\nBy section 8(2) of the Act, as amended as at the relevant time, a consumer credit agreement is a personal credit agreement by which the creditor provides the debtor with credit not exceeding 25,000.\nSections 9 and 20 of the Act provide, so far as relevant, as follows: 9 Meaning of Credit (1) In this Act credit includes a cash loan, and any other form of financial accommodation. (4) For the purposes of this Act, an item entering into the total charge for credit shall not be treated as credit even though time is allowed for its payment. 20 Total charge for credit (1) The Secretary of State shall make provisions containing such regulations as appear to him to be appropriate for determining the true cost to the debtor of the credit provided or to be provided under an actual or prospective consumer credit agreement (the total charge for credit), and regulations so made shall prescribe (a) what items are to be treated as entering into the total charge for credit, and how their amount is to be ascertained; the method of calculating the rate of the total charge for credit. (b) By section 189, unless the context otherwise requires, credit is to be construed in accordance with section 9.\nThe relevant regulations under the Act were the Consumer Credit (Total Charge for Credit) Regulations 1980 (the TCC Regulations) and the Consumer Credit (Agreements) Regulations 1983 (the Agreements Regulations).\nWe will refer to them together as the Regulations.\nThey have been amended over time, both before and after the agreement.\nFor present purposes both the Act and the Regulations in the form in which they were in April 2005 apply.\nThe TCC Regulations were made under section 20 of the Act.\nRegulation 4 of them is entitled Items included in total charge for credit and provides, so far as relevant: Except as provided by regulation 5 below, the amounts of the following charges are included in the total charge for credit in relation to an agreement: (a) the total of the interest on the credit which may be provided under the agreement; (b) other charges at any time payable under the transaction by or on behalf of the debtor or a relative of his whether to the creditor or any other person.\nSection 60 of the Act requires the Secretary of State to make regulations as to the form and content of documents embodying regulated agreements.\nHe made the Agreements Regulations under that section.\nSection 61(1)(a) of the Act provides that, among other things, a regulated agreement is not properly executed unless a document containing all the prescribed terms is signed by the debtor.\nThe Act and the Regulations distinguish between prescribed terms and required terms.\nIn the case of an agreement predating 6 April 2007 such as the agreement which is the subject of this appeal, by section 127(3) of the Act a failure properly to include a prescribed term in the agreement renders the agreement wholly unenforceable, whereas a failure properly to include a required term merely means that the agreement is enforceable only by court order under section 65(1) of the Act.\nIn the case of the agreement in this case, the prescribed terms were: a term stating the amount of credit (Agreements Regulations reg 6(1) and Sch 6, para 2), a term stating the rate of any interest on the credit to be provided under the agreement (ibid Sch 6, para 4) and a term stating how the debtor is to discharge his obligations under the agreement to make the repayments (ibid Sch 6, para 5).\nIn the instant case it is common ground that, if the agreement contains a term correctly stating the amount of the credit, it complies with Schedule 6, para 2 of the Agreements Regulations and is enforceable, whereas if it does not, it is irredeemably unenforceable.\nDiscussion\nBut for the provisions of section 9 of the Act, there would be a strong case for saying that, since the total amount advanced was 18,350, that was the amount of credit and, since that sum was not stated in the agreement to be the amount of the credit, it follows that it does not contain a prescribed term and is unenforceable.\nThe problem is that section 9(4) provides that an item entering into the total charge for credit shall not be treated as credit.\nIt follows that if an item is part of the total charge for credit, it cannot form part of the amount of credit, even if it would otherwise be regarded as credit.\nThat conclusion, which, in our judgment, follows from the plain meaning of subsection (4), is supported by the authorities: see in particular Wilson v First County Trust Ltd [2001] QB 407, Watchtower Investments Ltd v Payne [2001] EWCA Civ 1159, [2001] GCCR 3055 and Wilson v Robertsons (London) Ltd [2005] EWHC 1425 (Ch), [2006] 1 WLR 1248.\nIn each of those cases it was stressed that the first step is to assess the total charge for credit because, as Mummery LJ put it at para 15 of his judgment in this case, those items financed by the creditor which form part of the charge for credit must be identified and stripped out before the amount of credit can be determined.\nHe took that phrase from para 35 of the judgment of Laddie J in the Robertsons (London) case, where the judge quoted from para 24.144 of the then edition of Professor Goodes work Consumer Credit Law and Practice.\nIn Wilson v First County it was held that the agreement was unenforceable because the amount of credit was not correctly stated in it.\nThe lender had agreed a loan of 5,000, to which was added a document fee of 250, which itself bore interest.\nThe agreement stated that the amount of the loan was 5,250.\nSo indeed in one sense it was.\nHowever, the Court of Appeal held that the amount of the credit was 5,000 and was incorrectly stated as 5,250.\nThe reason was that the document fee was part of the charge for credit, that is the cost of the credit, and that, under section 9(4) of the Act, it could not be treated as, and thus form part of, the amount of the credit.\nAs Mummery LJ observed at para 16, the Act does not define charge for credit.\nAt para 52 of his judgment in the Watchtower case Peter Gibson LJ noted that it is not always easy to draw the line between an item forming part of the total charge for credit and an item forming part of the credit itself.\nHe concluded that, in order to identify the total charge for credit, the purpose of the courts consideration is to arrive at what in reality is the true cost to the debtor of the credit provided.\nSee also the judgment of Clarke LJ in that case at para 63, where it is noted that section 20 of the Act (quoted above) points the way.\nThe question is thus what was the true cost to the borrowers of the credit provided under the agreement.\nThere are two items which have been the subject of debate.\nThe first is the Broker Administration Fee and the second is the interest on that fee.\nAs to the fee, there cannot, in our judgment, be any doubt that it was part of the total cost of the credit.\nIt was a fee paid to intermediary brokers and, as such, was a cost to the borrowers of borrowing the 17,500 from SPPL.\nThat is plainly so, even though it was itself borrowed from SPPL.\nOnce it is accepted that it was part of the total charge for credit, it follows that it must be stripped out of the amount of credit and, by section 9(4) of the Act shall not be treated as credit.\nIt is analogous to the document fee in the Wilson v First County case.\nIf it had been expressed as part of the amount of credit, like the document fee, so that amount of credit was expressed as 18,375, the agreement would have been unenforceable for the same reason as the Court of Appeal held the agreement, which stated the amount of credit as 5,250, to be unenforceable in that case.\nThere seems little doubt that the form in which the agreement was drafted in the instant case owed much to the decision and reasoning of the Court of Appeal in the Wilson v First County case.\nThe question remains whether that conclusion is affected by the fact that SPPL was lending the fee at the same rate of interest as that on the sum of 17,500, or indeed at any rate of interest.\nThe answer must be no. Section 9(4) does not prohibit the charging of interest.\nIf the fee itself was part of the total charge for credit, it seems to us to follow that interest on that fee was also part of the total charge for credit and not therefore to be treated as credit.\nAs the court sees it, both the fee and interest on the fee are other charges within regulation 4(b) of the TCC Regulations quoted above and are thus included in the total charge for credit.\nEven if, for some reason, the interest were not so included in the charge for credit, we do not see how the interest could itself be credit.\nThe borrowers argument involves saying that, whereas in the case of, say, a loan of 1,000 repayable with interest and a document fee of 50 repayable without interest, the amount of credit is 1,000, nevertheless in the case of such a loan but with a document fee of 50 repayable with interest, the amount of credit is 1,050.\nThat seems to us to be nonsensical.\nEither the credit is 1,050 in both cases or in neither.\nFor the reasons we have given we conclude that the answer in both cases is 1,000.\nThe borrowers submission is that so to conclude is to infringe the principle of truth in lending.\nThe argument is essentially that the true position here is that the total amount lent was 18,375 and that to describe the amount of the credit as 17,500 was therefore misleading and wrong.\nIt is true that the total amount financed was 18,375 and that, in ordinary parlance, that was indeed the total amount of the loan or the total amount of the credit.\nSo to conclude would, however, be to disregard the provisions of the Act, especially section 9(4).\nAs the court sees it, the borrowers case involves construing section 9(4) as if it read: For the purposes of this Act, an item entering into the total charge for credit shall not be treated as credit even though time is allowed for payment (unless interest is charged, in which case it shall be treated as credit).\nThere is in our judgment no warrant for the addition of the words in italics.\nWe agree with the conclusions of Mummery LJ at paras 34 and 35: in particular that the borrowers submissions treat interest as a necessary feature or indicator of credit, which it is not, and that it was not the function of section 9 to prohibit anything but rather to supply a special statutory meaning to the core concept of credit in the Act and to distinguish it from the charge for, or cost of, credit.\nFor the reasons we have given, which are based both on the language of the statute and the authorities cited above, we hold that, although it too was advanced to the borrowers and repayable with interest, the fee of 875 was part of the total cost of, or charge for, credit and therefore cannot be treated as part of the credit.\nOnce that is appreciated, it can be seen that there is no infringement of the principle of truth in lending.\nThe agreement is in clear terms.\nIn the box on the front it draws a distinction between Amount of Credit, which in this case is the amount of the Loan namely 17,500 and the Total Amount Financed, namely the Amount of the Credit plus the Broker Administration Fee of 875, which makes 18,375.\nMoreover the boxes, together with the provision quoted at para 4 above, make it clear that the rate of interest of 13.98 per cent is payable on the whole of the Total Amount Financed and that the Monthly Payment was 244.46.\nThere was no basis for confusion as to what sum was to be paid each month or as to what made up the Amount of Credit and what was the Broker Administration Fee.\nNor was there any basis for confusion as to the calculation of the APR shown in the bottom right hand box of 16 per cent.\nAs the description states, it was applicable to the credit shown in both A&B, namely the Amount of Credit of 17,500, but taking into account the interest chargeable on both that sum and the 875 Broker Administration Fee.\nIt is not suggested that the APR was incorrectly calculated.\nFor these reasons, which are essentially the same as those more concisely set out by Mummery LJ in the Court of Appeal, we dismiss the appeal.\nWe merely note by way of postscript that, if the fee had been included in the amount of credit, so that the Amount of Credit was stated as 18,375, the borrowers would no doubt have said that the loan was unenforceable on the ground that the fee was part of the cost of the credit and should not therefore have been treated as part of the credit.\nSuch an argument would have succeeded on the basis of the decision and reasoning in Wilson v First County.\nAs we see it, in order to succeed in this appeal, the borrowers would have to persuade the court that Wilson v First County was wrongly decided.\nHowever, in our opinion it was not.\nFinally, some reliance was placed upon the last sentence of para 19 of Sir Andrew Morritt V Cs judgment in Wilson v First County, which was in these terms: It is apparent from these two considerations that section 9(4) must be applied without too narrow an interpretation of the word item.\nIf a charge for credit is correctly recognised in accordance with the detailed regulations to which I have referred then any cash loan or other financial accommodation made or afforded by the creditor to the debtor for the purpose of discharging the liability for that charge should not be treated as part of that credit to which the total charge for credit relates.\nIt may be, though it is unnecessary to any decision in this case, that the loan made to pay the charge is itself a separate credit which should be made the subject of a regulated agreement to which the Act applies, whether as a linked transaction within section 19 or otherwise.\nWe can see that there might be cases in which, on analysis of the facts, it might be held that the loan to pay a charge was a separate credit which should be made the subject of a regulated agreement but it is not easy to envisage such a case.\nIn any event there is no question that this is such a case.\nHere the Broker Administration Fee was simply part of the cost of the credit and thus not to be treated as part of the credit.\nIt is perhaps important to note for the future that section 127(3) of the Act was repealed by sections 15, 70 and Schedule 4 of the Consumer Credit Act 2006 and does not apply to agreements made after 5 April 2007.\nFurther, when the Consumer Credit (Agreements) Regulations 2010 come into force, they will require documentation of the total amount of credit, which is defined as the credit limit or the total sums made available under a consumer credit agreement.\nCONCLUSION\nThe appeal is dismissed, essentially for the reasons given by the Court of Appeal.\n","output":"The parties entered into a fixed sum credit agreement on 20 April 2005 whereby Southern Pacific Securities (the respondent) loaned Mr and Mrs Walker (the appellants), the sum of 17,500.\nIn addition to the loan a Broker Administration Fee of 875 was advanced to the appellants to enable them to pay for the arrangement of the loan.\nInterest was payable on the Broker Administration Fee at the same rate as on the loan of 17,500.\nThe credit agreement set out the Amount of Credit as 17,500 (being the loan) and the Total Amount Financed as 18,375 (being the loan together with the Broker Administration Fee).\nUnder the Consumer Credit Act 1974 (the Act) agreements predating 6 April 2007 are only enforceable if they contain certain prescribed terms (section 127(3)).\nThe prescribed terms for agreements such as the one entered into by the parties in this case included a term stating the amount of credit.\nSection 9 of the Act defines credit as including a cash loan, and any other form of financial accommodation (section 9(1)) and provides that for the purposes of the Act an item entering into the total charge for credit shall not be treated as credit even though time is allowed for its payment (section 9(4)).\nThe appellants are in arrears on the loan payments, owing at least 40,000, and risk losing their home.\nOn 21 June 2007, a District Judge granted a suspended order for possession of the property.\nThey appealed to the Circuit Judge, arguing that the credit agreement incorrectly states the amount of credit and therefore, by section 127(3) of the Act, the credit agreement is unenforceable.\nThe appellants case is that the true amount of credit was not 17,500 but 18,375, which is the amount shown in the agreement as the Total Amount Financed.\nThe Appellants succeeded in the Chester County Court on 27 April 2009, and the judge ordered the discharge of the charge registered on their property.\nThe Court of Appeal allowed the respondents appeal on 12 November 2009.\nThe issue in the appellants appeal to the Supreme Court is the correct definition of an amount of credit under the Act, and whether the Act permits interest to be charged on a sum (such as the Broker Administration Fee) which is not part of the total amount of credit but rather is a charge for credit.\nThe Supreme Court unanimously dismisses the appeal, essentially for the reasons given by the Court of Appeal.\nAlthough the Broker Administration Fee of 875 was advanced to the appellants\nand repayable with interest, it was part of the total cost of, or charge for, credit and therefore cannot be treated as part of the credit.\nLord Clarke delivered the judgment of the Court.\nSection 9(4) of the Act provides that an item entering into the total charge for credit shall not be treated as credit.\nIt follows that if an item is part of the total charge for credit, it cannot form part of the amount of credit.\nThe relevant authorities stress that the first step is to assess the total charge for credit so that those items financed by the creditor which form part of the charge for credit can be identified and stripped out before the amount of credit is determined (paras [14] [16]).\nThe Act does not define charge for credit.\nFollowing Watchtower Investments Ltd v Payne [2001] EWCA Civ 1159, in determining the charge for credit, the court must decide the true cost to the appellants of the credit provided under the agreement.\nIn this case, two items were the subject of debate: the Broker Administration Fee and the interest charged on that fee.\nIn the courts judgment there was no doubt that the Broker Administration Fee was part of the total cost of the credit.\nIt was a fee paid to intermediary brokers and, as such, was a cost to the appellants of borrowing the 17,500.\nOnce it is accepted that the fee was part of the total charge for credit, it follows that it must be stripped out of the amount of credit and, by section 9(4) of the Act, cannot be treated as credit.\nIf the fee had been expressed in the agreement as part of the amount of credit so that the amount of credit was shown as 18,375, the agreement would have been unenforceable, as was held in Wilson v First County Trust Ltd [2001] QB 407 (paras [18] [19]).\nThe court then considered whether that conclusion is affected by the fact that the respondent was lending the fee at a rate of interest.\nThe court concluded it is not.\nSection 9(4) does not prohibit the charging of interest.\nIf the fee itself was part of the total charge for credit, it follows that interest on the fee was also part of the total charge for credit and cannot be treated as credit.\nContrary to the Appellants submissions, interest is not a necessary feature or indicator of credit (paras [20] [24]).\n","id":55}
{"input":"The appeal concerns a proposed development by Crisp Maltings Group Ltd (CMGL) at their Great Ryburgh plant in Norfolk, in the area of the North Norfolk District Council (the council).\nIt was opposed by the appellant, Mr Matthew Champion, a member of the Ryburgh Village Action Group.\nThe proposal involved the erection of two silos for 3,000 tons of barley, and the construction of a lorry park with wash bay and ancillary facilities, on a site close to the River Wensum.\nPermission was granted by the council, following consultation with the relevant statutory bodies, notably Natural England (NE) and the Environment Agency (EA), on 13 September 2011.\nThe river is a Special Area of Conservation, part of the EU Natura 2000 network of sites, and thus entitled to special protection as a European site under the EU Habitats Directive (Directive 97\/62\/EC), which is given effect in this country by the Conservation and Habitats Species Regulations 2010 (the Habitats Regulations).\nThe river was described in one council report as . probably the best whole river of its type in nature conservation terms, with a total of over 100 species of plants, a rich invertebrate fauna and a relatively natural corridor.\nThe river supports an abundant and diverse invertebrate fauna including the native freshwater crayfish (a European protected species) as well as a good mixed fishery.\nThe appellants complaint, in short, is that the council failed to comply with the procedures required by the regulations governing Environmental Impact Assessment (EIA) and appropriate assessment, respectively under EIA and Habitats Regulations.\nLegislation\nEnvironmental Impact Assessment\nDirective 2011\/92\/EU (the EIA Directive) provides the framework for the national regulations governing environmental assessment.\nThe preamble (para (2)) states that Union policy is based on the precautionary principle and that effects on the environment should be taken into account at the earliest possible stage in all the technical planning and decision making processes.\nBy article 2 the EIA Directive requires member states to adopt all measures necessary to ensure that projects likely to have a significant effect on the environment are subject to environmental impact assessment before consent is given.\nThe projects to which it applies are those defined in article 4 and annexes I and II.\nProjects in annex I require assessment in any event; those in annex II (which covers the present project) require a determination by the competent authority whether it is likely to have a significant effect, so as to require assessment (article 4(2)).\nThe competent authority is the authority designated for that purpose by the member state (article 1(f)).\nFor projects subject to assessment member states are required to adopt the measures necessary to ensure that the developer supplies in an appropriate form the information specified in annex IV, which includes details of the project and its anticipated effects, and the measures proposed to prevent or reduce adverse effects (article 5).\nThat information is to be made available to the public likely to be affected, who must be given early and effective opportunities to participate in the decision making process (article 6).\nIn the United Kingdom the environmental assessment procedure is integrated into the procedures for granting planning permission under the planning Acts.\nThe current regulations are the Town and Country Planning (Environmental Impact Assessment) (England and Wales) Regulations 2011.\nIt will be convenient to refer to these (the EIA Regulations), although they replaced the 1999 Regulations which were in force at the time of the present application.\nThe Regulations do not follow precisely the form of the EIA Directive, but there is no suggestion of any failure of implementation.\nThe starting point is the expression EIA development, defined by reference to Schedules 1 and 2 (corresponding to annexes I and II of the EIA Directive).\nAlthough the Regulations do not in terms designate a competent authority, it is clear at least by implication that this role is given in the first instance to the local planning authority, which is given the task of determining whether Schedule 2 development is EIA development (see eg regulation 4(6)).\nThe mechanism by which the authority determines whether assessment is required is referred to in the Regulations as screening (not an expression used in the EIA Directive).\nA screening opinion may be given in response to a specific request by the developer (regulation 5), or, in various circumstances where an application is received by the authority for development which appears to require EIA and is not accompanied by an environmental statement (regulations 7 10).\nRegulation 3 prohibits the grant of consent for EIA development without consideration of the environmental information, defined (by regulation 2) to include the environmental statement and any representations duly made about the environmental effects of the development.\nThe contents of the environmental statement are defined by reference to Schedule 4 (which corresponds to annex IV of the EIA Directive, and like it includes a reference to measures envisaged to prevent, reduce or offset any significant adverse effects on the environment).\nThe environmental statement, in proper form, is central to this process.\nIn Berkeley v Secretary of State for the Environment [2001] 2 AC 603, Lord Hoffmann rejected the submission that it was enough if the relevant information was available to the public in the various documents provided for inspection: I do not accept that this paper chase can be treated as the equivalent of an environmental statement.\nIn the first place, I do not think it complies with the terms of the Directive.\nThe point about the environmental statement contemplated by the Directive is that it constitutes a single and accessible compilation, produced by the applicant at the very start of the application process, of the relevant environmental information and the summary in non technical language.\nIt is true that article 6(3) gives member states a discretion as to the places where the information can be consulted, the way in which the public may be informed and the manner in which the public is to be consulted.\nBut I do not think it allows member states to treat a disparate collection of documents produced by parties other than the developer and traceable only by a person with a good deal of energy and persistence as satisfying the requirement to make available to the public the annex III information which should have been provided by the developer. (p 617D F)\nHabitats Directive\nCouncil Directive 92\/43\/EEC (the Habitats Directive) provides for the establishment of a European network of special areas of conservation under the title Natura 2000.\nArticle 6 imposes duties for the protection of such sites.\nBy article 6(3) Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site's conservation objectives.\nIn the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.\nArticle 6(4) provides for limited exceptions, but only for imperative reasons of overriding public interest, including those of a social or economic nature.\nThe relevant implementing regulations are the Conservation of Habitats and Species Regulations 2010 (the Habitats Regulations).\nRegulation 61 reproduces the effect of article 6(3).\nA competent authority, before deciding to give consent for a project which is likely to have a significant effect on a European site (either alone or in combination with other plans or projects) must make an appropriate assessment of the implications for that site in view of that sites conservation objectives.\nIt may agree to the project only after having ascertained that it will not adversely affect the integrity of the European site, having regard to any conditions or restrictions subject to which they propose that the consent should be given.\nAuthoritative guidance on the interpretation of article 6(3) has been given by the Court of Justice of the European Union (CJEU) in (Case C 127\/02) Waddenzee [2006] 2 CMLR 683 (relating to a proposal for mechanical cockle fishing in the Waddenzee Special Protection Area).\nThere is an elaborate analysis of the concept of appropriate assessment, taking account of the different language versions, in the opinion of Advocate General Kokott (paras 95 111).\nIn its judgment the court made clear that the article set a low threshold for likely significant effects: 41. the triggering of the environmental protection mechanism provided for in article 6(3) of the Habitats Directive does not presume as is, moreover, clear from the guidelines for interpreting that article drawn up by the Commission, entitled Managing Natura 2000 Sites: The provisions of article 6 of the Habitats Directive (92\/43\/EEC) that the plan or project considered definitely has significant effects on the site concerned but follows from the mere probability that such an effect attaches to that plan or project.\nThe court noted that article 6(3) adopts a test essentially similar to the corresponding test under the EIA Directive. (para 42), and that it subordinates the requirement for an appropriate assessment of a project to the condition that there be a probability or a risk that the latter will have significant effects on the site concerned.\nThe Habitats Directive had to be interpreted in accordance with the precautionary principle which is one of the foundations of Community policy on the environment (para 44).\nIt concluded: 45.\nIn the light of the foregoing, the answer to Question 3(a) must be that the first sentence of article 6(3) of the Habitats Directive must be interpreted as meaning that any plan or project not directly connected with or necessary to the management of the site is to be subject to an appropriate assessment of its implications for the site in view of the sites conservation objectives if it cannot be excluded, on the basis of objective information, that it will have a significant effect on that site, either individually or in combination with other plans or projects.\nAs to the content of such appropriate assessment, the court said: 52.\nAs regards the concept of appropriate assessment within the meaning of article 6(3) of the Habitats Directive, it must be pointed out that the provision does not define any particular method for carrying out such an assessment. 53.\nNone the less, according to the wording of that provision, an appropriate assessment of the implications for the site concerned of the plan or project must precede its approval and take into account the cumulative effects which result from the combination of that plan or project with other plans or projects in view of the sites conservation objectives. 54.\nSuch an assessment therefore implies that all the aspects of the plan or project which can, either individually or in combination with other plans or projects, affect those objectives must be identified in the light of the best scientific knowledge in the field.\nThose objectives may, as is clear from articles 3 and 4 of the Habitats Directive, in particular article 4(4), be established on the basis, inter alia, of the importance of the sites for the maintenance or restoration at a favourable conservation status of a natural habitat type in annex I to that Directive or a species in annex II thereto and for the coherence of Natura 2000, and of the threats of degradation or destruction to which they are exposed 56.\nIt is therefore apparent that the plan or project in question may be granted authorisation only on the condition that the competent national authorities are convinced that it will not adversely affect the integrity of the site concerned.\nMore recently in Sweetman v An Bord Pleanla (Galway County Council intervening) (Case C 258\/11) [2014] PTSR 1092 the court spoke of the two stages envisaged by article 6(3): 29.\nThat provision thus prescribes two stages.\nThe first, envisaged in the provisions first sentence, requires the member states to carry out an appropriate assessment of the implications for a protected site of a plan or project when there is a likelihood that the plan or project will have a significant effect on that site [citing Waddenzee (above) paras 41, 43] 31.\nThe second stage, which is envisaged in the second sentence of article 6(3) of the Habitats Directive and occurs following the aforesaid appropriate assessment, allows such a plan or project to be authorised on condition that it will not adversely affect the integrity of the site concerned, subject to the provisions of article 6(4). 40.\nAuthorisation for a plan or project, as referred to in article 6(3) of the Habitats Directive, may therefore be given only on condition that the competent authorities once all aspects of the plan or project have been identified which can, by themselves or in combination with other plans or projects, affect the conservation objectives of the site concerned, and in the light of the best scientific knowledge in the field are certain that the plan or project will not have lasting adverse effects on the integrity of that site.\nThat is so where no reasonable scientific doubt remains as to the absence of such effects\nThe application and its consideration\nBefore addressing the issues of law, it is necessary to return to the factual background.\nThe application for planning permission was initially made on 1 October 2009, but not validated until 15 April 2010.\nIt was accompanied by a Site Specific Flood Risk Assessment, which recognised that the proposal involved the potential to discharge surface water runoff to the nearby ditch system and could lead to pollution reaching the River Wensum.\nThis risk was to be mitigated by a staged system of drainage, involving an interceptor\/separator facility and thereafter a storage infiltration basin to be planted with indigenous plants to act as a secondary passive treatment system.\nThe lengthy process of investigation and consultation, which led eventually to the grant of conditional permission for the proposal on 13 September 2011, is described in detail in the judgments below.\nFor present purposes the process can be divided into three main phases: ii) i) October 2009 to June 2010: the initial supporting material, consultations with statutory agencies, and EIA screening (23 April 2010); July 2010 to January 2011: submission of July Flood Risk Assessment (updated in August) and Phase II Ecological Assessment, leading to withdrawal of statutory objections and the decision of the planning committee on 20 January 2011 to give delegated powers to officers to approve the development subject to conditions; June 2011 to September 2011: correspondence with appellants solicitors leading to a reference back to the committee and final decision to approve on 8 September 2011. iii)\nPhase 1\nIt became apparent at a very early stage that the main environmental issue was the possible effect of run off from the site to the river.\nOn this there was a substantial degree of common ground between all concerned that more information was required, and that appropriate assessment under the Habitats Regulations was likely to be needed: i) In response to an informal approach by CMGLs planning consultant, Natural England on 3 December 2009 expressed concern in respect of the possible effect on the river of the drain system, particularly in relation to the potential for diesel spillage and polluted run off from the water bay when lorries are washed down.\nThey said that if hydrological connectivity could be established, it was likely that an ii) appropriate assessment would be required under the Habitats Regulations.\nIn February 2010 a Phase I Ecological Assessment, commissioned by CMGL from specialist consultants, recorded that the potential risks to the River Wensum SAC had not been fully evaluated.\nIt was essential that pollution control measures and operation of the Interceptor were adequate for the lorry park in all conditions, particularly during heavy rainfall.\nIt was assumed that an Appropriate Assessment will be required under the Habitats Regulations 1994 which will fully address risks to the SAC and identify further mitigation requirements. iii) On 14 May 2010 Natural England objected to the application on the basis that there was insufficient information for them to advise whether the proposal was likely to have significant effects on the river under the Habitats Regulations.\nThe applicant should be required to submit information relating to the hydrological connectivity between the Surface Water Infiltration Basin and drain system adjacent to the proposed lorry park, and the River Wensum SAC. iv) On the same day the planning officer wrote to CMGL expressing his own concerns that the submitted water measures would be inadequate.\nHe observed that the details submitted in respect of flood risk and surface water management were very sketchy and imprecise regarding the actual management train to be used to handle surface water pollutants.\nAdvice from the Construction Industry Research and Information Association (CIRIA) suggested that the use of oil receptors should be avoided where possible, primarily because of the management required to maintain them, and the risk that inadequate management in heavy rain could result in pollutants not being properly contained. v) On 28 May 2010, the Environment Agency wrote to the council recording their objection on the basis of the inadequate flood risk assessment, noting in particular the lack of information on the infiltration test and the design of the infiltration basin.\nThe screening opinion The formal registration of the application in April 2010 seems to have triggered the EIA screening process.\nThe evidence comes in a copy of the standard form filled in by the relevant planning officer, Mr Lyon, acting under delegated powers, and signed by him on 23 April 2010.\nThat was supplemented by a witness statement.\nAccording to this, he contacted Natural England by way of telephone call on 23 April, and spoke with Mr Mike Meadows: I explained the proposed development to Natural England and was advised that, subject to pollution prevention measures being clearly identified and addressed, an Environmental Impact Assessment would not be required.\nThe screening form, as completed by him, indicated that the site was in a sensitive area and that the development fell within Schedule 2 of the Regulations, but that it was not likely to have significant effects on the environment and no EIA was required, the reasons being given as follows: Subject to the applicant\/agent ensuring that appropriate mitigation and safeguarding measures are put in place to prevent the possible discharge of pollutants and contamination from the site in the River Wensum (SAC & SSSI).\nAdvice received from Natural England (Mike Meadows) that subject to pollution prevention measures being clearly identified and addressed, EIA would not be necessary.\nGiven the views expressed by Natural England in December 2009 and again in May 2010 as to the need for further information and the likely need for appropriate appraisal, this report of Mr Meadowss views seems surprising.\nHe also gave evidence of the same conversation.\nAlthough he confirmed Mr Lyons account as broadly accurate, it was not a formal consultation and he had kept no record.\nIt was not Natural Englands role to decide whether an EIA is necessary and he did not purport to do so on this occasion.\nHis advice was solely related to the degree to which there might be a significant effect on the SPA on the basis that CMGL would advance suitable pollution prevention control measures.\nIn the same evidence he makes clear that on the information then available he could not exclude the risk of significant effects on the SAC.\nPhase 2\nOn 10 July 2010 new consultants for CMLG produced a Flood Risk Assessment and Pollution Prevention Strategy (the July 2010 FRA).\nPart of the scope of the report was to carry out an assessment of the environmental impacts of the proposals to the water environment (and provide potential solutions) including pollution risks to groundwater, surface water and the adjacent SSSI.\nThis contained detailed information about site conditions and hydrology, and set out detailed mitigation measures, to be formulated in accordance with the relevant guidance.\nThe responses of the statutory authorities to this new information were mixed: i) On 13 August 2010, Natural England withdrew their objection, indicating that the new material had addressed satisfactorily the concerns raised in their previous letter. ii) The Environment Agency, by letter dated 19 August 2010, maintained its objection on a number of grounds, including the absence of details about future maintenance.\nIn response CMGLs consultants prepared a further report (the August 2010 FRA), which included further details of run off and peak rainfall proposed by the Environment Agency were incorporated, and proposals for a larger separator, and also set out the proposed maintenance regime.\nThis satisfied the Agency, which on 13 September 2010 withdrew its previous objection, on the condition that a surface water drainage scheme in accordance the August 2010 FRA be implemented prior to the completion and occupation of the development. iii) On 3 October a report from the councils own Conservation, Design and Landscape team maintained their objections, commenting on inadequacies in the two FRAs.\nOn 9 December 2010, following receipt of further information from CMGL, they withdrew their objections.\nThe judge noted (para 85), and as I understand accepted, the evidence of the planning officer as to the reasons for their change of position.\nIt follows that by the time the proposal came before the committee on 20 January 2011 the concerns of all the statutory consultees on the SAC issue had been overcome.\nThe committee resolved by a bare majority to give the senior planning officer delegated powers to approve the development, subject to the imposition of a number of planning conditions.\nPhase 3\nThe January decision was met by a large number of complaints locally.\nOn 10 June 2011, solicitors for the appellant, acting for the Ryburgh Village Action Group, wrote complaining that there had been a failure to comply with the requirements of the Habitats and EIA Directives.\nOf the former they noted that NEs view in early correspondence that assuming hydrological connectivity with the SAC an appropriate assessment would be required, but that, although hydrological connectivity had been established, no appropriate assessment had been undertaken.\nOf the latter, they said that the EIA screening dated 23 April 2010 had been defective because it failed to assess the specifics of the environmental issues raised in the application, and asking for the council to revise its EIA screening to require the developer to carry out a full environmental assessment.\nOn 2 August 2011, the council wrote to the appellants solicitors noting that the application was to be referred back to a future Development Committee.\nThe letter drew attention to the current views of Natural England on this issue, and invited any further specific comments or evidence to support the assertion that an appropriate assessment under the Habitats Directive or an Environmental Impact Assessment under the EIA Directive was still required.\nA response was requested within 21 days.\nApart from a holding letter, there was no substantive response to this letter before the meeting of the Development Control Committee, which took place on 8 September 2011.\nAt that meeting the committee had a detailed officers report.\nAs the judge noted (para 99), the report summarised the extensive representations against the proposed development, including concerns about light pollution, noise pollution, the storage of hazardous fuel, environmental degradation, wildlife habitat destruction, water table and river pollution, but also extensive representations in support on local economic grounds.\nIn relation to an objection concerning drainage, it was reported that consent would be needed from the Internal Drainage Board, which had requested a number of conditions.\nIn relation to the Habitats Directive, it summarised the views of Natural England and stated: [Officers] are of the view that no appropriate assessment is required in light of all the information that now exists and that there would not be a likely significant effect on the River Wensum SAC as a result of this proposal and that the requirements of the Habitats Directive and Habitats Regulations have been satisfied.\nIn relation to the EIA Directive, the officers' view remains that the proposal is not EIA development on the basis that there are not likely to be significant environmental effects.\nThis view was supported by the recent response from Natural England confirming that there would not be a likely significant effect on the River Wensum SAC as a result of this proposal if the proposed mitigation measures are put in place.\nThe committee were invited first to agree the officers view that the proposal was not EIA development, and that it was entitled to determine the planning application without the need for an environmental statement or appropriate assessment.\nThis was approved (by nine votes to zero with one abstention).\nThe officers then recommended that the application be approved subject to the conditions, including implementation of a surface water drainage scheme in accordance with the details set out in the August 2010 FRA (conditions 13 and 14).\nThere followed a substantive debate on whether the application for planning permission should be granted.\nIn particular, there was discussion of one councillors continuing concern about the risk of substantial run off from the site into the River Wensum.\nShe proposed that water monitoring should be carried out over a period of time to assess whether there were any pollution issues.\nThe committee then resolved (by ten votes to two) to approve the application subject to appropriate conditions to deal with this point.\nThe formal planning permission was issued on 13 September 2011.\nThe conditions included conditions 23 and 24 relating to monitoring of water quality and remedial measures if needed, as requested by the councillor.\nThe present proceedings\nThe proceedings for judicial review were commenced by a claim form filed on 12 December 2011.\nThey were heard in April 2013 before James Dingemans QC, sitting as a Deputy High Court Judge, who allowed the application and quashed the permission.\nIn his judgment (paras 119 121) the judge accepted that the committee would have been entitled on the material before them in 2011 rationally to reach the conclusion that there was no relevant risk requiring appropriate assessment or an EIA.\nHowever, he thought such a conclusion was inconsistent with their decision at the same time to impose a requirement for testing of water quality and remediation if necessary: These conditions, which could only be imposed where the Committee considered them necessary, suggested that the Committee considered that there was a risk that pollutants could enter the river.\nThis would also have been a rational and reasonable conclusion available to the Committee, in the light of the detailed matters set out above.\nIt does not seem to me that the council could, rationally, adopt both positions at once.\nI do not consider that it is open for me to consider that this inconsistency was simply a function of local democracy at work, and that it could be ignored.\nHe did not think that the decision could be saved by exercising a discretion not to quash.\nAccordingly he ordered that the grant of permission be quashed.\nAt the same time he dismissed a separate claim to quash the response given by Natural England, which he considered to have been based on the correct Waddenzee test.\nThere has been no appeal against that part of his judgment.\nIn the Court of Appeal the only substantive judgment was given by Richards LJ.\nHe set out the relevant statutory provisions relating to both the EIA and the Habitats Directives.\nIn connection with the former he noted that in determining the likelihood of significant effects, it is open to the decision maker to have regard to proposed remedial measures, citing Gillespie v First Secretary of State [2003] EWCA Civ 400, [2003] Env LR 30, and R (Jones) v Mansfield District Council [2003] EWCA Civ 1408, [2004] Env LR 21.\nHe added: The only other point I should mention in relation to the EIA Regulations is that they make provision for a local planning authority to adopt an early screening opinion as to whether a proposed development requires an EIA.\nA defective screening opinion does not, however, invalidate the entire decision making process.\nThe ultimate question is whether planning permission has been granted without an EIA in circumstances where an EIA was required: see R (Berky) v Newport City Council [2012] EWCA Civ 378, [2012] Env LR 35, per Carnwath LJ at para 22 (para 12).\nI would respectfully question Richards LJs reliance on my own remarks in Berky, which were not directed to the same issue.\nHowever, the judgment thereafter seems to have proceeded on the basis (which does not seem to have seriously challenged) that a defect in the screening process at an early stage could be remedied by proper consideration at the time of the actual grant.\nHaving set out the facts, he addressed the appeal against the judges decision to quash the permission (paras 42 49).\nHe was unable to support the judges reasoning.\nThe committees decision on the issues arising under the Directives showed that they were satisfied that there would be no significant adverse effects.\nThat was not inconsistent with the imposition of conditions as a precautionary measure for the purposes of reassurance, without considering that in their absence there was a likelihood that pollutants would enter the river.\nAlthough this point was not abandoned by Mr Buxton in this court, it was not strongly pressed in his written or oral submissions.\nIn my view the Court of Appeal was clearly right on this issue, and I need say no more about it.\nOn the other grounds of challenge, Richards LJ noted that the main thrust of the submissions of Mr Harwood QC (then appearing for Mr Champion) had been that the committee at its meeting on 8 September 2011 was not in a position to make a lawful decision as to whether an EIA or appropriate assessment was required, having been given insufficient information for that purpose: for example as to how low the threshold of likelihood was, as to the relevant criteria and the significance of proximity to a sensitive location, or as to the case law on the relevance of mitigation measures (para 51).\nRichards LJ did not accept that submission.\nHe said: It is true that the decision making process got off to a bad start, with a flawed screening opinion.\nBut that did not lead in practice to any failure to consider relevant matters.\nThe concerns expressed by Natural England and the Environment Agency, in particular, ensured that the question of mitigation measures was properly addressed.\nThe measures proposed in the resulting flood risk assessments served to meet those concerns.\nNatural Englands final view that there would not be a likely significant effect was re stated in emphatic terms in its letter of 26 July 2011, which was one of the documents before the Committee and was highlighted in the officers report The committee had all the necessary information before them, and there was nothing to suggest that they applied too relaxed a test.\nThe significance of the sites proximity to the River Wensum SSSI and the SAC was spelled out very clearly in the report, as was the relevance of mitigation measures to the assessment.\nHe concluded: In my view, therefore, the Committee was put in a position where it could properly make the requisite assessment as to the likely effect of the development on the SSSI and the SAC, and I agree with the deputy judge that the decision not to have an EIA or an Appropriate Assessment was a rational and reasonable conclusion available to the Committee on the material before it. (para 52) He also rejected, in the same terms as the judge, the grounds of challenge relating to matters other than effects on the SAC.\nIn view of these conclusions, it was not necessary for the court to consider the possible exercise of discretion in relation to remedies.\nThe arguments in the appeal\nBefore this court, the argument for Mr Champion has been presented for the first time by Mr Richard Buxton, appearing as a solicitor advocate.\nThe emphasis appears to have shifted from the arguments as presented to the courts below, and certainly as addressed in their judgments.\nAt their heart are two related issues, first the timing of the decision whether EIA (or appropriate assessment) is required, and secondly the relevance of mitigation measures.\nThey are put perhaps most succinctly in his printed case in the context of the EIA Regulations (para 14): domestic law (in line with the [preamble to the EIA Directive]) anticipates a decision on whether or not EIA is required to be made by the decision making authority at an early stage.\nIt is accepted that it may happen for whatever reason that a decision not to have EIA is made erroneously at an earlier stage and this can and must be rectified.\nIndeed the decision maker should keep a negative screening under review.\nHowever what is not permitted, but which occurred starkly in the present case, is reliance on mitigation measures during the consenting process (here, measures contained in the [July FRA]) to convert a project that is likely to have significant effects on the environment into one which is judged not to do so and thus screen out the project from the assessment process.\nNo objection has been taken to this reformulation.\nThe issues, as set out in the agreed statement of facts and issues, are in summary: i) The correct approach towards the timing of screening for the need for EIA and AA, in the process of applying for planning permission or other consents; ii) Whether or to what extent mitigation measures may be taken into iii) account in EIA screening.\nIf either the first or second issue is decided in the appellants favour, whether the court nevertheless can and should exercise its discretion to refuse to quash the planning permission. iv) Whether the answers to the above points under European law are sufficiently clear not to require a reference to the CJEU.\nScreening and the Habitats Directive\nIt is convenient first to address Mr Buxtons contention that a process analogous to EIA screening is an implicit requirement of the Habitats Directive.\nAs he puts it in his case: In summary as the CJEU explains the HD process is a two step process and the decision maker has to be sure at stage one (the screening stage) that the possibility of adverse effects can be excluded before dispensing with the requirement for AA.\nIn order to satisfy the HD, the decision maker doing the screening must identify the conservation objectives of the site and the risks posed by the project and reach a decision that the risks to the conservation objectives can be excluded on the basis of objective information.\nIf the risks are not excluded and an AA is required at stage 2, the project can only be authorised if the decision maker can be sure that no reasonable scientific doubt remains as to an absence of adverse effects to the conservation objectives.\nThis two stage view of the process under the Habitats Directive was not as such challenged by Mr Lockhart Mummery.\nTo some extent, as I understood him, he felt constrained by the fact that a similar approach had been adopted by the council itself.\nHowever, since there seems to be some confusion on the point, it is important that we should address it as a matter of principle.\nAs has been seen, the Habitats Directive and Regulations contain no equivalent to screening under the EIA Regulations.\nMr Buxton relies on the opinion of Advocate General Sharpston in Sweetman itself.\nShe was principally concerned to dispel confusion created by different terminology used in some of the cases to describe the test under article 6(3).\nIn her view all that was needed at what she called the first stage of article 6(3) was to show that there may be a significant effect (para 47): 49.\nThe threshold at the first stage of article 6(3) is thus a very low one.\nIt operates merely as a trigger, in order to determine whether an appropriate assessment must be undertaken of the implications of the plan or project for the conservation objectives of the site 50.\nThe test which that expert assessment must determine is whether the plan or project in question has an adverse effect on the integrity of the site, since that is the basis on which the competent national authorities must reach their decision.\nThe threshold at this (the second) stage is noticeably higher than that laid down at the first stage.\nThat is because the question (to use more simple terminology) is not should we bother to check? (the question at the first stage) but rather what will happen to the site if this plan or project goes ahead; and is that consistent with maintaining or restoring the favourable conservation status of the habitat or species concerned?\nMr Buxton suggests that her first stage (Should we bother to check?) can be regarded as analogous to screening.\nHe points also to use of the term screening in a document entitled Assessment of plans and projects significantly affecting Natura 2000 sites Methodological guidance (prepared by consultants for the European Commission in 2001).\nIt identifies four stages in the process under article 6(3): stage one screening; stage two appropriate assessment; stage three assessment of alternative solutions; stage four assessment where no alternative solutions exist and where adverse effects remain.\nHowever, there is nothing in the language of the Habitats Directive to support a separate stage of screening in any formal sense.\nNor is it reflected in the reasoning of the CJEU itself.\nIn Sweetman the first stage was the appropriate assessment, the second the decision whether in the light of its conclusions the project could be permitted.\nTriggering was simply the word the CJEU used to set the threshold for the first stage.\nThe same approach is also found in the European Commissions guidance Managing Natura 2000 Sites: The Provisions of article 6 of the Habitats Directive 92\/43\/EEC, which adds a third stage, with reference to article 6(4): Article 6(3) and (4) define a step wise procedure for considering plans and projects. (a) The first part of this procedure consists of an assessment stage and is governed by article 6(3), first sentence. (b) The second part of the procedure, governed by article 6(3), second sentence, relates to the decision of the competent national authorities. (c) The third part of the procedure (governed by article 6(4)) comes into play if, despite a negative assessment, it is proposed not to reject a plan or project but to give it further consideration.\nThe applicability of the procedure and the extent to which it applies depend on several factors, and in the sequence of steps, each step is influenced by the previous step. (para 4.2)\nIt is true that the guidance, when commenting on the low threshold required to trigger the safeguards in article 6(3) and (4), observes that the formula is almost identical to that in the EIA Directive, and it comments on the close relationship in practice between the two procedures (paras 4.4.2, 4.5.1).\nThe guidance also extends to the content of the assessment, again drawing parallels with the methodology envisaged by the EIA Directive (para 4.5.2).\nHowever, there is no suggestion that this imposes any separate legal obligation analogous to EIA screening.\nIt is important to emphasise that the legal requirements must be found in the legislation, as interpreted by the CJEU itself, not (with respect) in the opinions of the Advocates General nor in guidance issued by the Commission (however useful it may be as an indication of good practice).\nAt least in this country the use of the term screening in relation to the Habitats Directive is potentially confusing, because of the technical meaning it has under the EIA Regulations.\nThe formal procedures prescribed for EIA purposes, including screening, preparation of an environmental statement, and mandatory public consultation, have no counterpart in the Habitats legislation.\nAs Sullivan J said in R (Hart District Council) v Secretary of State for Communities and Local Government [2008] EWHC 1204 (Admin), [2008] 2 P & CR 302, para 71: Unlike an EIA, which must be in the form prescribed by the EIA Directive, and must include, for example, a non technical summary, enabling the public to express its opinion on the environmental issues raised (see Berkeley v the Secretary of State for the Environment [2001] 2 AC 603 per Lord Hoffmann at p 615), an appropriate assessment under article 6(3) and regulation 48(1) does not have to be in any particular form (see para 52 of Waddenzee judgment), and\nobtaining the opinion of the general public is optional\nA similar argument by Mr Buxton was rejected by the Court of Appeal in No Adastral New Town Ltd (NANT) v Suffolk Coastal District Council [2015] EWCA Civ 88, paras 63 69.\nRichards LJ considered the language of article 6(3), which focuses on the end result of avoiding damage to an SPA and the carrying out of an AA for that purpose.\nHe noted the difference in Sweetman between the Advocate Generals formulation, but found no support in the courts judgment for the contention that there must be a screening assessment at an early stage in the decision making process: In none of this material do I see even an obligation to carry out a screening assessment, let alone any rule as to when it should be carried out.\nIf it is not obvious whether a plan or project is likely to have a significant effect on an SPA, it may be necessary in practice to carry out a screening assessment in order to ensure that the substantive requirements of the Directive are ultimately met.\nIt may be prudent, and likely to reduce delay, to carry one out [at] an early stage of the decision making process.\nThere is, however, no obligation to do so. (para 68)\nThe process envisaged by article 6(3) should not be over complicated.\nAs Richards LJ points out, in cases where it is not obvious, the competent authority will consider whether the trigger for appropriate assessment is met (and see paras 41 43 of Waddenzee).\nBut this informal threshold decision is not to be confused with a formal screening opinion in the EIA sense.\nThe operative words are those of the Habitats Directive itself.\nAll that is required is that, in a case where the authority has found there to be a risk of significant adverse effects to a protected site, there should be an appropriate assessment.\nAppropriate is not a technical term.\nIt indicates no more than that the assessment should be appropriate to the task in hand: that task being to satisfy the responsible authority that the project will not adversely affect the integrity of the site concerned taking account of the matters set in the article.\nAs the court itself indicated in Waddenzee the context implies a high standard of investigation.\nHowever, as Advocate General Kokott said in Waddenzee: 107. the necessary certainty cannot be construed as meaning absolute certainty since that is almost impossible to attain.\nInstead, it is clear from the second sentence of article 6(3) of the Habitats Directive that the competent authorities must take a decision having assessed all the relevant information which is set out in particular in the appropriate assessment.\nThe conclusion of this assessment is, of necessity, subjective in nature.\nTherefore, the competent authorities can, from their point of view, be certain that there will be no adverse effects even though, from an objective point of view, there is no absolute certainty.\nIn short, no special procedure is prescribed, and, while a high standard of investigation is demanded, the issue ultimately rests on the judgement of the authority.\nIn the present case, in the light of the new information provided and the mitigation measures developed during the planning process, the competent authority, in common with their expert consultees, were satisfied that any material risk of significant effects on the SAC had been eliminated.\nAlthough this was expressed by the officers as a finding that no appropriate assessment under article 6(3) was required, there is no reason to think that the conclusion would have been any different if they had decided from the outset that appropriate assessment was required, and the investigation had been carried out in that context.\nMr Buxton has been unable to point to any further action which would have been required to satisfy the Waddenzee standard.\nThe mere failure to exercise the article 6(3) trigger at an earlier stage does not in itself undermine the legality of the final decision.\nIt follows that issue (i), relating to the timing of screening as a matter of law, is one which can only arise under the EIA Regulations.\nTiming of EIA screening\nIt is not in dispute that authorities should in principle adopt screening opinions early in the planning process.\nThat intention is expressed in the preamble to the EIA Directive, and carried into the trigger events in the EIA Regulations.\nEqually, it is not in dispute that a negative screening opinion may need to be reviewed in the light of later information.\nIn R (Mageean) v Secretary of State for Communities and Local Government [2011] EWCA Civ 863, [2012] Env LR 3, in the context of screening directions made by the Secretary of State, it was held that that circumstances may require initial screening decisions to be reviewed where other material facts come to light.\nIn R (Loader) v Secretary of State for Communities and Local Government [2012] EWCA Civ 869, [2013] PTSR 406, Pill LJ applied the same reasoning to the adoption of screening opinions by local planning authorities: 40.\nMr Maurici [for the Secretary of State] accepted that screening decisions will usually be made at an early stage of the planning process.\nHowever, if a council came to the belief during the course of making the decision that the proposed development might have significant effects on the environment it would be open to the council\nto require an environmental statement at that stage\nMr Lockhart Mummery QC (for the respondents) also relies on words of Elias J in British Telecommunications Plc v Gloucester City Council [2001] EWHC (Admin) 1001, [2002] 2 P & CR 33.\nThe issue in that case was different.\nThe council had failed to adopt a screening opinion within the three week period provided for by the Regulations; the claimant argued that it was too late to require an environmental statement.\nIn dismissing this argument, Elias J made some more general comments on the procedure: Provided the procedures relating to consultation are complied with, and the representations are before the planning authority when it makes its decision, neither logic nor common sense nor the public interest dictate that the courts should treat the exercise as invalid merely because the planning authority only realised the need for the statement late in the day.\nSimilarly, in my view it also follows that if a decision is taken not to call for a statement, that is capable of being a valid decision notwithstanding that it was not taken until shortly before the permission was given.\nThere would be no point in requiring a fresh application in which the authority would again conclude that no statement was required. (para 58, emphasis added)\nWhile the actual decision in that case was unremarkable, the second sentence in the passage quoted above (Similarly ) is perhaps open to misinterpretation.\nIt is one thing to say that a negative opinion, lawfully arrived at on the information then available, may need to be reviewed in the light of subsequent information.\nIt is quite another to say that a legally defective opinion not to require EIA, or even a failure to conduct a screening exercise at all, can be remedied by the carrying out of an analogous assessment exercise outside the EIA Regulations.\nEven if that exercise results in the development of mitigation measures which are in themselves satisfactory, it would subvert the purposes of the EIA Directive for that to be conducted outside the procedural framework (including the environmental statement and consultation) set up by the Regulations.\nIn the present case, there is no disagreement that it was appropriate for the authority to undertake a screening exercise in April 2010, once the application was formally registered.\nNor is it now in dispute that the exercise was legally defective.\nAs the judge said: in circumstances where the pollution prevention measures had not been fully identified at that stage the council could not be satisfied that the mitigation measures would prevent a risk of pollutants entering the river, when the mitigation measures were not known (para 60) Mr Lyon evidently relied on his understanding of the advice of Mr Meadows, but he in turn had not regarded it as a formal consultation, and it was not part of his role to advise on EIA issues.\nMore importantly, it was impossible at that stage to reach the view that there was no risk of significant adverse effects to the river.\nAll the expert opinion, including that of CMGLs own advisers, was to the effect that there were potential risks, and that more work was needed to resolve them.\nIt was also clear that the mitigation measures as then proposed had not been worked up to an extent that they could be regarded as removing that risk.\nThis could be regarded as an archetypal case for environmental assessment under the EIA Regulations, so that the risks and the measures intended to address them could be set out in the environmental statement and subject to consultation and investigation in that context.\nIn my view that defect was not remedied by what followed.\nIt is intrinsic to the scheme of the EIA Directive and the Regulations that the classification of the proposal is governed by the characteristics and effects of the proposal as presented to the authority, not by reference to steps subsequently taken to address those effects.\nNo point having been taken about delay since the date of the defective screening opinion (an issue to which I shall return), Mr Buxtons request in June 2011 that the development should be reclassified as EIA development was in principle well founded.\nIt was not enough to say that the potential adverse effects had now been addressed in other ways.\nMitigation measures\nThe second agreed issue relates to the relevance of mitigation measures in EIA screening.\nIt is said to be common ground that mitigation measures may be considered as part of the process of appropriate assessment once it has been decided following screening that appropriate assessment should be carried out.\nIn the case as presented by Mr Buxton, the issue is not so much the relevance of mitigation measures in general, but the reliance on them at the permission stage to dispense retrospectively with the requirement for EIA which should have been initiated at the outset.\nThe relevance of mitigation measures at the screening stage has been addressed in a number of authorities.\nOne of the first was R (Lebus) v South Cambridgeshire DC [2002] EWHC 2009 (Admin), [2003] Env LR 17 (relating to a proposed egg production unit for 12,000 free range chickens).\nSullivan J said: 45.\nWhilst each case will no doubt turn upon its own particular facts, and whilst it may well be perfectly reasonable to envisage the operation of standard conditions and a reasonably managed development, the underlying purpose of the Regulations in implementing the Directive is that the potentially significant impacts of a development are described together with a description of the measures envisaged to prevent, reduce and, where possible, offset any significant adverse effects on the environment.\nThus the public is engaged in the process of assessing the efficacy of any mitigation measures. 46.\nIt is not appropriate for a person charged with making a screening opinion to start from the premise that although there may be significant impacts, these can be reduced to insignificance as a result of the implementation of conditions of various kinds.\nThe appropriate course in such a case is to require an environmental statement setting out the significant impacts and the measures which it is said will\nreduce their significance\nOf the particular proposal in that case, he said that it must have been obvious that with a proposal of this kind there would need to be a number of non standard planning conditions and enforceable obligations under section 106, and that these were precisely the sort of controls which should have been identified in a publicly accessible way in an environmental statement prepared under the Regulations it was not right to approach the matter on the basis that the significant adverse effects could be rendered insignificant if suitable conditions were imposed.\nThe proper approach was to say that potentially this is a development which has significant adverse environmental implications: what are the measures which should be included in order to reduce or offset those adverse effects?\nThose passages to my mind fairly reflect the balancing considerations which are implicit in the EIA Directive: on the one hand, that there is nothing to rule out consideration of mitigating measures at the screening stage; but, on the other, that the EIA Directive and the Regulations expressly envisage that mitigation measures will where appropriate be included in the environmental statement.\nApplication of the precautionary principle, which underlies the EIA Directive, implies that cases of material doubt should generally be resolved in favour of EIA.\nWe were shown various statements on the same issue, with arguably differing shades of emphasis, in a number of judgments of the Court of Appeal: Gillespie v First Secretary of State [2003] Env LR 30, paras 37, 48, 49; R (Jones) v Mansfield District Council [2004] Env LR 21, paras 38 39; R (Catt) v Brighton and Hove City Council [2007] EWCA Civ 298, [2007] Env LR 32, paras 33 35.\nSome were cited by the Court of Appeal in the present case.\nMr Lockhart Mummery, rightly in my view, did not rely on any of those statements as representing a material departure from the approach of Sullivan J. They simply illustrate the point that each case must depend on its own facts.\nIn R (Jones) v Mansfield District Council (in a judgment with which I agreed), Dyson LJ said: 39.\nI accept that the authority must have sufficient information about the impact of the project to be able to make an informed judgment as to whether it is likely to have a significant effect on the environment.\nBut this does not mean that all uncertainties have to be resolved or that a decision that an EIA is not required can only be made after a detailed and comprehensive assessment has been made of every aspect of the matter.\nAs the judge said, the uncertainties may or may not make it impossible reasonably to conclude that there is no likelihood of significant environmental effect.\nIt is possible in principle to have sufficient information to enable a decision reasonably to be made as to the likelihood of significant environmental effects even if certain details are not known and further surveys are to be undertaken.\nEverything depends on the circumstances of the individual case.\nAs far as concerns the present case, it is not now in dispute that the screening opinion should have gone the other way.\nThe mitigation measures as then proposed were not straightforward, and there were significant doubts as to how they would be resolved.\nI do not ignore Mr Meadows evidence to the court that the proposed mitigation did not represent novel or untested techniques and that similar methods have and are being successfully used around the country.\nBut that was said in the light of the further reports produced in July 2010, and even then there remained unresolved problems for the Environment Agency and the councils own officers, for example in relation to the maintenance regime.\nThe fact that they were ultimately resolved to the satisfaction of Natural England and others did not mean that there had been no need for EIA.\nThe failure to treat this proposal as EIA development was a procedural irregularity which was not cured by the final decision.\nDiscretion\nHaving found a legal defect in the procedure leading to the grant of permission, it is necessary to consider the consequences in terms of any remedy.\nFollowing the decision of this court in Walton v Scottish Ministers [2012] UKSC 44, [2013] PTSR 51, it is clear that, even where a breach of the EIA Regulations is established, the court retains a discretion to refuse relief if the applicant has been able in practice to enjoy the rights conferred by European legislation, and there has been no substantial prejudice (para 139 per Lord Carnwath, para 155 per Lord Hope).\nThose statements need now to be read in the light of the subsequent judgment of the CJEU in Gemeinde Altrip v Land Rheinland Pfalz (Case C 72\/12) [2014] PTSR 311.\nThat concerned a challenge to proposals for a flood retention scheme, on the grounds of irregularities in the assessment under the EIA Directive.\nA question arose under article 10a of the Directive 85\/337 (article 11 of the 2011 EIA Directive), which requires provision for those having a sufficient interest to have access to a court to challenge the substantive or procedural legality of decisions under the Directive.\nOne question, as reformulated by the court (para 39), was whether article 10a was to be interpreted as precluding decisions of national courts that make the admissibility of actions subject to conditions requiring the person bringing the action to prove that the procedural defect invoked is such that, in the light of the circumstances of the case, there is a possibility that the contested decision would have been different were it not for the defect and that a substantive legal position is affected thereby.\nIn answering that question, the court reaffirmed the well established principle that, while it is for each member state to lay down the detailed procedural rules governing such actions, those rules in accordance with the principle of equivalence, must not be less favourable than those governing similar domestic actions and, in accordance with the principle of effectiveness, must not make it in practice impossible or excessively difficult to exercise rights conferred by Union law (para 45) Since one of the objectives of the Directive was to put in place procedural guarantees to ensure better public information and participation in relation to projects likely to have a significant effect on the environment, rights of access to the courts must extend to procedural defects (para 48).\nThe judgment continued: 49.\nNevertheless, it is unarguable that not every procedural defect will necessarily have consequences that can possibly affect the purport of such a decision and it cannot, therefore, be considered to impair the rights of the party pleading it.\nIn that case, it does not appear that the objective of Directive 85\/337 of giving the public concerned wide access to justice would be compromised if, under the law of a member state, an applicant relying on a defect of that kind had to be regarded as not having had his rights impaired and, consequently, as not having standing to challenge that decision. 50.\nIn that regard, it should be borne in mind that article 10a of that Directive leaves the member states significant discretion to determine what constitutes impairment of a right 51.\nIn those circumstances, it could be permissible for national law not to recognise impairment of a right within the meaning of subparagraph (b) of article 10a of that Directive if it is established that it is conceivable, in view of the circumstances of the case, that the contested decision would not have been different without the procedural defect invoked. 52.\nIt appears, however, with regard to the national law applicable in the case in the main proceedings, that it is in general incumbent on the applicant, in order to establish impairment of a right, to prove that the circumstances of the case make it conceivable that the contested decision would have been different without the procedural defect invoked.\nThat shifting of the burden of proof onto the person bringing the action, for the application of the condition of causality, is capable of making the exercise of the rights conferred on that person by Directive 85\/337 excessively difficult, especially having regard to the complexity of the procedures in question and the technical nature of environmental impact assessments. 53.\nTherefore, the new requirements thus arising under article 10a of that Directive mean that impairment of a right cannot be excluded unless, in the light of the condition of causality, the court of law or body covered by that article is in a position to take the view, without in any way making the burden of proof fall on the applicant, but by relying, where appropriate, on the evidence provided by the developer or the competent authorities and, more generally, on the case file documents submitted to that court or body, that the contested decision would not have been different without the procedural defect invoked by that applicant. 54.\nIn the making of that assessment, it is for the court of law or body concerned to take into account, inter alia, the seriousness of the defect invoked and to ascertain, in particular, whether that defect has deprived the public concerned of one of the guarantees introduced with a view to allowing that public to have access to information and to be empowered to participate in decision making in accordance with the objectives of Directive 85\/337.\nAllowing for the differences in the issues raised by the national law in that case (including the issue of burden of proof), I find nothing in this passage inconsistent with the approach of this court in Walton.\nIt leaves it open to the court to take the view, by relying on the evidence provided by the developer or the competent authorities and, more generally, on the case file documents submitted to that court that the contested decision would not have been different without the procedural defect invoked by that applicant.\nIn making that assessment it should take account of the seriousness of the defect invoked and the extent to which it has deprived the public concerned of the guarantees designed to allow access to information and participation in decision making in accordance with the objectives of the EIA Directive.\nJudged by those tests I have no doubt that we should exercise our discretion to refuse relief in this case.\nIn para 52 of its judgment, the Court of Appeal summarised the factors which in its view entitled the authority to conclude that applying the appropriate tests, and taking into account the agreed mitigation measures, the proposal would not have significant effects on the SAC.\nThat, admittedly, was in the context of its consideration whether the committee arrived at a rational and reasonable conclusion, rather than the exercise of discretion.\nHowever, there is nothing to suggest that the decision would have been different had the investigations and consultations over the preceding year taken place within the framework of the EIA Regulations.\nThis was not a case where the environmental issues were of particular complexity or novelty.\nThere was only one issue of substance: how to achieve adequate hydrological separation between the activities on the site and the river.\nIt is a striking feature of the process that each of the statutory agencies involved was at pains to form its own view of the effectiveness of the proposed measures, and that final agreement was only achieved after a number of revisions.\nIt is also clear from the final report that the public were fully involved in the process and their views were taken into account.\nIt is notable also that Mr Champion himself, having been given the opportunity to raise any specific points of concern not covered by Natural England before the final decision, was unable to do so.\nThat remains the case.\nThat is not to put the burden of proof on to him, but rather to highlight the absence of anything of substance to set against the mass of material going the other way.\nFor completeness I should mention that, in his written submissions to this court, Mr Buxton attempted to rely on a witness statement which had been prepared for the High Court in support of an additional ground relating to failure to consider cumulative effects of incremental development at the site over many years.\nThis he suggests can be used as evidence that it is at least possible that lawful screening might produce a different substantive result.\nHowever, as he accepts, this ground, and the evidence in support, were not admitted in the High Court.\nThis court can only proceed on the evidence properly before it.\nConclusion\nFor the reasons given, I would dismiss the appeal, albeit for somewhat different reasons from those of the Court of Appeal, taking account of the different emphasis of the arguments before us.\nAlthough the proposal should have been subject to assessment under the EIA Regulations, that failure did not in the event prevent the fullest possible investigation of the proposal and the involvement of the public.\nThere is no reason to think that a different process would have resulted in a different decision, and Mr Champions interests have not been prejudiced.\nFinally, I see no need for a reference to the CJEU.\nAs I have attempted to indicate, the principles, in so far as not clear from the Directives themselves, are fully covered by existing CJEU authority, and the only issues are their application to the facts of the case.\nI would add two final comments.\nFirst, as I have said, no issue has been taken on the delay which elapsed between the screening opinion in April 2010 and the date when it was first challenged in correspondence more than a year later.\nThe formal provision, in both the EIA Directive and the Regulations, for a decision on this issue at an early stage seems designed to provide procedural clarity for the developer and others affected.\nIt is in no ones interest for the application to proceed in good faith for many months on a basis which turns out retrospectively to have been defective.\nHowever, in R (Catt) v Brighton & Hove City Council [2007] Env LR 32, para 39ff, it was decided by the Court of Appeal (applying by analogy the decision of the House of Lords in R (Burkett) v Hammersmith and Fulham LBC [2002] 1 WLR 1593) that a failure to mount a timeous legal challenge to the screening opinion was no bar to a challenge to a subsequent permission on the same grounds.\nAlthough we have not been asked to review that decision, I would wish to reserve my position as to its correctness.\nI see no reason in principle why, in the exercise of its overall discretion, whether at the permission stage or in relation to the grant of relief, the court should be precluded from taking account of delay in challenging a screening opinion, and of its practical effects (on the parties or on the interests of good administration).\nSecondly, although this development gave rise to proper environmental objections, which needed to be resolved, it also had support from those who welcomed its potential contribution to the economy of the area.\nIt is unfortunate that those benefits have been delayed now for more than four years since those objections were, as I have found, fully resolved.\nI repeat what I said, in a similar context, in R (Jones) v Mansfield District Council [2003] EWCA Civ 1408: 57.\nThe appellant (who is publicly funded) lives near the site, and shares with other local residents a genuine concern to protect her surroundings.\nWith hindsight it might have saved time if there had been an EIA from the outset.\nHowever, five years on, it is difficult to see what practical benefit, other than that of delaying the development, will result to her or to anyone else from putting the application through this further procedural hoop. 58.\nIt needs to be borne in mind that the EIA process is intended to be an aid to efficient and inclusive decision making in special cases, not an obstacle race.\nFurthermore, it does not detract from the authority's ordinary duty, in the case of any planning application, to inform itself of all relevant matters, and take them properly into account in deciding the case.\nIn this case also CMGL may feel in retrospect that it would have been better if they had prepared an environmental statement under the EIA Regulations on their own initiative rather than simply relying on the negative opinion of the planning officer.\nThat might in any event have been a more logical response to the advice of their own consultant that appropriate assessment under the Habitats Directive was likely to be required.\nJones was decided at a time when the extent of the courts discretion to refuse relief in such cases was less clear.\nIt is to be hoped that this appeal has enabled this court to lay down clearer guidance as to the circumstances in which relief may be refused even where an irregularity has been established.\nIn future cases, the court considering an application for permission to bring judicial review proceedings should have regard to the likelihood of relief being granted, even if an irregularity is established. (I emphasise that this is said without any reference to the new section 31A(2) of the Senior Courts Act 1981, which as is agreed does not apply to this appeal.)\n","output":"The appeal concerns a proposed development by Crisp Maltings Group Limited (CMGL) at a plant in the area of the North Norfolk District Council (the council).\nThe development comprised two silos and a lorry park with associated facilities on a site close to the River Wensum.\nThe appellant, Mr Champion, is a member of the Ryburgh Village Action Group, which opposed the development.\nThe river is a Special Area of Conservation protected by the EU Habitats Directive (97\/92\/EC), given effect in the UK by the Conservation and Habitats Species Regulations 2010.\nRegulation 61, implementing article 6(3) of the Directive, requires that before giving consent for a project likely to have a significant effect on a European site, the competent authority must make an appropriate assessment of the implications for that site.\nIt may agree to the project only after having ascertained that it will not adversely affect the integrity of the European site.\nAlso relevant is the Environmental Impact Assessment (EIA) Directive, given effect by the Town and Country Planning (Environmental Impact Assessment) Regulations 2011.\nUnder the regulations, a competent authority carries out screening to decide if a proposal is likely to have significant effects on the environment.\nIf so, EIA is required.\nThe EIA process involves an environmental statement and public consultation, which informs the decision whether to grant consent to an EIA development.\nCMGLs planning application of October 2009 included a Flood Risk Assessment (FRA) recognising a risk that surface water runoff from the site would pollute the river.\nThere followed investigation of measures meant to prevent this pollution.\nFrom October 2009 June 2010 the council consulted with relevant statutory bodies.\nIt issued a screening opinion on 23 April 2010 stating that EIA was not required.\nBetween July 2010 and January 2011, two new FRAs and an ecological assessment were prepared, which led to the statutory bodies withdrawing their objections.\nThe council decided on 20 January 2011 to give delegated powers to its officers to approve the development subject to conditions.\nThis led to local complaints, including from the appellant, who argued that appropriate assessment and EIA were required.\nThe council decided to refer the application back to committee and asked for further comments from the appellant, who did not respond.\nAt the councils committee meeting of 8 September 2011, planning officers presented a detailed report concluding that appropriate assessment and EIA were not required.\nThe committee resolved to approve the application subject to conditions, including monitoring the rivers water quality.\nThe appellant challenged the consent successfully before the High Court for failure to comply with the EIA and Habitats legislation, but lost in the Court of Appeal.\nThe Supreme Court unanimously dismisses the appeal.\nLord Carnwath gives a judgment with which Lord Neuberger, Lord Mance, Lord Clarke and Lord Toulson agree.\nThe two issues were the timing of the councils decisions that appropriate assessment or EIA was not required, and the relevance of measures meant to address adverse effects on the river from the site.\nOn the first issue, there is nothing in the Habitats Directive or regulations to support a separate stage of screening in any formal sense.\nCase law of the Court of Justice of the European Union describes two stages under article 6(3) of the Directive: the appropriate assessment, and the decision in light of it.\nIt used the word trigger to set the threshold for the first stage.\nThe formal procedures in the EIA regulations, including screening, an environmental statement, and mandatory public consultation, have no counterpart in the habitats legislation.\nWhere it is not obvious, the competent authority will consider whether the trigger for appropriate assessment is met, but this is not a screening in the EIA sense.\nAll that is required is that, where there is found to be a risk of significant adverse effects to a protected site, there is an appropriate assessment.\nIn this case, the planning authority and the expert consultees were satisfied that the material risk of significant effects on the river had been eliminated.\nThough the officers expressed this conclusion by saying that no appropriate assessment was required, there is no reason to think that the conclusion would have been different if they had decided from the outset that appropriate assessment was required.\nThe mere failure to exercise the article 6(3) trigger at an earlier stage does not in itself undermine the legality of the final decision. [37 42] On timing of EIA screening, authorities should in principle adopt screening opinions early in the planning process. [43] Though a negative opinion, lawfully arrived at on the information then available, may need to be reviewed in light of subsequent information, this does not mean that a legally defective screening opinion not to require EIA, or a failure to conduct a screening opinion at all, can be cured by carrying out an assessment exercise outside the EIA regulations.\nIn the present case it was accepted that the councils screening exercise in April 2010 was legally defective: the pollution prevention measures had not been fully identified at that point, so the council could not be satisfied then that mitigation measures would prevent a risk of pollutants entering the river.\nThis was an archetypal case for EIA so that the risks and measures to address them could be set out in the environmental statement and subject to consultation and investigation.\nThat defect was not remedied by what followed: it was not enough to say that the potential adverse effects had now been addressed in other ways. [45 47] On the second issue, the appellant disputed the legality of the councils reliance on mitigation measures, at the stage of granting planning permission, to dispense retrospectively with the requirement for EIA which should have been initiated at the outset. [48] There is nothing to rule out consideration of mitigation measures at the EIA screening stage, but the Directive and the regulations expressly envisage that they will where appropriate be included in the environmental statement.\nCases of material doubt should generally be resolved in favour of EIA. [51].\nThe failure to treat this proposal as EIA development was a procedural irregularity, which was not cured by the final decision. [53] Despite the legal defect in the procedure leading to the grant of planning permission, the court retains a discretion to refuse relief if the applicant has been able in practice to enjoy the rights conferred by European legislation and there is no substantial prejudice. [54] There is nothing to suggest that the councils decision would have been different had the process taken place within the framework of the EIA regulations.\nThere was only one issue of substance: measures to achieve adequate hydrological separation between the sites activities and the river.\nIt is clear from the final report that the statutory agencies involved formed their own view of the measures effectiveness, and that the views of the public were taken into account.\nAt the time the appellant was unable to raise specific concerns that had not been dealt with before the final decision, which remains the case.\nThe appeal is dismissed. [59 62]\n","id":56}
{"input":"This is the judgment of the Court on the issue of whether a bribe or secret commission received by an agent is held by the agent on trust for his principal, or whether the principal merely has a claim for equitable compensation in a sum equal to the value of the bribe or commission.\nThe answer to this rather technical sounding question, which has produced inconsistent judicial decisions over the past 200 years, as well as a great deal of more recent academic controversy, is important in practical terms.\nIf the bribe or commission is held on trust, the principal has a proprietary claim to it, whereas if the principal merely has a claim for equitable compensation, the claim is not proprietary.\nThe distinction is significant for two main reasons.\nFirst, if the agent becomes insolvent, a proprietary claim would effectively give the principal priority over the agents unsecured creditors, whereas the principal would rank pari passu, ie equally, with other unsecured creditors if he only has a claim for compensation.\nSecondly, if the principal has a proprietary claim to the bribe or commission, he can trace and follow it in equity, whereas (unless we develop the law of equitable tracing beyond its current boundaries) a principal with a right only to equitable compensation would have no such equitable right to trace or follow.\nThe facts\nOn 22 December 2004, FHR European Ventures LLP purchased the issued share capital of Monte Carlo Grand Hotel SAM (which owned a long leasehold interest in the Monte Carlo Grand Hotel) from Monte Carlo Grand Hotel Ltd (the Vendor) for 211.5m.\nThe purchase was a joint venture between the claimants in these proceedings, for whom FHR was the vehicle.\nCedar Capital Partners LLC provided consultancy services to the hotel industry, and it had acted as the claimants agent in negotiating the purchase.\nIt is common ground that Cedar accordingly owed fiduciary duties to the claimants in that connection.\nCedar had also entered into an agreement with the Vendor (the Exclusive Brokerage Agreement) dated 24 September 2004, which provided for the payment to Cedar of a 10m fee following a successful conclusion of the sale and purchase of the issued share capital of Monte Carlo Grand Hotel SAM.\nThe Vendor paid Cedar 10m on or about 7 January 2005.\nOn 23 November 2009 the claimants began these proceedings for recovery of the sum of 10m from Cedar (and others).\nThe trial took place before Simon J, and the main issue was whether, as it contended, Cedar had made proper disclosure to the claimants of the Exclusive Brokerage Agreement.\nSimon J gave a judgment in which he found against Cedar on that issue [2012] 2 BCLC 39.\nThere was then a further hearing to determine what order should be made in the light of that judgment, following which Simon J gave a further judgment [2013] 2 BCLC 1.\nIn that judgment he concluded that he should (i) make a declaration of liability for breach of fiduciary duty on the part of Cedar for having failed to obtain the claimants fully informed consent in respect of the 10m, and (ii) order Cedar to pay such sum to the claimants, but (iii) refuse to grant the claimants a proprietary remedy in respect of the monies.\nThe claimants appealed to the Court of Appeal against conclusion (iii), and it allowed the appeal for reasons given in a judgment given by Lewison LJ, with supporting judgments from Pill LJ and Sir Terence Etherton C [2014] Ch 1.\nAccordingly, the Court of Appeal made an order which included a declaration that Cedar received the 10m fee on constructive trust for the claimants absolutely.\nCedar now appeals to the Supreme Court on that issue.\nThere is and was no challenge by Cedar to the Judges conclusions (i) and (ii), so the only point on this appeal is whether, as the Court of Appeal held, the claimants are entitled to the proprietary remedy in respect of the 10m received by Cedar from the Vendor.\nPrefatory comments\nThe following three principles are not in doubt, and they are taken from the classic summary of the law in the judgment of Millett LJ in Bristol and West Building Society v Mothew [1998] Ch 1, 18.\nFirst, an agent owes a fiduciary duty to his principal because he is someone who has undertaken to act for or on behalf of [his principal] in a particular matter in circumstances which give rise to a relationship of trust and confidence.\nSecondly, as a result, an agent must not make a profit out of his trust and must not place himself in a position in which his duty and his interest may conflict and, as Lord Upjohn pointed out in Boardman v Phipps [1967] 2 AC 46, 123, the former proposition is part of the [latter] wider rule.\nThirdly, [a] fiduciary who acts for two principals with potentially conflicting interests without the informed consent of both is in breach of the obligation of undivided loyalty; he puts himself in a position where his duty to one principal may conflict with his duty to the other.\nBecause of the importance which equity attaches to fiduciary duties, such informed consent is only effective if it is given after full disclosure, to quote Sir George Jessel MR in Dunne v English (1874) LR 18 Eq 524, 533.\nAnother well established principle, which applies where an agent receives a benefit in breach of his fiduciary duty, is that the agent is obliged to account to the principal for such a benefit, and to pay, in effect, a sum equal to the profit by way of equitable compensation.\nThe law on this topic was clearly stated in Regal (Hastings) Ltd v Gulliver (Note) (1942) [1967] 2 AC 134, 144 145, by Lord Russell, where he said this: The rule of equity which insists on those, who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff, or whether the profiteer was under a duty to obtain the source of the profit for the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action.\nThe liability arises from the mere fact of a profit having, in the stated circumstances, been made.\nThe principals right to seek an account undoubtedly gives him a right to equitable compensation in respect of the bribe or secret commission, which is the quantum of that bribe or commission (subject to any permissible deduction in favour of the agent eg for expenses incurred).\nThat is because where an agent acquires a benefit in breach of his fiduciary duty, the relief accorded by equity is, again to quote Millett LJ in Mothew at p 18, primarily restitutionary or restorative rather than compensatory.\nThe agents duty to account for the bribe or secret commission represents a personal remedy for the principal against the agent.\nHowever, the centrally relevant point for present purposes is that, at least in some cases where an agent acquires a benefit which came to his notice as a result of his fiduciary position, or pursuant to an opportunity which results from his fiduciary position, the equitable rule (the Rule) is that he is to be treated as having acquired the benefit on behalf of his principal, so that it is beneficially owned by the principal.\nIn such cases, the principal has a proprietary remedy in addition to his personal remedy against the agent, and the principal can elect between the two remedies.\nWhere the facts of a particular case are within the ambit of the Rule, it is strictly applied.\nThe strict application of the Rule can be traced back to the well known decision in Keech v Sandford (1726) Sel Cas Ch 61, where a trustee held a lease of a market on trust for an infant, and, having failed to negotiate a new lease on behalf of the infant because the landlord was dissatisfied with the proposed security for the rent, the trustee negotiated a new lease for himself.\nLord King LC concluded at p 62 that, though I do not say there is a fraud in this case and though it may seem hard, the infant was entitled to an assignment of the new lease and an account of the profits made in the meantime a conclusion which could only be justified on the basis that the new lease had been beneficially acquired for the infant beneficiary.\nSince then, the Rule has been applied in a great many cases.\nThe question on\nthis appeal is not so much concerned with the application of the Rule, as with its limits or boundaries.\nSpecifically, what is in dispute is the extent to which the Rule applies where the benefit is a bribe or secret commission obtained by an agent in breach of his fiduciary duty to his principal.\nOn the one hand, Mr Collings QC contends for the appellant, Cedar, that the Rule should not apply to a bribe or secret commission paid to an agent, because it is not a benefit which can properly be said to be the property of the principal.\nThis has the support of Professor Sir Roy Goode, who has suggested that no proprietary interest arises where an agent obtains a benefit in breach of his duty unless the benefit either (i) flows from an asset which was (a) beneficially owned by the principal, or (b) intended for the principal, or (ii) was derived from an activity of the agent which, if he chose to undertake it, he was under an equitable duty to undertake for the principal.\nSir Roy suggested that to treat [a principal] as having a restitutionary proprietary right to money or property not derived from any asset of [the principal] results in an involuntary grant by [the agent] to [the principal] from [the agents] pre existing estate Proprietary Restitutionary Claims in Restitution: Past, Present and Future (1998) ed Cornish, p 69 and see more recently (2011) 127 LQR 493.\nProfessor Sarah Worthington has advanced a slightly different test.\nShe suggests (summarising at the risk of oversimplifying) that proprietary claims arise where benefits are (i) derived from the principals property, or (ii) derived from opportunities in the scope of the agents endeavours on behalf of the principal, but not (iii) benefits derived from opportunities outside the scope of those endeavours Fiduciary Duties and Proprietary Remedies: Addressing the Failure of Equitable Formulae (2013) 72 CLJ 720.\nOn the other hand, it is suggested by Mr Pymont QC on behalf of the respondent claimants in this appeal, that the Rule does apply to bribes or secret commissions received by an agent, because, in any case where an agent receives a benefit, which is, or results from, a breach of the fiduciary duty owed to his principal, the agent holds the benefit on trust for the principal.\nThis view has been supported by Lord Millett writing extra judicially.\nIn Bribes and Secret Commissions [1993] Rest LR 7, he suggested that, on grounds of practicality, policy and principle, a principal should be beneficially entitled to a bribe or secret commission received by his agent and see more recently, (2012) 71 CLJ 583.\nHe bases his conclusion on the proposition that equity will not permit the agent to rely on his own breach of fiduciary duty to justify retaining the benefit on the ground that it was a bribe or secret commission, and will assume that he acted in accordance with his duty, so that the benefit must be the principals.\nThis approach is also supported by Lionel Smith, Constructive trusts and the no profit rule (2013) 72 CLJ 260, whose view, in short, is that the basic rule should be that an agent who obtains a benefit in breach of his fiduciary duty to his principal holds that benefit on trust for his principal.\nThe decision as to which view is correct must be based on legal principle, decided cases, policy considerations, and practicalities.\nWe start by summarising the effect of many of the cases which touch on the issue; we then turn to the policy and practical arguments, and finally we express our conclusion.\nThe decided cases\nThere is a number of 19th century cases not involving bribes or secret commissions, where an agent or other fiduciary makes an unauthorised profit by taking advantage of an opportunity which came to his attention as a result of his agency and judges have reached the conclusion that the Rule applied.\nExamples include Carter v Palmer (1842) 8 Cl & F 657, where a barrister who purchased his clients bills at a discount was held by Lord Cottenham to have acquired them for his client.\nThe Privy Council in Bowes v City of Toronto (1858) 11 Moo PC 463 concluded that the mayor of a city who bought discounted debentures issued by the city was in the same position as an agent vis vis the city, and was to be treated as holding the debentures on trust for the city.\nBagnall v Carlton (1877) 6 Ch D 371 involved complex facts, but, pared to a minimum, agents for a prospective company who made secret profits out of a contract made by the company were held to be trustees for the company of those profits (per James, Baggallay and Cotton LJJ).\nIn the Privy Council case of Cook v Deeks [1916] 1 AC 554, a company\nformed by the directors of a construction company was held to have entered into a contract on behalf of the construction company as the directors only knew of the contractual opportunity by virtue of their directorships.\nIn Phipps v Boardman [1964] 1 WLR 993 (affirmed [1965] Ch 992, and [1967] 2 AC 46), where agents of certain trustees purchased shares, in circumstances where they only had that opportunity because they were agents, Wilberforce J held that the shares were held beneficially for the trust.\nMore recently, in Bhullar v Bhullar [2003] 2 BCLC 241, the Court of Appeal reached the same conclusion on similar facts to those in Cook (save that the asset acquired was a property rather than a contract).\nJonathan Parker LJ said this at para 28: [W]here a fiduciary has exploited a commercial opportunity for his own benefit, the relevant question, in my judgment, is not whether the party to whom the duty is owed (the company, in the instant case) had some kind of beneficial interest in the opportunity: in my judgment that would be too formalistic and restrictive an approach.\nRather, the question is simply whether the fiduciarys exploitation of the opportunity is such as to attract the application of the rule.\nTurning now to cases concerned with bribes and secret commissions, the effect of the reasoning of Lord Lyndhurst LC in Fawcett v Whitehouse (1829) 1 Russ & M 132 was that an agent, who was negotiating on behalf of a prospective lessee and who accepted a loan from the lessor, held the loan on trust for his principal, the lessee.\nIn Barker v Harrison (1846) 2 Coll 546, a vendors agent had secretly negotiated a sub sale of part of the property from the purchaser at an advantageous price, and Sir James Knight Bruce V C held that that asset was held on trust for the vendor.\nIn In re Western of Canada Oil, Lands and Works Co, Carling, Hespeler, and Walshs Cases (1875) 1 Ch D 115, the Court of Appeal (James and Mellish LJJ, Bramwell B and Brett J) held that shares transferred by a person to individuals to induce them to become directors of a company and to agree that the company would buy land from the person, were held by the individuals on trust for the company.\nIn In re Morvah Consols Tin Mining Co, McKays Case (1875) 2 Ch D 1, the Court of Appeal (Mellish and James LJJ and Brett J) decided that where a company bought a mine, shares in the vendor which were promised to the companys secretary were held by him for the company beneficially.\nThe Court of Appeal (Sir George Jessel MR and James and Baggallay LJJ) in In re Caerphilly Colliery Co, Pearsons Case (1877) 5 Ch D 336 concluded that a company director, who received shares from the promoters and then acted for the company in its purchase of a colliery from the promoters, held the shares on trust for the company.\nIn Eden v Ridsdale Railway Lamp and Lighting Co Ltd (1889) 23 QBD 368, a company was held by the Court of Appeal (Lord Esher MR and Lindley and Lopes LJJ) to be entitled as against a director to shares which he had secretly received from a person with whom the company was negotiating.\nThere are a number of other 19th century decisions to this effect, but it is unnecessary to cite them.\nInducements and other benefits offered to directors and trustees have been treated similarly.\nIn Sugden v Crossland (1856) 2 Sm & G 192, Sir William Page Wood V C held that a sum of money paid to a trustee to persuade him to retire in favour of the payee was to be treated as a part of the trust fund.\nSimilarly, in Nant y glo and Blaina Ironworks Co v Grave (1878) 12 Ch D 738, shares in a company given by a promoter to the defendant to induce him to become a director were held by Sir James Bacon V C to belong to the company.\nIn Williams v Barton [1927] 2 Ch 9, Russell J decided that a trustee, who recommended that his co trustees use stockbrokers who gave him a commission, held the commission on trust for the trust.\nThe common law courts were meanwhile taking the same view.\nIn Morison v Thompson (1874) LR 9 QBD 480, Cockburn CJ, with whom Blackburn and Archibald JJ agreed, held that a purchasers agent who had secretly agreed to accept a commission from the vendor of a ship, held the commission for the benefit of his principal, the purchaser, in common law just as he would have done in equity see at p 484, where Cockburn CJ referred to the earlier decision of Lord Ellenborough CJ to the same effect in Diplock v Blackburn (1811) 3 Camp 43.\nIn Whaley Bridge Calico Printing Co v Green (1879) 5 QBD 109, Bowen J (albeit relying on equity at least in part) held that a contract between the vendor and a director of the purchaser, for a secret commission to be paid out of the purchase money, was to be treated as having been entered into for the benefit of the purchaser without proof of fraud.\nIt is fair to say that in the majority of the cases identified in the previous five\nparagraphs it does not appear to have been in dispute that, if the recipient of the benefit had received it in breach of his fiduciary duty to the plaintiff, then he held it on trust for the plaintiff.\nIn other words, it appears to have been tacitly accepted that the Rule applied, so that the plaintiff was entitled not merely to an equitable account in respect of the benefit, but to the beneficial ownership of the benefit.\nHowever, many of those cases contain observations which specifically support the contention that the Rule applies to all benefits which are received by an agent in breach of his fiduciary duty.\nIn Sugden at p 194, Sir William Page Wood V C said that it is a well settled principle that if a trustee make a profit of his trusteeship, it shall enure to the benefit of his cestuique trusts.\nAnd in McKays Case at p 5, Mellish LJ said that it was quite clear that, according to the principles of a Court of Equity, all the benefit which the agent of the purchaser receives under such circumstances from the vendor must be treated as received for the benefit of the purchaser.\nIn Carlings Case at p 124, James LJ said the arrangement amounted to a a simple bribe or present to the directors, constituting a breach of trust on their part and that the company would be entitled to get back from their unfaithful trustees what the unfaithful trustees had acquired by reason of their breach of trust.\nIn Pearsons Case Sir George Jessel MR said at pp 340 341 that the director as agent could not retain that present as against the actual purchasers and must be deemed to have obtained [the benefit] under circumstances which made him liable, at the option of the cestuis que trust, to account either for the value or for the thing itself .\nIn Eden, Lord Esher said at p 371 that if an agent put[s] himself in a position which the law does not allow [him] to assume he commit[s] a wrong against his principal, and [i]f that which the agent has received is money he must hand it over to his principal, if it is not money, but something else, the principal may insist on having it.\nLindley and Lopes LJJ each said that they were of the same opinion as Lord Esher, and Lindley LJ observed at p 372 that it would be contrary to all principles of law and equity to allow the plaintiff to retain the gift.\nIt is also worth noting that in Morison at pp 485 486, Cockburn CJ quoted with approval from two contemporary textbooks.\nFirst, he cited Story on Agency, para 211, where it was said that it could be laid down as a general principle, that, in all cases when a person is an agent for other persons, all profits and advantages made by him in the business, beyond his ordinary compensation, are to be for the benefit of his employers.\nSecondly, he referred to Paley on Principal and Agent, p 51, which stated that not only interest, but every other sort of profit or advantage, clandestinely derived by an agent from dealing or speculating with his principals effects, is the property of the latter, and must be accounted for.\nThe cases summarised in paras 13 17 above and the observations set out in paras 19 20 above are all consistent with the notion that the Rule should apply to bribes or secret commissions paid to an agent, so that the agent holds them on trust for his principal, rather than simply having an equitable duty to account to his principal.\nIt is true that in many of those cases there was apparently no argument as to whether the benefit obtained by the fiduciary was actually held on trust for the principal.\nHowever, in some of the cases there was a dispute on the nature of the relief; in any event, the fact that it was assumed time and again by eminent barristers and judges must carry great weight.\nHowever, there is one decision of the House of Lords which appears to go the other way, and several decisions of the Court of Appeal which do go the other way, in that they hold that, while a principal has a claim for equitable compensation in respect of a bribe or secret commission received by his agent, he has no proprietary interest in it.\nThe House of Lords decision is Tyrrell v Bank of London (1862) 10 HL Cas 26.\nThe facts of the case are somewhat complex and the reasoning of the opinions of Lord Westbury LC, Lord Cranworth and Lord Chelmsford is not always entirely easy to follow.\nThe decision has been carefully and interestingly analysed by Professor Watts, Tyrrell v Bank of London an Inside Look at an Inside Job (2013) 129 LQR 527.\nIn very brief terms, a solicitor retained to act for a company in the course of formation secretly arranged to benefit from his prospective clients anticipated acquisition of a building called the Hall of Commerce by obtaining from the owner a 50% beneficial interest in a parcel of land consisting of the Hall and some adjoining land.\nAfter the client had purchased the Hall from the owner, it discovered that the solicitor had secretly profited from the transaction and sued him.\nSir John Romilly MR held that the solicitor had held on trust for the client both (i) his interest in (and therefore his subsequent share of the proceeds of sale of) the Hall, and (ii) with very considerable hesitation, his interest in the adjoining land (1859) 27 Beav 273, especially at p 300.\nOn appeal, the House of Lords held that, while the Master of the Rolls was right about (i), he was wrong about (ii): although the client had an equitable claim for the value of the solicitors interest in the adjoining land, it had no proprietary interest in that land.\nLord Westbury LC made it clear at pp 39 40 that the fact that the client had not been formed by the time that the solicitor acquired his interest in the land did not prevent the claim succeeding as the client had been conceived, and was in the process of formation.\nHe also made it clear at p 44 that, in respect of the profit which the solicitor made from his share of the Hall (which he described as the subject matter of the transaction, and, later at p 45, that particular property included in the [clients] contract), the solicitor must be converted into a trustee for the [client].\nHowever, he was clear that no such trust could arise in relation to the adjoining land, which was outside the limit of the agency, and so there [was] no privity, nor any obligation, although the solicitor must account for the value of that property p 46.\nLord Cranworth agreed, making it clear that the financial consequences for the solicitor were no different from those that followed from the Master of the Rolls order, although he had thought that possibly we might arrive at the conclusion that the decree was, not only in substance, but also in form, perfectly correct p 49.\nLord Chelmsford agreed, and discussed bribes at pp 59 60, holding that the principal had no right to a bribe received by his agent.\nAlthough there have been suggestions that, with the exception of Lord Chelmsfords obiter dicta about bribes, the decision of the House of Lords in Tyrrell was not inconsistent with the respondents case on this appeal, it appears clear that it was.\nIf, as the House held, the solicitor was liable to account to the client for the profit which he had made on the adjoining land, that can only have been because it was a benefit which he had received in breach of his fiduciary duty; and, once that is established, then, on the respondents case, the Rule would apply, and that profit would be held on trust for the client (or, more accurately, his share of the adjoining land would be held on trust), as in Fawcett, Sugden, Carter, Bowes and Barker, all of which had been decided before Tyrrell, and of which only Fawcett was cited to the House.\nWe turn to the Court of Appeal authorities which are inconsistent with the notion that the Rule applies to bribes or secret commissions.\nIn Metropolitan Bank v Heiron (1880) 5 Ex D 319, the Court of Appeal held that a claim brought by a company against a director was time barred: the claim was to recover a bribe paid by a third party to induce the director to influence the company to negotiate a favourable settlement with the third party.\nIt was unsuccessfully argued by the bank that its claim was proprietary.\nBrett LJ said at p 324 [n]either at law nor in equity could this sum be treated as the money of the company, but he apparently considered that, once the company had obtained judgment for the money there could be a trust.\nCotton LJ expressed the same view.\nJames LJ simply thought that there was an equitable debt and applied the Limitation Acts by analogy.\nThis approach was followed in Lister & Co v Stubbs (1890) 45 Ch D 1, where an agent of a company had accepted a bribe from one of its clients, and an interlocutory injunction was refused on the ground that the relationship between the company and its agent was that of creditor and debtor not beneficiary and trustee.\nCotton LJ said at p 12 that the money which [the agent] has received cannot be treated as being the money of the [company].\nLindley LJ agreed and said at p 15 that the notion that there was a trust startle[d] him, not least because it would give the company the right to the money in the event of the agents bankruptcy.\nBowen LJ agreed.\nLister was cited with approval by Lindley LJ in In re North Australian Territory Co, Archers case [1892] 1 Ch 322, 338, and it was followed in relation to a bribe paid to an agent by Sir Richard Henn Collins MR (with whom Stirling and Mathew LJJ agreed) in Powell & Thomas v Evan Jones & Co [1905] 1 KB 11, 22, where the principal was held entitled to an account for the bribe, but not to a declaration that the bribe was held on trust.\nThe same view was taken in the Court of Appeal in Attorney Generals Reference (No 1 of 1985) [1986] QB 491, 504 505, where Lord Lane CJ quoted from the judgments of Cotton and Lindley LJJ in what he described as a powerful Court of Appeal in Lister, and followed the reasoning.\nIn Regal (Hastings), the decision in Lister was referred to by Lord Wright at p 156, as supporting the notion that the relationship in such a case is that of debtor and creditor, not trustee and cestui que trust.\nHowever, that was an obiter observation, and it gets no support from the other members of the committee.\nMore recently, in 1993, in Attorney General for Hong Kong v Reid, the Privy Council concluded that bribes received by a corrupt policeman were held on trust for his principal, and so they could be traced into properties which he had acquired in New Zealand.\nIn his judgment on behalf of the Board, Lord Templeman disapproved the reasoning in Heiron, and the reasoning and outcome in Lister, and he thought his conclusion inconsistent with only one of the opinions, that of Lord Chelmsford, in Tyrrell.\nIn Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119, paras 75ff, Lawrence Collins J indicated that he would follow Reid rather than Lister, as did Toulson J in Fyffes Group Ltd v Templeman [2000] 2 Lloyds Rep 643, 668 672.\nBut in Sinclair Investments Ltd v Versailles Trade Finance Ltd [2012] Ch 453, in a judgment given by Lord Neuberger MR, the Court of Appeal decided that it should follow Heiron and Lister, and indeed Tyrrell, for a number of reasons set out in paras 77ff, although it accepted that this Court might follow the approach in Reid.\nIn this case, Simon J considered that he was bound by Sinclair, whereas the Court of Appeal concluded that they could and should distinguish it.\nLegal principle and academic articles\nAs mentioned above, the issue raised on this appeal has stimulated a great deal of academic debate.\nThe contents of the many articles on this issue provide an impressive demonstration of penetrating and stimulating legal analysis.\nOne can find among those articles a powerful case for various different outcomes, based on analysing judicial decisions and reasoning, equitable and restitutionary principles, and practical and commercial realities.\nIt is neither possible nor appropriate to do those articles justice individually in this judgment, but the court has referred to them for the purpose of extracting the principle upon which the Rule is said to be based.\nIn addition to those referred to in paras 10, 11 and 23 above, those articles include Hayton, The Extent of Equitable Remedies: Privy Council versus the Court of Appeal [2012] Co Law 161, Swadling, Constructive trusts and breach of fiduciary duty (2012) 18 Trusts and Trustees 985, Virgo, Profits Obtained in Breach of Fiduciary Duty: Personal or Proprietary Claim? (2011) 70 CLJ 502, Edelman Two Fundamental Questions for the Law of Trusts (2013) 129 LQR 66 and others listed by Sir Terence Etherton, The Legitimacy of Proprietary Relief, (2014) Birkbeck Law Review vol 2(1), 59, at p 60.\nAt p 62 Sir Terence refers to this relentess and seemingly endless debate, which, in the Court of Appeal in this case, Pill LJ described as revealing passions of a force uncommon in the legal world [2014] Ch 1, para 61.\nThe respondents formulation of the Rule, namely that it applies to all benefits received by an agent in breach of his fiduciary duty to his principal, is explained on the basis that an agent ought to account in specie to his principal for any benefit he has obtained from his agency in breach of his fiduciary duty, as the benefit should be treated as the property of the principal, as supported by many judicial dicta including those in para 19 above, and can be seen to be reflected in Jonathan Parker LJs observations in para 14 above.\nMore subtly, it is justified on the basis that equity does not permit an agent to rely on his own wrong to justify retaining the benefit: in effect, he must accept that, as he received the benefit as a result of his agency, he acquired it for his principal.\nSupport for that approach may be found in Mellish LJs judgment in McKays Case at p 6, and Bowen Js judgment in Whaley Bridge at p 113.\nThe appellants formulation of the Rule, namely that it has a more limited reach, and does not apply to bribes and secret commissions, has, as mentioned in para 10 above, various different formulations and justifications.\nThus, it is said that, given that it is a proprietary principle, the Rule should not apply to benefits which were not derived from assets which are or should be the property of the principal, a view supported by the reasoning of Lord Westbury in Tyrrell.\nIt has also been suggested that the Rule should not apply to benefits which could not have been intended for the principal and were, rightly or wrongly, the property of the agent, which seems to have been the basis of Cotton LJs judgment in Heiron at p 325 and Lister at p 12.\nIn Sinclair, it was suggested that the effect of the authorities was that the Rule should not apply to a benefit which the agent had obtained by taking advantage of an opportunity which arose as a result of the agency, unless the opportunity was properly that of the [principal] para 88.\nProfessor Worthingtons subsequent formulation, referred to in para 10 above, is very similar but subtly different (and probably more satisfactory).\nEach of the formulations set out in paras 30 and 31 above have their supporters and detractors.\nIn the end, it is not possible to identify any plainly right or plainly wrong answer to the issue of the extent of the Rule, as a matter of pure legal authority.\nThere can clearly be different views as to what requirements have to be satisfied before a proprietary interest is created.\nMore broadly, it is fair to say that the concept of equitable proprietary rights is in some respects somewhat paradoxical.\nEquity, unlike the common law, classically acts in personam (see eg Maitland, Equity, p 9); yet equity is far more ready to accord proprietary claims than common law.\nFurther, two general rules which law students learn early on are that common law legal rights prevail over equitable rights, and that where there are competing equitable rights the first in time prevails; yet, given that equity is far more ready to recognise proprietary rights than common law, the effect of having an equitable right is often to give priority over common law claims sometimes even those which may have preceded the equitable right.\nGiven that equity developed at least in part to mitigate the rigours of the common law, this is perhaps scarcely surprising.\nHowever, it underlines the point that it would be unrealistic to expect complete consistency from the cases over the past 300 years.\nIt is therefore appropriate to turn to the arguments based on principle and practicality, and then to address the issue, in the light of those arguments as well as the judicial decisions discussed above.\nArguments based on principle and practicality\nThe position adopted by the respondents, namely that the Rule applies to all unauthorised benefits which an agent receives, is consistent with the fundamental principles of the law of agency.\nThe agent owes a duty of undivided loyalty to the principal, unless the latter has given his informed consent to some less demanding standard of duty.\nThe principal is thus entitled to the entire benefit of the agents acts in the course of his agency.\nThis principle is wholly unaffected by the fact that the agent may have exceeded his authority.\nThe principal is entitled to the benefit of the agents unauthorised acts in the course of his agency, in just the same way as, at law, an employer is vicariously liable to bear the burden of an employees unauthorised breaches of duty in the course of his employment.\nThe agents duty is accordingly to deliver up to his principal the benefit which he has obtained, and not simply to pay compensation for having obtained it in excess of his authority.\nThe only way that legal effect can be given to an obligation to deliver up specific property to the principal is by treating the principal as specifically entitled to it.\nOn the other hand, there is some force in the notion advanced by the appellant that the Rule should not apply to a bribe or secret commission paid to an agent, as such a benefit is different in quality from a secret profit he makes on a transaction on which he is acting for his principal, or a profit he makes from an otherwise proper transaction which he enters into as a result of some knowledge or opportunity he has as a result of his agency.\nBoth types of secret profit can be said to be benefits which the agent should have obtained for the principal, whereas the same cannot be said about a bribe or secret commission which the agent receives from a third party.\nThe respondents formulation of the Rule has the merit of simplicity: any benefit acquired by an agent as a result of his agency and in breach of his fiduciary duty is held on trust for the principal.\nOn the other hand, the appellants position is more likely to result in uncertainty.\nThus, there is more than one way in which one can identify the possible exceptions to the normal rule, which results in a bribe or commission being excluded from the Rule see the differences between Professor Goode and Professor Worthington described in paras 10 and 32 above, and the other variations there described.\nClarity and simplicity are highly desirable qualities in the law.\nSubtle distinctions are sometimes inevitable, but in the present case, as mentioned above, there is no plainly right answer, and, accordingly, in the absence of any other good reason, it would seem right to opt for the simple answer.\nA further advantage of the respondents position is that it aligns the circumstances in which an agent is obliged to account for any benefit received in breach of his fiduciary duty and those in which his principal can claim the beneficial ownership of the benefit.\nSir George Jessel MR in Pearsons Case at p 341 referred in a passage cited above to the agent in such a case having to account either for the value or for the thing itself .\nThe expression equitable accounting can encompass both proprietary and non proprietary claims.\nHowever, if equity considers that in all cases where an agent acquires a benefit in breach of his fiduciary duty to his principal, he must account for that benefit to his principal, it could be said to be somewhat inconsistent for equity also to hold that only in some such cases could the principal claim the benefit as his own property.\nThe observation of Lord Russell in Regal (Hastings) quoted in para 6 above, and those of Jonathan Parker LJ in Bhullar quoted in para 14 above would seem to apply equally to the question of whether a principal should have a proprietary interest in a bribe or secret commission as to the question of whether he should be entitled to an account in respect thereof.\nThe notion that the Rule should not apply to a bribe or secret commission received by an agent because it could not have been received by, or on behalf of, the principal seems unattractive.\nThe whole reason that the agent should not have accepted the bribe or commission is that it puts him in conflict with his duty to his principal.\nFurther, in terms of elementary economics, there must be a strong possibility that the bribe has disadvantaged the principal.\nTake the facts of this case: if the vendor was prepared to sell for 211.5m, on the basis that it was paying a secret commission of 10m, it must be quite likely that, in the absence of such commission, the vendor would have been prepared to sell for less than 211.5m, possibly 201.5m.\nWhile Simon J was not prepared to make such an assumption without further evidence, it accords with common sense that it should often, even normally, be correct; indeed, in some cases, it has been assumed by judges that the price payable for the transaction in which the agent was acting was influenced pro rata to account for the bribe see eg Fawcett at p 136.\nThe artificiality and difficulties to which the appellants case can give rise may be well illustrated by reference to the facts in Eden and in Whaley Bridge.\nIn Eden, the promoter gave 200 shares to a director of the company when there were outstanding issues between the promoter and the company.\nThe Court of Appeal held that the director held the shares on trust for the company.\nAs Finn J said in Grimaldi v Chameleon Mining NL (No 2) (2012) 287 ALR 22, para 570, the effect of that decision, if Heiron and Lister were rightly decided, would appear to be that where a bribe is paid to an agent, the principal has a proprietary interest in the bribe if it consists of shares but not if it consists of money, which would be a serious anomaly.\nIn Whaley Bridge, a director of a company who negotiated a purchase by the company for 20,000 of a property was promised but did not receive 3,000 out of the 20,000 from the vendor.\nThe outcome according to Bowen J was that the vendor was liable to the company for the 3,000, because the company was entitled to treat the contract between the vendor and the director as made by the director on behalf of the company.\nBowen J held that it could not be successfully denied that if the 3,000 had been paid to the director he would have held it on trust for the company.\nMr Collings suggested that the decision was correct because, unlike in this case, the director and vendor had agreed that the 3,000 would come out of the 20,000 paid by the company.\nNot only is there no trace of such reasoning in Bowen Js judgment, but it would be artificial, impractical and absurd if the issue whether a principal had a proprietary interest in a bribe to his agent depended on the mechanism agreed between the briber and the agent for payment of the bribe.\nThe notion that an agent should not hold a bribe or commission on trust because he could not have acquired it on behalf of his principal is somewhat inconsistent with the long standing decision in Keech, the decision in Phipps approved by the House of Lords, and the Privy Council decision in Bowes.\nIn each of those three cases, a person acquired property as a result of his fiduciary or quasi fiduciary position, in circumstances in which the principal could not have acquired it: yet the court held that the property concerned was held on trust for the beneficiary.\nIn Keech, the beneficiary could not acquire the new lease because the landlord was not prepared to let to him, and because he was an infant; in Boardman, the trust could not acquire the shares because they were not authorised investments; in Bowes, the city corporation would scarcely have been interested in buying the loan notes which it had just issued to raise money.\nThe respondents are also able to point to a paradox if the appellant is right and a principal has no proprietary right to his agents bribe or secret commission.\nIf the principal has a proprietary right, then he is better off, and the agent is worse off, than if the principal merely has a claim for equitable compensation.\nIt would be curious, as Mr Collings frankly conceded, if a principal whose agent wrongly receives a bribe or secret commission is worse off than a principal whose agent obtains a benefit in far less opprobrious circumstances, eg the benefit obtained by the trustees agents in Boardman.\nYet that is the effect if the Rule does not apply to bribes or secret commissions.\nWider policy considerations also support the respondents case that bribes and secret commissions received by an agent should be treated as the property of his principal, rather than merely giving rise to a claim for equitable compensation.\nAs Lord Templeman said giving the decision of the Privy Council in Attorney General for Hong Kong v Reid [1994] 1 AC 324, 330H, [b]ribery is an evil practice which threatens the foundations of any civilised society.\nSecret commissions are also objectionable as they inevitably tend to undermine trust in the commercial world.\nThat has always been true, but concern about bribery and corruption generally has never been greater than it is now see for instance, internationally, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 1999 and the United Nations Convention against Corruption 2003, and, nationally, the Bribery Acts 2010 and 2012.\nAccordingly, one would expect the law to be particularly stringent in relation to a claim against an agent who has received a bribe or secret commission.\nOn the other hand, a point frequently emphasised by those who seek to justify restricting the ambit of the Rule is that the wide application for which the respondents contend will tend to prejudice the agents unsecured creditors, as it will serve to reduce the estate of the agent if he becomes insolvent.\nThis was seen as a good reason in Sinclair for not following Reid see at [2012] Ch 453, para 83.\nWhile the point has considerable force in some contexts, it appears to us to have limited force in the context of a bribe or secret commission.\nIn the first place, the proceeds of a bribe or secret commission consists of property which should not be in the agents estate at all, as Lawrence Collins J pointed out in Daraydan, para 78 (although it is fair to add that insolvent estates not infrequently include assets which would not be there if the insolvent had honoured his obligations).\nSecondly, as discussed in para 37 above, at any rate in many cases, the bribe or commission will very often have reduced the benefit from the relevant transaction which the principal will have obtained, and therefore can fairly be said to be his property.\nNonetheless, the appellants argument based on potential prejudice to the agents unsecured creditors has some force, but it is, as we see it, balanced by the fact that it appears to be just that a principal whose agent has obtained a bribe or secret commission should be able to trace the proceeds of the bribe or commission into other assets and to follow them into the hands of knowing recipients (as in Reid).\nYet, as Mr Collings rightly accepts, tracing or following in equity would not be possible, at least as the law is currently understood, unless the person seeking to trace or follow can claim a proprietary interest.\nCommon law tracing is, of course, possible without a proprietary interest, but it is much more limited than equitable tracing.\nLindley LJ in Lister at p 15 appears to have found it offensive that a principal should be entitled to trace a bribe, but he did not explain why, and we prefer the reaction of Lord Templeman in Reid, namely that a principal ought to have the right to trace and to follow a bribe or secret commission.\nFinally, on this aspect, it appears that other common law jurisdictions have adopted the view that the Rule applies to all benefits which are obtained by a fiduciary in breach of his duties.\nIn the High Court of Australia, Deane J said in Chan v Zacharia (1984) 154 CLR 178, 199 that any benefit obtained in circumstances where a conflict . existed or by reason of his fiduciary position or of opportunity or knowledge resulting from it is held by the fiduciary as constructive trustee.\nMore recently, the Full Federal Court of Australia has decided not to follow Sinclair: see Grimaldi, where the decision in Reid was preferred see the discussion at paras 569 584.\nAlthough the Australian courts recognise the remedial constructive trust, that was only one of the reasons for not following Sinclair.\nAs Finn J who gave the judgment of the court said at para 582 (after describing Heiron and Lister as imposing an anomalous limitation on the reach of Keech v Sandford at para 569), Australian law in this connection matches that of New Zealand , Singapore, United States jurisdictions and Canada.\nAs overseas countries secede from the jurisdiction of the Privy Council, it is inevitable that inconsistencies in the common law will develop between different jurisdictions.\nHowever, it seems to us highly desirable for all those jurisdictions to learn from each other, and at least to lean in favour of harmonising the development of the common law round the world.\nConclusions\nThe considerations of practicality and principle discussed in paras 33 44 above appear to support the respondents case, namely that a bribe or secret commission accepted by an agent is held on trust for his principal.\nThe position is perhaps rather less clear when one examines the decided cases, whose effect we have summarised in paras 13 28 above.\nHowever, to put it at its lowest, the authorities do not preclude us adopting the respondents case in that they do not represent a clear and consistent line of authority to the contrary effect.\nIndeed, we consider that, taken as a whole, the authorities favour the respondents case.\nFirst, if one concentrates on the issue of bribes or secret commissions paid to an agent or other fiduciary, the cases, with the exception of Tyrrell, were consistently in favour of such payments being held on trust for the principal or other beneficiary until the decision in Heiron which was then followed in Lister.\nThose two decisions are problematical for a number of reasons.\nFirst, relevant authority was not cited.\nNone of the earlier cases referred to in paras 13, 14 or 16 above were put before the court in Heiron (where the argument seems to have been on a very different basis) or in Lister.\nSecondly, all the judges in those two cases had given earlier judgments which were inconsistent with their reasoning in the later ones.\nBrett LJ (who sat in Heiron) had been party to the decision in McKays and Carlings Cases; Cotton LJ (who sat in Heiron and Lister) had been party to Bagnall (which was arguably indistinguishable), James LJ (who sat in Heiron) was party to Pearsons and McKays Cases, as well as Bagnall; Lindley LJ (who sat in Lister) had been party to Eden; and Bowen LJ (who sat in Lister) had decided Whaley Bridge.\nThirdly, the notion, adopted by Cotton and Brett LJJ that a trust might arise once the court had given judgment for the equitable claim seems to be based on some sort of remedial constructive trust which is a concept not referred to in earlier cases, and which has authoritatively been said not to be part of English law see per Lord Browne Wilkinson in Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, 714 716.\nFourthly, the decisions in Heiron and Lister are difficult to reconcile with many cases not concerned with bribes or secret commissions paid to agents, such as those set out in paras 12, 13 and 15 above.\nIf the reasoning in Heiron and Lister is correct, then either those other cases were wrongly decided or the law is close to incoherent in this area.\nAs for the domestic cases subsequent to Lister, they are all explicable on the basis that it was either conceded or decided that the reasoning in the Court of Appeal in Lister was binding.\nFurther, even after Lister, cases were being decided in which it seems to have been accepted or decided by Chancery Judges that where an agent or other fiduciary had a duty to account for a benefit obtained in breach of his fiduciary duty, the principal was entitled to a proprietary interest in the benefit examples include Wilberforce J in Phipps, Lord Templeman in Reid, and Lawrence Collins J in Daraydan Holdings Ltd.\nWere it not for the decision in Tyrrell, we consider that it would be plainly appropriate for this Court to conclude that the courts took a wrong turn in Heiron and Lister, and to restate the law as being as the respondents contend.\nAlthough the fact that the House of Lords decided Tyrrell in the way they did gives us pause for thought, we consider that it would be right to uphold the respondents argument and disapprove the decision in Tyrrell.\nIn the first place, Tyrrell is inconsistent with a wealth of cases decided before and after it was decided.\nSecondly, although Fawcett was cited in argument at p 38, it was not considered in any of the three opinions in Tyrrell; indeed, no previous decision was referred to in the opinions, and, although the opinions were expressed with a confidence familiar to those who read 19th century judgments, they contained no reasoning, merely assertion.\nThirdly, the decision in Tyrrell may be explicable by reference to the fact that the solicitor was not actually acting for the client at the time when he acquired his interest in the adjoining land hence the reference in Lord Westburys opinion to the limit of the agency and the absence of privity [or] obligation as mentioned in para 24 above.\nIn other words, it may be that their Lordships thought that the principal should not have a proprietary interest in circumstances where the benefit received by the agent was obtained before the agency began and did not relate to the property the subject of the agency.\nQuite apart from these three points, we consider that, the many decisions and the practical and policy considerations which favour the wider application of the Rule and are discussed above justify our disapproving Tyrrell.\nIn our judgment, therefore, the decision in Tyrrell should not stand in the way of the conclusion that the law took a wrong turn in Heiron and Lister, and that those decisions, and any subsequent decisions (Powell & Thomas, Attorney Generals Reference (No 1 of 1985) and Sinclair), at least in so far as they relied on or followed Heiron and Lister, should be treated as overruled.\nIn this case, the Court of Appeal rightly regarded themselves as bound by Sinclair, but they managed to distinguish it.\nAccordingly, the appeal is dismissed.\n","output":"This appeal concerns the issue of whether a bribe or secret commission received by an agent is held by that agent on trust for his principal, or whether the principal merely has a claim for equitable compensation in a sum equal to the value of the bribe or commission.\nIf the bribe or commission is held on trust, the principal has a proprietary claim to it, whereas if the principal merely has a claim for equitable compensation, the claim is not proprietary.\nThe distinction is important for two main reasons.\nFirst, if the agent becomes insolvent, a proprietary claim would give the principal priority over the agents unsecured creditors.\nSecondly, if the principal has a proprietary claim to a bribe or commission, he can trace and follow it in equity.\nOn 22 December 2004, FHR European Ventures LLP purchased the issued share capital of Monte Carlo Grand Hotel SAM from Monte Carlo Grand Hotel Ltd (the Seller) for 211.5m.\nThe purchase was a joint venture between the claimants in these proceedings, for whom FHR was the vehicle.\nCedar Capital Partners LLC provided consultancy services to the hotel industry, and it had acted as the claimants agent in negotiating the purchase.\nCedar accordingly owed fiduciary duties to the claimants.\nCedar had also entered into an Exclusive Brokerage Agreement with the Seller, which provided for the payment to Cedar of a 10m fee following a successful conclusion of the sale and purchase of the issued shared capital of Monte Carlo Grand Hotel SAM.\nThe Seller paid Cedar 10m on or about 7 January 2005.\nOn 23 November 2009 the claimants began these proceedings for recovery of the sum of 10m from Cedar.\nThe main issue at trial was whether Cedar had made proper disclosure to the claimants of the Exclusive Brokerage Agreement.\nSimon J found against Cedar on that issue, and made a declaration of liability for breach of fiduciary duty on the part of Cedar for having failed to obtain the claimants fully informed consent in respect of the 10m, and ordered Cedar to pay that sum to the claimants.\nHowever, he refused to grant the claimants a proprietary remedy in respect of the monies.\nThe claimants successfully appealed to the Court of Appeal, who made a declaration that Cedar received the 10m fee on constructive trust for the claimants absolutely.\nCedar now appeals to the Supreme Court on this issue.\nThe Supreme Court unanimously dismisses the appeal.\nLord Neuberger gives the judgment of the court.\nWhere an agent acquires a benefit which came to his notice as a result of his fiduciary position, or pursuant to an opportunity which results from his fiduciary position, the general equitable rule (the Rule) is that he is to be treated as having acquired the benefit on behalf of his principal, so it is beneficially owned by the principal.\nThe dispute in this case is the extent to which the Rule applies where the benefit is a bribe or secret commission obtained by an agent in breach of his fiduciary duty to his principal.\nWhile it is not possible, as a matter of pure legal authority, to identify any plainly right or plainly wrong answer to the issue of the extent of the Rule, considerations of practicality and principle support the case that a bribe or secret commission accepted by an agent is held on trust for his principal.\nThe only point on this appeal is whether the claimants are entitled to the proprietary remedy in respect of the 10m received by Cedar from the Seller [4].\nThe following principles are not in doubt:\n1) An agent owes a fiduciary duty to his principal because he is someone who has undertaken to act for or on behalf of his principal in a particular matter in circumstances which give rise to a relationship of trust and confidence; 2) As a result, an agent must not make a profit out of his trust, and must not place himself in a position in which his duty and his interest may conflict; and 3) A fiduciary who acts for two principals with potentially conflicting interests without the informed consent of both is in breach of the obligation of undivided loyalty, by putting himself in a position where his duty to one principal may conflict with his duty to the other [5].\nAnother well established principle, which applies where an agent receives a benefit in breach of his fiduciary duty, is that the agent is obliged to account to the principal for such a benefit, and to pay, in effect, a sum equal to profit by way of equitable compensation [6].\nThe principals right to seek an account undoubtedly gives him a right in equitable compensation in respect of the bribe or secret commission, which equals the quantum of that bribe or commission.\nIn cases to which the Rule applies, the principal has a proprietary remedy in addition to his personal remedy against the agent, and the principal can elect between the two remedies [7].\nWhat is in dispute is the extent to which the Rule applies where the benefit is a bribe or secret commission obtained by an agent in breach of his fiduciary duty to his principal [9].\nThe appellant contends that the Rule should not apply to a bribe or secret commission paid to an agent, because it is not a benefit which can properly be said to be the property of the principal [10].\nThe respondents argue that the Rule does apply to bribes or secret commissions received by an agent, because, in any case where an agent receives a benefit, which is, or results from, a breach the fiduciary duty owed to his principal, the agent holds the benefit on trust for the principal [11].\nIt is not possible to identify any plainly right or plainly wrong answer to the issue of the extent of the Rule, as a matter of pure legal authority [32].\nThe respondents formulation of the Rule has the merit of simplicity: any benefit acquired by an agent as a result of his agency and in breach of his fiduciary duty is held on trust for the principal.\nIn contrast, the appellants position is more likely to result in uncertainty [35].\nWider policy considerations also support the respondents case that bribes and secret commissions received by an agent should be treated as the property of his principal, rather than merely giving rise to a claim for equitable compensation.\nBribes and secret commissions undermine trust in the commercial world, and one would expect the law to be particularly stringent in relation to a claim against an agent who has received a bribe or secret commission [42].\nThe argument that the respondents version of the Rule will tend to prejudice the agents unsecured creditors has limited force in the context of a bribe or secret commission.\nIn the first place, the proceeds of a bribe or secret commission consists of property which should not be in the agents estate at all.\nSecondly, the bribe or commission will very often have reduced the benefit from the relevant transaction which the principal will have obtained, and therefore can fairly be said to be his property.\nFinally, it is just that a principal whose agent has obtained a bribe or secret commission should be able to trace the proceeds of the bribe or commission into other assets and to follow them into the hands of knowing recipients [43 44].\nConsiderations of practicality and principle support the case that a bribe or secret commission accepted by an agent is held on trust for his principal.\nWhile the position is less clear when one examines the decided cases, taken as a whole the authorities support the respondents case [46].\nThe cases, with the exception of Tyrrell v Bank of London (1862) 10 HL Cas 26, are consistently in favour of bribes or secret commissions being held on trust for the principal or other beneficiary until the decision in Metropolitan Bank v Heiron (1880) 5 Ex D 319, which was then followed in Lister & Co v Stubbs (1890) 45 Ch D 1.\nThe domestic cases subsequent to Lister are explicable on the basis that the issue was either conceded, or decided on the basis that Lister was binding.\nThe decision in Tyrrell should not stand in the way of the conclusion that the law took a wrong turn in Heiron and Lister, and that those decisions, and any subsequent decisions in so far as they relied on or followed Heiron and Lister, should be treated as overruled [47 50].\n","id":57}
{"input":"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.\nThe 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].\nIt 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.\nHer 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.\nBut, 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.\nSo issues about the interpretation of the subsection, at any rate as between Mr and Mrs Owens, have narrowed substantially.\nBut our judgments may nevertheless remain of some value to those who in the future wish to invoke, or need to apply, the subsection.\nResolution, the name by which the Solicitors Family Law Association is now known, intervenes in the appeal.\nIt commends, by contrast, a re interpretation of the subsection along the lines of that principal ground of appeal.\nThe court is grateful for its presentation but in the circumstances will refer only briefly to it.\nMrs Owens is aged 68.\nMr Owens is aged 80.\nThey were married in 1978 and have two children, now adult.\nDuring the marriage, with the support of Mrs Owens, Mr Owens built a successful business and they each now have significant wealth.\nThe matrimonial home, in which Mr Owens continues to live, is a substantial manor house in a village in Gloucestershire.\nMrs Owens now lives next door, in a property which they also own.\nIt was in June 2012 that Mrs Owens first consulted her solicitors about a divorce.\nIn about November 2012 she began an affair.\nIt ended in August 2013, which was when (as Mrs Owens later discovered) Mr Owens learnt of it.\nMrs Owens told the judge that the affair was the result of a bad marriage, not the cause for divorce.\nThe 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.\nIn 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.\nThey have not lived together since her departure.\nThe 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.\nBack 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.\nAs he accepts, Mr Owens then told Mrs Owens that, if she filed the petition, he would never speak to her again.\nThe judge remarked that, like the petition which she filed much later, this initial draft lacked beef.\nThat should have been a compliment, not a criticism.\nFamily 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.\nSuch allegations often inflame their relationship, to the prejudice of any amicable resolution of the ensuing financial issues and to the disadvantage of any children.\nThus 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\nsatisfy the court\nIn his judgment the judge observed that the draft petition was delivered to Mr Owens at the time when Mrs Owens had begun the affair.\nThe strong implication, he said, is that there was no substance in the draft petition.\nIndeed 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.\nWith 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.\nIn the event the draft petition was never issued.\nMr and Mrs Owens continued to live in the matrimonial home, and to a substantial extent to live together, for a further two years.\nBut Mrs Owens continued to keep a diary of incidents between herself and Mr Owens of which she might later wish to complain.\nIn May 2015 Mrs Owens issued the petition which is the subject of the proceedings.\nLike the earlier draft, it was based on the subsection and was cast in appropriately anodyne terms.\nThe statement of case comprised five paragraphs.\nIn 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.\nFor 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.\nHe indicated an intention to defend the suit.\nBy 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.\nAt 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.\nIn October 2015 a recorder conducted a case management hearing pursuant to rule 7.22(2) of the Family Procedure Rules 2010 (the FPR).\nIn 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.\nThe recorder also directed that the parties should file short witness statements, which were to stand as their evidence in chief.\nThe recorder made two further significant directions.\nThe first was that there should be no witness other than the parties themselves.\nIt appears that, by counsel, Mrs Owens agreed to that direction.\nThe second related to the requirement under the rule for the recorder to give directions for the conduct of the final hearing of the suit.\nThe 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.\nIn the event the recorders direction was for a hearing of one day.\nWhy 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?\nThe answer to this question is not in dispute.\nIt lies in an understanding of the practical operation of the family court nowadays when determining a defended suit for divorce.\nDefended suits are exceedingly rare.\nIn 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.\nThe 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.\nWhile 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.\nIn 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.\nIn 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.\nThat 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.\nThe 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.\nFor reasons which I will explain, the subsection nowadays sets at a low level the bar for the grant of a decree.\nThe 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.\nAs Mr Owens himself acknowledged when recounting the advice given to him, Courts rarely stand in the way of a party seeking a divorce.\nIndeed 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.\nMrs Owens duly amended her petition.\nBy 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.\nShe cannot have thought that the time allowed for the hearing would enable her to give evidence of more than a few of them.\nThe earliest of her examples was said to have occurred in 2013.\nSo 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.\nPerhaps there was no such example which she could honestly give; or perhaps, on advice, she did not regard it as necessary to do so.\nIn 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.\nHe entered very few denials.\nAt 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.\nMr Marshall did so; and, at the judges invitation, Mr Dunlop, on behalf of Mr Owens, did likewise.\nIndeed, during his final submission Mr Marshall, at the request of the judge, identified the four examples on which he most relied.\nThe 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.\nIt 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.\nIn 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.\nHaving 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.\nThe Law\nThis 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.\nIts words largely speak for themselves.\nBut there are six judgments delivered in the lower courts which helpfully illumine their effect.\nThey are old authorities which date from a period when controversy surrounding the establishment of a case under the subsection was slightly less rare.\nFirst, Pheasant v Pheasant [1972] Fam 202.\nA 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.\nSection 1(2)(b) of the 1973 Act is in the same terms as was section 2(1)(b) of the 1969 Act.\nThe husbands case was that the wife had been unable to give him the demonstrative affection which he needed.\nOrmrod J dismissed the petition.\nAt 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.\nAt pp 207 208 he construed section 2(1)(b) as placing primary emphasis on the respondents behaviour rather than on the petitioners personal idiosyncrasies.\nAnd 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\nabnegation\nSecond, Livingstone Stallard v Livingstone Stallard [1974] Fam 47.\nDunn J upheld a wifes petition based on the subsection.\nAt p 54 he suggested that it was unhelpful to analyse the conduct required by the subsection in terms of its gravity.\nWhile 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.\nThird, Thurlow v Thurlow [1976] Fam 32.\nA 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.\nAt 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.\nAt pp 41 43 he held that a respondents failure to act could amount to behaviour for the purposes of the subsection.\nEven 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.\nFourth, Stevens v Stevens [1979] 1 WLR 885.\nThe facts were unusual and, for present purposes, of interest.\nIn March 1976 a judge had dismissed the wifes petition under the subsection.\nHe 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.\nThereupon the parties had continued to live under the same roof.\nIn due course the wife presented a second petition, again under the subsection but relying only on the husbands behaviour occurring after March 1976.\nSheldon J granted her a decree.\nHe 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.\nHe held that he had to consider the totality of the evidence of the matrimonial history and the cumulative conduct of the husband.\nHe 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.\nFifth, Balraj v Balraj (1981) 11 Fam Law 110.\nThe 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.\nThe 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.\nShe 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.\nIn 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.\nIn 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.\nAs 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.\nAnd sixth, Buffery v Buffery [1988] 2 FLR 365.\nA 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.\nThe Court of Appeal held that behaviour under the subsection did not have to be grave or weighty.\nAt p 367 May LJ said that the gravity or otherwise of the conduct complained of is of itself immaterial.\nThe 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.\nThe wifes appeal was nevertheless dismissed on the basis that, even when judged by reference to correct principles, her petition failed.\nAs 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.\nThe 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.\nResolution 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.\nIt argues that the State thereby actively precipitates dispute.\nPending wholesale reform of section 1 of the 1973 Act, it clearly wishes to mitigate what it regards as the malign effect of the subsection.\nIt therefore submits that historically the lower courts have placed a flawed construction on it.\nIt 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.\nBut 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.\nIn 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.\nWith respect to Resolution, its suggested interpretation of the subsection is incorrect.\nSo 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.\nBut, 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.\nIn R (Quintavalle) v Secretary of State for Health [2003] UKHL 13, [2003] 2 AC 687, Lord Bingham of Cornhill said: 9.\nThere 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.\nIf 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.\nThe 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.\nIn 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.\nIt 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.\nI 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.\nIn 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.\nThe judges suggestion now seems almost comical.\nIn the two specific examples quoted, surely each spouse would nowadays be entitled to a decree against the other under the subsection.\nBut 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.\nFor a wife that moment now arrives earlier than it did before; it now arrives at the same time for both sexes in equivalent situations.\nIn 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.\nBut, 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.\nI 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.\nToday such an assessment would be inconceivable.\nEight 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.\nThe 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.\nIf 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.\nBut 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.\nNevertheless, in making that reference, I used a phrase which I regret: for I referred to the unreasonableness of the behaviour.\nUnreasonable behaviour has always been the family lawyers shorthand description for the content of the subsection.\nBut it is wrong.\nThe subsection requires not that the behaviour should have been unreasonable but that the expectation of continued life together should be unreasonable.\nWithin 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.\nIndeed, 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.\nThe 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.\nIt is difficult to find an alternative shorthand expression for this subsection, so we all talk, inaccurately, of unreasonable behaviour.\nThe Judgment\nIn the course of his short judgment in the present case the judge referred five times to unreasonable behaviour.\nQuestions arise.\nWas 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.\nBut such is not a pre requisite of a successful petition under the subsection.\nas it went.\nHe 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.\nI 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.\nThe President described the judges self direction as entirely adequate.\nBut 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.\nLord 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.\nIn 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.\nHe 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.\nBut 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.\nIt was this court itself which, at the hearing, raised with counsel another possible cause for concern about the judgment.\nIt 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.\nNevertheless Mr Owens and his advisers energetically denied that any behaviour on his part had caused the breakdown of the marriage.\nIn 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.\nThis 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.\nFor, 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.\nThe ground is no more than a conventional form of words with no application to the present or the breakdown of the marriage at all.\nMoreover, 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.\nThe fact that she does not live with the husband has other causes.\nThe 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.\nThe 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.\nIn such circumstances it is inappropriate for this court further to consider the point.\nThere 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.\nBut uneasy feelings are of no consequence in this court, nor indeed in any other appellate court.\nThe advantages of the judge in reaching the relevant conclusions need no rehearsal.\nThe 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.\nPermission 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.\nAs 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.\nThe Conclusion\nThe appeal of Mrs Owens must be dismissed.\nShe must remain married to Mr Owens for the time being.\nWere 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.\nParliament may wish to consider whether to replace a law which denies to Mrs Owens any present entitlement to a divorce in the above circumstances.\nLADY HALE:\nI have found this a very troubling case.\nIt 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.\nLord Wilson has explained very clearly what that law requires.\nHe sets out the three stages of the inquiry at para 28.\nHe 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.\nExpectations 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.\nAs 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.\nIndeed, 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.\nWith that statement of the law in mind, I have several misgivings about the trial judges judgment in this case.\nThe first is his repeated reference to unreasonable behaviour.\nThis is a convenient but deeply misleading shorthand for a very different concept.\nAnd it can so easily lead into error.\nIn particular, it can lead to a search for blame, which is not required.\nIndeed, 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.\nWorse still, referring to unreasonable behaviour can also lead to a search for who is the more to blame, which is also irrelevant.\nThe 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.\nThe current law simply does not do this.\nIt 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.\nWe should be referring to the facts in section 1(2)(a) and (b) as conduct based rather than fault based.\nMy 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.\nThat is, as Lord Wilson has explained, simply not the law.\nThe marriage has to have broken down irretrievably.\nOne of the five facts prescribed in section 1(2)(a) to (e) of the 1973 Act has to be proved.\nBut the Act does not require that there be a causal connection between them.\nIt 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.\nBut my third misgiving is the most troubling of all.\nThis 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.\nThose 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.\nThere is an analogy here with constructive dismissal cases in employment law.\nAs 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.\nIn 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.\nThe 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.\nBut what are we to do about it?\nThis court is not a court of error.\nIf 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.\nIn 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.\nThat argument is no longer pursued.\nHowever, 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.\nI am concerned that the trial court did indeed fall into error in the three respects identified earlier.\nAre 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.\nWe cannot assume that a properly instructed and constructed hearing would inevitably lead to a decree being granted.\nIn my view therefore, the correct disposal of this appeal would be to allow the appeal and send the case back to be tried again.\nHowever, 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).\nOrally, counsel viewed such a prospect with dread.\nIt 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.\nI am therefore reluctantly persuaded that this appeal should be dismissed.\nLORD MANCE:\nI agree that this appeal should be dismissed.\nAs to the law, I agree with paras 21 37 of Lord Wilsons judgment.\nAs to its application to the facts, my reasons can be put in like terms to those contained in Lord Wilsons summary in para 43.\nI also agree with his conclusions and observations in paras 44 45.\nThe judge stated and explained the legal test correctly in his para 10.\nHis 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.\nBut there is no reason to think that the judge did not ultimately apply the correct test to the allegations.\nHe expressly applied it when reaching his conclusions in his para 15.\nThe 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.\nHe 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.\nHe then considered various batches of allegations and three allegations which counsel for Mrs Owens ranked foremost in terms of seriousness.\nHe 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.\nIt 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.\nThe judge clearly formed the view that there was nothing in the case overall.\nI 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.\nBut 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.\nThe 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.\nI 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.\nFinally, 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.\nConsidering 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.\nIn his conclusions in para 15, he said: I find no behaviour such that the wife cannot reasonably be expected to live with the husband.\nThe fact that she does not live with the husband has other causes.\nThe 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.\nAfter 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.\n","output":"The Appellant, Mrs Owens, and the Respondent, Mr Owens, were married in 1978 and have two adult children.\nMrs 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.\nThe parties have not lived together since her departure.\nIn May 2015 Mrs Owens issued the divorce petition which is the subject of the current proceedings.\nIt 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.\nIt 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.\nIn October 2015 the matter came before a recorder for a case management hearing.\nIn light of Mr Owens defence, the recorder granted Mrs Owens permission to amend her petition so as to expand her allegations of behaviour.\nThe 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.\nMrs 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.\nThe 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.\nAccordingly, the test under s.1(2)(b) was not met and Mrs Owens petition for divorce was dismissed.\nMrs Owens appealed against this decision to the Court of Appeal, but her appeal was also dismissed.\nShe now appeals against the Court of Appeals decision to the Supreme Court.\nThe Supreme Court unanimously dismisses the appeal, with the result that Mrs Owens must remain married to Mr Owens for the time being.\nLord Wilson gives the majority judgment, with whom Lord Hodge and Lady Black agree.\nLady Hale and Lord Mance each give a concurring judgment.\nIt is important to bear in mind the legal context to this dispute, namely that defended suits for divorce are exceedingly rare.\nWhile 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].\nThe 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\nof the court in such a hearing will almost certainly result in the pronouncement of a decree [17].\nThis 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].\nWhen 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].\nThis 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].\nThe 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].\nAt the hearing, the judge gave himself the correct self direction; he understood he was applying an objective test, but with subjective elements [39].\nThe majority nevertheless have concerns about other aspects of the judges analysis.\nIn 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].\nHowever, uneasy feelings are of no consequence in an appellate court.\nA 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.\nIn such circumstances it is most unlikely for it to be appropriate for the Supreme Court to intervene [43].\nHowever, the majority invite Parliament to consider replacing a law which denies Mrs Owens a divorce in the present circumstances [44 45].\nConcurring judgments Lady Hale agrees with Lord Wilson as to the legal analysis, but has several misgivings about the judges judgment [47 48].\nHer 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].\nIn 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.\nHowever, 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].\nLord 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.\nLord 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].\nMoreover, 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.\nIt 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].\n","id":58}
{"input":"an employee that an employer has discriminated against him by dismissing him contrary to section 4(2)(c) of the Race Relations Act 1976? The 1976 Act was repealed by section 211(2) of, and Schedule 27 to, the Equality Act 2010 and with effect from 1 October 2010 the provision in section 4(2)(c) has been subsumed in section 39(2)(c) of the 2010 Act.\nINTRODUCTION\nThe appellant, Miss Hounga, appears to have a current age of about 21.\nShe is of Nigerian nationality and now resides in England.\nIn January 2007, when she was aged about 14, she came from Nigeria to the UK under arrangements made by the family of the respondent, Mrs Allen, who is of joint Nigerian and British nationality and who resides in England with her children.\nPursuant to these arrangements, in which Miss Hounga knowingly participated, her entry was achieved by her presentation to UK immigration authorities of a false identity and their grant to her of a visitors visa for six months.\nFor the following 18 months Miss Hounga lived in the home of Mrs Allen and of her husband who, albeit formally a respondent to it, plays no part in this appeal.\nAlthough Miss Hounga had no right to work in the UK, and after July 2007 no right to remain in the UK, Mrs Allen employed her to look after her children in the home.\nIn July 2008 Mrs Allen evicted Miss Hounga from the home and thereby dismissed her from the employment.\nThis appeal proceeds on the basis that, by dismissing her, Mrs Allen discriminated against Miss Hounga in that on racial grounds, namely on ground of nationality, she treated Miss Hounga less favourably than she would have treated others.\nIn due course Miss Hounga issued a variety of claims and complaints against Mrs Allen in the Employment Tribunal (the tribunal).\nThe one claim or complaint which the tribunal upheld was her complaint of unlawful discrimination but only that part of it which related to her dismissal.\nIn this regard it ordered Mrs Allen to pay compensation to her for the resultant injury to her feelings in the sum of 6,187.\nThe Employment Appeal Tribunal (the appeal tribunal) dismissed Mrs Allens cross appeal against the order.\nBut the Court of Appeal upheld a further cross appeal brought by Mrs Allen against it and set it aside: [2012] EWCA Civ 609, [2012] IRLR 685.\nBy a judgment given by Rimer LJ, with which Longmore LJ and Sir Scott Baker agreed, the court held that the illegality of the contract of employment formed a material part of Miss Houngas complaint and that to uphold it would be to condone the illegality.\nIt is against the Court of Appeals order, dated 15 May 2012, that Miss Hounga brings her appeal.\nA small claim generates an important point.\nMiss Hounga and Mrs Allen both gave oral evidence to the tribunal, which concluded that both of them, but particularly Mrs Allen, had lied to it.\nThe unreliability of the evidence must have made the tribunals task of resolving factual issues difficult.\nFurthermore the tribunals rejection of part of Miss Houngas complaint on jurisdictional grounds, explained in para 18(c) below, may have led it to consider that it had no need to make certain findings.\nBut whether these factors entirely explain the tribunals widespread failure to find facts is unclear.\nThe absence of findings has hampered the inquiry at all three appellate levels.\nMiss Houngas evidence was that, when she travelled to the UK in January 2007, she had been aged only 14.\nShe said that an affidavit which she had sworn in Lagos just prior to her journey, in which she asserted that she had been born in July 1986 and so was then aged 20, was untrue.\nMrs Allen contended before the tribunal that the assertion in Miss Houngas affidavit was true or, at any rate, that she had been an adult by the date of her entry into the UK.\nExpert evidence supported Miss Houngas contention that in January 2007 she had been aged only 14.\nA consultant paediatrician with expertise in assessing age reported in January 2009 that at the date of his report she was aged about 16 and was certainly no more than 18.\nIn June 2009 a local authority conducted a Merton compliant age assessment and concluded similarly that, at the date of its assessment, Miss Hounga was aged 16.\nThe tribunal said only that it was impossible to make a definite finding in relation to Miss Houngas age.\nIt referred to the report and to the assessment but, while it did not make an express finding about her age even in approximate terms, it gave no reason for disagreeing with them.\nIt also accepted Miss Houngas assertion that in the affidavit sworn in Lagos she had falsified her date of birth.\nIn these circumstances, unsatisfactory though they are, it is reasonable to proceed and to conclude that the tribunal proceeded on the basis that, at the time of her entry into the UK, Miss Hounga had been aged about 14.\nA psychological report on Miss Hounga, dated July 2009, was presented to the tribunal on her behalf but in its reasons the tribunal did not refer to it.\nThe psychologist reported that Miss Houngas cognitive functioning might well be in the extremely low range and indicated a learning disability; that she had long term emotional difficulties; and that she functioned at a developmental age much lower than her chronological age which, again, the writer took to be 16 as at the date of the report.\nThe tribunal did acknowledge that Miss Hounga was illiterate and had not received an education in Nigeria but it added that she spoke English well.\nUnderstandably the tribunal did not resolve an issue whether, as Miss Hounga claimed, her parents were dead.\nIt did find, however, that in due course Miss Hounga had joined the well to do family of Mrs Allens brother in Lagos; that for two years she had lived there as a home help; that in due course Mrs Allens mother, who lived in England but was visiting Lagos, and Mrs Allens brother had jointly put a proposal to Miss Hounga, which she had willingly accepted, that she should go to live in England with Mrs Allen, where she would again work as a home help but would also go to school; and that, by telephone, Mrs Allen had offered to pay her 50 per month additional to the provision of bed and board.\nThe tribunal found that it was the prospect of education in England which particularly attracted Miss Hounga.\nThe tribunal found that Mrs Allens brother in Lagos had thereupon masterminded a plan, in which Mrs Allen and her mother had been complicit, to secure Miss Houngas entry into the UK.\nIt was pursuant to the plan that Miss Hounga had sworn the affidavit, drafted in terms directed by Mrs Allens brother, in which she had asserted not only that she had been born in July 1986 (and that her birth certificate had been lost) but also that her surname was that of Mrs Allens mother.\nThe affidavit had led to the issue to Miss Hounga of a Nigerian passport in that name.\nMrs Allens family had then caused Miss Hounga to be driven to the British High Commission in Lagos, where she had produced a document by which Mrs Allens mother, pretending to be Miss Houngas grandmother, had purported to invite her to come to stay with her in England.\nThe High Commission had thereupon given her entry clearance.\nMrs Allens brother had then purchased a ticket for her travel to England.\nOn arrival at Heathrow on 28 January 2007 Miss Hounga had confirmed to an immigration officer that the purpose of her visit was to stay with her grandmother.\nMiss Houngas passport had thereupon been indorsed with a visitors visa, valid for six months.\nThe tribunal found that Miss Hounga (a) knew the difference between right and wrong; (b) knew that the assertions in her affidavit about her name and date of (c) knew that she had secured the right to enter the UK on false pretences; birth had been false; (d) knew that it was illegal for her to remain in the UK beyond 28 July (e) knew that it was illegal for her to take employment in the UK.\n2007; and\nMrs Allen met Miss Hounga at Heathrow and took her to her home in Hanworth, Middlesex.\nFor the next 18 months Miss Hounga acted, according to the tribunal, as a sort of au pair.\nShe helped to care for the three small children of Mrs Allen and her husband, who at that time was also living in the home.\nShe also did housework.\nShe was not entirely confined to the house.\nShe went with the family by car to the supermarket but stayed inside the car while Mrs Allen did the shopping.\nOccasionally she went with the family to the local park; and once they all went to Thorpe Park.\nShe knew the whereabouts of the key to the front door and was allowed to open it to callers.\nMrs Allen bought earrings and clothes for her.\nBut Miss Hounga was never enrolled in a school and, although she was provided with bed and board, she was never paid 50 per month or any wages at all.\nIt was Miss Houngas case before the tribunal that, prior to her departure from the home on 17 July 2008, Mrs Allen had regularly treated her with violence and threats and had thereby harassed her.\nMiss Hounga gave a detailed account, albeit unsupported by dates, of various acts of violence allegedly perpetrated upon her by Mrs Allen and of ugly threats allegedly made by her.\nMrs Allen denied all these allegations.\nIn the event the tribunal made only two findings in this regard, namely first that Mrs Allen had inflicted serious physical abuse on Miss Hounga and second that she had caused her extreme concern by telling her that, were she to leave the house and be found by the police, she would be sent to prison because her presence in the UK was illegal.\nBut the tribunal did accept in full Miss Houngas account of the incident which led to her departure on 17 July 2008, as follows: (a) on that evening Mrs Allen was angry to discover that the children had not eaten the supper which she had directed Miss Hounga to prepare for them; (b) Mrs Allen smacked and hit Miss Hounga; (c) after Miss Hounga had put the children to bed, Mrs Allen attacked and beat her, threw her out of the house and poured water over her; (d) on his return from work, Mrs Allens husband let Miss Hounga back into the house but he later changed his mind and said that Mrs Allen could do whatever she liked to Miss Hounga; (e) thereupon Mrs Allen opened the front door, told Miss Hounga to leave the house and to die and pushed her outside again; (f) that night Miss Hounga slept in the garden in her wet clothes; (g) at 7:00 am she tried to get back into the house but no one would open the door; and (h) she then made her way to a supermarket car park, where she was found and taken to the social services department of the local authority.\nPROCEEDINGS\nIn December 2008 Miss Houngas claim was filed in the tribunal on her behalf.\nIt did not, at first, recite Mrs Allens address: for, although she had lived there for 18 months, Miss Hounga had remained unaware of it.\nIt was only later that her lawyers discovered it.\nMiss Houngas claim had various components.\nThey fell into two groups, which, in the interests only of convenience, I will describe as the contract claims and the discrimination complaints.\nThe former included claims for unfair dismissal, breach of contract, unpaid wages and holiday pay.\nThe latter were brought under the Race Relations Act 1976 (the Act) and comprised complaints of racial discrimination both in the form of harassment prior to Miss Houngas dismissal contrary to section 3A of the Act and in relation to the dismissal itself contrary to section 4(2)(c) of the Act.\nMrs Allen filed an initial response to the claims and complaints in which she alleged that, other than perhaps meeting Miss Hounga in Hanworth, she had had no dealings with her in any way and had never employed her.\nAt a case management discussion Mrs Allen changed her account only to the extent of accepting that Miss Hounga had visited her house on a number of occasions.\nIt was only later that Mrs Allen accepted that Miss Hounga had lived in her house for an extended period.\n(a) The tribunal upheld Miss Houngas assertion that there had been a contract of employment between her and Mrs Allen.\nIn the appellate proceedings Mrs Allen did not challenge this determination. (b) The tribunal dismissed Miss Houngas contract claims on the basis that, as she knew, it was illegal for her to have entered into the contract of employment and that the defence of illegality operated so as to defeat such of her claims as were based on it.\nMiss Hounga unsuccessfully appealed to the appeal tribunal against the dismissal of her contract claims but did not appeal further in that regard. (c) The tribunal dismissed Miss Houngas complaint of pre dismissal harassment on the ground that she had not complied with the grievance procedure made applicable to such a complaint by Schedule 4 to the Employment Act 2002 and that she was therefore precluded from presenting it by section 32(2) of that Act.\nThe appeal tribunal dismissed Miss Houngas appeal in this regard.\nThe Court of Appeal, however, upheld her further appeal in this regard.\nIt held that the tribunal and the appeal tribunal had failed to consider her assertion that the circumstances were as specified in regulation 11(3)(c) of the Employment Act 2002 (Dispute Resolution) Regulations 2004 (SI 2004\/752) and that therefore, by regulation 11(1), the grievance procedure did not apply.\nThe court ruled, however, that it would be futile to remit the point for determination by the tribunal because the complaint of discrimination in relation to pre dismissal harassment would in any event face defeat on the ground on which the court was rejecting the complaint of discrimination in relation to the dismissal itself. (d) The tribunal upheld Miss Houngas complaint of discrimination in relation to the dismissal itself.\nIt was agreed that on any view the grievance procedure did not apply to this complaint.\nThe tribunal found that Mrs Allen had dismissed Miss Hounga from her employment because of her vulnerability consequent upon her immigration status, i.e. upon the absence of any right for her either to remain in the UK or to have taken the employment in the first place.\nIt made the order for compensation which the Court of Appeal subsequently set aside.\nNEW POINTS\nA month prior to the hearing in this court Mrs Allen, by her solicitors, indicated that she proposed at its inception to apply for permission under para 6.3.3 of UKSC Practice Direction 6 to raise two points which had not been raised on her behalf at any earlier stage of the proceedings.\nThe court received argument on the application accordingly.\nThe first point was based on section 4(3) of the 1976 Act, which has not been replicated in the 2010 Act.\nThe effect of the subsection was that, in the case of employment for the purposes of a private household, it was not unlawful for the employer to discriminate against the employee by dismissing her (or him) on ground of nationality (as opposed to grounds of race or ethnic or national origins).\nMiss Hounga conceded that, had it been invoked before the tribunal, the subsection would have defeated her complaint of discrimination in relation to dismissal on ground of nationality and that such had indeed been the ground on which in the event the tribunal had upheld it.\nShe contended, however, that, had it then been invoked, she would, as foreshadowed by the general terms of her claim form, have presented the grounds of discrimination as being those of race or ethnic or national origins.\nMrs Allen, for her part, conceded that, in the light of its terms, the subsection could not operate so as to defeat the complaints of pre dismissal harassment which, were this court to uphold Miss Houngas appeal against the Court of Appeals application of the illegality defence, would fall to be remitted to the tribunal.\nThe second point was that, in asking itself pursuant to section 1(1)(a) of the 1976 Act whether on ground of nationality Mrs Allen had treated Miss Hounga less favourably than she would treat other persons, the tribunal had fallen into error in its construction of the hypothetical other persons.\nWithout objection on behalf of Mrs Allen, the tribunal had compared her treatment of Miss Hounga with her hypothetical treatment of a British subject, i.e. a person entitled to remain and work here.\nThat such was the correct comparison had not been challenged on behalf of Mrs Allen whether in the appeal tribunal or in the Court of Appeal.\nNevertheless her second new point was that such was an incorrect comparison.\nShe wished to argue that many foreign nationals had rights to remain and work in the UK; that therefore it did not follow from a persons foreign nationality that she (or he) had no such right; that therefore an employer who discriminated against an employee of foreign nationality on grounds that she had no right to remain or work in the UK did not discriminate against her on ground of nationality; put another way, that it was incorrect to construct a comparator who had such rights; and that the correct comparator was a person who had a foreign nationality other than Nigerian but who was remaining in the UK illegally and had no right to work.\nFollowing receipt of the argument this court announced that it refused to grant permission to Mrs Allen to introduce either of the new points.\nThe basis of its refusal was only that the points were raised too late.\nThe result of the refusal is that, in the event that the court were to uphold Miss Houngas challenge to the Court of Appeals application of the illegality defence to her complaint in relation to dismissal, the tribunals award would be restored and not amenable to further challenge.\nIn that event, her complaint in relation to pre dismissal harassment on grounds of race or ethnic or national origins would be remitted to the tribunal to determine whether the ground identified by the Court of Appeal for possible disapplication of the grievance procedure existed and, if so, whether the complaint was established.\nTHE DEFENCE OF ILLEGALITY\nIt will thus be seen that, of the various claims and complaints made by Miss\nHounga against Mrs Allen in the tribunal, the only one to reach this court is the complaint of discrimination in relation to her dismissal.\nThis particular complaint may well be said not to capture the gravamen of Miss Houngas case against Mrs Allen.\nIrrespective of whether all of it can form the subject of a civil claim, the case which, on the tribunals exiguous findings, Miss Hounga makes against Mrs Allen relates centrally to her participation in the plan to secure her entry into the UK on a false basis; to Mrs Allens failure to pay her the promised wages and, in particular, to secure for her the promised education (although the tribunal made no finding that Mrs Allen had never intended to secure it for her); and to her acts of serious violence towards Miss Hounga over 18 months, coupled with threats of imprisonment which were entirely convincing to Miss Hounga and which in effect disabled her from taking any steps to rescue herself from her situation in Mrs Allens home.\nIn the event it was Mrs Allens eviction of her which precipitated her rescue.\nCruel though the manner of its execution was, the dismissal was, in a real sense, a blessing for Miss Hounga.\nBut, while the facts upon which the present appeal is founded may not represent Miss Houngas essential case against Mrs Allen, the clean legal issue remains: was the Court of Appeal correct to hold that the illegality defence defeated the complaint of discrimination?\nThe application of the defence of illegality to a claim founded on contract often has its own complexities.\nBut, in that it was unlawful (and indeed a criminal offence under section 24(1)(b)(ii) of the Immigration Act 1971) for Miss Hounga to enter into the contract of employment with Mrs Allen, the defence of illegality in principle precluded her from enforcing it.\nIn this regard a claim for unfair dismissal might arguably require analysis different from a claim for wrongful dismissal.\nBut a claimant for unfair dismissal is nevertheless seeking to enforce her contract, including often to secure her reinstatement under it.\nIn Enfield Technical Services Ltd v Payne [2008] EWCA 393, [2008] ICR 1423, the Court of Appeal, while rejecting its applicability to the two cases before it, clearly proceeded on the basis that a defence of illegality could defeat a claim for unfair dismissal.\nThis present appeal proceeds without challenge to the conclusion of the tribunal, upheld by the appeal tribunal, that the defence indeed precluded Miss Houngas claim for unfair dismissal.\nEqually there is no challenge to the dismissal on that same basis of her claim for unpaid wages although the considerations of public policy to which I will refer from para 46 onwards might conceivably have yielded a different conclusion.\nUnlawful discrimination is, however, a statutory tort: in relation to discrimination in the field of employment, see sections 56(1)(b) and 57(1) of the 1976 Act, now sections 124(6) and 119(2)(a) of the 2010 Act.\nThe application of the defence of illegality to claims in tort is highly problematic.\nIn National Coal Board v England [1954] AC 403 an employee sued his employer for breach of statutory duty in respect of injuries suffered in an explosion.\nIt had occurred while the employee was implementing an unlawful arrangement between him and a colleague that he, rather than the colleague, should join a cable to a detonator.\nThe House of Lords accepted that he had been contributorily negligent but rejected the defence of illegality.\nLord Asquith of Bishopstone said at pp 428 429: The defendants relied on the maxim ex turpi causa non oritur actio as absolving them of liability.\nThe vast majority of cases in which the maxim has been applied have been cases where, there being an illegal agreement between A and B, either seeks to sue the other for its enforcement or for damages for its breach.\nThat, of course, is not this case.\nCases where an action in tort has been defeated by the maxim are exceedingly rare.\nPossibly a party to an illegal prize fight who is damaged in the conflict cannot sue for assault (Boulter v Clark (1747) Bull N.P. 16).\nIf two burglars, A and B, agree to open a safe by means of explosives, and A so negligently handles the explosive charge as to injure B, B might find some difficulty in maintaining an action for negligence against A.\nBut if A and B are proceeding to the premises which they intend burglariously to enter, and before they enter them, B picks As pocket and steals his watch, I cannot prevail on myself to believe that A could not sue in tort The theft is totally unconnected with the burglary.\nBut, although it has since become established that the defence will sometimes defeat an action in tort, the circumstances in which it will do so have never been fully settled.\nIn Saunders v Edwards [1987] 1 WLR 1116 the purchasers of a flat sued the\nvendor for damages for the tort of deceit in having fraudulently represented to them that the premises included a roof terrace.\nBy arrangement between the parties, the price of the flat had been improperly reduced below its value, and the price of chattels also included in the sale had been correspondingly inflated above their value, in order to enable the purchasers to pay less stamp duty.\nThe Court of Appeal held that the vendor could not rely on the defence of illegality.\nKerr LJ, with whom Bingham LJ agreed, held at p 1127 that the purchasers dishonest apportionment of the price was wholly unconnected with their cause of action and that their moral culpability in that regard was greatly outweighed by that of the vendor in making the fraudulent representation.\nNicholls LJ, with whom Bingham LJ also agreed, held at p 1132 that the question (which he answered negatively) was whether to uphold the claim would be an affront to the public conscience in appearing indirectly to encourage the unlawful conduct of which the purchasers had been guilty.\nFor six years the public conscience test was applied to defences of illegality to claims both in tort and in contract: see for example Howard v Shirlstar Container Transport Ltd [1990] 1 WLR 1292.\nBut in Tinsley v Milligan [1994] 1 AC 340 all members of the House of Lords, including the two dissenting judges, agreed that the public conscience was, as Lord Browne Wilkinson observed at p 369, too imponderable a factor.\nThe majority of the House considered that, once that test was stripped out of the law, a reliance test was laid bare, namely that, in the words of Lord Browne Wilkinson at p 376, a claimant is entitled to recover if he is not forced to plead or rely on the illegality, even if it emerges that the title on which he relied was acquired in the course of carrying through an illegal transaction.\nBefore the House was, indeed, a claim to property, namely by Ms Milligan to a joint and equal equitable interest in a home which she had agreed to be vested in the sole name of Ms Tinsley, her cohabitant, only in order that she, Ms Milligan, could represent herself to be Ms Tinsleys lodger and claim state benefits accordingly.\nIn the wake of the Tinsley case the reliance test has inevitably taken hold; and\nit has been applied to claims in tort.\nIn Stone & Rolls Ltd v Moore Stephens [2008] EWCA Civ 644, [2009] UKHL 39, [2009] AC 1391, a company sued its auditors for negligence in failing to detect fraudulent transactions into which its former controlling director had caused it to enter.\nIt was held both in the Court of Appeal and, by a majority, in the House of Lords that the conduct of the director was to be attributed to the company; and that the defence of illegality defeated it.\nIn his judgment in the Court of Appeal, with which Keene and Mummery LJJ agreed, Rimer LJ referred at para 16 to the reliance test and described its effect in stark terms as follows: The relevant question it identifies is whether, to advance the claim, it is necessary for the claimant to plead or rely on the illegality.\nIf it is, the Tinsley case decided that the axe falls indiscriminately and the claim is barred, however good it might otherwise be.\nThere is no discretion to permit it to succeed.\nIn the House of Lords, Lord Phillips of Worth Matravers concluded at para 86 that the illegal conduct formed the basis of the companys claim, in other words that the company was forced to rely on it.\nHe had, however, observed at para 25: I do not believe that it is right to proceed on the basis that the reliance test can automatically be applied as a rule of thumb.\nIt is necessary to give consideration to the policy underlying ex turpi causa in order to decide whether this defence is bound to defeat [the companys] claim.\nI will explain in paras 42 and following why I consider that Lord Phillips was correct to soften the effect of the reliance test by the need to consider the underlying policy.\nThe test continues to carry maximum precedential authority but has attracted criticism.\nIt is said that it can work arbitrarily: it was only the presumption of a resulting trust which saved Ms Milligan from having to plead the agreement to defraud and, had Ms Tinsley instead been, for example, her daughter, a presumption of advancement might well have operated and, if so, Ms Milligan would have had to plead the agreement.\nIt is also said that the concept of a need to rely on an unlawful act is often easier to state than to apply.\nThese concerns were summarised in the report of the Law Commission entitled The Illegality Defence, presented to Parliament on 16 March 2010, Law Com No 320, at paras 2.13 15, to which was annexed a draft Bill which, in relation to claims to equitable interests, would have replaced the reliance test.\nMeanwhile, however, another test, overlapping with the reliance test but not coterminous with it, had been developed in relation to tort and in particular was to be applied to complaints of unlawful discrimination: the inextricable link test.\nIn Cross v Kirkby CA [2000] EWCA Civ 426, The Times 5 April 2000, the\nclaimant was a hunt saboteur and the defendant a local farmer.\nThe claimant shouted to the defendant Youre fucking dead and jabbed him in the chest and throat with a broken baseball bat.\nIn order to ward off further blows, the defendant grappled with him.\nHe wrested the bat from him and hit him on the head, causing his skull to fracture.\nThe Court of Appeal held that the claimants claim for assault and battery failed both because the defendant was acting in self defence and because it was defeated by the illegality defence.\nBeldam LJ, with whom Otton LJ agreed, said at para 76: In my view the [defence] applies when the claimants claim is so closely connected or inextricably bound up with his own criminal or illegal conduct that the court could not permit him to recover without appearing to condone that conduct.\nJudge LJ said at para 103 that the defence arose if the facts behind the claimants claim were inextricably linked with his criminal conduct and that this factor went well beyond questions of causation in the general sense.\nHe added at para 125 that, if the defendants behaviour was truly disproportionate overall, it might be powerful evidence that the claimants criminal conduct was not sufficiently linked to the injuries so as to attract the defence.\nThree months later, in Hall v Woolston Hall Leisure Ltd [2001] ICR 99, the inextricable link test was applied to a complaint of unlawful sex discrimination.\nThe employer dismissed the employee because of her pregnancy and thus discriminated against her on ground of sex.\nHer wages were 250 net per week but, to her knowledge, were misrepresented on her pay slips as 250 gross per week so that the employer might account to the Inland Revenue for less sums than were due.\nRejecting the employers defence of illegality, the Court of Appeal allowed her appeal against a refusal to include in her award compensation for loss of earnings.\nPeter Gibson LJ held at para 46 that there was no inextricable link between the employees complaint and the employers illegal underpayments to the Revenue.\nAfter citing the decision in the Cross case, Mance LJ said: 79.\nWhile the underlying test therefore remains one of public policy, the test evolved in this court for its application in a tortious context thus requires an inextricable link between the facts giving rise to the claim and the illegality, before any question arises of the court refusing relief on the grounds of illegality.\nIn practice, as is evident, it requires quite extreme circumstances before the test will exclude a tort claim. [Emphasis supplied] At para 80(D) he also concluded that there was no such inextricable link.\nIn Rhys Harper v Relaxion Group plc [2003] UKHL 33, [2003] ICR 867, the House of Lords determined a different point, namely that an employer might discriminate against an employee in breach of the discrimination statutes even by acts occurring after termination of the employment.\nBut Lord Rodger of Earlsferry quoted with approval from the judgments of Peter Gibson and Mance LJJ in the Hall case and if, as one might assume, he thereby impliedly indorsed the inextricable link test, he clearly thought that it would seldom, if ever, lead to the defeat of a complaint of discrimination.\nFor he said at p 930: where a contract of employment is tainted by illegality, an employee may none the less complain that her employer discriminated against her on the ground of her sex by dismissing her, since both the Equal Treatment Directive and the 1975 [Sex Discrimination] Act are designed to provide effective relief in respect of discriminatory conduct rather than relief which reflects any contractual entitlement which may or may not exist.\nIn Vakante v Governing Body of Addey and Stanhope School (No 2) [2004] EWCA Civ 1065, [2005] ICR 231, the Court of Appeal upheld a defence of illegality to a teachers complaint against a school of unlawful discrimination by dismissal on racial grounds.\nThe teacher was an asylum seeker who was not entitled to work in the UK without a work permit, which he never obtained.\nHe had represented to the school that he did not need a permit and it was unaware that its employment of him was unlawful.\nMummery LJ, with whose judgment Lord Slynn of Hadley and Brooke LJ agreed, analysed the inextricable link test as follows: 9.\nAlthough Halls case uses some of the familiar language of legal and factual causation (connection, link), the test does not restrict the tribunal to a causation question.\nMatters of fact and degree have to be considered: the circumstances surrounding the applicants claim and the illegal conduct, the nature and seriousness of the illegal conduct, the extent of the applicants involvement in it and the character of the applicants claim are all matters relevant to determining whether the claim is so inextricably bound up with the applicants illegal conduct that, by permitting the applicant to recover compensation, the tribunal might appear to condone the illegality.\nMummery LJ went on to hold at para 34 that the teachers employment was unlawful from top to bottom and from beginning to end and at para 36 that his complaint was so inextricably linked with the illegality of his employment that, were it to have upheld it, the tribunal would have appeared to condone the illegality.\nIn their case comment Race discrimination and the doctrine of illegality (2013) 129 LQR 12 Bogg and Novitz suggest that a series of errors entered the law in the Vakante case.\nThey are right to say that, in para 9 of Mummery LJs judgment above, there was a loosening of the inextricable link test and an entry into it of factors which, logically, might not have been entitled to entry.\nBut whether the loosened test led the Court of Appeal to make the wrong decision is much less clear.\nIn Gray v Thames Trains Ltd [2009] UKHL 33, [2009] 1 AC 1339, the House of Lords, while not disapproving the inextricable link test, expressed reservations about it.\nThe claimant was injured in the Ladbroke Grove rail disaster and in consequence suffered post traumatic stress disorder.\nThis led him to commit manslaughter, for which he was ordered to be detained in hospital.\nHe sued two railway companies for negligence, which they admitted.\nThe House held however that the defence of illegality barred such part of his claim as sought general damages arising out of his detention and damages for the loss of earnings which followed it.\nIt held that the defence precluded compensation for losses arising from the sentence passed upon him for a criminal act for which he had had responsibility, albeit diminished.\nSo, as Lord Rodger pointed out at para 63, the case was different from the National Coal Board case and the Cross case, in which the claimant had been engaged in an unlawful activity at the time when the defendant committed the alleged tort.\nNevertheless reference was made to the inextricable link test.\nLord Hoffmann said at para 54: It might be better to avoid metaphors like inextricably linked or integral part and to treat the question as simply one of causation.\nCan one say that, although the damage would not have happened but for the tortious conduct of the defendant, it was caused by the criminal act of the claimant?.\nOr is the position that although the damage would not have happened without the criminal act of the claimant, it was caused by the tortious act of the defendant? In the same vein Lord Rodger observed at para 74 that opinions were likely to differ about whether the alleged tort was inextricably linked with the claimants criminal conduct.\nI agree but am not convinced that the alternative inquiry suggested by Lord Hoffmann is any more likely to secure consistency of decision making.\nEvery formulation of a requirement to identify the active or effective cause of an event or an act to which it is inextricably linked has a potential for inconsistent application driven by subjective considerations.\nIn his article entitled Ex Turpi Causa when Latin avoids liability in the Edinburgh Law Review, 18 (2014) 175, Lord Mance made a related point at p 184: Your painter negligently leaves your front door open, and a thief enters.\nOf course, in your action for negligence against the painter, the painter is responsible for causing the loss of your goods.\nEqually, however, in your action for theft of the goods against the thief, if he is caught, he is the cause.\nCausation, like much else in the law, depends on context.\nThe subjectivity inherent in the requisite value judgement is well demonstrated by the facts of the present case.\nThree judges in the Court of Appeal were of the view, articulated in the judgment of Rimer LJ, that Miss Houngas complaint was inextricably linked to her own unlawful conduct obviously so.\nThey considered that the only difference between the complaints of Miss Hounga and of Mr Vakante was that, whereas his employers were unaware of the illegality, Mrs Allen and Miss Hounga were equal participants in entry into the illegal contract of employment.\nWhichever party bore the greater responsibility for making of the illegal contract, said Rimer LJ, [Miss Hounga] was a willing participant in it.\nHe made a further point: Ms Houngas dismissal discrimination case was dependent upon the special vulnerability to which she was subject by reason of her illegal employment contract: she was relying on the facts that she was an illegal immigrant, had no right to be employed here, effectively had no rights here at all and so could be treated less well because of her inferior situation.\nBut were Mrs Allen and Miss Hounga equal participants in entry into the illegal contract? Was there any doubt about the identity of the party who bore greater responsibility for it? And, despite the superficial attraction in logic of Rimer LJs further point, should Mrs Allens cruel misuse of Miss Houngas perceived vulnerability arising out of the illegality, by making threats about the consequences of her exposure to the authorities, be a further justification for the defeat of her complaint? As I will explain in para 49, such threats are an indicator that Miss Hounga was the victim of forced labour but in the hands of the Court of Appeal they become a ground for denial of her complaint.\nIf, indeed, the test applicable to Mrs Allens defence of illegality is that of the inextricable link, I, for one, albeit conscious of the inherent subjectivity in my so saying, would hold the link to be absent.\nEntry into the illegal contract on 28 January 2007 and its continued operation until 17 July 2008 provided, so I consider, no more than the context in which Mrs Allen then perpetrated the acts of physical, verbal and emotional abuse by which, among other things, she dismissed Miss Hounga from her employment.\nBut the bigger question is whether the inextricable link test is applicable to Mrs Allens defence.\nPUBLIC POLICY\nThe defence of illegality rests upon the foundation of public policy.\nThe principle of public policy is this said Lord Mansfield by way of preface to his classic exposition of the defence in Holman v Johnson (1775) 1 Cowp. 341, p 343, 98 Eng Rep 1120, p 1121.\nRules which rest upon the foundation of public policy, not being rules which belong to the fixed or customary law, are capable, on proper occasion, of expansion or modification: Maxim Nordenfelt Guns and Ammunition Co v Nordenfelt [1893] 1 Ch 630, 661 (Bowen LJ).\nSo it is necessary, first, to ask What is the aspect of public policy which founds the defence? and, second, to ask But is there another aspect of public policy to which application of the defence would run counter?\nAn answer to the first question is provided in the decision of the Canadian Supreme Court in Hall v Hebert [1993] 2 SCR 159.\nAfter they had been drinking heavily together, Mr Hebert, who owned a car, allowed Mr Hall to drive it, including initially to give it a rolling start down a road on one side of which there was a steep slope.\nThe car careered down the slope and Mr Hall was seriously injured.\nThe Supreme Court held that the illegality of his driving did not bar his claim against Mr Hebert but that he was contributorily negligent as to 50%.\nAt the outset of her judgment on behalf of the majority, McLachlin J, at p 169, announced her conclusion about the basis of the power to bar recovery in tort on the ground of illegality, which later she substantiated in convincing terms by reference to authority.\nHer conclusion was as follows: The basis of this power, as I see it, lies in [the] duty of the courts to preserve the integrity of the legal system, and is exercisable only where this concern is in issue.\nThis concern is in issue where a damage[s] award in a civil suit would, in effect, allow a person to profit from illegal or wrongful conduct, or would permit an evasion or rebate of a penalty prescribed by the criminal law.\nThe idea common to these instances is that the law refuses to give by its right hand what it takes away by its left hand.\nConcern to preserve the integrity of the legal system is a helpful rationale of the aspect of policy which founds the defence even if the instance given by McLachlin J of where that concern is in issue may best be taken as an example of it rather than as the only conceivable instance of it.\nI therefore pose and answer the following questions: (a) Did the tribunals award of compensation to Miss Hounga allow her to profit from her wrongful conduct in entering into the contract? No, it was an award of compensation for injury to feelings consequent upon her dismissal, in particular the abusive nature of it. (b) Did the award permit evasion of a penalty prescribed by the criminal law? No, Miss Hounga has not been prosecuted for her entry into the contract and, even had a penalty been thus imposed upon her, it would not represent evasion of it. (c) Did the award compromise the integrity of the legal system by appearing to encourage those in the situation of Miss Hounga to enter into illegal contracts of employment? No, the idea is fanciful. (d) Conversely, would application of the defence of illegality so as to defeat the award compromise the integrity of the legal system by appearing to encourage those in the situation of Mrs Allen to enter into illegal contracts of employment? Yes, possibly: it might engender a belief that they could even discriminate against such employees with impunity.\nSo the considerations of public policy which militate in favour of applying the defence so as to defeat Miss Houngas complaint scarcely exist.\nBut what about the second question posed in para 42? It requires the court to consider whether Mrs Allen was guilty of trafficking in bringing Miss Hounga from Nigeria to the UK and into the home in Hanworth.\nThe accepted international definition of trafficking is contained in the UN Protocol to Prevent, Suppress and Punish Trafficking in Persons (the Palermo Protocol) signed in 2000 and ratified by the UK on 9 February 2006.\nArticle 3 provides: (a) Trafficking in persons 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 for the purpose of exploitation.\nExploitation shall include, at a minimum, 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 persons to the intended exploitation set forth in subparagraph (a) of this article shall be irrelevant where any of the means set forth in subparagraph (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 persons even if this does not involve any of the means set forth in subparagraph (a) of this article.\nSo did Mrs Allen, together with other members of her family, recruit and\/or transport and\/or receive Miss Hounga, being then a child, for the purpose of exploitation, namely forced labour or servitude?\nIn her claim form Miss Hounga alleged that the UK Human Trafficking Centre had accepted her as a victim of human trafficking.\nBefore the tribunal she filed a report on herself made by Ms Skrivankova, Trafficking Programme Coordinator, Anti Slavery International, which intervenes in this appeal.\nThe report must be handled with care because Ms Skrivankova did not interview Miss Hounga and relied on written material, in particular her witness statement, which included disputed allegations in relation to which the tribunal made no findings.\nAt all events Ms Skrivankova reported that all the elements in the definition of trafficking in the Palermo Protocol were present in Miss Houngas case.\nShe suggested that it was a classic case of the trafficking of a vulnerable child, lacking family support, by people known to her, who abused her natural trust in them with promises which were not kept and who subjected her to forced labour.\nIn this latter regard Ms Skrivankova referred to a list of six indicators of forced labour published by the International Labour Organisation (the ILO), which takes the view that, if at least two of the indicators are present, forced labour exists.\nThe tribunal made no finding whether Miss Hounga was the victim of trafficking.\nNo doubt it considered that it had no need to do so.\nIt is only at this third level of appeal that the issue crops up again; and this courts duty to be fair to Mrs Allen demands that it should approach the issue with the utmost caution.\nNevertheless, although the court should remember, for example, that Miss Hounga was not actually locked into the home, it is hard to resist the conclusion that Mrs Allen was guilty of trafficking within the meaning of the definition in the Palermo Protocol.\nThus, of the ILOs six indicators of forced labour, there might be argument about the existence of the second (restriction of movement) but, on the tribunals findings, there certainly existed the first (physical harm or threats of it), the fourth (withholding of wages) and the sixth (threat of denunciation to the authorities where the worker has an irregular immigration status).\nJudicious hesitation leads me to conclude that, if Miss Houngas case was not one of trafficking on the part of Mrs Allen and her family, it was so close to it that the distinction will not matter for the purpose of what follows.\nThe Council of Europe Convention on Action against Trafficking in Human Beings CETS No 197 (the Convention) was done in Warsaw on 16 May 2005 and, following ratification, the UK became obliged to adhere to it, as a matter of international law, on 1 April 2009.\nAmong the purposes of the Convention, set out in article 1, are the prevention of trafficking, the protection of the human rights of victims and the design of a comprehensive framework for their protection and assistance.\nBy article 4, the Convention imports the definition of trafficking set out in the Palermo Protocol.\nArticle 15 provides: 3.\nEach party shall provide, in its internal law, for the right of victims to compensation from the perpetrators.\nIt is too technical an approach to an international instrument to contend that paragraph 3 relates to compensation only for the trafficking and not for related acts of discrimination.\nIn my view it would be a breach of the UKs international obligations under the Convention for its law to cause Miss Houngas complaint to be defeated by the defence of illegality.\nAs Lord Hoffmann said in R v Lyons [2002] UKHL 44, [2003] 1 AC 976, at para 27, Of course there is a strong presumption in favour of interpreting English law (whether common law or statute) in a way which does not place the United Kingdom in breach of an international obligation.\nArticle 4 of the European Convention on Human Rights provides: 1.\nNo one shall be held in slavery or servitude. 2.\nNo one shall be required to perform forced or compulsory labour.\nIn Rantsev v Cyprus and Russia (2010) 51 EHRR 1 a Russian woman, aged 20, had gone to work as an artiste in a cabaret in Cyprus.\nThree weeks later she was found dead in a street.\nThe European Court of Human Rights (the ECtHR) upheld her fathers complaint that Cyprus was in breach of article 4 in that its regime for the issue of visas for cabaret artistes had failed to afford effective protection to her against trafficking and that its police had failed properly to investigate events during those weeks which suggested that she was the victim of it.\nFor present purposes the importance of the courts judgment lies in the following: 282.\nThere can be no doubt that trafficking threatens the human dignity and fundamental freedoms of its victims and cannot be considered compatible with a democratic society and the values expounded in the Convention.\nIn view of its obligation to interpret the Convention in light of present day conditions, the Court considers it unnecessary to identify whether the treatment about which the applicant complains constitutes slavery, servitude or forced and compulsory labour.\nInstead, the Court concludes that trafficking itself, within the meaning of article 3(a) of the Palermo Protocol and article 4(a) of the Anti Trafficking Convention, falls within the scope of article 4 of the Convention.\nIn Siliadin v France (2005) 43 EHRR 287 the ECtHR ruled that a 15 year old girl, brought from Togo to France and made to work for a family without pay for 15 hours a day, had been held in servitude and required to perform forced labour and that France had violated article 4 by having failed to introduce criminal legislation which would afford effective protection to her.\nIn CN v United Kingdom (2012) 56 EHRR 869 the court made an analogous ruling against the UK.\nAfter the events in that case, Parliament had provided, by section 71 of the Coroners and Justice Act 2009 which extends to England, Wales and Northern Ireland, that it is a specific criminal offence to hold a person in slavery or servitude or to require her (or him) to perform forced labour.\nNo doubt mindful of their obligations under article 4, the UK authorities are striving in various ways to combat trafficking and to protect its victims.\nI refer, for example, to the Draft Modern Slavery Bill, Cm 8770, presented to Parliament in December 2013 and in particular to the amendments to it proposed by the government in its paper, Cm 8889, presented in June 2014 by way of response to the report of a parliamentary committee on the draft Bill.\nI note, for example, that one such amendment would provide a statutory defence to a victim of trafficking who, as a result, has been compelled to commit a crime.\nAlthough Miss Hounga is not in that category, the decision of the Court of Appeal to uphold Mrs Allens defence of illegality to her complaint runs strikingly counter to the prominent strain of current public policy against trafficking and in favour of the protection of its victims.\nThe public policy in support of the application of that defence, to the extent that it exists at all, should give way to the public policy to which its application is an affront; and Miss Houngas appeal should be allowed.\nLORD HUGHES (with whom Lord Carnwath agrees)\nI agree that Miss Houngas appeal should be allowed in relation to her claim for the statutory tort of discrimination, committed in the course of dismissal.\nI also agree that it follows that her claim in relation to alleged pre dismissal harassment on grounds of race or ethnic origin (again a claim in relation to the statutory tort) should be remitted to the tribunal to determine whether the ground identified by the Court of Appeal for possible disapplication of the grievance procedure existed and, if so, whether the complaint was established.\nI am, however, unable to go quite so far in the basis for this conclusion as Lord Wilson feels able to do.\nAs Lord Wilsons penetrating analysis clearly shows, a generalised statement of the conceptual basis for the doctrine under which illegality may bar a civil claim has always proved elusive.\nThe same search for it produced a similar conclusion through no less than three concentrated Law Commission documents, Consultation Papers 154 (1999) and 160 (2001) and its report on the limited case of illegality as it affects claims to beneficial interests under trusts The Illegality Defence, Law Com 320 (March 2010).\nA case in which, as I understand it, all the members of this court are agreed on the outcome of the appeal is not a suitable vehicle to essay a general synthesis such as has been so difficult to formulate.\nI attempt no more than a bare summary of such aspects of the question as affect the present case, which is a claim in tort.\nMiss Houngas contractual claims have rightly not been pursued either in the Court of Appeal or in this court.\nThe various analyses offered in past cases are largely, as it seems to me, different ways of expressing two connected aspects of the basis for the law of illegality.\nThe first is that 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.\nThe second is that before this principle operates to bar a civil claim, and particularly one in tort, there must be a sufficiently close connection between the illegality and the claim made.\nNeither proposition is suggested as a comprehensive test.\nEn route to the answer in an individual case, the court is likely to need to consider also the gravity of the illegality of which the claimant is guilty and her knowledge or intention in relation to it.\nIt will no doubt also consider the purpose of the law which has been infringed and the extent to which to allow a civil claim nevertheless to proceed will be inconsistent with that purpose.\nOther factors may arise in individual cases.\nIt is via considerations such as these that the general public policy is to be served.\nPublic policy very obviously underlies the rules upon illegality as it affects civil claims, but I do not think that the cases establish a separate trumping test of public policy.\nWhilst Lord Mansfields early statement of the law in Holman v Johnson (1775) 1 Cowp 341, 98 Eng Rep 1120 cannot be treated as a comprehensive test for the application of the law of illegality, it is important to remember one central feature of it, which remains true.\nWhen a court is considering whether illegality bars a civil claim, it is essentially focussing on the position of the claimant vis vis the court from which she seeks relief.\nIt is not primarily focusing on the relative merits of the claimant and the defendant.\nIt is in the nature of illegality that, when it succeeds as a bar to a claim, the defendant is the unworthy beneficiary of an undeserved windfall.\nBut this is not because the defendant has the merits on his side; it is because the law cannot support the claimants claim to relief.\nLord Mansfields classical expression of this principle was as follows: The objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant.\nIt is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may so say.\nThis is, as it seems to me, consistent with elementary justice.\nIf the bank robbers (or terrorists) are using explosives in their crime, and A is injured by a premature explosion attributable to the carelessness of B, it does not seem to me to be controversial to deny A a civil claim against B.\nThat will not be because he voluntarily accepted the risk of Bs negligence; on the contrary he no doubt relied on B to do his job well.\nIt will be because there is such a close connection between the illegality and the civil claim that the court could not consistently condemn the first and give relief upon the second.\nFor the same reason, claims by one criminal against another in relation to bad driving in escape from the crime will fail.\nConversely, when the illegality is not sufficiently closely connected to the claim, and can properly be regarded as collateral, or as doing no more than providing the context for the relationship which gives rise to the claim, the bar of illegality will not fall.\nAn example is Saunders v Edwards [1987] 1 WLR 1116, where a claim in fraud relating to the sale of real property was not defeated by a collateral agreement between the parties to deflate the price in order to avoid stamp duty.\nBingham LJ stated the principle thus, at p 1134: Where issues of illegality are raised, the courts have. to steer a middle course between two unacceptable positions.\nOn the one hand it is unacceptable that any court of law should aid or lend its authority to a party seeking to pursue or enforce an object or agreement which the law prohibits.\nOn the other hand, it is unacceptable that the court should, on the first indication of unlawfulness affecting any aspect of a transaction, draw up its skirts and refuse all assistance to the plaintiff, no matter how serious his loss nor how disproportionate his loss to the unlawfulness of his conduct. [O]n the whole the courts have tended to adopt a pragmatic approach to these problems, seeking where possible to see that genuine wrongs are righted so long as the court does not thereby promote or countenance a nefarious object or bargain which it is bound to condemn.\nWhere the plaintiffs action in truth arises directly ex turpi causa, he is likely to fail. [w]here the plaintiff has suffered a genuine wrong, to which allegedly unlawful conduct is incidental, he is likely to succeed.\nOnce again, it can be seen that the proportionality to which Bingham LJ was directing his attention was such as lay between the claimants offence and the claim, not as between the claimants turpitude and that of the defendant.\nHowever, although the relative turpitude of claimant and defendant is not the test, the extent of the claimants turpitude may be relevant to determining whether there is a sufficiently close connection between the illegal act and the claim.\nAn example is Vakante v Governing Body of Addey and Stanhope School (No 2) [2004] EWCA Civ 1065; [2005] ICR 231, in which the claimant had obtained his employment not only in breach of immigration law but also by criminal deception which caused the employers to take him on, and to risk themselves committing an offence, quite innocently; there his illegal acts were held to be so central to his claims for statutory discrimination, both in employment and in dismissal, as to bar them.\nFor the reasons given by Lord Wilson, I agree that the claim of statutory tort in the present case was set in the context of the claimants unlawful immigration, but that there was not a sufficiently close connection between the illegality and the tort to bar her claim.\nContrast her claim to recover for breach of contract of employment (or, by statutory extension, for unfair dismissal), when such claims depend on a lawfully enforceable contract of employment but her whole employment was forbidden and illegal.\nHuman Trafficking?\nHuman trafficking is a very serious crime, recognised both internationally and nationally.\nThose who practise it can expect, and receive in England and Wales, severe penalties.\nThe position of those who have been transported is, however, more complex.\nFirst, the line between (on the one hand) trafficking properly so called and (on the other) the often rapacious demands for money made by agents of persons who are only too keen to be transported to a western country may sometimes be difficult to discern in a particular case.\nThe latter situation is generally referred to as smuggling, to distinguish it from trafficking.\nSecond, assuming that the case is indeed one of trafficking, properly so called, the question arises how offences committed by the trafficked person ought to be treated.\nThe UK is bound by a series of international instruments, all of which adopt the same definition of trafficking, which originates in the Protocol to the UN Convention against Transnational Organised Crime, 2000 (the Palermo Protocol), ratified by the UK on 9 February 2006.\nThe accepted definition is, as set out by Lord Wilson: For the purposes of this Protocol: (a) Trafficking in persons 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.\nExploitation 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 persons to the intended exploitation set forth in subparagraph (a) of this article shall be irrelevant where any of the means set forth in subparagraph (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 persons even if this does not involve any of the means set forth in subparagraph (a) of this article.\nThe same definition appears in subsequent international instruments, the Council of Europe Convention on Action against Trafficking in Human Beings 2005 (CETS No 197) (the Council of Europe Convention), ratified by the UK on 17 December 2008 and the directly effective EU Directive 2011\/36\/EU on Preventing and Combating Trafficking in Human Beings and Protecting its Victims (the EU Directive), which came into effect on 6 April 2013, after the events with which this case is concerned.\nThe first two instruments are not part of English law, but it is of course a general principle of that law that ambiguous questions of construction are to be resolved in favour of compliance with the UKs international obligations where reasonably possible, and such obligations may similarly inform the application of open questions of common law.\nIt follows that under these instruments transportation amounts to trafficking if, in the case of an adult it is (a) accomplished by threat, force, deception or the other forms of coercion referred to and (b) only if it is undertaken with a view to exploitation, in the sense defined.\nIn the case of a child, (b) suffices.\nAssuming for the moment that Miss Hounga was a child at the time, which seems overwhelmingly likely, it remains necessary that the transportation was undertaken with a view to her exploitation.\nHer subsequent exploitation (again assuming despite the absence of findings that it is correctly so described) is no doubt evidence of a prior intent on the part of Mrs Allen, but it is not conclusive, and the tribunal has made no finding one way or the other.\nHowever that may be, if this was trafficking, the position of offence(s) committed by Miss Hounga remains to be considered.\nNone of the international instruments, nor any rule of English criminal law, provides any automatic defence to a trafficked person who commits a criminal offence: see R v L(C) [2013] EWCA Crim 991; [2013] 1 All ER 113 per Lord Judge CJ at paras 13 and 17, and R v M(L) [2010] EWCA Crim 2327; [2011] 1 Cr App R 135 at paras 13 and 14.\nThe mechanism of the instruments is different.\nThe second and third of them (although not the first) stipulate that signatory States must have a system which allows for the discretionary non punishment of those who have committed offences which they were compelled by their trafficking to commit.\nThis is particularly necessary in the several European countries where it is a general principle of the criminal law that prosecution must follow the commission of any offence (see for example section 152(2) of the German Code of Criminal Code of Procedure and article 112 of the Italian constitution) but it applies also in England and Wales where the Crown always has an ex post facto discretion to decide against prosecution if it is not judged to be in the public interest.\nThus article 26 of the Council of Europe Convention provides: \"Each party shall, in accordance with the basic principles of its legal system, provide for the possibility of not imposing penalties on victims for their involvement in unlawful activities, to the extent that they have been compelled to do so.\" Article 8 of the EU Directive is to the same effect: \"Member States shall, in accordance with the basic principles of their legal systems, take the necessary measures to ensure that competent national authorities are entitled not to prosecute or impose penalties on victims of trafficking in human beings for their involvement in criminal activities which they have been compelled to commit as a direct consequence of being subjected to [trafficking].\"\nThus, the internationally recognised rule is clear, as is English criminal law.\nThe trafficked victim, assuming that is what she is, is not relieved of criminal liability for an offence which she has committed.\nIf, however, she was compelled to commit it as a direct consequence of being trafficked, careful consideration ought to be given to whether it is in the public interest to prosecute her.\nIn the present case, there is no finding that Miss Hounga was compelled to commit the immigration offences which she committed; the tribunal understandably found that she was well aware of what she was doing and voluntarily did it in the hope of advantage.\nYoung as she clearly was, she was no doubt under the influence of Mrs Allen and that would constitute very real mitigation if punishment were in question.\nBut what her trafficking, if that is what it was, does not do is to take away the illegality of what she knowingly did.\nArticle 6(6) of the Palermo Protocol provides: Each State Party shall ensure that its domestic legal system contains measures that offer victims of trafficking in persons the possibility of obtaining compensation for damage suffered.\nIt is not possible to interpret this international obligation as requiring English law to permit Miss Hounga to recover damages for the statutory tort of discrimination.\nThat statutory tort is not in any sense co extensive with trafficking or for that matter with exploitation.\nFor the same reasons, it would not be possible to interpret this article as requiring English law to depart from its general principles of illegality so as to enable a person such as Miss Hounga to recover wages under an unlawful contract of employment.\nMoreover, the EU Directive, now in force, is more specific and explains what article 6(6) appears to have in mind: Article 17 Compensation to victims Member States shall ensure that victims of trafficking in human beings have access to existing schemes of compensation to victims of violent crimes of intent.\nFor the sake of completeness, it should be noted that there are currently Government proposals to reinforce the English statutory law on trafficking: see the Draft Modern Slavery Bill (Cm 8770) and proposed adjustments to it following consideration by the joint parliamentary committee (Cm 8889).\nThey are mostly directed to making more severe the controls of, and penalties upon, traffickers, but there are some which affect the position of victims.\nThese are at present proposals only and there can be no certainty that they will be enacted in the form currently suggested.\nBut even if they are, they would not alter the position set out above in any manner which would alter the conclusions set out above in relation to Miss Hounga.\nThe proposals include: a. to provide a trafficked person with a statutory defence to a criminal offence but only where he or she has been compelled to commit the offence; this would be a change to English law, but there is in this case no sufficient evidence, still less a finding, that Miss Hounga was compelled to commit her immigration offences; b. to provide for amendments to the Proceeds of Crime Act 2002 so as to enable victims of trafficking to be compensated out of the confiscatable assets of traffickers; there is already a power to order compensation, which may be payable out of confiscatable assets, but even if this alters the position significantly it will be directed at compensation for trafficking and for the reasons set out above would not impact on the application of the ordinary principles of illegality as a bar to civil claims.\nConclusion\nFor these reasons my conclusion is that Miss Hounga succeeds in her appeal, on the particular facts of this case, on the ground that there is insufficiently close connection between her immigration offences and her claims for the statutory tort of discrimination, for the former merely provided the setting or context in which that tort was committed, and to allow her to recover for that tort would not amount to the court condoning what it otherwise condemns.\nBut it is not possible to read across from the law of human trafficking to provide a separate or additional reason for this outcome.\nEven if one assumes in Miss Houngas favour that her treatment by Mrs Allen in England amounted to slavery or forced labour, and even if one assumes, without any findings of fact, that Mrs Allen brought her to England with the purpose of so treating her, she does not appear to have been compelled to commit the immigration offences which she certainly did commit.\n","output":"The appellant, Miss Hounga, appears to have a current age of about 21.\nShe is of Nigerian nationality and now resides in England.\nIn January 2007, when she was aged about 14, she came from Nigeria to the UK under arrangements made by the family of the respondent, Mrs Allen, who is of joint Nigerian and British nationality and who resides in England with her children.\nPursuant to these arrangements, in which Miss Hounga knowingly participated, her entry was achieved by her presentation to UK immigration authorities of a false identity and their grant to her of a visitors visa for six months.\nFor the following 18 months Miss Hounga lived in the home of Mrs Allen and of her husband who, although formally a respondent to it, plays no part in this appeal.\nAlthough Miss Hounga had no right to work in the UK, and after July 2007 no right to remain in the UK, Mrs Allen employed her, unpaid, to look after her children in the home.\nThere Mrs Allen inflicted serious physical abuse on Miss Hounga and told her that, if she left the home, she would be imprisoned because her presence in the UK was illegal.\nIn July 2008 Mrs Allen forcibly evicted Miss Hounga from the home and thereby dismissed her from the employment.\nThis appeal proceeds on the basis that, by dismissing her, Mrs Allen discriminated against Miss Hounga in that on racial grounds, namely on ground of nationality, she treated Miss Hounga less favourably than she would have treated others.\nIn due course Miss Hounga issued a variety of claims and complaints against Mrs Allen in the Employment Tribunal.\nThe one claim which the tribunal upheld was her complaint of unlawful discrimination but only the part of the complaint which related to her dismissal.\nIn this regard it ordered Mrs Allen to pay compensation to Miss Hounga for the resultant injury to her feelings in the sum of 6,187.\nThe Employment Appeal Tribunal dismissed Mrs Allens cross appeal against the order.\nBut the Court of Appeal upheld a further cross appeal brought by Mrs Allen against it and set it aside.\nThe court held that the illegality of the contract of employment formed a material part of Miss Houngas complaint and that to uphold it would be to condone the illegality.\nIt is against the Court of Appeals order that Miss Hounga brings her appeal.\nThe Supreme Court unanimously allows the appeal in relation to Miss Houngas claim for the statutory tort of discrimination, committed in the course of dismissal.\nMiss Houngas claim in relation to alleged pre dismissal harassment on grounds of race or ethnic origin should be remitted to the tribunal to determine whether the ground identified by the Court of Appeal for possible disapplication of the grievance procedure existed and, if so, whether the complaint was established.\nLord Wilson (with whom Lady Hale and Lord Kerr agree) gives the lead judgment.\nLord Hughes (with whom Lord Carnwath agrees) gives a concurring judgment.\nThe main legal issue is whether the Court of Appeal was correct to hold that the illegality defence defeated the complaint of discrimination [23].\nLord Wilson holds that the application of the defence of illegality to claims in tort is problematic [25].\nThe Court of Appeal has held in a previous case that the defence of illegality to a complaint of discrimination should succeed only if there is an inextricable link between the complaint and the claimants illegal conduct.\nIf the test applicable to Mrs Allens defence of illegality is that of the inextricable link, Lord Wilson would hold the link to be absent.\nEntry into the illegal contract on 28 January 2007 and its continued operation until 17 July 2008 provided no more than the context in which Mrs Allen then perpetrated the acts of physical, verbal and emotional abuse by which, among other things, she dismissed Miss Hounga from her employment.\nBut Lord Wilson proceeds to ask whether the inextricable link test is applicable to Mrs Allens defence. [40] The defence of illegality rests upon the foundation of public policy.\nIt is necessary, therefore, first to ask what aspect of public policy founds the defence and, second to ask whether there is another aspect of public policy to which application of the defence would run counter. [42] On the first question, concern to preserve the integrity of the legal system is a helpful rationale of the aspect of policy which founds the defence but the considerations of public policy which militate in favour of applying the defence so as to defeat Miss Houngas complaint scarcely exist. [45] On the second question, the facts disclose that Mrs Allen and her family were guilty or close to being guilty of trafficking Miss Hounga from Nigeria to England.\nThe UK authorities are striving in various ways to combat trafficking and to protect its victims.\nThe decision of the Court of Appeal to uphold Mrs Allens defence of illegality to Miss Houngas complaint runs strikingly counter to this prominent strain of public policy.\nThe public policy in support of the application of that defence, to the extent that it exists at all, should give way to the public policy to which its application is an affront. [52] Lord Hughes concludes that Miss Hounga succeeds in her appeal on the ground that there is insufficiently close connection between her immigration offences and her claims for the statutory tort of discrimination.\nBut it is not possible to read across from the law of human trafficking to provide a separate or additional reason for this outcome.\nEven if one assumes in Miss Houngas favour that her treatment by Mrs Allen in England amounted to slavery or forced labour, and even if one assumes, without any findings of fact, that Mrs Allen brought her to England with the purpose of so treating her, she does not appear to have been compelled to commit the immigration offences which she certainly did commit. [67]\n","id":59}
{"input":"This case concerns the circumstances in which under EU law a finding in a judicial decision by an EU court is binding in later judicial proceedings.\nThe EU principle of res judicata, which applies directly in a domestic court of a member state when dealing with a dispute falling within the scope of EU law, has a number of strands.\nOne is known as relative res judicata and applies where a second action is brought between the same parties, dealing with the same subject matter and based on the same grounds as an earlier action.\nHowever, this case concerns a distinct strand known as absolute res judicata or, to use its full Latin tag, res judicata erga omnes.\nThis is intended to convey that, where the principle applies, a judicial decision is given dispositive effect which is binding not simply on the parties to the decision but on all the world.\nIt is a principle of EU law which has been developed by the EU courts in recent decades in a specific context for a specific purpose which relates to the effective judicial control of EU institutions and the maintenance of the EU legal order.\nIt concerns the binding scope of a judgment of the General Court of the European Union (the General Court) or the Court of Justice of the European Union (CJEU) annulling a measure adopted by an EU institution.\nIn addressing its scope and applicability it is therefore necessary to set to one side distinct notions of res judicata, issue estoppel and abuse of process as understood in common law jurisdictions.\nThe factual background\nThe appellants (referred to collectively as Servier), who are defendants in each of the proceedings giving rise to this appeal, developed and manufactured the medicinal product perindopril erbumine (Perindopril), which is used in the treatment of cardiovascular diseases including the treatment of high blood pressure.\nThey marketed Perindopril under the trade name Coversyl.\nPerindopril falls within the class of medicines known as angiotensin converting enzyme inhibitors (ACE inhibitors).\nServier obtained a number of patents for Perindopril during the course of its development.\nThe respondents to this appeal (referred to collectively as the claimants), are the national health authorities of England, Wales, and Scotland and Northern Ireland.\nThey are the claimants in the national proceedings.\nThe High Court has directed that the three sets of proceedings be jointly managed and be tried on the same occasion (Order of Henderson J dated 26 February 2016).\nThe present appeal is against the order of the Court of Appeal dated 27 June 2019 that followed a one day hearing on 18 June 2019 ([2019] EWCA Civ 1096; [2020] Ch 193).\nThat order dismissed Serviers appeal from the order of Roth J at first instance dated 17 April 2019, following a two day hearing on 6 7 March 2019 ([2019] EWHC 1004 (Ch); [2019] 5 CMLR 6).\nThe national proceedings\nThe national proceedings were commenced by the claimants between May 2011 and September 2012.\nIn those proceedings, each of the claimants alleged: (1) breaches by Servier of article 101 of the Treaty on the Functioning of the European Union (TFEU) and\/or the Chapter 1 prohibition under the Competition Act 1998 (the 1998 Act), consisting in the conclusion of anticompetitive agreements between Servier and potential manufacturers and\/or suppliers of generic Perindopril, under which the generic manufacturers\/suppliers would stay out of the market in return for financial consideration; and (2) an abuse of a dominant position by Servier contrary to article 102 TFEU and\/or the Chapter 2 prohibition under the 1998 Act consisting in: (a) the obtaining, defending and enforcing of an invalid patent through the provision of misleading information to patent authorities and\/or courts; and (b) the adoption of an exclusionary strategy, designed to keep competitors off the market, by entering into anticompetitive agreements with generic manufacturers and\/or suppliers (as above), and by purchasing rights to an alternative means of manufacturing Perindopril developed by a company known as Azad.\nIn addition, the English claimants alone pleaded a further claim for the tort of causing loss by unlawful means, based on largely the same facts as the alleged patent abuse.\nFollowing the striking out of that claim ([2019] EWCA Civ 1160; [2019] 3 WLR 938), the claims are essentially identical across all three sets of proceedings.\nThe English claimants appeal against the decision of the Court of Appeal to uphold the strike out of that cause of action is pending before the Supreme Court.\nThe claimants allege that by reason of Serviers unlawful conduct, the entry of generic Perindopril onto the UK market was delayed, which caused the price of Perindopril to be higher than it otherwise would have been.\nThe claimants allege that as a result they have suffered substantial financial loss through the higher prices they have paid for Serviers Perindopril product.\nIn October 2016, Servier was granted permission by Henderson J to amend its pleadings to include defences to the effect that if liability and causation are established then the claimants damages should be reduced or extinguished (i) because the claimants failed to mitigate their losses, (ii) for contributory negligence or (iii) because the losses claimed are too remote: [2016] EWHC 2381 (Ch); [2016] 5 CMLR 25.\nThese defences are described collectively and for convenience as the prescribing argument.\nThe Commission proceedings\nIn 2009 the European Commission (the Commission) commenced an investigation in case COMP\/39.612 into whether Serviers conduct relating to Perindopril had the object or effect of hindering generic entry of Perindopril on European Economic Area (EEA) markets.\nThe Commission granted interested party status to the English claimants for the purpose of the administrative stage of the proceedings.\nThis entailed: (i) access to a confidential 16 page summary of the Statement of Objections but not access to any of the evidence, submissions or other documents on the Commissions file (after the Commission proceedings had concluded, access was granted to relevant documents from the Commissions file in the disclosure exercise in the national proceedings); (ii) the opportunity, which was taken, to make submissions in writing; and (iii) the opportunity, which was taken, to attend the oral hearing and make 30 minutes oral submissions.\nThe other claimants did not request to be and were not interested parties in the proceedings before the Commission.\nOn 9 July 2014, the Commission issued a decision finding that Servier contravened articles 101 and 102 TFEU and imposing fines (the Commission Decision).\nThose aspects of the Commission Decision concerning article 102 are most relevant to the present appeal.\nIn particular, in determining that Servier held a dominant position in a relevant market (an element of the finding of breach of article 102 TFEU), the Commission defined the relevant market as comprising only Perindopril and it rejected Serviers argument that it comprised, at least, all ACE inhibitors.\nAfter obtaining disclosure of the Commission Decision on 9 March 2015, the claimants in all three sets of proceedings introduced amendments to their particulars of claim to rely on the Commission Decision, including in relation to the definition of the relevant market.\nServiers Appeal against the Commission Decision and the General Court Judgment\nOn 21 September 2014, Servier applied to the General Court in Case T 691\/14 seeking the annulment of the Commission Decision.\nServier relied on 17 pleas in support of its application, including the 14th plea which was summarised as follows: the Commission wrongly and artificially restricted the relevant market for finished products to the single molecule of perindopril, by excluding the 15 other enzyme conversion inhibitors available on the market.\nThe claimants did not apply to intervene and they were not involved in the General Court proceedings.\nThe General Court gave its judgment on 12 December 2018 (Case T 691\/14) EU:T:2018:922 (the General Court Judgment).\nIn it, the General Court: (1) annulled one of the findings of infringement of article 101 TFEU (in relation to the settlement agreement between Krka (Krka Tovarna Zdravil dd is a Slovenian pharmaceutical company which had, with a number of other pharmaceutical companies, filed opposition proceedings before the European Patent Office against one of Serviers patents) and Servier), but upheld the remainder of the Commissions findings of infringement of article 101 TFEU; and (2) annulled the finding of infringement of article 102 TFEU in its entirety, on the grounds that the relevant market at the relevant time extended beyond Perindopril and Servier did not have a dominant position in that wider market.\nBoth the Commission and Servier have now appealed from the General Court Judgment to the CJEU: see pending cases C 201\/19P and C 176\/19P.\nThe UK Government has been granted permission to intervene in those appeals.\nThe Commission is challenging (i) the General Courts approach to market definition including the General Courts analysis of the considerations of therapeutic substitutability and (ii) the determination that the Krka Agreement was not in breach of article 101 TFEU.\nThere are significant overlaps between the allegations of infringement in the national proceedings and the infringements investigated and found by the Commission.\nAs a result, it is common ground that the domestic proceedings cannot proceed to a final trial until the Commission proceedings and appeals therefrom have been finally resolved at EU level.\nThe prescribing argument\nThe prescribing argument relies (inter alia) on factual contentions that (a) ACE inhibitors exert a class effect (meaning that all drugs in the class work in essentially the same way and produce essentially the same effects) and (b) that there was no clinical difference between Perindopril and alternative ACE inhibitors that should have been material to NHS prescribers choice between ACE inhibitors, or to the claimants decision as to whether to encourage switching to other ACE inhibitors already available in generic form.\nOn the basis of those factual contentions, Servier pleads further that NHS prescribers could therefore prescribe these ACE inhibitors as an alternative to Perindopril and the claimants should therefore have taken all reasonable steps to encourage switching from the prescription of Perindopril to the prescription of cheaper alternative ACE inhibitors in generic form.\nParagraph 83C of Serviers re re amended defence to the English claimants claim sets out the particular steps which Servier contends the claimants should have taken to encourage prescribers to prescribe cheaper alternative ACE inhibitors that, unlike Perindopril, were already available in generic form during the relevant period.\nOn 31 January 2018, Roth J ordered that there should be a nine day trial of a set of preliminary issues in relation to the prescribing argument.\nThe early determination of these issues was intended to be useful because it could eliminate or substantially reduce the costs of a disclosure exercise relating to the prescribing argument.\nOn 8 November 2018, the trial estimate for the preliminary issues was extended to 22 days and the trial was relisted for October 2019.\nRoth J indicated that the preliminary issues trial should not take place before the General Court had issued its judgment, which it had not yet done at that time.\nThe preliminary issues ordered to be tried, as subsequently amended, were: (1) Would it have been reasonable or appropriate in the period between 2003 and 2009 for a clinician to prescribe another ACE inhibitor instead of Perindopril in all circumstances, except where the patient was allergic to or intolerant of all alternative ACE inhibitors? (2) inappropriate? If not, in what circumstances would that have been unreasonable or (3) Was it unreasonable for the claimants to fail to take any (and if so, which) of the steps set out in paragraph 83C of Serviers re re amended defence to the English claimants claim or identified in Serviers Further Information dated 29 September 2017?\nThe General Court having delivered its judgment on 12 December 2018, Servier indicated that its position was that certain findings made by the General Court (in particular as to the substitutability of Perindopril with other ACE inhibitors) would be binding on the High Court in the trial of the preliminary issues.\nOn 18 January 2019, Roth J directed the parties to serve pleadings on the question of the extent to which findings of fact made in the General Court Judgment that also arise for determination in the preliminary issue trial of the prescribing argument are binding in that trial.\nOn 1 February 2019, Servier served its pleading setting out eight propositions of fact derived from the General Court Judgment on which it intended to rely as binding in the trial of the preliminary issues.\nThese propositions were: (1) There was no significant difference between Perindopril and other ACE inhibitors in therapeutic terms, including in terms of efficacy and side effects, mode of action, main indications and contra indications (General Court Judgment paras 1425, 1429, 1481, 1519, 1589). (2) ACE inhibitors were widely perceived as substitutable by prescribers and there were many medications considered by physicians as therapeutic equivalents to Perindopril (General Court Judgment paras 1481, 1489). (3) There were no reasons why physicians should not have prescribed ACE inhibitors other than Perindopril for new patients (General Court Judgment para 1489). (4) Switching between ACE inhibitors for existing patients did not raise particular fears on the part of physicians (General Court Judgment para 1519). (5) The prescribing behaviour of physicians was not characterised by a high degree of inertia and treatment changes in patients undergoing continuous treatment were significant (General Court Judgment para 1544). (6) At least some Primary Care Trusts (PCTs) considered, as from 2005, that Perindopril was no more effective than any other ACE inhibitor and recommended, for cost reasons, the use of other ACE inhibitors than Perindopril, or even the substitution of another ACE inhibitor for Perindopril, in particular lisinopril or ramipril (General Court Judgment para 1464). (7) At least some PCT policies had a real negative effect on Perindopril sales at local level (General Court Judgment para 1534). (8) Serviers promotional activities did not sufficiently differentiate Perindopril from other ACE inhibitors for it to be recognised for particular therapeutic qualities by physicians (General Court Judgment paras 1472, 1473).\nServier contended that in so far as those propositions were findings made in the General Court Judgment, they were binding in the preliminary trial for two reasons: (1) the EU law principle of res judicata renders findings of fact and law constituting the ratio of an annulling judgment of the General Court binding erga omnes with absolute effect; and (2) in all of the circumstances of the case, including the claimants ability to participate in the EU proceedings (through the UK state) and their own positive reliance on the Commissions findings in relation to the prescribing argument, it would be an abuse of process for the claimants to require Servier to relitigate those factual issues in the mitigation trial.\nThe claimants admitted as facts the propositions stated at (6) and (7) in para 19 above, so the question of whether those findings were binding did not arise for consideration by Roth J.\nThe claimants denied, however, that the principle of res judicata confers binding effect in respect of the other findings of fact relied on by Servier in these proceedings, and denied that there would be an abuse of process as alleged or at all.\nIn his judgment Roth J addressed (at para 51) the question of whether the six disputed propositions were actually found as facts in the General Court Judgment.\nHe concluded that: (1) propositions (1) to (3) were findings made in the General Court Judgment; (2) proposition (5) was only made in modified form, to the effect that the Commission had not established that the prescribing behaviour of physicians was characterised by a high degree of inertia, and treatment changes in patients undergoing continuous treatment were significant; and (3) propositions (4) and (8) were not findings made in the General Court Judgment.\nIn his judgment, Roth J held that none of the findings of fact constituted res judicata for the purposes of the preliminary issues trial, and that it was not an abuse of process for the claimants to advance arguments and adduce evidence at the preliminary issues trial contrary to the propositions set out by Servier.\nRoth J granted permission to appeal in respect of Serviers res judicata pleading on the grounds that the question of how the EU principle of res judicata applies in this context had not been decided before and raised an important issue on which Servier had a reasonable prospect of success.\nIn addition, Servier sought permission first from Roth J, and then from the Court of Appeal, on the questions of (i) whether propositions (4), (5) and (8) had been found as facts in the General Court Judgment, and (ii) on the question of abuse of process.\nPermission to appeal was refused on these further grounds.\nOn 18 June 2019, the Court of Appeal heard the expedited appeal from Roth J in relation to the issue of res judicata.\nOn 27 June 2019 the Court of Appeal delivered its judgment ([2020] Ch 193), in which it held that none of the findings of fact relied on by Servier constituted res judicata for the purposes of the preliminary issues hearing.\nIt refused permission to appeal to the Supreme Court.\nOn 25 July 2019, the Supreme Court granted Servier permission to appeal on the issue of res judicata, solely on the basis that the application involved a point of law which is arguably not acte clair.\nOn 26 July 2019, at the pre trial review in relation to the preliminary issues hearing, with the consent of the parties, Roth J vacated the October 2019 preliminary issues hearing pending determination of this appeal to the Supreme Court.\nIssues on this appeal\nOn this appeal, the Supreme Court is asked to determine whether the following findings of fact made by the General Court are binding on the national court in a trial of preliminary issues under the EU principle of res judicata: the finding that there was no significant difference between (1) Perindopril and other ACE inhibitors in therapeutic terms, including in terms of efficacy and side effects, mode of action, main indications and contra indications (paras 1425, 1429, 1481, 1519 and 1589 of the General Court Judgment); the finding that ACE inhibitors were widely perceived as substitutable (2) by prescribers and there were many medications considered by physicians as therapeutic equivalents to Perindopril: (paras 1481 and 1489 of the General Court Judgment); (3) the finding that there was no element that limited the discretion available to physicians to prescribe ACE inhibitors other than Perindopril for new patients (para 1489 of the General Court Judgment); and the findings: (i) that the Commission had not established that the (4) prescribing behaviour of physicians was characterised by a high degree of inertia; and (ii) treatment changes in patients undergoing continuous treatment were significant (paras 1540 and 1544 of the General Court Judgment).\nServier contends that the appeal raises a point of EU law that cannot be characterised as acte clair against Servier.\nBy contrast, the claimants contend that the point of law is acte clair and that the High Court and Court of Appeal reached the right conclusion.\nIf the Supreme Court agrees with Servier that this issue is not acte clair against it, the Supreme Court is asked to refer the question to the CJEU pursuant to article 267 TFEU and, upon a preliminary ruling being received from the CJEU, to determine the issue.\nPreliminary reference to the CJEU\nOn this appeal Servier seeks a preliminary reference to the CJEU.\nMs Kelyn Bacon QC for Servier submits that the limitations imposed by the Court of Appeal on the absolute res judicata principle have no basis in the EU jurisprudence.\nHowever, recognising that the application of the principle in domestic proceedings has never previously been considered by the EU courts, she submits that the appropriate way forward is for this court to make a reference to the CJEU under article 267 TFEU.\nShe accordingly submits that the CJEU should be asked directly whether the findings of fact identified by Servier in the judgment of the General Court are binding in the national proceedings in relation to the quantification of the claimants loss.\nThat, she submits, is a question of law the answer to which is essential to the pending national proceedings and which cannot be said to be acte clair against Servier.\nI consider that the fact that the Commission has appealed against the\njudgment of the General Court to the CJEU where that appeal is pending constitutes an insuperable obstacle to this court making a preliminary reference at this time.\nIt is clearly established in the case law of the European courts that the principle of absolute res judicata applies only to judicial decisions which have become definitive after all rights of appeal have been exhausted, or after expiry of the time limits provided to exercise those rights.\nIt is only in such circumstances that the principle operates so as to prevent a judicial decision from being called into question (P&O European Ferries (Vizcaya) SA v Commission of the European Communities (Joined Cases C 442\/03P and C 471\/03P) [2006] ECR I 4845 (P&O European Ferries CJEC), para 47; Artegodan GmbH v European Commission (Case C 221\/10P) EU:C:2012:216 (Artegodan), paras 86 78, 92 93).\nIndeed, on the hearing of the appeal before us, this was common ground between the parties.\nThe Commissions appeal to the CJEU attacks the decision of the General Court on the definition of the relevant product market.\nThere can be no definitive judicial ruling on that issue until the judgment of the CJEU is handed down.\nThat court may come to a different conclusion on this issue from that of the General Court.\nAt that time, it would be necessary to analyse the decision and reasoning of the CJEU and to consider the possible application of the absolute res judicata principle to that judgment.\nAs matters presently stand, it cannot be said, in accordance with article 267 TFEU, that answers to the questions which Servier proposes we should refer to the CJEU are necessary in order to enable the national courts to give judgment.\nThose questions ask, in particular, whether specific findings in the General Court Judgment are binding on the national courts.\nThose findings may well be reversed or rendered redundant by the judgment of the CJEU on the appeal.\nFor the same reasons, the hearing of this appeal may be considered premature.\nThis court has been addressed on the findings of the General Court in relation to the relevant product market and invited to rule on whether under the principle of absolute res judicata they are binding on the parties in the national proceedings.\nThe short answer is that they are not because, as matters stand, the findings are not definitive and they may never become definitive because they may be overturned by the CJEU on appeal.\nNevertheless, the underlying issues of law before us are of considerable general importance and have been addressed in detail in the judgment of the Court of Appeal and in the submissions of counsel to this court.\nAs the members of this court have come to a clear and unanimous view on the underlying legal issues, it is appropriate for this court to set out its views in the hope that they might assist in later stages of the national proceedings.\nThe principle of absolute res judicata\nThe leading authority on the EU principle of absolute res judicata is P&O European Ferries CJEC.\nIt is necessary to refer to the history of the litigation in some detail.\nIn July 1992 P&O Ferries entered into an agreement (the original agreement) with the Ministry of Trade and Tourism of the Basque Government (the Ministry) and the Provincial Council of Biscay (the Diputacin) relating to the establishment of a ferry service between Bilbao and Portsmouth, under which the Ministry and the Diputacin agreed to purchase over a period of three years 26,000 travel vouchers for use on that ferry route at a price higher than the commercial rate.\nBrittany Ferries (BAI), which operated a service between Plymouth and Santander, complained to the Commission alleging that this amounted to state aid.\nThe Commission took the initial view that the agreement was not a normal commercial transaction and initiated a procedure to investigate whether the agreement was a state aid incompatible with the common market.\nImplementation of the original agreement was later suspended and on 7 March 1995, P&O Ferries entered into a new agreement (the new agreement) with the Diputacin but not with the Ministry, under which the Diputacin agreed to buy 46,500 travel vouchers for use on the same route over a three year period with the price per ticket set at a discounted rate to reflect the Diputacins long term purchasing commitment.\nThe new agreement was notified to the Commission in accordance with state aid rules.\nOn 7 June 1995 the Commission adopted a decision terminating the procedure that it had initiated to investigate the original agreement.\nThe Commission stated that the new agreement introduced significant modifications which met its earlier concerns and that, accordingly, it did not constitute state aid.\nThat decision was challenged by BAI before the Court of First Instance.\nP&O Ferries and the Kingdom of Spain intervened in support of the Commission but the Diputacin did not intervene.\nBy its judgment of 28 January 1999 in Bretagne Angleterre Irlande (BAI) v Commission of the European Communities (Case T 14\/96) [1999] ECR II 139 (BAI v Commission), the Court of First Instance annulled the decision of 7 June 1995 on the ground that the Commission had founded its decision that the new agreement did not constitute state aid on a misinterpretation of the state aid rules.\nIn May 1999 the Commission accordingly decided to initiate a state aid procedure to investigate the new agreement.\nOn 29 November 2000 it adopted a decision in which it declared that the new agreement did constitute state aid and that the aid was incompatible with the common market.\nThe Kingdom of Spain was ordered to recover the sums already paid.\nP&O Ferries and the Diputacin challenged that decision in the Court of First Instance, the Diputacin challenging the whole decision but P&O merely challenging the order for recovery of aid already paid.\nIn its judgment of 5 August 2003 in P&O European Ferries (Vizcaya) SA v Commission of the European Communities (Joined Cases T 116\/01 and T 118\/01) [2003] ECR II 2957 (P&O Ferries GF1) the Court of First Instance rejected a plea by the Commission that the challenge was inadmissible because of the force of res judicata arising from the judgment in BAI v Commission.\nThe Court of First Instance held (at paras 77 80) that the force of res judicata attaching to a judgment could constitute a bar to the admissibility of an action only if the action which gave rise to the judgment was between the same parties, had the same subject matter and was founded on the same grounds.\nAccordingly, res judicata could not be pleaded where the actions did not relate to the same measure, since the measure whose annulment was sought was an essential element of the subject matter of an action.\nIn its view, since the action was directed against the Commissions decision of 29 November 2000 while the BAI v Commission judgment concerned the Commissions decision of 7 June 1995 the two actions could not be considered to have the same subject matter.\nFurthermore, the action was not between the same parties as those in the BAI case.\nRes judicata did not prevent the action from being brought.\nHowever, on addressing the merits, the Court of First Instance concluded, in summary, that the changes made in the new agreement did not affect the substance of the aid instituted by the original agreement and that the two agreements constituted a single grant of aid.\nThe challenge to the Commissions infringement decision was therefore dismissed.\nP&O Ferries and the Diputacin appealed against this judgment to the Court of Justice of the European Communities (CJEC).\nOn the appeal the Commission did not revive its objection on grounds of res judicata but the CJEC took the point of its own motion on the basis that observance of the principle was a matter of public policy and a fundamental principle of the Community legal order.\nOn this issue, Advocate General Tizzano (at paras 60 79 of his Opinion EU:C:2006:91) came to the same conclusion as the Court of First Instance but for different reasons.\nHe was not sure that the fact that the parties to the two sets of proceedings were different was decisive.\nWhat mattered, in his view, was whether the cases dealt with the same subject matter.\nThis did not require that two claims should be entirely identical but that they related to the points of law before the court.\nHe considered that the point of law at issue in both cases was the same, namely the assessment that the Commission had made of the measure at issue in determining whether or not the new agreement constituted state aid.\nHowever, since after the BAI v Commission judgment the Commission had instituted a new procedure, during which the interested parties had submitted further observations and information, he could not ignore the possibility that the replacement Commission decision of 29 November 2000 had been based on new material.\nOn this basis he considered that there was no res judicata.\nThe CJEC, however, rejected both the General Courts view and the Advocate Generals view of the scope of the force of res judicata attaching to the BAI v Commission judgment: 41.\nContrary to the view taken by the Court of First Instance, the BAI v Commission judgment did not only have relative authority preventing merely new actions from being brought with the same subject matter, between the same parties and based on the same grounds.\nThat judgment was invested with the force of res judicata with absolute effect and prevented legal questions which it had already settled from being referred to the Court of First Instance for re examination.\nIn the BAI v Commission judgment the Court of First 42.\nInstance annulled the decision of 7 June 1995 in which the Commission held that the new agreement did not constitute state aid and consequently decided to terminate the review procedure which had been initiated in respect of the aid granted to Ferries Golfo de Vizcaya. 43.\nThat annulment led retroactively to the disappearance of the decision of 7 June 1995 with regard to all persons.\nAn annulling judgment of that nature thus has authority erga omnes, which gives it the force of res judicata with absolute effect (see, in particular, France v High Authority (Case 1\/54) [1954] ECR 1, or p 17, 34; Italy v High Authority (Case 2\/54) [1954] ECR 37, at p 55; Assider v High Authority (Case 3\/54) [1955] ECR 63; and Commission v AssiDomn Kraft Products (Case C 310\/97P) [1999] ECR I 5363, para 54). 44.\nThat authority is not attached only to the operative part of the BAI v Commission judgment.\nIt is also attached to the ratio decidendi of that judgment which is inseparable from it (see, to that effect, Asteris v Commission (Joined Cases 97\/86, 193\/86, 99\/86 and 215\/86) [1988] ECR 2181, para 27, and Commission v AssiDomn Kraft Products, para 54). 45.\nIn addition, the question of the force of res judicata with absolute effect is a matter of public policy, which must, consequently, be raised by the court of its own motion.\nThe CJEC then applied those principles to the case before it (at paras 46 52).\nIn order to annul the decision of 7 June 1995 the Court of First Instance based itself on the conclusion that the new agreement was not a normal commercial transaction and on the fact that the cultural and social aims pursued by the Spanish authorities played no part in the characterisation of the new agreement in the light of the Treaty provisions.\nFurthermore, the Court of First Instance had found that the Commissions conclusion that the new agreement did not constitute state aid was based on a misinterpretation of the Treaty provisions.\nThere had been no appeal against the judgment in BAI v Commission and its operative part and ratio decidendi had therefore become final.\nIn the view of the CJEC, it was clear from the grounds of that judgment that the Commission should have classified the aid at issue as state aid and that, following the annulment, it would have to reopen the review procedure in respect of that aid.\nIn order to comply with that judgment, the Commission, as it was required to do, reopened the review procedure on the compatibility of the aid in dispute with the Treaty.\nIn the contested decision it had confirmed the classification as state aid acknowledged by the Court of First Instance in the BAI v Commission judgment and had considered that the aid in dispute was incompatible with the Treaty.\nThe Commission therefore gave its decision on the same measures as those which were classified as state aid in the BAI v Commission judgment.\nThe CJEC continued: 50.\nIn those circumstances, when the Diputacin brought its application against the contested decision before the Court of First Instance that court could not re examine the pleas alleging that the aid at issue did not amount to state aid without disregarding the scope of the BAI v Commission judgment.\nConsequently, in finding as it did, the Court of First Instance failed to have regard to the force of res judicata with absolute effect of its previous judgment. 51.\nThus, the judgment under appeal is vitiated by an error of law in so far as it examined the plea alleging infringement of article 87(1) EC (now article 107 TFEU) which, in its three parts, sought to challenge the classification of the aid in dispute as state aid.\nThat error does not, however, mean that the operative part of the judgment under appeal should be called into question. 52.\nIt follows from the above considerations that the Diputacins first three grounds of appeal cannot, in the light of the force of res judicata of the BAI v Commission judgment, be examined by the Court of Justice.\nThose grounds of appeal are irrelevant and must be dismissed.\nIn seeking to define the scope and applicability of the principle of absolute res judicata it is essential to have regard to its purpose.\nThis is firmly rooted in the annulment by the EU courts of acts of EU institutions.\nArticle 263 TFEU provides for the judicial review of the legality of certain acts of specified EU institutions and, for this purpose, it confers jurisdiction in actions on grounds of lack of competence, infringement of an essential procedural requirement, infringement of the Treaties or of any rule of law relating to their application, or misuse of powers.\nPursuant to article 266 TFEU, an institution whose act has been annulled is required to take the necessary measures to comply with the annulling judgment.\nAs the CJEC explained in P&O Ferries, where a Commission decision has been annulled on substantive as opposed to procedural grounds the judgment itself has the force of res judicata; what becomes binding is the substance of the judgment and not simply the conclusion that the Commission has failed to adduce sufficient evidence to support the decision.\nFurthermore, the annulment of the act which has been challenged leads retroactively (ex tunc) to the disappearance of the act in question with regard to all persons (P&O European Ferries CJEC at para 43).\nAn annulling judgment of that nature accordingly has authority erga omnes, which gives it the force of res judicata with absolute effect.\nThis is necessary in order to ensure stability of legal relations, in particular by securing that legal matters which have been definitively settled by judicial decision cannot be referred once again to the EU courts for reconsideration (P&O Ferries CJEC at para 41; Artegodan at para 86).\nIt also serves to define with certainty what is required in order to comply with the annulling decision and, thereby, to assist the institution concerned to achieve compliance.\nIf, however, subsequent proceedings do not call into question an issue that has already been settled by the EU courts, the principle of absolute res judicata can have no application.\nThe principle of absolute res judicata gives dispositive effect to the judgment itself.\nIt is the usual practice of EU courts to express the outcome of the action in a brief final paragraph of the judgment referred to as the operative part.\nWhile this will have binding effect, it will be necessary to look within the judgment beyond the operative part in order to ascertain its basis, referred to as the ratio decidendi. (EU law has no system of stare decisis or binding precedent comparable to that in common law jurisdictions and this EU concept of ratio decidendi is, once again, distinct from the concept bearing the same name in the common law.) It will be essential to look beyond the operative part in this way in order to identify the reason for the decision and in order that the institution whose act has been annulled should know what steps it must take to remedy the situation.\nIn a case where the principle of absolute res judicata applies, it will extend to findings that are the necessary support for the operative part of the annulling judgment.\nThis has been expressed very clearly by the CJEC in a series of cases.\nIn Asteris AE v Commission of the European Communities (Joined Cases 97\/86, 193\/86, 99\/86 and 215\/86) [1988] ECR 2181; [1988] 3 CMLR 493 (Asteris) it observed at para 27: In order to comply with the judgment and to implement it fully, the institution is required 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.\nIt is those grounds which, on the one hand, identify the precise provision held to be illegal and, on the other, indicate the specific reasons which underlie the finding of illegality contained in the operative part and which the institution concerned must take into account when replacing the annulled measure.\nSimilarly, in Commission of the European Communities v AssiDomn Kraft Products AB (Case C 310\/97P) [1999] ECR I 5363 (AssiDomn) the CJEC observed at para 55: The only purpose of considering the grounds of the judgment which set out the precise reasons for the illegality found by the Community Court is to determine the exact meaning of the ruling made in the operative part of the judgment.\nThese authorities were referred to by the CJEC in P&O European Ferries CJEC (at para 44, cited at para 36 above) where it observed that the authority erga omnes of an annulling judgment is not attached only to the operative part of the BAI v Commission judgment but is also attached to the ratio decidendi of that judgment which is inseparable from it.\nSimilarly, in Artegodan (at para 87) the CJEU observed: In that regard, the court has held, firstly, that res judicata extends only to the matters of fact and law actually or necessarily settled by the judicial decision in question and, secondly, that the force of res judicata attaches not only to the operative part of that decision, but also to the ratio decidendi of\nthat decision which is inseparable from it\nIn the present case, Servier submits that the four findings of the General Court on which it seeks to rely (see para 28 above) are binding for all purposes in the claimants damages actions.\nWhile accepting that the ultimate question before the General Court was whether other ACE inhibitors were substitutable for Perindopril at the relevant time, Servier maintains that the court needed to make each of the key findings on which they now seek to rely and that, accordingly, they form part of the ratio decidendi which is binding.\nThe claimants, on the other hand, while denying that the four findings of the General Court on which Servier seeks to rely are essential to or inseparable from the General Courts final conclusion that the Commission erred in its definition of the relevant product market, raise the more fundamental objection that the principle of absolute res judicata is limited to preventing an annulment judgment from being called into question in subsequent proceedings.\nThe purpose of the principle of absolute res judicata provides the key to identifying which parts of an annulling decision are binding erga omnes.\nThey can have that effect only if it is necessary to respect them in order to prevent the courts conclusions from being undermined or, in the context of an EU institution charged with complying with the terms of the judgment, in order to prevent contradiction of the courts decision as to what needs to be done to secure compliance with EU law.\nConsidered in the light of its purpose, it is clear that the notion of ratio decidendi comprises the grounds which form the essential basis of the judgment, the precise reasons for the illegality.\nIt is for this reason that it is inseparable from the authority erga omnes of an annulling judgment.\nAs the claimants put it in their written case, only those aspects of the grounds of the judgment which explain the meaning of the annulment decision form part of the ratio decidendi because those are the aspects which must be respected in order to fulfil the purpose of preventing the annulment judgment from being called into question in subsequent proceedings.\nContrary to the submission on behalf of Servier, the judgment of the General Court in Shoe Branding Europe BVBA v European Union Intellectual Property Office (EUIPO) (adidas AG intervening) (Case T 629\/16) EU:T:2018:108 (Shoe Branding) is not inconsistent with this analysis.\nIn an earlier case (adidas AG v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) (Shoe Branding Europe BVBA intervening) (Case T 145\/14) [2015] ETMR 33 (adidas)) the General Court annulled a decision of the Board of Appeal of OHIM that a trademark registered by Shoe Branding consisting of two diagonal stripes on a shoe was sufficiently different from adidass three stripe mark to be regarded as dissimilar and not likely to give rise to consumer confusion.\nBefore the General Court adidas had alleged several errors of assessment by the Board in assessing the likelihood of consumer confusion within article 8(1)(b) of Council Regulation (EC) No 207\/2009.\nThe General Court undertook an assessment of all factors relevant to the case and concluded that the Board of Appeal had made several errors in assessing the competing marks.\nOne element of the General Courts reasoning (at paras 31 35, 40 42) was that, as a matter of fact, the shoe purchasing public is made up of average consumers, whose degree of attention is only average.\nThe General Court recalled that the average consumer normally perceives a mark as a whole and does not analyse its various details.\nOn this basis the General Court concluded (at para 43) that the combined effect of the errors meant that the Board of Appeal had been wrong to conclude that the marks were visually dissimilar and (at paras 49 50) that this vitiated its finding that there was no likelihood of confusion.\nThe General Court (at para 53) upheld on the same basis a further plea of adidas relating to infringement of article 8(5) of Regulation 207\/2009 which applies where a mark would take unfair advantage of, or be detrimental to, the distinctive character or reputation of a similar earlier trademark.\nThe Board of Appeal of OHIM then reconsidered the matter.\nIn its fresh decision it applied the General Courts reasoning to conclude that there was visual similarity between the marks and it went on to find that the use of the new mark by Shoe Branding would take unfair advantage of the reputation of adidass mark.\nShoe Branding then appealed to the General Court (Shoe Branding (Case T 629\/16)) challenging, inter alia, the Boards assessment of the existence of damage to the reputation or distinctive character of adidass mark.\nThe General Court rejected Shoe Brandings complaint of a misapplication of the average consumer test on the basis that it concerned matters that were res judicata with absolute effect as a result of the adidas judgment.\nIn particular, it held (at paras 103 105) that the General Courts findings in adidas relating to the degree of attention of the relevant public constitute the necessary support for the operative part of that judgment and therefore themselves have the authority of res judicata with absolute effect.\nAs the Board had fully complied with those grounds of the annulling judgment it was not open to Shoe Branding to challenge the Boards assessment regarding the degree of attention of the relevant public.\nFurthermore, with regard to Shoe Brandings complaint concerning the failure of the Board to perform a global assessment of the degree of similarity, the court concluded (at paras 111 112) that the General Court in adidas had definitively settled the issue of similarity by considering the similarities and differences in the marks for itself.\nThe General Court observed (at paras 113 115) that the courts conclusions on the similarity of the marks in adidas constituted the necessary support for the operative part of that judgment, that it had not been open to the Board to depart from the courts assessment of similarity in adidas and that it was therefore not open to Shoe Branding to challenge the Boards adoption of that conclusion.\nMs Bacon is correct in her submission on behalf of Servier that the General Courts findings in relation to the degree of attention of the relevant public were not the ultimate conclusion on the legal issue in the adidas case.\nThey were findings of fact that fed into the courts multifactorial assessment of the similarity between the two marks which in turn led to the courts ultimate conclusion on risk of confusion under article 8(1)(b) of Regulation 207\/2009 and detriment to reputation under article 8(5).\nThe finding in the adidas case as to the degree of attention paid by purchasers was inseparable from the courts ultimate conclusion in that appeal and, as a result, it was part of the ratio decidendi.\nHowever, as Rose LJ explained in her insightful judgment in the Court of Appeal in the present case (at para 69), in the challenge brought by Shoe Branding the debate was not about whether or not buyers of sports shoes pay average or lower than average attention to buying shoes but about whether Shoe Branding was entitled to try to overturn the Board of Appeals finding that the marks were similar on the grounds that buyers paid higher than average attention.\nThe ruling was that Shoe Branding could not rely on that or on any other ground for the purpose of challenging the decision that the marks were similar.\nIt was in that context, and that context alone, that the previous decision as to the degree of attention paid by purchasers was binding.\nTurning to the judgment of the General Court in the present case (Case T 691\/14) EU:T:2018:922, the operative part of the judgment simply annuls the finding that there has been an infringement of article 102 TFEU and is uninformative as to the basis for doing so.\nAn examination of the judgment reveals that the specific reason it came to that conclusion was that the Commission erred in concluding that the relevant product market was limited solely to originator and generic Perindopril as opposed to all ACE inhibitors.\nIn coming to that conclusion, the General Court (at paras 1589 1591) considered that the Commission made a series of errors in the analysis of the definition of the relevant market.\nIn this regard, the General Court made a number of findings of fact, including the four findings on which Servier now seeks to rely.\nThe issue of the scope and extent of the General Courts ratio decidendi only arises in a context where the General Courts assessment of Serviers conduct under article 102 is sought to be re examined.\nAssuming for present purposes that the ruling of the General Court were to become definitive, if there were such a challenge it would be necessary to ask which parts of the judgment would need to be respected in order to prevent the judgment from being undermined.\nIf and to the extent that it could be shown that each of the four findings of fact on which Servier now seeks to rely was an essential basis of the General Courts ruling as to what was the relevant product market, those findings would form part of the ratio decidendi and it would not be possible to challenge them for the purpose of challenging the General Courts conclusion as to what was the relevant product market within article 102.\nIn the present case, however, Servier seeks to rely on the four findings of fact\nof the General Court in an entirely different context.\nMs Bacon submits that the EU principle of absolute res judicata applies to render the four findings of the General Court binding in the national proceedings in relation to issues of causation, remoteness and mitigation of loss.\nShe submits that the General Court has found that all ACE inhibitors were substitutable and were perceived by prescribers as being substitutable, that in practice there were no obstacles to switching between any of them and that these specific findings were the necessary support or essential basis or specific reasons for the General Courts annulment of the Commission Decision.\nShe says that those findings therefore carry the authority of res judicata erga omnes with absolute effect in any proceedings that fall within the scope of EU law in which those same factual issues arise.\nIn making this submission, Servier seeks to detach those findings from the authority erga omnes of the annulling judgment which alone can make them part of the ratio decidendi.\nAlthough the proceedings before the national court originally included a claim for damages founded on an infringement of article 102 TFEU, the claimants have confirmed, following the General Courts judgment annulling the Commission Decision, that if that judgment is upheld in the further appeal to the CJEU that claim will no longer be pursued.\nAs presently constituted, the claim in the national proceedings is a claim for breach of statutory duty founded on alleged infringements of article 101 TFEU.\nNo question arises in the proceedings before the national court as to the relevant product market for the purposes of article 102 or the applicability of article 102.\nAs a result, the ratio decidendi of the annulling judgment is simply not engaged.\nThe findings on which Servier relies have no significance independent of the annulling judgment.\nIt is not necessary to treat those findings as binding in any other legal context in order to preserve the authority of the annulling judgment.\nFurthermore, the broad view of absolute res judicata for which Servier contends is not supported by the case law of the EU courts.\nThis is not surprising, as to apply the principle in a context detached from the annulling judgment would be entirely inconsistent with the purpose of that principle, which is to prevent the annulling judgment from being called into question in subsequent proceedings.\nAssiDomn has its origin in a Commission infringement decision against 43 producers finding unlawful collusion in the international wood pulp market, in particular by concerting on prices for bleached sulphate wood pulp.\nSubsequently, 26 of the producers, not including AssiDomn or any of the other Swedish producers, applied successfully to annul that decision (Ahlstrm Osakeyhti v Commission of the European Communities (Joined Cases C 89, 104, 114, 116 117 and 125 129\/85) [1988] ECR 5193 (Wood Pulp)).\nLater, and after the expiry of the time limit for challenging the Commissions decision, the Swedish producers asked the Commission to reconsider their legal position in the light of the Wood Pulp judgment and to refund to each of them the fines which they had paid, to the extent that they exceeded the sum upheld by the CJEC in relation to certain applicants for findings of infringement which it had not annulled.\nThey contended in particular that they were in the same position as the other producers in relation to the operative part of the Wood Pulp judgment and that the annulment by the CJEC of the Commissions finding that addressees of the Commission decision had concerted on prices should also have been applied to them, even though they were not party to the proceedings in Wood Pulp.\nThe Commission refused their request and the Swedish producers brought proceedings challenging that refusal.\nThat challenge succeeded before the Court of First Instance (AssiDomn Kraft Products AB v Commission of the European Communities (Case T 227\/95) [1997] ECR II 1185; [1997] 5 CMLR 364) but failed on appeal by the Commission to the CJEC (Case C 310\/97P) [1999] ECR I 5363; [1999] All ER (EC) 737.\nIn their action for annulment of the Commissions refusal decision the\nSwedish producers advanced two grounds.\nFirst, they contended that the Commission infringed the principle of EU law according to which a judgment annulling a measure has the effect of rendering the contested measure null and void, erga omnes and ex tunc.\nSecondly, they contended that the Commission had infringed the first paragraph of what is now article 266 TFEU.\nA Grand Chamber of the CJEC considered that the Commissions original infringement decision had to be regarded as a bundle of individual decisions against each producer.\nIt considered ([1999] ECR I 5363, paras 50 53) that what is now article 266 TFEU requires an institution which adopted an annulled measure only to take the necessary measures to comply with the judgment annulling its measure and that if an addressee of a decision decides to bring an action for annulment, the matter to be tried relates only to those aspects of the decision which concern that addressee.\nIt continued: [54] Furthermore, although the authority erga omnes exerted by an annulling judgment of a court of the Community judicature attaches to both the operative part and the ratio decidendi of the judgment, it cannot entail annulment of an act not challenged before the Community judicature but alleged to be vitiated by the same illegality. [55] The only purpose of considering the grounds of the judgment which set out the precise reasons for the illegality found by the Community Court is to determine the exact meaning of the ruling made in the operative part of the judgment.\nThe authority of a ground of a judgment annulling a measure cannot apply to the situation of persons who were not parties to the proceedings and with regard to whom the judgment cannot therefore have decided anything whatever.\nServier submits that AssiDomn is a case where the applicants sought to rely on findings of fact about the conduct of the non Swedish producers to prove similar but distinct factual propositions about the Swedish producers.\nIn their submission, because the findings of fact in the earlier Wood Pulp decision were different there was no scope for the application of the principle of absolute res judicata.\nThis is, however, a misreading of the CJEC decision in AssiDomn.\nThe plea of the Swedish producers related to findings as to the wood pulp market made in the earlier decision and which applied directly to the Swedish producers.\nThus the Court of First Instance in AssiDomn expressly stated (at para 75) that the decision had been annulled on the basis of considerations which apply generally to the Commissions analysis of the wood pulp market and are not founded on any examination of conduct or practices on the part of individual addressees of the Wood Pulp decision and (at para 82) that the relevant findings related generally to the validity of the Commissions economic and legal assessment of parallel conduct observed on the market.\nSimilarly, on appeal to the CJEC, Advocate General Ruiz Jarabo Colomer (at para 71) expressly endorsed the former statement of the Court of First Instance.\nAccordingly, the point of distinction identified by the CJEC was not, as Servier submits, the scope of the findings of fact in Wood Pulp but, rather, the ambit of the operative part of the annulling judgment.\nThe reasoning of the CJEC was that the principle of absolute res judicata did not apply because the legal context was materially different.\nAssiDomn therefore provides compelling support for the claimants submission that the grounds of an EU judgment annulling a measure cannot be considered to have binding effect when transplanted into a context divorced from the annulling judgment.\nEuropean Commission v Tomkins plc (In re Copper Fittings Cartel) (Case C 286\/11P) [2013] Bus LR 999 (Tomkins) does not support Serviers reading of AssiDomn.\nIn Tomkins an operating subsidiary company and its parent company were penalised by the Commission for infringement of the EU competition rules.\nThe liability of the parent was wholly derived from the subsidiarys participation in the cartel and the Commission imposed a fine jointly and severally on the parent and subsidiary.\nThey each brought separate actions before the General Court challenging the Commissions decision.\nThe subsidiarys appeal succeeded in obtaining an annulment of the decision in relation to a period of the infringement that the parent had not challenged in its appeal.\nThe General Court ((Case T 382\/06) [2011] ECR II 1157), nevertheless, annulled the Commissions decision in relation to the parent companys involvement during that period, because its liability was wholly derived from that of the subsidiary.\nThe Commission appealed to the CJEU, arguing that in reducing the duration of the infringement for the parent, without any express claim to that end having been made by the parent, the General Court had ruled ultra petita, thereby infringing the courts case law, in particular the judgments in AssiDomn and ArcelorMittal Luxembourg SA v Commission of the European Communities (Joined Cases C 201\/09P and C 216\/09P) [2011] ECR I 2239.\nIn rejecting that submission, the Grand Chamber held that where the liability of a parent was derived exclusively from that of its subsidiary and where both have brought parallel actions having the same object, the General Court was entitled, without ruling ultra petita, to take account of the outcome of the action brought by the subsidiary and to annul the contested decision in respect of the relevant period also in so far as the parent was concerned.\nContrary to Serviers submission, Tomkins casts no light on the true effect of AssiDomn.\nIn Prez Daz v Commission of the European Communities (Case T 156\/03) EU:T:2006:153 Mr Prez Daz applied in a competition for inclusion in a reserve list of Commission staff.\nThe 60 best candidates were to be appointed.\nMr Prez Daz was rejected and he challenged this decision.\nThe Court of First Instance annulled the decision on the ground that the examining panel had an insufficient knowledge of Spanish, when it was required to assess Mr Prez Dazs proficiency in that language.\nTwo other unsuccessful candidates, Sabbag and Bachotet, had also successfully challenged the process on the ground that the composition of the assessment panel had fluctuated.\nThe Commission then held a further oral test for Mr Prez Daz before a reconstituted panel which rescored him and compared his new score with the original score of the lowest successful candidate.\nHe was informed that his results in the new test were insufficient and that he could not be included in the reserve list.\nMr Prez Daz then brought a further challenge, maintaining that it was wrong to compare his score with a score reached through the original process during which the composition of the panel had fluctuated.\nAlthough Mr Prez Daz had not criticised the fluctuation of the composition of the panel in his original challenge, the Court of First Instance held that he could rely on the effects of the annulling judgments in the challenges brought by Sabbag and Bachotet.\nIt held (at para 60) that the organisation of Mr Prez Dazs new oral test disregarded the res judicata arising from the grounds constituting the necessary support for the operative parts of the judgments in the actions brought by Sabbag and Bachotet against the Commission.\nServier submits that Prez Daz demonstrates that the question whether a res judicata can be relied on in a second set of proceedings depends on a close analysis of the reasons for the annulment in the first decision and whether those same reasons have any application in the second proceedings as opposed to any formal analysis of who the parties were or whether findings are being borrowed from one context to another.\nHowever, the judgment shows that the case turns on the scope of the annulling judgments and the Commissions obligations under article 266 TFEU to take the necessary measures to comply with them.\nThe Court of First Instance explained (at paras 46 48, 57, 60) that in complying with the annulling judgment resulting from Mr Prez Dazs first challenge the Commission was required to act in accordance with EU law and was therefore required to remedy the breach of equal treatment arising from the fluctuation of the composition of the panel, identified in the challenges of the other unsuccessful candidates, which had vitiated the examination of all the candidates including Mr Prez Daz.\nThe Commission could not legally, in remedying the annulment decisions in accordance with article 266, re open the selection procedure for the benefit of the excluded candidates by reproducing the conditions of the conduct of the initial oral test.\nThe Commissions remedial obligation resulting from the judgments in the Sabbag and Bachotet challenges extended to according equal treatment to Mr Prez Daz.\nIn simply comparing his result on the second assessment with the results of the original flawed process, the Commission had failed to discharge that obligation.\nThis is not, therefore, a case where a factual finding was transposed with binding effect from its context in an annulling judgment to the distinct context of different litigation.\nThe finding had no legal force independent of the annulment declaration.\nPrez Daz exemplifies a feature of the principle of absolute res judicata which the CJEC described in Asteris.\nHaving explained (at para 27, cited at para 40 above) that the obligation of an EU institution to comply with an annulling judgment requires it to have regard not only to the operative part 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, the CJEC continued (at para 28): However, although a finding of illegality in the grounds of a judgment annulling a measure primarily requires the institution which adopted the measure to eliminate that illegality in the measure intended to replace the annulled measure, it may also, in so far as it relates to a provision with specific scope in a given area, give rise to other consequences for that institution.\nIn Asteris the CJEC had, in an action brought by Greece, annulled Commission Regulation No 1615\/83 fixing the coefficients to be applied to the production aid for tomato concentrates for the 1983\/84 marketing year.\nThe Regulation was annulled to the extent to which the coefficients resulted in inequality of treatment as between Greek producers and those in other member states.\nIn its annulling judgment the CJEC stated that it was the duty of the Commission to fix new coefficients for Greece or to devise some other system of compensation taking account of the fact that the aid scheme differentiated between Greece and the other member states.\nThe Commission adopted a new Regulation in respect of the 1983\/84 year but refused to adopt new regulations in respect of the years before or after 1983\/84.\nOf the Regulations which the Commission refused to amend, the Regulations in respect of the years 1981\/82 and 1982\/83 were adopted before the annulled Regulation and the Regulation in respect of the years 1984\/85 to 1986\/87 was adopted after the annulled Regulation.\nGreece challenged the Commissions refusal to take the necessary consequential measures with respect to the previous and subsequent years, covered by regulations identical to the annulled Regulation but which were not challenged within the prescribed time limits.\nThe CJEC noted that those Regulations related to situations different from those governed by the annulled Regulation.\nHaving set out (at paras 26 and 27, cited above) the obligations which an annulling judgment entails for the institution concerned, the CJEC held (at paras 29 31) that where, as in that case, the effect of the annulled Regulation was limited to a clearly defined period (ie the year 1983\/84) the institution which adopted the measure (ie the Commission) was, first, under an obligation to ensure that the new legislation adopted following the annulling judgment and governing the marketing years subsequent to that judgment contains no provisions having the same effect as the provisions held to be illegal.\nHowever, by virtue of the retroactive effect of annulling judgments, the finding of illegality took effect from the date on which the annulled measure entered into force.\nAccordingly, the Commission was also under an obligation to eliminate from the Regulations already adopted when the annulling judgment was delivered and governing years after 1983\/84 any provisions with the same effect as the provision held to be illegal.\nConsequently, the finding that the coefficients to be applied to the amount of aid for Greek producers were illegally fixed was binding with respect not only to the year 1983\/84 covered by the annulled Regulation, but also to all subsequent marketing years.\nBy contrast, that finding could not apply to the marketing years covered by the Regulation adopted before the year 1983\/84.\nThe grant of relief in Asteris in respect of the later years was not the result of the transposition with binding effect of an essential finding to a different legal context.\nRather, it provides a further example of the further consequences which may be required to flow from an annulling judgment. (See further in this regard Socit Nouvelle des Usines de Pontlieue Aciries du Temple (SNUPAT) v High Authority (Joined Cases 42 and 49\/59) [1961] ECR 53, considered in AssiDomn [1999] ECR I 5363, paras 64 68.) The refusal of relief in Asteris in respect of the earlier years where the Commissions acts had been vitiated by precisely the same illegality, is, however, particularly significant for present purposes because it is entirely inconsistent with Serviers submission as to the transferability of a binding res judicata from one legal context to another.\nIn support of its case, Servier also relies by way of analogy on the status of\nCommission decisions before national courts of member states and in particular on the recent judgment of the Competition Appeal Tribunal in Royal Mail Group Ltd v DAF Trucks Ltd [2020] CAT 7; [2020] Bus LR 1795 (Trucks).\nFollowing a settlement decision of the Commission in 2016 finding that five major European truck manufacturing groups had operated a cartel between 1997 and 2011, a number of purchasers brought in the Competition Appeal Tribunal follow on claims for damages against those manufacturers.\nThe Tribunal observed (at para 129) that detailed factual findings made in infringement decisions about the operation of a cartel can be relied upon to quantify the loss caused by that cartel in follow on national proceedings.\nServier accordingly submits that findings of fact that are essential to the operative part of an infringement decision are binding for the purposes of the damages claim, without any further limitation on the use that the parties can make of those findings in the proceedings.\nThe difficulty with this submission is that the two situations are not analogous.\nFirst, the status of Commission infringement decisions before the courts of member states is governed by specific EU legislation, Council Regulation (EC) No 1\/2003, which modernised the system for enforcement of rules of EU competition law and which conferred on national courts the power to apply those rules in parallel with the Commission.\nThe legislation emphasises (recital (22)) the importance of avoiding conflicting decisions, in order to ensure compliance with the principles of legal certainty and the uniform application of the EU competition rules in a system of parallel powers.\nAccordingly, article 16 of Council Regulation (EC) No 1\/2003 provides that when national courts rule on agreements, decisions or practices under articles 101 or 102 TFEU which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission.\nSecondly, under the law as it existed prior to the coming into effect of Council Regulation (EC) No 1\/2003, (see Masterfoods Ltd v HB Ice Cream Ltd (Case C 344\/98) [2000] ECR I 11369), a national court was not bound to apply any of the underlying findings of fact that were previously reached by the Commission where the subject matter of the case before the national court was different (Crehan v Inntrepreneur Pub Co (CPC) (Office of Fair Trading intervening) [2007] 1 AC 333 per Lord Bingham at para 11; per Lord Hoffmann at para 69).\nThirdly, I note that in Trucks itself the Tribunal observed (at para 33), correctly in my view, that the principle of res judicata is not engaged where the issue concerns a decision of the Commission (as opposed to a decision of the EU courts) and that the determination of what findings in a Commission decision are binding involves different considerations.\nI agree with the observations of Rose LJ (at paras 72 and 73 of her judgment in the Court of Appeal [2020] Ch 193) that the approach for which Servier contends raises a host of practical difficulties and that it is wide ranging and unstable with no workable defined limits.\nShe identifies three practical difficulties in particular.\nThe first is ascertaining the degree of granularity of the factual findings made that fall within the scope of what is res judicata.\nSecondly, there will frequently be a number of facts found by the General Court to support a particular conclusion.\nNational courts are likely to experience difficulty in deciding which are essential to or inseparable from or sufficiently proximate to or a pillar of the ratio decidendi.\nThere is here, moreover, considerable scope for different national courts to come to different conclusions as to which findings are binding.\nThirdly, factual findings will often point in different directions, requiring the General Court to undertake a multi factorial assessment in order to arrive at its ultimate conclusion.\nMoreover, if only some of the General Courts factual findings are res judicata, this could lead to a very unbalanced factual analysis in any subsequent national proceedings.\nMore generally, it seems to me that confined to the context of the consequences of an annulling judgment, the principle of absolute res judicata performs a useful function in promoting legal certainty, the effective judicial control of EU institutions and the maintenance of the EU legal order.\nHowever, once freed from that restriction it could operate in an arbitrary and unjust manner, binding strangers to the original dispute in a wholly different legal context in a manner which could not be reconciled with principles of a fair trial. (See, by analogy, the Opinion of Advocate General Trstenjak in Nemzeti Fogyasztvdelmi Hatsg v Invitel Tvkzlsi Zrt (Case C 472\/10) [2012] 3 CMLR 1, para 60.)\nServiers attempt to rely in the present case upon the principle of absolute res judicata is, therefore, misplaced.\nServier seeks to borrow findings of fact from the annulling judgment of the General Court made in the context of abuse of dominant position under article 102 TFEU and to deploy them in an entirely different context which concerns mitigation of loss flowing from alleged anti competitive agreements under article 101 TFEU and which has nothing to do with article 102 or with the consequences of the annulling judgment.\nThe claims by the claimants in the national proceedings do not call into question or undermine in any way the conclusion of the General Court in its annulling judgment or the consequences of that judgment, nor do they contradict the General Courts decision as to what needs to be done to secure compliance with EU law.\nFor these reasons I am satisfied to the standard of acte clair that the principle of absolute res judicata has no application to the present case.\nI would dismiss the appeal.\n","output":"In this appeal, the Supreme Court is asked to decide whether findings of fact made by the General Court of the European Union (the General Court) are binding in subsequent domestic proceedings, under the EU principle of absolute res judicata.\nThe appellants (collectively known as Servier), developed and manufactured the drug Perindopril, which is used to treat cardiovascular diseases including high blood pressure.\nPerindopril falls within the class of medicines known as angiotensin converting enzyme inhibitors (ACE inhibitors).\nThe respondents, who are the claimants in the domestic proceedings, are the national health authorities of England, Wales, Scotland and Northern Ireland.\nBetween May 2011 and September 2012, the claimants issued proceedings in England and Wales which alleged that Servier had: (i) breached article 101 of the Treaty on the Functioning of the European Union (TFEU) and\/or Chapter 1 of the Competition Act 1998 (the 1998 Act) by entering into anticompetitive agreements with potential generic manufacturers and\/or suppliers; and (ii) abused its dominant position in the market contrary to article 102 TFEU and\/or Chapter 2 of the 1998 Act.\nThe claimants contend that this allegedly unlawful conduct has delayed the entry of cheaper generic versions of Perindopril onto the UK market, which has, in turn, caused the claimants to suffer substantial financial loss.\nServiers conduct relating to Perindopril was investigated by the European Commission (the Commission).\nOn 9 July 2014, the Commission issued a decision which found that Servier had infringed articles 101 and 102 TFEU.\nServier appealed to the General Court seeking the annulment of the Commissions decision.\nThe General Court judgment upheld all but one of the Commissions findings of infringement of article 101 TFEU, but found that Servier had not infringed article 102 TFEU.\nThis was because the relevant product market was not limited to Perindopril but extended to ACE inhibitors generally, and Servier did not have a dominant position in that wider market.\nBoth the Commission and Servier have appealed to the Court of Justice of the European Union (CJEU).\nAs there are significant overlaps, the domestic proceedings cannot proceed to a final trial until the EU proceedings have been resolved.\nHowever, in October 2016, Servier was granted permission to plead that the claimants failed to take reasonable steps to encourage switching from the prescription of Perindopril to cheaper generic ACE inhibitors.\nServier asserts that, even if liability and causation are established, the claimants damages should be reduced or extinguished: (i) because the claimants failed to mitigate their loss; (ii) for contributory negligence; and (iii) because the losses claimed are too remote.\nIt was determined that there should be a trial of preliminary issues relating to this argument.\nServier argued that certain findings in the General Court judgment in particular concerning the extent to which Perindopril can be substituted for other ACE inhibitors are binding on the domestic courts in the preliminary issues trial.\nHowever, both the High Court and the Court of Appeal held that none of the findings relied on by Servier constituted res judicata for these purposes.\nServier appealed to the Supreme Court.\nIt claimed that the point of law is uncertain, not acte clair, and that the Supreme Court should therefore refer the question to the CJEU under article 267 TFEU.\nThe Supreme Court unanimously dismisses Serviers appeal.\nIt holds that the General Court findings Servier relies on are not binding in the domestic proceedings, and declines to make a reference to the CJEU.\nLord Lloyd Jones gives the judgment, with which all members of the Court agree.\nThe EU principle of absolute res judicata only applies to judicial decisions which have become definitive, either after all rights of appeal have been exhausted or after the time limits for exercising those appeal rights have expired.\nThe General Courts findings are not yet definitive, and may never become definitive, because they may be reversed or rendered redundant in the appeal pending before the CJEU.\nThe findings are not, therefore, binding in the domestic proceedings under the EU principle of absolute res judicata.\nA reference to the CJEU is unnecessary to decide the issues in this case [31 32].\nThe Court nevertheless sets out its views on the underlying issues of law, in the hope that they might assist at later stages of the domestic proceedings [32].\nThe leading authority on the EU principle of absolute res judicata is P&O European Ferries (Vizcaya) SA and Diputacin Foral de Vizcaya v Commission (Joined Cases C 442\/03P and C 471\/03P) [2006] ECR I 4845 [33 37].\nThis explains that, where the EU courts have annulled a Commission decision on substantive as opposed to procedural grounds, the substance of that judgment becomes binding on all the world, not just on the parties.\nThis ensures stability of legal relations, because it means that a matter which has been definitely settled by judicial decision cannot be referred to the courts by different parties for reconsideration [38].\nThe purpose of the EU principle of absolute res judicata is to prevent the annulling judgment from being called into question in subsequent proceedings.\nThis purpose provides the key to the principles scope and applicability [38, 42].\nAbsolute res judicata gives dispositive effect to the judgment itself.\nIt therefore extends to the essential reasons for the judgment (or ratio decidendi), not just to the outcome set out in the operative part [39 40].\nOnly those aspects of the judgment which explain why the Commission decision has been annulled form part of the ratio decidendi, because those are the aspects which must be respected to prevent the annulling judgment from being called into question later on [42].\nThe General Court judgment annuls the Commissions finding that Servier had infringed article 102 TFEU, on the basis that the Commission was wrong to conclude that the relevant product market was limited to Perindopril, as opposed to all ACE inhibitors.\nThe General Court made a number of findings of fact in this regard, including those Servier relies on.\nAccordingly, if the General Court judgment becomes definitive and it can be shown that the relevant findings were an essential basis of that judgment, it would not be possible to challenge those findings in later proceedings which sought to contradict the General Courts conclusions on the relevant product market within article 102 TFEU [46].\nIt is not necessary to treat the General Courts findings as binding in any other legal context.\nIf the CJEU upholds the General Court judgment that Servier did not infringe article 102 TFEU, the claimants will no longer pursue their article 102 claim.\nIn any case, at present, the domestic proceedings do not concern the relevant product market for the purposes of that article.\nInstead, Servier relies on the General Courts findings to support its defence based on mitigation of loss flowing from alleged anti competitive agreements contrary to article 101 TFEU.\nThe General Courts findings cannot be detached from the authority of the annulling judgment and deployed in this wholly different context [48].\nServier contends that the General Courts findings are binding in any EU law proceedings which raise the same factual issues [47].\nThe Supreme Court rejects this argument because it is not supported by the EU or domestic case law [49 60].\nThis is not surprising, because it would be inconsistent with the purpose of the principle of absolute res judicata [49].\nServiers proposed approach also raises practical difficulties because it has no workable defined limits.\nMore generally, if it is confined to the context of the consequences of an annulling judgment, the principle of absolute res judicata promotes legal certainty, the effective judicial control of EU institutions and the maintenance of the EU legal order.\nHowever, once freed from this restriction, it could operate in way that is arbitrary and unjust, binding persons not party to the original dispute in a wholly different legal context in a way which would be inconsistent with the principles of a fair trial [61].\nThe claimants claims in the domestic proceedings do not call into question or undermine the General Court judgment or its consequences in any way, nor do they contradict the General Courts decision as to what needs to be done to comply with EU law.\nThe Supreme Court is therefore satisfied to the standard of acte clair that the EU principle of absolute res judicata does not apply [62].\n","id":60}
{"input":"This case is about the proper approach to ordering the unsuccessful party to pay the costs of a successful appeal in cases about the care and upbringing of children.\nIt arises in the specific context of a parents successful appeal to the Court of Appeal against care and placement orders made in a county court.\nBut that issue obviously has to be seen in the wider context of appeals in childrens cases generally.\nThis case\nThese are care proceedings concerning the four children of Ms A, a girl now aged 13, a boy aged 12, a girl aged seven and a boy aged three.\nWe are concerned only with the seven year old, whom I shall call Amelia.\nThe respondent to this appeal is the father of Amelia and her older brother.\nHe is also the social father of the oldest child, who was born during his marriage to the childrens mother.\nThe mother comes from Portugal and the father comes from Nepal.\nThey married in 2002 and separated in 2007, before Amelia was born.\nThe father is not the biological, social or legal father of the youngest child.\nAs it happens, the oldest and youngest have the same biological father, but he has played little part in their lives or in these proceedings.\nFrom May 2009 there were increasing concerns about the presentation and behaviour of the children in their mothers care.\nCare proceedings were eventually brought in January 2012 and in November 2012 Her Honour Judge Karp found that there had been a serious lack of supervision and neglect of the children; they had suffered physical injuries from each other as a result of not being properly supervised; the mother was unable to meet their emotional, developmental and educational needs; they were at risk of sexual abuse because of their mothers inability to safeguard them from men allowed into the home about whom she knew little; and the two oldest had shown inappropriate sexual behaviour.\nShe found, therefore, for the purpose of the threshold conditions in section 31(2) of the Children Act 1989, that they had suffered or were likely to suffer significant harm owing to a lack of proper parental care.\nThis is conceded by the father.\nThe mother was ruled out as a future carer for any of the four children.\nThe father had had only limited contact with the family since separating from the mother and was not implicated in her neglect of the children during that time.\nHe had since remarried.\nWhen the proceedings were begun, it was agreed that the older boy would live with his father and his new wife under an interim supervision order.\nIn breach of his agreement with the local authority, however, the father left the boy with the mother for a short time while he went to work in Norway.\nAnd in May 2012 the father asked the local authority to take the boy back into foster care because of his challenging behaviour.\nHe was soon joined by Amelia and their older sister, who had been removed from their mother.\nThey remained together as a sibling group with the same foster family for a year, until the two oldest had to be separated because of their sexual behaviour together.\nBetween August and October 2012 the father and his wife were assessed by an independent social worker as potential carers for the three older children, including Amelia.\nThe first assessment was positive, but the social worker had not been told that the wife was now pregnant.\nAt that stage, a consultant child and adolescent psychiatrist had reported that Amelias development appeared normal for a child of her age.\nAn updating assessment, conducted between October and December 2012, became negative, largely because of the couples lack of candour and the fathers lack of insight into the need to be resilient, consistent and able to implement firm boundaries when looking after children who had suffered as these children had suffered.\nThe father and his wife separated in February 2013, before their child was born.\nThe father decided to move permanently to Norway, where he had obtained steady and well paid employment and spacious accommodation.\nHe asked to be assessed there as a carer for all three children, but both the local authority and the childrens guardian resisted that.\nThe local authoritys plan was for long term fostering for the two oldest children and a closed adoption (that is without contact with the birth family) for the two youngest.\nThe childrens guardian had originally wanted the three children to stay with the foster family which had looked after them for a year, but when that placement failed because of the older childrens sexual behaviour with one another, he supported the local authoritys plan.\nA placement order was made in relation to the youngest child in February 2013. (This has now been implemented; he was adopted in May 2014.) At the final hearing in relation to the elder three children in July 2013, the local authority sought a placement order for Amelia, by now aged five.\nThe father opposed this because it would result in her losing all her established family relationships with her parents and her siblings.\nHe had maintained good contact with the children since his move to Norway and asked to be assessed as her sole carer.\nThis was opposed by the local authority and the childrens guardian.\nAmelia had been assessed by a social worker and family therapist in 2013 (in contrast to the view of the child psychiatrist in late 2012) as having a high level of emotional and behavioural need and their view was that the father did not have the capacity to meet this.\nJudge Karp accepted their opinions and made a placement order authorising Amelias placement for adoption without her fathers consent.\nThe father appealed.\nIn the meantime, in September 2013, the Court of Appeal had delivered judgment in In re B S (Children) (Adoption Order: Leave to Oppose) [2013] EWCA Civ 1146, [2014] 1 WLR 563, emphasising the need for the court to evaluate all the options for the childs future where adoption was proposed, analysing the pros and cons of each in the light of the paramount consideration of the childs future in the long term.\nThe fathers appeal was allowed: [2014] EWCA Civ 135, [2015] 1 FLR 130.\nThe Court of Appeal held that the judge had been wrong to make the order without further assessment of the situation of the father and child and in any event did not adequately articulate her reasons to proceed to make a placement order in the circumstances of this case (para 4).\nWe are told that the process of assessing the father and increasing his contact with Amelia since then has been successful and she has now been placed with him in Norway under a child arrangements order.\nThe issue before us is not whether the Court of Appeal was right to allow the appeal.\nThe issue is whether it was right to order the local authority to pay the fathers costs of the appeal (assessed in the sum of 13,787.70).\nThe father had funded it privately, the non means tested legal aid which is available to all parents in care proceedings not being available on appeal.\nIt was not suggested that the local authority had behaved reprehensibly in relation to the child or unreasonably in the stance taken at first instance (para 30).\nBut they had resisted the appeal while recognising the deficiencies in the judgment in the lower court (para 32).\nA parent should not be deterred from challenging decisions which impact upon the most crucial of human relationships (para 30).\nThe decision in this court in In re T (Care Proceedings: Costs) [2012] UKSC 36, [2012] 1 WLR 2281 was distinguishable and the courts discretion broad (para 31).\nIn their application for permission to appeal, the local authority made it clear that, whatever the outcome, they would not seek to recover the costs awarded and paid to the father.\nThey argued that the case raises matters of public interest which merit consideration by this court, but it is not intended that Mr S should suffer financial detriment as a result.\nPermission to appeal was given on that basis.\nThe court is accordingly very grateful to Dr Bainham and the fathers legal team, who acted for him pro bono, thus enabling the case to be properly and fully argued.\nIn re T (Care Proceedings: Costs)\nIn In re T, care proceedings were brought in respect of two children who had made allegations of sexual abuse against their father and a number of men, in which it was alleged that their paternal grandparents had colluded.\nThe grandparents intervened in the proceedings in order to refute the allegations.\nAs interveners they did not qualify for the non means tested legal aid which is available to parents.\nTheir means were modest but above the legal aid threshold.\nThey therefore had to borrow to pay for their own representation.\nThe allegations were investigated at a split fact finding hearing, at which the grandparents were exonerated, although no criticism was made of the local authority for putting the allegations before the court.\nThe Supreme Court held that the trial judge had been correct not to make an order that the local authority pay the grandparents costs.\nLord Phillips, giving the judgment of the court held, at para 44, that the general practice of not awarding costs against a party, including a local authority, in the absence of reprehensible behaviour or an unreasonable stance, is one that accords with the ends of justice and which should not be subject to an exception in the case of split hearings.\nIt was irrelevant whether or not a party was legally aided.\nIf the grandparents were entitled to their costs, so too should have been the five publicly funded men who were also exonerated.\nThe local authority had a statutory duty to protect the children, by bringing proceedings where appropriate.\nIt was for the court, and not for the local authority, to decide whether or not the allegations were true.\nLocal authorities should not be deterred from putting such cases before the court by the prospect of having to pay the costs of those who were exonerated.\nThis would reduce the funds available to provide for children in need.\nThere was no warrant for distinguishing between hearings where fact finding was split from deciding what was best for the child and hearings where all issues were dealt with together.\nThere are, of course, several distinctions between that case and this.\nIn re T was a first instance trial, indeed that part of the care proceedings trial in which the essential facts are found, before moving on to discuss what solution will best serve the interests of the child in the light of those facts.\nCosts at first instance are governed by the Family Procedure Rules 2010, Part 28.\nThis case concerns an appellate hearing, in which the essential facts were not in dispute, and the issue was what would be best for the child.\nCosts on appeal are governed by the Civil Procedure Rules, Part 44.\nIn re T concerned the costs to be borne by interveners, indeed interveners whose interest was in clearing their names rather than in looking after the child.\nThis case concerns the costs to be borne by a parent of the child, indeed a parent who wishes to undertake the care of the child himself.\nagain to examine the issue of costs in childrens cases from first principles.\nIn order to decide whether those are material distinctions, it is necessary once\nCosts in childrens cases\nUnder section 51 of the Senior Courts Act 1981, costs in the civil division of the Court of Appeal and in the family court are in the discretion of the court but subject to the rules of court.\nUnder the Civil Procedure Rules, the general rule in civil proceedings is that the unsuccessful party will be ordered to pay the costs of the successful party (CPR, rule 44.2(2)(a)).\nHowever, this general rule does not apply to first instance proceedings about children (FPR rule 28.2(1) disapplies CPR rule 44.2(2)).\nNor does the general rule apply to proceedings in the Court of Appeal in connection with proceedings in the Family Division of the High Court or from a judgment, direction, decision or order in any court in family proceedings (CPR, rule 44.2(3)).\nHowever, CPR 44.2(4) and (5) do apply to childrens proceedings both at first instance and on appeal: (4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including (a) the conduct of all the parties; (b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and (c) any admissible offer to settle made by a party which is drawn to the courts attention, and which is not an offer to which costs consequences of Part 36 apply. (5) The conduct of the parties includes (a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed . any relevant pre action protocol; (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and (d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.\nAs was pointed out in In re T, rule 44.2(4)(b) is relevant in a situation where the general rule applies but has no direct relevance where it does not (para 11).\nThis is not, of course, to say that success or failure is irrelevant in childrens cases: no one has suggested in this case that the successful party should have to pay the unsuccessful partys costs (although, as will be seen, there may be circumstances where this would be appropriate).\nNor does rule 44.2(4)(c) readily fit the conduct of childrens cases, save as an aspect of the general desirability of the parties co operating and negotiating to reach an agreed solution which will best serve the paramount consideration of the welfare of the child.\nAs such, it is part of the general conduct of the proceedings, some aspects of which are listed in rule 44.2(5).\nAs long ago as Gojkovic v Gojkovic (No 2) [1992] Fam 40, at 57B, the Court of Appeal observed that it was unusual to make an order for costs in childrens cases.\nIn Keller v Keller and Legal Aid Board [1995] 1 FLR 259, at 267 268, Neill LJ went further: In the last decade, however, it has become the general practice in proceedings relating to the custody and care and control of children to make no order as to the costs of the proceedings except in exceptional circumstances.\nHe did, however, go on to say that it was unnecessary and undesirable to try to limit or place into rigid categories the cases which a court might regard as suitable for such an award.\nNevertheless, the cases which might be regarded as suitable may be deduced from the reasons why the courts have adopted the no costs approach.\nThe classic explanation is that given by Wilson J in Sutton London Borough Council v Davis (No 2) [1994] 1 WLR 1317, at 1319: Where the debate surrounds the future of a child, the proceedings are partly inquisitorial and the aspiration is that in their outcome the child is the winner and indeed the only winner.\nThe court does not wish the spectre of an order for costs to discourage those with a proper interest in the welfare of the child from participating in the debate.\nNor does it wish to reduce the chance of their co operation around the future life of the child by casting one as the successful party entitled to his costs and another as the unsuccessful party obliged to pay them.\nThe proposition applies in its fullest form to proceedings between parents and other relations; but it also applies to proceedings to which a local authority are a party.\nThus, even when a local authoritys application for a care order is dismissed, it is unusual to order them to pay the costs of the other parties.\nWhenever a court has to determine a question relating to the upbringing of a child, the welfare of the child is the courts paramount consideration: Children Act 1989, section 1(1).\nThis applies just as much to care proceedings brought to protect a child from harm as it does to disputes between parents or other family members about the childs future.\nAlthough the proceedings are adversarial in form, they have many inquisitorial features.\nAn application cannot be withdrawn without the courts consent (FPR, rule 29.4).\nThe court is not bound by the cases put forward by the parties, but may adopt an alternative solution of its own.\nThe court is not bound by the choice of evidence put forward by the parties, but can decide for itself what evidence it wishes to hear.\nThe court is very often assisted by the independent investigations and reports of the family court reporter (in private law cases) or the childrens guardian (in care and adoption proceedings) and other experts.\nEven in care proceedings, there are many possible outcomes available to the court.\nThus, for example, in a case such as this, the available outcomes ranged from a closed adoption with no contact (other than letterbox contact) with the birth family to the child going to live with her father with no further intervention by the local authority.\nIn between could be, for example, an open adoption, a special guardianship order, long term fostering under a care order with only limited contact with the birth family, medium term fostering with increasing contact with a view to restoring the child to her birth family in due course, placement with the birth family under a care order, placement with the birth family under a supervision order together with a child arrangements order, a child arrangements order or even no order at all.\nIt can readily be seen, therefore, why in such proceedings there are no adult winners and losers the only winner should be the child.\nFurthermore, it can generally be taken for granted that each of the persons appearing before the court has a role to play in helping the court to achieve the best outcome for the child.\nIt would be difficult indeed for a court to decide how to secure that the child has a meaningful relationship with each parent without hearing from them both.\nIt would be difficult indeed for a court to decide the best way of protecting a child from the risk of harm without hearing from her parents and those whose task it is to protect her.\nThat is why parents are compellable witnesses in care proceedings, even when it is alleged that they have committed criminal offences.\nNo one should be deterred by the risk of having to pay the other sides costs from playing their part in helping the court achieve the right solution.\nIt can also generally be assumed that all parties to the case are motivated by concern for the childs welfare.\nThe parents who dispute with one another or with the local authority over their childrens future do generally love their children dearly and want the best for them as they see it.\nThere are of course some wicked, neglectful, selfish or merely misguided parents who are not motivated to do their best for their children, but these are not the generality of parents, even those whose children are the subject of care proceedings.\nLocal authorities are not motivated by love, in the way that parents are motivated by love, but they do have statutory duties to investigate and take action to protect children if there is reasonable cause to suspect them to be suffering or likely to suffer significant harm: Children Act 1989, section 47.\nThey will be severely criticised by press and public alike if they fail to take action when they should have done.\nAnother consideration is that, in most childrens cases, it is important for the parties to be able to work together in the interests of the children both during and after the proceedings.\nChildrens lives do not stand still.\nTheir needs change and develop as they grow up.\nThe arrangements made to cater for those needs may also have to change.\nParents need to be able to co operate with one another after the case is over.\nUnless there is to be a closed adoption they also need to co operate with the local authority and the people who are looking after their children.\nThe local authority need to be able to co operate with them.\nStigmatising one party as the loser and adding to that the burden of having to pay the other partys costs is likely to jeopardise the chances of their co operating in the future.\nThere is one final consideration.\nIn certain circumstances, having to pay the other sides costs, or even having to bear ones own costs, will reduce the resources available to look after this child or other children.\nThus, for example, if a mother who is bringing up the children on modest means had not only to bear her own costs but also to pay the fathers costs, when unsuccessfully resisting his application for more contact with the children, the principal sufferers might well be the children.\nNor can it be ignored that, if local authorities are faced with having to pay the parents costs as well as their own, there will be less in their budgets for looking after the children in their care, providing services for children in need, and protecting other children who are or may be at risk of harm.\nOn the other hand, there is one consideration which cannot be taken into account.\nThe automatic availability of non means tested and non merits tested public funding for parents at first instance in care proceedings has masked the issue.\nIt has only surfaced on appeal, as here, or for interveners, where public funding is means tested.\nBut the question of whether it is just to make an order for costs should as a matter of principle be determined irrespective of whether any of the parties are publicly funded.\nAs Baker J put it in G v E (Costs) [2010] EWHC 3385 (Fam), [2011] 1 FLR 1566, para 39.\nGone are the days when it is appropriate for a court to dismiss applications for costs on the basis that it all comes out of the same pot. (The consequences of making a costs order for or against a publicly funded litigant are a separate matter.) Thus, as Lord Phillips pointed out in In re T, at para 41, if in principle the local authority should be liable in costs to interveners against whom allegations, reasonably made, have been held to be unfounded, this liability should arise whether or not those interveners were publicly funded.\nThe other five men who were exonerated in that case should also have got their costs.\nParents, automatically publicly funded, who successfully resist care proceedings would also get their costs.\nIt might even be said that successful local authorities should get their costs against the parents (or interveners) irrespective of public funding.\nAll the reasons which make it inappropriate as a general rule to make costs orders in childrens cases apply with equal force in care proceedings between parents and local authorities as they do in private law proceedings between parents or other family members.\nThey lead to the conclusion that costs orders should only be made in unusual circumstances.\nTwo of them were identified by Wilson J in Sutton London Borough Council v Davis (No 2): where, for example, the conduct of a party has been reprehensible or the partys stance has been beyond the band of what is reasonable: Havering London Borough Council v S [1986] 1 FLR 489 and Gojkovic v Gojkovic [1992] Fam 40, 60C D (p 1319).\nThose were also the two circumstances identified in In re T, at para 44.\nShould this case be distinguished?\nTwo questions arise: first, is there any reason to depart from the general approach in In re T in this case; and second, are there any other circumstances, beyond the two identified in In re T, in which a costs order might be justified?\nIt cannot be a valid distinction that the people claiming costs in In re T were interveners wishing to clear their names rather than parents wishing to care for their children.\nAll the reasons why costs orders are inappropriate in childrens cases apply much more strongly to parents and local authorities than they do to such interveners.\nThe fact that parents are resisting the claim of the state to take their children away from them is undoubtedly relevant, but it is relevant to whether one of the exceptions should apply.\nAs a general proposition, I would accept Dr Bainhams argument that parents are always entitled to resist the claim of the state to remove their children from them.\nThey will usually be reasonable in doing so.\nThey should not have to pay the local authoritys costs if they lose.\nBut it does not follow from that that if the local authority lose, they are unreasonable in seeking to protect the child: that will all depend upon the particular circumstances of the case.\nNor in my view is it a good reason to depart from the general principle that this was an appeal rather than a first instance trial.\nOnce again, the fact that it is an appeal rather than a trial may be relevant to whether or not a party has behaved reasonably in relation to the litigation.\nAs Wall LJ pointed out in EM v SW, In re M (A Child) [2009] EWCA Civ 311, there are differences between trials and appeals.\nAt first instance, nobody knows what the judge is going to find (para 23), whereas on appeal the factual findings are known.\nNot only that, the judges reasons are known.\nBoth parties have an opportunity to take stock and consider whether they should proceed to advance or resist an appeal and to negotiate on the basis of what they now know.\nSo it may well be that conduct which was reasonable at first instance is no longer reasonable on appeal.\nBut in my view that does not alter the principles to be applied: it merely alters the application of those principles to the circumstances of the case.\nSecondly, however, are there circumstances other than reprehensible behaviour towards the child or unreasonable conduct of the proceedings which might justify a costs order in care proceedings? It is clear from the authorities cited above that there may be other such circumstances in private law proceedings between parents or family members.\nShould care proceedings be any different?\nI do not understand that Lord Phillips, giving the judgment of the court in In re T, was necessarily intending to rule out the possibility that there might be other circumstances in which an award of costs in care proceedings might be appropriate and just.\nThat would be to ascribe to para 44 of the judgment the force of a statutory provision.\nSuch a rigid rule was unnecessary to the decision in that case and cannot be treated as its ratio decidendi.\nOn the other hand, it was necessary to the decision in that case that local authorities should not be in any worse position than private parties when it comes to paying the other parties costs.\nThere is an attraction in regarding local authorities in a different light from private parties, because of their so called deep pockets.\nBut, as Lord Phillips observed, at para 34, Local authorities have limited funds.\nTheir costs in relation to care proceedings are met from their childrens services budget.\nThere are many other claims on this budget.\nNo evidence is needed, , to support the proposition that if local authorities are to become liable to pay the costs of those [whom] they properly involve in care proceedings this is going to impact on their finances and the activities to which these are directed.\nThe court can also take judicial notice of the fact that local authorities are financially hard pressed, While it is true that appeals are comparatively rare and their costs comparatively low compared with the costs of care proceedings generally, that is not by itself a good reason for making an exception in their case.\nBut nor should local authorities be in any better position than private parties to childrens proceedings.\nThe object of the exercise is to achieve the best outcome for the child.\nIf the best outcome for the child is to be brought up by her own family, there may be cases where real hardship would be caused if the family had to bear their own costs of achieving that outcome.\nIn other words, the welfare of the child would be put at risk if the family had to bear its own costs.\nIn those circumstances, just as it may be appropriate to order a richer parent who has behaved reasonably in the litigation to pay the costs of the poorer parent with whom the child is to live, it may also be appropriate to order the local authority to pay the costs of the parent with whom the child is to live, if otherwise the childs welfare would be put at risk. (It may be that this is one of the reasons why parents are automatically entitled to public funding in care cases.)\nPro bono costs\nThe Access to Justice Foundation (whose legal team has also acted pro bono) has helpfully intervened, principally in order to argue that the principles applicable to pro bono costs orders should be the same as those applicable in other cases.\nUnder section 194 of the Legal Services Act 2007, the court may make a pro bono costs order in favour of the Access to Justice Foundation in respect of legal representation which has been provided free of charge.\nIn making such an order the court has to have regard to whether it would have made a costs order had the pro bono represented party been represented on a fee paying basis and if so what such an order would have been (section 194(4)).\nIn In re E (B4\/2014\/0146), the Court of Appeal made a pro bono costs order against a local authority which had unsuccessfully opposed a fathers appeal in care proceedings.\nIn a short written ruling, they explained that they did so on the basis that this created an exception to the general position: There is a public interest in the Bar Pro Bono Unit being compensated on a reasonable basis by an award of costs where such an award is available under the legislation.\nThe Foundation argues that it was right to make the order but the reasoning was wrong.\nThe general position should be that local authorities are ordered to pay the costs of parents who successfully appeal in care proceedings.\nPro bono costs should be no exception.\nHowever, we have decided that the general position should be that local authorities, like any other party to childrens proceedings, should not be ordered to pay the costs.\nThe logic of the Foundations argument is that no exception should be made for pro bono costs.\nIndeed, it would be hard to reconcile such an exception with section 194(4), but the point does not arise in this case.\nApplication in this case\nIt is not suggested that the local authority have behaved in any way reprehensibly towards these children or their parents.\nIt is not a case like A and S (Children) v Lancashire County Council (Costs) (No 2) [2013] EWHC 851 (Fam), [2013] 2 FLR 122, where the local authoritys conduct towards the children over many years was blatantly unlawful and unreasonable and led inexorably to substantial litigation (para 22).\nIndeed, the only criticism which could be levied against them was that they might have taken action to protect these children earlier than they did (see para 10 of the Court of Appeals judgment).\nThere is, perhaps, a faint suggestion (see para 32 of the Court of Appeals judgment) that the local authority behaved unreasonably in relation to the appeal, by resisting it despite the deficiencies in the first instance judgment.\nIn this case, I consider any such suggestion to be unwarranted.\nIt is true that Judge Karp had not gone through the pros and cons of the various possibilities in the detail expected since the judgment in In re B section But had the Court of Appeal considered that she had reached the right conclusion on the merits of the case, I have little doubt that they would have remedied this deficiency.\nThe crux of the matter is that they considered that there should have been an assessment of the fathers ability to care for his daughter in Norway.\nIt is not difficult to understand why: there were several positives in his favour and the evidence of Amelias particular needs was contentious.\nBut neither is it difficult to understand why the local authority maintained their stance, supported as it was by the childrens guardian as well as the independent social worker and the psychotherapist, that Amelia should be placed for adoption.\nThe Court of Appeal would have been surprised indeed had the local authority failed to respond to the appeal (and risked the criticism incurred by the local authority which failed to respond to application for permission to appeal in In re S (Children) Care Proceedings: fact Finding Hearing) [2014] EWCA Civ 638, [2014] 3 FCR ).\nIn the circumstances, it was also in my view reasonable of them to have maintained the stance that they had taken at first instance.\nAs to the question of whether a refusal to award costs might indirectly create hardship for the child, this would have required the Court of Appeal either to reserve the costs of the appeal until the outcome of the assessment had been known and the childs future decided or to remit the question of the appeal costs to be decided at the future first instance hearing.\nAt that point it would have been clear where Amelia was to live and evidence could have been filed as to the impact upon her of the father having to bear his own costs in the appeal.\nIt has not been suggested that that would have been an appropriate course in this case.\nIn these circumstances, it is unnecessary to address the alternative argument mounted by the local authority, that the costs should have been apportioned between the authority and the childrens guardian, as both were opposing the appeal, although the guardian took no part in the hearing.\nWe note that the Legal Aid Agency has expressed the view that they do not think that there is any lawful way that a proportion of the fathers costs can be paid by the child under his certificate.\nThat issue is not before us and I would prefer to make no comment.\nConclusion\nFor all those reasons, none of the exceptions to the general approach applicable to awards of costs in childrens cases applies in this case.\nThe appeal should be allowed and the costs order made in the Court of Appeal set aside (the local authority having given the assurance referred to in para 10).\n","output":"The father of a young girl (called Amelia in the judgment) successfully appealed against a placement order obtained by a local authority for Amelias adoption without her fathers consent.\nThe Court of Appeal ordered the local authority to pay the fathers costs of the appeal.\nThe issue arising on this appeal is whether it was right to do so, given the principle confirmed by the Supreme Court in In re T (Care Proceedings: costs) [2012] UKSC 36 that in general local authorities should not be ordered to pay costs in care proceedings.\nAmelias father married her mother in 2002 but they separated in 2007 before she was born.\nAmelia lived with her mother.\nCare proceedings were commenced as a result of concerns on the part of the local authority that Amelia and her other sibling and half siblings had suffered or were likely to suffer significant harm owing to a lack of proper parental care from their mother.\nThe father had had only limited contact with the children.\nThe local authority considered that he did not have the capacity to meet Amelias high level of need and, with the support of the childrens guardian allocated in the care proceedings, sought a closed adoption for her (ie without contact with her birth family).\nThe judge at first instance accepted the local authoritys opinion and made the placement order.\nThe placement order was overturned by the Court of Appeal on the basis that the judge had been wrong to make the order without further assessment of the situation of the father and child, and had not adequately articulated her reasons.\nSince then further assessment has taken place and Amelia has now been placed with her father under a child arrangements order.\nIn bringing the appeal the father incurred legal costs assessed in the sum of 13,787.\nThe Court of Appeal ordered that the local authority should pay those costs because it had resisted the appeal, and in order not to deter a parent from challenging decisions which impact on the most crucial of human relationships.\nIt held that the principle in In re T was not applicable to appeals.\nThe local authority appealed to the Supreme Court in relation to the costs order only, and on the basis that whatever the outcome, it would not seek to recover the costs awarded and paid to the father.\nThe Supreme Court unanimously allows the appeal by the local authority and sets aside the costs order made in the Court of Appeal.\nLady Hale gives the only judgment.\nIn re T upheld the general practice of not awarding costs against a party, including a local authority, in childrens proceedings, in the absence of reprehensible behaviour or an unreasonable stance.\nIt held that local authorities should not be deterred from their statutory duty to protect children by bringing proceedings.\nIn re T was different from this case, in that it involved a first instance fact finding hearing rather than an appeal; and the costs of interveners who merely wished to clear their names of abuse allegations, rather than of parents who wished to care for the child themselves [13].\nThe question was whether these distinctions were material.\nThe general rule that in civil proceedings the unsuccessful party will be ordered to pay the costs of the unsuccessful party does not apply to first instance or appellate proceedings about children [15].\nFor many years the practice in such proceedings has been to make no order in the absence of exceptional circumstances.\nThe only winner should be the child and no one should be deterred by the risk of having to pay the other sides costs from playing their part in helping the court achieve the right solution [21].\nIt is important for the parties to be able to work together in the interests of the children during and after the proceedings, which stigmatising one party as the loser does not assist [23].\nAn order to pay costs may reduce the resources available to look after the child or, for a local authority, reduce the budget for the protection of other children [24].\nIt is irrelevant whether a party is publicly funded or not [25].\nParents are always entitled to resist the claim of the state to remove their children from them, but it does not follow that the local authority is unreasonable in seeking to protect the child if it loses [28].\nOn an appeal different considerations will apply when assessing whether a party has acted unreasonably but the principle is the same [29].\nIn re T did not rule out the possibility of other circumstances in which an award of costs in care proceedings might be appropriate [31] provided that a local authority was not put into a worse position than private parties [32].\nNor should it be put in a better position.\nThe object of the exercise is to achieve the best outcome for the child and there may be cases where the welfare of the child would be put at risk if a costs order is not made [33].\nIn this case it is not suggested that the local authority has behaved in any way reprehensibly towards Amelia or her father [35].\nThe suggestion that it should not have opposed the appeal because of the deficiencies in the first instance judgment is unwarranted and the Court of Appeal would have been surprised had the local authority failed to respond to the appeal [36].\nNone of the exceptions to the general approach to awards of costs in children cases applies in this case and the appeal (with the assurance that the local authority has given as regards the fathers costs in this case) is therefore allowed [39].\n","id":61}
{"input":"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.\nIt was alleged that the three offences concerned a total sum of approximately 120,000.\nThe 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).\nThe 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).\nPart 1 of the 2003 Act, as amended, applies in this case.\nThe 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.\nThe 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.\nA 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.\nThe 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.\nOn 2 March 2017 the EAW was certified by the NCA under sections 2(7) and (8) of the 2003 Act.\nThe appellant was arrested pursuant to section 3 of the 2003 Act on 2 March 2017.\nThe initial hearing took place at Westminster Magistrates Court pursuant to section 4 of the 2003 Act.\nThe appellant was remanded in custody to the extradition hearing.\nThe extradition hearing took place before District Judge Ashworth at Westminster Magistrates Court on 10 April 2017.\nOne 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.\nIn 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.\nThe appellant also maintained that his extradition would infringe his rights under article 8 of the European Convention on Human Rights (ECHR).\nIn 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.\nHe 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.\nHe 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.\nHe, 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.\nThe appellants surrender to the Czech Republic was ordered pursuant to section 21(3) of the 2003 Act.\nThe appellant sought to appeal against the order for his extradition.\nOn 21 June 2017 Collins J granted permission to appeal.\nOn 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.\nThe judge concluded that the extradition of the appellant would not be unjust or oppressive.\nHe did, however, address the issue of delay further in the context of the article 8 challenge.\nHe noted that the District Judge was fully aware of the very long delay between the offending and the hearing before him.\nSir Wyn considered that the delay which had occurred was a powerful factor militating against extradition.\nHowever, he could not conclude that the District Judges decision on the article 8 issue could be said to be wrong.\nAccordingly, he dismissed the appeal pursuant to section 27(1)(b) of the 2003 Act.\nOn 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.\nOn 23 March 2018 the Supreme Court (Lord Mance, Lord Hughes and Lady Black) granted permission to appeal to the Supreme Court.\nThe relevant legislation\nThe 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.\nThe 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.\nIt 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)).\nThe mechanism of the EAW is based on a high level of confidence between member states (recital (10)).\nIn relations between member states the EAW was intended to replace all the previous instruments concerning extradition (recital (11)).\nArticle 1 of the Framework Decision provides in relevant part: Definition of the European arrest warrant and obligation to execute it Article 1 1.\nThe 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.\nMember 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.\nArticle 3 sets out grounds for mandatory non execution of an EAW and article 4 sets out grounds for optional non execution.\nArticle 8 provides in relevant part: Article 8 Content and form of the European arrest warrant 1.\nThe 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;\nCouncil Framework Decision 2009\/299\/JHA of 26 February 2009 amends the Framework Decision.\nIts 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.\nRecital (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.\nThese 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.\nArticle 4a Decisions rendered following a trial at which the person did not appear in person 1.\nThe 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.\nArticle 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.\nThe Framework Decision as amended is implemented in the United Kingdom by Part 1 of the Extradition Act 2003 as amended.\nSection 2 provides in relevant part: 2.\nPart 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.\nSection 10 provides: 10.\nInitial stage of extradition hearing Section 11 provides in relevant part: 11.\nBars 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.\nPassage 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).\nSection 20 provides: 20.\nCase 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.\nSection 21 provides in relevant part: 21.\nPerson 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.\nSection 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.\nUnlawfully 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.\nThe EAW\nThe EAW in this case was issued by the District Court on 17 April 2013.\nIt 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.\nIt states that the length of the custodial sentence imposed was eight years.\nIn 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.\nHowever, it specifies legal guarantees as follows: After surrendering, the convict will have the right for a new process in his presence.\nSuch right is ensured by the provisions of section 306a para 2 of the Code of Criminal Procedure.\nThe 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.\nIf 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.\nOtherwise 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.\nThe convict must receive instructions on the right to file an application for revocation of the legally effective conviction when the conviction is delivered.\nThe 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.\nIn 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.\nAccusation warrants and conviction warrants\nPart 1 of the 2003 Act gives effect in national law to the Framework Decision as amended.\nThe choice of form and methods to achieve that result is left to member states.\nIn this instance, the United Kingdom has departed significantly from a direct implementation of the scheme of the Framework Decision.\nThe 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.)\nThe 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)).\nIn general, the Framework Decision deals with accusation and conviction cases together although the respective formal requirements of the two types of warrant differ.\nThe 2003 Act distinguishes between an accusation warrant (section 2(3) and (4)) and a conviction warrant (section 2(5) and (6)).\nThis 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.\nOn 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.\nIf it is, he must then consider whether extradition is barred by any of the matters set out in section 11.\nMost of the bars apply equally to accusation and conviction warrants but two (absence of prosecution decision and forum) apply only to accusation warrants.\nThe 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).\nIf extradition is not barred, the different routes diverge further at this point.\nThe 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)).\nUnder 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.\nIf 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).\nBy 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.\nSection 21A is discrete from section 21 and requires the judge to address both Convention rights under the 1998 Act and the issue of proportionality.\nAt the heart of the present appeal lies the issue of the characterisation of the appellant as an accused person or a convicted person.\nThe 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.\nHowever, 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.\nIn 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.\nIt 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.\nIt 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.\nHowever, 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.)\nThe appellants case\nOn 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.\nHe 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.\nIn 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.\nMr Summers submits that, as a result, consideration of delay prior to conviction and consideration of injustice were precluded.\nMr Summers seeks to advance his case on two distinct bases.\nFirst, 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.\nSecondly, he submits that, as a matter of domestic law, the appellant is not to be categorised as convicted under the 2003 Act.\nThese submissions will be considered in turn.\nEU law\nMr 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.\nIB, 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.\nThat sentence was upheld on appeal.\nHowever, on further appeal the Supreme Court ordered that the sentence be served in custody.\nThe decision of the Supreme Court was rendered in absentia and IB was not notified of the date or place of the hearing.\nThe sentence was never executed.\nIB fled Romania and settled in Belgium where he obtained a residence permit and was joined by his wife and children.\nThe Romanian requesting authority issued an EAW for his arrest with a view to executing the sentence.\nAt 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.\nArticle 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.\nArticle 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.\nArticle 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.\nThe 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.\nThat 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.\nIt 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.\nThe court referred the matter to the Belgian Constitutional Court which, in turn, made a preliminary reference to the CJEU.\nIts 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?\nMr Summers places particular reliance on the following passage in the judgment of the CJEU in response to the first two questions: 56.\nIf 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.\nGiven 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.\nThe CJEU concluded in relation to the first two questions:\nMr 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.\nI 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.\nThe 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.\nIt 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.\nOn 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).\nThe court was extending the application of article 5(3).\nIt 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).\nThe 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.\nI 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.\nIn 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.\nAccordingly, 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.\nHowever, there is no trace of such reasoning in the judgment of the court.\nMoreover, 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.\nWhen 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.\nHe did, however, refer the court to Criminal proceedings against Tupikas (Case C 270\/17PPU) [2017] 4 WLR 188.\nThis case, it seems to me, is concerned with a different issue.\nThere, 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.\nHe 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.\nThe 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).\nThe 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.\nCriminal proceedings against Zdziaszek (Case C 271\/17PPU) [2017] 4 WLR 189 addresses the same issue and applies Tupikas.\nThis 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.)\nIn 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.\nOn 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.\nHowever, 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.\nThe 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.\nArticle 8(f) does require that a warrant should state the penalty imposed if there is a final judgment.\nBy contrast, article 8(c) requires a warrant to contain evidence of an enforceable judgment and any other enforceable judicial decision having the same effect.\nWe 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.)\nI have, accordingly, come to the clear conclusion that the appellants case founded on EU law is not made out.\nIn 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.\nDomestic law\nOn 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.\nContumacious convictions\nMr 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.\nHe 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.\nIf so, that persons extradition had to be sought as an accused person, the conviction being contumacious.\nIf not, the persons extradition had to be sought as a convicted person.\nIn this regard we were referred to a large number of decisions concerning contumacious convictions.\nIt 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.\nThe 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.\nOn 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.\nIndeed, 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.\nRecital (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.\nThis 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.\nThis 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.\nLest 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.\nIn 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.\nI consider that the principles relating to contumacious convictions developed in the case law under previous legislation can have no application under the current scheme.\nFor 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.\nThe 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.\nThe final question discussed before the House was the period of time for consideration under section 82.\nIt 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.\nThe statutory scheme\nMore 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.\nMr 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.\nHowever, 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.\nSection 68A defines unlawfully at large for the purposes of section 11.\nHere, the appellant clearly falls within that definition.\nHe 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.\nHis 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.\nAs a result, the judge is directed to proceed under section 20 and not under section 21A.\nMr 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.\nHe would have been recognised by the extradition court as entitled to an unfettered and unconditional retrial.\nIn 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.\nI am unable to accept this submission.\nFirst, 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.\nIn 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).\nHowever, 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).\nIf the last issue were not resolved in that way, the appellant would have to be discharged.\nIn 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.\nSecondly, 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.\nIn 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.\nHowever, 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.\nThirdly, 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.\nHowever, nothing in the statutory scheme contemplates or makes provision for such changes of status.\nMr 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.\nIt does indeed.\nIf 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.\nMr Summers response was that this was an oversight in the drafting of the legislation.\nHe 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.\nFurther, 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.\nHere he relies on Criminal proceedings against Pupino.\nFor reasons stated earlier in this judgment, I do not accept that EU law requires the result for which he contends.\nMoreover, 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.\nThe express provisions in their natural meaning provide a coherent structure within which to address all cases of trial in absentia.\nAuthorities\nWe have been referred to a number of authorities which, it is said, support the appellants case.\nMr Summers places considerable reliance on the decision of the House of Lords in Caldarelli.\nIn that case, Mr Caldarelli had been convicted by an Italian court of a drugs offence and sentenced to a term of imprisonment.\nHe had deliberately absented himself from the trial but was represented by lawyers appointed by him personally.\nHis lawyers lodged an appeal on his behalf.\nWhile that appeal was still pending an Italian judge issued an EAW which stated that he was accused in Italy of a drugs offence.\nHe was arrested in the United Kingdom under the warrant and his extradition to Italy ordered.\nHe 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.\nThe 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).\nContrary to what might appear at first sight, however, the decision does not assist the appellant in the present case.\nUnder 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.\nFurthermore, he was not entitled as of right to a retrial or to a review amounting to a retrial.\nAs Lord Bingham explained: Here, as is common ground, the foreign judge has treated the appellant as an accused and not a convicted person.\nThis 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.\nBut 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.\nOn 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.\nIn 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)\nWe 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).\nThat decision was, however, an application of Caldarelli (see Sweeney J at paras 67 68) and therefore does not assist the appellant.\nThe 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.\nIn 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.\nHenriques 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.\nIn 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.\nAn EAW was issued.\nIn 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.\nHis lawyers lodged an appeal against conviction and sentence.\nOn appeal the conviction was upheld but the sentence reduced.\nAt the extradition hearing the District Judge ordered his discharge on the ground that the accusation warrant was defective as he had been convicted.\nThe Divisional Court (Waller LJ and Swift J) allowed the appeal.\nFurther 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).\nIn 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.\nIn these circumstances the court considered it plain that the conviction and sentence was not a final determination of the criminal process.\nUntil the expiry of time within which to appeal the judgment was neither final nor enforceable.\nAccordingly, the accusation warrant was in correct form.\nThe court approved the similar conclusion in Janiga.\nBikar, 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).\nIn 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.\nHe 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.\nThis submission was rejected by the Divisional Court (Scott Baker LJ and Maddison J).\nScott 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.\nThe structure of Part 1 of the Extradition Act 2003 envisages a step by step approach by the judge.\nEach step requires consideration of a particular question and its answer determines the next move that the judge is required to make.\nIt 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.\nAs 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.\nMs Freemans argument, as it seems to me, puts the cart before the horse.\nIt 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.\nA similar approach was adopted by the Divisional Court (Laws LJ, Collins and Stadlen JJ) in Istanek.\nThe appellant had been convicted in the Czech Republic in his absence.\nHe 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.\nA conviction EAW was issued for his surrender and his return was ordered.\nOn 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.\nLaws 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.\nHowever, in his view there was no reason to hold that in the result any of those cases was wrongly decided on its facts.\nHe considered it plain that Sonea was correctly decided.\nLaws 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.\nApplying 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.\nWith 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).\nHe 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.\nFurthermore, 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.\nTo apply such a one size fits all approach would be inconsistent with his general approach and with section 20.\nThe issue of characterisation was not to be decided by courts in this jurisdiction by their own lights.\nThat 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.\nI find the reasoning of the Divisional Courts in Sonea and Istanek compelling.\nThe 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.\nThis step by step approach is entirely incompatible with the appellants case.\nIf 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.\nThe process of characterisation\nThe 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.\nThose criteria must be applied to the position as it exists under the law and practice of the member state of the requesting authority.\nI 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.\nThe 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.\nIn 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.\nDisadvantage to the appellant?\nComplaint 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.\nFirst 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).\nThe particular point made here concerns particularity.\nIn 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.\nHowever, 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.\nIn 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.\nOn the contrary, the EAW contains in Box (e) full particulars of the three relevant offences.\nSecondly, 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.\nSection 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.\nUnjust 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).\nTo my mind, there is more substance in this complaint.\nThis 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).\nMr 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.\nIf, 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.\nIt seems to me that this is a deficiency in the drafting of the statute which requires consideration by the legislature at an early opportunity.\nThis is a matter which has troubled judges in a number of cases concerning convictions in absentia.\nIn 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.\nIn 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.\nIn 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.\nHe 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).\nHowever, 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.\nSimilarly, 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.\nIn Farzal Rahman v County Court of Boulogne sur Mer, France [2014] EWHC 4143 (Admin) Blake J adopted a rather different approach.\nThere a conviction warrant was founded on a conviction in absentia.\nIt 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.\nThe 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.\nThe 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.\nNoting 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.\nHe 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.\nSuch 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.\nHowever, I consider that this strenuous reading is inconsistent with the scheme of the Framework Decision and Part 1 of the 2003 Act.\nIt 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.\nPassage 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.\nIn the article 8 balancing exercise, the relevant period of time will not be subject to the restrictions which appear in section 14.\nI 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.\nFurthermore, 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.\nThe risk of prejudice at a retrial would be highly relevant in the balancing exercise which the extradition court would be required to undertake.\nMoreover, the threshold test to be satisfied would not be one of injustice or oppression but the lower one of disproportionality.\nThis 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.\nApplication to the present case\nOn 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.\nThe 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.\nIt 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.\nHowever, 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.\nI 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.\nThe letter from the requesting judicial authority dated 17 March 2017 confirms that the appellant will have an unqualified right for complete retrial before court.\nThere 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.\nIn these circumstances District Judge Ashworth correctly characterised the EAW as a conviction warrant.\nFurthermore, he was correct in characterising this as a conviction case.\nThe EAW indicated that there was an enforceable judgment and a legally effective conviction which would remain such until revoked.\nThere 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.\nThe District Judge proceeded by following the appropriate channel in the case of a conviction warrant as required by the 2003 Act.\nIt was common ground that the offences specified in the warrant were extradition offences as required by section 10.\nUnder 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.\nSo 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).\nThe 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.\nHaving 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).\nIn 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.\nThe conviction was confirmed by the Regional Court on 23 July 2008.\nThe EAW was issued on 17 April 2013.\nIt was certified by the National Crime Agency on 2 March 2017 and the appellant was arrested on the same day.\nAt the extradition hearing the appellant relied on evidence as to changes in his personal circumstances.\nHe 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.\nThe documents, which he claimed would exculpate him, had not been returned.\nAt the extradition hearing the District Judge considered the passage of time under section 11(1)(c) and section 14.\nAt this point in his judgment he confined his attention to the passage of time since the date of conviction in 2008.\nIn 2003 the appellant had been convicted and sentenced to four years imprisonment in the Czech Republic.\nThat conviction related to the same building project to which the 2008 convictions related.\nHe had been aware in November 2005 that the police were once again conducting investigations.\nHe came to the United Kingdom in June 2007.\nIn November 2007 the Office of the District Public Prosecutor had issued a consent to his detention.\nThe 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.\nDuring the period since 2008 the appellant had been working as a lorry driver in the United Kingdom.\nHis 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.\nThe 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.\nThe offending was particularly serious, repetitive and followed closely his release for a similar offence.\nMr Konecny had been termed a particularly dangerous recidivist by the Czech authorities.\nSo 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.\nIf 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.\nHaving 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.\nThis 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.\nHowever, the District Judge returned to the issue of delay when carrying out the balancing exercise under article 8 ECHR.\nHe listed this among the factors militating against extradition.\nHe 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.\nHere the offending had been some 12 13 years earlier when the appellant had been considerably younger.\nThe passage of time would have served to mature him and in the intervening period he had worked peaceably.\nThere was no evidence he had any knowledge of the proceedings against him.\nThere was no explanation for the considerable delay in finding him, bearing in mind that he was living openly in another member state.\nNevertheless, the public interest factors in favour of extradition outweighed his family and private life considerations, even when the delay was taken into account.\nOn 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.\nHe 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.\nThe District Judge was not to be criticised for his observations in relation to the possibly exculpatory papers.\nThere was no real basis for a conclusion that extradition would be unjust.\nHe could not conclude that the District Judge was wrong to conclude that extradition of the appellant would not be oppressive.\nSir Wyn returned to the issue of delay in the context of article 8.\nHe 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.\nThe 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.\nThe District Judge was right to consider that there were very powerful factors supporting an order for extradition.\nWhile 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.\nAccordingly, he dismissed the appeal.\nI 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.\nI am also satisfied that this appellant has not been disadvantaged in any way as a result.\nLike 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.\nFinally, 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.\nThese relate to double criminality, prematurity, issues of forum and proportionality.\nHowever, 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.\nConclusion\nFor these reasons, I would dismiss the appeal.\n","output":"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.\nThe 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).\nThe Framework Decision is implemented in the United Kingdom by Part 1 of the Extradition Act 2003 (the 2003 Act).\nThe EAW states that it is based on an enforceable judgment, namely the judgment of the District Court dated 12 May 2008.\nThe 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.\nOn 2 March 2017, the EAW was certified by the National Crime Agency (NCA) and the appellant was arrested.\nThe extradition hearing took place on 10 April 2017.\nIn 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.\nThe appellant also maintained that his extradition would infringe his rights under article 8 of the European Convention on Human Rights (ECHR).\nDistrict 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.\nHe 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.\nHe 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.\nIn this context he took account of the passage of time since 2004.\nOn 27 September 2017, the High Court dismissed the appeal.\nOn 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?.\nThe appellant sought and obtained permission to appeal to the Supreme Court.\nThe Supreme Court unanimously dismisses the appeal.\nLord Lloyd Jones gives the sole judgment with which the other Justices agree.\nAt the heart of the present appeal lies the issue of the characterisation of the appellant as an accused person or a convicted person.\nThe 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.\nThe 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].\nThe Court considers that the appellants case founded on EU law is not made out [28].\nIt also considers that the appellants case is inconsistent with the EAW scheme and the express provisions of the 2003 Act [34].\nThe express provisions in their natural meaning provide a coherent structure within which to address all cases of trial in absentia [37].\nThe 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.\nThe 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.\nIn 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.\nThe 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.\nThis is a deficiency in the drafting of the statute which requires consideration by the legislature at an early opportunity [54].\nHowever, 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].\nIn this case, District Judge Ashworth correctly characterised the EAW as a conviction warrant.\nThe EAW indicated there was an enforceable judgment and a legally effective conviction which would remain such until revoked.\nThe 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].\nFor these reasons, the Court dismisses the appeal [72].\n","id":62}
{"input":"The specific issue raised by this appeal is whether East Sussex County Council (the County Council) was wrong in law to decide to register an area of just over 6 hectares (or 15 acres) known as West Beach at Newhaven (the Beach) as a village green pursuant to the provisions of the Commons Act 2006.\nThe points of principle raised by the appeal are, potentially at least, far more wide ranging.\nThose points are (i) the nature of the publics rights over coastal beaches, (ii) whether byelaws can give rise to an implied consent to the public to use land, and (iii) the interrelationship of the statutory law relating to village greens and other duties imposed by statute.\nThe factual background\nNewhaven is a port town on the mouth of the River Ouse in East Sussex, and its harbour (the Harbour) has existed since the mid sixteenth century, after a storm blocked the original mouth of the River Ouse, some three miles to the east.\nSince at least 1731, the operation of the Harbour has been subject to legislation.\nThe Newhaven Harbour and Ouse Lower Navigation Act 1847 (the 1847 Newhaven Act) repealed the earlier legislation, and established harbour trustees (the trustees), to whom it gave powers to maintain and support the harbour and associated works.\nSection 49 of the 1847 Newhaven Act is in these terms:\n[T]he Trustees shall maintain, and support the said harbour of Newhaven, and the piers, groynes, sluices, wharfs, mooring berths, and other works connected therewith, and also maintain and support the open navigation of the River Ouse between\nNewhaven Bridge and Lewes Bridge\nThe Newhaven Harbour and Ouse Lower Navigation Act 1863 (the 1863 Newhaven Act) gave the trustees powers to construct and maintain and support the Harbour and associated works.\nThe Newhaven Harbour Improvement Act 1878 (the 1878 Newhaven Act) established the Newhaven Harbour Company to which were transferred the rights, powers and duties of the trustees.\nUnder section 57 of the 1878 Newhaven Act it is provided that: the Company may hire or purchase and use any dredging machine for the purpose of deepening and cleansing the harbour Section 2 of the 1878 Newhaven Act applied to the port section 33 of the Harbours, Docks and Piers Clauses Act 1847 (the 1847 Clauses Act), which provides that: Upon payment of the rates made payable by this and the special Act, and subject to the other provisions thereof, 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.\nBy virtue of the Southern Railway Act 1926, the Harbour Company was vested in the Southern Railway Company.\nPursuant to the Transport Act 1947, the Southern Railway Company was nationalised, and the Harbour was vested in the British Transport Commission.\nAs a result of subsequent statutory and contractual arrangements, the Harbour subsequently vested in British Railways Board (1962), Sealink (UK) Limited (1979), Sea Containers Limited (1984), and, most recently, in 1991, Newhaven Port and Properties Limited (NPP), pursuant to the Sealink (Transfer of Newhaven Harbour) Harbour Revision Order 1991 (SI 1991\/1257) (the 1991 Newhaven Order).\nParas 10 and 11 of the 1991 Newhaven Order provide:\n10 (1) The Company, subject to obtaining the necessary rights in or over land, may execute, place, maintain and operate in and over the transferred harbour such works and equipments as are required for or in connection with the exercise by it of any of its functions and may alter, renew or extend any works so constructed or placed. 11 (1) The Company may deepen, widen, dredge, scour and improve the bed and foreshore of the transferred harbour and may blast any rock within the transferred harbour or in such approaches.\nThe Beach is part of the operational land of the Harbour, which is currently owned and operated by NPP, and is subject to statutory provisions and byelaws.\nThe extent of the Harbour area includes (i) a substantial breakwater and lighthouse, seawall and the Beach which form the west of the entry into the port, (ii) a pier, a much longer (and naturally created) shingle beach which form the east of that entry, (iii) the mouth of the River Ouse and the next thousand metres or so of the river, and (iv) land running either side of the river, which includes (v) a car park, marina and fishing berth to the west, and (vi) two quays, a ferry dock, a cool store, a harbour railway station, and harbour offices to the east.\nNPPs current strategic plan for development of the port is contained in its Masterplan (2012).\nThe 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.\nThe breakwater extends just over 700 metres out to sea.\nAfter the construction of the breakwater, accretion of sand occurred along the eastern side of the breakwater, and that accretion has resulted in the Beach.\nTo the north, the Beach is bounded by a harbour wall.\nOn top of the harbour wall is an area of hard standing and a car park, which is now owned and operated by NPP.\nThere are physically two means of access to the Beach: first, by steps leading down from the top of the wall, and, secondly, by another set of steps leading down from the top of the breakwater.\nThe Beach is substantially covered by the sea for periods of time either side of high tide.\nInevitably, as the tide ebbs and flows, the amount of the land uncovered varies, and the amount of the land uncovered at low tide and the period for which the whole of the Beach is covered with water varies between spring (high) and neap (low) tides.\nOn average, the Beach is wholly covered by water for 42% of the time and for the remaining 58% of the time it is uncovered to some extent, but it is entirely uncovered by water only for a few minutes at a time.\nThe steps leading down to the Beach from the top of the harbour wall were accessible in practice by members of the public from shortly after the end of the Second World War (during which time it was closed) until it was fenced off by NPP in April 2006.\nThereafter, access by the public was no longer possible, because access from the steps leading from the top of the breakwater had been closed off before 2006.\nThe making of byelaws relating to Newhaven Harbour\nSection 58 of the 1878 Newhaven Act conferred on the Harbour Company the power to make byelaws which were to be approved and published in the manner prescribed by the 1847 Clauses Act.\nSection 83 of the 1847 Clauses Act gives to the undertakers in whom a harbour is vested the power to make byelaws as they shall think fit for various purposes, including [f]or regulating the use of the harbour, dock, or pier.\nSection 84 provides for criminal sanctions at the suit of the undertaker for breach of such byelaws.\nSection 85 of the 1847 Clauses Act states that the byelaws should not come into operation until the same be confirmed as required by that Act.\nSections 86 and 87 of that Act are concerned with advertising and providing copies of the byelaws before confirmation.\nProvisions relating to the publication and display of such byelaws were contained in sections 88 and 89 of the 1847 Clauses Act: 88.\nThe said byelaws when confirmed shall be published in the prescribed manner, and when no manner of publication is prescribed they shall be printed; and the clerk to the undertakers shall deliver a printed copy thereof to every person applying for the same, without charge, and a copy thereof shall be painted or placed on boards, and put up in some conspicuous part of the office of the undertakers, and also on some conspicuous part of the harbour, dock, or pier, and such boards, with the byelaws thereon, shall be renewed from time to time, as occasion shall require, and shall be open to inspection without fee or reward 89.\nAll byelaws made and confirmed according to the provisions of this and the special Act, when so published and put up, shall be binding upon and be observed by all parties, and shall be sufficient to justify all persons acting under the same.\nSection 89 was repealed by the Statute Law (Repeals) Act 1993.\nSection 90 of the 1847 Clauses Act provides that [t]he Production of a written or printed Copy of the Bye laws appropriately authenticated shall be evidence of the Existence and due making of such Bye Laws, and with respect to the Proof of the Publication of any such Bye Laws it shall be sufficient to prove that a Board containing a Copy thereof was put up and continued in manner by this Act directed .\nIn February 1931, the Southern Railway Company made byelaws for the Regulation of Newhaven Harbour (the Byelaws), which were confirmed by the Minister of Transport the following month.\nThe following Byelaws are germane to the present appeal:\nNo person shall enter or remain on the quays of the harbour unless he has lawful business thereon, or has received permission from the Harbour Master to do so; and every person entering or who shall have entered on such quays, shall, whenever required so to do by any duly authorised servant of the Company, truly inform him of the business in respect of which such person claims to be entitled to be thereon.\nAny person committing a breach of this byelaw may be forthwith removed from the quays and be excluded therefrom 52.\nNo person shall, without the consent of the Harbour Master, enter or remain within any part of the piers or quays which may, under a reasonable direction of the Harbour Master, be enclosed by chains, or by a barrier. 68.\nNo person, without the permission of the Harbour Master, shall fish in the harbour; and no person shall bathe in that part of the harbour which lies between Horse Shoe Sluice and an imaginary line drawn from the East Pier Lighthouse and the Breakwater Lighthouse. 70.\nNo person shall engage in or play any sport or game so as to obstruct or impede the use of the harbour, or any part thereof, or any person thereon; nor (except in case of necessity or emergency) shall any person, without the consent of the Harbour Master, wilfully do any act thereon, which may cause danger or risk of danger to any other person. 71.\nNo person shall bring any dog within the harbour, or permit it to be within the harbour, unless it is securely fastened by a suitable chain or cord, or is otherwise under proper and sufficient control.\nAs regards publication and enforcement of the Byelaws, according to the Inspector who wrote the reports referred to in para 19 below, there were no byelaw signs in place during the relevant twenty year period that would have indicated to users of the Beach that their use was regulated by byelaws.\nShe also concluded that there was no evidence of active enforcement of the Byelaws during that period; and that there was no other suggestion of any other overt act on the part of the landowner during that period to demonstrate that he was granting an implied permission for local inhabitants to use the Beach.\nThe Commons Act 2006\nTown and village greens have been protected by statute since at least 1857.\nHowever, the currently applicable legislation is to be found in the Commons Act 2006, and in particular in section 15 of that Act, which replaced the preceding governing legislation, which was contained in the Commons Registration Act 1965.\nSection 15(1) of the 2006 Act provides that Any person may apply to the commons registration authority to register land to which this Part applies as a town or village green in a case where subsection (2), (3) or (4) applies.\nSubsections (2), (3) and (4) each refer to cases where: (a) a significant number of the inhabitants of any locality, or of any neighbourhood within a locality, indulged as of right in lawful sports and pastimes on the land for a period of at least 20 years.\nSubsection (2) only applies where this use was continuing at the date of the application; subsection (3) only applies where the use had ceased after section 15 commenced, provided that the application was made within two years of such cesser; and subsection (4) only applies where the land ceased to be so used before section 15 commenced, provided (i) the application is made within five years of the cesser and (ii) an inconsistent planning permission has not been granted and implemented.\nIt is, of course, subsection (4) which is relied on in this case.\nBy section 61 of the 2006 Act, it is provided that land includes land covered by water.\nIt was argued below on behalf of NPP that a tidal beach cannot be a town or village green within the meaning of the 2006 Act.\nA speaker of ordinary English might well think that there is very considerable force in that argument.\nHowever, substantially for the reasons given by Ouseley J in the High Court and by Richards LJ in the Court of Appeal, the argument must be rejected see at [2012] EWHC 647 (Admin), [2014] QB 186, paras 11 39 and [2013] EWCA Civ 276, [2014] QB 186, paras 31 42.\nIn summary, the argument is inconsistent with the reasoning of the majority of the House of Lords in Oxfordshire County Council v Oxford City Council [2006] UKHL 25, [2006] 2 AC 674, a case on the 1965 Act (as amended in 2000), which,\nfor the purposes of the point at issue was identically worded to the 2006 Act\nsee per Lord Hoffmann, Lord Rodger and Lord Walker respectively at paras 39, 115 and 128.\nIt might have been appropriate for this Court to reconsider the Oxfordshire case were it not for the fact that it was decided while Parliament was considering the Bill which became the 2006 Act, and Lord Hoffmann, Lord Rodger and Lord Walker each expressly observed (in the paragraphs just mentioned) that, if Parliament was unhappy with the decision, the Bill could be amended appropriately, and it was not.\nImplied Parliamentary approval of a courts decision should not be lightly inferred, but in the present case, we thought it inappropriate to grant permission to appeal on this issue.\nThe application to register\nOn 18 December 2008 Newhaven Town Council (the Town Council) applied to the County Council, as the statutory registration authority, to register the Beach as a town or village green.\nThe application was supported by evidence that the Beach had been used by a significant number of local inhabitants as of right and for a period of at least 20 years down to April 2006.\nNPP objected to the proposal, and the County Council appointed an Inspector, Ruth Stockley, a barrister experienced in this area of the law, to hold a public inquiry.\nThe inquiry was held between 6 and 8 July 2010, following which Ms Stockley produced a report dated 6 October 2010 and an addendum report dated 14 December 2010, recommending that the Beach be registered as a town or village green.\nMs Stockleys two reports were very full and clear.\nImportantly, she concluded that members of the public, and, crucially residents of the locality, had used the Beach for well over 80 years as a place to play, sunbathe, swim from, picnic and the like (save during much of the First and Second World War periods, when the port area, including the Beach, were inaccessible).\nOn 22 December 2010, the two reports and recommendation were put before the County Councils Commons and Village Green Registration Panel (the Panel), together with an officers recommendation that the County Council accept the application and register the land as a town or village green.\nThe Panel resolved to accept the application to register the Beach, but the actual registration awaits the outcome of these proceedings.\nNPP then applied to the High Court for judicial review of the decision to register the Beach as a town or village green.\nThe application came before Ouseley J who, in a comprehensive and carefully considered judgment, rejected a number of arguments raised by NPP, but granted their application on one ground, namely that it was reasonably foreseeable that the registration of the Beach would conflict with the statutory functions for which the Beach was held by NPP, namely as part of Newhaven Harbour [2012] EWHC 647 (Admin) [2014] QB 186.\nThe County Council and the Town Council appealed that decision to the Court of Appeal, who, in the course of their impressive judgments, unanimously disagreed with the Judges reason for granting the application [2013] EWCA 276, [2014] QB 186.\nAccordingly, the majority of the Court of Appeal (Richards and McFarlane LJJ) allowed the appeal.\nLewison LJ would have dismissed the appeal on the ground that the use of the Beach by members of the public, and therefore by inhabitants of the locality, up to 2006 had not been as of right, but by implied licence, for two different reasons, namely (i) because members of the public had enjoyed an implied licence to use coastal beaches in the UK for recreational and associated purposes, and\/or (ii) by virtue of the provisions of the byelaws governing the Harbour area.\nThe issues on this appeal\nThe provisions of section 15 of the 2006 Act only enable land to be registered as a town or village green if it has been used for recreational and similar purposes by inhabitants of the locality for more than twenty years as of right.\nAs was explained most recently by this Court in R (Barkas) v North Yorkshire County Council [2014] UKSC 31, [2014] 2 WLR 1360, paras 14 19 and 58 68, that expression, perhaps somewhat confusingly, is to be contrasted with by right, and generally connotes user without any right, whether derived from custom and usage, statute, prescription or express or implied permission of the owner.\nAccordingly, where the inhabitants of the locality have indulged in sports and pastimes on the land in question with the licence of the owner for at least part of the relevant twenty year period, section 15 will not apply.\nThree issues arise on this appeal.\nThe first is whether the fact that the Beach is part of the foreshore defeats the contention that the user by local inhabitants for sports and pastimes can have been as of right, on the ground that the public had an implied licence to use the foreshore for such purposes and the implied right was never revoked in the case of the Beach.\nThe second issue is whether, if that is not right, the public none the less had an implied licence to use the Beach, as part of the Harbour, in the light of the Byelaws.\nThe third issue is whether, in any event, section 15 of the 2006 Act cannot be interpreted so as to enable registration of land as a town or village green if such registration was incompatible with some other statutory function to which the land was to be put.\nWe will take these three issues in turn.\nPublic rights over the foreshore: the arguments\nThe foreshore around England and Wales, by which is meant the area between the high water and low water mark, is owned by the Crown, although it is open to the Crown to alienate it, either permanently by conveying or transferring it, or temporarily by granting leases over it see eg Halsburys Laws (4th ed 1998 reissue) vol 12(1), para 242.\nDuring the course of argument, we were informed that the Crown retained ownership and possession of more than half the foreshore around England and Wales.\nMost of the foreshore which the Crown no longer owns was at some point conveyed or transferred away.\nBut to describe the Beach in this case as having been alienated in this way may be slightly misleading, as the Beach only came into existence as a beach in 1883 in the circumstances described in para 9 above.\nHowever, that does not impinge on NPPs argument, which is that there is a rebuttable presumption that the public use of the foreshore is by permission of the owner of the Beach that is, the Crown or its successors in title.\nThis proposition was rejected by Ouseley J at first instance and by the majority of the Court of Appeal, Richards and McFarlane LJJ.\nHowever, it was accepted by Lewison LJ.\nThe state of the law relating to public rights over the foreshore of England and Wales is more controversial than one might have expected.\nIt appears clear that there is, at least normally, a public right of navigation and of fishing in the sea and rights ancillary to it Halsbury op cit, para 243.\nHowever, the question in this case is the existence and nature of any further or greater rights, and in particular the right to use the foreshore for the purpose of bathing and the sort of familiar activities which people indulge in on a beach at least in good weather.\nAt least where there is no express permission from the owner of the foreshore, there are in principle at least three possible conclusions in relation to the issue of the publics right to use the foreshore for bathing, by which we mean using the foreshore as access to the sea at low tide, or bathing in the sea over the foreshore at high tide (or a combination of the two), plus associated recreational activities.\nThe first is that members of the public have, as a matter of general law and irrespective of the wishes of the owner of the foreshore, the right to use the foreshore for the purpose of bathing, as a matter of general common law.\nThe second possibility is that the owner of the foreshore is presumed to permit members of the public to use of the foreshore for the purpose of bathing, unless and until the owner communicates a revocation of its implied permission.\nThe third possibility is that members of the public have no right to use the foreshore for bathing, in which case they are trespassers.\nNPP would succeed on the first issue on this appeal if the first or second of these possibilities is correct.\nIf local inhabitants (a subset of members of the public) had been using the Beach because they were entitled to do so as a matter of common law (the first possibility), or because they had an implied permission to do so (the second possibility), then, in so far as they were inhabitants of the locality, they would not have been doing so as of right, but by right.\nOn the other hand, if the third possibility is correct, NPP would fail because the user by local inhabitants would have been as trespassers, and therefore as of right, at least subject to the other two issues on this appeal.\nSo far as the relevant cases on the issue are concerned, none is binding on this Court, but they tend to be against the first possibility and somewhat unclear as between the second and third possibilities.\nPresumably for that reason, Mr George QC, on behalf of NPP, does not argue for the first possibility and takes his stand on the second possibility.\nPublic rights over the foreshore: the authorities\nThe leading, and it may be said the only, reported case where the topic of the rights of members of the public to bathe on the foreshore has been considered in any detail is Blundell v Catterall (1821) 5 B & Ald 268.\nIn that case, the defendant used the beach between the high water mark and the low water mark of the River Mersey at Great Crosby in Lancashire for the purpose of providing bathing facilities (including bathing machines and carriages for members of the public who wished to swim in the sea).\nThe plaintiff, as Lord of the Manor of Great Crosby and owner of the beach in question, sought an injunction to restrain this use.\nThe defendant argued that all members of the public had the right to use a beach for the purpose of gaining access to, and bathing in, the sea.\nThe Court of Kings Bench, Best J dissenting, decided that, unless such a right could be established by usage and custom, there was no common law right for all the Kings subjects to bathe in the sea and to pass over the seashore for that purpose.\nThe leading judgment has long been regarded as that of Holroyd J who gave the extent of the rights of the public over the seashore impressively full and detailed consideration, although Abbott CJ and Bayley J also delivered full judgments, as did the dissenting Best J.\nBest J in effect followed the view expressed in Bractons De Legibus et Consuetudinibus Angliae, where it is written Naturali vero iure communia sunt omnium haec: aqua profluens, aer et mare et litora mare, quasi mari accessoria.\nNemo igitur ad litus maris accedere prohibetur (By natural law these are common to all: running water, air, the sea, and the shores of the sea, as though accessories of the sea.\nNo one therefore is forbidden access to the seashore).\nHowever, Holroyd J considered that this represented the civilian law, but not the common law.\nEssentially, as we see it, the reasoning of the majority can be justified by reference to the well established common law proposition that rights over land can normally only be obtained by grant, custom and usage, or prescription.\nCustom and usage required a long period of use for the specified purpose, and prescription could (at any rate until 1832) normally only be invoked if it could be shown that the use had continued since time immemorial which, at least normally, meant 1189.\nBathing in the sea, unlike fishing and navigation, was a comparatively recent popular activity, which seems to have started as such around the middle of the 18th century.\nAlthough Strutt in Sports and Pastimes of the People of England (1802) refers to swimming as an exercise of great antiquity, the first recorded instance of people bathing in the sea for pleasure, according to NPP in this case, was in Scarborough in 1732 (Crane, Coast: Our Island Story: A Journey of Discovery Around Britain's Coastline, 2010, p 218).\nAccordingly, bathing could rarely be a right obtained by custom and usage or (at least until the Prescription Act 1832, which introduced the twenty year and forty year rules) by prescription.\nThe decision in Blundell was not concerned with the second possibility canvassed in para 29 above, namely whether there was, or could be taken to be, some sort of tacit licence on the part of the owner of the sea shore permitting members of the public to use it for bathing, recreations and pastimes.\nThe point could not have arisen in that case, because it would not have availed the defendant, as any such licence would have been revoked by the plaintiffs objection to the defendants use of the beach.\nNone the less, there are observations in the judgments in Blundell, which appear to imply that the right to use the foreshore for bathing or for access to the sea for bathing could be acquired by prescription.\nFor instance, at p 301, albeit in a passage whose clarity is not assisted by a double negative, Holroyd J said nor, if [the present claim] were [supported by custom or usage], would it follow that it was such a common law right as might not, by prescription at least, be otherwise appropriated.\nIt seems to us that that observation carries with it the implication that a member of the public would be trespassing on the foreshore if he used it for that purpose, as otherwise they could not raise a claim by prescription.\nHowever, it would not be safe to make much of what is little more than a throw away obiter observation.\nFurther, in what may be seen as a hint at the possibility of an implied licence at p 300, Holroyd J said this: Where the soil remains the King's, and where no mischief or injury is likely to arise from the enjoyment or exercise of such a public right, it is not to be supposed that an unnecessary and injurious restraint upon the subjects would, in that respect, be enforced by the King, the parens patriae.\nThis provides some apparent assistance to NPPs argument that there is an implied licence from the owner of a beach to use it for purposes which do not interfere with the interests of the owner.\nHowever, it would be wrong to place much weight on it, as, once again, it was not really relevant to the issue which the court had to decide, and it is not clear quite what the legal characterisation of the owners indulgence Holroyd J had in mind.\nIn Mace v Philcox (1864) 15 CB (NS) 600, Williams J appears to have treated Blundell as a decision limited to the presence or use of bathing machines.\nIn the same case, Erle CJ was apparently unenthusiastic about the majority view in Blundell, saying I am desirous of guarding my judgment so as not to restrict the valuable usage or right of Her Majestys subjects to resort to the sea shore for bathing purposes, although he followed the majority view.\nSo did Cozens Hardy J in Llandudno Urban District Council v Woods [1899] 2 Ch 705, albeit without any expressed lack of enthusiasm.\nHowever, it could be said that he demonstrated a degree of restraint by refusing an injunction to restrain the activity in question (preaching on the foreshore) although concluding, in accordance with the reasoning in Blundell, that it was a trespass.\nIn Brinckman v Matley [1904] 2 Ch 313, 317, Buckley J, after referring to the fact that it had been applied in two first instance decisions of Mace and Llandudno, followed the judgment of Holroyd J in Blundell, and proceeded on the basis that members of the public did not have the right to go on the foreshore for the purpose of bathing or getting access to the sea for bathing.\nIn the Court of Appeal in Brinckman, Vaughan Williams LJ said at p 322 that the majority view in Blundell, even if technically obiter, has been recognised ever since by the whole of the profession as an accurate and binding statement of the law.\nAccordingly, he concluded, I do not think that we ought now, after the lapse of eighty years, to upset the law thus settled.\nRomer and Cozens Hardy LJJ took the same view see at pp 326 and 327. 41.\nShortly after this, Buckley J in Behrens v Richards [1905] 2 Ch 614 refused an injunction sought by the owner of land leading to the foreshore against\nfishermen who used the land to gain access to the foreshore, although he held\n42. that the fishermen had established no public right of way by long user.\nBuckley J said this at pp 619 620: I cite again, as I did in Brinckman v Matley, Bowen LJs words in Blount v Layard [1891] 2 Ch 681n, 691n, that nothing worse can happen in a free country than to force people to be churlish about their rights for fear that their indulgence may be abused, and to drive them to prevent the enjoyment of things which, although they are matters of private property, naturally give pleasure to many others besides the owners, under the fear that their good nature may be misunderstood, and that, however continuous, however lengthy, the indulgence may have been, a jury ought to be warned against extracting out of it an inference unfavourable to the person who has granted the indulgence.\nIn permitting persons to stray along the cliff edge or wander down the cliff face or stroll along the foreshore the owner of the land was permitting that which was no injury to him and whose refusal would have been a churlish and unreasonable act on his part.\nFrom such a user nothing, I think, is to be inferred.\nThis observation may give some support for the notion of an implied licence, the second possibility identified in para 29 above, but it refers to the use of land as a public means of access to the foreshore, not to the use of the foreshore itself.\nIn Alfred F Beckett Ltd v Lyons [1967] Ch 449, the Court of Appeal declined to hold that gatherers of coal on the foreshore for personal use were trespassers.\nCoal gathering by local inhabitants went back to 1895, and, if they had been trespassers, the coal gathering would have been carried on as of right for more than 20 years.\nHowever, as it was held that there was no trespass, no prescriptive right could have been obtained.\nThe judgments therefore provide support for the second possibility referred to in para 29 above, and in particular there are dicta which support the notion that the use of the seashore for purposes other than fishing and navigation would be pursuant to an implied licence from the owner of the foreshore.\nThus, Harman LJ observed at p 469A that it was notorious that in many and indeed most places the use of the foreshore by the public for purposes of recreation and bathing is tolerated, and at 472F that The practice may be sufficiently explained by tolerance of the foreshore owner, who would have been churlish indeed if he had stopped a poor man climbing up the cliff with a bag of small coals picked up on the shore to nourish his evening fire.\nAccordingly, at p 474A, he held that there was no prescribed right to collect coal from the beach as toleration is a sufficient explanation.\nRussell LJ, who said pithily at p 476A that the only reasonable conclusion is mere tolerance of the 43. unimportant, and Winn LJ, who referred at p 485G to collecting coal as being a practice which had been long permitted took the same view.\nIn passing, it is worth noting that Harman and Winn LJJ considered that a fluctuating group of people (such as local inhabitants) could not claim the right to gather coal by prescription see at pp 474B D and 479C D respectively.\nHarman LJ based his reasoning on the fact that the right would be a profit a prendre.\nHowever, Winn LJ quoted from a judgment of Farwell J in Attorney General v Antrobus [1905] 2 Ch 188, 198 which suggested that an easement could not be obtained for recreational purposes.\nHowever, that may not be right in the light of In re Ellenborough Park [1956] Ch 131.\nHaving said that, it is questionable whether, under common law as opposed to statute, a right to use the foreshore for bathing could be claimed by a fluctuating group of people such as the inhabitants of a neighbourhood or locality, as opposed to each owner of an alleged dominant property establishing a prescriptive easement arising from more than 20 years of such use as of right by that owner and\/or his predecessors. 44.\nWhile the reasoning in Beckett provides some support for the second possibility identified in para 29 above, it has a number of features which render it at least arguably of limited assistance.\nFirst, it was not concerned with the right to bathe.\nSecondly, as is clear from what was said at pp 465A D and 469B D, the right to gather coal was treated as acknowledged in two deeds of grant from the Crown.\nThirdly, it appears to have been accepted that the public rights over the foreshore were limited as held in Blundell, but the point was left open at least by Winn LJ at p 486C.\nFourthly, the Court in Beckett proceeded on the basis that Jones v Bates [1938] 2 All ER 237 was correct, ie that the subjective belief of the person claiming a prescriptive right was relevant, indeed often determinative, on the question whether he had been acting as of right, which is wrong see R v Oxfordshire County Council, Ex p Sunningwell Parish Council [2000] 1 AC 335, 358H, per Lord Hoffmann. 45.\nFurthermore, in Mills v Silver [1991] Ch 271, 279G 280B, Dillon LJ pertinently observed in relation to the reasoning in Beckett that if there is an established principle of law that no prescriptive right can be acquired if the user by the dominant owner of the servient tenement has been tolerated without objection by the servient owner, it would be fundamentally inconsistent with the whole notion of acquisition of rights by prescription.\nThis passage was cited with approval in Sunningwell at p 358F, in R (Beresford) v Sunderland City Council [2003] UKHL 60, [2004] 1 AC 889, paras 5 6 and 79 82, and in Barkas at para 28.\nPublic rights over the foreshore: discussion 46.\nThe choice between the three possibilities identified in para 29 raises an issue which is both difficult and important.\nThe importance of conclusively deciding the nature and extent of the publics rights over the foreshore of England and Wales is self evident.\nThe difficulty arises because each of the three possibilities gives rise to problems. 47.\nThere is a great deal to be said for the third possibility, namely that the public have no rights to use the foreshore for bathing, on the basis that their rights are limited to access for navigation and fishing, given the reasoning in, and long standing nature of, the majority judgments in in Blundell.\nThe reasoning speaks for itself, and the judgments have generally been followed by judges and have been assumed to be correct.\nHowever, the decision is not binding on this Court, the dissenting judgment of Best J is not without force, and, as was reportedly stated on behalf of the unsuccessful appellant in Brinckman at p 320: The decision in Blundell v Catterall has been disapproved by text writers, eg, Hall on the Seashore, 2nd ed, pp 156 et seq.\nThe same view is taken in Phears Rights of Water, pp 44 et seq, Stuart Moore on the Foreshore, pp 833 et seq.\nQuite apart from this, it can be said that the second (implied licence) possibility mentioned in para 29 above is somewhat artificial and was only developed because it was assumed that the majority view in Blundell represented the law.\nFurther, the law of Scotland appears consistent, or at least more consistent, with Best Js dissenting view see Officers of State v Smith (1846) 8 D 711, 719 per the Lord Justice Clerk.\nHaving said that, it would be a strong thing to depart from the majority view in Blundell, given that it has been treated as being the law for nearly 200 years. 48.\nThe second possibility, namely a rebuttable presumption of a licence, has some support in the cases (see paras 41 43 above), but it may well be based on somewhat shaky legal foundations (see paras 44 45 above).\nIt would also be rather curious, as it would mean that the position with regard to the foreshore is the opposite of the position with regard to almost all other land: a permission for the public to use is to be assumed for the foreshore, but not for any other land.\nThere are some possible reasons for treating the foreshore in a special way for present purposes, as Lewison LJ mentioned in para 128 of the Court of Appeal judgment, but, Mr Sauvain QC, for the County Council argues with some force that they do not seem to be overwhelmingly powerful.\nFurther, if the rebuttable presumption of permission applied to the foreshore, it would either also apply to any part of a beach above high water mark, or one would have what may be a rather odd dichotomy between the foreshore and the upper part of many beaches. 50. 49.\nAs to the first possibility, the notion that members of the public have the right to use the foreshore for bathing would, as mentioned, align the law of England and Wales with that of Scotland, and it may well accord with the views and expectations of many non lawyers.\nHowever, it might risk upsetting the effect of decisions and actions based on the not unreasonable assumption that the majority view in Blundell represented the law.\nAnd it may give rise to other problems for owners of the foreshore.\nIt would also give rise to the arguable dichotomy mentioned at the end of para 48 above.\nIn all these circumstances, it seems to us that, unless it is necessary to do so for the purpose of determining this appeal (and it is not for the reasons which appear later in this judgment), this court ought not to determine the first issue, that is which of the three possibilities set out in para 29 above is correct.\nThe issue is one of wide ranging importance, and we would be uncomfortable about determining it in circumstances where it was common ground that the first possibility could be ruled out.\nHowever, given that the point has been raised and argued, and as it may well arise in another case (whether under the 2006 Act or otherwise), we considered that it would be worthwhile identifying the issue as well as referring to the arguments and problems as they appear to us at this stage.\nSince writing this, we have had the opportunity of reading in draft the judgment of Lord Carnwath, which gives further food for thought on this interesting issue. 51.\nAccordingly, we proceed on the assumption that the majority of the Court of Appeal and Ouseley J were correct, and that, at least so far as the general common law is concerned, and subject to the other two more specific issues to which we now turn, members of the public, and therefore inhabitants of the locality, used the Beach for bathing as of right and not by right.\nThe Byelaws: introductory 52.\nNPPs argument is that the effect of the Byelaws was to amount to a licence or permission to members of the public to use the Beach for leisure activities.\nIf that argument is correct, then NPPs appeal must succeed, as the use of the Beach by inhabitants of the neighbourhood, as members of the public, would not have been as of right. 53.\nNPPs argument on this issue raises two points.\nThe first is whether the Byelaws, if they had been, or should be treated as having been, properly communicated, would have amounted to a licence or permission sufficient to defeat the public use of the Beach as having been as of right.\nThe second point is whether the Byelaws were, or should be treated as having been, sufficiently communicated to members of the public during the twenty years preceding 2006 when the Beach was used for bathing by members of the public.\nNPP contends that the answer to both points is in the affirmative, the County Council contends that both points should be answered no, and the Town Council agrees with NPP on the first point and with the Council on the second.\nWhile the Court of Appeal were unanimously in agreement with NPP on the first point, only Lewison LJ agreed with them on the second point.\nWe will consider each of the two points in turn.\nThe Byelaws: did they give rise to a licence as a matter of interpretation? 54.\nIt appears to be common ground that a byelaw can, as a matter of principle permit an activity which would otherwise be unlawful, and we think that this is right.\nAs suggested in Halsburys Laws (5th ed, 2009) vol 69, para 553, the classic definition of a byelaw was given by Lord Russell of Killowen CJ in Kruse v Johnson [1898] 2 QB 91, 96: A by law, of the class we are here considering, I take to be an ordinance affecting the public, or some portion of the public, imposed by some authority clothed with statutory powers ordering something to be done or not to be done, and accompanied by some sanction or penalty for its non observance.\nIt necessarily involves restriction of liberty of action by persons who come under its operation as to acts which, but for the by law, they would be free to do or not do as they pleased.\nFurther, it involves this consequence that, if validly made, it has the force of law within the sphere of its legitimate operation. 55.\nThe reference to ordering something to be done or not to be done carries with it an ability permitting something to be done: if an entity has the power to forbid or require, it must also have the power to permit that which it can forbid.\nHowever, in agreement with Richards LJ at para 72 in the Court of Appeal, we would accept that mere silence or inaction on the part of the entity cannot amount to permitting.\nIn the same way as silence and inactivity on the part of a private landowner cannot, without more, amount to consent (save, arguably, as discussed in cases such as those mentioned in paras 44 45 above), so would the absence of any express or implied prohibition in the byelaws, without more, not amount to an implied licence. 56.\nOf course, it may be that the statutory powers pursuant to which particular byelaws are made are expressed in terms which lead to the conclusion that the byelaws made thereunder cannot or are not intended to extend to permitting activities or certain activities, in which event the byelaws would either have to be construed so that they did not have that effect or they would be ultra vires.\nHowever, there is no question of such an argument being applicable in this case, in the light of the wide words of section 83 of the 1847 Clauses Act (quoted in para 12 above).\nIndeed, it is worth bearing in mind that the 1847 Clauses Act stipulates that it is to be the relevant undertaking which makes the Byelaws, and the undertaking is the entity which owns the harbour.\nIn other words, the Byelaws are made and enforced by the owner of the land concerned, which plainly supports the notion that they can properly involve the grant of rights over the land. 57.\nAccordingly, the question which arises is whether, on their true construction, the Byelaws permitted members of the public to use the Beach for leisure activities.\nNPP cannot point to a Byelaw which expressly permits such activities in terms and therefore one is in the realm of implied permission.\nIt is not part of the County Councils case, as we understand it, that byelaws could not grant a licence by implication.\nThis is unsurprising: once it is accepted that byelaws can grant a licence, it is hard to justify the argument that they can only grant a licence expressly.\nOf course, the usual principles apply to implications: they are only justified when they are necessary or obvious. 58.\nA prohibition can be expressed in such a way as to imply a permission.\nFor instance, it is hard to argue against the proposition that a byelaw which states that dogs must be kept on a lead in a public park implies a permission to bring dogs into the park, provided that they are kept on a lead.\nIt is at least as a matter of pure linguistic logic, possible to interpret the byelaw as solely meaning that, if (and only if) specific permission is obtained from the park authority by a person to bring a dog into the park, then the byelaw will apply.\nHowever, any reasonable reader of the byelaw would not consider that it had such a limited meaning.\nIn other words, as with any question of interpretation, a strictly logical linguistic analysis of the words concerned cannot prevail over a contextual assessment of what they would naturally convey to an ordinary and reasonable speaker of English. 59.\nThus, Byelaw 71, which forbids the bringing of a dog into the Harbour unless it is securely fastened by a suitable chain or cord, or is otherwise under proper and sufficient control, would appear to a normal person speaking ordinary English to imply that dogs could be brought into the area of Newhaven Harbour, provided that they are appropriately fastened or under control, and are not precluded by any other Byelaw.\nWe do not consider that this point is undermined if the Harbour Master had forbidden dogs to be brought into certain parts of the Harbour area, or even the Harbour generally.\nThe fact that a property owner voluntarily gives a general permission to the public (or to an individual or group of individuals) to do an act does not prevent him from subsequently revoking or cutting down that permission. 60.\nThe central question for present purposes is whether the Byelaws, and in particular Byelaws 68 and 70, imply that members of the public have the right to use the Beach for recreational activities associated with beaches.\nThe argument advanced by NPP, and accepted by the Court of Appeal, is that (i) the prohibition of bathing in the area identified in the second part of Byelaw 68 and (ii) the prohibition on sports and games which impede the use of the harbour in Byelaw 70, imply that bathing can take place elsewhere in the Harbour and that associated recreational activities can also take place provided that they do not impede the use of the Harbour.\nIn our view, particularly when one remembers that the Byelaws are made and enforced by and on behalf of the owner and operator of the Harbour, this argument is correct.\nA normal speaker of English reading the Byelaws would assume that he or she was permitted to bathe or play provided the activity did not fall foul of the restrictions in the two Byelaws (and in any other Byelaws).\nThis conclusion is also supported by the reference to the consent of the Harbour Master in the first part of Byelaw 68 and the second half of Byelaw 70: if the activities referred to in the latter Byelaw (ie including an activity which endangers others) are permitted if the Harbour Masters consent is obtained, that reinforces the view that generally harmless activities such as bathing and playing are permitted, at least in principle.\nThe conclusion is further reinforced by the fact that, at the time the Byelaws were made, members of the public had been and were using the Beach freely for the purpose of bathing and recreation. 61. 62.\nAs Lord Sumption pointed out in argument, this conclusion is also supported by Byelaws 51 and 52.\nThose Byelaws would serve to cut down the areas within the Harbour in which bathing and recreations could take place (without the Harbour Masters permission), as they exclude people who simply want to bathe or play from the quays or from the piers in so far as they are enclosed by chains ie from the operational parts of the Harbour.\nIn the first place, those two Byelaws suggest that any other person who does not have lawful business in the Harbour would be entitled to go onto other parts of the Harbour area unless precluded by another Byelaw (or any other law).\nSecondly, they undermine any argument which might otherwise be raised that the implied licence raised by NPP would go too far.\nIn addition, they both contain reference to the Harbour Masters permission, which, as already mentioned, provides some further support for NPPs case.\nIn these circumstances, the only factor which can stand in the way of NPPs succeeding in its argument that the use of the Beach by members of the public 63. was by right as a result of the Byelaws, is the fact that the Byelaws were not brought to the attention of the public, the issue to which we now turn.\nThe Byelaws: did they have to be brought to the publics attention? 64.\nA preliminary point which is raised in this connection is the argument that the Byelaws were only valid or effective so long as a copy thereof was painted or placed on boards, and put up in some conspicuous part of the office of the undertakers, and also on some conspicuous part of the harbour, dock, or pier, pursuant to section 88 of the 1847 Clauses Act.\nThe Court of Appeal rightly rejected that contention.\nAs Lewison LJ said in para 133 in the Court of Appeal, it seems highly improbable that Parliament can have intended that the byelaws for harbours enabled by the 1847 Clauses Act should not apply if, for instance, the boards displaying them had been destroyed or washed away by a storm, or even pulled down by vandals. 65.\nSection 85 of the 1847 Clauses Act also supports this conclusion as, although expressed in the negative, it indicates that the byelaws become effective once they are confirmed, and publication and display clearly are intended to follow confirmation, as is clear from the opening part of section 88.\nFurther, section 89 of the 1847 Clauses Act, now repealed, at most only imposed the initial display of the byelaws as a precondition to their efficacy; if it had had that effect, then the strong implication was that the continuing display of the byelaws was not a prerequisite to their continuing efficacy.\nIn fact, as Lady Hale pointed out in argument, section 89 very probably took matters no further, given the grounds given for its repeal by the Law Commission pursuant to whose recommendation it was repealed.\nThe Commission described it as an unnecessary [provision] confirming the binding effect of byelaws which reflected 19th century doubts as to the legal effect of subordinate legislation and would never be enacted in modern legislation see Statute Law Revision 14th Report (1993), Law Com 211, p 175.\nAs Mr Laurence QC, for the Town Council, puts it, section 89 was repealed because it was and always had been unnecessary. 66.\nNor is this conclusion called into question by section 90 of the 1847 Clauses Act.\nIn so far as that section implies that it would be necessary to establish that the byelaws were exhibited on a board, it would only be for the purpose of justifying a prosecution for an infringement of the byelaws.\nThe fact that it may be necessary to show that the byelaws were appropriately displayed before a prosecution for their infringement could proceed does not justify the contention that they are of no effect generally unless they are displayed.\nAccordingly, we conclude that the Byelaws were effective as byelaws in the sense of representing the local laws applicable to Newhaven Harbour, even though they were not displayed as required by section 88 of the 1847 Clauses Act, although that may well have meant that breach of the Byelaws could not have led to a prosecution (at least of someone who had infringed them without having seen them). 67.\nSo we turn to the question whether the failure of NPP (and its predecessor) to ensure that the Byelaws were displayed means that they did not operate as an effective licence rendering the use of the Beach by member of the public by right, rather than as of right. 68.\nThe majority of the Court of Appeal, in agreement with Ouseley J, considered that it was essential that any licence be communicated to the inhabitants of the locality before it could be said that their usage of land was by right.\nThat is certainly the normal rule where one is concerned with a private land owner (subject to the point discussed in paras 41 43 above, namely where it is possible or appropriate to infer a consent or licence from the surrounding circumstances, even though there is no communication of a consent, a point which may well require reconsideration in the light of the cases referred to in para 45 above).\nSupport for such a proposition can be found in R (Godmanchester Town Council) v Secretary of State for the Environment, Food and Rural Affairs [2007] UKHL 28, [2008] AC 221, paras 32, 56, 68, 74 and 81.\nThe basis of this principle is explained in a number of cases including, Sunningwell, R (Lewis) v Redcar and Cleveland Borough Council (No 2) [2010] UKSC 11, [2010] 2 AC 70, and, most recently, Barkas, where, at para 21, Lord Neuberger quoted from Lord Hoffmanns opinion in Sunningwell that whether user was as of right should be judged by how the matter would have appeared to the owner of the land, adding that that question should be assessed objectively. 69.\nHowever, as the decision in Barkas demonstrates, it is not always necessary for the landowner to show that members of the public have to have had it drawn to their attention that their use of the land concerned was permitted in order for their use to be treated as being by right rather than as of right.\nIn Barkas, land had been acquired and in part developed by a local authority for housing purposes under a statute which permitted any undeveloped part of the land so acquired to be used as recreation grounds if appropriate ministerial consent was obtained, which it was.\nThe undeveloped part of the land was then used for recreation by members of the public, to whom the statutory purpose was not communicated.\nDespite the absence of any communication of a licence, it was held that local inhabitants were using that undeveloped part of the land by right, and not as of right.\nIn Barkas, para 23, Lord Neuberger said that: 70.\nWhere land is held [by a local authority] for [the statutory] purpose [of recreation], and members of the public then use the land for that purpose, the obvious and natural conclusion is that they enjoy a public right, or a publicly based licence, to do so.\nIf that were not so, members of the public using for recreation land held by the local authority for the statutory purpose of public recreation would be trespassing on the land, which cannot be correct.\nTo much the same effect, at para 65, after referring to the general proposition [that] if a right is to be obtained by prescription, the persons claiming that right must by their conduct bring home to the landowner that a right is being asserted against him, Lord Carnwath said: It follows that, in cases of possible ambiguity, the conduct must bring home to the owner, not merely that a right is being asserted, but that it is a village green right.\nWhere the owner is a public authority, no adverse inference can sensibly be drawn from its failure to warn off the users as trespassers, if it has validly and visibly committed the land for public recreation, under powers that have nothing to do with the acquisition of village green rights. 71.\nIn our judgment, the position in the present case is indistinguishable from that in Barkas for the purpose of deciding whether the use of the land in question by members of the public was as of right.\nIn 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.\nThe 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).\nWe agree with Lewison LJ, who reached the same conclusion in the Court of Appeal, and said at para 138 that given that the Inspector rightly found that Byelaw 68 was an effective prohibition on swimming in the part of the harbour there referred to, it would be inconsistent then to reject the contention that the Byelaws implied permission for swimming elsewhere in the harbour did not operate as a valid licence. 72.\nBy contrast, Richards and McFarlane LJJ considered that the Byelaws had to be communicated to the general public, or at least to the local inhabitants, using the Beach, before they could constitute an effective licence rendering the use by right.\nThey took this view at least partly because of the decision and reasoning of the House of Lords in R (Beresford) v Sunderland City Council [2004] 1 AC 889 see paras 82 87 in the judgment of Richards LJ and para 100 in the judgment of McFarlane LJ.\nAfter the decision of the Court of Appeal in the present case, this court in Barkas disapproved the decision and much of the reasoning in Beresford.\nThe disapproval extended to passages quoted by Richards LJ in paras 83 and 84 of his judgment from the opinions of Lord Bingham and Lord Walker. 73.\nThus, Richards LJ said at para 86, that, if (as he had concluded) on their proper construction the Byelaws impliedly permitted the public to access the harbour and engage in various sports and activities, it did not follow that they had the effect of conferring any right on the public to do those things.\nHe went on to explain that, on this basis the Byelaws went no further than to give an implied revocable permission by the harbour authority, as landowner, for such access and activities, and if the authority had fenced off some part of the harbour, thereby preventing access to it, he did not think that a claim could have been maintained against the authority by a member of the public on the basis that the fencing off was in breach of rights conferred on him by the byelaws.\nHowever, that analysis cannot stand: once one concludes that there is an implied revocable permission for an activity, it follows that there is a licence, which renders the activity in question being carried on by right not as of right.\nThe fact that permission can be subsequently withdrawn by an action on the part of the authority, such as fencing off, merely means that, when and if that occurs, the permission is withdrawn, so that any subsequent continuation of the activity concerned becomes a trespass and would therefore normally be as of right.\nThe Byelaws: conclusion 74.\nIt follows therefore that we would allow NPPs appeal on the second issue, which renders it strictly unnecessary to consider its appeal on the third issue.\nHowever, as the third issue is an important issue which was fully argued, and we have reached a clear conclusion on it, we consider that it is appropriate to allow the appeal on that ground as well, for reasons to which we now turn.\nStatutory incompatibility: introduction 75.\nNPPs argument is that section 15 of the 2006 Act should not be interpreted as extending to the Harbour because it was reasonably foreseeable that registration of the Beach as a town or village green would conflict with the port authoritys future exercise of its statutory powers.\nThis argument, which Ouseley J upheld, was, as we have said, unanimously rejected by the Court of Appeal. 76.\nSection 15 is in Part 1 of the 2006 Act, which extends to all land in England and Wales, with the exception of the New Forest, Epping Forest and the Forest of Dean (section 5), and land includes land covered by water (section 61(1)).\nThere is no express exclusion of land held by statutory undertakers for statutory purposes.\nTherefore any restriction on the scope of section 15 would have to be implicit.\nNPP argues that statutory incompatibility provides that restriction.\nIn support of its assertion NPP relies on case law in relation to public rights of way and private easements in English law and public rights of way and servitudes in Scots law. 77.\nWhen considering some of that case law it is important to recall that, in the context of the legislation relating to town and village greens, reference to case law on public rights of way, easements and servitudes is only by way of analogy.\nIn Beresford, Lord Scott stated at para 34: It is a natural inclination to assume that these expressions, claiming right thereto (the [Prescription Act 1832], as of right (the [Rights of Way Act 1932] and the [Highways Act 1980] and as of right in the [Commons Registration Act 1965], all of which import the three characteristics, nec vi, nec clam, nec precario, ought to be given the same meaning and effect.\nThe inclination should not, however, be taken too far.\nThere are important differences between private easements over land and public rights over land and between the ways in which a public right of way can come into existence and the ways in which a town or village green can come into existence.\nTo apply principles applicable to one type of right to another type of right without taking account of their differences is dangerous.\nStatutory incompatibility: the English law of dedication and prescription 78.\nThe case law therefore needs to be examined with care.\nIn English law public rights of way are created by dedication by the owner of the land, whether express, implied or deemed, and by acceptance by the public, usually in the form of user (Sunningwell at pp 351H 353B per Lord Hoffmann; Megarry & Wades The Law of Real Property (8th ed (2012)) para 27 035).\nIn such cases, the legal capacity of the landowner to dedicate land for that purpose is a relevant consideration; if the owner had no such power, there could be no dedication.\nSection 1 of the Rights of Way Act 1932 (now section 31(1) of the Highways Act 1980) provided for deemed dedication resulting from 20 years of uninterrupted user unless there was sufficient evidence that the owner had no intention to dedicate.\nIn this context where dedication is implied through user, the owners ability to dedicate remains relevant.\nThis was stated expressly (in section 1(7) of the 1932 Act and now section 31(8) of the 1980 Act): Nothing in this section affects any incapacity of a corporation or other body or person in possession of land for public or statutory purposes to dedicate a way over that land as a highway if the existence of a highway would be incompatible with those purposes.\nThus, in British Transport Commission v Westmorland County Council [1958] AC 126, in which a county council sought to assert a public right of way on a footpath across a bridge over a railway line, the issue was whether the railway owners could be deemed to have dedicated the path.\nThe House of Lords held that the question whether the power to dedicate was incompatible with the owners statutory objects was a question of fact and was to be assessed by reference to what could reasonably be foreseen. 79.\nSimilarly, in the English law of private easements (other than access of light) the capacity of the owner of the potential servient tenement to grant an easement is relevant to prescriptive acquisition.\nAs prescription is based on the fiction of a grant, a landowner who could not have granted the claimed easement cannot suffer prescription (see Sunningwell, per Lord Hoffmann at pp 349G 351C in relation to the common law; Housden v Conservators of Wimbledon and Putney Common [2008] EWCA Civ 200, [2008] 1 WLR 1172, paras 43 and 76, per Mummery LJ, and Carnwath LJ respectively, in relation to the 1832 Act; Megarry & Wade op cit at para 28 065; Gale on Easements (19th ed (2012)), paras 4.88 4.91).\nThe Law Commission in its 2011 Report, Making Land Work: Easements, Covenants and Profits Prendre (Law Com No 327; HC 1067) while advocating the removal of the fiction of grant, recommended (at para 3.168) that the use of land cannot be qualifying use, for the purposes of prescription, at any time when the land is in the freehold ownership of a person or body who is not competent to grant an easement over it. 80.\nBy contrast, the owner of land which others wish to register as a town or village green does not need to have capacity to create such a green.\nAll that is required is that people from the relevant locality have used the land as of right for lawful sports and pastimes (Barkas at paras 14 19 per Lord Neuberger).\nIndeed, it was only on the enactment of the 2006 Act that an owner obtained power to register land as a town or village green (section 15(8)).\nUntil then an owner could not do so (Barkas at para 68 per Lord Carnwath).\nThe landowner could only create the equivalent of a village green by settlement on trust for local inhabitants or the public at large (R v Doncaster Metropolitan Borough Council, Ex p Braim (1986) 57 P & C R 1, 8, per McCullough J).\nStatutory incompatibility: the Scots law of positive and negative prescription 81.\nFaced with this problem NPP turns to the law of Scotland for support for its proposition.\nAgain, those authorities which deal with the creation of public rights of way and servitude rights of way have to be handled with care, not least because they come from a separate legal system whose property law is much more closely related to the civil law than the common law of England and Wales.\nNone the less, in the field of acquisitive prescription there is a clear analogy with English law as, drawing on the rules of Roman law, the user or possession which grounds prescription must be nec vi, nec clam, nec precario (see McGregor v Crieff Co operative Society Ltd 1915 SC (HL) 93, per Earl Loreburn LC at 98, and Lord Dunedin at 103 104).\nBefore the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act) created the modern rules for positive (including acquisitive) prescription and also negative prescription, such prescription was governed by early Scottish statutes of the 16th and 17th centuries, although the period for positive prescription was reduced in the 19th and early 20th centuries.\nAt the heart of positive prescription was uninterrupted possession of property.\nBut some of the institutional writers of Scots law advanced rationalisations of the law of acquisitive prescription.\nThus Stair (Institutions II 7.1 and 2) and Erskine (Institutes II 9.3 and III 7.2) spoke of the acquisition of a servitude by prescription as giving rise to a presumption of the owners grant of a title or consent.\nThere are also judicial dicta which supported implied grant, presumed grant or presumed consent but, as we shall show, it has long been accepted that the basis of acquisitive prescription of a positive servitude or a public right of way is uninterrupted user as of right for the prescriptive period.\nWe deal first with public rights of way and then private servitudes.\nIn Scots law a public right of way can be constituted without any actual or fictional dedication by the owner of the land.\nBefore the period of positive prescription was reduced, user by the public as a matter of right, continuously and without interruption for 40 years was sufficient to create such a right of way (Mann v Brodie (1885) 10 App Cas 378, per Lord Blackburn 387 388 and Lord Watson 390 391; (1885) 12 R (HL) 52, 54 55 and 57).\nLord Watson explained it thus (pp 390 391): 82.\nAccording to the law of Scotland, the constitution of such a right does not depend upon any legal fiction, but upon the fact of user by the public, as matter of right, continuously and without interruption, for the full period of the long prescription.\nI am aware that there are dicta to be found, in which the prescriptive acquisition of a right of way by the public is attributed to implied grant, acquiescence by the owner of the soil, and so forth; but these appear to me to be mere speculations as to the origin of the rule, and their tendency is to obscure rather than to elucidate its due application to a case like the present. 83.\nLord Watsons clarification led to the leading case in Scotland on statutory incompatibility, to which we turn.\nIn Magistrates of Edinburgh v North British Railway Co (1904) 6 F 620 the First Division of the Court of Session dealt with a claim that a railway company, which was a statutory undertaker, was obliged to maintain a railway bridge over which a public right of way was asserted.\nThe Court held that there was insufficient evidence of public user for 40 years.\nBut it also held that the public could not acquire a public right of way over the railway by user because it was incompatible with the statutory purposes of the railway company.\nLord Kinnear, with whom the Lord President (Lord Kinross), Lord Adam and Lord McLaren concurred, gave the opinion of the court.\nHe accepted Lord Watsons explanation of the basis of acquisitive prescription when he stated (at pp 636 637): I am of opinion, in the first place, that no right of way can be acquired by user over the line of the defenders railway, and especially at a point where the railway traffic is so great as on the main line close to Portobello station.\nIt must always be presumed that if people having no statutory right of any kind have been allowed to cross the line, their passage is permitted only so long as it does not interfere with the purposes of the railway traffic.\nI am of opinion that no such right can be maintained, and that on the same principle on which it has been repeatedly held that a railway company cannot voluntarily grant a right inconsistent with the performance of the purposes for which it acquired its land.\nI assent entirely to the doctrine laid down by Lord Watson that the reference to the prescriptive right of way to an implied grant is a juridical speculation to account for an established rule, and not itself a rule of law.\nBut at the same time I do not think it possible that a right of way which it would be ultra vires to grant can be lawfully acquired by user. 84.\nIn so holding, the First Division upheld the decision of the Lord Ordinary, Lord Kincairney, in that case, who in Kinross County Council v Archibald (1899) 7 SLT 308 had relied on Lord Watsons approach in Mann v Brodie to reject any idea of an implied grant as the legal basis of the assertion of a right of way through user. 85.\nShortly before the First Division handed down their opinion in Magistrates of Edinburgh the same Division of the Inner House (comprising the same judges) reached a similar conclusion in relation to an assertion of a private servitude right of way by apparently different but not inconsistent reasoning.\nIn Ellices Trustees v The Commissioners of the Caledonian Canal 1904 6 F 325, the First Division considered an assertion by the owners of a landed estate through which the Caledonian Canal passed that they had obtained by user during the prescriptive period of 40 years a servitude right of way over the towpath of the canal.\nThe commissioners, in the exercise of statutory powers to construct and maintain the canal, had constructed a weir, which intersected the towpath, to allow floodwater to escape.\nThe owners sought declarations that they were entitled to use the towpath for access and that the commissioners were obliged to maintain that access road and construct a bridge or other passage over the weir.\nThe court rejected their claim, holding that the slight use made of the towpath, which did not inconvenience the commissioners, was not sufficient to create a servitude right of way.\nThe Lord President (with whom the other judges concurred) also held that the commissioners did not have the power to grant a right of way which was not compatible with the exercise of their statutory duties.\nHe stated (p 335): I think, however, that even if the character of the use of the towing path of the canal had been such as might otherwise have constituted a public or servitude right of passage, the admitted circumstances of the case are such as to exclude any such a result.\nThe Commissioners of the canal, as already stated, hold, and always have held, the canal banks for the purposes of the canal, and they have not now, and never had, any right either to alienate them or to agree that they should be subjected to any uses which were or might become inconsistent with or adverse to the use of the banks for their proper purpose videlicet, the containing and working of the canal.\nHe continued (p 336): And if it would be ultra vires of them to make such an express grant, an effective grant could not be inferred from any such user by the pursuers and their authors as is alleged to have been permitted or tolerated in the present case. 86.\nIn Ellices Trustees the court followed a line of authority, which included Ayr Harbour Trustees v Oswald (1883) 8 App Cas 623, (1883) 10 R (HL) 85, that a statutory body had no power to alienate lands which it had acquired for a statutory purpose or to grant any right over such land which was inconsistent with its use for statutory purposes.\nThe courts reliance on that case might suggest that it considered that the acquisition of a servitude right of way by prescription was based on implied grant.\nBut the reclaimers counsel cited both Mann v Brodie and Kinross County Council in their submissions, and the Lord President stated (again at p 336): I further agree with the Lord Ordinary in thinking that even if a limited and qualified right of user of the canal banks had been acquired by prescription, that right could not be allowed to come into competition with, or to prevail against, the rights possessed by the [commissioners] and the statutory duties which are imposed upon them. 87.\nThe case is thus consistent with the approach the court went on to take in Magistrates of Edinburgh that statutory incompatibility could bar acquisitive prescription.\nIn British Transport Commission Lord Keith of Avonholm (at pp 164 165) 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.\nHe opined (p 166) that incompatibility was a question of fact and that it was for the statutory undertaker to prove incompatibility. 88.\nSince those cases, the Scots law of prescription has been reformed by statutory provision.\nThe 1973 Act sets out the modern Scots law of positive prescription.\nSection 3(2) provides: If a positive servitude over land has been possessed for a continuous period of twenty years openly, peaceably and without judicial interruption, then, as from the expiration of that period, the existence of the servitude as so possessed shall be exempt from challenge.\nSection 3(3) provides essentially the same basis for the creation of a public right of way by prescription.\nIn contrast with the provisions for the short negative prescription of five years which in section 6(4)(b) excludes from the prescriptive period any period in which the original creditor is under a legal disability, by reason of non age or disability of mind, such disability on the part of a landowner does not prevent the operation of positive prescription against him.\nThis approach to positive prescription by possession following on a recorded title was expressly stated in earlier statutes, including section 16 of the Conveyancing (Scotland) Act 1924 which provided that periods of legal disability were not to be deducted from the prescriptive period.\nIt applies ex silentio to such prescription in sections 1, 2 and 3(1) of the 1973 Act and extends to prescription by possession without title under section 3(2) and (3).\nThus in the Scottish statutory scheme, the lack of legal capacity to grant a public right of way or a servitude of way is of itself not relevant.\nIn this respect the Scottish statute differs from the English law of prescription as section 7 of the 1832 Act excludes from the computation of the period of, among others, the 20 year prescription under section 2 any time during which a person was incapable of resisting a claim because he was an infant or otherwise disabled as specified.\nBut we note that neither the 1832 Act nor the Scottish 1973 Act addresses the issue of statutory incompatibility.\nIt is not necessary in this appeal, which concerns English law, to express any view on whether in Scots law the doctrine of statutory incompatibility has survived the enactment of the 1973 Act.\nIt suffices to note that it is a matter of controversy.\nProfessor David Johnston in his scholarly Prescription and Limitation 2nd ed (2012) questions the continued relevance of the Scottish case law to which we have referred (para 19.27) while Professor Cusine and Professor Paisley, Servitudes and Rights of Way (1998) support the case law on the ground of inconsistency with the statutory purpose for which the servient owner holds the land (para 4.02).\nProfessor Gordon, Scottish Land Law 2nd ed (1999) (paras 24.54 and 24.130) also sees statutory incompatibility or incapacity to grant as a bar to acquisitive prescription.\nProfessor Reid, The Law of Property in Scotland (1996) (at para 449) states: When land has been acquired compulsorily for certain purposes, this precludes the creation of any servitude rights the exercise of which could be prejudicial to these purposes.\nBut he does not repeat this assertion in his discussion of acquisition of such rights by prescription under the 1973 Act (paras 458 461).\nStatutory incompatibility: statutory construction 91.\nAs 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.\nIt 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 89. 90. 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.\nThat approach is also consistent with the Irish case, McEvoy v Great Northern Railway Co [1900] 2 IR 325, (Palles CB at 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.\nIn 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.\nBut 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. 92. 93.\nThe question of incompatibility is one of statutory construction.\nIt does not depend on the legal theory that underpins the rules of acquisitive prescription.\nThe 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.\nWhere 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.\nWhere 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): 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.\nAccordingly the earlier specific provision is not treated as impliedly repealed.\nWhile 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.\nThere 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).\nNPP 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 paras 10 and 11 of the 1991 Newhaven Order). 96. 95.\nThe 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.\nSee the Oxfordshire case [2006] 2 AC 674, per Lord Hoffmann at para 56.\nIn 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.\nSuch registration would clearly impede the use of the adjoining quay to moor vessels.\nIt would prevent the Harbour authority from dredging the Harbour in a way which affected the enjoyment of the Beach.\nIt might also restrict NPPs ability to alter the existing breakwater.\nAll this is apparent without the leading of further evidence. 97.\nNPP has also suggested that vessels en route to and from other parts of the port might have to reduce speed in circumstances where such reduction would not be desirable to maintain the stability of the vessels.\nIt also led evidence of proposals to unload materials for an offshore windfarm on the Beach.\nBut we do not need to consider such matters in order to determine that there is a clear incompatibility between NPPs statutory functions in relation to the Harbour, which it continues to operate as a working harbour, and the registration of the Beach as a town or village green. 98.\nThe County Council referred to several cases which supported the view that land held by public bodies could be registered as town or village greens.\nIn our view they can readily be distinguished from this case.\nIn New Windsor Corporation v Mellor [1975] Ch 380, the Court of Appeal was concerned with the registration of Bachelors Acre, a grassed area of land in New Windsor, as a customary town or village green under the 1965 Act.\nThe appeal centred on whether the evidence had established a relevant customary right.\nWhile the land had long been in the ownership of the local council and its predecessors, it was not acquired and held for a specific statutory purpose.\nIt had been used for archery in mediaeval times and had been leased for grazing subject to the recreational rights of the inhabitants.\nIn recent times it had been used as a sports ground and more recently it was used as to half as a car park and half as a school playground.\nNo question of statutory incompatibility arose. 99.\nThe Oxfordshire case concerned the Trap Grounds, which were nine acres of undeveloped land in North Oxford comprising scrubland and reed beds.\nThe land was, as Lord Hoffmann stated (in para 2) not idyllic.\nMore significantly, while the City Council owned the land and wanted to use a strip on the margin of it to create an access road to a new school and to use a significant part of the land for a housing development, there was no suggestion that it had acquired and held the land for specific statutory purposes that might give rise to a statutory incompatibility. 100.\nThirdly, the County Council referred to Lewis v Redcar, which concerned land at Redcar owned by a local authority which had formerly been leased to the Cleveland golf club as part of a links course but which local residents also used for informal recreation.\nThe council proposed to redevelop the land in partnership with a house building company as part of a coastal regeneration project involving a residential and leisure development.\nAgain, there was no question of any statutory incompatibility.\nIt 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. 101.\nIn our view, therefore, these cases do not assist the respondents.\nThe 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.\nBy 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. 102.\nIn this context it is easy to infer that the harbour authoritys passive response to the use by the public of the Beach was evidence of an implicit permission so long as such user did not disrupt its harbour activities.\nThis is consistent with our view of the byelaws which we have discussed above.\nThere has been no user as of right by the public of the Beach that has interfered with the harbour activities.\nIf there had been such an assertion of right it would not avail the public, because the 2006 Act cannot operate in respect of the Beach by reason of statutory incompatibility.\nConclusion 103.\nThe poet Ovid spoke of time as the devourer of things (tempus edax rerum.\nMetamorphoses 15.234).\nIn the English law of prescription, user as of right can over time eat into a landowners freedom to use land.\nSo too can the 2006 Act.\nIn this case, however, we conclude that, assuming that there is no general common law right for the public to use the foreshore for bathing and associated recreational activities, the user was by permission in the light of the Byelaws, and that in any event the 2006 Act cannot operate by reason of incompatibility with the statutory basis on which NPPs predecessors acquired the land, and the statutory purposes for which they held, and now NPP holds, that land. 104.\nWe therefore would allow the appeal and set aside the order of the Court of Appeal dated 27 March 2013.\nLORD CARNWATH: 105.\nAs will become apparent, I agree that the appeal should be allowed under ground (ii) for the reasons given by Lord Neuberger and Lord Hodge.\nWhile I agree that we need not reach a conclusion on ground (i), I think it useful also to comment on some of the more general issues discussed in argument, which have not previously been considered at this level and which may become relevant in other cases.\nBathing rights on the foreshore 106.\nAt least since Brinckman v Matley [1904] 2 Ch 313, the decision of the Court of Kings Bench in Blundell v Catterall (1821) 5 B & Ald 268 has been taken as establishing at Court of Appeal level that under English law the public has no general right to go onto the foreshore for the purpose of bathing or other recreation.\nIn the words of the 1904 headnote: The public have no common law right to use the foreshore or to pass and repass thereon for the purpose of bathing in the sea, whether the foreshore is the property of the Crown or of a private owner.\nNot even the strong dissenting judgment of Best J in the earlier case, the advocacy of a future Lord Chancellor (Buckmaster KC), nor the criticism of three textbook writers cited by him (p 320), were sufficient to persuade the court to revisit the issue, or even to call on opposing counsel.\nThe members of the court were unanimous in their praise for the model judgment of Holroyd J, regarded it seems as one of the finest examples of how a judgment should be expressed (p 323).\nOnly Cozens Hardy LJ, while observing that the principles laid down in that case have never since been questioned by any authority to which our attention has been called, was prepared to concede that the point might be open for reconsideration by the House of Lords (p 327). 107.\nNo doubt because judicial fashions have changed, I confess that I do not find the enthusiasm of the Court of Appeal for the judgment of Holroyd J altogether easy to share.\nIts erudite analysis of extracts from Justinian, Bracton, and Hale, and of obscure exchanges between the court and counsel in some early English cases, makes rather heavy reading to modern eyes. 108.\nIt is also difficult to find the basis of the assertion by Vaughan Williams LJ that the majority judgments in the earlier case had been recognised ever since by the whole of the profession as an accurate and binding assertion of the law (p 322).\nIn the intervening century, recreational use of the foreshore and the associated beaches had become an even more wide spread and popular activity.\nAs far as one knows, the public had continued to enjoy the pleasures of the beach without interference, and without anyone suggesting that they were mere trespassers.\nThere is no record of anyone relying on the judgment in Blundell v Catterall to restrict such use.\nNor were we referred to any evidence of support from legal commentators to set against the three sources relied on by the appellants (Hall on the Seashore, Phears Rights of Water, and Stuart Moore on the Foreshore). 109.\nFurthermore, as Vaughan Williams LJ acknowledged (p 322) the actual issue in the earlier case had been narrower than that facing his court.\nIt had been, not the general right of the public to bathe on the foreshore, but their right to bring on to the beach bathing machines for that purpose, and to do so in an area where it conflicted with private rights of fishing with stake nets.\nOn the same page, Vaughan Williams LJ also cited the short statement by Abbott CJ of what the decision of the court was: that is, where one man endeavours to make his own special profit by conveying persons over the soil of another, and claims a public right to do so he has no reason to complain if the owner of the soil shall insist upon participating in the profit .\nOn that footing the case was about commercial exploitation of the beach, rather than the publics right to its recreational use. 110.\nAs appears from the dissenting judgment of Best J in the earlier case (p 279), it had been found as a fact that there was a custom for the public to cross the spot in question on foot for the purpose of bathing.\nThat usage as such was not apparently in issue.\nThe problem arose because of the associated need for bathing machines, use of which at that time was seen as essential to the practice of bathing (Decency must prevent all females, and infirmity many men, from bathing, except from a machine).\nEven the judgment of the majority was not seen by them as restricting the established right of access to bathing on foot: The right is claimed on the pleadings, as founded not on usage or custom, but upon the supposed general law only; and the usage, as stated in the special case, is found to have been for the public to cross the sea shore on foot only, for the purpose of bathing, no bathing machines having ever been used in Great Crosby, where the locus in quo is situate, before the establishment of the present hotel.\nMy opinion, therefore, on this case, will not affect any right that has been or can be gained by prescription or custom, either by individuals or by either the permanent or temporary inhabitants of any village, parish, or district. (p 289, per Holroyd J) It is unfortunate that neither in that case, nor in any of the later cases relying on it, was there any discussion of the legal basis of such a hypothetical right gained by prescription or custom. 111.\nThis was a point touched on by the first of the textbook writers, Robert Hall, a barrister of Lincolns Inn.\nIn his 1830 treatise An essay on the rights of the Crown and the privileges of the subject in the sea shore of the realms, he devoted some 40 pages of a supplemental chapter to a detailed criticism of the majority judgments.\nHe was troubled (p 219) by the implications of Holroyd Js acceptance that there might be a local usage or custom of bathing, and the difficulty of distinguishing such a custom from one available to the public generally.\nIt would be singular to denominate this a collection of local customs.\nHe compared fishing on the seashore which, though likely to be practised by local inhabitants, was accepted as a general rather than a purely local right.\nIt would be strange, he said, to treat the right to bathe any differently. 112.\nMore generally, he noted that much of Holroyd Js discussion was devoted to criticisms of Bractons exposition of the law relating to river banks, rather than the passages directly concerned with the public right over the sea shore.\nHe commented: The reasoning, therefore, seems to have been this, Bracton was wrong in his law that Riparum usus communis est &c therefore littorum usus non est communis.\nBut this is certainly a non sequitur; and although the court, from the authorities, proved Bracton wrong, to a certain extent in his law respecting particular uses made of banks of rivers (as for towage), yet no authorities were adduced shewing that communis usus of the sea shore for bathing is not a good custom. (pp 191 192) Best J, by contrast, had preferred to see Bractons writings on this issue as derived not so much from the civil or common law, as from the law of all civilised nations (p 281). 113.\nAs to judicial authorities, the only judgment cited to the court in which Blundell v Catterall had been followed without question was Llandudno Urban Council v Woods [1899] 2 Ch 705, but that was at first instance, and it was concerned, not with bathing or general recreation, but with the holding of religious services on the beach. 114.\nMore significant in the present context is Mace v Philcox (1864) 15 CB(NS) 600, which was cited to the Court of Appeal but not mentioned in their judgments.\nAs appeared from the case stated, it was accepted that the sea beach or foreshore throughout the whole length of the borough of Hastings, including the locus in quo had been used from time immemorial by the public as a place of public resort (p 603), subject only to the corporations statutory powers to regulate the use by byelaws.\nThe issue was simply as to the right of the defendant to place bathing machines on a part of the foreshore in private ownership, it being accepted that such a right existed on adjoining land owned by the corporation.\nAlthough Blundell v Catterall was cited on that point, the court did not evidently read it as settling any wider issue; rather Erle CJ was desirous of guarding (his) judgment so as not to restrict the valuable usage or right of her Majestys subjects to resort to the sea shore for bathing purposes (p 614 per Erle CJ). 115.\nAgainst this background the unwillingness of the Court of Appeal in 1904 to reopen the issue seems both surprising and disappointing.\nScotland 116.\nThe hearing in Brinckman v Matley took place on 13 July 1904.\nThe judgments appear to have been given on the same day.\nBy a curious coincidence, three days later a similar issue (relating to shooting wildfowl on the foreshore) was considered by the Court of Session in Scotland (Hope v Bennewith (1904) 6 F 1004).\nAlthough Brinckman v Matley is noted in a footnote to the report (p 1008), it seems highly improbable that the detail of those judgments would have been available at the hearing.\nIn any event, counsel was able to submit, apparently without contradiction, that Blundell v Catterall had been much criticised and followed with reluctance (p 1010).\nHe relied (inter alia) on Mace v Philcox and various textbook writers, including those cited to the English Court of Appeal.\nThe court did not comment on the authorities, but proceeded on the basis of an admitted public right to use the foreshore (p 1010) without considering its precise scope. 117.\nIt seems that from the middle of the previous century, Scottish law had begun to recognise a public right to use the foreshore for recreation, without feeling inhibited by authorities from the other side of the border.\nIn 2001, the Scottish Law Commission reviewed the cases, beginning with Officers of State v Smith (1846) 8 D 711), and concluded that such a right was well supported by authority.\nThe precise scope of the right was not clear: It appears to include walking and running, having a picnic or barbecue, sunbathing and swimming.\nWhile it does not include the right to put up a hut on the shore, it does include the right to shoot wildfowl.\nThe sale of refreshments on the beach is outwith the scope of the right. (Discussion Paper No 113 Uses of the Foreshore para 4(25)) 118.\nBy the time of the Commissions final report (report 190 (2003)) its recommendations had to some extent been overtaken by the enactment of the Land Reform (Scotland) Act 2003 which conferred general rights of access to land for recreational purposes, land for this purpose being defined as including the foreshore (section 32).\nNone the less it was recommended that the common law rights, which were regarded as more extensive than the new access rights, should themselves be put on a separate statutory footing (para 3.1 17).\nComparative jurisprudence 119.\nAt the end of the hearing in the present case, the court offered Mr George QC the opportunity to provide information about the practice in other common law jurisdictions.\nHe did not take up that invitation, perhaps in the understandable fear of opening up a Pandoras box.\nSome comparative material can, however, be found in the appendix to the Scottish Law Commissions 2001 Discussion Paper.\nThat has been supplemented since the hearing in this case by some further work by our own judicial assistants, particularly relating to the United States of America.\nThis research is far from exhaustive, and, since it is not material to our conclusion in the present case, it has not been thought necessary to invite comments from the parties.\nHowever, as it may be of relevance to future cases, it seems desirable to make a brief reference to some of the main points. 120.\nAppendix 2 to the Scottish Law Commissions Discussion Paper contained a short review of the law relating to the foreshore, including rights of recreation, in various jurisdictions.\nThis shows little consistency of approach.\nIn the European countries mentioned (France, Germany, Norway, Spain) recreation on the sea shore seems generally to be regulated by statute.\nOf the common law countries referred to (Canada, England & Wales, New Zealand), the English position unsurprisingly is defined by reference to Blundell v Catterall; and the position in Canada is said to be unclear (para 31). 121.\nOf more interest is New Zealand, where reference (para 156) is made to a case from the 19th century, Crawford v Lecren [1868] NZLA 117.\nIn that case the Court of Appeal held, in reliance on Blundell v Catterall, that there was no right for the public to load and unload goods on the foreshore.\nThe court seems to have attached particular weight to the support for this proposition of Best J, as well as of the majority (pp 128 129).\nThe Commission also notes (paras 159 162) that in New Zealand public access to the foreshore is preserved through the concept of the Queens Chain, a strip of land up to 20 metres wide, measured from the high water mark of spring tide.\nThe concept, which has had varying acceptance, and is now implemented by statute, is said to find its origins in an instruction of Queen Victoria given in 1840.\nUnited States 122.\nThe Commission did not look at the position in the United States.\nIt says something for the degree of interchange in the early 19th century between the legal communities on either side of the Atlantic, that Halls criticisms of Blundell v Catterall case were being cited with approval in the following year in an academic article: 3 US Law Intelligencer & Review 114 1831. (The US Law Intelligencer and Review was a periodical edited by one Joseph K Angell, who was born in the United States but lived in England from 1819 to 1824.\nHe founded the periodical in 1829, which ran monthly for three years.) The article quoted extensively from the treatise, and praised its author for his zeal and ability in combatting a judicial decision which would abridge the publics undoubted right of indulging in the favourite and healthful practice of bathing in the sea. 123.\nSomewhat paradoxically, although the subsequent development of the law has varied between the states, it was to the English common law that the judges in later cases looked for the foundation for recognition of public rights of recreation over the foreshore.\nThus in Florida, in White v Hughes 139 Fla 54, 59, 190 So 446 (1939), Brown J observed: There is probably no custom more universal, more natural or more ancient, on the sea coasts, not only of the United States, but of the world, than that of bathing in the salt waters of the ocean and the enjoyment of the wholesome recreation incident thereto.\nThe lure of the ocean is universal; to battle with its refreshing breakers a delight After quoting Byron on the primeval quality of the wild waves play (Childe Harolds Pilgrimage IV, 182) he continued: The constant enjoyment of this privilege of thus using the ocean and its fore shore for ages without dispute should prove sufficient to establish it as an American common law right, similar to that of fishing in the sea, even if this right had not come down to us as a part of the English common law, which it undoubtedly has (p 449 emphasis added). 124.\nA more sophisticated (if less poetic) discussion of the development of the law up to 1969 can be found in the Yale Law Journal (William Dayton The Public Trust in Tidal Areas: a Sometime Submerged Traditional Doctrine (1970) 79 YLJ 762).\nThe author traced the history of the law from its Roman roots, through Magna Carta, to the more modern law in England and America.\nOf Blundell v Catterall he said: This exclusion from common law protection of an ancient and customary right is a prime example of the needless exclusion of an activity.\nHe noted that the State of Oregon in particular had seized the customary usage opening and widened it (citing inter alia State ex rel Thornton v Hay 89 Ore 887 (1969)) (p 784 785).\nHe ended by suggesting that the common law of the foreshore seemed to be entering a major period of reformulation, which he described as a sharp acceleration of the process begun by Magna Carta.\nHe looked forward to the day when common law citizens will have as many rights in the foreshore as Roman citizens once did (p 785 789). 125.\nThe decision of the Oregon Supreme Court in Thornton, which may have provided a stimulus for that article, concerned the publics right to recreational use of what was described as the dry sand area, that is the privately owned area of beach between the vegetation line, and the state owed foreshore (or wet sand area) in which the publics paramount right was not in dispute.\nThe court accepted that the dry sand area had been enjoyed by the general public as a recreational adjunct of the foreshore area since the beginning of the states political history, and before that by aboriginal inhabitants using the foreshore for clam digging and the dry sand area for their cooking fires.\nThe majority upheld the public right over that area, by reference to the English doctrine of custom (as enunciated in Blackstones Commentaries), preferring that basis of decision to one based on prescription.\nThe minority (Denecke J) arrived at the same result, relying simply on long usage by the public of such dry beaches, combined with long and universal belief by the public in their right to that use, and long and universal acquiescence in it by the owners.\nThe narrower English law on customary rights was distinguished as appropriate for a small island nation at a time when most inhabitants lived and died within a days walk from their birthplace, as compared to the vast geography of this continent and the freshness of its civilisation. 126.\nNew Jersey is perhaps of greater interest because of the development of the law by the courts relying on the so called public trust doctrine, using language not dissimilar to that of Best J in the English case.\nHe had spoken of the public trust in such property: From the general nature of this property, it could never be used for exclusive occupation.\nIt was holden by the King, like the sea and the highways, for all his subjects.\nThe soil could only be transferred, subject to this public trust; and general usage shews that the public right has been excepted out of the grant of the soil (p 287).\nThe Court of Appeal in Brinckman v Matley accepted that the Crown holds the foreshore on the terms that it must recognise the jus publicum whatever it may be but saw that as limited by authority to rights of navigation and fishing (p 325). 127.\nA recent review of the New Jersey authorities comes in the judgment of the New Jersey Supreme Court, in Raleigh Avenue Beach Association v Atlantis Beach Club Inc 879 A 2d 112 (2005).\nThe court (p 119) traced the history of the public trust doctrine to their decision in Arnold v Mundy (1821) 6 NLJ 1.\nThat case, decided as it happens in the same year as Blundell v Catterall, concerned a claim to rights in an oyster bed.\nThe court had explained that following independence the English sovereign's rights to the tidal waters had become vested in the people of New Jersey as the sovereign of the country, and that the land on which water ebbs and flows, including the land between the high and low water, belonged to the State, to be held, protected, and regulated for the common use and benefit. 128.\nMore recently, in Borough of Neptune City v Borough of Avon by the Sea, 61 NJ 296, 303, 294 A 2d 47 (1972), the same court had referred to the roots of that principle in Roman jurisprudence, which held that by the law of nature . the air, running water, the sea, and consequently the shores of the sea, were common to mankind, and had extended the public rights in tidal lands to recreational uses, including bathing, swimming and other shore activities.\nThat extension had been approved in Matthews v Bay Head Improvement Association 95 NJ 306 (1984), in which the court had gone on to consider the extent of the public's interest in privately owned dry sand beaches, in particular its right to cross such beaches in order to gain access to the foreshore (p 323).\nThe court had also affirmed the concept already implicit in our case law that reasonable access to the sea is integral to the public trust doctrine.\nThere was reference to the dissenting judgment of Best J in Blundell v Catterall (without reference to the majority judgments) for the proposition that the particular circumstances must be considered and examined before arriving at a solution that will accommodate the publics right and the private interests involved (p 324). 129.\nIn Raleigh itself, following Matthews, the court applied the principle that the public use of the upland sands is subject to an accommodation of the interests of the owner, to be determined by case to case consideration (pp 120 121).\nIt repeated the following statement from Matthews: Archaic judicial responses are not an answer to a modern social problem.\nRather, we perceive the public trust doctrine not to be fixed or static, but one to be molded and extended to meet changing conditions and needs of the public it was created to benefit Precisely what privately owned upland sand area will be available and required to satisfy the public's rights under the public trust doctrine will depend on the circumstances.\nLocation of the dry sand area in relation to the foreshore, extent and availability of publicly owned upland sand area, nature and extent of the public demand, and usage of the upland sand land by the owner are all factors to be weighed and considered in fixing the contours of the usage of the upper sand.\nToday, recognizing the increasing demand for our State's beaches and the dynamic nature of the public trust doctrine, we find that the public must be given both access to and use of privately owned dry sand areas as reasonably necessary.\nWhile the public's rights in private beaches are not co extensive with the rights enjoyed in municipal beaches, private landowners may not in all instances prevent the public from exercising its rights under the public trust doctrine.\nThe public must be afforded reasonable access to the foreshore as well as a suitable area for recreation on the dry sand. (Matthews p 326) Comparative material summary 130.\nThis review of the comparative jurisprudence is of interest, on the one hand for the apparently universal recognition of the recreational use of the foreshore in practice, but on the other for the continuing uncertainty in many jurisdictions as to the legal basis for that use and the wide variety of legal methods (statutory or judicial) used to resolve it.\nThis divergence seems surprising, given the universality of the practice, and the common roots of most of the systems of law considered, either in Roman law, or in the rights and obligations of the Crown under the English common law.\nIn the common law jurisdictions this confusion seems in part to be the legacy of Blundell v Catterall.\nAlthough the authority of that decision has been acknowledged in some common law jurisdictions, there is little evidence of it being given practical application so as to restrict use on the ground.\nThe development of the law in New Jersey is of particular interest as an illustration of how the law in this country might have developed (and might yet develop) if the view of Best J had prevailed over that of the majority.\nUsage, custom or implied licence 131.\nIt remains to consider what lessons can be drawn for the present case.\nIn the absence of argument to the contrary we must proceed on the basis that Blundell v Catterall and Brinckman v Matley were rightly decided.\nIt follows that public use of the West Beach during the relevant period cannot be attributed to a general public right to use the foreshore for recreational purposes.\nLeaving aside the arguments relating to the bye laws under the second issue, there are three possibilities: (a) some form of prescriptive or customary right (b) implied licence (as found by Lewison LJ) (c) trespass tolerated or acquiesced in by the owners (as found by the majority of the Court of Appeal). 132.\nI mention (a), which is not supported by any of the parties, because it is a possibility left open by the majority in Blundell v Catterall.\nWhile it may not be appropriate to the relatively recent use found in this case, it might be relevant as an alternative explanation of long standing recreational uses of beaches more generally.\nHowever, as I have said, the legal basis for such a right is unclear.\nA right gained by prescription, as generally understood, would have had to be related to a particular property, which would not have explained the more general usage found in the case.\nThe alternative, a custom claimed by the inhabitants of any village, parish or district, would accord with the principle that a custom should be linked to a particular locality, rather than for the benefit of the public in general.\nThat was a familiar feature of the law of village greens, which in due course was repeated in the definition of customary village greens in the Commons Registration Act 1965.\nHowever, quite apart from the criticisms made by Robert Hall in 1830, there seems to have been nothing in the actual findings before the court to support such a limitation. 133.\nExplanation (c) that those who use public beaches for recreation without specific authorisation do so as mere trespassers defies common sense.\nIt flies in the face of public understanding, and the reality of their use of the beaches of this country for the last three hundred years or more. 134.\nExplanation (b) accords with the view of Lewison LJ in the present case.\nHe said he thought that the foreshore should be treated as a special case, for a number of reasons: i) The nature of the land is such that it cannot readily be enclosed.\nIt would be wholly impractical to attempt to enclose it on the seaward side; and even on the landward side any attempt would be fraught with difficulty. ii) Historically the foreshore has been Crown property (although there are private persons who derive title from the Crown) and the Crown would not, in practice, prevent citizens from resorting to the foreshore for recreational purposes.\nThis has been the case since time immemorial, and in those circumstances it is not unreasonable to presume that the Crown has implicitly licensed such activities. iii) Even where the owner of the foreshore does attempt to enforce his strict legal rights, there are serious impediments in obtaining an injunction. iv) Although in theory it is possible to prescribe for rights over the foreshore or to establish a customary right, there is no case in the books where a recreational right over the foreshore has been established. v) It would take very little, having regard to the nature of foreshore and the manner in which it is generally enjoyed, to draw the inference that use is permissive by virtue of an implied licence. 129.\nEven if this is not, on its own, an independent reason for concluding that the use of the foreshore in this case is precario, it does in my judgment provide the context in which the byelaws are to be interpreted. 135.\nI agree, but I would put the emphasis on the point (v).\nIt is the character of the foreshore and the use which is traditionally made of it, without question or interference, which leads to the natural inference that it is permitted by the owners in accordance with that tradition.\nAs I said in Barkas (para 61 referring to comments of Lord Scott in Beresford [2004] 1 AC 889, para 34): Lord Scott's analysis shows that the tripartite test cannot be applied in the abstract.\nIt needs to be seen in the statutory and factual context of the particular case.\nIt is not a distinct test, but rather a means to arrive at the appropriate inference to be drawn from the circumstances of the case as a whole.\nApplying that approach to public use of beaches generally, I see no difficulty in drawing the obvious inference, in the absence of evidence to the contrary, that their use, if not in exercise of a public right, is at least impliedly permitted by the owners, rather than a tolerated trespass. 136.\nThat general approach cannot necessarily be applied without question to the present case.\nThis is not an historic beach, but one created artificially in relatively recent times, as a consequence of the statutory harbour works.\nNor was public use accepted without question.\nAs appears from the application for registration, the public were barred for some time after the end of the First World War, and their use only resumed in response to a public protest.\nThere might well be a case for treating what followed as tolerated trespass, or use as of right, had not the whole area been brought under formal regulation by the making of the byelaws.\nFor the reasons given by Lord Neuberger, I agree that thereafter the only possible inference is that the use was permitted by the harbour authorities and was therefore by right.\nGround (iii) statutory incompatibility 137.\nIn view of our unanimous conclusion on ground (ii), I would have preferred not to have to reach a decision on ground (iii), which I find much more difficult.\nI see considerable force, with respect, in the detailed reasoning of Richards LJ in the Court of Appeal, and in particular his reasons for not finding assistance in the Scottish cases ([2014] QB 186 paras 10 28). 138.\nI see a further problem which may have been touched on before Ouseley J (see his judgment at paras 133, 141 142), but has not been raised by the parties or explored in any depth before us.\nThis concerns the consequences of registration under the 2006 Act.\nLord Neuberger and Lord Hodge (para 95), citing Lord Hoffmann in the Oxfordshire case, proceed on the basis that registration of the Beach as a town or village green would make it subject to the restrictions (subject to criminal sanctions) imposed by the 19th century village green statutes.\nIt is easy to see why such restrictions are likely to be incompatible with future use for harbour purposes, even if that has not proved a problem hitherto. 139.\nHowever, it is to be noted that the supposed incompatibility does not arise from anything in the 2006 Act itself, but rather from inferences drawn by the courts as to Parliaments intentions.\nIn the relevant passage (para 56), Lord Hoffmann expressed agreement with the courts below on this issue, including by implication my own rather fuller reasoning in the Court of Appeal ([2006] Ch 43 paras 82 90).\nHowever, he did not see this issue as impinging directly on the question whether the land should be registered.\nHaving noted and disposed of some of the arguments on the effect of the 19th century statutes, he added: Nor do I follow how the fact that, upon registration, the land would become subject to the 1857 and 1876 Acts can be relevant to the question of whether there has been the requisite user by local inhabitants for upwards of 20 years before the date of the application(para 57).\nIt was not necessary in that case to consider the issue which arises here: that is, the potential conflict between the general village green statutes and a more specific statutory regime, such as under the Harbours Acts.\nIt 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. 140.\nIn conclusion, for the reasons already given, I agree that the appeal should be allowed.\n","output":"Newhaven is a port town on the mouth of the River Ouse in East Sussex; its harbour (the Harbour) has existed since the mid sixteenth century.\nThe Newhaven Harbour and Ouse Lower Navigation Act 1847 established harbour trustees with powers to maintain and support the Harbour and associated works.\nThe Newhaven Harbour Improvement Act 1878, transferred these powers to the Newhaven Harbour Company.\nThat Act also conferred on the Harbour Company the power to make byelaws in the manner prescribed by the Harbours, Docks and Piers Clauses Act 1847.\nIn 1931, byelaws were made regulating access to the Harbour and the use of the Harbour for (among other things) fishing, playing sports or games and dog walking (the Byelaws).\nThe Harbour was subsequently vested in Newhaven Port and Properties Limited (NPP) in 1991 by statutory instrument (the 1991 Newhaven Order).\nWest Beach (the Beach) is part of the operational land of the Harbour, and is subject to statutory provisions and to the Byelaws.\nNPP is obliged to maintain and support the Harbour and it has powers including the dredging of the sea bed and the foreshore In December 2008 Newhaven Town Council applied to the County Council to register the beach as a town or village green on the basis that it had been used by a significant number of local inhabitants as of right for a period of at least 20 years.\nThe issue raised by this appeal is whether the County Council was wrong in law to decide to register the Beach as a village green under the Commons Act 2006.\nThis was on the basis either: (i) that the public enjoyed an implied licence to use the foreshore and therefore the use was not as of right; (ii) that the public enjoyed an implied licence arising from the Byelaws and therefore the use was not as of right; or (iii) that in any event, the Commons Act 2006 cannot be interpreted so as to enable registration of land as a town or village green if such registration was incompatible with some other statutory function.\nThe Supreme Court unanimously allows the appeal.\nLord Neuberger and Lord Hodge (with whom Lady Hale and Lord Sumption agree) give the main judgment, allowing the appeal on both the second and third ground.\nLord Carnwath (who writes a concurring judgment) would have preferred not to reach any decision on the third ground as it was not necessary to do so in order to dispose of the appeal.\nUse as of right means use without any right, whether derived from custom and usage, statute, prescription or express or implied permission of the owner.\nNPP argued that the public enjoyed an implied licence to use the foreshore for sports and pastimes and therefore that use was not as of right.\nIn the alternative they argued that the public had an implied licence to use the Beach arising from the Byelaws.\nIn the further alternative they argued that the Commons Act 2006 could not be interpreted so as to enable registration in circumstances where registration was incompatible with some other statutory function to which the land was to be put, that is, as a working harbour [23 24].\nImplied licence to use the foreshore In the absence of express permission from the owner of the foreshore, there are three possible conclusions on the legal basis of the publics use of the foreshore for bathing; (i) there exists a general common law right to use the foreshore for bathing; (ii) the owner of the foreshore is presumed to permit members of the public to use the foreshore for bathing until the owner revokes this implied permission; or (iii) no such right exists and members of the public who do so are trespassers [29].\nHowever, given the difficulty of the issues raised, it seems that, unless necessary to do so for the purpose of determining this appeal, the Court ought not to determine the first issue; it is therefore best to proceed on the assumption that, so far as the general common law is concerned, members of the public used the Beach for bathing as of right and not by right [50 51] Lord Carnwaths concurring judgment offers further discussion and analysis on the question of public rights over the foreshore and the approach taken in Scotland, New Zealand and the United States [105 140].\nImplied licence from byelaws A byelaw can permit an activity which would otherwise be unlawful; there is nothing in the wide words of the 1847 Clauses Act to prevent byelaws created under that Act from creating such a permission [54 56].\nMoreover, a prohibition can be expressed in such a way as to imply a permission; a requirement that dogs in a park must be kept on a lead implies a permission to bring dogs into the park [57 58].\nA normal speaker of English reading the Byelaws would assume that he or she was permitted to bathe or play provided the activity did not fall foul of the restrictions in the Byelaws [60 63].\nThe only remaining question was whether the Byelaw needed to be brought to the publics attention for this implied licence to exist.\nIt is not always necessary for the landowner to show that members of the public have to have had it drawn to their attention that their use of land was permitted in order their use to be treated as being by right.\nIn this case there existed a public law right for the public to go onto the land and to use it for recreational purposes, and therefore, the recreational use of the land in question by inhabitants of the locality was by right and not as of right [69 71].\nIt follows that NPPs appeal should be allowed on the second issue [74].\nStatutory incompatibility The statutory scheme for registering town and village greens is analogous to the acquisition of rights over land by long use (prescription) under English and Scots law.\nUnder both English and Scots law, it is not possible to acquire rights by prescription against a public authority which had acquired land for specified statutory purposes and continued to carry out those purposes, when the use of the land would be incompatible with those statutory purposes [91].\nThe question of incompatibility is one of the statutory construction and some assistance may be obtained from the rule that a later general provision does not depart from an earlier special one [93].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 as a place for exercise and recreation.\nRegistration would clearly be incompatible with the use of the Harbour as a working harbour [95 97].\nIt follows that the Commons Act 2006 cannot operate in respect of the Beach by reason of statutory incompatibility [101 102].\n","id":63}
{"input":"These appeals arise out of a dispute between British Telecommunications Plc, whom I shall call BT, and four mobile network operators.\nThe dispute is about the termination charges which BT is entitled to charge to mobile network operators for putting calls from the latters networks through to BT fixed lines with associated 08 numbers.\nThe dispute is a highly technical one, both factually and legally, and like most such disputes involves a surfeit of acronyms.\nBut it raises issues of great importance to the telecommunications industry, to its regulator, and indirectly to millions of consumers.\nThe following summary is a gross over-simplification but is sufficient for present purposes.\nIn principle, the cost of a call is charged to the caller by the originating communications provider to which he subscribes (a CP, in the jargon of the business).\nOut of its charges to the caller, the originating CP must pay charges to the terminating network or to an intermediate carrier if there is one.\n08 numbers are known as non-geographic numbers.\nThey are allocated to fixed line subscribers, and automatically translated into the appropriate geographic number in the course of transmission.\nWhere the call originates from another fixed line, an 08 number allows the subscriber to whom that number has been allocated to receive it on the basis that the caller will be charged at a standard, and generally reduced, charge.\nCalls to 080 numbers are free to fixed line callers except where charges are notified at the beginning of the call.\nCalls to 0845 numbers are charged to fixed line callers by the originating CP at its standard local call rate.\nCalls to 0870 numbers are charged to fixed line callers by the originating CP at its standard national call rate except where different charges have been published.\nIn each case, the terminating CP will collect a termination charge from the CP from which it received the call.\nHowever, where calls originate from a mobile network operator, that operator will commonly charge the caller for a call to a 080 number, or charge him more than the standard local or national rate for a call to a 0845 or 0870 number.\nIn 2009 BT notified mobile network operators of a revised scheme of termination charges for 08 numbers.\nThe defining feature of the new scheme was that mobile network operators would be charged at a rate which varied according to the amount which the originating network charged the caller.\nThe higher the charges to the caller, the greater the termination charge.\nThe new scheme was rejected by the four mobile network operators party to these appeals.\nThe issue was submitted to the Office of Communications (Ofcom) under a statutory dispute resolution procedure.\nAppeal lies from Ofcom to the Competition Appeal Tribunal, and from them on points of law only to the Court of Appeal.\nOfcom decided that BT should not be allowed to introduce the new charging scheme.\nThe Competition Appeal Tribunal overturned that decision and decided that they should.\nThe Court of Appeal restored the original decision of Ofcom.\nThe legal framework\nThe sector is regulated under a pan-European regulatory scheme known as the Common Regulatory Framework.\nThe objective of the scheme is to ensure end- to-end connectivity on a common basis throughout the EU, without distortions arising from anti-competitive behaviour or restrictions arising from national law or practices.\nIt is contained in a number of Directives, all issued on 7 March 2002.\nTwo of these are important for present purposes.\nThey are Directive 2002\/21\/EC, known as the Framework Directive and Directive 2002\/19\/EC known as the Access Directive.\nThey were amended in 2009, with a deadline for transposition in 2011, after the time which is relevant for the present appeal.\nI shall refer to them below in their unamended form.\nThey refer to each other, and have to be construed together.\nThe Directives\nThe background to the Directives, and previous Directives on the same subject, is the progressive liberalisation of the European telecommunications market which had previously been dominated by state-controlled monopolies.\nThe Framework Directive recites, at Recital (1), that the current regulatory framework under previous Directives has been successful in creating the conditions for effective competition in the telecommunications sector during the transition from monopoly to full competition.\nRecital (25) records that it may still be necessary to impose ex ante obligations on CPs to ensure the development of a competitive market, where CPs exceed a given threshold of market power, but that the relevant threshold should now correspond to the concept of dominance as defined in the case-law of the Court of Justice, i.e. the possession of significant power enabling a CP to operate unconstrained by competitive pressure.\nRecital (27) recites: (27) It is essential that ex ante regulatory obligations should only be imposed where there is not effective competition, i.e. in markets where there are one or more undertakings with significant market power, and where national and Community competition law remedies are not sufficient to address the problem.\nSubject to ex ante regulation in circumstances where there is not effective competition, the scheme of the Directives is permissive.\nThe Access Directive recites: (5) In an open and competitive market, there should be no restrictions that prevent undertakings from negotiating access and interconnection arrangements between themselves, in particular on cross-border agreements, subject to the competition rules of the Treaty.\nIn the context of achieving a more efficient, truly pan-European market, with effective competition, more choice and competitive services to consumers, undertakings which receive requests for access or interconnection should in principle conclude such agreements on a commercial basis, and negotiate in good faith.\n(6) In markets where there continue to be large differences in negotiating power between undertakings, and where some undertakings rely on infrastructure provided by others for delivery of their services, it is appropriate to establish a framework to ensure that the market functions effectively.\nNational regulatory authorities should have the power to secure, where commercial negotiation fails, adequate access and interconnection and interoperability of services in the interest of end-users.\nIn particular, they may ensure end-to-end connectivity by imposing proportionate obligations on undertakings that control access to end-users.\n(14) Directive 97\/33\/EC laid down a range of obligations to be imposed on undertakings with significant market power, namely transparency, non-discrimination, accounting separation, access, and price control including cost orientation.\nThis range of possible obligations should be maintained but, in addition, they should be established as a set of maximum obligations that can be applied to undertakings, in order to avoid over-regulation.\n(20) Price control may be necessary when market analysis in a particular market reveals inefficient competition.\nThe regulatory intervention may be relatively light, such as an obligation that prices for carrier selection are reasonable as laid down in Directive 97\/33\/EC, or much heavier such as an obligation that prices are cost oriented to provide full justification for those prices where competition is not sufficiently strong to prevent excessive pricing.\nIn particular, operators with significant market power should avoid a price squeeze whereby the difference between their retail prices and the interconnection prices charged to competitors who provide similar retail services is not adequate to ensure sustainable competition.\nThe general objectives of the scheme are identified by Articles 7.1 and 8 of the Framework Directive (as in force at the relevant time).\nThey provide: Article 7 Consolidating the internal market for electronic communications 1.\nIn carrying out their tasks under this Directive and the Specific Directives, national regulatory authorities shall take the utmost account of the objectives set out in Article 8, including in so far as they relate to the functioning of the internal market.\nArticle 8 Policy objectives and regulatory principles 1.\nMember States shall ensure that in carrying out the regulatory tasks specified in this Directive and the Specific Directives, the national regulatory authorities take all reasonable measures which are aimed at achieving the objectives set out in paragraphs 2, 3 and 4.\nSuch measures shall be proportionate to those objectives.\nMember States shall ensure that in carrying out the regulatory tasks specified in this Directive and the Specific Directives, in particular those designed to ensure effective competition, national regulatory authorities take the utmost account of the desirability of making regulations technologically neutral.\nNational regulatory authorities may contribute within their competencies to ensuring the implementation of policies aimed at the promotion of cultural and linguistic diversity, as well as media pluralism.\n2\nThe national regulatory authorities shall promote competition in the provision of electronic communications networks, electronic communications services and associated facilities and services by inter alia: (a) ensuring that users, including disabled users, derive maximum benefit in terms of choice, price, and quality; (b) ensuring that there is no distortion or restriction of competition in the electronic communications sector; (c) encouraging efficient investment in infrastructure, and promoting innovation; 4.\nThe national regulatory authorities shall promote the interests of the citizens of the European Union by inter alia: (a) ensuring all citizens have access to a universal service specified in Directive 2002\/22\/EC (Universal Service Directive); (b) ensuring a high level of protection for consumers in their dealings with suppliers, in particular by ensuring the availability of simple and inexpensive dispute resolution procedures carried out by a body that is independent of the parties involved;\nDetailed provision for the terms of interconnection between CPs is contained in the Access Directive.\nArticle 1 provides: Article 1 Scope and aim 1.\nWithin the framework set out in Directive 2002\/21\/EC (Framework Directive), this Directive harmonises the way in which Member States regulate access to, and interconnection of, electronic communications networks and associated facilities.\nThe aim is to establish a regulatory framework, in accordance with internal market principles, for the relationships between suppliers of networks and services that will result in sustainable competition, interoperability of electronic communications services and consumer benefits.\nThe key element of the system for achieving these objects is the legal relationship between CPs.\nThis is embodied in interconnection terms agreed between them, generally in a series of bilateral contracts.\nThe relevant provisions of the Access Directive are Articles 4 and 5.\nArticle 4 Rights and obligations for undertakings 1.\nOperators of public communications networks shall have a right and when requested by other undertakings so authorised, an obligation to negotiate interconnection with each other for the purpose of providing publicly available electronic communications services, in order to ensure provision and interoperability of services throughout the Community.\nOperators shall offer access and interconnection to other undertakings on terms and conditions consistent with obligations imposed by the national regulatory authority pursuant to Articles 5, 6, 7 and 8.\nArticle 5 Powers and responsibilities of the national regulatory authorities with regard to access and interconnection 1.\nNational regulatory authorities shall, acting in pursuit of the objectives set out in Article 8 of Directive 2002\/21\/EC (Framework Directive), encourage and where appropriate ensure, in accordance with the provisions of this Directive, adequate access and interconnection, and interoperability of services, exercising their responsibility in a way that promotes efficiency, sustainable competition, and gives the maximum benefit to end-users.\nIn particular, without prejudice to measures that may be taken regarding undertakings with significant market power in accordance with Article 8, national regulatory authorities shall be able to impose: (a) to the extent that is necessary to ensure end-to-end connectivity, obligations on undertakings that control access to end-users, including in justified cases the obligation to interconnect their networks where this is not already the case; 3.\nObligations and conditions imposed in accordance with paragraphs 1 and 2 shall be objective, transparent, proportionate and non- discriminatory, and shall be implemented in accordance with the procedures referred to in Articles 6 and 7 of Directive 2002\/21\/EC (Framework Directive).\n4\nWith regard to access and interconnection, Member States shall ensure that the national regulatory authority is empowered to intervene at its own initiative where justified [or, in the absence of agreement between undertakings, at the request of either of the parties involved,] in order to secure the policy objectives of Article 8 of Directive 2002\/21\/EC (Framework Directive), in accordance with the provisions of this Directive and the procedures referred to in Articles 6 and 7, 20 and 21 of Directive 2002\/21\/EC (Framework Directive).\nThe words in square brackets in Article 5.4 were removed by Directive 2009\/140\/EC.\nArticles 9 to 13 of the Access Directive represent the most intrusive parts of the regulatory scheme.\nThey require member states to ensure that national regulatory authorities are empowered to impose obligations of transparency, non- discrimination, accounting separation, access to and use of specific network facilities, and price control and accounting obligations in certain cases.\nArticle 8.3 provides that without prejudice to (among other provisions) Article 5.1, national regulatory authorities shall not impose the obligations set out in Articles 9 to 13 on operators that have not been designated in accordance with paragraph 2.\nOperators are designated in accordance with paragraph 2 of Article 8 if they have been shown to have significant market power in a specific market by a market analysis carried out in accordance with Article 16 of the Framework Directive.\nSignificant market power is defined by Article 14.2 of the Framework Directive: 2.\nAn undertaking shall be deemed to have significant market power if, either individually or jointly with others, it enjoys a position equivalent to dominance, that is to say a position of economic strength affording it the power to behave to an appreciable extent independently of competitors, customers and ultimately consumers.\nBT has not been designated as having significant market power in the market relevant to this case, and the present appeal has nothing to do with Articles 9 to 13 of the Access Directive, which are relevant only by way of background.\nThe scheme of the Directives has been considered on a number of occasions by the Court of Justice of the European Union, notably in Case C-227\/07 Commission of the European Communities v Republic of Poland [2008] ECR I-8403 and Case C-192\/08 TeliaSonera Finland Oyj [2009] ECR I-10717.\nIt can fairly be summarised as follows.\nThe objectives of the scheme are set out in Article 8 of the Framework Directive, and in particular in Article 8.2, which assumes that consumer welfare will generally be achieved by competition and requires national regulatory authorities to promote both.\nThe telecommunications sector is assumed to have become competitive except in those cases where a CP can be identified as having significant market power in a relevant market.\nIn a competitive market, the objectives in Article 8 of the Framework Directive are to be achieved through the terms of the interconnection agreements between CPs.\nCPs operating in such a market are left to negotiate their own interconnection terms in good faith, with the minimum of regulatory interference.\nBut they are required by Article 4.1 of the Access Directive to offer interconnection terms consistent with the obligations imposed by the national regulatory authority pursuant to Articles 5, 6, 7 and 8.\nUnder Article 5.4 of the Access Directive, these obligations of the regulator include its obligation to secure the policy objectives in Article 8 of the Framework Directive.\nThe result is that interconnection terms consistent with the objectives in Article 8 of the Framework Directive must be available to any CP which asks for them.\nReserve powers are required to be conferred on national regulatory authorities by Article 5 of the Access Directive to impose objective, transparent, proportionate and non-discriminatory terms calculated to achieve the objectives in Article 8 of the Framework Directive.\nIn summary, these powers are exercisable where it is necessary to do so in order (i) to achieve end-to-end connectivity in a case where the parties have failed to agree interconnection terms (Articles 5.1 and 5.4 of the Access Directive); or (ii) to achieve the objectives in Article 8 of the Framework Directive, in a case where interconnection terms have been agreed but are not calculated to achieve those objectives (Article 5.4 of the Access Directive); or (iii) in order to impose certain kinds of term on parties with significant market power (Articles 8 to 13 of the Access Directive).\nIt should be noted that the promotion of efficient and competitive markets is one of the overarching objectives in Article 8.2 of the Framework Directive, and is therefore potentially relevant in all three cases.\nAlthough price control may not be imposed by regulation on CPs without significant market power, this does not mean that competition considerations are irrelevant in a competitive market.\nAs the Court of Justice pointed out in Case C-192\/08 TeliaSonera [2009] ECR I-10717, para 55, a national regulatory authority may intervene to prevent the imposition by a CP of interconnection terms likely to hinder the emergence of a competitive market even if that CP does not have significant market power.\nThis is a point of some practical importance, because a CP without significant market power nevertheless has a monopoly of access to its current customers.\nDispute resolution\nArrangements for dispute resolution are an integral part of the scheme.\nI have already referred to Article 5.4 of the Access Directive, which deals with the resolution of disputes about access and connectivity and cross-refers to Article 20 of the Framework Directive.\nArticle 20 contains the principal provision governing dispute resolution.\nIt provides so far as relevant: Article 20 Dispute resolution between undertakings 1.\nIn the event of a dispute arising in connection with obligations arising under this Directive or the Specific Directives between undertakings providing electronic communications networks or services in a Member State, the national regulatory authority concerned shall at the request of either party, and without prejudice to the provisions of paragraph 2, issue a binding decision to resolve the dispute in the shortest possible time frame and in any case within four months except in exceptional circumstances.\nThe Member State concerned shall require that all parties cooperate fully with the national regulatory authority.\n2\nMember States may make provision for national regulatory authorities to decline to resolve a dispute through a binding decision where other mechanisms, including mediation, exist and would better contribute to resolution of the dispute in a timely manner in accordance with the provisions of Article 8.\nThe national regulatory authority shall inform the parties without delay.\nIf after four months the dispute is not resolved, and if the dispute has not been brought before the courts by the party seeking redress, the national regulatory authority shall issue, at the request of either party a binding decision to resolve the dispute in the shortest possible time frame and in any case within four months.\n3\nIn resolving a dispute, the national regulatory authority shall take decisions aimed at achieving the objectives set out in Article 8.\nAny obligations imposed on an undertaking by the national regulatory authority in resolving a dispute shall respect the provisions of this Directive or the Specific Directives.\nArticle 4 of the Framework Directive requires that there should be a right of appeal from any decision of a national regulatory authority, whether under its regulatory or its adjudicatory powers.\nThis is not just a right of judicial review.\nThe appeal must ensure that the merits of the case are duly taken into account.\nThe Communications Act 2003\nEffect is given to the Directives in the United Kingdom by the Communications Act 2003.\nUnder the Act, Ofcom is the national regulatory authority for the purposes of the scheme.\nSince it is common ground that the Directives are accurately transposed in the Act, it will generally be convenient to refer to the European rather than the domestic legislation.\nIt is, however, appropriate to refer to section 190 of the Act of 2003, which deals with the resolution of disputes by Ofcom.\nSection 190(2) provides: (2) Their main power is to do one or more of the following- (a) to make a declaration setting out the rights and obligations of the parties to the dispute; (b) to give a direction fixing the terms or conditions of transactions between the parties to the dispute; (c) to give a direction imposing an obligation, enforceable by the parties to the dispute, to enter into a transaction between themselves on the terms and conditions fixed by Ofcom; and (d) for the purpose of giving effect to a determination by Ofcom of the proper amount of a charge in respect of which amounts have been paid by one of the parties of the dispute to the other, to give a direction, enforceable by the party to whom the sums are to be paid, requiring the payment of sums by way of adjustment of an underpayment or overpayment.\nSections 3 and 4 provide, in terms corresponding to the Directives, for the matters to which Ofcom must have regard in performing its functions generally.\nSection 3(3) reflects the permissive character of the regulatory scheme, by providing that Ofcom must have regard, in all cases, to the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed (emphasis added).\nThe contract\nBT provides connection services to other CPs on the terms of its Standard Interconnect Agreement.\nClause 12 of this document deals with BT charges.\nIt provides: 12.\nBT SERVICES 12.1 For a BT service or facility the Operator shall pay to BT the charges specified from time to time in the Carrier Price List.\n12.2 BT may from time to time vary the charge for a BT service or facility by publication in the Carrier Price List and such new charge shall take effect on the Effective Date, being a date not less than 28 calendar days after the date of such publication, unless a period other than 28 calendar days is expressly specified in a Schedule.\n12.5 As soon as reasonably practicable following an order, direction, determination or consent by Ofcom of a charge (or the means of calculating that charge) for a BT service or facility, BT shall make any necessary alterations to the Carrier Price List so that it accords with such determination.\n12.9 If there is a difference between a charge for a BT service or facility specified in the Carrier Price List and a charge determined by Ofcom, the charge determined by Ofcom shall prevail.\nA change in BT charges is notified to the counterparties by a Network Charge Change Notice (or NCCN).\nThe reference in Clause 12 to determinations by Ofcom is to determinations under Clause 26, which reflects the terms of Article 20 of the Framework Directive.\nIt provides that subject to any other mode of dispute resolution available to the parties, disputes are to be resolved as far as possible by agreement, but failing agreement either party may refer the dispute to Ofcom.\nThe combined effect of Clauses 12 and 26 is that variations to BTs charges are introduced unilaterally by BT and take effect automatically from the date proposed, subject to the counterpartys right to object.\nIf agreement cannot be reached, the dispute is referred to Ofcom for determination, unless both parties elect some other form of dispute resolution.\nMeanwhile, the variation is treated as provisionally valid.\nThe Change Notices\nOn 3 June 2009, BT issued Network Charge Change Notice 956 in respect of calls to 080 numbers.\nThis was on its face an exercise by BT of the powers of variation conferred on BT by Clause 12.2 of the Interconnection Agreement.\nThe revised tariffs proposed in the Change Notice provided for BT to make a payment to the originating network if that network charged zero for the call.\nIf the originating network charged the caller, there were no charges either way provided that the charge was below a given threshold.\nAbove that threshold, the CP interconnecting with BT was required to pay a progressively rising termination charge depending on the band into which the charge to the caller fell.\nOn 2 October 2009, BT issued corresponding notices numbered 985 and 986 relating to calls to 0845 and 0870 numbers.\nThese provided for BT to charge CPs a variable proportion of the charge made by the originating network to the caller, again depending on the band into which the charge to the caller fell.\nAll of these notices were disputed and referred by one or more mobile network operators to Ofcom.\nOfcoms determinations\nOfcom issued a final determination dated 5 February 2010 in relation to 080 numbers, and a second final determination dated 10 August 2010 in relation to 0845 and 0870 numbers.\nFor present purposes, it is possible to concentrate on the determination relating to 0845 and 0870 numbers, because it is common ground that that determination may be taken to represent Ofcoms position in relation to all three number ranges.\nOfcom decided that it would permit the changes to be made only if they were fair and reasonable, judged by three governing principles.\nPrinciple 1 was that mobile network operators should be able to recover their efficient costs of originating calls to the relevant numbers.\nPrinciple 2 was that the new charges should (i) provide benefits to consumers, and (ii) not entail a material distortion of competition.\nPrinciple 3 was that implementation of the new charges should be reasonably practicable.\nAll three principles can be related to objectives set out in Article 8.2 of the Framework Directive.\nNo one has challenged this as an appropriate analytical framework.\nOfcom found that Principle 1 was satisfied.\nIt found that Principle 3 was not satisfied, but it was overruled on that point by the Competition Appeal Tribunal, and there has been no appeal against its decision on that point.\nAccordingly the outcome of this appeal turns on the application of Principle 2.\nOfcom found that Principle 2 was not sufficiently likely to be met.\nAs regards Principle 2(i), which is known as the welfare test, Ofcom distinguished between three potential effects on consumers: the direct effect, essentially the effect on consumer prices for calls to 08 numbers; the indirect effect, which referred to the possibility that revenue gains by BT would feed back to the consumer in the form of lower charges or higher standards of service by service providers who use 08 numbers; and the mobile tariff package effect (or waterbed effect), by which it meant the potential for mobile network operators deprived of one revenue stream to try to compensate themselves by seeking to raise prices elsewhere.\nIt thought that the direct effect was likely to be positive for consumers, because a tariff based on the originating networks charge to the caller was likely to lead mobile network operators to reduce their charges to callers, although it could not say by how much.\nIt thought that the indirect effect was also likely to be positive, because over time some of the benefits to BT would be passed on to service providers using the 08 numbers in question, although callers to 08 numbers would not necessarily benefit.\nOfcoms concern was about the mobile tariff package effect.\nIt thought that this was likely to be negative because mobile network operators would probably try to recoup the higher termination charges by raising charges for other services.\nTaking the three effects together, Ofcoms conclusion was as follows: 9.30 As set out above, there is uncertainty about the sizes of each of the Direct, Indirect and Mobile tariff package effects.\nHowever, as shown in Table 9.1, the overall effect on consumers depends on the relative sizes of these offsetting effects (even though we place more weight on the Direct effect than the Mobile tariff package effect, because of our policy preference for 0845\/0870 prices to be aligned with geographic call prices).\n9.31 Our judgement in respect of Principle 2 is therefore finely balanced.\nWe recognise the possibility that consumers could benefit from NCCNs 985 and 986.\nHowever, we also recognise the risk of harm to consumers from NCCNs 985 and 986, particularly in light of our conclusions on the Mobile tariff package effect.\n9.32 Given the uncertainty which we have identified as to whether BT's NCCNs would result in a net benefit or net harm to consumers, and in light of our overriding statutory duties to further the interests of consumers, we consider it is appropriate for us to place greater weight on this potential risk to consumers from NCCNs 985 and 986.\nTurning to the competition test at Principle 2(ii), Ofcom concluded that while there were some concerns on this count, the risk of a material distortion of competition arising from the changes was relatively low.\nTaking the welfare test and the competition test together, Ofcom concluded that Principle 2 was not satisfied, because BT could not positively demonstrate that the proposed tariff changes would be beneficial to consumers.\nIn summary, what Ofcom decided was that although the direct and the indirect effect of BTs proposed price changes could be expected to result in lower prices for consumers, BT should not be allowed to make the changes because it was not possible to forecast how far mobile network operators would be able to compensate themselves by increasing other charges.\nThe decision of the Competition Appeal Tribunal\nUnder section 192 of the Communications Act 2003, an appeal to the CAT is an appeal on the merits.\nIt is a rehearing, and is not limited to judicial review or to points of law.\nThis reflects the requirements of Article 4 of the Framework Directive.\nThe CAT allowed BTs appeals.\nThe tribunal agreed with the approach embodied in Ofcoms three principles, but they had a different starting point.\nIn their view, BT was prima facie entitled to change its charges for three reasons.\nI list them in the order in which they will be addressed below.\nThe first was that BT had a contractual right to vary its charges, subject to Ofcoms determination if the dispute resolution procedure was operated.\nThe second was that the introduction of innovative charging structures was itself a mode of competing, and that interference with it would restrict competition.\nThe third was that price control is an intrusive form of control which elsewhere in the 2003 Act can only be introduced by SMP condition (para. 442).\nIt was therefore inappropriate for Ofcom to use its dispute resolution powers as a way of controlling the charges of a CP like BT which did not have significant market power in a relevant market.\nSummarising their view of these points, the CAT said: 396.\nThe crucial question is what is a regulator to do in the context of such uncertainty? Essentially, the regulator has two choices: (1) To prevent change unless it can be demonstrated that the change is beneficial- in which case it may well be said that the dead hand of regulation is constraining behaviour which may actually be beneficial to consumers.\nWe stress that our conclusion regarding Principle 2(i) was that the welfare assessment was inconclusive, not that consumers would be harmed.\n(2) Alternatively, to allow change despite the uncertainty, even though there is a risk that the change may result in a disbenefit to consumers, recognising that an undue fetter on commercial freedom is itself a disbenefit to consumers.\nIt followed that, if Principles 1 and 3 were satisfied (as they were), Ofcom could reject a proposed change in a CPs termination charges only if the welfare test distinctly showed that they would adversely affect consumer welfare.\nThe CAT reached substantially the same conclusions about the welfare test as Ofcom did, namely that it was inconclusive.\nThey expressed their conclusion as follows at paragraph 379: Fundamentally, the welfare analysis is inconclusive, due to a lack of empirical evidence.\nEven with the assistance of the simplifying assumptions that we have described, a reliable assessment of elasticity of demand is not possible.\nWhilst it is possible to conclude that prices for 080, 0845 and 0870 calls will, on balance, fall, it cannot be said how far they will fall, nor what volumes of calls there will be at any given price.\nEqually, the extent of the Mobile Tariff Package Effect is essentially unknown.\nAn inconclusive welfare test could not in the CATs view be enough.\nThe CATs conclusion on this point is conveniently summarised at paragraphs 447-448 of their judgment: 447.\nIf, therefore, the test to be applied is whether the NCCNs can be shown to provide benefits to consumers, then that test is not met.\nHowever, we do not consider this to be the correct test in the circumstances of the present case, because it places undue importance on Ofcom's policy preference, at the expense of the two other relevant factors that we have identified as forming a part of Principle 2 (namely Principle 2(ii) [the risk of a distortion to competition arising from restricting CP's commercial freedom to price] and BT's private law rights.\n448\nWe consider that whilst Ofcom's welfare analysis could override these other factors, it should only do so where it can clearly and distinctly be demonstrated that the introduction of the NCCNs would act as material disbenefit to consumers.\nIn short, given the presence of the two other factors that we have identified, it is not enough for the welfare analysis to be simply inconclusive.\nThe welfare analysis must demonstrate, and demonstrate clearly, that the interests of consumers will be disadvantaged.\nThe decision of the Court of Appeal\nAppeal lies from the CAT to the Court of Appeal on a point of law only.\nThe Court of Appeal (Lloyd, Etherton and Elias L.JJ) overruled the CAT and restored the decision of Ofcom.\nThe leading judgment was given by Lloyd LJ, with whom both the other members of the Court agreed.\nIn summary, Lloyd LJ rejected the CATs starting point.\nIn the first place, he held that the tribunal had been wrong to treat BT as having a prima facie right to change its charges, which needed to be displaced.\nIt had no more than a right to do so subject to the determination of Ofcom if the counterparty objected.\nSecondly, he held that they had been wrong to attach weight to their view that a restraint on BTs freedom to set its own charges would itself distort competition.\nThirdly, he held that the CAT had been wrong to attach weight to the fact that BT, not having significant market power in a relevant market, was not subject to ex ante control of its prices on competition grounds.\nHaving disposed of the three considerations that led the CAT to put the burden of justifying their objection to the new charges on the mobile network operators, Lloyd LJ held that it was for BT to justify its charges as being fair and reasonable.\nThis, he thought, required them to establish positively that consumers would benefit by them, something which the inconclusive outcome of the welfare test made it impossible for them to do.\nThe function of Ofcom in resolving disputes\nLloyd LJ attached considerable importance to the nature of the function which Ofcom is performing when it resolves disputes about charges under an interconnection agreement.\nHe considered (para 63) that dispute resolution is a form of regulation in its own right, to be applied in accordance with its own terms.\nIn his view, the terms of the Interconnection Agreement were of little if any relevance because their effect was that any new charges introduced by BT were liable to be overridden by Ofcom in the exercise of its regulatory powers.\nThis led him to regard interconnection charges as an essentially regulatory construct.\nMuch of the rest of his analysis follows from these premises.\nBecause Ofcoms determination of the dispute was a regulatory function, Lloyd LJ considered that the balancing of the various factors relevant to Principle 2 was a value judgment for it.\nSince it was not shown to have erred in principle, its decision should be restored.\nThe dispute resolution functions of Ofcom have often been described as regulatory, notably by the CAT in T-Mobile (UK) Ltd v Office of Communications [2008] CAT 12.\nIt is unquestionably true that the dispute resolution functions of national regulatory authorities are part of the regulatory scheme, and that in exercising those functions the regulator is required by Article 20.3 of the Framework Directive to promote the overarching objectives set out in Article 8, just as it is required to do in exercising its other functions.\nBut the description of dispute resolution as a form of regulation in its own right is apt to mislead without some analysis of what is meant by it.\nAs a national regulatory authority charged with the resolution of disputes, Ofcom has both regulatory and adjudicatory powers.\nArticle 20.1 of the Framework Directive requires national regulatory authorities to have power to resolve disputes between CPs in connection with obligations arising under this Directive or the Specific Directives between undertakings.\nArticle 5.4 of the Access Directive requires national regulatory authorities to have a power of intervention in a dispute about access and interconnection in accordance with (inter alia) the procedures in Article 20 of the Framework Directive, in order to secure the policy objectives of Article 8 of the Framework Directive.\nThe combined effect of these provisions is that the dispute resolution function extends to disputes of different kinds.\nA dispute may arise (i) under the existing interconnection terms, or (ii) because the parties have been unable to agree terms and one of them wants the regulator to impose them, or (iii) because there are binding terms but they do not satisfy (or no longer satisfy) Article 5.3 of the Access Directive or the policy objectives in Article 8 of the Framework Directive.\nIn case (i) it may perform an adjudicatory or a regulatory role or a combination of the two.\nThe existence side by side of both adjudicatory and regulatory functions follows from the scheme of the Directives, but is particularly clearly spelled out in section 190 of the Communications Act, which I have already quoted.\nThe section distinguishes between Ofcoms powers in the course of dispute resolution to declare the rights and obligations of the parties (section 190(2)(a)), to fix the terms of transactions between the parties (section 190(2)(b)) and to impose an obligation to enter into a transaction on terms fixed by Ofcom (section 190(2)(c)).\nThe first of these powers is plainly adjudicatory.\nThe second and third are regulatory.\nAs I have pointed out above, the scheme of the Directives depends critically on the agreed interconnection terms.\nThis is a feature of the scheme which is fundamental to its essentially permissive character.\nIt reflects the consistent emphasis in the Directives on respecting freely negotiated interconnection terms in a competitive market: see in particular Recital (5) of the Access Directive.\nIn the ordinary case, the interconnection terms will have been negotiated between the parties, within the constraints imposed by law, namely that the result must be consistent with the objectives in Article 8 of the Framework Agreement.\nIf, however, they were imposed or modified by Ofcom under Article 5.1, the effect is the same, namely to create a contract or something that will be treated as legally equivalent to a contract.\nWhen Ofcom is resolving a dispute about a proposed variation of charges under an existing agreement, it is performing a mixture of adjudicatory and regulatory functions.\nThe terms of the interconnection agreement are the necessary starting point for this process.\nIf there is no contractual right to vary the charges, it is difficult to see how Ofcom can approve a variation unless it is necessary to achieve end-to-end connectivity (for example to enable operators to recover their efficient costs) or to achieve the Article 8 objectives.\nIf there is a contractual right to a variation, but the proposed variation is not consistent with the Article 8 objectives, Ofcom may reject the variation.\nIt may also modify any terms which created an entitlement inconsistent with the Article 8 objectives.\nIf there is a contractual right to a variation which is consistent with the Article 8 objectives, Ofcoms function when the right is challenged is to give effect to it.\nThe contractual effect of the interconnection terms will of course depend on their proper law, and in some respects this may vary from one member state to another.\nBut as far as the Article 8 objectives are concerned, there will be commonality between every member state because all of them have the same obligation to ensure that interconnection agreements are framed and applied in a manner consistent with those objectives, and the same obligation to require their national regulatory authorities to give effect to those objectives both in imposing or modifying terms and in resolving disputes about them.\nClause 12 of the Interconnection Agreement\nClauses 12.1 and 12.2 of BTs Standard Interconnect Agreement confer a power on BT unilaterally to fix or vary its charges.\nAlthough the mobile network operators did argue in the CAT that their unilateral character was a reason why they should not be given weight, neither they nor Ofcom argued in the CAT that clause 12 should be modified.\nThe manner in which English law ensures that contractual effect is given to the Article 8 objectives is by treating BTs discretion under Clause 12 as limited.\nAs a general rule, the scope of a contractual discretion will depend on the nature of the discretion and the construction of the language conferring it.\nBut it is well established that in the absence of very clear language to the contrary, a contractual discretion must be exercised in good faith and not arbitrarily or capriciously: Abu Dhabi National Tanker Company Ltd v Product Star Shipping Ltd (No 2) [1993] 1 Lloyds Rep 397, 404 (Leggatt LJ); Gan Insurance Company Ltd v Tai Ping Insurance Company Ltd (No 2) [2001] 2 All ER (Comm) 299, para 67 (Mance LJ); Paragon Finance Plc v Nash [2002] 1 WLR 685, paras 39-41 (Dyson LJ).\nThis will normally mean that it must be exercised consistently with its contractual purpose: Ludgate Insurance Company Ltd v Citibank NA [1998] Lloyds Rep (I&R) 221, para 35 (Brooke LJ); Equitable Life Assurance Society v Hyman [2002] 1 AC 408, 459 (Lord Steyn), 461 (Lord Cooke of Thorndon).\nInterconnection agreements are made in a regulated environment.\nThe regulatory scheme may change, quite possibly after interconnection terms have been agreed (as it did in this case).\nBut the intention of the parties must be to comply with the scheme as it stands from time to time so far as the contract permits.\nThat intention necessarily informs the scope and operation of any contractual discretions.\nIn my opinion, it is entirely clear that the discretion conferred by clause 12 of the Standard Interconnect Agreement is limited by reference to the purposes set out in Article 8 of the Framework Directive.\nIt follows that contractually BT was entitled to set its own charges, but only within limits which are fixed by those objectives.\nBy virtue of clause 12.5, BTs power to set its own charges within those limits is subject to any order, direction, determination or consent of Ofcom.\nBut this does not mean that Ofcom can do what it likes.\nIt is bound to start from the parties contractual rights and may override them only if that is required by the Article 8 objectives.\nHowever, under Clause 12 of the Interconnection Agreement, this is a conflict which cannot arise, because BT has no contractual right to require a price variation which is not consistent with the Article 8 objectives.\nIn this case, therefore, Ofcoms function was to determine whether BTs proposed charges exceeded the limits of its contractual discretion.\nThat depends on whether they were in fact consistent with the Article 8 objectives.\nThis is where the three principles applied by Ofcom, including the welfare test and the competition test, come in.\nClause 13 of the Interconnection Agreement\nAt this point, it is necessary to make a short excursion into Clause 13 of the Interconnection Agreement.\nWhereas Clause 12 is concerned with charges for BT services, Clause 13 deals with charges payable by BT to the Operator for Operator services.\nIt provides by Clause 13.1 that the charges are to be those specified from time to time in the Carrier Price List.\nThe remainder of Clause 13 is concerned with variations to the Operators charges in the Carrier Price List proposed by the Operator.\nBut it works in a different way from the corresponding provisions of Clause 12 relating to variations proposed by BT.\nIn particular, there is no direct equivalent of Clause 12.2.\nThe Operator has no unilateral right to introduce a variation.\nHe must request one.\nIf the request is rejected by BT and the parties fail to agree upon a modified version of the proposed variation, the issue is referred to Ofcom.\nUnder Clause 13, the variation is not treated as provisionally valid pending a determination.\nThe Court of Appeal attached importance to these differences because it considered that the way in which Ofcom determined a dispute about pricing must be the same whether the issue arose under Clause 12 or Clause 13.\nIt drew attention to the fact that the bottom rung of BTs proposed 080 pricing ladder involved a payment by BT to the CP and might therefore be said to represent an Operator service, and that at the next rung up no payment was due either way, which made it difficult to say whether it represented an Operator service or a BT service.\nIt might, thought Lloyd LJ, be a matter of chance which clause applied.\nHe regarded this as a reason for treating BTs right to vary its charges under Clause 12.2 as being of very limited importance.\nMr Daniel Beard QC, who appeared for BT, declined to go into this question at all, and there was little argument upon it even after the Court called for further submissions on the point.\nIn my opinion we need not enter into it either, because it is irrelevant.\nClause 12 is concerned with variations proposed by BT to charges for a BT service.\nThe fact a variation proposed by BT comprises a tariff in which some payments for the BT service are negative or nil while others are positive does not alter the character of the tariff as a scheme of charges for the BT service, or take it outside Clause 12.\nThe only variations before us are those proposed by BT under Clause 12.\nWe are not concerned with the effect of Clause 13.\nThere is no obvious reason why Ofcoms treatment of the two cases should necessarily be the same notwithstanding differences between the relevant contractual provisions.\nI am therefore disinclined to attach much practical importance in the present case to the differences between them.\nDifficult questions may arise in a case where the Article 8 objectives neither preclude nor require a variation and the relevant party has no contractual right to require one.\nThe resolution of those questions must await a case in which they arise.\nThe welfare test\nLeaving aside Principle 3, which it is now common ground was satisfied, the sole basis on which Ofcom rejected the new charges was that the welfare test having been inconclusive, it had not been demonstrated that BTs new schedule of charges would produce consumer benefits.\nIn my opinion, this was wrong in principle, for substantially the reasons given by the CAT.\nBT were contractually entitled to vary their charges unless the proposed variations were inconsistent with the Article 8 objectives, including the objective of ensuring consumer benefit in accordance with Article 8.2(a).\nOfcom have not found that they were inconsistent with those objectives.\nThey have found that they would produce direct and indirect consumer benefits of unquantifiable value, and that these benefits might or might not be exceeded by disbenefits arising from the attempts of mobile network operators to increase revenue in other directions.\nThe latter factor was found by the CAT to be essentially unknown.\nIn my opinion, it is not consistent with either the contract or the scheme of the Directives for Ofcom to reject charges simply because they might have adverse consequences for consumers, in the absence of any reason to think that they would.\nIt is not consistent with the contract because it prevents BT from exercising its discretion to alter its charges in circumstances where there is no reason to suppose, and Ofcom has not found, that the limits of that discretion have been exceeded.\nIt is inconsistent with the scheme of the Directives because it involves applying an extreme form of the precautionary principle to a dynamic and competitive market, in a manner which is at odds with the Directives market-oriented and essentially permissive approach.\nLogically, given the inherent difficulty of forecasting the extent of any direct or indirect effects, and the practical impossibility of forecasting the mobile tariff package effect, it would rule out any increases in termination charges other than those justified by reference to underlying costs.\nOn this point, therefore, I think that the CAT were right and that the Court of Appeal were wrong to overturn them.\nIn its submissions on the appeal, Ofcom submitted that the degree of risk which is acceptable must be related to the gravity of the adverse effect if the risk materialises.\nIt expressed concern that it should not, for example, be inhibited from blocking a price variation which on a balance of probabilities was unlikely to be adverse, but which if things went wrong would be catastrophic.\nI agree.\nThis would be an example of a case where the existence of the risk was itself adverse to the interests protected by Article 8.\nBut on the facts found by Ofcom and the CAT, we are a long way from that kind of situation in the present case.\nIt is right to add that if and when sufficiently adverse effects were to materialise at some point in the future, Ofcom has power to intervene to address them at that stage.\nAnti-competitive effect of price control\nThe Court of Appeals second reason for thinking that it was for BT to demonstrate positively that there would be consumer benefits from the proposed changes to their charging structure was that they disagreed with the CATs emphasis on the anti-competitive effect of preventing the introduction of innovative charging structures.\nThe Court of Appeal did not suggest that it was economically mistaken.\nBut they considered that too much weight had been attached to it by the CAT.\nIn their view, this was a matter of regulatory policy.\nSince Ofcom was the regulator and it was exercising a regulatory function in resolving the present dispute, the CAT should not have interfered with their conclusion unless Ofcom erred in principle.\nThe Court of Appeal thought that since the CAT substantially agreed with Ofcoms conclusion on the welfare test, there was no error of principle.\nI think that in this respect also, the Court of Appeal was wrong.\nIn the first place, as I have explained, in resolving this particular dispute, Ofcom was not exercising a regulatory function, but resolving a dispute under the unchallenged terms of an existing agreement.\nBut the main problem about the Court of Appeals view is a more fundamental one.\nAccording to the CATs analysis, the effect of not allowing BT to introduce innovative charging structures was itself anticompetitive because innovative pricing structures are an effective mode of competing.\nThis was clearly a relevant consideration, even if it was not a conclusive one: see Article 8.2(b) of the Framework Directive.\nIt was not a consideration taken into account by Ofcom.\nSince the right to introduce the proposed pricing package brought benefits for competition, the mobile network operators should have to justify their demand that the package should be rejected by pointing to some countervailing detriments to consumers disclosed by the welfare test if it were to be accepted.\nAn inconclusive welfare test could not be enough for this purpose.\nThe CAT was hearing an appeal by way of rehearing on the merits.\nTheir conclusion about the anti-competitive effects of restricting price changes and the weight to be attached to it was a factual judgment which it was perfectly entitled to make.\nIt was, moreover, an economic judgment by an expert tribunal which had received a substantial amount of additional evidence, including economic evidence.\nSince appeal lay to the Court of Appeal only on points of law, the CATs findings on the distortion of competition liable to result from the rejection of the new charging structure were not open to rejection on appeal.\nInappropriateness of restricting prices in the absence of significant market power\nThese considerations are enough to resolve the present dispute in favour of BT.\nIt is therefore unnecessary to consider the CATs third reason for requiring the mobile network operators to show a distinct disbenefit to consumers in order to justify rejecting a proposed change to interconnection charges.\nThis was that the rejection of BTs proposed charges amounted to imposing price control on an entity such as BT which had not been designated as having significant market power in a relevant market.\nThis, it was argued, was wrong in principle because there was no power under the Directives and the Act to regulate the prices of a firm without such power.\nBT put this point at the forefront of their submissions.\nFor reasons which were never entirely clear but may have to do with their commercial and regulatory strategies, they were anxious to avoid relying on BTs rights under the Interconnection Agreements or adopting those parts of the CATs reasoning which were based on them, and instead sought to obtain a ruling that the Common Regulatory Framework can never authorise Ofcom to reject a price variation unless it would leave an efficient operator unable to cover its costs.\nI will only say that as at present advised I am not convinced by this.\nIt seems to me to be irrelevant to the question on which this appeal turns, namely whether BT must positively demonstrate consumer benefit if they are to justify their proposed charges.\nMoreover, the fact that BT does not have significant market power in a relevant market does not mean that the promotion of competition, which is included among the Article 8 objectives, is irrelevant to a dispute about charges.\nIt only means that Ofcom may not exercise its regulatory power to control prices.\nOfcom has not purported to do this.\nThere is an important difference between (i) exercising a regulatory power to impose price control in order to correct market failure or control the abuse of a dominant economic position, and (ii) deciding whether a particular proposed tariff change advances consumer welfare for the purpose of determining whether there is a right to introduce it.\nA hypothetical alternative analysis\nIt will be apparent that I do not accept the basic conceptual framework within which the Court of Appeal reviewed these questions.\nIt is, however right, in view of the way that the argument went and in the light of suggestions that there should be a reference to the Court of Justice of the European Union, to point out that the result would have been the same even if Lloyd LJ had been right to regard Ofcoms dispute resolution functions as purely regulatory and the interconnection terms as being unimportant.\nThe whole scheme of the Directives is to leave the arrangements for interconnection to the parties unless there are grounds for regulatory intervention.\nThe permissible grounds of regulatory intervention in the case of a CP without significant market power are that the interconnection terms have been framed or are being operated in a manner which is inconsistent with end-to-end connectivity or conflicts with the Article 8 objectives.\nIf the result of the welfare test and the competition test is that there is no positive reason to believe that the effects will be adverse, there is no justification for regulatory intervention.\nReference to the Court of Justice of the European Union\nIf this appeal turned on the point about the absence of significant market power which BT put at the forefront of their submissions (see paragraphs 47-8 above), it would in my view have been appropriate to refer that point to the CJEU before determining it.\nAs it is, I would decide the appeal on less controversial grounds, and I do not consider that a reference is appropriate.\nThe recognition that the interconnection terms are the starting point does not itself warrant a reference, since the centrality of the interconnection terms in the scheme of the Directives is obvious and no convincing reason has been put forward by any of the parties or interveners for ignoring them.\nIn any event, for the reasons that I have given, the outcome would be the same even on a purely regulatory analysis.\nLeaving aside Mr Beards argument about the absence of significant market power, there is no dispute about the Article 8 criteria themselves.\nUltimately, the problem which the Respondents have faced on this appeal is that the CATs economic analysis of the facts was that there was no reason to anticipate a net adverse effect engaging that Article.\nConclusion\nIn my opinion there was no justification for the Court of Appeal to set aside the careful analysis of the CAT on a matter lying very much within its expertise.\nI would accordingly allow this appeal.\nCounsel will be invited to make written submissions on the form of order unless this can be agreed.\nIn my opinion there was no justification for the Court of Appeal to set aside the careful analysis of the CAT on a matter lying very much within its expertise.\nI would accordingly allow this appeal.\nCounsel will be invited to make written submissions on the form of order unless this can be agreed.\n","output":"These appeals arise out of a dispute between British Telecommunications Plc (BT), and four mobile network operators.\nThe dispute is about the termination charges which BT is entitled to charge to mobile network operators for putting calls from the latters networks through to BT fixed lines with associated non geographic numbers beginning in 08.\nIn 2009 BT notified mobile network operators of a proposal of a revised scheme of termination charges for 08 numbers.\nThe defining feature of the new scheme was that mobile network operators would be charged at a rate which varied according to the amount which the originating network charged the caller.\nThe higher the charges to the caller, the greater the termination charge.\nThe new scheme was rejected by the four mobile net operators party to these appeals.\nThe issue was submitted to the Office of Communications (Ofcom) under a statutory dispute resolution procedure.\nA decision of Ofcom can be appealed to the Competition Appeal Tribunal (CAT).\nAppeals from the CAT to the Court of Appeal can be brought on points of law only.\nOfcom decided that BT should not be allowed to introduce the new charging scheme because the charges were not fair and reasonable.\nThis conclusion was based on Ofcoms view that the proposed changes were not sufficiently likely to provide benefits to consumers (the welfare test).\nThe CAT overturned Ofcoms decision and decided that BT should be able to introduce the new regime.\nThe Court of Appeal restored the original decision of Ofcom.\nThe Supreme Court unanimously allows the appeal and restores the order of the CAT.\nLord Sumption gives the judgment of the court.\nThe Court of Appeal, finding that it was for BT to justify its charges, had rejected the CATs determination for three reasons, each of which the Supreme Court addresses in its judgment.\nFirst, the Court of Appeal held that the CAT had been wrong to treat BT as having a prima facie right to change its charges, which needed to be displaced.\nIt found that BT had no more than a right to do so subject to the determination of Ofcom if another party objected [30].\nThe Supreme Court notes that where, as in this case, Ofcom is resolving a dispute about a proposed variation of charges under an existing interconnection agreement, it is performing a mixture of adjudicatory and regulatory functions.\nThe terms of the interconnection agreement are the necessary starting point for this process.\nWhere the terms of the contract permit variation, Ofcom should give effect to that variation unless it would be inconsistent with its regulatory objectives, including under the welfare test [31 34].\nClause 12 of BTs Standard Interconnect Agreement confers a discretion on BT to unilaterally fix or vary its charges, but only within the limits fixed by the objectives of the regulatory environment imposed on it [3637].\nBTs power to set its own charges is subject to any order, direction, determination or consent of Ofcom.\nHowever, Ofcom could not just do what it liked.\nIts function was to determine whether BT had exceeded the limits of its contractual discretion [38].\nIn this case, Ofcom has not found that the variation to the charges was inconsistent with the regulatory objectives, including the welfare test.\nOfcom cannot reject the proposed charges simply because they might have adverse consequences for consumers, in the absence of any reason to think that they would [4244].\nSecondly, the Court of Appeal held that the CAT had been wrong to attach weight to their view that a restraint on BTs freedom to set its own charges would itself distort competition.\nThe Supreme Court disagrees with the Court of Appeal for three reasons.\nFirst, Ofcom was not exercising a regulatory function, but resolving a dispute under the unchallenged terms of an existing agreement.\nSecondly, the CAT was entitled to attach weight to the value of innovative charging structures as a form of competition.\nThirdly, the CATs conclusion about the anti competitive effects of restricting price changes was a factual judgment.\nSince appeal lay to the Court of Appeal only on points of law, the CATs findings on the distortion of competition liable to result from the rejection of the new charging structure were not open to appeal [4647].\nThe Court of Appeal held that the CAT had been wrong to attach weight to the fact that BT, not having significant market power in a relevant market, was not subject to ex ante control of its prices on competition grounds.\nGiven the reasoning on the other points, the Supreme Court considers it unnecessary to address this point in detail.\nIt does however note that the fact that BT does not have significant market power in a relevant market does not mean that the promotion of competition is irrelevant to a dispute about charges.\nIt only means that Ofcom may not exercise its regulatory power to control prices [4849].\n","id":64}
{"input":"The question in this appeal is what is the true construction of the expression property which is for the time being in use or intended for use for commercial purposes in section 13(4) of the State Immunity Act 1978 (the Act).\nThe facts\nOn 9 September 1988 the appellant (SerVaas), which is a company incorporated in Indiana, entered into an agreement (the Agreement) with the Iraqi Ministry of Industry (the Ministry) for the supply of equipment, machinery and related services required for the commissioning of a state owned copper and brass processing factory in Iraq.\nOn 2 August 1990 Iraq invaded Kuwait and on 4 August 1990 the assets of Rafidain Bank (Rafidain) in the United Kingdom were frozen in accordance with the United Nations (UN) sanctions regime established under UN Security Council Resolution 661.\nOn 13 August 1990 SerVaas terminated the Agreement and on 25 January 1991 it commenced proceedings in the Paris Commercial Court against the Ministry in order to recover money due to it under the Agreement.\nOn 21 February 1991 provisional liquidators (the Provisional Liquidators) were appointed in respect of Rafidain on a winding up petition presented by the Bank of England.\nOn 16 April 1991 the Paris Commercial Court gave judgment in default in favour of SerVaas in the sum of US$14,152,800 (the Judgment) in respect of money due under the Agreement.\nOn 10 July 1991 the Judgment was recognised in the Netherlands and shortly thereafter SerVaas recovered US$966,515 by partial enforcement of the Judgment in the Netherlands against Iraqs assets.\nOn 1 October 1991 the judgment was recognised in Germany and on 2 April 1992 Mummery J ordered that the provisional liquidation be limited to those assets of Rafidain situated in England and Wales.\nOn 4 June 1996 the Bank of Englands petition was adjourned generally.\nIn July 2002 SerVaas received US$6,736,285 from the UN Claims Commission by way of compensation for losses caused by Iraq as a result of the invasion of Kuwait.\nIn May 2003 the regime of Saddam Hussein in Iraq fell.\nOn 22 May 2003 the Security Council passed Resolution 1483 which established the Development Fund for Iraq (DFI).\nOn 28 July 2003 Lewison J made an order permitting the Provisional Liquidators to collect the assets of Rafidains London Branch and to agree claims against Rafidain.\nOn 21 November 2004 Iraq made a debt cancellation agreement with government creditors comprising the Paris Club.\nIn December 2004 Iraq began a process of debt restructuring with its commercial creditors and the creditors of other specified Iraqi entities, including Rafidain, under the auspices of the Iraq Debt Reconciliation Office (the IDRO Scheme).\nOn 26 July 2005 Iraq announced an offer to repurchase claims from the commercial creditors of specified Iraqi debtors, including Rafidain, where claims arose before 6 August 1990.\nIn May 2006 Iraq issued an invitation to tender claims for cash purchase and for exchange.\nThereafter Iraq took assignments of certain debts owed to Rafidains creditors by Rafidain in accordance with the IDRO Scheme.\nAs was its right, SerVaas did not register an interest in and has chosen not to participate in the IDRO Scheme.\nOn 3 April 2008 Henderson J sanctioned a scheme of arrangement for the distribution of assets held by the Provisional Liquidators to Rafidains creditors (the Scheme).\nBy 18 August 2009 Iraq had submitted claims in the Scheme which were admitted in the sum of US$253.8 million (the Admitted Claims).\nThe original commercial debts constituting the Admitted Claims were acquired by Iraq by way of assignment from existing creditors of Rafidain.\nOn 4 November 2009 SerVaas obtained an order registering the Judgment in England and Wales against the Ministry and Iraq under the Civil Jurisdiction and Judgments Act 1982 (the Registration Order).\nIt was served on Iraq on 2 May 2010 and became enforceable against the Ministry and Iraq in England and Wales on 2 September 2010.\nOn 11 October 2010 Iraqs US lawyers responded to a request from the Scheme Administrators by stating that the dividend payment on the Admitted Claims should be paid to the account in the name of the DFI with the Federal Reserve Bank in New York.\nAs at 18 November 2010, the debt due in respect of the Judgment is said to have amounted to US$34,481,200.49, inclusive of interest and allowable costs.\nThe proceedings\nIn the meantime on 7 October 2010 Mann J granted an application by SerVaas lifting the stay on proceedings against Rafidain and enjoining Rafidain, the Provisional Liquidators and the Scheme Administrators from making any payment to Iraq under the Scheme in respect of the Admitted Claims or recognising or giving effect to any assignment or transfer of the Admitted Claims to a third party which would have the effect of reducing the amount payable to Iraq to an amount less than the Judgment debt.\nOn 13 October 2010 SerVaas issued an application for a Third Party Debt Order (the TPDO Application) against Rafidain in relation to the debt payable to Iraq by Rafidain by way of dividend under the Scheme, seeking an order that Rafidain pay to SerVaas such part of the monies otherwise payable to Iraq as was necessary to satisfy the judgment.\nThat injunction has been variously continued until now.\nIn the meantime on 11 November 2010 Iraq issued an application to discharge the injunction on the ground that monies due to Iraq by Rafidain were immune from execution by virtue of section 13(2)(b) of the Act and\/or article 9(1) of the Iraq (United Nations Sanctions) Order 2003 (SI 2003\/1519) (the 2003 Order).\nOn 30 November 2010 the Charg dAffaires and Head of Mission of the Embassy of Iraq in London signed a certificate (the Certificate) in these terms: 1.\nThe Admitted Scheme Claims of Iraq under the Scheme [of arrangement in respect of Rafidain] have never been used, are not in use, and are not intended for use, by or on behalf of the State of Iraq for any commercial purpose. 2.\nAny assets or distributions received in respect of any Admitted Scheme Claim of Iraq under the Scheme are not intended for use by or on behalf of the State of Iraq for any commercial purpose. 3.\nThe State of Iraq has directed the Scheme Administrators, and intends to continue to so direct the Scheme Administrators, to transfer any assets or distributions in respect of any Admitted Scheme Claim of Iraq under the Scheme to the Development Fund for Iraq.\nFollowing a hearing on 3 December 2010, Arnold J dismissed the TPDO Application on 14 December 2010 holding that the Admitted Claims were immune from execution by reason of section 13(2)(b) and (4) of the Act because they were not property which was for the time being in use or intended for use for commercial purposes within the meaning of section 13(4).\nIraq's submission that the provisions of the 2003 Order were engaged was dismissed.\nArnold J granted both sides permission to appeal.\nOn 18 May 2011 the Court of Appeal heard SerVaas appeal on the section 13(2)(b) point, reserved judgment against Arnold J's decision and adjourned generally Iraq's appeal on the 2003 Order point with liberty to restore.\nOn 3 November 2011, by a majority (Stanley Burnton and Hooper LJJ, Rix LJ dissenting), the Court of Appeal dismissed SerVaas' appeal and refused permission to appeal to this Court, which subsequently granted permission.\nThe only party other than SerVaas to have taken an active part in the proceedings to date has been Iraq.\nThe issues\nThe issues in this appeal are not concerned with a states immunity from suit, which is governed by section 3 of the Act, but (as stated in the Statement of Facts and Issues) are solely concerned with the scope of its immunity from execution of a judgment given against it, which is governed by section 13(2)(b) and 13(4).\nSection 13(2)(b) provides, so far as relevant: (2) Subject to subsection (4) below (b) the property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest detention or sale.\nSection 13(4) provides, so far as relevant: (4) Subsection (2)(b) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes; Section 17, which, like section 13, is in Part I of the Act, provides so far as relevant that in Part I of the Act: commercial purposes means purposes of such transactions or activities as are mentioned in section 3(3) above; Section 3(3) defines commercial transaction as meaning: (a) any contract for the supply of goods or services; (b) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation; and (c) any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority.\nSection 13(5) provides: (5) The head of a State's diplomatic mission in the United Kingdom, or the person for the time being performing his functions, shall be deemed to have authority to give on behalf of the State any such consent as is mentioned in subsection (3) above and, for the purposes of subsection (4) above, his certificate to the effect that any property is not in use or intended for use by or on behalf of the State for commercial purposes shall be accepted as sufficient evidence of that fact unless the contrary is proved.\nIt is common ground: (a) that the monies payable under the Scheme to Iraq are a debt and a chose in action and as such that they are property within the meaning of section 13(2)(b) of the Act; (b) that Iraq's stated intention is to transfer the proceeds of the Admitted Claims to the DFI; (c) that, by virtue of section 13(5), the Certificate creates a rebuttable presumption that the Admitted Claims are not in use or intended for use for commercial purposes; (d) that the onus lies on SerVaas to show a real prospect that it can rebut that presumption; and (e) that the debts were intended for use for sovereign and not commercial purposes.\nThese proceedings are summary proceedings, so that, as identified in the Statement of Facts and Issues, the particular issue to be resolved in the appeal is whether there is any real prospect of SerVaas rebutting the presumption created by the Certificate that Iraq's right to receive payment of dividends from the Scheme in respect of the Admitted Claims as at 13 October 2010 was property which was not for the time being in use for commercial purposes within the meaning of section 13(4) of the Act.\nThe questions for decision are thus whether (a) the Admitted Claims were in use for the purpose of a transaction or activity in which Iraq engaged otherwise than in the exercise of its sovereign authority for the purpose of section 3(3)(c) of the Act; or (b) the Admitted Claims were (to the extent that they were acquired by Iraq in exchange for bonds) in use for the purpose of a loan or other transaction for the provision of finance or of any other financial obligation for the purpose of section 3(3)(b) of the Act.\nDiscussion\nIt is not in dispute that the judgment which SerVaas seeks to enforce arises from the Agreement, that it is a commercial contract and that Iraq is liable for the debts of the Ministry.\nNor is it in dispute that, although incorporated in Iraq and state controlled, Rafidain conducted business as a commercial bank.\nIt was not and is not Iraqs central bank.\nMoreover the Admitted Claims are all claims arising from commercial transactions between Rafidain and the third parties involved and are not claims arising from commercial transactions between Rafidain and Iraq.\nThey are simply debts previously owed by Rafidain to their commercial creditors which have now been transferred to Iraq.\nRafidain, although placed in liquidation in England in 1991, is not in liquidation elsewhere and continues to trade outside the jurisdiction of the English court.\nThe Scheme is a mechanism for distributing the assets of Rafidains London branch to its creditors.\nThe Admitted Claims in respect of which dividends are, subject to the TPDO application, payable to Iraq total US$253.8 million.\nBut for the intervention by SerVaas, the US$253.8 million would have been transferred to the account of DFI in New York within a matter of days of that intervention in accordance with the instruction of 11 October 2010 referred to above.\nThe dividend rate under the Scheme is 56 per cent, giving rise to a total dividend payable to Iraq of US$142.1 million.\nIn essence the case for SerVaas is that the nature of the transaction which gave rise to Rafidains liability was entirely commercial.\nThe Admitted Claims and the right to a dividend contribution are properly described as in use, in order either to obtain payment or to complete the underlying commercial transactions giving rise to the claim or alternatively as part of the transaction pursuant to which Iraq acquired the Admitted Claims, the nature of which was not a sovereign act.\nThere is an issue between the parties as to whether, as SerVaas say, Iraq bought the debts in order to make a profit and as part of a commercial venture or whether, as Iraq says, they were bought in the exercise of sovereign authority as part of a huge restructuring of debts incurred in the Saddam Hussein era.\nArnold J did not resolve that issue.\nHis conclusions were concisely summarised thus in para 29: In my judgment SerVaas has no real prospect of successfully rebutting the presumption created by the Certificate for the reasons given by counsel for Iraq.\nIn my view SerVaass argument wrongly conflates the transactions by which Iraq acquired the debts that are the subject of the Admitted Claims with the intended use of those assets.\nIraq is not presently using those assets, but intends to pay the dividends on them to the DFI.\nThat property is not being used to provide finance to Iraq, and it is immaterial that that property was acquired by means of bonds in the cases where the consideration took the form of bonds.\nNor is the property being used or intended to be used for transactions otherwise than in the exercise of sovereign authority.\nIraq has decided to transfer the distributions to the DFI in the exercise of its sovereign authority, albeit constrained in this respect by Resolution 1483, for the purposes set out in the resolution.\nI therefore conclude that Iraqs Admitted Claims are entitled to immunity from execution by virtue of section 13(2)(b) of the 1978 Act.\nThe majority of the Court of Appeal held that Arnold J was correct to hold that the origin of the debts was irrelevant.\nAs Stanley Burnton LJ put it at para 32, the fact that the property, here a debt, arises from a commercial transaction does not inform the question whether that property was, at the relevant time, used for a commercial purpose.\nAs I read his judgment, Stanley Burnton LJ did not express a view on the question whether the origin of the debts was commercial but held that, at the relevant time, the debts were not being used at all and that it followed that SerVaas could not discharge the burden of showing that they were in use for commercial purposes.\nAt para 39 he expressly approved the conclusions reached by Arnold J in para 29 of his judgment quoted above.\nHooper LJ agreed with Stanley Burnton LJ but went further.\nHe said at para 60 that in his view the evidence pointed overwhelmingly against the conclusion that Iraq bought the debts in order to make a profit.\nThe debts, he said, were bought by Iraq, in the exercise of its sovereign authority, as part of a huge restructuring of debts incurred in the Saddam Hussein era.\nAs appears below, it is not necessary to resolve this question in order to determine this appeal.\nRix LJ dissented on the ground that the property in question, namely the Admitted Claims giving rise to a dividend (not the dividend itself), was (as he put it at para 83) very arguably for the time being in use for commercial purposes, so that the issue should be sent for trial.\nAs I see it, the central question in this appeal is whether the nature of the origin of the debts is relevant to the question whether the property in question was in use for commercial purposes.\nIn my opinion it is not.\nThis conclusion is based upon the language of section 13(4).\nIt is also informed by the decision of the House of Lords in Alcom Ltd v Republic of Columbia [1984] AC 580 (Alcom).\nIn addition we were referred to three decisions at first instance and, in particular, to a number of decisions of various courts of appeals in the United States and to a decision of the Court of Appeal in Hong Kong.\nAs to the language of section 13(4), I would accept Mr Howard QCs submission on behalf of Iraq that the expression in use for commercial purposes should be given its ordinary and natural meaning having regard to its context.\nI would further accept his submission that it would not be an ordinary use of language to say that a debt arising from a transaction is in use for that transaction.\nParliament did not intend a retrospective analysis of all the circumstances which gave rise to property, but an assessment of the use to which the state had chosen to put the property.\nThe language of section 13(4) is to be contrasted with other parts of the Act.\nIt is, for example, to be contrasted with section 3(1), which refers to proceedings relating to a commercial transaction, and section 10, which refers to claims in connection with a ship.\nIn enacting section 13(4), Parliament could have referred to property that related to a commercial transaction, or arose in connection with a commercial transaction as being susceptible to enforcement.\nIt chose not to do so, which suggests that it intended a difference in meaning.\nProperty will only be subject to enforcement where it can be established that it is currently in use or intended for use for a commercial transaction.\nIt is not sufficient that the property relates to or is connected with a commercial transaction.\nI would accept Mr Howards submission that this is consistent with the different treatment of the two categories of immunity in the Act.\nI turn to the authorities.\nIn Alcom the House of Lords held that money in a bank account used to meet the expenditure incurred in the day to day running of Colombias diplomatic mission was not within the exception.\nLord Diplock (with whom the other members of the House agreed) said this at pages 602F 603D and 603H 604E: The crucial question of construction for your Lordships is whether a debt which has these legal characteristics falls within the description contained in section 13(4) of property which is for the time being in use or intended for use for commercial purposes.\nTo speak of a debt as being used or intended for use for any purposes by the creditor to whom the debt is owed involves employing ordinary English words in what is not their natural sense, even if the phrase commercial purposes is given the ordinary meaning of jure gestionis in contrast to jure imperii that is generally attributed to it in the context of rights to sovereign immunity in public international law; though it might be permissible to apply the phrase intelligibly to the credit balance in a bank account that was earmarked by the state for exclusive use for transactions into which it entered jure gestionis.\nWhat is clear beyond all question is that if the expression commercial purposes in section 13(4) bore what would be its ordinary and natural meaning in the context in which it there appears, a debt representing the balance standing to the credit of a diplomatic mission in a current bank account used for meeting the day to day expenses of running the mission would fall outside the subsection.\nCommercial purposes, however, is given by section 17(1) the extended meaning which takes one back to the comprehensive definition of commercial transaction in section 3(3).\nParagraph (a) of this tripartite definition refers to any contract for the supply of goods or services, without making any exception for contracts in either of these two classes that are entered into for purposes of enabling a foreign state to do things in the exercise of its sovereign authority either in the United Kingdom or elsewhere.\nThis is to be contrasted with the other paragraph of the definition that is relevant to the instant case, paragraph (c), which on the face of it would be comprehensive enough to include all transactions into which a state might enter, were it not that it does specifically preserve immunity from adjudicative jurisdiction for transactions or activities into which a state enters or in which it engages in the exercise of sovereign authority, other than those transactions that are specifically referred to either in paragraph (a) or in paragraph (b), with the latter of which the instant appeal is not concerned.\nMy Lords, the decisive question for your Lordships is whether in the context of the other provisions of the Act to which I have referred, and against the background of its subject matter, public international law, the words property which is for the time being in use or intended for use for commercial purposes, appearing as an exception to a general immunity to the enforcement jurisdiction of United Kingdom courts accorded by section 13(2) to the property of a foreign state, are apt to describe the debt represented by the balance standing to the credit of a current account kept with a commercial banker for the purpose of meeting the expenditure incurred in the day to day running of the diplomatic mission of a foreign state.\nSuch expenditure will, no doubt, include some moneys due under contracts for the supply of goods or services to the mission, to meet which the mission will draw upon its current bank account; but the account will also be drawn upon to meet many other items of expenditure which fall outside even the extended definition of commercial purposes for which section 17(1) and section 3(3) provide.\nThe debt owed by the bank to the foreign sovereign state and represented by the credit balance in the current account kept by the diplomatic mission of that state as a possible subject matter of the enforcement jurisdiction of the court is, however, one and indivisible; it is not susceptible of anticipatory dissection into the various uses to which moneys drawn upon it might have been put in the future if it had not been subjected to attachment by garnishee proceedings.\nUnless it can be shown by the judgment creditor who is seeking to attach the credit balance by garnishee proceedings that the bank account was earmarked by the foreign state solely (save for de minimis exceptions) for being drawn upon to settle liabilities incurred in commercial transactions, as for example by issuing documentary credits in payment of the price of goods sold to the state, it cannot, in my view, be sensibly brought within the crucial words of the exception for which section 13(4) provides.\nIt seemed to me that the whole of that passage merited quoting.\nHowever, the critical point for present purposes is the proposition that the judgment creditor must show that the bank account was earmarked by the state solely for being drawn down upon to settle liabilities incurred in commercial transactions.\nThe essential distinction is between the origin of the funds on the one hand and the use of them on the other.\nAs Stanley Burnton LJ said in the instant case at para 34, it was not suggested by Lord Diplock in Alcom that if the moneys in the bank account resulted from commercial transactions, that might be relevant to the question whether the account was used or intended for use for commercial purposes.\nWe were referred to three English decisions at first instance.\nThey were AIC Ltd v Federal Government of Nigeria [2003] EWHC 1357 (QB) (Stanley Burnton J), AIG Capital Partners Inc v Republic of Kazakhstan [2005] EWHC 2239 (Comm), [2006] 1 WLR 1420 (Aikens J) and Orascom Telecom Holding SAE v Republic of Chad [2008] EWHC 1841 (Comm) (Burton J).\nThey all focus on present or future use.\nFor example, at para 92(2) of the AIG case Aikens J focused on whether the debts were put to use for the purposes of a commercial transaction within the meaning of section 3(3) of the Act.\nI note in passing that in the AIC case Stanley Burnton J noted at para 56, after referring to Alcom, that evidence of recent use of an account wholly for commercial purposes over a significant period of time may lead to the conclusion that the account is used or intended for use wholly for commercial purposes; but the older the use in evidence, the weaker the inference that may be drawn as to the use or intended use of the account.\nThe focus is throughout on actual use.\nIn para 58 he noted that there was evidence that the relevant bank account had been dormant and said that, if an account was dormant for at least 18 months, it cannot be said to be presently used for any relevant purpose, and that the previous use was weak evidence of a present intention as to its use.\nIt was an example of a case, as he concluded here, where the evidence was insufficient to disprove the statement in the Certificate.\nIt was suggested on behalf of SerVaas that there is a relevant distinction for present purposes between the current use of a debt and the current use of a bank account.\nFor my part, I would not accept that there is such a distinction.\nIn each case the question is the same, namely whether the relevant property is in use or is intended for use for commercial purposes.\nThe American cases draw the same distinction between the source of the property and its use.\nThe immunity of states from execution in the United States is governed by the Foreign Sovereign Immunities Act 1976 28 USC 1602 1611 (the FSIA), which was a leading precursor of the Act. 1610(a) of the FSIA provides that, where other specific conditions are satisfied, courts in the United States may execute against property in the United States used for a commercial activity in the United States.\nThere are a number of decisions of courts of appeals in different US states on the true construction of that provision.\nThe leading case is perhaps Connecticut Bank of Commerce v Republic of Congo, 309 F 3d 240 (US Court of Appeals, 5th Cir, Texas, 2002).\nConnecticut Bank had acquired the rights to a valid London judgment against the Congo for defaulting on a loan agreement.\nIt obtained a default judgment in New York in relation to the London judgment debt.\nThe Bank then sought to attach various debts owed by a group of Texas oil companies to the Congo.\nThe debts constituted, inter alia, royalty obligations by the oil companies for activities connected with the exploration for and the sale of the Congos oil.\nThe court held that the debts owed by the oil companies were not propertyused for a commercial activity within the meaning of 1610(a).\nThe majority opinion in the 5th Circuit Court of Appeals was given by Judge Garza.\nHe said (at p 251, paras 19 22): What matters under the statute is what the property is used for, not how it was generated or produced.\nIf property in the United States is used for a commercial purpose here, that property is subject to attachment and execution even if it was purchased with tax revenues or some other noncommercial source of government income.\nConversely, even if a foreign states property has been generated by commercial activity in the United States, that property is not thereby subject to execution or attachment if it is not used for a commercial activity within our borders.\nThe district court (and the litigants) have focused on the question of whether the Congos joint venture with the garnishees, which gave rise to the royalty and tax obligations that the Bank want to garnish, was a commercial activity in the United States.\nThis was the wrong question to consider.\nWhat matters under the statute is not how the Congo made its money, but how it spends it.\nThe amenability of these royalties and taxes to garnishment depends on what they are used for, not on how they were raised.\nJudge Garza added (at p 254, paras 36 and 37 39): The phrase used for in 1610(a) is not a mere syntactical infelicity that permits courts to look beyond the use of property, and instead try to find any kind of nexus or connection to a commercial activity in the United States.\nThe statute means what it says: property of a foreign sovereignmay be executed against only if it is used for a commercial activity.\nThat the property is revenue from or otherwise generated by commercial activity in the United States does not thereby render the property amenable to execution.\nTo use property for a commercial activity, within the ordinary meaning of use, would be to put the property in the service of the commercial activity, to carry out the activity by means of the property.\nHere, the royalty obligations in question represent the revenue, the income, from an allegedly commercial activity.\nIn ordinary usage, we would not say that the revenue from a transaction is used for that transaction.\nFinally, Judge Garza referred to the Act (at p 256, para 42).\nHe noted the distinction in the Act between the jurisdictional immunity in section 3(1), which provides that a state is not immune as respects proceedings relating to a commercial transaction and section 13(4), which, as he put it, makes explicit that the mere relationship to a commercial activity does not suffice to permit execution, the property must for the time being be in use or intended for use for a commercial purpose.\nHe concluded that the Act parallels the FSIA on the footing that: it allows jurisdiction based on mere relationship to a commercial activity, but very clearly permits execution only depending on the use of the property.\nThe distinction can clearly be seen from the different view of Judge Dennis, who dissented on this part of the case.\nHe said (at p 264): Because the Texas oil companies' obligation to pay royalties to the Congo were necessary and integral to, and therefore used for, the joint venture commercial activity conducted, in substantial part in the United States, by the Congo and the other parties to the joint venture, those royalty obligations fell within the exceptions to immunity from execution provided for by FSIA 1610(a)(1).\nAt page 254 (paras 37 39) Judge Garza, for the majority, rejected that sentence as a non sequitur for this reason: The phrase used for on its face denotes something different and more specific than the phrases integral to or necessary to.\nIt also denotes something distinct (and narrower) than the other phrases the Bank uses in its petition, such as related to or contemplated by.\nThe Connecticut Bank case has been followed in a number of cases in the United States.\nIn Af Cap Inc v Republic of Congo 475 F3d 1080 (US Court of Appeals 9th Circuit, California 2007) the Court of Appeals rejected a submission that the court should determine whether property was used for commercial activity by examining the entire underlying activity that generated the property in question.\nIn doing so it adopted the reasoning in the Connecticut Bank case, contrasting the language used for with the language related to or connected with in other parts of the FSIA.\nA differently constituted 9th Circuit Court of Appeals also adopted the same reasoning in 2007 in Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v Cubic Defense Systems Inc 495 F3d 1024, 2007.\nThe case had similarities with the instant case.\nThe Court said at pp 1036 1037 (para 6): To satisfy 1610(a), MOD must have used the Cubic judgment for a commercial activity in the United States, and this it has not done.\nWe have recently stated that property is used for a commercial activity in the United States' when it is put into action, put into service, availed or employed for a commercial activity, not in connection with a commercial activity or in relation to a commercial activity.\nAf Cap Inc, 475 F3d at 1091 (emphasis in original).\nCautioning that FSIA does not contemplate a strained analysis of the words 'used for' and commercial activity, we instructed courts to consider[ ] the use of the property in question in a straightforward manner.\nThe Ministry has not used the Cubic judgment as security on a loan, as payment for goods, or in any other commercial activity.\nInstead, Iran intends to send the proceeds back to Iran for assimilation into MOD's general budget.\nBecause repatriation into a ministry's budget does not constitute commercial activity, we hold that the Cubic judgment is not subject to attachment under 1610(a).\nSee also EM Ltd v Republic of Argentina 473 F3d 463 (2nd Circuit, 2007) at p 484 (para 5), where NML was also a claimant.\nThose decisions are strong persuasive authority and, given the close relationship between the language in section 13(4) of the Act and 1610(a) of the FSIA, seem to me to support the meaning of the expression property which is for the time being in use or intended for use for commercial purposes in section 13(4) identified in para 17 above.\nSimilar support is to be found in the decision of the majority on this point in the Court of Appeal in Hong Kong in FG Hemisphere Associates LLC v Democratic Republic of Congo [2010] HKCA 19.\nSee in particular per Yuen JA at para 277 and Stock VP at para 179, where they held that at common law, applying the restrictive principle of immunity from execution, the question was whether the property was to be put to use for a private or commercial purpose.\nAlthough an appeal to the Court of Final Appeal succeeded on the basis that the Congo was entitled to absolute immunity, the reasoning of the majority of the Court of Appeal was not challenged and remains persuasive authority in cases where the restrictive principle of immunity from execution apples.\nOn the facts of the instant case SerVaas cannot show that the Admitted Claims were property in use for a commercial purpose.\nIt does not say that Iraq intended or intends to draw them down for commercial purposes.\nOn the contrary, it accepts that they were intended to be used for sovereign purposes.\nBy section 13(5) of the Act, the burden is on SerVaas to prove that the Certificate that the property is not in use for commercial purposes is not correct.\nIt cannot do so unless it can show that it is entitled to rely upon the source of the Admitted Claims and can show that the source is commercial and not sovereign.\nFor the reasons I have given, I would hold that the source of the Admitted Claims is irrelevant.\nIt follows that it is not necessary to express a view upon the question whether the source is sovereign or commercial.\nIn short, SerVaas cannot show that the debt is or was earmarked (or in use) for being drawn down upon in order to satisfy commercial liabilities.\nIn para 75 Rix LJ said this: . it is difficult to see that the property in question, the admitted claim, has no current use.\nIt is in use in order to secure the scheme dividend.\nOf course, the dividend, when secured, might be put to any of the uses to which money funds might be put, either by being expended or by being invested.\nFor the present, however, until the dividend is paid, the claims obvious use and purpose, I would have thought, was to be the means by which the claims owner, Iraq, seeks to secure its value by way of a dividend in the scheme of arrangement.\nThat is what the commercial debt was bought for in the first place, and, until the scheme of arrangement (or, in its absence, a liquidation) has been brought to fruition, the owner holds the debt for the purpose of seeking payment of its claim.\nFor these purposes, Iraq is just like the holder of any commercial debt.\nAs purchaser of the debt, it merely stands in the shoes of the merchants and other commercial parties who were the original owners of the debt in question.\nIf those parties were still holders of the debt, it would not be said that they held it for no current purpose.\nIt seems to me to be at least highly arguable that Iraq is in the same position.\nOn this basis, the linchpin of Iraqs argument fails.\nFor my part, I would not accept that analysis.\nIt elides the historical origins of the Admitted Claims with their current and future use.\nThe determinative feature, in my view, is the absence of any current or future commercial activity on the part of the state of Iraq.\nIt is common ground that any dividends received from the administrators of Rafidain Bank will be paid to and used by the DFI, which is manifestly not a commercial purpose.\nThe Admitted Claims are simply the means to the end of the dividends.\nThey are nothing more than a legal mechanism by which Iraqs entitlement to receive dividend payments is secured and given effect to.\nIn these circumstances, it is artificial and highly technical to seek to distinguish the Admitted Claims from the dividends that they secure.\nNeither is connected to, or destined for use in, any mercantile or profit making activity by Iraq.\nIt follows that neither can sensibly be described as for the time being in use or intended for use for commercial purposes.\nIt was suggested on behalf of SerVaas that, even if it cannot succeed in relation to the entirety of the Admitted Claims, in so far as the Claims were acquired with bonds, they were in use for a commercial transaction within section 3(3)(b) of the Act, namely a transaction for the provision of finance.\nThe Court of Appeal unanimously rejected this part of SerVaas submissions.\nAs Rix LJ put it at para 81, it was mere background.\nAssuming the expression in use or intended for use in section 13(4) is given the meaning discussed above, I cannot see any basis for reaching a different conclusion in respect of the Admitted Claims acquired with bonds.\nCONCLUSION\nFor these reasons, which are essentially those given by Arnold J and Stanley Burnton LJ, I would dismiss the appeal.\n","output":"On 9 September 1988, the Appellant (SerVaas) entered into an agreement with the Iraqi Ministry of Industry for the supply of equipment, machinery and related services required for the commissioning of a state owned copper and brass processing factory in Iraq.\nOn 2 August 1990 Iraq invaded Kuwait and on 4 August 1990, the assets of Rafidain Bank (Rafidain) in the UK were frozen in accordance with a United Nations sanctions regime.\nOn 13 August 1990 SerVaas terminated the agreement and subsequently commenced proceedings in the Paris Commercial Court against the Ministry to recover money due under the agreement.\nIt gave judgment in favour of SerVaas for US$14,152,800 (the Judgment).\nThe Judgment was recognised in the Netherlands and SerVaas recovered US$966,515 by partial enforcement there against Iraqs assets.\nIn July 2002, SerVaas received US$6,736,285 from the UN Claims Commission by way of compensation for losses caused by Iraq as a result of the invasion of Kuwait.\nIn May 2003, the regime of Saddam Hussein in Iraq fell.\nOn 22 May 2003 the UN Security Council passed Resolution 1483 establishing the Development Fund for Iraq (DFI).\nOn 21 November 2004, Iraq made a debt cancellation agreement with government creditors comprising the Paris Club.\nIn December 2004, Iraq began a process of debt restructuring with its commercial creditors and the creditors of other specified Iraqi entities, including Rafidain under the auspices of the Iraq Debt Reconciliation Office (the IDRO Scheme).\nRafidain, in the meantime, had had a winding up petition presented in respect of it by the Bank of England, in relation to which Provisional Liquidators had been appointed in respect of its UK assets, but which petition had been adjourned generally.\nOn 26 July 2005, Iraq announced an offer to repurchase claims for the commercial creditors of specified Iraqi debtors, including Rafidain, where claims arose before 6 August 1990.\nIn May 2006, Iraq issued an invitation to tender claims for cash purchase and for exchange.\nThereafter Iraq took assignments of certain debts owed to Rafidains creditors by Rafidain in accordance with the IDRO Scheme.\nOn 3 April 2008, a scheme of arrangement for the distribution of assets held by the Provisional Liquidators to Rafidains creditors was sanctioned (the Scheme).\nBy 19 August 2009, Iraq had submitted claims in the Scheme which were admitted in the sum of US$253.8 million (the Admitted Claims).\nThe original commercial debts constituting the Admitted Claims were acquired by Iraq by way of assignment from existing creditors of Rafidain.\nOn 4 November 2009, SerVaas obtained an order registering the Judgment in England and Wales against the Ministry under the Civil Jurisdiction and Judgments Act 1982 (the Registration Order).\nIt was served on Iraq on 2 May 2010 and became enforceable against the Ministry and Iraq in England and Wales on 2 September 2010.\nOn 11 October 2010 Iraqs US lawyers responded to a request from the Scheme Administrators by stating that the dividend payment on the Admitted Claims should be paid to the account in the name of the DFI with the Federal Reserve Bank in New York.\nAs at November 2010, the debt due in respect of the Judgment is said to have amounted to US$34,481,200.49.\nIn the meantime on 7 October 2010 Mann J granted an application by SerVaas lifting the stay on proceedings against Rafidain and made an order preventing Rafidain, the Provisional Liquidators and the Scheme Administrators from making any payment to Iraq under the Scheme in respect of the Admitted Claims or recognising or giving effect to any assignment or transfer of the Admitted Claimant to a third party which would have the effect of reducing the amount payable to Iraq to an amount less than the Judgment debt.\nOn 13 October 2010 SerVaas issued an application for a Third Party Debt Order, that is, an order that the debts payable to Iraq by Rafidain by way of dividend under the Scheme be instead paid to SerVaas insofar as necessary to satisfy the Judgment.\nOn 30 November 2010, the Charg dAffaires and Head of Mission of the Embassy of Iraq in London signed a certificate (the Certificate) that the Admitted Scheme Claims have never been used, are not in use and are not intended to be for use for any commercial purpose.\nIraq applied to discharge the injunction on the ground that monies due to Iraq by Rafidain were immune from execution by virtue of section 13(2)(b) of the State Immunity Act 1978.\nIn the High Court, Arnold J held that the Admitted Claims were immune from execution by reason of s.13(2)(b) and (4) because they were not property which was for the time being in use or intended for use for commercial purposes.\nBy a majority, the Court of Appeal dismissed SerVaas appeal.\nSerVaas appealed to the Supreme Court.\nThe Supreme Court unanimously dismisses the appeal.\nWhether property is for the time being in use or intended for use for commercial purposes within the meaning of s.13(4) of the State Immunity Act 1978 does not depend on whether that property has in the past been used for commercial purposes.\nLord Clarke gives the leading judgment with which Lord Phillips, Lady Hale, Lord Sumption and Lord Reed agree.\nIt was common ground that (a) the monies payable under the Scheme are a debt and a chose in action and as such are property within the meaning of s.13(2)(b); (b) that Iraqs state intention is to transfer the proceeds of the Admitted Claims to the DFI; (c) that, the Certificate creates a rebuttable presumption that the Admitted Claims are not in use or intended for use for commercial purposes; (d) that the onus lies on SerVaas to show a real prospect that it can rebut that presumption; and (e) that the debts were intended for use for sovereign and not commercial purposes.\nAs these are summary proceedings, the issue is whether there is any real prospect of SerVaas rebutting the presumption.\nThe central question in this appeal is therefore whether the nature of the origin of the debts is relevant to the question whether the property in question was in use for commercial purposes.\nIt is not.\nThis conclusion is based on the language of s.13(4) and on previously decided domestic and comparative authority.\nAs to language, s.13(4) should be given its ordinal and natural meaning having regard to its context and it would not be an ordinary use of language to say that a debt arising from a transaction is in use for that transaction.\nParliament did not intend a retrospective analysis of all the circumstances which gave rise to property but an assessment of the use to which the state had chosen to put the property.\nThe language of s.13(4) can also be contrasted with other sections of the Act.\nAs to authority, Lord Diplock in Alstom v Republic of Columbia [1984] AC 580 distinguished between the origin of the funds on the one hand and the use of them on the other.\nVarious decisions of the American Federal courts of appeals and of the Court of Appeal in Hong Kong also support this distinction.\n","id":65}
{"input":"This is another round in the series of important points of law which arise as preliminary issues in actions brought by people who claim to have been wrongfully detained or mistreated by British or American troops in the course of the conflicts in Iraq and Afghanistan.\nThe litigation is being expertly managed by Leggatt J, but so far there have been no trials and so the points of law are being decided mainly on the basis of assumed facts.\nTo summarise the issues which have so far been heard in this court: (1) Mr Rahmatullah is a Pakistani national who was captured by the British forces in Iraq on 28 February 2004, transported to a United States detention facility that same day, and transferred by the US to a detention facility in Afghanistan on 29 March 2004, where he remained until his release on 15 May 2014.\nHe is suing the Ministry of Defence and the Foreign and Commonwealth Office, first in respect of the United Kingdoms own treatment of him, and second in respect of the UKs alleged complicity in his detention and treatment by the United States.\nIn relation to the second aspect of his claim, the UK government has raised the defences of state immunity and foreign act of state.\nThe arguments relating to these defences were heard together with the claims of Mr Belhaj and his wife, Mrs Boudchar, against Mr Jack Straw and a number of UK officials and agencies, for alleged complicity in their rendition by Malaysian, Thai and US officials to Libya and their detention and torture there, where the same defences were raised.\nJudgment is given today: see Belhaj and another (Respondents) v Straw and others (Appellants) and Rahmatullah (No 1) (Respondent) v Ministry of Defence and another (Appellants) [2017] UKSC 3.\nIn relation to the first aspect of his claim, which is based on both the Iraqi law of tort and the UK Human Rights Act 1998, the UK Government has raised the doctrine of Crown act of state in relation to the tort claim, and this judgment is concerned with that doctrine. (2) A large number of Iraqi citizens have made claims similar to that of Mr Rahmatullah in respect of their detention and treatment by UK troops and transfer to the US authorities at various times during the UKs military presence in Iraq.\nIn relation to many of these claims, the UK Government raised the defence that they were statute barred by the Iraqi law of limitation.\nJudgment on that issue was given on 12 May 2016: see Iraqi Civilians v Ministry of Defence [2016] UKSC 25; [2016] 1 WLR 2001.\nThe UK Government has also raised the doctrine of Crown act of state.\nThree of the claimants, known as XYZ, ZMS and HTF, have been chosen as representative for the purpose of deciding this issue. (3) Mr Serdar Mohammed is an Afghan national who was captured in a planned International Security Assistance Force (ISAF) operation targeting a senior Taliban commander on 7 April 2010.\nHe was detained by British troops until 25 July 2010 when he was transferred into Afghan custody.\nHe was subsequently tried, convicted and sentenced to ten years imprisonment for offences relating to the insurgency in Afghanistan.\nHe too claims that his detention was unlawful both under the Afghan law of tort and the Human Rights Act 1998.\nIn relation to his Human Rights Act claim, the UK Government argues that his detention was not in breach of article 5 of the European Convention on Human Rights, because article 5 has to be modified to take account of detention during armed conflict which is permitted, either under resolutions of the United Nations Security Council or under International Humanitarian Law.\nThe argument about article 5 was heard together with a similar argument raised against the Ministry of Defence by Mr Al Waheed, an Iraqi national detained in the course of the conflict in Iraq.\nJudgment is given today: see Abd Ali Hameed Al Waheed (Appellant) v Ministry of Defence (Respondent) and Serdar Mohammed (Respondent) v Ministry of Defence (Appellant) [2017] UKSC 2.\nIn relation to Mr Mohammeds tort claim, the UK Government has raised the same doctrine of Crown act of state as is raised in Mr Rahmatullahs and the Iraqi civilians cases, and with which this judgment is concerned. (4) For completeness, there should also be mentioned the claims brought by the PIL three under both the Human Rights Act 1998 and UK public law in respect of their detention in Afghanistan.\nThey bring no claim under the Afghan law of tort and so the question of Crown act of state does not arise in their cases.\nThe issues relating to Crown act of state\nSo what is this doctrine of Crown act of state? An act of state has been very widely defined, for example, by ECS Wade (in Act of State in English Law: Its Relations with International Law (1934) 15 British Yearbook of International Law 98, at p 103): Act of state means an act of the Executive as a matter of policy performed in the course of its relations with another state, including its relations with the subjects of that state, unless they are temporarily within the allegiance of the Crown.\nThat definition is cited, not entirely approvingly, in the leading case of Nissan v Attorney General [1970] AC 179, at 212 (Lord Reid), 218 (Lord Morris) and 231 (Lord Wilberforce).\nIt is also cited in the footnotes to the current issue of Halsburys Laws of England, with the comment that act of state is not a term of article Halsbury refines the definition slightly: An act of state is a prerogative act of policy in the field of international affairs performed by the Crown in the course of its relationship with another state or its subjects.\nNo doubt it is a necessary component of the doctrine that the act in question falls within some such definition.\nBut, as Lord Wilberforce pointed out in Nissan, that does not tell us what the doctrine is, or to what rule or rules of law it gives rise.\nThe doctrine is very rarely pleaded and so recent authority is scant.\nIn this century, it has been raised in the context of the conflicts in Iraq and Afghanistan, first in Al Jedda v Secretary of State for Defence (No 2) [2010] EWCA Civ 758; [2011] QB 773, which was decided on other grounds, and now in the current cases.\nIn the 20th century, there are only two reported House of Lords cases in which it was raised, Johnstone v Pedlar [1921] 2 AC 262 and Nissan v Attorney General, above, and in neither of them was it successful, although it did succeed in a number of Indian appeals before the Judicial Committee of the Privy Council.\nWe have therefore to go back to the 19th century and beyond to discover its origins and rationale.\nThe starting point is that English law does not recognise that there is an indefinite class of acts concerning matters of high policy or public security which may be left to the uncontrolled discretion of the Government and which are outside the jurisdiction of the courts (H Street, Governmental Liability, A Comparative Study, Oxford University Press, 1953, p 50).\nThat there is no general defence of state necessity to a claim of wrongdoing by state officials was firmly established in the landmark case of Entick v Carrington (1765) 19 St Tr 1029, following on from Leach v Money (1765) 19 St Tr 1001 and Wilkes v Wood (1763) 19 St Tr 1029.\nThis principle was reiterated by Viscount Finlay in Johnstone v Pedlar, at 271: It is the settled law of this country, applicable as much to Ireland as to England, that if a wrongful act has been committed against the person or the property of any person the wrongdoer cannot set up as a defence that the act was done by the command of the Crown.\nThe Crown can do no wrong, and the Sovereign cannot be sued in tort, but the person who did the act is liable in damages, as any private person would be.\nIt was thus no defence to a claim for the return of money and a cheque, taken by the police from a person arrested in Ireland for illegal drilling in 1918, that the Chief Secretary for the Treasury had signed a certificate formally to ratify, adopt and confirm the said seizure and detention of the said cash and cheque as an act of state for the defence of the realm and for the prevention of crime.\nIt made no difference that the person arrested was a US citizen: the United Kingdom was not at war with the United States.\nAs a friendly alien resident here he was a subject by local allegiance with a subjects rights and obligations, per Viscount Cave at 276.\nHowever, there was an exception, which Viscount Finlay stated in very wide terms, at 271: This rule of law has, however, been held subject to qualification in the case of acts committed abroad against a foreigner.\nIf an action be brought in the British Courts in such a case it is open to the defendant to plead that the act was done by the orders of the British Government, or that after it had been committed it was adopted by the British Government.\nIn any such case the act is regarded as an act of state of which a municipal court cannot take cognizance.\nThe foreigner who has sustained injury must seek redress against the British Government through his own Government by diplomatic or other means.\nThe question for this court is whether there is indeed a qualification such as that expressed by Viscount Finlay and, if so, how far that qualification goes.\nIt is not contended on behalf of the Government that it is so broad as to cover any act committed against a foreigner abroad which is authorised or ratified by the Crown.\nThe contention of the Government is that the doctrine of Crown act of state covers two distinct principles.\nThe first is a principle of non justiciability: this is that certain acts committed by a sovereign state are, by their very nature, not susceptible to adjudication in the courts.\nThe obvious examples (given by Lord Pearson in Nissan v Attorney General, at 237) are making war and peace, making treaties with foreign sovereigns, annexations and cessions of territory.\nThe second is a defence to an action in tort: that a foreigner cannot sue the Government, or its servants or agents, in the courts of this country in respect of certain acts committed abroad pursuant to deliberate UK policy in the conduct of its foreign affairs.\nThe respondent claimants, on the other hand, argue that there is only the first rule, a narrow rule of non justiciability whereby certain acts of government in the conduct of foreign affairs are by their very nature not justiciable in the courts.\nThe decision to go to war in Iraq, and to remain there after the cessation of hostilities between the allied invaders and the state of Iraq in order to bring about internal peace and stability, and the decision to contribute to the International Security Assistance Force in Afghanistan, were of that nature.\nBut the decision to detain these particular individuals in the course of those operations was of a completely different character.\nThe question of whether the detention of an individual is lawful, under whichever system of law is applicable, is quintessentially a matter for a court (per Leggatt J, in Mohammed v Ministry of Defence [2014] EWHC 1369 (QB), para 381).\nNone of the reasons that might make it non justiciable (helpfully summarised at para 377, referring to Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888 and R (Al Haq) v Secretary of State for Foreign and Commonwealth Affairs [2009] EWHC 1910 (Admin); see also Shergill v Khaira [2014] UKSC 33; [2015] AC 359) apply: there is no absence of judicial or manageable standards by which to judge it; the courts have the relevant expertise; and this is not a matter of high policy, which is constitutionally in the hands of Government Ministers who are accountable to Parliament and not in the hands of the courts.\nFor those reasons, in Mr Mohammeds case, Leggatt J held that the non justiciability rule did not apply.\nHowever, he went on to hold that the tort defence did apply, at para 395: It is not the business of the English courts to enforce against the UK state rights of foreign nationals arising under Afghan law for acts done on the authority of the UK government abroad, where to do so would undercut the policy of the executive arm of the UK state in conducting foreign military operations.\nHe went on to emphasise how narrow this second rule was: it applied only to executive acts done abroad pursuant to deliberate UK foreign policy and might well be confined to acts involving the use of military force (para 397).\nIt was analogous to the conflict of laws rule that English courts will not enforce a right arising under the law of a foreign country if to do so would be contrary to English public policy, and to the rule that English courts will not enforce the penal, revenue and public law of a foreign state (para 396).\nHe returned to this question in the case of Mr Rahmatullah and the Iraqi civilians and rejected the argument that there was no good authority for such a rule; he also rejected the arguments that, if there were, it had been abolished by the Crown Proceedings Act 1947 or was incompatible with the right to a fair hearing under article 6 of the European Convention on Human Rights: Rahmatullah v Ministry of Defence and Foreign and Commonwealth Office; R (Rahmatullah and Ali) v Secretary of State for Defence and Secretary of State for Foreign and Commonwealth Affairs [2014] EWHC 3846 (QB), paras 179 223.\nThe cases were taken together in the Court of Appeal: Mohammed (Serdar) v Ministry of Defence, Qasim v Secretary of State for Defence, Rahmatullah v Ministry of Defence, Iraqi Civilians v Ministry of Defence [2015] EWCA Civ 843; [2016] 2 WLR 247.\nThat court also accepted that there was a tort defence as well as a non justiciability rule.\nBut it was an exception to the general principle that proceedings may be brought in this country founded on a tort which is actionable under the law of a foreign country where the law of that country is the applicable law.\nThey agreed with the judge that the rationale for the exception was to be found in domestic public policy (para 349).\nAccordingly, it was necessary to identify, in each case, the public policy interests which justified denying access to the courts in this way (para 352).\nIn Mr Mohammeds case there were no compelling considerations of public policy which should prevent reliance on Afghan law as the basis of his tort claims (para 364).\nIn the other cases, the relevant facts and evidence had not yet been pleaded.\nThe court held that claims would be barred by the doctrine of act of state only if the defendant is able to establish that there are compelling grounds of public policy to refuse to give effect to Iraqi law (para 377).\nOn the Governments appeal against those decisions, therefore, the parties have defined the issues thus: (i) Is the doctrine of Crown act of state limited to a non justiciability rule or does it also encompass a tort defence? (ii) If it does encompass a tort defence, what is its scope? (iii) In particular, is the test to be applied, by analogy with section 14(3)(a) of the Private International Law (Miscellaneous Provisions) Act 1995, whether there are compelling grounds of public policy to refuse to give effect to the local law of tort? (iv) Was the tort defence extinguished by the Crown Proceedings Act 1947? (v) Is the tort defence incompatible with article 6 of the European Convention on Human Rights?\nIt may well be, however, that issues (i), (ii) and (iii) can be reduced to a single issue, that is, the circumstances in which a claim is not cognisable in the courts of England and Wales because it relates to a Crown act of state.\nThe following issues are not now in dispute: (i) if the doctrine is limited to a narrow non justiciability rule, of the sort identified before Leggatt J and the Court of Appeal, it is not applicable in these cases, for the reasons given by the judge; (ii) the doctrine is not a defence to claims made under the Human Rights Act 1998 and so those will continue in any event.\nFor the purpose of the Crown act of state issue, it is to be assumed that the claimants detentions were in fact contrary to the Afghan or Iraqi laws of tort, although that too is in issue in the case of Serdar Mohammed.\nSome context\nIn order to discover the nature and content of the doctrine, it will be necessary to look at some old authorities which, although culminating in Nissan v Attorney General, were decided against a legal landscape which was very different from the legal landscape of today.\nThe conduct of foreign affairs, making treaties, making peace and war, conquering or annexing territories, are all aspects of the Royal prerogative.\nUntil the decision of the House of Lords in Council of the Civil Service Unions v Minister for the Civil Service [1985] AC 374 (the GCHQ case), the general position was that the courts would review whether what had been done fell within the scope of the Royal prerogative but would not review how that prerogative had been exercised.\nAfter that case, the exercise of executive power might be excluded from the scope of judicial review, not because of its source, whether statute or the prerogative, but because of its subject matter: hence the need to distinguish between certain acts of high policy, which by their very nature are not subject to judicial review, and other actions taken in pursuance of that policy, which are.\nSecond, the old cases were decided against the backdrop of the principle that the King can do no wrong.\nThe King could not be sued in his own courts.\nThe officials who carried out his policies could be sued for their unlawful actions, and the practice developed of nominating an official as a defendant to claims in tort.\nBut the courts had to grapple with the circumstances in which the Kings prior authority or subsequent ratification might import the doctrine that the King could do no wrong and thus afford a defence to such a claim.\nWe have already seen how the courts distinguished between acts done to foreigners abroad and acts done to citizens or residents here.\nThe Crown Proceedings Act 1947 abolished the general immunity of the Crown from liability in tort and enabled litigants to sue Government departments such as the defendants in these cases.\nThirdly, it may be worth bearing in mind that until the Private International Law (Miscellaneous Provisions) Act 1995, a tort committed abroad could only be the subject of a claim in the English courts if the conduct complained of was tortious, both by the law of the place where it took place and by the law of this country.\nThis rule was abolished by the 1995 Act, which established the general rule that the applicable law in an action in tort is the law of the country in which the events took place.\nHence it is now accepted that the tort claims have to be determined according to the law of Afghanistan or Iraq respectively, subject to the doctrine of Crown act of state if applicable, while the human rights claims have to be determined according to the Human Rights Act 1998.\nFinally, as already noted, the term act of state is also used in a completely different context, that of whether the courts of this country will adjudicate upon the acts of a foreign legislature or executive.\nSometimes, of course, both doctrines may arise in the same case (they are both, for example, discussed by Lord Wilberforce in the leading case of Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888).\nAnd insofar as the doctrine of foreign act of state covers governmental acts outside the territory of the state concerned, there may be some similarities, as Lord Mance has shown.\nBut Crown act of state was not raised as a defence in Belhaj v Straw and foreign act of state is not the subject matter of this judgment.\nDoes the Crown act of state doctrine encompass two rules?\nThe clearest judicial statement that the doctrine does encompass two rules is that of Lord Wilberforce in Nissans case, at 231: The first rule is one which provides a defendant, normally a servant of the Crown, with a defence to an act otherwise tortious or criminal, committed abroad, provided that the act was authorised or subsequently ratified by the Crown.\nIt is established that this defence may be pleaded against an alien, if done abroad, but not against a friendly alien if the act was done in Her Majestys Dominions.\nIt is supported in its positive aspect by the well known case of Buron v Denman (1848) 2 Exch 167 and in its negative aspect by Johnstone v Pedlar [1921] 2 AC 262.\nThe second rule is one of justiciability: it prevents British municipal courts from taking cognisance of certain acts.\nThe class of acts so protected has not been accurately defined: one formulation is those acts of the Crown which are done under the prerogative in the sphere of foreign affairs (Wade and Phillipss Constitutional Law, 7th ed (1956), p 263).\nAs regards such acts it is certainly the law that the injured person, if an alien, cannot sue in a British court and can only have resort to diplomatic protest.\nHow far this rule goes and how far it prevents resort to the courts by British subjects is not a matter on which clear authority exists.\nFrom the terms of the pleading it appears that it is this aspect of the rule upon which the Crown seeks to rely.\nIt would appear, however, that the case was only concerned with the second, the non justiciability rule.\nThe United Kingdom had made a treaty with the government of Cyprus (then an independent country) to provide troops in order to restore peace between the Greek and Turkish Cypriot communities.\nThe claimant, a British subject, ran a successful luxury hotel near Nicosia.\nThe British troops took over the hotel as their headquarters.\nNo claim in tort was made in respect of the occupation of the hotel, to which the claimant had apparently consented.\nThere was a tort claim in respect of damage to furniture and other chattels, but it was accepted that this should go to trial.\nThe main claim was that there was a contractual right to compensation, which was disputed.\nBut if there was such a contract, act of state could not be a defence.\nThe disputed claim was one in restitution, for compensation for the use and occupation of the hotel.\nTo this the government pleaded that the actions of the British forces in Cyprus were acts of state of Her Majesty on the territory of an independent sovereign performed in pursuance of an agreement with the Cyprus government and as such not cognisable by the court.\nThe House of Lords unanimously rejected this defence, Lord Reid on the ground that it could not be pleaded against a British subject, but the other members of the House on the ground that the occupation of the hotel did not have the character of an act of state.\nA distinction should be drawn between the making of the treaty with Cyprus, which was an act of state, and the actions of the troops complained about, which were not so closely connected with the treaty as to amount to an act of state.\nLord Morris regarded Professor Wades definition of an act of state (para 2 above) as helpful but went on to explain why it did not apply (at 218): I do not think that such actions as securing food or shelter in peace time for troops situate abroad are to be regarded as acts of the executive performed in the course of relations with another state within the conception of the above definition.\nBut, even if they were, I would be surprised if the contention were advanced that it was a matter of policy on the part of the executive to take food or shelter and not to make payment.\nIt is worth noting that the House rejected the contention that the UK was acting as agent for the government of Cyprus.\nBut, as Lord Wilberforce pointed out at p 230, if it had been, then the doctrine of foreign act of state might well have applied: they would have been acts attributable to a foreign government in its own territory.\nAs Lord Mance has shown in his judgment in Belhaj, that doctrine may extend to a states appropriation of property within its own territory even if this is illegal by the law of that state.\nThe question for us is not whether the type of rule, with which Nissan was concerned, exists: there is no reason to doubt that it does.\nThe question is whether a different type of rule, affording a tort defence even though the subject matter is entirely suitable for adjudication by a court, also exists.\nAlthough its existence was acknowledged in Nissan, and indeed Lord Morris stated that it was so recognised that it cannot now be overthrown (at 220), the foundations upon which it is built are very shaky.\nThe source of such a rule is the direction to the jury by Parke B in the well known case of Buron v Denman (1848) 2 Exch 167, 154 ER 450 (the background is explained by C Mitchell and L Turano in C Mitchell and P Mitchell (eds), Landmark Cases in the Law of Tort (Hart, 2010) and also by A Perreau Saussine, British Acts of State in English Courts [2008] British Yearbook of International Law 176).\nBriefly, in 1835, as part of its campaign to suppress the slave trade, Britain made a treaty with Spain, which allowed British ships to stop and search Spanish vessels on the high seas if they were suspected of trading in slaves.\nCommander Denmans patrol was looking for slaving ships at the mouth of the Gallinas river in West Africa.\nHe was asked by the Governor of Sierra Leone to liberate two British subjects who were being held as slaves in one of the barracoons (slave pens) on islands at the mouth of the river.\nDenman and his crew landed on the islands, chased away the Spanish slavers, and liberated the slaves they were trying to take with them.\nDenman then made a treaty with the local chiefs, outlawing slavery in their lands, handed over the slavers trade goods in return, took possession of the barracoons, liberated the slaves and burned the barracoons down.\nHe carried several hundred former slaves back with him to Sierra Leone.\nHe also rescued some of the slavers, who were fleeing local retribution, one of whom was Seor Buron.\nAll of this was greeted with great jubilation when the news reached England, the Colonial Secretary and the Foreign Secretary exchanged letters praising Denmans actions, Parliament voted a bounty to him and his crew, and he was promoted to Captain.\nSeor Buron, however, brought an action in trespass against him, claiming damages for the loss of his chattels, including the slaves.\nParke B directed the jury that, slave owning not being shown to be against the law in the Gallinas, Denmans actions could amount to a trespass; but their subsequent ratification by the Government turned them into an act of state, for which he could not be sued (although the judge left open whether Seor Buron might able to proceed against the Crown by petition of right or whether he could only pursue a remedy by diplomatic means, because this was irrelevant to the action he was trying).\nIt appears that the only act of state case cited in argument was Elphinstone v Bedreechund (1830) 1 Kn 316, 12 ER 340.\nBut that was essentially a non justiciability case: the issue was whether the Supreme Court of Bombay had jurisdiction to hear a claim for damages for the seizure of property of the governor of a fortress conquered in the course of military hostilities.\nThere is a whole series of cases, not all of them easy to reconcile (helpfully discussed by Perreau Saussine, loc cit), concerning the appropriation of property in the course of annexing territory in India (and on occasions in Africa) supporting the proposition that the transactions of independent states between each other are governed by other laws than those which municipal courts administer: such courts have neither the means of deciding what is right, nor the power of enforcing any decision which they may make (Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 7 Moore Ind App 476, at 529, 19 ER 388, at 407; Cook v Sprigg [1899] AC 572, at 578).\nThe leading case is Kamachee, where the East India Company, as agent for the British Crown, had seized the Raj of Tanjore, and the whole of the property of the Rajah, who had died without male issue, under Treaties authorising the annexation of the Raj.\nThe Rajahs widow sued for the return of his private property.\nShe succeeded in the Supreme Court of Madras but failed before the Judicial Committee of the Privy Council.\nNo distinction could be drawn between private and public property for the purpose of such an act of state.\nMost of the discussion relates to the character of the act, but there is a brief reference to Buron v Denman.\nThe subject matter of Buron v Denman, however, was something different.\nIt was not a transaction between states.\nDenmans actions were not carried out on the high seas in accordance with the treaty with Spain.\nBritain was not at war with another state or conquering territory (although it could be said to be conducting a war on the slave trade).\nHis actions were by ordinary standards, both of the local law and of English law, unlawful.\nThe case has therefore been treated as establishing a defence to an action in tort over which the ordinary courts would otherwise have jurisdiction.\nIt was so regarded by the House of Lords in Johnstone v Pedlar, in which the scope of such a defence was directly in point, and also in Nissan v Attorney General, where it was not.\nNo doubt it was so regarded, in part at least, because this was how it was regarded by some eminent academic authorities.\nFor example, Lord McNair, in International Law Opinions (1956) in a chapter dealing with The Position of the United Kingdom Government, its Servants and Agents, as Defendants instituted in Actions in British Courts, distinguished between (a) the defence called act of state available to certain defendants in British courts and (b) the rule which entirely excludes from British courts certain areas of British governmental action in the realm of foreign affairs.\nAs to (a): Act of state has been defined in a standard text book as follows: The plea, act of state, can be raised as a defence to an act, otherwise tortious or criminal, committed abroad by a servant of the Crown against a subject of a foreign State or his property, provided that the act was authorised or subsequently ratified by the Crown. (citing Wade and Phillips, Constitutional Law (4th ed (1950), 193 196)) To this very wide definition McNair added the slight qualification: Its scope of operation is the whole field of governmental or official activity in relation to the Crowns dealings with foreign states.\nThe only authorities cited are Buron v Denman, Johnstone v Pedlar, where the argument that it could be relied upon in claims brought by friendly aliens was rejected, and Commercial and Estates Co of Egypt v Board of Trade [1925] 1 KB 271, at 290 and 297, where the argument that it could be relied upon in respect of actions within the realm was rejected; however, Scrutton LJ noted that the owners of the cargo of timber on a British ship which had been requisitioned abroad during the first world war and brought to this country did not rely on any dealings with the cargo outside the realm for the probable reason that on the authority of such cases as Buron v Denman a claim by a foreigner for such acts would be successfully met by the defence that the interference was an act of state.\nThe doctrine was also relied upon in Al Jedda v Secretary of State for Defence (No 2) [2010] EWCA Civ 758; [2011] QB 773.\nThis was another tort claim arising from detention by British forces in Iraq, this time of a person with dual British and Iraqi nationality.\nAs here, the applicable law was the law of Iraq and Underhill J held that the detention was lawful under the law of Iraq.\nBut he also held that the defence of act of state would have been available.\nIn the Court of Appeal, Lord Dyson JSC and Elias LJ agreed with the judge that the detention was not unlawful under Iraqi law.\nLord Dyson declined to deal with the act of state issue, on the ground that it did not arise and raised points of very considerable difficulty, on which they had not heard full argument (para 127).\nElias LJ did discuss it (paras 192 226) and his tentative view was that it would not be an answer to the claim (para 193).\nThe act did fall into the category of act of state, in that it would have removed the jurisdiction of the courts to question the detention of a foreign subject (para 195); but the courts would be failing in their constitutional duty if they were to leave the executive with unfettered powers to intern British citizens merely because the act of internment occurred abroad (para 216); however, he did float an intermediate possibility, that even if this were to be an act of state, and thus not to give rise to liability for damages in tort, it would be amenable to judicial review on conventional principles.\nArden LJ, on the other hand, agreed with Underhill J that act of state was a defence; but this was on the basis of the House of Lords decision in R (Al Jedda) v Secretary of State for Defence [2007] UKHL 58; [2008] AC 332, that the UK was entitled and bound under its obligations under article 103 of the United Nations Charter and the applicable UN Security Council Resolution to intern people where this was necessary for the internal security of Iraq (para 108); thus, not only was the decision to join the Multi National Force an act of state, but acts required to be done pursuant to that decision were also acts of state; the fact that the claimant was a British national made no difference.\nClearly, therefore, Al Jedda (No 2) is of very little help in resolving the issue between the parties here.\nBoth Underhill J and Arden LJ appeared to be treating the case as non justiciable, because internment was required under international law; Elias LJ appears to have agreed with them, but considered that this afforded no defence to the internment of a British citizen.\nIn the cases before us, both Leggatt J, at [2014] EWHC 3846, para 197, and the Court of Appeal, at [2016] 2 WLR 247; [2015] EWCA Civ 843, para 330, thought that the issue in Al Jedda (No 2) was better analysed under the tort defence than under the non justiciability rule.\nIn the light of these shaky foundations, it is scarcely surprising that the respondent claimants argue that the tort rule does not, in fact, exist.\nThe only rule is that certain decisions of high policy in the conduct of foreign relations are non justiciable.\nThe arguments to the contrary are of two kinds: first, that the existence of a wider rule is long established both in the case law and in academic commentaries and texts, as already discussed; and second, that there are good reasons for it, certainly in the context of military operations abroad.\nAs I understand it, we are not asked to consider whether it exists outside that context.\nSir James Fitzjames Stephen, in his History of the Criminal Law (1883), Vol II, argued that where an injurious act done to a foreigner is an act of open war, duly proclaimed, there can be no doubt at all that it does not amount to a crime the very essence of war is that it is a state of things in which each party does the other all the harm they possibly can.\nThe same should apply to acts which are in their nature warlike done in time of peace: I think that if such acts are done by public authority, or, having been done, are ratified by public authority, they fall outside the sphere of the criminal law (pp 62 63).\nHe could cite no criminal law authority but relied upon Buron v Denman and Secretary of State for India v Kamachee Boye Sahaba.\nOf course, in those days, the criminal law was even more territorially limited than it is today and so only killings by British subjects abroad would be within the jurisdiction of the English courts.\nBut the point is, if act of state is a defence to the use of lethal force in the conduct of military operations abroad, it must also be a defence to the capture and detention of persons on imperative grounds of security in the conduct of such operations.\nIt makes no sense to permit killing but not capture and detention, the military then being left with the invidious choice between killing the enemy or letting him go.\nThere are conceptual advantages in confining the doctrine to a non justiciability rule; but in doing so, a rather broader concept of non justiciability would be required than that which was espoused in the courts below.\nIt would have to encompass aspects of the conduct of military operations abroad as well as the high policy decision to engage in them, and perhaps also some other aspects of the conduct of foreign relations, even though their subject matter was entirely suitable for determination by the court.\nIt is necessary that the courts continue to recognise that there are some acts of a governmental nature, committed abroad, upon which the courts of England and Wales will not pass judgment.\nThey may, of course, have to hear evidence and find facts in order to determine whether the acts in question fall into that category.\nIt is also necessary to confine that category within very narrow bounds.\nContrary to the impression given in some accounts (for example, J Collier, Act of state as a Defence against a British Subject (1968) 26 CLJ 102) it cannot give carte blanche to the authorities to authorise or ratify any class of tortious acts committed abroad in the conduct of the foreign relations of the state.\nIs this aspect of the doctrine one of public policy?\nThe approach of the Court of Appeal has very real attractions.\nIt is consistent with the policy of the Private International Law (Miscellaneous Provisions) Act 1995, that where the English courts have jurisdiction over a tort committed abroad, the applicable law is the law of the state where the conduct took place, unless to apply that law would conflict with principles of public policy (section 14(3)(a)).\nIt would enable a case by case approach depending upon a range of policy factors, such as those identified by the Court of Appeal.\nThere is, however, no hint of such an approach in the cases concerned with act of state.\nIn essence, public policy may be the reason why the courts of this country will apply the domestic doctrine of act of state rather than the tort law of the state where the events took place, but it cannot tell us what the content of that defence is to be.\nIt is not enough to say that it is not for the courts of this country to enforce the tort laws of another state, because that is exactly what the 1995 Act expects us to do.\nThe question is in what circumstances we should decline to do so.\nThe Court of Appeal, when considering Mr Mohammeds case, concluded that there was no authority to detain him, either under the regime established by the United Nations, or under local Afghan law, and the UK government had deliberately decided to apply a policy outside both of these without promoting UK legislation to permit this.\nThe public interest that not doing harm to the nation by precluding HM Armed Forces from detaining a commander in the Taliban for more than 96 hours because it appeared that questioning him would provide significant new intelligence vital for force protection purposes was not sufficiently compelling to outweigh the public interest in the protection of liberty.\nIn effect, therefore, military necessity, however compelling, provided no defence.\nIf this aspect of the doctrine is to have any content at all, this cannot be right.\nWhat is its scope?\nIt would be unwise for this court to attempt a definitive statement of the circumstances in which this aspect of the doctrine might apply.\nThe question is whether it applies in the circumstances of Mr Mohammeds case, some of which have been explored in pleadings and evidence, and how it might apply in the circumstances of Mr Rahmatullah and the Iraqi civilians cases, which have not yet been explored in pleadings and evidence.\nFor the reasons already given, it cannot apply to all torts committed against foreigners abroad just because they have been authorised or ratified by the British Government.\nIt can only apply to acts which are by their nature sovereign acts, acts which are inherently governmental, committed in the conduct of the foreign relations of the Crown.\nThe Government accepts that it cannot apply to acts of torture, even supposing that the Government of the United Kingdom would ever authorise or ratify such acts.\nThe Government also accepts that it cannot apply to the maltreatment of prisoners or detainees, such as happened in Baha Moussas case.\nBearing in mind that this is a doctrine of the law of the United Kingdom, I would prefer to regard this as an acknowledgement that such acts are not inherently governmental, rather than creating exceptions to a general rule.\nThe Government of the United Kingdom can achieve its foreign policy aims by other means.\nNor would it generally apply to the expropriation of property, for which compensation can always be paid, but there could be circumstances in which the expropriation, or more probably the destruction, of property, for example in the course of battle, was indeed a governmental act.\nWe are left with a very narrow class of acts: in their nature sovereign acts the sorts of thing that governments properly do; committed abroad; in the conduct of the foreign policy of the state; so closely connected to that policy to be necessary in pursuing it; and at least extending to the conduct of military operations which are themselves lawful in international law (which is not the same as saying that the acts themselves are necessarily authorised in international law).\nFor the purpose of these cases, we do not need to go further and inquire whether there are other circumstances, not limited to the conduct of military operations which are themselves lawful in international law, in which the defence might arise.\nBuron v Denman was at the borderline.\nThe slaves were freed in the conduct of military operations pursuant to British foreign policy.\nCommander Denman was clever enough to negotiate a treaty with the local chiefs outlawing slavery before he freed most of them and burned down the barracoons but that did not necessarily render his acts lawful by local law.\nNor do we need to decide whether the doctrine can ever be pleaded against British citizens: it was freely acknowledged in the courts below that there are arguments either way.\nThey do not arise in these cases.\nThe Crown Proceedings Act 1947\nThe respondents argue that the defence was abolished by section 2(1) of the Crown Proceedings Act 1947.\nThis provides: Liability of the Crown in tort E+W+S+N.I. Subject to the provisions of this Act, the Crown shall be subject to all those liabilities in tort to which, if it were a private person of full age and capacity, it would be subject: in respect of torts committed by its servants or (a) agents; (b) in respect of any breach of those duties which a person owes to his servants or agents at common law by reason of being their employer; and (c) in respect of any breach of the duties attaching at common law to the ownership, occupation, possession or control of property: Provided that no proceedings shall lie against the Crown by virtue of paragraph (a) of this subsection in respect of any act or omission of a servant or agent of the Crown unless the act or omission would apart from the provisions of this Act have given rise to a cause of action in tort against that servant or agent or his estate.\nBoth Leggatt J and the Court of Appeal held that the 1947 Act had not had the effect of abrogating the defence of act of state.\nSection 2(1)(a) made the Crown vicariously liable for the torts of its servants or agents.\nThe proviso makes it clear that this does not apply where the act or omission would not have given rise to a cause of action in tort against the servant or agent.\nThe servant or agent could claim the defence of Crown act of state before the Act and the effect is, now, that the Crown can do so too.\nThat is certainly how it was understood at the time, for example, by Professor Glanville Williams, in Crown Proceedings (Stevens, 1948, p 44), although he also suggested that the proviso was an unnecessary bludgeon as the so called defence meant that there was no liability in any event.\nThe claimants argue that the purpose of the 1947 Act was to put the Crown in the same position as any other litigant in civil proceedings.\nOther litigants did not enjoy the benefit of the defence of Crown act of state.\nIt would be illogical if a provision intended to put the Crown on the same footing as anyone else had a proviso having precisely the opposite effect.\nIt is also odd to do so by a proviso aimed at the agent rather than the Crown.\nWhere the Act intended to create immunities or restrictions, or preserve existing common law rules, or make savings, it did so clearly and expressly; an example is section 2(5), which gives the Crown immunity from liability for anything done by any person while discharging responsibilities of a judicial nature.\nThere is, however, nothing odd about preserving the previous law by means of a proviso aimed at the agent.\nThe Act imposed vicarious liability for the acts of its servants or agents upon the Crown.\nIt is natural, therefore, to make it clear that the Act is not making any difference to the previous law relating to the liability of that servant or agent, even if the previous law in question is one which applies only to Crown servants or agents.\nIt may be that the proviso was unnecessary but there is no reason to doubt that the previous law of Crown act of state, whatever it was, was left intact.\nArticle 6\nThe respondents accept that if, as held by the Court of Appeal, Crown act of state is only a defence where there are overriding reasons of public policy not to apply the tort law of a foreign state, this would be a proportionate interference with the right of access to a court and thus compatible with article 6 of the European Convention on Human Rights.\nHowever, they argue that any wider defence would be an unjustifiable impediment to that right of access.\nThis depends upon two questions: first, whether the defence is an aspect of the substantive law or whether it is a procedural restriction on the right to go to court to vindicate a right; secondly, if it is merely a procedural bar, whether it is justified as a proportionate means of pursuing a legitimate aim.\nThe respondents argue that the defence is not an aspect of a substantive right, akin to the rule of Italian law considered by the Grand Chamber of the European Court of Human Rights in Markovic v Italy (2006) 44 EHRR 52.\nClaims had been brought in an Italian court against the Prime Minister, Ministry of Defence and Commander of NATO forces in southern Europe in respect of deaths caused by military action in the former Yugoslavia in 1999.\nThe Cour de Cassation had held that the Italian court had no jurisdiction, under a rule very like the non justiciability aspect of our own Crown act of state doctrine, that certain acts of government, including the conduct of hostilities, did not give rise to civil liability.\nThe Grand Chamber held that the claimants had not been deprived of access to a court: their claims had been fairly examined in the Italian courts in the light of the applicable domestic legal principles.\nThose principles marked out the bounds of the law of tort so that the inability to sue was not the result of an immunity but of the principles governing the substantive right of action.\nBy contrast, argue the respondents, the Crown act of state defence is a procedural bar, which prevents the United Kingdom courts from enforcing rights and liabilities in tort which would otherwise be justiciable.\nThis means, they argue, that the government must justify it and this they cannot do.\nIt cannot be justified on the basis that it pursues the legitimate aim of ensuring that the government and the courts speak with one voice on matters of foreign policy.\nAs the Court of Appeal pointed out (para 372), they are not required to do so in public law claims or in claims under the Human Rights Act.\nLeggatt J held that it serves the legitimate aim of protecting the interests of the nation abroad, in particular where military action is considered necessary by the executive in the national interest (Rahmatullah, para 217) and was proportionate to that aim (para 218).\nThe respondents accept that it might be justified on the basis that it pursued the legitimate aim of enabling the legality of the Governments conduct of foreign affairs, and in particular military operations abroad, to be determined by international law rather than the law of the place where those operations took place.\nThus it enables the Government to comply with its obligations in international law without having to concern itself with local domestic law.\nBut the rule as contended for by the Government goes wider than is necessary to meet that aim and is thus disproportionate to it.\nThe Government, on the other hand, contends that article 6 is not engaged.\nThis is a Markovic case.\nArticle 6 does not guarantee any particular content to the civil rights and liabilities protected by domestic law.\nIt merely guarantees a right of access to the courts to have those rights and liabilities determined: Z v United Kingdom (2001) 34 EHRR 3, paras 87, 92.\nThe claimants have the right to a fair hearing of whether the doctrine of Crown act of state, in either of its aspects, applies.\nBut that doctrine defines the content of their rights.\nIt means that there are certain actions which do not give rise to civil liability.\nIt is not simply a procedural bar.\nEven if it were, they argue, it pursues the legitimate aim identified by Leggatt J and is proportionate to that aim for the reasons he gave: it applies only to acts done pursuant to deliberate United Kingdom foreign policy and only to claims arising under foreign law.\nIt does not therefore apply to claims under the Human Rights Act.\nIn my view, this is clearly a rule of the substantive law rather than a procedural bar.\nIt does not confer an immunity on a particular class of actors.\nIt defines the circumstances in which there may be liability for a particular type of activity.\nThe rules are the same whether that activity is governed by English law or by foreign law.\nAs these cases show, the claimants do have access to a court to determine the scope of their rights.\nThis court is concerned with the question of law as to how far their rights extend.\nIn Mr Mohammeds case, the facts necessary to determine the extent of his rights have already been examined.\nIn the other cases, the facts have yet to be fully pleaded and evidence filed.\nWhen they have, the court will have to decide what the facts are and whether they fall within the defence of Crown act of state as defined by this court.\nThere has been no procedural bar to the claimants bringing these claims and fighting them vigorously through the courts.\nIt is the substantive law which will determine whether, on the facts found, they succeed.\nConclusion\nI would therefore allow the Governments appeal.\nI would substitute a declaration to the effect that, in proceedings in tort governed by foreign law, the Government may rely on the doctrine of Crown act of state to preclude the court passing judgment on the claim if the circumstances are such as stated in paras 36 and 37 above.\nIt may well be that the declarations made by Leggatt J should be restored.\nIn the case of Serdar Mohammed, he declared that, on the assumption that the facts relating to his arrest and detention pleaded by the Government were true, and without prejudice to his right to challenge the factual basis of his arrest and detention at any further trial, the defendants could rely on the doctrine of Crown act of state to preclude the enforcement of a claim under Afghan law.\nIn the case of Yunus Rahmatullah, he declared that the claims in tort in relation to his arrest and detention by UK armed forces were barred by the doctrine of Crown act of state, if the defendants established that his arrest and detention was authorised pursuant to lawful UK policy.\nHe made a declaration in similar terms in the Iraqi Civilian Litigation.\nI would, however, invite further submissions as to the precise form of declaration which would be appropriate in each of these cases.\nLORD MANCE: (with whom Lord Hughes agrees)\nCrown act of state certainly presents terminological and conceptual difficulties.\nBut I think it clear that the underlying principle is one of non justiciability or (as I would prefer to say: see para 54 below) abstention or restraint.\nIt creates unnecessary confusion to suggest that the principle has two branches, one non justiciability, the other a defence based on Buron v Denman (1848) 2 Exch 167.\nLord Sumption suggests a dichotomy between two rules (para 79).\nBut he ends with a proposition that, in the present context, the two rules merge into one (para 81).\nThis is achieved by defining non justiciability in the present context as going to the existence or scope of legal rights (para 80) and so as a defence (para 81).\nTo my mind, this involves confusion.\nLord Sumption seeks to support it in para 80 by suggesting that the case of R (Campaign for Nuclear Disarmament) v Prime Minister [2002] EWHC 2777 (Admin) proceeded on the footing that the Divisional Court had both jurisdiction and competence to determine whether a resolution of the United Nations Security Council authorised military operations against Iraq but that it declined to do so because there were no relevant domestic law rights.\nThis, however, in my opinion, misreads the Divisional Courts judgment.\nThe essential ground of the decision in Campaign for Nuclear Disarmament was that the subject matter was non justiciable: see per Simon Brown LJ at para 47(ii), Maurice Kay LJ at para 50, and Stephen Richards LJ at paras 59 60.\nAbsence of domestic foothold was a separate and (as Maurice Kay and Stephen Richards LJJ make clear in these passages) lesser objection to the claim (see also Simon Brown LJ at paras 35 36).\nThe case of Campaign for Nuclear Disarmament therefore lends no support to a proposition that Crown act of state involves a defence.\nOn the contrary, it places Crown act of state, involving foreign policy action including the deployment of armed forces, firmly within the domestic principle of non justiciability or abstention, and this is so whether the Crown or its agent is being impleaded.\nCrown act of state is at the same time (as Lady Hale notes: paras 43 45) a principle of substantive law outside the scope of article 6 of the European Convention on Human Rights.\nCrown act of state is in short based on the same underlying principle of abstention that can in some circumstances also apply to preclude adjudication of the third type of foreign act of state identified in my separate judgment on that topic handed down concurrently with this judgment in the present case and in Belhaj v Straw [2017] UKSC 3.\nThat is not to suggest that the principle of abstention applies with the same force or by reference to the same considerations in relation to the latter context.\nBecause of the way in which the issues in these cases were identified and divided for determination, this was not an aspect on which the submissions before us focused.\nI will say some provisional words about it.\nBoth Crown act of state and the third type of foreign act of state are based on an underlying perception of the role of domestic courts.\nThe constitutional relationship of a domestic court with its own State differs from its relationship with that of any foreign sovereign state.\nCrown act of state is reserved for situations of sovereign authority exercised overseas as a matter of state policy.\nIn these circumstances a straight forward principle of consistency directly underpins Crown act of state (as identified by Lord Sumption in para 87).\nIn contrast, if and when the third type of foreign act of state applies, its underpinning is a more general conception of the role of a domestic court, and, more particularly, the incongruity of a domestic court adjudicating upon the conduct of a foreign sovereign state, even though the foreign state is neither directly or indirectly impleaded or affected in its rights.\nHowever, concern for the international relations of the domestic with the foreign state, and in that sense a concern that the domestic courts stance should not be out of line with that of its own states, may probably in some cases play some part: see the discussion in paras 103 to 105 of my judgment in Belhaj v Straw.\nThis analysis is supported by what Lord Wilberforce said in Buttes Gas, 938A C, quoted in para 42, as well as with my own observations in para 91, of my judgment in Belhaj v Straw.\nBut to immunise the home state of the domestic court from action anywhere (or, in a Buttes Gas type case to refuse to adjudicate upon civil litigation between third parties), by reference to the conduct of a foreign state, is self evidently an extreme step.\nThis is no doubt why the principle of abstention recognised in Buttes Gas has rarely found application.\nThese differences in underpinning and analysis between Crown act of state and foreign act of state mean, in my opinion, that it must be easier to establish that a domestic court should abstain from adjudicating on the basis of Crown act of state than on the basis of the third type of foreign act of state.\nThe relationship is closer and the threshold of sensitivity lower in the case of the former than the latter.\nIt is necessary to grasp the considerations which may make a case non justiciable.\nA consideration which in the past may have encouraged an overly narrow view is Lord Wilberforces pithy references in Buttes Gas & Oil Co v Hammer [1982] AC 888, 938B C to an absence of judicial or manageable standards by which to judge the issues in that case, placing the court in a judicial no mans land.\nBut it is clear that these references do not represent the definitional limit of non justiciability in the present context.\nThey represent as Lord Sumption pointed out in Shergill v Khaira [2014] UKSC 33; [2015] AC 359, para 40 only one of two reasons why the issue in Buttes Gas was political or non justiciable.\nThe other was that the issue trespassed on the proper province of the executive, as the organ of the state charged with the conduct of foreign relations, a consideration which takes one back to the discussion in the previous paragraphs.\nBearing in mind the potential for misunderstanding the concept of non justiciability in the light of Lord Wilberforces aphorisms in Buttes Gas, it may be preferable to refer instead, as I have done above, to a principle of abstention or restraint, whereby Crown decisions and\/or activities of a certain nature in the conduct of foreign affairs are not open to question (or are not cognisable) in domestic civil proceedings, at the instance of anyone injured thereby (except, perhaps, someone owing allegiance to the Crown a point which can be left open on this appeal).\nI have already indicated that I do not accept what was the primary case of the appellants, the Ministry of Defence and the Foreign and Commonwealth Office, namely that there is a dichotomy between two rules (non justiciability and a tort defence).\nHowever, the appellants never committed themselves to bringing their case within either rule.\nOn the contrary, they submitted in paras 101, 107 and 173(4) and (5) of their written case: that each of the claims should be dismissed on the grounds that Crown act of state operates as a separate defence and\/or a jurisdictional bar: that the Court of Appeal mischaracterised the scope of the justiciability limb of the Crown act of state doctrine, and consequently concluded that it did not apply in the present case; that the Court of Appeal erred in holding that the non justiciability rule only applies in circumstances where the issue is one which the court is constitutionally incompetent to determine; and that in any event, the tort defence and\/or non justiciability rule applies to each of the cases.\nIn his oral submissions, Mr Eadie QC maintained this position, in submissions to the effect that how you characterise the doctrine, whether as a defence or non justiciability, does not matter; its criteria and effect are what matters.\nThere is good sense in this.\nIt is, nonetheless, helpful to identify the conceptual basis of Crown act of state.\nIn my view, there is, as I have stated, a single doctrine based on non justiciability or, in the terms which I prefer, judicial abstention or restraint.\nI turn to examine further the core rationale behind cases where courts will abstain from adjudicating upon civil claims against the Crown or its servants.\nThis is also discussed in some detail in the passages from Campaign for Nuclear Disarmament cited above.\nSince Council of Civil Service Unions v Minister for the Civil Service (GCHQ) [1985] AC 374, reinforced by R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61; [2009] 1 AC 453, the exercise of prerogative powers, including prerogative legislation in the form of an order in council, has not enjoyed any general immunity from judicial scrutiny.\nBut the nature and subject matter of the particular prerogative power being exercised may make it inappropriate for adjudication before a domestic court.\nThus in GCHQ Lord Roskill said, at p 418, that Prerogative powers such as those relating to the making of treaties, the defence of the realm, the prerogative of mercy, the grant of honours, the dissolution of Parliament and the appointment of ministers as well as others are not, I think, susceptible to judicial review because their nature and subject matter are such as not to be amenable to the judicial process.\nIn Shergill v Khaira, para 42, Lord Sumption referred to this category of case as beyond the constitutional competence assigned to the courts under our conception of the separation of powers, and included within it the non justiciability of certain transactions of foreign states and of proceedings in Parliament.\nThe thinking behind all these concepts is linked in Blackstones Commentaries on the Laws of England (vol 1) pp 251 and 257 258.\nThere, the non justiciability of the royal prerogative of making war and peace or treaties is explained on the basis that the appropriate forum for its control is Parliament (including, in the last resort, as Blackstone notes, by impeachment).\nIn the case of certain foreign activities of the British state, there is in my view an additional parallel aspect at the international level to their non justiciability in domestic courts.\nThat is that representations and redress in respect of activities involving foreign states and their citizens may be more appropriately pursued at a traditional state to state level, rather than by domestic litigation brought by individuals.\nIn any event, it is, as already shown, wrong to regard either Lord Roskill in GCHQ or the Supreme Court in Shergill v Khaira as basing this category of case on an absence of judicial or manageable standards or the presence of a judicial no mans land.\nWhen there is an appropriate domestic foothold and the matter is otherwise justiciable, domestic courts are well able to adjudicate upon and give effect to international law (see the citations from Campaign for Nuclear Disarmament, above).\nIndeed, customary international law was long said to be automatically incorporated into domestic law: see the discussion in R (Keyu) v Secretary of State for Foreign and Commonwealth Affairs [2015] 3 WLR 1665, paras 117 122 and 144 151.\nAs Lord Sumption also recognised in Shergill v Khaira, para 43, a private claim may require adjudication upon issues of international law, where there is a domestic foothold in the sense of a prima facie domestic law right under whatever may be the relevant law: see eg Republic of Ecuador v Occidental Exploration Production Co [2005] EWCA Civ 1116; [2006] QB 432.\nThe Report of William Murray (later Lord Mansfield) and other Law Officers on the Rules of Admiralty Jurisdiction, etc in time of war dated 18 January 1753 and the decision in The Rolla (1807) 6 Robinson 364, to which Lord Sumption refers (para 83), do no more than exemplify the same point.\nBoth concerned the civil rights of neutrals whose property had been seized during the blockade of an enemy port.\nThey turn on the customary international law of war and prize, treated as incorporated into domestic law.\nThe Law Officers Report was thus sought concerning the consistency of certain Prussian prize proceedings with the Law of Nations, and any Treaties , the established Rules of Admiralty Jurisdiction, and the Laws of this Kingdom (p 889).\nThe Report was given on the basis that By the Maritime Law of Nations, universally and immemorially received, there is an established method of determination, whether the Capture be or be not lawful Prize (p 890), and that In this method, by Courts of Admiralty acting according to the Law of Nations and particular Treaties, all captures at sea have immemorially been judged of, in every Country of Europe (p 892).\nThe Admiralty Court had immemorially held trading with enemy subjects to be illegal: see Oppenheims International Law (7th ed) paras 101, footnote 2, and 192; and see also McNair and Watts, The Legal Effects of War (1966) pp 336 337.\nNeither the Law Officers Report nor The Rolla bears on the issue currently under discussion.\nThey concern the application of customary international law as and where incorporated into domestic law, giving rise to a foothold for domestic adjudication, as there was for example in the case of The Rolla, where the issue concerned a claim to seize and condemn a ship as prize for contravention of a legal blockade.\nThe Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 7 Moore Ind App 476 is, in contrast, an example of a case falling within the conduct of foreign affairs which the Privy Council held was unsuitable for adjudication in a domestic court.\nIt concerned the annexation by the East India Company (exercising sovereign power on behalf of the British Government) of a foreign territory and the taking of its late rulers public and private property.\nThe late rulers eldest widow brought an action claiming to be entitled to the private property which (the Privy Council was ready to accept) would under Hindoo law pass and belong to the late rulers eldest widow.\nIn relation to the appropriation of the private property, there was clearly a domestic foothold for the claim.\nBut the claim failed in its entirety.\nThis was not because it was non justiciable in some narrow sense, involving absence of judicial or manageable standards.\nA domestic court could, if necessary, identify standards and rules of international law by reference to which to adjudicate upon such a dispute.\nIt was because the whole case fell within the category of non justiciability identified by Lord Roskill in GCHQ and the Supreme Court in Shergill v Khaira, para 42.\nIt was a case upon which domestic courts should not adjudicate because of its nature and subject matter.\nIt was a classic case of intervention by forces acting for the British Crown intervening in and taking over a foreign territory and property of its subjects.\nAttempts at a bifurcation in this area between (a) cases of non justiciability (or cases not open to question) in a domestic court and (b) cases falling within the so called rule in Buron v Denman are in my view incorrect and confusing.\nThe correct analysis is that the rule applied in Buron v Denman is no more than a corollary of the principle of non justiciability, abstention or restraint.\nIn short, the rule applied protects the Crowns servants or agents in circumstances where that principle precludes a claim against the Crown itself.\nA claim which is non justiciable against the Crown itself cannot be justiciable against the servants or agents who, with the Crowns authority or subsequent ratification, undertook the relevant acts.\nOtherwise, the principle of Crown act of state could and would be subverted.\nThe point is illustrated by the case of Secretary of State in Council of India v Kamachee Boye Sahaba itself.\nThe action there was not against the Crown, but for an act done, as Lord Kingsdown said, by the East India Company as its delegate, over which act domestic courts had no jurisdiction and of the propriety or justice of that act, neither the court below nor the Judicial Committee have the means of forming, or the right of expressing, if they had formed, any opinion (p 540).\nSee also, in the quotations from Lord Kingsdowns judgment that Lord Sumption sets out in para 86: such [viz municipal] courts have neither the means of deciding what is right and an act not affecting to justify itself on grounds of municipal law; over which the Supreme Court of Madras has no jurisdiction and It is sufficient to say that, even if a wrong has been done, it is a wrong for which no Municipal Court of Justice can afford a remedy.\nThis is the language of non justiciability, abstention or restraint.\nThe authorities relied on by counsel for the East India Company also demonstrate the same point.\nThey included Tandy v Earl of Westmoreland (1792) 27 State 1246, in which the official acts of the Lord Lieutenant of Ireland were considered acts of state, and not within the cognizance of the Municipal jurisdiction, and Mostyn v Fabrigas (1775) Cowp 161, where Lord Mansfield laid it down that no Governor of a Colony could be sued while he is exercising the functions of a Governor.\nIn each case, the principle identified is one of non justiciability.\nFurther, in Lord McNairs magisterial and influential work International Law Opinions vol 1 (1956), from which Lord Wilberforce quoted in Nissan v Attorney General [1970] AC 179, at p 234C F, the general principle of non justiciability is described in terms making clear that it protects the Crowns servants and agents as much as the Crown.\nThe reality is that the rule in Buron v Denman is a necessary aspect of the principle of abstention or non justiciability.\nLikewise, in the analogical context of state immunity, not only the Crown, but also its servants and agents are protected, or otherwise the rule would be subverted: see Jones v Saudi Arabia [2007] 1 AC 270.\nEqually, it cannot be open to a Crown servant or agent by waiving a plea of Crown act of state to enable a domestic court to adjudicate upon an area falling within the scope of the concept.\nYet that would seem the consequence if Crown act of state were a mere defence, rather than a bar to adjudication based upon a principle of abstention or restraint.\nThere were only two issues in the Court of Exchequer case of Buron v Denman.\nOne, swiftly dispatched by Parke B in summing up (p 187), was whether the plaintiff could show sufficient property or possession in slaves.\nThe other, the main issue, was whether a Crown servant or agent could by ratification of his acts by the Crown be put in the same position as if those acts had been authorised by the Crown from the outset.\nHad there been prior authorisation, it is clear from the way that Buron v Denman was argued, that there would have been no doubt that the action was not maintainable.\nThe Attorney General cited briefly in this connection at the end of his submissions (p 185) Elphinstone v Bedreechund, which concerned British forces seizure of a military fortress during military hostilities and is, correctly, analysed by Lady Hale in para 25 as a case of non justiciability.\nConversely, without prior authorisation or ratification, it was well established before Buron v Denman that a Crown servant could be held liable for unauthorised naval action taken against foreign slavers conducting a trade which remained lawful under the (Spanish) law of the flag of the ship they were using.\nIn Madrazo v Willes (1820) 3 B & Ald 353, relied on by counsel for the plaintiff in Buron v Denman, Captain Willes, commanding a Royal Navy vessel, had without authority taken possession of a Spanish brig engaged in the slave trade between Africa and Cuba, detaining her, her stores and other goods as well as 300 slaves, and preventing her from further trading.\nThe Spanish owner sued Captain Willes, maintaining (consistently with the principle in Entinck v Carrington (1765) 19 State Tr 1029) that he was personally liable.\nThe only question which arose was as to the measure of damages.\nReluctantly, the Court of Kings Bench found itself obliged to award Seor Madrazo damages which included not merely the deterioration of the ships stores and goods, but also the alleged profit which would have been made from the ships cargo of slaves.\nWhen Buron v Denman was argued nearly 30 years later, the only substantial question was therefore whether a different result could and should follow if the Crown had, after the event, purported to ratify what its naval captain had done.\nThere was a faint suggestion, which led to nothing, that Lord John Russells and Viscount Palmerstons commendations of Captain Denmans very spirited and able and highly meritorious conduct and their expressions of desire that such conduct should be repeated, whenever occasion arose, were insufficient to amount to ratification in fact.\nThe plaintiffs real argument was that ratification was only permissible if the act would have been justified, if done by the principal, whereas here it was not for the purpose of showing that the act was justifiable, but for the purpose of protecting the party committing it against examination as to whether it was right or wrong.\nThat ratification was permissible, if the act done would under domestic law have been justified if done by the principal, was in fact demonstrated by The Rolla.\nThere a British blockade of Monte Video (a Spanish enemy port) was in principle legal under international and domestic law, had however actually been imposed by the local British fleet commander, Sir Home Popham, without governmental authority, but was ratified by the British government after the event.\nParke B was in Buron v Denman concerned by the plaintiffs submission that a plea of Crown act of state was of a different character, since it did not turn on any conclusion that the act would, if authorised by the Crown be lawful (but simply withdrew it from domestic adjudication).\nUltimately, however, he joined with the other members of the Court in holding that ratification was in this context also equivalent to prior authorisation even if it left the plaintiff without remedy against the Crown because the injury would count as an act of state without remedy (p 189).\nthere is only one principle of Crown act of state; In summary: (i) (ii) Buron v Denman is simply authority for the proposition that conduct capable by its nature of being an act of state may be so not only when authorised in advance but also when subsequently ratified by the Crown; and (iii) Crown servants or agents committing an act of state with prior authorisation or subsequent ratification by the Crown enjoy the same immunity from liability that the Crown does otherwise, indeed, the doctrine of Crown act of state would have very little bite at all.\nIn support of this analysis, I note the following further points: (i) The suggestion that there are two separate rules of Crown act of state, operating somehow in parallel but at different levels, stems essentially from dicta of Lord Wilberforce in Nissan v Attorney General [1970] AC 179, 231C E. Nothing said by other members of the House supports such a bifurcation: see eg per Lord Reid at pp 207G, 208C G and 212C D and Lord Morris at pp 219B 221B.\nBoth analysed the issue in Nissan as turning on the scope of the rule in Buron v Denman ie as treating the rule in Buron v Denman and the principle of non justiciability as interdependent.\n(ii) It is far from clear that Lord Wilberforce intended the conceptual distinction now proposed between two separate rules.\nHe himself spoke of Crown act of state as a principle that includes within itself two conceptions or rules.\nHis first conception or rule can be seen to have been focused on the liability or immunity of Crown servants whose acts have been authorised or subsequently ratified by the Crown.\nOn that basis, his second conception or rule represents the sole principle focusing on the case of a claim against the Crown itself. (iii) A precursor to Lord Wilberforces dicta consists in Lord McNairs International Law Opinions vol 1 (1956), from which, as I have already noted, Lord Wilberforce quoted at p 234C F in Nissan.\nLord McNair confined discussion of the rule in Buron v Denman to circumstances where a claim is made against a Crown servant, and dealt with non justiciability as a wider and more fundamental principle precluding claims against the Crown, its servants or agents (pp 111 112).\nBut, in circumstances where Crown servants are protected under the rule in Buron v Denman, the Crown itself must also be protected.\nThe inference again is that the rule in Buron v Denman is simply an aspect of the protection afforded by the wider and more fundamental principle of non justiciability.\nThe two rules cover different facets of the same situation. (iv) Further, in so far as Buron v Denman addressed the Crowns immunity from suit in relation to foreign military activity at all, it was based on authority addressing circumstances of non justiciability and has subsequently been analysed in the same terms.\nThus: (a) the Attorney General in Buron v Denman successfully advanced Crown act of state as a defence by referring to circumstances which were and are clearly non justiciable, referring (at p 184) to acts under a treaty and, as I have already noted, by referring (at p 185) to Elphinstone v Bedreechund, which concerned seizure of a military fortress during military hostilities and is a case of non justiciability; (b) the rationale of Buron v Denman is clearly identified in later authority at the highest level as being that it concerned non justiciable activity, that is (in the light of the ratification) state activity undertaken abroad as a matter of policy at an inter state level or in the course of something like military operations against a foreign state or its subjects: see Johnstone v Pedlar [1921] AC 262, per Viscount Finlay, p 271 foot; per Viscount Cave, p 275 foot; per Lord Atkinson, p 279; and per Lord Sumner, p 290 and pp 291 292.\nIn these passages, both Viscount Cave and Lord Atkinson assimilated Buron v Denman and Kamachee Boye Sahaba, which is another case correctly analysed by Lady Hale at para 25 as an instance of non justiciability.\nIn addition, no rationale for or explanation of the contours of any distinction between circumstances of non justiciability and circumstances falling within a supposedly separate rule to be derived from Buron v Denman is available.\nIndeed, Lord Sumption argues that the two rules are in the present context one (para 80), but only (as I have pointed out in para 48 above) by assigning to non justiciability the unnatural meaning of a defence.\nHe suggests that, contrary to contemporary and later views, Buron v Denman was a case of a tort law defence.\nTaking the criteria for activities which are non justiciable or inappropriate to be questioned in domestic civil proceedings, they clearly include all those identified by Lord Sumption in para 82, that is they must involve an exercise of sovereign power, inherently (i) governmental in nature; (ii) done outside the United Kingdom; (iii) with the prior authority or subsequent ratification of the Crown; and (iv) in the conduct of the Crowns relations with other states or their subjects (possibly excluding persons owning allegiance to the Crown).\nI add two points.\nFirst, Crown act of state must be potentially applicable as much to acts in the execution of policy makers decisions as it is to the decisions themselves.\nIt would not otherwise be a coherent doctrine.\nIn this, I am at one with Lady Hale (para 33) and Lord Sumption (para 90).\nSecond, in relation to the availability of Crown act of state as a plea in relation to conduct towards the subjects of foreign states: see eg the citations which Lady Hale gives in her para 2, the first of which was also quoted and endorsed by Lord Wilberforce in Nissan at p 231B; see also per Lord Reid at p 212C D.\nThe upshot is that the criteria suggested for the rule in Buron v Denman are the same criteria as lead to a conclusion that circumstances are non justiciable or inappropriate for adjudication in domestic civil proceedings.\nThe reason is clear.\nThere is only one principle, though it has different aspects protecting Crown servants or agents (Buron v Denman) and the Crown more generally.\nWhat matters in any case is therefore its scope and application in relation to the particular circumstances the subject of the relevant civil proceedings.\nAs to this, I agree with Lady Hale and Lord Sumption that the present claimants detention by Her Majestys forces and their transfer from British to United States and Afghan custody were, as such, Crown acts of state which are not justiciable or open to question in domestic proceedings for common law damages such as the present.\nThey were, on the actual or presently assumed facts, steps taken pursuant to or in implementation of deliberately formed policy against persons (none owing any allegiance to the Crown) reasonably suspected to be insurgents or terrorists in the context and furtherance of foreign military operations during a time of armed conflict.\nI also agree with Lady Hales conclusions regarding the Crown Proceedings Act 1947 and article 6 of the European Convention on Human Rights.\nAs she observes, the rule of Italian law considered by the European Court of Human Rights in Markovic v Italy (2006) 44 EHRR 52 was effectively a rule of non justiciability.\nThe Italian Court of Cassation had before it claims by relatives of persons killed in the NATO bombing of Belgrade, in which Italian forces had participated.\nThe Court of Cassation categorised the impugned act as an act of war, and said that since such acts were a manifestation of political decisions, no court possessed the power to review the manner in which that political function was carried out (para 106).\nThe European Court of Human Rights said, at para 114, that the Court of Cassations ruling does not amount to recognition of an immunity but is merely indicative of the extent of the courts powers of review of acts of foreign policy such as acts of war.\nIt comes to the conclusion that the applicants inability to sue the state was the result not of an immunity but of the principles governing the substantive right of action in domestic law.\nThis statement fits precisely the circumstances of the present case on my approach to Crown act of state.\nFurther, in the light of the above, I agree that there should be a declaration in each appeal as Lady Hale proposes in her para 46, and that we should invite further submissions on its precise form.\nIn the cases of Yunus Rahmatullah and the Iraqi Civilian Litigation, I would specifically invite further assistance as to the effect and appropriateness of the qualifying adjective lawful quoted by Lady Hale in her para 46.\nLORD SUMPTION:\nIn Nissan v Attorney General [1970] AC 179, 231, Lord Wilberforce, whose speech comes closest to supplying a coherent judicial statement of the doctrine of Crown act of state, reviewed the main relevant authorities on the doctrine and concluded that it comprised two rules.\nOne was a rule of non justiciability, by which he meant a rule which prevents British municipal courts from taking cognisance of certain acts.\nThe other was a rule which provides a defendant, normally a servant of the Crown, with a defence to an act otherwise tortious or criminal, committed abroad, provided that the act was authorised or subsequently ratified by the Crown.\nThe dichotomy between these two rules had previously been suggested by Lord McNair in International Law Opinions (1956), pp 111 116.\nNon justiciability is a treacherous word, partly because of its lack of definition, and partly because it is commonly used as a portmanteau term encompassing a number of different legal principles with different incidents.\nStrictly speaking, as this court observed in Shergill v Khaira [2015] AC 359 at para 41, it should be reserved for cases where an issue is said to be inherently unsuitable for judicial determination by reason only of its subject matter.\nThis may result in a court declining to determine an issue notwithstanding its relevance to the dispute between the parties, for example because there are no juridical standards by which to determine it, as in Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888; or because its determination is not within the constitutional competence of the courts, for example because it would trespass on Parliamentary privilege, as in Prebble v Television New Zealand Ltd [1995] 1 AC 321.\nThese are mandatory rules of public policy, originating in the laws recognition of the separation of powers between different organs of the state.\nThey define the limits of the courts jurisdiction or juridical competence.\nBut there are other principles, also originating in the separation of powers and described as principles of non justiciability, which do not go to the courts jurisdiction or competence but to the existence or scope of legal rights.\nThus in R (Campaign for Nuclear Disarmament) v Prime Minister [2002] EWHC 2777 (Admin), the court proceeded on the footing that it had both jurisdiction and competence to determine whether a resolution of the United Nations Security Council authorised military operations against Iraq, but declined to do so because, among other reasons, there were no relevant rights, interests or duties under domestic law: paras 14 15, 36.\nI venture to suggest that if domestic law rights, interests or duties had been engaged, the court would not have regarded the issues as non justiciable.\nCrown act of state is a rule of substantive law which belongs in this latter category.\nThe court is not disabled from adjudicating on a Crown act of state by virtue of its subject matter.\nThe acts of the Crown and its agents are always in principle subject to the adjudicative power of the courts.\nThey unquestionably have both jurisdiction and competence to determine the legal effects of a Crown act of state on the rights of those adversely affected by it.\nThe real question is what are those rights.\nThe rule of law relating to Crown acts of state defines the limits which as a matter of policy, the law sets upon certain categories of rights and liabilities, on the ground that they would otherwise be inconsistent with the exercise by the executive of the proper functions of the state.\nIn principle an agent of the Crown is liable as a matter of English law for injury or detention of persons or goods without lawful authority.\nBut that liability does not extend to a limited class of acts constituting Crown acts of state.\nIt follows that the agent has a defence if his acts fall within that class.\nLike other members of the court, I doubt whether it helps to treat the doctrine as comprising two rules.\nBut in this context, it can fairly be said that Lord Wilberforces two rules merge into one.\nI agree with Lady Hale that a Crown act of state gives rise to no liability on the part of the Crown or its agents.\nI also agree with her upon the essential elements of a Crown act of state in this context.\nThey are (i) that the act should be an exercise of sovereign power, inherently governmental in nature; (ii) done outside the United Kingdom; (iii) with the prior authority or subsequent ratification of the Crown; and (iv) in the conduct of the Crowns relations with other states or their subjects.\nThere may be a fifth requirement, that the alleged tort should have been committed against a person not owing allegiance to the Crown.\nBut that raises a distinct and controversial question which does not need to be decided on these appeals.\nThe claimants in these proceedings did not owe allegiance to the Crown.\nAlthough the label act of state is modern, the concept is very ancient.\nThe earliest illustrations relate to the right to seize ships or cargoes at sea.\nThe right, without incurring liability under English law, to seize property under letters of marque and reprisal issued on the authority of the Crown, even in peacetime, dates back to the 13th century.\nIt was not, however, until the 18th century that the underlying rationale of the doctrine began to emerge.\nThe growth of British seapower made it necessary to consider the interrelation between international and municipal law concerning captures at sea.\nIn a celebrated opinion of 1753, written by Sir William Murray, later Lord Mansfield, the law officers of the Crown advised that a belligerent power was entitled in international law to seize not only enemy property but the property of neutrals destined for an enemy: British and Foreign State Papers, 20 (1836), 889ff.\nThe result was that the seizure of the property on behalf of the Crown gave rise to no right to damages or possession at the suit of the former owner.\nIn The Rolla (1807) 6 Robinson 364, 365 367, Sir William Scott, perhaps the greatest British international lawyer of his day, identified the basis of the rule as being the authority or ratification of the Crown in the exercise of its sovereign power.\nThe result was that the American owner of a cargo had no rights under English municipal law in respect of the seizure of his property by Admiral Sir Home Popham in the course of his highly irregular (but ratified) blockade of the River Plate in 1806.\nGreater definition was brought to this area of law in two seminal cases decided in the middle of the 19th century: Buron v Denman (1848) 2 Exch 167, and Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 7 Moo Ind App 476.\nBuron v Denman is one of those cases which is more significant for what it has always been understood to have decided, than for anything Parke B actually said in the course of his summing up to the jury.\nIts significance is that Captain Denmans act in seizing the plaintiffs slaves and destroying his property in the Gallinas in West Africa was not a valid act of war, since Britain was at peace with Spain.\nNor was it justifiable in international law, since the slave trade had been held to be lawful by the law of nations: see Le Louis (1817) 2 Dod 210.\nAlthough the indigenous ruler of the Gallinas had undertaken by treaty with Captain Denman to destroy the barracoons and surrender the slaves, he had not authorised Captain Denman to do these things, which was presumably why the treaty was not relied upon by Captain Denman and ignored by Parke B. There was therefore no legal basis whether in international or municipal law for the invasion of Seor Burons proprietary rights.\nIn those circumstances, the only plea available to Captain Denman was that by virtue of the Crowns adoption of his acts, they were acts of state.\nThe judge took it to be axiomatic that the prior authority of the Crown would have constituted a defence.\nThe defendant would in that case be irresponsible (p 190), ie not liable.\nThe only contentious issue was whether subsequent ratification was equivalent to prior authority.\nHe held that it was.\nParke B did not explain why it went without saying that the authority of the Crown was a defence, but the basis of the rule became clearer a decade later in the advice of the Privy Council in Secretary of State in Council of India v Kamachee Boye Sahaba.\nLord Kingsdown, delivering the advice of the Board, applied the principle in Buron v Denman (see pp 539 540) to the annexation of the Indian state of Tanjore and the seizure of the late Rajahs property there by the East India Company in the exercise of the sovereign power of the Crown.\nHe declared, at p 529: The general principle of law was not, as indeed it could not, with any colour of reason be disputed.\nThe transactions of independent states between each other are governed by other laws than those which Municipal Courts administer: such courts have neither the means of deciding what is right, nor the power of enforcing any decision which they may make.\nLord Kingsdown went on, at p 531, to inquire what was the nature of the act of the East India Companys officers: Was it a seizure by arbitrary power on behalf of the Crown of Great Britain, of the dominions and property of a neighbouring state, an act not affecting to justify itself on grounds of municipal law? Or was it, in whole or in part, a possession taken by the Crown under colour of legal title of the property of the late Rajah of Tanjore, in trust for those who, by law, might be entitled to it on the death of the last possessor? He concluded (p 540) that the property now claimed, by the respondent has been seized by the British Government, acting as a Sovereign power, through its delegate the East India Company; and that the act so done, with its consequences, is an act of state over which the Supreme Court of Madras has no jurisdiction.\nOf the propriety or justice of that act, neither the court below nor the Judicial Committee have the means of forming, or the right of expressing, if they had formed, any opinion.\nIt may have been just or unjust, politic or impolitic, beneficial or injurious, taken as a whole, to those whose interests are affected.\nThese are considerations into which their Lordships cannot enter.\nIt is sufficient to say that, even if a wrong has been done, it is a wrong for which no Municipal Court of Justice can afford a remedy.\nLeggatt J regarded this as a perverse doctrine under which the executive can be held to account if it purports to act legally, but not if it openly flouts the law.\nBut I think that the judge has misunderstood Lord Kingsdowns reasoning.\nLord Kingsdown was not saying that the East India Company could not be held to account because it had openly flouted the law.\nHe was doing two things.\nIn the first place he was pointing out that even if the Crowns annexation of Tanjore was unlawful in international law that could not of itself give rise to any legal rights in municipal law.\nSecondly, he was distinguishing between the sovereign and non sovereign acts of the Crown.\nIf the seizure of the late Rajahs property had been carried out under colour of municipal law, for example as a taking of possession by a trustee, it would not have been a sovereign act but an act such as any non sovereign could have done.\nAs it was, it was an extraterritorial exercise of sovereign power, and as such an act of state.\nIt therefore gave rise to no actionable duty owed to the late Rajahs heirs.\nThe judgment of Lord Kingsdown has been treated by the House of Lords and the Privy Council on many occasions since it was decided as an authoritative statement of the law: see, among other cases, Sirdar Baghwan Singh v Secretary of State for India [1874] LR 2 Ind App 38, 47; Cook v Sprigg [1899] AC 572; Johnstone v Pedlar [1921] 2 AC 262, 275 (Viscount Cave), 278 279 (Lord Atkinson), 290 291 (Lord Sumner); Vajesingji Joravarsingji v Secretary of State for India [1924] LR 51 Ind App 357; Secretary of State for India v Sardar Rustam Khan [1941] AC 536; Nissan v Attorney General [1970] AC 179, 218 (Lord Morris of Borth y Gest), 225 (Lord Pearce), 231 232 (Lord Wilberforce), 238 (Lord Pearson).\nThe reason why the liabilities of the Crown in municipal law do not extend to sovereign acts done in the course of military operations outside the United Kingdom is essentially a principle of consistency.\nThe deployment of armed force in the conduct of international relations, or the threat of its deployment (express or implicit) is one of the paradigm functions of the state.\nThe law vests in the Crown the power to conduct the United Kingdoms international relations, including the deployment of armed force in support of its objectives.\nConstitutionally, as Blackstone observed, the result is that what is done by the royal authority with regard to foreign powers is the act of the whole nation: Commentaries, para 252.\nOr, as Willes J put it a century later in Esposito v Bowden 7 EL & BL 763, 781 (1857), speaking of a declaration of war, as an act of state, done by virtue of the prerogative exclusively belonging to the Crown, such a declaration carries with it all the force of law.\nIn the nature of things, the use of armed force abroad involves acts which would normally be civil wrongs not only under English law but under any system of municipal law.\nPeople will be detained or killed.\nTheir property will be damaged or destroyed.\nIt would be incoherent and irrational for the courts to acknowledge the power of the Crown to conduct the United Kingdoms foreign relations and deploy armed force, and at the same time to treat as civil wrongs acts inherent in its exercise of that power.\nIn this respect, Crown act of state differs from foreign act of state.\nWhen the courts consider an exercise of sovereign authority by a foreign state, no question of consistency arises because the sovereign authority of the foreign state is not derived from English law.\nForeign act of state operates purely as a rule of non justiciability.\nIts effect in the very limited class of cases to which it applies is not to afford a defence but to preclude the courts from taking cognisance of an alleged civil wrong if it necessarily depends on determining the lawfulness of a foreign act of state.\nNone of this means that whatever an agent of the Crown does pursuant to its decisions in the conduct of the United Kingdoms foreign relations gives rise to the defence of act of state.\nThe boundaries are admittedly difficult to draw.\nThe only extended discussion appears in the speeches in the House of Lords in Nissan v Attorney General [1970] AC 179.\nBut the inconsistencies between them, the unsatisfactory terms of the pleading on which the argument was based and the obscurity of the facts combine to make it hard to extract any very clear ratio from this decision.\nIt is unquestionably right to say, as Lord Pearson did at p 237F, that an act of state must be something exceptional.\nHe cited the making of war and peace, the making of treaties and annexations or cessions of territory as obvious examples (p 237F G), and the dispatch of a peacekeeping force to the territory of an independent sovereign as having to some extent the character of acts of state even if it did not follow that everything that it did there was an act of state (pp 239F 240B).\nBut this brings one no closer to a workable criterion on which to decide cases like the present ones.\nIn my opinion, the main relevant limitations on the act of state doctrine are implicit in the doctrine itself.\nIn particular, they are implicit in the requirement that the act must be inherently governmental in nature, and either specifically authorised or ratified by the Crown or inherent in what the Crown has authorised or ratified.\nWithout seeking to formulate a comprehensive definition of a rule whose application is inevitably fact sensitive, I consider that the following points can fairly be made.\nThe first is that an act does not need to raise questions of high policy in order to give rise to a plea of Crown act of state.\nThis is because the rule extends not just to the decisions of policy makers, but to actions taken by the Crowns agents in the execution of those decisions, often at a relatively low level, far below the level of policy making.\nMoreover, as Lord Reid pointed out in Nissan, at p 212, acts which are unauthorised but ratified after the event are unlikely to have been done in accordance with any high policy of the Crown.\nSecondly, it is sometimes said that the act must be the necessary consequence of a decision made by the Crown through its ministers.\nI think that this is right, provided that we are careful about what we mean by necessary.\nIn rejecting the Crowns reliance on act of state in Nissan, two members of the Appellate Committee observed that while the agreement with the government of Cyprus to station troops on the island was itself an act of state, the occupation of the Cornaro Hotel was not necessary to its implementation: pp 216 217 (Lord Morris of Borth y Gest), 227B C (Lord Pearce).\nBut it is important to guard against the suggestion that the availability of the act of state defence depends on a judicial assessment of the political or tactical alternatives, an exercise which must be left to the judgment of the executive or its officers on the spot.\nAs Sir William Scott observed in The Rolla, at p 366, a commander going out to a distant station may reasonably be supposed to carry with him such a portion of sovereign authority delegated to him, as may be necessary to provide for the exigencies of the service on which he is employed.\nIn my opinion, the question depends on the character of the act.\nIt is whether an act of that character is inherent in what the Crown has authorised or ratified.\nIt is in this sense that the concept of necessity is used in this context.\nThirdly, however, the fact that the act is of a kind which is inherent in what the Crown has authorised or ratified, although undoubtedly a necessary condition, cannot be a sufficient one.\nIt must also be by its nature a sovereign, ie an inherently governmental act, for the Crown to be capable of authorising or ratifying it as an act of state.\nIn his speech in Nissan (p 218F), Lord Morris, after quoting the definition of act of state in the then current edition of Halsburys Laws of England (an act of the executive as a matter of policy performed in the course of its relations with another state including its relations with the subjects of that state), observed, at p 218F: I do not think that such actions as securing food or shelter in peace time for troops situate abroad are to be regarded as acts of the executive performed in the course of relations with another state within the conception of the above definition.\nI think that this was the true ratio of the decision.\nThe appropriation of the hotel was not an inherently governmental act in the circumstances pleaded.\nIt was an ordinary case of the army acquiring accommodation in peacetime, in respect of which they were in no different position from any other organisation acquiring accommodation.\nThey therefore had to pay like any one else.\nAs Lord Pearson suggested at p 240B, the position might be different if there had been an urgent military necessity to occupy the hotel.\nI would prefer to reserve my opinion on the question whether the appropriation of property, with or without compensation, can be an act of state.\nI think that the answer would be likely to depend on the circumstances.\nIn Buron v Denman and in Kamachee Boye Sahaba and other colonial annexation cases, the seizure of property without compensation was held to be an act of state.\nThe same would, I suspect, be true of most appropriations of property in the course of active military operations.\nIn other circumstances, like those in Nissan, the position would be different.\nWe have heard no argument on this question.\nIn the present cases, Crown act of state is raised by the Secretary of State only so far as the allegations are based on the mere fact of the claimants detention by Her Majestys forces or the mere fact of their transfer from British custody to that of the United States.\nIn my opinion these were acts of state so far as they were authorised by the United Kingdoms detention policy or required by the United Kingdoms agreements with the United States, these being the only particulars of authority relied upon.\nIf these criteria were satisfied, they were both inherently governmental in character and authorised by the Crown in the conduct of the United Kingdoms international relations.\nThe Crown and its servants could not therefore be liable for them in tort.\nI would make a declaration to that effect.\nThe Secretary of State denies that the claimants were maltreated, but does not contend that any maltreatment which may have occurred was an act of state.\nThat is as one would expect.\nAny maltreatment of detainees was not authorised by the United Kingdoms detention policy.\nIt is not alleged to have been authorised in any other way, or to have been ratified.\nIt is therefore unnecessary to address the question whether the maltreatment of detainees ever could be an act of state, in the highly improbable event of its being done with the authority of the Crown.\nI would merely record my reservations about Lady Hales suggestion that the torture or maltreatment of prisoners is not an inherently governmental act, although I agree that in the light of the governments statements on the subject this is a moot point.\nAs an international crime and a statutory offence in the United Kingdom, torture is by definition a governmental act: see Jones v Saudi Arabia [2007] 1 AC 270, paras 19 (Lord Bingham of Cornhill) and 81 85 (Lord Hoffmann).\nThere are, unfortunately, well documented modern instances across the world of the use of torture and other forms of maltreatment as an instrument of state policy authorised at the highest levels.\nThere is a more satisfactory answer to the hypothetical problem of governmental torture and deliberate governmental maltreatment.\nGiven the strength of the English public policy on the subject, a decision by the United Kingdom government to authorise or ratify torture or maltreatment would not as a matter of domestic English law be a lawful exercise of the royal prerogative.\nIt could not therefore be an act of state.\nNor would there be any inconsistency with the proper functions of the executive in treating it as giving rise to civil liability.\nI have nothing to add to Lady Hales analysis of the Crown Proceedings Act 1947, or her conclusions about article 6 of the European Convention on Human Rights, with which I entirely agree.\nLORD NEUBERGER: (with whom Lord Hughes agrees)\nThis aspect of these proceedings concerns the principle or doctrine of Crown act of state, which has been raised by the defendants in circumstances which have been explained by Lady Hale in paras 1 14 above.\nCrown act of state, like foreign act of state, is a doctrine which has been developed by judges over the years, as explained in the judgments of Lady Hale, Lord Mance and Lord Sumption.\nIt would be a fruitless exercise to try and reconcile all the judicial dicta, even from the House of Lords, on this doctrine.\nIndeed, it is very difficult to identify a comprehensive definition of the doctrine, as is clear from the somewhat different approaches in the speeches of Lord Reid, Lord Morris and Lord Wilberforce in the most recent decision of the House of Lords on the topic, Nissan v Attorney General [1970] AC 179.\nA remarkable aspect of this doctrine is the weight that has been given to Buron v Denman (1848) 2 Exch 167, given that it was a direction to a jury where the nature and extent of the doctrine was not really in issue.\nThe fact that the judge concerned was Baron Parke no doubt helps to explain why the ruling has been accorded particular respect.\nHowever, in agreement with Lord Mances analysis of the report, it seems to me that, to the extent that the case is strictly an authority, it is simply for the proposition that an action which would have been an act of state if it had been authorised in advance, will (or at least may) be treated by the court as an act of state if it is subsequently ratified by the Crown.\nNonetheless, Buron was cited with approval by Lord Reid, Lord Morris and Lord Wilberforce in Nissan, and by Viscount Finlay, Viscount Cave, and Lord Sumner in Johnstone v Pedlar [1921] 2 AC 262, in relation to what Baron Parke said about the doctrine of Crown act of state.\nThe fact that any attempt to define the precise nature and extent of the principle of Crown act of state is doomed to failure is unsurprising.\nThe doctrine is ultimately based on judicial decisions and dicta as to when the judiciary should decline to rule on the lawfulness of an act on the ground that any challenge to the act should be left to the executive, at least normally where the act is based on the Royal prerogative.\nHowever, it is only in relation to some acts based on the Royal prerogative that when a court will decline to adjudicate, namely acts which, because of their nature or circumstances, call for judicial self restraint.\nThere have been very few cases in the past 100 years when the doctrine has been considered and hardly any in which it has been held to apply.\nAnd decisions given even 50 years ago may reflect a somewhat different approach to that which appears appropriate today, following the growth of judicial review and the introduction of human rights into our domestic law.\nThe difficulty in identifying or delimiting the doctrine is reinforced by the flexibility and imprecision of the United Kingdoms constitutional settlement.\nAnd it appears to me that any observation on the doctrine prior to the decision of the House of Lords in Council of the Civil Service Unions v Minister for the Civil Service [1985] AC 374 must be considered with particular caution, essentially for the reason given by Lady Hale in para 15.\nHowever, despite these points, there is no doubt that the doctrine of Crown act of state remains a constitutionally important, if rarely invoked, feature of the common law.\nFor the reasons already given, I agree with Lady Hale (in para 36) that it would be unwise for us to propound a definitive statement as to when the Crown act of state doctrine can be invoked.\nHowever, I entirely endorse the attempts in the preceding judgments to give as much guidance as we can on the extent of the doctrine.\nIn that connection, I consider that the formulations of Lady Hale (in paras 32 and 36 37), of Lord Mance (in paras 56 58 and 64) and of Lord Sumption (in paras 88 93) provide helpful guidance as to what may constitute (or may not constitute) a Crown act of state, as do the definitions cited in para 2 of Lady Hales judgment.\nThat leaves the question of the proper characterisation of the doctrine.\nIn those rare cases where an issue involving a Crown act of state arises, it does not mean that a judge lacks the information or expertise to resolve the issue (although in some exceptional cases that may be a different reason for the court not determining an issue).\nAs Lady Hale says in para 45, this is not because the doctrine bestows any sort of immunity, or indeed because of any judicial discretion: it is because there are certain acts of the UK government (sc the executive) which, owing to their nature or circumstances, are not susceptible to judicial assessment.\nAs Lord Sumption says in para 88, the doctrine is ultimately based on the need for consistency or coherence in the distribution of functions between the executive and the judiciary in the United Kingdoms constitutional arrangements.\nAccordingly, if a claim depends on establishing the unlawfulness of a Crown act of state, then, as a matter of United Kingdom law, the claim must fail, as a Crown act of state cannot give rise to a legal liability.\nWhen Crown act of state applies to a particular act, that act is often described as being non justiciable.\nHowever, as Lord Sumption explains in para 79, the expression non justiciable can have a number of different meanings, and, for that very reason it seems to me that it is one which is best avoided if one is seeking to explain precisely why an issue cannot be resolved because the doctrine of Crown act of state applies.\nThus, the expression non justiciable could well be understood as suggesting that the court is incapable of determining, or choosing not to determine, the lawfulness of the act in question, or that the court is declining to address any legal liability flowing from that act.\nBut, as I have just explained (and is explained more fully in the preceding judgments), none of those analyses represents the basis of Crown act of state.\nI agree with Lady Hale, for the reasons which she gives, that neither the Crown Proceedings Act 1947 nor article 6 of the European Convention on Human Rights assists the respondents.\nHowever, I also agree with her, Lord Mance and Lord Sumption, for the reasons which they all give, that the doctrine of Crown act of state can be relied on by the defendants in this case, and accordingly I would join them in allowing this appeal.\nLORD CLARKE:\nI have read all these judgments with interest and admiration.\nThere has been much debate as to whether Crown act of state involves one or two principles.\nHowever nobody has so far suggested a case in which it would make a difference as to which of the two principles applied.\nLike Lord Sumption (the principal proponent of the two principles approach), at the end of para 80, I doubt whether it helps to treat the doctrine as comprising two rules or one.\nI also agree with him that in this context it can fairly be said that Lord Wilberforces two rules merge into one.\nThe only point that I would stress is this.\nIt does seem to me that whether there is one principle or two, the question whether a defendant can successfully rely upon Crown act of state does not involve the court exercising a discretion or anything approaching a discretion.\nThe defendant either has a legal right to rely upon Crown act of state or it does not.\nOnly in the former case will it succeed, whether it is held that it does so by way of defence or by the application of the principle of non justiciability.\nI agree that the disposition of this appeal should be as proposed by the other members of the court for the reasons they give.\nIn so far as there may be differences between them, I do not detect any difference which is critical to the resolution of this appeal.\n","output":"This appeal concerns the nature and content of the doctrine of Crown act of state.\nThe question arises from proceedings brought against the Ministry of Defence and the Foreign and Commonwealth Office (the Government) by a large number of people (the respondents) who claim to have been wrongfully detained or mistreated by UK or US forces in the course of the conflicts in Iraq and Afghanistan.\nInsofar as the proceedings include claims based on the Iraqi or Afghan law of tort, the Government has (along with other defences) raised the doctrine of Crown act of state.\nThe question of whether the doctrine is applicable in these cases was ordered to be determined as a preliminary issue, before the individual cases are heard by the lower courts.\nThe Government argues that certain acts of high policy committed by a sovereign state are not susceptible to adjudication in the courts (they are non justiciable), but also that Crown act of state is a defence to an action in tort where a foreigner seeks to sue the Government in the courts of this country in respect of certain acts committed abroad, pursuant to UK policy in the conduct of its foreign affairs.\nThe respondents argue that the doctrine of Crown act of state is only a narrow rule of non justiciability for acts of high policy in the conduct of foreign relations, which does not extend to decisions made to detain or transfer particular individuals.\nIn the High Court, Leggatt J held that the claims were justiciable, but declared that the Crown act of state doctrine provided a defence to the tort claims.\nThe Court of Appeal allowed the respondents appeals.\nIt held that the doctrine provided a tort defence as well as a non justiciability rule, but that the defence would only apply when the Government could establish that there were compelling grounds of public policy to refuse to give effect to the local tort law.\nNo such grounds arose in the case of Mr Mohammed, which is the only claim so far in which the relevant facts and evidence have been pleaded.\nThe Supreme Court unanimously allows the Governments appeals, holding that, insofar as the respondents tort claims are based on acts of an inherently governmental nature in the conduct of foreign military operations by the Crown, these were Crown acts of state for which the Government cannot be liable in tort.\nLady Hale (with whom Lord Wilson agrees) gives the main judgment.\nLord Mance, Lord Sumption, Lord Neuberger and Lord Clarke each give concurring judgments.\nLord Hughes agrees with Lady Hale, Lord Mance and Lord Neuberger.\nThe court will seek further submissions from the parties as to the appropriate form of declaration in each of these cases.\nA Crown act of state is a prerogative act of policy in the field of international affairs performed by the Crown in the course of its relationship with another state or its subjects [2].\nThe principle that there is no general defence of state necessity to a claim of wrongdoing by state officials has been established since the eighteenth century [4].\nThe early cases, however, indicated that there was an exception in the case of acts committed abroad against a foreigner which were authorised or ratified by the Crown [6]; it was also suggested that this doctrine encompassed two rules: one of non justiciability for certain prerogative acts of the Crown in sphere of foreign affairs and a second providing the Government or its servants with a defence to claims arising from acts of state committed abroad [19].\nThere is no reason to doubt that the first rule exists but the question for the Supreme Court is whether, as the Government submits, the doctrine also provides a defence to a claim which is otherwise suitable for adjudication for a court [22].\nIf the doctrine is to be confined to a non justiciability rule, a broader concept of non justiciability is required, which encompasses aspects of the conduct of military operations abroad as well as the high policy decision to engage in them.\nThe courts may need to hear evidence and find facts in order to determine whether the acts in question fall within this category [33].\nBut the doctrine must be narrowly confined to a class of acts which involve an exercise of sovereign power, inherently governmental in nature, committed abroad, with the prior authority or subsequent ratification of the Crown, in the conduct of foreign relations of the Crown.\nThe class of acts must be so closely connected to that policy to be necessary in pursuing it.\nIt extends at least to the conduct of military operations which are themselves lawful in international law.\nThe Government accepts that it cannot apply to acts of torture or to the maltreatment of detainees [36 37, 72, 81].\nOn the presently assumed facts, the respondents detention by Her Majestys forces and transfers out of British custody were steps taken pursuant to deliberately formed policy against persons reasonably suspected to be insurgents, in the context and furtherance of foreign military operations during a time of armed conflict, and were thus Crown acts of state for which the Government cannot be held liable in proceedings for common law damages [75, 95].\nLord Mance considers that the underlying principle of Crown act of state is one of non justiciability (or judicial abstention or restraint) and it creates unnecessary confusion to suggest that it has two branches [47].\nLord Sumptions analysis is that Crown act of state does offer a defence, but he doubts whether it helps to treat the doctrine as comprising two rules, and in any event in the present context the two rules merge into one [80].\nLord Neuberger agrees with Lord Sumption that the doctrine is ultimately based on the need for consistency or coherence in the distribution of functions between the executive and the judiciary in the United Kingdoms constitutional arrangements.\nIt is not that a judge lacks the information or expertise to resolve the issue, but rather that there are certain governmental acts which owing to their nature or circumstances are not susceptible to judicial assessment [104].\nThe doctrine was not abolished by the Crown Proceedings Act 1947, which preserved the previous law by the proviso in section 2(1) [41].\nIt is also compatible with the right to a fair trial protected by article 6 of the European Convention on Human Rights, as it is clearly a rule of substantive law rather than a procedural bar [45].\nThe appeal is therefore allowed and a declaration substituted to the effect that, in proceedings in tort governed by foreign law, the Government may rely on the doctrine of Crown act of state to preclude the court passing judgment on the claim if the circumstances are such as stated in paragraphs 36 37 of this judgment [46].\n","id":66}
{"input":"The Legal Services Board (the Board) was established by the Legal Services Act 2007 (the 2007 Act).\nIt exercises supervisory functions in relation to approved regulators of persons carrying on legal activities, including the Bar Standards Board (BSB), the Solicitors Regulation Authority (SRA) and the ILEX Professional Standards Board (IPS).\nThis appeal concerns the lawfulness of the Boards decision on 26 July 2013 to grant a joint application by the BSB, SRA and IPS for approval of alterations to their regulatory arrangements, under Part 3 of Schedule 4 to the 2007 Act.\nThe alterations gave effect to the Quality Assurance Scheme for Advocates (the scheme), which provides for the assessment of the performance of criminal advocates in England and Wales by judges.\nThe appellants are barristers practising criminal law.\nThey seek judicial review of the decision on a variety of grounds, all of which were rejected by the Divisional Court and the Court of Appeal: [2014] EWHC 28 (Admin) and [2014] EWCA Civ 1276 respectively.\nThey were given permission to appeal to this court on the single question whether the decision was contrary to regulation 14 of the Provision of Services Regulations 2009 (SI 2009\/2999) (the Regulations).\nThe Regulations\nThe Regulations were made under section 2(2) of the European Communities Act 1972, in order to implement Directive 2006\/123\/EC of the European Parliament and of the Council on services in the internal market (OJ No L 376, 27.12.2006, p 36) (the Directive).\nRegulation 14 provides, so far as material: (1) A competent authority must not make access to, or the exercise of, a service activity subject to an authorisation scheme unless the following conditions are satisfied. (2) The conditions are that (a) the authorisation scheme does not discriminate against a provider of the service, (b) the need for an authorisation scheme is justified by an overriding reason relating to the public interest, and (c) the objective pursued cannot be attained by means of a less restrictive measure, in particular because inspection after commencement of the service activity would take place too late to be genuinely effective.\nRegulation 14 implements article 9(1) of the Directive, which is in almost identical terms.\nIn particular, regulation 14(2)(b) reproduces verbatim article 9(1)(b) of the Directive, while regulation 14(2)(c) departs from article 9(1)(c) only by translating the Latin phrase used in the Directive, an a posteriori inspection, into the less elegant English, inspection after commencement of the service activity.\nIt will be necessary to return to the Directive.\nThe 2007 Act\n3 of the 2007 Act: Finally, in relation to the domestic legislation, it is necessary to note section (1) In discharging its functions the Board must comply with the requirements of this section. (2) The Board must, so far as is reasonably practicable, act in a way (a) which is compatible with the regulatory objectives, and (b) which the Board considers most appropriate for the purpose of meeting those objectives. (3) The Board must have regard to (a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, and (b) any other principle appearing to it to represent the best regulatory practice.\nThe principles set out in section 3(3)(a) are known as the Better Regulation Principles.\nThe scheme\nThe details of the scheme are set out in the QASA Handbook and in separate sets of regulatory arrangements for the BSB, IPS and SRA.\nFor barristers the relevant provisions are in the Handbook and the BSB QASA Rules.\nThe object of the scheme is to ensure that those who appear as advocates in criminal courts have the necessary competence.\nThe scheme was devised because of serious concern about the poor quality of some criminal advocacy.\nThere was a general (although not universal) acceptance that there was a need for some form of quality assurance scheme involving assessment by the judiciary.\nThe judgment of the Divisional Court [2014] EWHC 28 (Admin) gives a detailed history of how the scheme came to be developed (at paras 16 to 38) and a detailed description of the nature of the scheme (at paras 39 to 50).\nIn outline, the scheme classifies criminal cases at four levels.\nMagistrates Court and Youth Court work is within Level 1.\nTrials at the Crown Court are at one of the upper levels, which are graded according to the seriousness and complexity of the work.\nAny advocate wishing to carry out work at one of the upper levels is required to register for provisional accreditation at the appropriate level.\nHe must then be judicially assessed in at least two of his first three effective trials at that level.\nIf he is assessed as competent, he will be granted full accreditation at that level, which will be valid for five years.\nThe assessment is carried out by the trial judge, against nine standards and a number of performance indicators set out in a Criminal Advocacy Evaluation Form.\nIf an advocate wishes to progress, for example from Level 2 to 3, he must first be judicially assessed as very competent at Level 2 in at least two out of three consecutive effective trials over a 12 month period.\nHe must then obtain at least two evaluations as competent in his first three consecutive trials at Level 3.\nIf an advocate is refused accreditation at the level for which he has applied, he drops back to his previous level but can seek to work his way up again.\nThere is no right of appeal against an individual assessment by a judge.\nThe BSB proposal of November 2012\nBetween December 2009 and July 2012 the BSB, SRA and IPS, acting together as a Joint Advocacy Group (JAG), issued a series of consultation papers which led to various amendments of the proposed scheme.\nAfter the fourth consultation, on 1 November 2012 the BSB proposed an alternative scheme under which advocates would register at the level which they thought appropriate for themselves and would be free to move up a level when they felt competent to do so.\nThey would remain at their chosen level unless judicial concerns were raised about their competence through monitoring referrals or evaluations in a rolling programme of judicial assessment.\nThe BSB argued that this would be a more proportionate method of quality assurance than a scheme which required a positive assessment before full accreditation at any of the higher levels, essentially because it would be less burdensome for the many advocates who were competent.\nIn its paper explaining its proposal the BSB said that its approach had the benefit that regulatory action is targeted at where there is the greatest risk and that Those who act within their competence and do not present a risk to the public or the wider regulatory objectives will therefore be subject to minimal oversight and administrative burdens.\nThe BSBs proposal met with opposition from the Board, SRA and IPS.\nThe Board considered that judicial evaluation of all advocates wishing to practise at the upper levels was essential for the effectiveness of the scheme and that the BSBs proposal would add little to the pre existing arrangements for judges to raise concerns with regulators, which had little impact on the problem.\nThe response of the Board, SRA and IPS placed the BSB in a dilemma whether to continue to participate with the other members of JAG in a joint scheme or to devise a separate accreditation scheme for barristers.\nIt decided for various reasons to continue to participate in a joint scheme involving prior accreditation and to negotiate various amendments on points of detail.\nThe decision under challenge\nIn the decision under challenge, the Board explicitly proceeded on the basis that the scheme was not an authorisation scheme within the meaning of the Regulations or the Directive.\nIt did not consider how regulation 14, or article 9(1), would apply to the scheme in the event that it was properly classified as an authorisation scheme.\nThe Board did however have regard to the Better Regulation Principles, in accordance with section 3(3)(a) of the 2007 Act.\nThe Board noted that, in developing the scheme, it was the duty of the BSB and other approved regulators to have regard to the Better Regulation Principles.\nIt was the BSBs duty to undertake the policy development and drafting of the arrangements.\nIt was also their responsibility to provide in their application any relevant material which supported it, including evidence establishing the necessity for regulatory arrangements.\nThe Board had itself undertaken a review of the history and development of the scheme in order to reassure itself that there was a risk which needed to be addressed and that there was a firm rationale for the particular scheme proposed.\nIn that regard, the Board noted that concerns had been expressed over a long period of time about standards of criminal advocacy.\nA range of evidence pointed towards a risk, and in some places a pattern, of advocacy not being of the required standard.\nThis included some senior judicial comments, the findings of a study conducted by Cardiff University, and reports by Her Majestys Crown Prosecution Service Inspectorate.\nThe Board noted that poor advocacy could have a detrimental impact on victims, witnesses and defendants, and on public confidence in the rule of law and the administration of justice, and could also result in increased costs.\nThe Board stated that it had taken into account views disputing the need for a scheme, and opposing the details of the scheme proposed.\nIt observed that much of the disagreement about the extent of low standards of criminal advocacy and the risks that this posed stemmed from the lack of consistent and measurable evidence available under the current arrangements.\nIt recognised that, without a quality assurance framework in place, it would be very difficult to find conclusive evidence of quality problems across criminal advocacy.\nIt observed that it was important that those practising criminal advocacy were operating at least to a minimum imposed standard and that the risks associated with poor quality were addressed by means of a proportionate regulatory response.\nThe Board concluded that there was sufficient consistency of evidence and concern to warrant a scheme such as that proposed by the application.\nThe concerns and limited evidence suggested a real risk, and a pattern, of actual problems in standards across a wide range of criminal advocates, and almost nothing by way of evidence that quality was consistently good enough.\nthe Board stated: In relation to the principle that regulatory activities should be proportionate, 28.\nThe Board considers that the proposed scheme has the potential to provide reliable and sustained evidence for approved regulators to measure and improve the quality of criminal advocacy over time.\nThe Board further considers that it is important that where there is opportunity, through a proportionate and targeted mechanism of accreditation, for relevant approved regulators to measure and enhance the quality of criminal advocacy, they should do so.\nIn that regard, the Board concludes that the scheme is proportionate because it addresses the risk in a structured way that allows the scheme to be adjusted on the basis of evidence gained from its actual implementation.\nThis is consistent with the Better Regulation Principles enabling a consistent, proportionate and targeted approach to regulation. 29.\nThe Board is further assured by the commitment from the applicants to review the scheme after two years.\nThe Board understands from the application that this review will provide a comprehensive analysis of the scheme including the assessment of the performance of key processes.\nThe review will also assess whether the scheme promotes the regulatory objectives and improves criminal advocacy standards.\nWith the experience and lessons gained from the operation of the scheme, the Board considers it should be possible to further calibrate it so that there continues to be a proportionate regulatory response to the risk posed from poor criminal advocacy.\nThe Board will actively engage with the review in its oversight role.\nThe Board also noted that the JAG had consulted four times on the details of the scheme, and that aspects of it had been adjusted as a result of representations made during the consultation process.\nThe Board stated: The Board considers that, on balance, the applicants have responded to issues raised during consultation and have adjusted the scheme to make it proportionate and targeted without undermining its potential effectiveness.\nThe ground of challenge\nAs we have explained, the only question in this appeal is whether the decision was contrary to regulation 14 of the Regulations.\nThe appellants argue that the scheme fails to meet the conditions set out in regulation 14(2)(b) and (c), namely that the need for an authorisation scheme is justified by an overriding reason relating to the public interest and that the objective pursued cannot be attained by means of a less restrictive measure.\nSince those provisions are derived from article 9(1)(b) and (c) of the Directive, and must be interpreted so as to give effect to the Directive, it is common ground that the argument is in substance a submission that the scheme falls within the ambit of the Directive and fails to comply with article 9(1)(b) and (c).\nWe shall address the argument on that basis.\nIn response, the Board submits that the scheme does not fall within the ambit of the Directive (or, therefore, the ambit of the Regulations), and that in any event it complies with article 9(1)(b) and (c).\nIt is convenient to begin by considering the second of these submissions, on the hypothesis that the Directive is applicable to the scheme.\nBefore turning to that matter, however, it is desirable to consider more widely the EU principle of proportionality, to which article 9(1)(c) gives effect.\nProportionality in EU law\nIt appears from the present case, and some other cases, that it might be helpful to lower courts if this court were to attempt to clarify the principle of proportionality as it applies in EU law.\nThat is the aim of the following summary.\nIt should however be said at the outset that the only authoritative interpreter of that principle is the Court of Justice.\nA detailed analysis of its case law on the subject can be found in texts such as Craig, EU Administrative Law (2006) and Tridimas, The General Principles of EU Law, 2nd ed (2006).\nIt has also to be said that any attempt to identify general principles risks conveying the impression that the courts approach is less nuanced and fact sensitive than is actually the case.\nAs in the case of other principles of public law, the way in which the principle of proportionality is applied in EU law depends to a significant extent upon the context.\nThis summary will range beyond the type of case with which this appeal is concerned, in order to demonstrate the different ways in which the principle of proportionality is applied in different contexts.\nIt will provide a number of examples from the case law of the court, in order to illustrate how the principle is applied in practice.\nProportionality is a general principle of EU law.\nIt is enshrined in article 5(4) of the Treaty on European Union (TEU): Under the principle of proportionality, the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties.\nIt is also reflected elsewhere in the EU treaties, for example in article 3(6) TEU: The Union shall pursue its objectives by appropriate means commensurate with the competences which are conferred upon it in the Treaties.\nThe principle has however been primarily and most fully developed by the Court of Justice in its jurisprudence, drawing upon the administrative law of a number of member states.\nThe principle applies generally to legislative and administrative measures adopted by EU institutions.\nIt also applies to national measures falling within the scope of EU law, as explained by Advocate General Sharpston in her opinion in Bartsch v Bosch und Siemens Hausgerte (BSH) Altersfrsorge GmbH (Case C 427\/06) [2008] ECR I 7245, para 69: For that to be the case, the provision of national law at issue must in general fall into one of three categories.\nIt must implement EC law (irrespective of the degree of the discretion the member state enjoys and whether the national measure goes beyond what is strictly necessary for implementation).\nIt must invoke some permitted derogation under EC law.\nOr it must otherwise fall within the scope of Community law because some specific substantive rule of EC law is applicable to the situation.\nThe principle only applies to measures interfering with protected interests: R (British Sugar plc) v Intervention Board for Agricultural Produce (Case C 329\/01) [2004] ECR I 1899, paras 59 60.\nSuch interests include the fundamental freedoms guaranteed by the EU Treaties.\nIt is also important to appreciate, at the outset, that the principle of proportionality in EU law is neither expressed nor applied in the same way as the principle of proportionality under the European Convention on Human Rights.\nAlthough there is some common ground, the four stage analysis of proportionality which was explained in Bank Mellat v Her Majestys Treasury (No 2) [2013] UKSC 39; [2014] AC 700, paras 20 and 72 76, in relation to the justification under domestic law (in particular, under the Human Rights Act 1998) of interferences with fundamental rights, is not applicable to proportionality in EU law.\nThe division of responsibility between the Court of Justice and national courts\nIssues of proportionality may arise directly before the Court of Justice and be decided by that court, as for example when the legality of an EU measure is challenged in direct proceedings, or when enforcement proceedings are brought by the Commission against a member state in relation to a national measure.\nIssues of proportionality may also arise before national courts, as occurred in the present case.\nAccording to the jurisprudence of the court, a national court may not declare an EU measure to be illegal.\nWhen, therefore, the validity of an EU measure is indirectly challenged before a national court on the ground of proportionality, the national court can refer the issue to the court for determination, and should do so if it considers the argument to be well founded (R (International Air Transport Association) v Department for Transport (Case C 344\/04) [2006] ECR I 403, para 32) or, in the case of a final court, if the issue is other than acte clair.\nOn the other hand, when the validity of a national measure is challenged before a national court on the ground that it infringes the EU principle of proportionality, it is in principle for the national court to reach its own conclusion.\nIt may refer a question of interpretation of EU law to the Court of Justice, but it is then for the national court to apply the Courts ruling to the facts of the case before it.\nThe court has repeatedly accepted that it does not have jurisdiction under the preliminary reference procedure to rule on the compatibility of a national measure with EU law: see, for example, Gebhard v Consiglio dellOrdine degli Avvocati e Procuratori di Milano (Case C 55\/94) [1995] ECR I 4165, para 19.\nIt has explained its role under that procedure as being to provide the national court with all criteria for the interpretation of Community law which may enable it to determine the issue of compatibility for the purposes of the decision in the case before it (Gebhard, para 19).\nNevertheless, where a preliminary reference is made, the court often effectively determines the proportionality of the national measure in issue, by reformulating the question referred so as to ask whether the relevant provision of EU legislation, or general principles of EU law, preclude a measure of that kind, or alternatively whether the measure in question is compatible with the relevant provision of EU legislation or general principles.\nThat practice reflects the fact that it can be difficult to draw a clear dividing line between the interpretation of the law and its application in concrete circumstances, and an answer which explains how the law applies in the circumstances of the case before the referring court is likely to be helpful to it.\nThe practice also avoids the risk that member states may apply EU law differently in similar situations, or may be insufficiently stringent in their scrutiny of national measures.\nIt may however give rise to difficulties if the courts understanding of the national measure, or of the relevant facts, is different from that of the referring court (as occurred, in a different context, in Her Majestys Revenue and Customs v Aimia Coalition Loyalty UK Ltd [2013] UKSC 15; [2013] STC 784).\nWhere the proportionality principle is applied by a national court, it must, as a principle of EU law, be applied in a manner which is consistent with the jurisprudence of the court: as is sometimes said, the national judge is also a European judge.\nThe jurisprudence in relation to the principle of proportionality is however not without complexity.\nAs will be explained, the principle has been expressed and applied by the court in different ways in different contexts.\nIn order for national judges to know how the principle should be applied in the cases before them, it is necessary for them to understand the nature and rationale of these differences, and to identify the body of case law which is truly relevant.\nThe nature of the test of proportionality\nProportionality 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.\nThere 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.\nIn practice, the court usually omits this question from its formulation of the proportionality principle.\nWhere 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.\nApart from the questions which need to be addressed, the other critical aspect of the principle of proportionality is the intensity with which it is applied.\nIn that regard, the court has been influenced by a wide range of factors, and the intensity with which the principle has been applied has varied accordingly.\nIt is possible to distinguish certain broad categories of case.\nIt is however important to avoid an excessively schematic approach, since the jurisprudence indicates that the principle of proportionality is flexible in its application.\nThe courts case law applying the principle in one context cannot necessarily be treated as a reliable guide to how the principle will be applied in another context: it is necessary to examine how in practice the court has applied the principle in the particular context in question.\nSubject to that caveat, however, it may be helpful to describe the courts general approach in relation to three types of case: the review of EU measures, the review of national measures relying upon derogations from general EU rights, and the review of national measures implementing EU law.\nAs a generalisation, proportionality as a ground of review of EU measures is concerned with the balancing of private interests adversely affected by such measures against the public interests which the measures are intended to promote.\nProportionality functions in that context as a check on the exercise of public power of a kind traditionally found in public law.\nThe courts application of the principle in that context is influenced by the nature and limits of its legitimate function under the separation of powers established by the Treaties.\nIn the nature of things, cases in which measures adopted by the EU legislator or administration in the public interest are held by the EU judicature to be disproportionate interferences with private interests are likely to be relatively infrequent.\nProportionality as a ground of review of national measures, on the other hand, has been applied most frequently to measures interfering with the fundamental freedoms guaranteed by the EU Treaties.\nAlthough private interests may be engaged, the court is there concerned first and foremost with the question whether a member state can justify an interference with a freedom guaranteed in the interests of promoting the integration of the internal market, and the related social values, which lie at the heart of the EU project.\nIn circumstances of that kind, the principle of proportionality generally functions as a means of preventing disguised discrimination and unnecessary barriers to market integration.\nIn that context, the court, seeing itself as the guardian of the Treaties and of the uniform application of EU law, generally applies the principle more strictly.\nWhere, however, a national measure does not threaten the integration of the internal market, for example because the subject matter lies within an area of national rather than EU competence, a less strict approach is generally adopted.\nThat also tends to be the case in contexts where an unregulated economic activity would be harmful to consumers, particularly where national regulatory measures are influenced by national traditions and culture.\nAn example is the regulation of gambling, discussed in R (Gibraltar Betting & Gaming Association Ltd v Secretary of State for Culture, Media and Sport) [2014] EWHC 3236 (Admin); [2015] 1 CMLR 751.\nWhere member states adopt measures implementing EU legislation, they are generally contributing towards the integration of the internal market, rather than seeking to limit it in their national interests.\nIn general, therefore, proportionality functions in that context as a conventional public law principle.\nOn the other hand, where member states rely on reservations or derogations in EU legislation in order to introduce measures restricting fundamental freedoms, proportionality is generally applied more strictly, subject to the qualifications which we have mentioned.\nHaving provided that broad summary, it may be helpful to consider in greater detail the application of the principle of proportionality to EU and national measures in turn.\nMeasures of EU institutions\nWhere EU legislative or administrative institutions exercise a discretion involving political, economic or social choices, especially where a complex assessment is required, the court will usually intervene only if it considers that the measure is manifestly inappropriate.\nThe general approach in such cases is illustrated by the judgment in R v Secretary of State for Health, Ex p British American Tobacco (Investments) Ltd and Imperial Tobacco Ltd (Case C 491\/01) [2002] ECR I 11453, concerned with Community legislation harmonising national measures concerning the marketing of tobacco products: 122.\nAs a preliminary point, it ought to be borne in mind that the principle of proportionality, which is one of the general principles of Community law, requires that measures implemented through Community provisions should be appropriate for attaining the objective pursued and must not go beyond what is necessary to achieve it . 123.\nWith regard to judicial review of the conditions referred to in the previous paragraph, the Community legislature must be allowed a broad discretion in an area such as that involved in the present case, which entails political, economic and social choices on its part, and in which it is called upon to undertake complex assessments.\nConsequently, the legality of a measure adopted in that sphere can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue.\nA further example of this approach is the judgment in R v Minister for Agriculture, Fisheries and Food, Ex p Fedesa.\nThe case concerned Community legislation which prohibited the use of certain hormones in livestock farming, so as to address barriers to trade and distortions of competition arising from differences in the relevant national legislation of the member states: differences which reflected differing national assessments of the effects of the hormones on public health, and differing levels of consumer anxiety.\nThe court stated: 13.\nThe court has consistently held that the principle of proportionality is one of the general principles of Community law.\nBy virtue of that principle, the lawfulness of the prohibition of an economic activity is subject to the condition that the prohibitory measures are appropriate and necessary in order to achieve the objectives legitimately pursued by the legislation in question; when there is a choice between several appropriate measures recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued. 14.\nHowever, with regard to judicial review of compliance with those conditions it must be stated that in matters concerning the common agricultural policy the Community legislature has a discretionary power which corresponds to the political responsibilities given to it by articles 40 and 43 of the Treaty.\nConsequently, the legality of a measure adopted in that sphere can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue.\nAs the court said in another similar case, the criterion to be applied is not whether the measure adopted by the legislature was the only one or the best one possible but whether it was manifestly inappropriate: Jippes v Minister van Landbouw, Natuurbeheer en Visserij (Case C 189\/01) [2001] ECR I 5689, para 83.\nThe court has not explained how it determines whether the inappropriateness of a measure is or is not manifest.\nIts practice in some cases suggests that it is sufficient to establish that there is a clear and material error, in law, or in reasoning, or in the assessment of the facts, which goes to the heart of the measure.\nIn other cases, the word manifestly appears to describe the degree of obviousness with which the impugned measure fails the proportionality test.\nIn such cases, the adverb serves, like comparable expressions in our domestic law, to emphasise that the court will only interfere when it considers that the primary decision maker has exceeded the generous ambit within which a choice of measures might reasonably have been made.\nIn this context, therefore, the court does not in practice apply the least onerous alternative test in any literal sense, but instead considers whether the measure chosen is manifestly inappropriate.\nThe court also made it clear in Jippes that the legality of an EU measure cannot depend on a retrospective check on a predictive assessment: Where the Community legislature is obliged to assess the future effects of rules to be adopted and those effects cannot be accurately foreseen, its assessment is open to criticism only if it appears manifestly incorrect in the light of the information available to it at the time of the adoption of the rules in question. (para 84)\nIt would however be a mistake to suppose that the manifestly inappropriate test means that the courts scrutiny of the justification for the measure is cursory or perfunctory.\nWhile the court will be slow to substitute its own evaluative judgment for that of the primary decision maker, and will not intervene merely because it would have struck a different balance between countervailing considerations, it will consider in some depth the factual foundation and reasoning underlying that judgment.\nThe point can be illustrated by the Fedesa case.\nThe proportionality of a blanket prohibition was challenged on the basis that the legislation was unsuitable to attain its objectives, since it was impossible to apply in practice and would lead to the creation of a black market in the prohibited hormones.\nIt was also argued to be unnecessary, since the objective could be achieved by the dissemination of information.\nIt was in addition argued to be disproportionate stricto sensu, since the financial losses imposed on the applicants would be disproportionate to the public benefit.\nIn relation to the first point, the court noted that, even if the presence of natural hormones in meat prevented the detection of prohibited hormones by tests on animals or on meat, other control methods could be used and had indeed been imposed by a supplementary measure.\nIt was not obvious that the authorisation of hormones described as natural would be likely to prevent the emergence of a black market for dangerous but less expensive substances.\nMoreover, it was not disputed that any system of partial authorization would require costly control measures whose effectiveness could not be guaranteed.\nIt followed that the prohibition could not be regarded as a manifestly inappropriate measure.\nAs to whether it was unnecessary, the applicants argument was based on the false premise that the only objective of the measure was to allay consumer anxieties.\nHaving regard to the requirements of public health, the removal of barriers to trade and distortions of competition could not be achieved merely by the dissemination of information.\nAs to proportionality stricto sensu, the importance of the objectives pursued was such as to justify substantial negative financial consequences for certain traders.\nIn cases concerned with EU measures establishing authorisation procedures, for example for the use of particular substances, the court will also require that the procedures reflect principles of sound administration and legal certainty.\nFor example, in R (Alliance for Natural Health) v Secretary of State for Health (Joined Cases C 154 and C 155\/04) [2005] ECR I 6451, the court said at para 73: Such a procedure must be accessible in the sense that it must be expressly mentioned in a measure of general application which is binding on the authorities concerned.\nIt must be capable of being completed within a reasonable time.\nAn application to have a substance included on a list of authorised substances may be refused by the competent authorities only on the basis of a full assessment of the risk posed to public health by the substance, established on the basis of the most reliable scientific data available and the most recent results of international research.\nIf the procedure results in a refusal, the refusal must be open to challenge before the courts.\nWhere a measure is challenged on the ground that it interferes with fundamental rights, article 52(1) of the EU Charter of Fundamental Rights is relevant: Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms.\nSubject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others.\nWhere a fundamental right is not absolute, the court has said that it must be viewed in relation to its social purpose: Consequently, its exercise may be restricted, provided that those restrictions in fact correspond to objectives of general interest pursued by the Community and do not constitute a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed (British American Tobacco, para 149).\nIn the British American Tobacco case, one of the grounds of challenge to the legislation was that it interfered with the fundamental right to property because of its impact on trademark rights.\nHaving applied the manifestly inappropriate test to grounds of challenge directed at the suitability and necessity of the legislation, the court then turned to the rights based argument, which it approached in the manner described.\nOne of the contested aspects of the legislation was to require large health warnings on packets.\nAlthough the amount of space available for the display of trademarks was consequently reduced, this did not prejudice the substance of the trademark rights, and was intended to ensure a high level of health protection.\nIt was a proportionate restriction.\nThe other contested aspect was the prohibition of certain descriptions (and hence of trademarks incorporating those descriptions) on the packaging, in order to protect public health.\nIt remained possible for manufacturers to distinguish their products by using other distinctive signs.\nIn addition, the measure provided for a sufficient period of time between its adoption and the entry into force of the prohibition to enable the affected manufacturers to adapt.\nIt was therefore proportionate.\nNational measures derogating from fundamental freedoms\nIt is necessary to turn next to measures adopted by the member states within the sphere of application of EU law.\nIn that context, issues of proportionality have arisen most often in relation to national measures taken in reliance upon provisions in the Treaties or other EU legislation recognising permissible limitations to the fundamental freedoms: the free movement of goods, the free movement of workers, freedom of establishment, freedom to provide services, and the free movement of capital.\nCompliance with the principle of proportionality is also a requirement of the justification of other national measures falling within the scope of EU law, including those which derogate from other rights protected by the Treaties, such as the right to equal treatment or non discrimination, or fundamental rights such as the right to family life.\nThe case law concerned with restrictions on the right of establishment and the provision of services is particularly relevant to the present case.\nThe Treaty on the Functioning of the European Union (TFEU) recognises permissible limitations to those rights which are justified upon grounds of public policy, public security or public health (articles 52(1) and 62).\nThose concepts have undergone considerable analysis in the case law of the court.\nThe courts general approach in this context was explained in the case of Gebhard, concerned with the provision of legal services: National measures liable to make less attractive the exercise of fundamental freedoms guaranteed by the Treaty must fulfil four conditions: they must be applied in a non discriminatory manner; they must be justified by imperative requirements in the general interest; they must be suitable for securing the attainment of the objective which they pursue; and they must not go beyond what is necessary in order to attain it. (para 37)\nThe last two of these requirements correspond to the two limbs of the proportionality principle.\nIn some more recent cases, the court has also emphasised other general principles of EU law, by requiring that procedures under the national measure should be compatible with principles of sound administration, such as being completed within a reasonable time and without undue cost, and also compatible with legal certainty, including the right to judicial protection.\nThe first of the conditions listed in Gebhard is relatively straightforward.\nIn relation to the second condition, the court must identify the objective of the measure in question and determine whether it is a lawful objective which is capable of justifying a restriction upon the exercise of a fundamental freedom.\nThe Court of Justice has recognised a wide range of public interest grounds capable of justifying restrictions on the exercise of fundamental freedoms.\nSpecifically in relation to legal services, the court has accepted that restrictions on freedom of establishment or the provision of services can be justified by the need to protect the interests of the recipients of those services, and by the public interest in the administration of justice.\nFor example, in Reisebro Broede v Sandker (Case C 3\/95) [1996] ECR I 6511, para 38, the court stated that the application of professional rules to lawyers, in particular those relating to organization, qualifications, professional ethics, supervision and liability, ensures that the ultimate consumers of legal services and the sound administration of justice are provided with the necessary guarantees in relation to integrity and experience.\nIn relation to the third and fourth conditions, the court must determine whether the measure is suitable to achieve the legitimate aim in question, and must then determine whether it is no more onerous than is required to achieve that aim, if there is a choice of equally effective measures.\nThe position was summarised by Advocate General Sharpston at para 89 of her opinion in Commission of the European Communities v Kingdom of Spain (Case C 400\/08) [2011] ECR I 1915, a case concerned with the right of establishment: Whilst it is true that a member state seeking to justify a restriction on a fundamental Treaty freedom must establish both its appropriateness and its proportionality, that cannot mean, as regards appropriateness, that the member state must establish that the restriction is the most appropriate of all possible measures to ensure achievement of the aim pursued, but simply that it is not inappropriate for that purpose.\nAs regards proportionality, however, it is necessary to establish that no other measures could have been equally effective but less restrictive of the freedom in question.\nThe justification for the restriction tends to be examined in detail, although much may depend upon the nature of the justification, and the extent to which it requires evidence to support it.\nFor example, justifications based on moral or political considerations may not be capable of being established by evidence.\nThe same may be true of justifications based on intuitive common sense.\nAn economic or social justification, on the other hand, may well be expected to be supported by evidence.\nThe point is illustrated by Commission of the European Communities v Grand Duchy Luxembourg (Case C 319\/06) [2008] ECR I 4323, concerned with legislation which imposed on providers of services in Luxembourg, who were based in other member states, the mandatory requirements of Luxembourgs employment law.\nIn addressing an argument that the measure ensured good labour relations in Luxembourg, the court stated: 51.\nIt has to be remembered that the reasons which may be invoked by a member state in order to justify a derogation from the principle of freedom to provide services must be accompanied by appropriate evidence or by an analysis of the expediency and proportionality of the restrictive measure adopted by that State, and precise evidence enabling its arguments to be substantiated . 52.\nTherefore, in order to enable the court to determine whether the measures at issue are necessary and proportionate to the objective of safeguarding public policy, the Grand Duchy of Luxembourg should have submitted evidence to establish whether and to what extent the [contested measure] is capable of contributing to the achievement of that objective.\nWhere goods or services present known and serious risks to the public, the precautionary principle permits member states to forestall anticipated harm, without having to wait until actual harm is demonstrated.\nThe point is illustrated by the case of Commission of the European Communities v Kingdom of the Netherlands (Case C 41\/02) [2004] ECR I 11375, which concerned a prohibition on the sale of foodstuffs fortified with additives, the justification being the protection of public health.\nThe court held that the existence of risks to health had to be established on the basis of the latest scientific data available at the date of the adoption of the decision.\nAlthough, in accordance with the precautionary principle, a member state could take protective measures without having to wait until the existence and gravity of the risks became fully apparent, the risk assessment could not be based on purely hypothetical considerations.\nIn a case concerned with an authorisation scheme designed to protect public health, the court required it to ensure that authorisation could be refused only if a genuine risk to public health was demonstrated by a detailed assessment using the most reliable scientific data available and the most recent results of international research: Criminal Proceedings against Greenham and Abel (Case C 95\/01) [2004] ECR I 1333, paras 40 42.\nAs in Commission of the European Communities v Kingdom of the Netherlands, the Court acknowledged that such an assessment could reveal uncertainty as to the existence or extent of real risks, and that in such circumstances a member state could take protective measures without having to wait until the existence and gravity of those risks were fully demonstrated.\nThe risk assessment could not however be based on purely hypothetical considerations.\nThe approach adopted in these cases is analogous to that adopted in relation to EU measures establishing authorisation schemes designed to protect public health, as for example in the Alliance for Natural Health case, discussed earlier.\nIt is not, however, necessary to establish that the measure was adopted on the basis of studies which justified its adoption: see, for example, Sto v Wetteraukreis (Case C 316\/07) [2010] ECR I 8069, para 72.\nParticularly in situations where a measure is introduced on a precautionary basis, with correspondingly less by way of an evidential base to support the particular restrictions imposed, it may well be relevant to its proportionality to consider whether it is subject to review in the light of experience.\nThe court has tended to examine closely (again, depending to some extent on the context) the question whether other measures could have been equally effective but less restrictive of the freedom in question.\nThe point is illustrated by the case of Criminal Proceedings against Bordessa (Joined Cases C 358\/93 and C 416\/93) [1995] ECR I 361, which concerned a Spanish law requiring that exports of coins, banknotes or bearer cheques should be the subject of a prior declaration if the amount was below a specified limit, and of prior authorisation if the amount was above that limit.\nThis interference with the free movement of capital was argued to be necessary in order to prevent tax evasion, money laundering and other offences.\nThe court noted that the requirement of a prior declaration was less restrictive than that of prior authorisation, since it did not entail suspension of the transaction in question.\nIt nevertheless enabled the national authorities to exercise effective supervision.\nThe Spanish Government contended that it was only by means of a system of prior authorisation that non compliance could be classified as criminal and hence criminal penalties imposed.\nThat contention was however rejected by the court, on the basis that the Spanish Government had failed to provide sufficient proof that it was impossible to attach criminal penalties to the failure to make a prior declaration.\nIt was therefore held that EU law precluded rules which made exports of coins, banknotes or bearer cheques conditional on prior authorisation, but not rules which made such exports conditional on a prior declaration.\nIn a different context, the point is also illustrated by the case of Germany v Deutsches Milch Kontor GmbH (Case C 426\/92) [1994] ECR I 2757, where the systematic inspection of the composition and quality of skimmed milk powder intended for use as animal feed, in order to combat fraud, was held to be disproportionate on the basis that random checks would have sufficed.\nThe less restrictive alternative test is not however applied mechanically.\nIn the first place, the court has made it clear that the burden of proof placed upon the member state to establish that a measure is necessary does not require it to exclude hypothetical alternatives.\nIn Commission of the European Communities v Italian Republic (Case C 518\/06) [2009] ECR I 3491, a case concerned with an obligation imposed on insurers, it stated at para 84: Whilst it is true that it is for a member state which relies on an imperative requirement to justify a restriction within the meaning of the EC Treaty to demonstrate that its rules are appropriate and necessary to attain the legitimate objective being pursued, that burden of proof cannot be so extensive as to require the member state to prove, positively, that no other conceivable measure could enable that objective to be attained under the same conditions.\nThe court has also accepted that, where a relevant public interest is engaged in an area where EU law has not imposed complete harmonisation, the member state possesses discretion (or, as it has sometimes said, a margin of appreciation) not only in choosing an appropriate measure but also in deciding on the level of protection to be given to the public interest in question.\nThis can be seen, for example, in cases where the public interest relied on is the protection of human life and health, such as Apothekerkammer des Saarlandes v Saarland and Ministerium fr Justiz, Gesundheit und Soziales (Joined Cases C 171\/07 and C 172\/07) [2009] ECR I 4171, which concerned a rule restricting the ownership of pharmacies.\nThe court stated: . it is for the member states to determine the level of protection which they wish to afford to public health and the way in which that level is to be achieved.\nSince the level may vary from one member state to another, member states must be allowed discretion. (para 19)\nThe court is therefore unimpressed, in areas of activity where member states enjoy this kind of discretion, by arguments to the effect that one member states regulatory scheme is disproportionate because anothers is less restrictive.\nIts focus is upon the objectives pursued by the competent authorities of the member state concerned and the level of protection which they seek to ensure.\nThis is illustrated by the case of Commission of the European Communities v Italian Republic (Case C 110\/05) [2009] ECR I 519, concerned with a ban on a type of trailer, on the ground of road safety, where the court said: 61.\nIn the absence of fully harmonising provisions at Community level, it is for the member states to decide upon the level at which they wish to ensure road safety in their territory, whilst taking account of the requirements of the free movement of goods within the European Community . 65.\nWith regard . to whether the said prohibition is necessary, account must be taken of the fact that, in accordance with the case law of the court referred to in para 61 of the present judgment, in the field of road safety a member state may determine the degree of protection which it wishes to apply in regard to such safety and the way in which that degree of protection is to be achieved.\nSince that degree of protection may vary from one member state to the other, member states must be allowed a margin of appreciation and, consequently, the fact that one member state imposes less strict rules than another member state does not mean that the latter's rules are disproportionate.\nIn a context closer to that of the present case, the same approach can also be seen in Alpine Investments BV v Minister van Financin (Case C 384\/93) [1995] ECR I 1141, para 51, concerned with the regulation of the provision of financial services.\nThis margin of appreciation applies to the member states decision as to the level of protection of the public interest in question which it considers appropriate, and to its selection of an appropriate means by which that protection can be provided.\nHaving exercised its discretion, however, the member state must act proportionately within the confines of its choice.\nA national measure will not, therefore, be proportionate if it is clear that the desired level of protection could be attained equally well by measures which were less restrictive of a fundamental freedom: see, for example, Rosengren v Riksklagaren (Case C 170\/04) [2007] ECR I 4071, para 43.\nIn applying the less restrictive alternative test it is necessary to have regard to all the circumstances bearing on the question whether a less restrictive measure could equally well have been used.\nThese will generally include such matters as the conditions prevailing in the national market, the circumstances which led to the adoption of the measure in question, and the reasons why less restrictive alternatives were rejected.\nThe court will be heavily reliant on the submissions of the parties for an explanation of the factual and policy context.\nIn relation to authorisation schemes, the court has identified a number of considerations, including considerations relating to principles of good administration, which should be taken into account in determining the compliance of the scheme with the principle of proportionality.\nThe following were mentioned in the case of Canal Satlite Digital SL v Administracin General del Estado and Distribuidora de Televisin Digital SA (Case C 390\/99) [2002] ECR I 607: 35. First . if a prior administrative authorisation scheme is to be justified even though it derogates from such fundamental freedoms, it must, in any event, be based on objective, non discriminatory criteria which are known in advance to the undertakings concerned, in such a way as to circumscribe the exercise of the national authorities' discretion, so that it is not used arbitrarily . 36.\nSecond, a measure introduced by a member state cannot be regarded as necessary to achieve the aim pursued if it essentially duplicates controls which have already been carried out in the context of other procedures, either in the same state or in another member state. 39.\nThird, a prior authorisation procedure will be necessary only where a subsequent control is to be regarded as being too late to be genuinely effective and to enable it to achieve the aim pursued. 41.\nFinally, it should be noted that, for as long as it lasts, a prior authorisation procedure completely prevents traders from marketing the products and services concerned.\nIt follows that, in order to comply with the fundamental principles of the free movement of goods and the freedom to provide services, such a procedure must not, on account of its duration, the amount of costs to which it gives rise, or any ambiguity as to the conditions to be fulfilled, be such as to deter the operators concerned from pursuing their business plan.\nIn other cases concerned with authorisation schemes, the court has also stipulated that the procedure should be easily accessible and capable of ensuring that the application will be dealt with objectively and impartially within a reasonable time, and that refusals to grant authorisation should be capable of being challenged in judicial or quasi judicial proceedings: see, for example, Geraets Smits v Stichting Ziekenfonds VGZ and Peerbooms v Stichting CZ Groep Zorgverzekeringen (Case C 157\/99) [2001] ECR I 5473, para 90.\nOther conditions have been mentioned in relation to schemes with specific aims, such as the imposition of public service obligations (Asociacin Profesional de Empresas Navieras de Lneas Regulares (Analir) and Others v Administracin General del Estado (Case C 205\/99) [2001] ECR I 1271).\nWhere the justification for the national measure is the protection of fundamental rights, the court approaches the issue in the manner described earlier in para 48.\nThe case of Schmidberger Internationale Transporte und Planzuge v Austria (Case C 112\/00) [2003] ECR I 5659, for example, concerned the Austrian governments failure to ban a demonstration on a motorway, on the ground of respect for the rights of freedom of expression and freedom of assembly guaranteed by the Austrian constitution and the European Convention on Human Rights.\nThe demonstration resulted in the motorways closure for over a day, restricting the free movement of goods.\nThe court accepted that since fundamental rights were recognised in EU law, the protection of those rights is a legitimate interest which, in principle, justifies a restriction of the obligations imposed by Community law, even under a fundamental freedom guaranteed by the Treaty such as the free movement of goods (para 74).\nIt noted, however, that neither the freedoms nor the rights were absolute.\nThe right to free movement of goods could be subject to restrictions for the reasons laid down in the Treaty or for overriding reasons of public interest.\nThe rights to freedom of expression and freedom of assembly were also subject to certain limitations justified by objectives in the public interest, in so far as those derogations are in accordance with the law, motivated by one or more of the legitimate aims under those provisions and necessary in a democratic society, that is to say justified by a pressing social need and, in particular, proportionate to the legitimate aim pursued (para 79).\nThe court continued: 80.\nConsequently, the exercise of those rights may be restricted, provided that the restrictions in fact correspond to objectives of general interest and do not, taking account of the aim of the restrictions, constitute disproportionate and unacceptable interference, impairing the very substance of the rights guaranteed . 81.\nIn those circumstances, the interests involved must be weighed having regard to all the circumstances of the case in order to determine whether a fair balance was struck between those interests. 82.\nThe competent authorities enjoy a wide margin of discretion in that regard.\nNevertheless, it is necessary to determine whether the restrictions placed upon intra Community trade are proportionate in the light of the legitimate objective pursued, namely, in the present case, the protection of fundamental rights.\nApplying that approach, the court accepted that the action in question had been proportionate.\nA similar approach can also be seen in the case of Omega Spielhallen und Automatenaufstellungs GmbH v Oberbrgermeisterin der Bundesstadt Bonn (Case C 36\/02) [2004] ECR I 9609, which concerned a German ban on electronic games involving simulated killing, on the ground that they infringed the guarantee of human dignity in the German Constitution.\nThe ban was upheld by the Court, which accepted that the circumstances which could constitute a justification on grounds of public policy could vary from one member state to another, and that the national authorities must be accorded a margin of discretion.\nNational measures implementing EU measures\nMember states must also comply with the requirement of proportionality, and with other aspects of EU law, when applying EU measures such as directives.\nAs when assessing the proportionality of EU measures, to the extent that the directive requires the national authority to exercise a discretion involving political, economic or social choices, especially where a complex assessment is required, the court will in general be slow to interfere with that evaluation.\nIn applying the proportionality test in circumstances of that nature, the court has applied a manifestly disproportionate test: see, for example, R v Minister of Agriculture, Fisheries and Food, Ex p National Federation of Fishermen's Organisations and Others (Case C 44\/94) [1995] ECR I 3115, para 58.\nThe court may nevertheless examine the underlying facts and reasoning: see, for example, Upjohn Ltd v Licensing Authority established by the Medicines Act 1968 (Case C 120\/97) [1999] ECR I 223, paras 34 35.\nWhere, on the other hand, the 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.\nThe case of Commission of the European Communities v Grand Duchy of Luxembourg, cited earlier, concerned a national measure of that kind.\nSinclair Collis\nIt may be helpful at this point to say a word about the case of R (Sinclair Collis Ltd) v Secretary of State for Health [2011] EWCA Civ 437; [2012] QB 394, which was followed by the Court of Appeal in the present case.\nSinclair Collis concerned a national measure restricting the free movement of goods.\nThe justification put forward was the protection of public health.\nThe issue was whether the measure was necessary, or whether the objective might have been achieved by a less restrictive measure.\nThe relevant area of EU jurisprudence was therefore the body of case law concerning the proportionality of national measures restricting the free movement of goods in the interests of public health.\nAs we have explained, that case law indicates that a measure of discretion is allowed to member states as to the level of protection of public health which they consider appropriate and as to the selection of an appropriate means of protection.\nThe judgments in the Court of Appeal, following the arguments of counsel as reported, focused primarily upon the judgments of the Court of Justice in the Fedesa case, British American Tobacco, and R v Minister of Agriculture, Fisheries and Food, Ex p National Federation of Fishermen's Organisations and Others.\nAs has been explained, the first and second of these cases were concerned with the question whether an EU measure was proportionate, while the third case was concerned with a national measure implementing EU requirements.\nIn their judgments, Arden LJ and Lord Neuberger of Abbotsbury MR correctly analysed these cases as yielding a manifestly inappropriate test.\nThey then applied that test in the different context of a national measure restricting a fundamental freedom.\nIn a dissenting judgment, Laws LJ correctly attached importance to case law concerned with national measures restricting the free movement of goods, but focused particularly upon a case concerned with the maintenance of a national retail monopoly (Rosengren v Riksklagaren), in which the court found that the monopoly was unsuitable for attaining the ostensible aim of protecting health.\nThose judgments might be contrasted with that delivered by the Lord Justice Clerk, Lord Carloway, in the parallel Scottish proceedings: Sinclair Collis Ltd v Lord Advocate [2012] CSIH 80; 2013 SC 221.\nLord Carloway rejected the submission that the question was whether the legislation was manifestly inappropriate, stating: . manifestly inappropriate is language used by the ECJ in relation to testing EU institution measures (or national measures implementing EU law) (see eg R v Secretary of State for Health, Ex p British American Tobacco (Investments) [2002] ECR 1 11453, para 123).\nThere the balance is between private and public interests.\nIt is not applicable when testing the legitimacy of state measures against fundamental principles contained in the EU Treaties where the balance is between EU and state interests. (para 56) At the same time, Lord Carloway recognised that there was a margin of appreciation afforded to the state not only in determining the general health objective of reducing smoking but also in selecting the manner in which the reduction in health risk is to be achieved (para 59).\nApplying that approach, the Inner House arrived at the same conclusion as the majority of the Court of Appeal.\nLord Carloway also questioned the proposition, accepted by the Court of Appeal, that the strictness with which the EU proportionality principle was applied to a national measure restricting a fundamental freedom should depend on the identity of the national decision maker (whether, for example, it was a minister or Parliament).\nLord Carloway commented: . the court has reservations about whether the margin can vary in accordance with the nature of the particular organ of the state which creates or implements the measure.\nIt might appear strange if the manner in which a EU member state elects to organise government within its borders were capable of increasing or decreasing the margin of appreciation available to that state relative to measures challenged as infringing one of the EU Treaties' fundamental principles.\nThe legality of a measure ought not to depend upon whether a measure is passed by a central, national, provincial or local government legislature or determined by an official or subsidiary body under delegated authority from such a legislature. (para 59)\nThere is force in the point made by Lord Carloway; and it is difficult to discern in the courts case law any clear indication that the identity or status of the national authority whose action is under review is a factor which influences the intensity of scrutiny.\nOn the other hand, we would not rule out the possibility that whether, for example, a measure has been taken at the apex of democratic decision making within a member state might, at least in some contexts, be relevant to an assessment of its proportionality, particularly in relation to the level of protection considered to be appropriate and the choice of method for ensuring it.\nIt is however unnecessary to resolve that question for the purposes of the present appeal.\nThe Court of Appeal based its approach in the present case, and in particular its adoption of a test of whether the scheme was manifestly inappropriate, upon the judgments of the majority of the Court of Appeal in Sinclair Collis.\nFor the reasons we have explained, that aspect of the reasoning in those judgments (as distinct from the conclusion reached) is open to criticism.\nThe Directive\nThe Directive is underpinned by the freedom of establishment, and freedom to provide services, guaranteed by articles 49 and 56 respectively of the TFEU.\nAs explained in recitals 6 and 7 to the Directive, barriers to those freedoms cannot be removed solely by relying on the direct application of the Treaty articles on a case by case basis.\nThe Directive therefore establishes a general legal framework, based on the removal of barriers which can be dismantled quickly, and, for the others, the launching of a process of evaluation, consultation and harmonisation of specific issues, making possible the coordinated modernisation of national regulatory systems for service activities.\nAs recital 30 to the Directive acknowledges, there existed prior to the Directive a considerable body of EU law on service activities.\nThe recital states that the Directive builds on, and thus complements, the Community acquis.\nIn particular, recital 54 states that the possibility of gaining access to a service activity should be made subject to authorisation only if that decision satisfies the criteria of non discrimination, necessity and proportionality: That means, in particular, that authorisation schemes should be permissible only where an a posteriori inspection would not be effective because of the impossibility of ascertaining the defects of the services concerned a posteriori, due account being taken of the risks and dangers which could arise in the absence of a prior inspection.\nTurning to the substantive provisions of the Directive, Chapter III is concerned with freedom of establishment for providers of services.\nIt is necessary to consider only Section 1, which is concerned with authorisations, and largely codifies the case law of the court, discussed earlier.\nThe first provision in that section is article 9, para 1 of which provides: Member states shall not make access to a service activity or the exercise thereof subject to an authorisation scheme unless the following conditions are satisfied: (a) the authorisation scheme does not discriminate against the provider in question; (b) the need for an authorisation scheme is justified by an overriding reason relating to the public interest; (c) the objective pursued cannot be attained by means of a less restrictive measure, in particular because an a posteriori inspection would take place too late to be genuinely effective.\nThe expression authorisation scheme is defined by article 4(6) as meaning any procedure under which a provider or recipient is in effect required to take steps in order to obtain from a competent authority a formal decision, or an implied decision, concerning access to a service activity or the exercise thereof.\nA fuller description is set out in recital 39, covering inter alia, the administrative procedures for granting authorisations, licences, approvals or concessions, and also the obligation, in order to be eligible to exercise the activity, to be registered as a member of a profession or entered in a register, roll or database, to be officially appointed to a body or to obtain a card attesting to membership of a particular profession.\nThe conditions set out in subparagraphs (a) to (c) of article 9(1) broadly reflect the Courts case law, as stated for example in Gebhard.\nIn relation to (b), overriding reasons relating to the public interest are defined by article 4(8) as meaning reasons recognised as such in the case law of the court, including inter alia public policy, the protection of consumers and recipients of services, and social policy objectives.\nSomewhat confusingly, a different and longer list of overriding reasons relating to the public interest is set out in recital 40, and a third list in recital 56.\nThe former list includes safeguarding the sound administration of justice.\nAs we have explained, that is a justification which has been recognised in the case law of the court, and therefore falls within the scope of article 4(8).\nIt is also relevant to note recital 41, which concerns the concept of public policy, and states that, as interpreted by the Court of Justice, it covers protection against a genuine and sufficiently serious threat affecting one of the fundamental interests of society, and may include, in particular, issues relating to human dignity, the protection of minors and vulnerable adults, and animal welfare.\nIn relation to the indication in subparagraph (c) that an authorisation scheme may be proportionate in particular because an a posteriori inspection would take place too late to be genuinely effective, it is relevant also to note that recital 54, set out above, refers to the need to take account of the risks and dangers which could arise in the absence of a prior inspection.\nArticle 10 goes on to require authorisation schemes to be based on criteria which preclude the competent authorities from exercising their power of assessment in an arbitrary manner (paragraph 1), and which are non discriminatory, justified by an overriding reason relating to the public interest, proportionate to that public interest objective, clear and unambiguous, objective, made public in advance, transparent and accessible (paragraph 2).\nIn terms of paragraph 5, the authorisation must also be granted as soon as it is established, in the light of an appropriate examination, that the conditions for authorisation have been met.\nArticle 11 prohibits an authorisation being for a limited period, except in particular circumstances.\nOne of those circumstances is where a limited authorisation period can be justified by an overriding reason relating to the public interest.\nThe ability of a member state to revoke authorisations, when the conditions for authorisation are no longer met, is recognised by article 11(4).\nArticle 13 lays down a number of requirements in relation to authorisation procedures.\nIn summary, these include that the procedures are clear, made public in advance, and such as to provide the applicants with a guarantee that their application will be dealt with objectively and impartially (paragraph 1); that they are not dissuasive and do not unduly complicate or delay the provision of the service; that they are easily accessible, and that any charges are reasonable and proportionate to the cost of the authorisation procedures and do not exceed the cost of those procedures (paragraph 2); and that applicants are guaranteed to have their application processed as quickly as possible, and in any event within a reasonable period (paragraph 3).\nThe Directive was due to be implemented by 28 December 2009.\nThe issues arising under the Directive\nThe issues in the present case have been focused by reference to the requirements set out in article 9(1)(b) and (c).\nIt is not contended that the scheme fails to comply with any other provisions of the Directive.\nThe arguments in relation to paras (b) and (c) overlap to the point of being practically indistinguishable.\nThe objectives identified as the overriding reason relating to the public interest justifying the need for the scheme, under article 9(1)(b), are the protection of consumers and other recipients of the services in question, and the sound administration of justice.\nThere is no dispute about the legitimacy and importance of those considerations.\nThe argument is about whether they are sufficient to justify the scheme in the form which has been approved by the Board.\nThat depends essentially on whether the scheme satisfies the condition in article 9(1)(c).\nThe issue arising under article 9(1)(c) in the present case is not a straightforward question whether prior authorisation is necessary, or whether an a posteriori inspection would be adequate.\nThe scheme is not a simple prior authorisation scheme, but involves a combination of provisional accreditation, based on self certification, and subsequent assessment.\nThe contentious element of the scheme is not the requirement, imposed on advocates wishing to practise at a level higher than level one, to register for provisional accreditation at the level at which they consider themselves to be practising.\nA requirement to register at a level on the basis of self assessment is common to both the scheme and the BSBs alternative proposal.\nIt is not argued that it presents any material obstacle to practice.\nThe issue concerns the particular character and purpose of the judicial assessment which takes place after the advocate has been practising at the level in question on the basis of his or her self assessment.\nAs was explained earlier, judicial assessment is automatic in relation to all advocates at Level 2 and above, and is carried out in order to decide whether full accreditation should be granted.\nSuch accreditation is then valid for five years, following which its renewal is conditional on a further assessment.\nProgression to a higher level requires provisional accreditation at that level, on the basis of judicial assessment as very competent at the current level, followed by full accreditation at the higher level, based on further assessment.\nUnder the BSBs alternative proposal, on the other hand, judicial assessment would take place only if concerns were raised about a particular advocate through monitoring referrals or evaluations completed in a rolling programme of judicial assessment.\nAdvocates would otherwise remain at their self assessed level, or move up a level when they felt competent to do so.\nThe point is put in a nutshell in the parties agreed statement of facts and issues: The BSB proposal was therefore one which involved self certification at a particular level, with the possibility of judicial assessment at that level to follow subsequently.\nQASA proposed self certification for the purposes of initial, provisional accreditation at a particular level, followed by judicial assessment for the purposes of the BSB determining whether the advocate is entitled to maintain full accreditation at the existing level, or to progress to a higher level.\nThe issue under article 9(1)(c), therefore, is whether, in so far as the requirements of the scheme are more stringent than those of the BSB proposal, the objectives pursued cannot be attained by means of a less restrictive measure.\nAs the Commissions Handbook on Implementation of the Services Directive (2007) states at para 6.1.1: Member States should keep in mind that, in many situations, authorisation schemes can be . replaced by less restrictive means, such as monitoring of the activities of the service provider by the competent authorities .\nIn essence, the appellants contend that this is such a situation.\nIt is clear from the case law of the court, summarised in paras 55 67, that consideration of that issue in a context of this kind requires scrutiny of the justification put forward for rejecting the less stringent alternative.\nA manifestly inappropriate or manifest error test is not appropriate in this context; but, as we have explained, that is not to say that no discretion is allowed to the primary decision maker as to the level of protection which should be afforded to the public interest in question or as to the choice of a suitable measure.\nThe approach of the courts below\nIn considering the decisions of the courts below, it should be noted at the outset that the EU jurisprudence which we have discussed was not cited to those courts.\nNor was it suggested to them that the proportionality principle in EU law differed in any material respect from that applicable under the Human Rights Act.\nIn considering the proportionality of the scheme, the Divisional Court ([2014] EWHC 28 (Admin)) referred at para 130 to the four stage analysis of proportionality explained in Bank Mellat v Her Majestys Treasury (No 2) [2014] AC 700, paras 20 and 72 76.\nThat analysis was however concerned with the proportionality under the Human Rights Act of measures which involve the limitation of a fundamental right, rather than with proportionality as a principle of EU law.\nAttempting nevertheless to apply the Bank Mellat approach, the court accepted at stage one of the analysis that the scheme had an important objective, namely to ensure competent advocacy.\nAt stage two, the court accepted that the scheme was a rational method of tackling incompetent advocacy.\nStages three and four do not appear to have been explicitly addressed.\nThe court noted that the BSB had considered whether a less intrusive scheme was possible, but had decided that the QASA scheme was the best way forward; that the cost to advocates of participating in the scheme would be very small; that judges would have to be trained before conducting assessments; and that the scheme would be reviewed within a short period.\nThe court then expressed its conclusion that we cannot regard the balance struck in the light of all these factors as being in any way disproportionate (para 132).\nThis discussion did not apply the EU principle of proportionality, or address the requirement in article 9(1)(c) of the Directive (or regulation 14(2) of the Regulations) that the objective pursued cannot be attained by means of a less restrictive measure.\nThe Court of Appeal began its consideration of proportionality by stating (para 102): It is not for the court to decide whether QASA is disproportionate.\nWe are unable to agree with that statement.\nIt is for the court to decide whether the scheme is disproportionate.\nThe court must apply the principle of proportionality and reach its own conclusion.\nThe Court of Appeal continued (para 102): The court is not entitled simply to substitute its own views for those of the LSB: see R (Sinclair Collis Ltd) v Secretary of State for Health [2011] EWCA Civ 437, [2012] QB 394, at paras 19 23 (per Laws LJ, dissenting), paras 115 155 (per Arden LJ) and paras 192 209 (per Lord Neuberger MR).\nWe remind ourselves that we are reviewing the proportionality of the LSBs decision.\nEven under a proportionality test, the decision maker retains a margin of discretion, which will vary according to the identity of the decision maker, and the subject matter of the decision, as well as the reasons for and effects of the decision.\nA decision does not become disproportionate merely because some other measure could have been adopted.\nWe accept the submission of [counsel for the Board] that the decision makers view of whether some less intrusive option would be appropriate as an alternative is likewise not a question on which the court should substitute its own view, unless the decision makers judgment about the relative advantages and disadvantages is manifestly wrong. (emphasis in original)\nFor the reasons we have explained, the judgments of the Court of Appeal in Sinclair Collis do not provide reliable guidance as to the test to be applied in a context of the present kind.\nIt is also difficult to see why, in the circumstances of the present case, the identity of the national decision maker should affect the courts assessment of the compatibility of the scheme with EU law.\nA test of whether the decision makers judgment was manifestly wrong has no place in the present context.\nA decision of the present kind is disproportionate if a less restrictive measure could have been adopted, provided that it would have attained the objective pursued.\nThe Court of Appeal considered the scheme in accordance with the approach it had described.\nIt began by emphasising that the Board was the regulator charged by Parliament with the task of making the necessary assessments: Having regard to the identity of the decision maker and the nature and subject matter of the decision, we consider that the LSB is entitled to a substantial margin of discretion in relation to the question whether the decision was proportionate. (para 103) For the reasons we have explained, that was not the correct approach.\nAddressing the argument that it had not been shown that there was no less intrusive means of achieving the aims pursued by the scheme, the Court of Appeal correctly observed that it was not the law that, unless the least intrusive measure was selected, the decision was necessarily disproportionate.\nRather, the question was whether a less intrusive measure could have been used without unacceptably compromising the objective of improving the standards of advocacy in criminal courts (para 105).\nAddressing the argument that the BSB proposal would have been an equally effective and less onerous alternative to the scheme, the Court of Appeal stated: In our judgment, the LSB was entitled to reject this proposal for the reasons that it gave.\nIt was not legally irrelevant that the LSB considered that, for reasons of consistency and in order to promote competition, it was in the public interest to have one scheme for all advocates.\nThat was not, however, the only reason why the LSB rejected the November alternative.\nIt judged that it was in the public interest that there should be a comprehensive assessment scheme and that the evidence indicated that there was a need to make assessments across the board.\nThis was a judgment that it reached after considering a massive amount of material on which it brought its expertise as a regulator to bear.\nIn short, the LSB was of the view that a separate enhanced quality monitoring scheme for barristers could not be adopted without unacceptably compromising the objective (in the best interests of the public) of having a single accreditation scheme for all advocates. (para 107)\nThe problem with this reasoning is that, having earlier identified the objective as being to improve the standards of advocacy in the criminal courts, the court here treated the objective as being to have a single accreditation scheme for all advocates.\nThat cannot however be a relevant objective for the purposes of the Directive.\nHaving an authorisation scheme is not an objective in itself: it has to be justified by some (other) overriding reason relating to the public interest.\nThe relevant objectives in the present case could only be the protection of consumers and recipients of services, and safeguarding the sound administration of justice.\nThe application of a scheme on a consistent basis to all criminal advocates might be necessary in order for the scheme to achieve those objectives effectively.\nIt might also be necessary in order for the scheme to comply with the requirement in article 9(1)(a) that it must not discriminate against the provider in question.\nThe court did not however address those issues.\nTreating proportionality as a matter primarily for the Board, the Court of Appeal concluded that the Board addressed the issue of proportionality and was entitled to conclude that QASA was proportionate (para 111).\nLike the Divisional Court, the Court of Appeal made no reference to the specific requirement imposed by article 9(1)(c) of the Directive, or to the corresponding requirement in regulation 14(2)(c) of the Regulations.\nIn the circumstances, it is necessary for the matter to be reconsidered on the proper basis.\nIn particular: (1) It is for the court to decide whether the scheme is proportionate, as part of its function in deciding upon its legality. (2) In so doing it should approach the matter in the same way in which the Court of Justice would approach the issue in enforcement proceedings. (3) Article 9(1)(c) requires the court to decide, in the present case, whether the Board has established that the objectives pursued by the scheme, namely the protection of recipients of the services in question, and the sound administration of justice, cannot be attained by means of a less restrictive scheme, and in particular by means of the procedure set out in the BSB proposal. (4) That decision does not involve asking whether the Boards judgment was manifestly wrong, or whether the scheme is manifestly inappropriate.\nThe court must decide for itself, on the basis of the material before it, whether the condition set out in article 9(1)(c) is satisfied. (5) In considering the question of necessity arising under article 9(1)(c), it should be borne in mind that EU law permits member states to exercise a margin of appreciation as to the level of protection which should be afforded to the public interest pursued.\nIt also allows them to exercise discretion as to the choice of the means of protecting such an interest, provided that the means chosen are not inappropriate.\nThis courts analysis of the proportionality of the Boards decision\nIn their joint application for the Boards approval of the scheme, the BSB, SRA and IPS explained the rationale of the scheme in terms which concentrated on the need to ensure greater protection for the public in relation to criminal advocacy across the board.\nTo that end they argued that the systematic assessment and accreditation of the competence of advocates will provide consumers of criminal advocacy with tangible reassurance that their advocate has the necessary competence to handle their case.\nThey described the proposed regulatory changes as a risk managed approach: only those advocates that meet the requirements will be permitted to undertake criminal advocacy and those that are accredited can deal only with cases within their competence.\nAnd they argued that the scheme was proportionate to the objective: 27.\nProtecting the public interest and interest of consumers of criminal advocacy has been at the heart of the design and development of the Scheme. 28.\nThe SRA, BSB and IPS believe that the proposed Scheme and regulatory changes are proportionate to the objective of protecting the interests of consumers of criminal advocacy.\nThe proposed changes will ensure consistent and systematic assessment of competence of advocates and result in advocates taking on only those cases in which they are competent to act.\nAs we have explained at para 14, the Board undertook its own assessment of whether there was a risk which needed to be addressed, and a firm rationale for the particular scheme proposed.\nThe Boards conclusion that there was such a risk was based upon a range of evidence, which we have summarised at para 15.\nIt noted the potentially serious consequences of poor advocacy for those affected and for the administration of justice, as we have explained at para 15.\nIn relation to the particular scheme proposed, the Board considered that a scheme applicable to advocates generally was justified in view of the gravity of the risk and the absence of evidence supporting the adoption of a more selective approach, as we have explained at paras 16 17.\nThe Board also noted that the scheme was to be reviewed after two years, and that it could be adjusted on the basis of evidence gained from its implementation, as we have explained at para 18.\nThe Board did not consider that the scheme was an authorisation scheme within the Regulations, but it considered the issue of proportionality in a broad sense and concluded that there is legitimate and sufficient concern about the quality of criminal advocacy and that the Scheme proposed in the application is both proportionate and targeted.\nThe evidence filed in these proceedings by the Boards chief executive is that the Board did not consider that there were equally effective ways of achieving the schemes objective without adopting a scheme of that nature.\nThe Court of Appeal considered that the Board was entitled to judge that it was in the public interest that there should be a comprehensive assessment scheme and that the evidence indicated that there was a need to make assessments across the board (original emphasis), and it observed that the Board reached that judgment after considering a massive amount of material on which it brought its expertise as a regulator to bear (para 107).\nThe appellants submitted that the reasoning of the Court of Appeal was faulty in that it failed to focus on whether an alternative scheme of the kind previously proposed by the BSB would be any less effective and that it rested on a suppressed, and unestablished, premise that the regulated professions represented by the BSB, SRA and IPS all presented the same risk profile, whereas a scheme of prior authorisation required separate analysis in relation to each category of service provider (barristers, solicitors and legal executives).\nThe appellants further submitted that the BSBs own previous stance was evidence that it could not be demonstrated that the proposed scheme was the least burdensome way of achieving its objective.\nThe core feature of the scheme is that every criminal advocate without exception, who wishes to practise at one of the upper levels, must undertake judicial assessment at the outset.\nNo criminal advocate, competent or incompetent, can slip through that net, and every client has the protection that whoever represents him in a case at an upper level will have been subject to such assessment.\nA precautionary scheme of this kind provides a high level of public protection, precisely because it involves an individual assessment of each provider wishing to practise at an upper level, and it places a corresponding burden on those affected by it.\nWhether such a level of protection should be provided is exactly the sort of question about which the national decision maker is allowed to exercise its judgment within a margin of appreciation: see paras 64 65 above.\nA self certifying scheme of the kind proposed by the BSB in November 2012 presents a higher level of risk because of the possibility that an advocate may consider himself competent to practise at a level where he does not have the necessary competence, and even if his incompetence is later detected and reported to the regulator (of which there can be no certainty), for those who have had the misfortune of being poorly represented by him it will be a case of shutting the stable door after the horse has bolted. (To illustrate the uncertainty of detection, an advocate who appears infrequently at the upper levels may lack competence, possibly through not keeping up with the law, but will be correspondingly less likely to be assessed under a rolling programme than an advocate who appears more regularly.) It is perfectly true that the evidence did not enable the level of risk to be quantified with any approach to precision, but that did not preclude the Board from considering that it was unacceptable.\nWe do not regard the judgment made by the Board in that regard as falling outside the appropriate margin of appreciation.\nSince the only way of reducing the risk, so as to provide the desired level of protection for all members of the public involved in criminal proceedings at an upper level, was to have a scheme of the kind proposed by the JAG, it follows that the scheme was proportionate to the objective, notwithstanding the inconvenience caused to competent members of the profession.\nAlthough our reasoning process has been different from the courts below, we therefore agree with the Court of Appeal that a comprehensive assessment scheme was proportionate, and that the Board was entitled to grant the application of the BSB, SRA and IPS.\nThe scope of the Directive\nThere remains the question whether the scheme is in fact an authorisation scheme falling within the scope of the Directive.\nThe answer to that question does not appear to us to be straightforward, and if it were necessary for this court to reach a decision on the point, we would be inclined to make a reference to the Court of Justice.\nGiven our conclusion, however, that even if the scheme falls within the scope of the Directive, it is compliant with article 9(1)(b) and (c), it is unnecessary for the question to be decided in these proceedings.\nConclusion\nFor these reasons we would dismiss the appeal\n","output":"The Legal Services Board (the Board) supervises approved regulators of persons carrying on legal activities, including the Bar Standards Board (BSB), the Solicitors Regulation Authority (SRA) and the ILEX Professional Standards Board (IPS).\nOn 26 July 2013 the Board granted an application by the BSB, SRA and IPS for approval of alterations to their regulatory arrangements to give effect to the Quality Assurance Scheme for Advocates (the scheme).\nIn making its decision the Board had regard to the Better Regulation Principles in section 3(3)(a) of the Legal Services Act 2007: regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed.\nIt noted concerns about standards of criminal advocacy and evidence pointing to a risk of advocacy not being of the required standard.\nThe scheme provides for the assessment of criminal advocates in England and Wales by judges.\nFull accreditation for criminal work at one of the upper levels depends on an assessment as competent by a trial judge.\nThe appellants, barristers practising criminal law, sought judicial review of the Boards decision on various grounds, all unsuccessful in the courts below.\nPermission to appeal to the Supreme Court was granted on the single question of whether the decision was contrary to regulation 14 of the Provision of Service Regulations 2009, which the Board considered did not apply.\nThe Regulations implement Directive 2006\/123\/EC on services in the internal market.\nRegulation 14 is nearly identical to article 9(1) of the Directive.\nIt provides: (1) A competent authority must not make access to, or the exercise of, a service activity subject to an authorisation scheme unless the following conditions are satisfied. (2) The conditions are that (a) the authorisation scheme does not discriminate against a provider of the service, (b) the need for an authorisation scheme is justified by an overriding reason relating to the public interest, and (c) the objective pursued cannot be attained by means of a less restrictive measure, in particular because inspection after commencement of the service activity would take place too late to be genuinely effective.\nThe Supreme Court unanimously dismisses the appeal.\nLord Reed and Lord Toulson give a joint judgment with which Lord Neuberger, Lady Hale and Lord Clarke agree\nLord Reed and Lord Toulson consider the appellants submissions that the scheme fails to meet the conditions set out in regulation 14(2)(b) and (c) on the hypothesis that the Directive (and therefore the Regulations) applies to the scheme. [21, 118] They review the case law of the Court of Justice of the European Union (CJEU) on the principle of proportionality.\nThis principle is given effect in the Directive in article 9(1)(c) from which regulation 14(2)(c) is derived. [22 82] Lord Reed and Lord Toulson reason that the issue is whether the legitimate and important objectives of protecting recipients of the services in question, and the sound administration of justice, justify the scheme in the form approved by the Board.\nJudicial assessment is automatic in relation to all advocates, and is carried out in order to decide whether full accreditation should be granted, for renewal of accreditation and for progression to higher levels.\nThe BSB had previously suggested an alternative proposal whereby judicial assessment would take place only if concerns were raised about a particular advocate, through a rolling programme of judicial assessment.\nThe critical question is whether the objectives cannot be attained by means of a less restrictive measure. [93 97] The proper basis for considering the requirement of article 9(1)(c) of the Directive and regulation 14(2)(c) is: (1) it is for the court to decide whether the scheme is proportionate, (2) it should approach the matter in the same way in which the CJEU would approach the issue in enforcement proceedings, (3) the court must decide whether the Board has established that the objectives cannot be attained by means of a less restrictive scheme, (4) that does not involve asking whether the Boards judgment was manifestly wrong, (5) in considering the question of necessity arising under article 9(1)(c), it should be borne in mind that EU law permits member states to exercise a margin of appreciation as to the level of protection to be afforded to the public interest pursued, and to exercise discretion as to the choice of means of protecting such an interest. [108] The Board noted the potentially serious consequences of poor advocacy and considered that a scheme applicable to advocates generally was justified in view of the gravity of the risk.\nIt also noted that the scheme was to be reviewed after two years. [110 111] The core feature of the scheme was that every criminal advocate who wishes to practise at one of the upper levels must undertake judicial assessment at the outset.\nA precautionary scheme of this kind provides a high level of public protection and places a corresponding burden on those affected by it.\nWhether such a level of protection should be provided is exactly the sort of question about which the national decision maker is allowed to exercise its judgment. [114 116, 64 65] In Lord Reed and Lord Toulsons opinion, the Boards judgment that the level of risk presented by a self certifying scheme, such as the BSBs previous proposal, was unacceptable, did not fall outside the appropriate margin of appreciation.\nSince the only way of providing the desired level of protection was to have a comprehensive assessment scheme, it followed that such a scheme was proportionate to the aims pursued.\nTherefore, the Supreme Court dismisses the appeal.\n","id":67}
{"input":"Permission to appeal was granted in this case in order to enable this Court to consider the following point of law, certified by the Court of Appeal as being of general public importance: If (1) D1 and D2 voluntarily engage in fighting each other, each intending to kill or cause grievous bodily harm to the other and each foreseeing that the other has the reciprocal intention, and if (2) D1 mistakenly kills V in the course of the fight, in what circumstances, if any, is D2 guilty of the offence of murdering V? The facts of this case are unusual, but the importance of the point of law lies in the implications that it may have in respect of the scope of potential liability of those who permit themselves to become involved in public order offences.\nNo previous decision in this jurisdiction provides a clear indication of how the point of law should be resolved.\nThe principles of law that fall to be applied are those of the common law, albeit that it will be necessary to consider a degree of statutory intervention.\nThe particular areas of criminal law that will have to be considered are (i) joint enterprise; (ii) transferred malice; (iii) exemption from liability where a party to what would normally be a crime is a victim of it.\nNo precedent indicates the result of the interaction of these three areas of law on the facts of this case.\nIn resolving the point of law it will be appropriate to have regard to policy.\nThe facts\nThe following account of the facts is taken from the Agreed Statement of Facts and Issues.\nThis reproduces almost verbatim the summary of the facts in the judgment of the Court of Appeal, delivered by Thomas LJ but to which all members of the court had contributed.\nThe other members were Hooper, Hughes and Gross LJJ and Hedley J.\nTogether the court brought to the problem very wide experience in the field of criminal law.\nShortly after 6 pm on Tuesday, 2 October 2007, a 26 year old Polish care worker, Magda Pniewska, was walking home from a nursing home through a car park for blocks of residential accommodation in New Cross, South London and up steps towards an open piece of ground.\nShe was on the telephone to her sister when she was killed by a single shot to her head.\nThat shot was fired in an exchange of fire between two gunmen one of whom was the respondent.\nThe respondent, who was born on 26 May 1990, and was 17 years of age at the time, had a dispute with another youth (TC).\nAt about 5 p.m. on 2 October 2007 he went with a friend, Nana Acheampong, by car to the home of his ex girlfriend, Roxanne Landell.\nShortly thereafter Nana Acheampong and the respondent drove round to a car park elsewhere on the same estate from where the respondent went on foot to an adjacent car park.\nHe had armed himself with a gun which was silver in colour and he had several rounds of live ammunition.\nNana Acheampong had remained in the car.\nA red Volkswagen Polo was already in the car park.\nThere were four occupants of the car, one of whom was pregnant.\nThe respondent spoke to the occupants of the Polo, as they were about to leave.\nAccording to two of them he told them that \"he had come to meet someone to handle some business\".\nHe asked if they had seen a man in a red bandana, saying that that man owed him some money.\nVery shortly thereafter the occupants of the red Polo saw someone come down the steps towards the car park.\nHis face was covered with a red bandana.\nAt the trial, he was referred to as \"Bandana Man\" and I shall so describe him in this judgment.\nHe pulled out a gun, black in colour, and started shooting at the respondent.\nThe respondent crouched down behind the red Polo, pulled out his gun and returned the fire.\nThe respondent fired two or three shots over the roof of the car.\nHe then went to the front of the car and started shooting over the bonnet whilst the other man shot back.\nThe clear evidence of those in the red Polo was that the respondent was shooting at Bandana Man.\nIt was in that crossfire between the respondent and Bandana Man that Magda Pniewska was killed.\nScientific examination showed that the single bullet to the deceased's head did not come from the respondent's gun; it had come from the gun held by Bandana Man.\nBoth the respondent and Bandana Man fled from the scene.\nTC, who was believed to be Bandana Man was arrested, but never charged.\nThe respondent was arrested four days later.\nThe car park, in which the gun fight took place, was surrounded by closely built, modern residential blocks in multiple occupation.\nAll had windows facing the parking area.\nThe areas of common law in play.\nAt this point we propose to summarise quite shortly the areas of common law in play.\nIt will be necessary to revert to these in greater detail when we come to consider their application to the facts of this case.\nJoint enterprise\nSection 8 of the Accessories and Abettors Act 1861, as amended by the Criminal Law Act 1977, provides: Whosoever shall aid, abet, counsel, or procure the commission of any indictable offence, whether the same be an offence at common law or by virtue of any Act passed or to be passed, shall be liable to be tried, indicted, and punished as a principal offender.\nThis section does not specify what is encompassed by the words aid, abet, counsel, or procure.\nThat question is determined by the common law.\nThere is no need in this case to attempt a comprehensive definition.\nIn particular we can ignore any complications that may arise in relation to the accessory before or after the fact, who is not present when the criminal act is committed.\nHaving regard to the facts of this case we can start with this simple proposition.\nWhere two persons, D1 and D2 agree to the commission of an indictable offence, where both are present at the place where the criminal act is to be performed and where one of them, D1, commits that act, both will be jointly liable for the crime.\nThe act will have taken place pursuant to their joint criminal purpose and D2 will be equally guilty with D1, having aided, abetted, counselled or procured D1 to commit the crime.\nThe law becomes more complicated where, in the course of committing, or attempting to commit the criminal act which is their common purpose, D1 commits a further criminal act which goes beyond that purpose.\nThe example that is usually given is the following.\nD1 and D2 break into a house with the common intention of committing a burglary.\nThey are surprised by the householder, whereupon D1 hits him on the head with a jemmy and kills him.\nD2 had had no intention, or wish, that either of them should inflict injury in the course of the burglary but had foreseen the possibility that D1 might inflict serious injury in the course of it.\nThe situation exemplified by these facts has been repeatedly considered in different factual contexts by the Court of Appeal and the House of Lords.\nThese authorities were recently analysed by Hughes LJ when giving the judgment of the Court of Appeal in R v A [2010] EWCA Crim 1622; [2011] QB 841.\nHis conclusion, which we would endorse, appears in the following passage from para 27 of his judgment: the liability of D2 rests, as all these citations show, on his having continued in the common venture of crime A when he realises (even if he does not desire) that crime B may be committed in the course of it.\nWhere crime B is murder, that means that he can properly be held guilty if he foresees that D1 will cause death by acting with murderous intent (viz either intent to kill or intent to do GBH).\nHe has associated himself with a foreseen murder.\nProfessor Sir John Smith coined the phrase parasitic accessory liability to describe this form of liability arising out of participation in a joint criminal enterprise.\nWhile this is not the most elegant phraseology we propose to adopt it in this judgment by way of convenient shorthand.\nTransferred malice\nThe principles that we are about to describe have long been recognised by commentators on the common law of crime, but there is a dearth of actual cases to illustrate them.\nWhere a defendant intends to kill or cause serious injury to one victim, V1, but accidentally kills another, V2, he will be guilty of the murder of V2.\nThe basis of this liability is customarily described as transferred malice, although a better description might be transferred mens rea see Archbold 2011 ed at 17 24; Blackstones Criminal Practice 2011 at A2.13.\nThe doctrine applies to secondary parties as it does to principal offenders.\nThus if D2 attempts to aid, abet, counsel or procure D1 to murder V1 but D1, intending to kill V1, accidentally kills V2 instead, D2 will be guilty of the murder of V2 see Smith & Hogan, Criminal Law,12th ed (2008) at p 205.\nExemption from liability where a party to what would normally be a crime is a\nvictim of it\nIn an article on Victims and other exempt parties in crime in (1990) 10 Legal Studies (1990), at p 245 Professor Glanville Williams identified a principle that he described as the victim rule.\nHe defined this as follows: where the courts perceive that the legislation is designed for the protection of a class of persons.\nSuch people should not be convicted as accessories to an offence committed in respect of them when they co operate in it.\nNor should they be convicted as conspirators.\nProfessor Glanville Williams stated that the principle was founded on a single English decision, but was widely accepted in common law countries.\nThat decision was R v Tyrrell [1894] 1 QB 710.\nSection 5 of the Criminal Law Amendment Act 1885 made it an offence for a man to have carnal knowledge of a girl between the age of 13 and 16.\nThe defendant, a girl whose age fell within that bracket, was convicted of (1) aiding, abetting, counselling and procuring the commission of that offence by a man upon herself and (2) of inciting the man to commit the same offence.\nOn appeal these convictions were robustly quashed.\nLord Coleridge CJ, giving the leading judgment, said at p 712: The Criminal Law Amendment Act 1885 was passed for the purpose of protecting women and girls against themselves.\nAt the time it was passed there was a discussion as to what point should be fixed as the age of consent.\nThat discussion ended in a compromise, and the age of consent was fixed at sixteen.\nWith the object of protecting women and girls against themselves the Act of Parliament has made illicit connection with a girl under that age unlawful; if a man wishes to have such illicit connection he must wait until the girl is sixteen, otherwise he breaks the law; but it is impossible to say that the Act, which is absolutely silent about aiding or abetting, or soliciting or inciting, can have intended that the girls for whose protection it was passed should be punishable under it for the offences committed upon themselves.\nI am of the opinion that this conviction ought to be quashed.\nIn R v Whitehouse [1977] QB 868 the Court of Appeal reluctantly held that this principle precluded the conviction of a father for inciting his daughter, who was under 16, to aid and abet him to commit incest with her.\nSection 1 of the Criminal Law Act 1977 created a statutory offence of conspiracy to commit a crime.\nSection 2(1) provides: 2. (1) A person shall not by virtue of section 1 above be guilty of conspiracy to commit any offence if he is an intended victim of that offence. (2) A person shall not by virtue of section 1 above be guilty of conspiracy to commit any offence or offences if the only other person or persons with whom he agrees are (both initially and at all times during the currency of the agreement) persons of any one or more of the following descriptions, that is to say (c) an intended victim of that offence or of each of those offences.\nBlackstone comments at A6.38 that section 2(1) appears designed to apply the principle established by Tyrell.\nIt will be necessary to consider in due course the scope of this provision and whether, by analogy, the common law should prohibit the conviction of a defendant for aiding and abetting an offence against the person where he is the victim of the offence.\nRelevant to these questions is the more restricted wording of section 51 of the Serious Crime Act 2007: (1) In the case of protective offences a person does not commit an offence under this Part by reference to such an offence if (a) he falls within the protected category; and (b) he is the person in respect of whom the protective offence was committed or would have been if it had been committed. (2) Protective offence means an offence that exists (wholly or in part) for the protection of a particular category of persons (the protected category) The judges ruling on the defence submission of no case to answer and the case\nsubsequently advanced by the Crown\nAt the end of the prosecution case Miss Bennett Jenkins QC for the defence submitted that there was no case to go to the jury.\nMr Altman QC for the Crown argued that there were two possible bases upon which the jury could convict.\nIt was common ground that Bandana Man had been guilty of murder of Miss Pniewska, applying the principle of transferred malice in that he had plainly been attempting to kill or cause serious bodily harm to the respondent.\nThe first basis upon which the jury could convict was that the respondent had aided and abetted this murder, in that he had encouraged Bandana Man to fire at him with homicidal intent.\nWhen, however, the judge asked whether he was submitting that the respondent aided and abetted his own attempted murder he replied that he could not so submit.\nHe argued that the liability of the respondent flowed on a wider basis from the implicit agreement between himself and Bandana Man that they should meet in a public place, each with an intent to kill or cause serious harm to the other.\nThe judge rejected this argument.\nHe observed that there was difficulty in an analysis of a joint enterprise where the defendant was himself the intended victim of the other gunman: He neither intended nor consented to bodily injury to himself at the hand of the other, nor could he truly be said to be a party to a joint enterprise to kill or cause grievous bodily harm to himself as the intended target of the other.\nEven if he contemplated that the other might shoot at him with the necessary intent, he not being a party to the enterprise to cause harm to himself, would not be liable for the unintended consequences on that basis alone.\nAbout this, in my judgment, there can be no doubt.\nThere is no possible joint enterprise involving the killing of himself to which the defendant was privy as such.\nIf he and Bandana Man had a common enterprise to kill a third party, and Magda was killed by a bullet from Bandana Mans gun, then the doctrine of transferred malice could operate to make Bandana Man guilty as a primary party to the murder of Magda, and in as much as the defendant was privy to a joint enterprise to kill someone in common with Bandana Man, sharing that common intention, he would also be liable as a secondary party.\nHere, however, there was no common intention to murder any particular person.\nEach of the protagonists had a separate intent to kill or to seriously injure the other.\nTheir intentions were parallel but running in opposite directions.\nHe later added Here, however, it cannot be said, in my judgment, that the defendant actively encouraged Bandana Man to shoot at him, and even if he did, it would be a real oddity for a victim of an attempted murder to be a secondary party to that attempt.\nIn reality on the evidence, the defendant fired at Bandana Man in the hope of killing him or causing him grievous bodily harm, frightening him, or arguably, in self defence.\nHe cannot be said to have encouraged the other to fire back, whatever the order of shots as the jury might ultimately find them to be.\nHe might have provoked further firing, but he did not encourage it.\nIn the light of this ruling, Mr Altman did not pursue this way of putting his case.\nThe alternative case that Mr Altman advanced was one of parasitic accessory liability.\nThe judge accepted that this alternative was viable.\nHe held that it was open to the jury to find that the respondent and Bandana Man were subject to a joint enterprise to commit an affray and that, if the jury then found that the respondent foresaw and envisaged that Bandana Man might shoot and kill an innocent passer by this would found a verdict of murder on the part of the respondent.\nThe judges direction to the jury\nThe judge crafted his direction to the jury with great care.\nHe founded it on the principle of parasitic accessory liability.\nFor reasons that we shall explain we do not consider that this principle could properly be applied on the facts of this case.\nNone the less it is necessary to set out a large part of his direction in order to decide whether the jury must have been satisfied that the relevant elements of the crime of murder, as we shall identify them, were proved: Now what the prosecution say about the defendants role in this murder is that the defendant was involved in a joint enterprise, that is a term which I will explain to you in a moment and which again will appear in the piece of paper that I am going to give you.\nIt was a joint enterprise because it had a gunfight and both the defendant and Bandana Man, say the prosecution, each took part in that gunfight, realising that the other was likely to shoot, and might, in shooting, with the intention of killing or causing really serious injury, kill someone other than himself who was the immediate target of the shots.\nAnd the prosecution say, in those circumstances, the defendant is jointly responsible for the murder with Bandana Man on the basis of this joint enterprise.\nJoint enterprise: that is a word I need to explain to you.\nLet me explain that concept.\nIt arises in the ordinary way where people jointly commit an offence.\nWhere a criminal offence is committed by two or more people, each of them may play a different part in that offence, but if they are in it together as part of a joint plan or joint agreement to commit it, each is guilty of the planned offence.\nThe words plan or agreement that I have just used do not mean that there has to be any formality about it.\nAn agreement to commit an offence may arise on the spur of the moment.\nNothing needs to be said at all.\nIt can be made with a nod or a wink or just a knowing look or by taking the first step in committing an offence in which the other person then joins, so that it can be inferred from their behaviour.\nThe essence of joint responsibility for a criminal offence is that each person shared the intention to commit the offence and took some part in it so as to achieve that aim, so in the ordinary way, you would consider each person said to be involved, and if you are sure that he took part in committing the offence with any intention necessary for that offence, he would be guilty.\nBut there is a further element in the concept of joint enterprise, and it is this: if two people agree or plan in the sense I have mentioned to commit one offence, one type of offence, but during the course of it, one of them commits another offence, both may still be responsible for that other offence.\nOf course, the person who actually does the offence, the act which constitutes that further offence will be guilty of it, but the other person will also be guilty of it if he realised that the act done was something which the first person might do with the necessary intent as part of their planned offence.\nNow here it is said by the prosecution that Bandana Man and the defendant planned to use unlawful violence towards another by having a shoot out, whether that plan was made beforehand and the meeting was pre arranged or was made on the spur of the moment when they saw each other and fired at each other from the steps and the car respectively.\nIf you are sure that Bandana Man and the defendant joined together to commit such unlawful violence by having a gunfight, whether pre planned or whether on the spur of the moment on the top of the steps and the side of the car, and that this joint enterprise came into being before Magda was killed by a shot from Bandana Man, then the defendant would be guilty of murder also, along with Bandana Man, provided the other requirements are satisfied.\nSo if you are sure that Bandana Man and the defendant were in a joint enterprise to cause an affray, to use unlawful violence against each other by having a gunfight and by firing at each other, whether this joint enterprise was the result of a pre planned meeting or arose on the spur of the moment when they saw each other, and that in the course of that joint enterprise fight, Magda was murdered by Bandana Man on the basis of transferred malice, as I have explained it to you, and that the defendant realised and the prosecution say that he must have realised that in the course of their joint enterprise gunfight, Bandana Man might kill with the requisite intention for murder, then the defendant would also be guilty of murder.\nThe decision of the Court of Appeal\nBefore the Court of Appeal Mr Altman made no attempt to revive the first way that he had sought to put the Crowns case.\nHe sought to uphold the judges direction on the basis of parasitic accessory liability.\nMiss Bennett Jenkins submitted that this case was not viable.\nThe starting point for parasitic accessory liability was a joint enterprise.\nThere had been no joint enterprise.\nThe respondent and Bandana Man had each been engaged on a separate, individual and diametrically opposed enterprise, for each was out to harm the other.\nSo far as foresight of Bandana Mans conduct was concerned, all that the respondent could have foreseen was that Bandana Man would try to kill him.\nParasitic accessory liability was founded on encouragement to commit the further offence, implicit in pursuing the original joint venture.\nThe judge had rightly found that the respondent had not encouraged Bandana Man to shoot at him.\nThus the further essential element of encouragement was missing.\nThe Court of Appeal accepted this argument.\nIts reasoning was complex and spanned paras 48 to 70 of its judgment, but we believe that we can summarise it quite shortly.\nParasitic accessory liability has to arise out of a joint enterprise that involves the two parties acting together, or in concert, or for a common purpose.\nWhere an affray is alleged to have arisen from a fight between two people it does not ordinarily involve a joint enterprise or common purpose.\nOrdinarily the purpose of each protagonist to such an affray is the individual purpose of striking the other and avoiding being struck himself.\nSuch purposes are not shared by the two protagonists, they are reciprocal, or equal and opposite purposes.\nIt was none the less possible to envisage a scenario in which two persons shared a common purpose to strike and be struck a prize fight or a duel were examples of this.\nOn the facts of the present case there might have been a common purpose to shoot and be shot at, as in a duel, but the judge had never asked the jury to consider that possibility.\nThe reasoning of the court was summarised in para 59 of its judgment: What is at issue here is secondary liability.\nThe essence of secondary liability is that the parties are acting together or, as it is often put, in concert.\nFor what we have described as the third type of joint enterprise liability they must be acting together or in concert in crime A, here affray.\nTwo people who voluntarily engage in fighting each other might, exceptionally, be acting together or in concert, but ordinarily they are not.\nIt is not realistic to say that they acted in concert to cause fear; they acted independently and antagonistically in a manner which did so.\nAbsent a shared purpose to shoot and be shot at, the submission made by the appellant was correct that there was no room on the facts for any other common purpose.\nThe jury was never asked to confront the question whether the shared common purpose was not only to shoot, but to be shot at.\nThe Crown had accepted that the respondent could not be convicted on the basis that he had been party to a joint enterprise with Bandana Man to shoot at each other, with the intent to kill or cause really serious bodily injury for the following reason (para 33): The difficulty on the facts of the current case is that the appellant himself was the intended victim of the other man.\nThe appellant neither intended nor consented to bodily injury to himself at the hand of the other man nor could he truly be said to have been party to a joint enterprise to kill or cause harm to himself (being the intended target of the other man).\nEven if he had contemplated that the other man might shoot at him with the necessary intent, he not being a party to the enterprise to cause harm to himself, could not be liable for any unintended consequences on that basis alone.\nThe Court of Appeal referred to this concession and emphasised at para 37 that it had not considered whether it was correctly made.\nHowever the Court of Appeal returned to the concession in a post script to its judgment and set out the following arguments that raised a question mark over the concession. 73. (i) If two persons agree to a duel with the use of guns, they have agreed to shoot at each other with the intention of killing or seriously harming the other.\nThat activity, as a matter of ordinary language, could be described as an agreement to shoot and be shot at.\nTo that extent it is arguable that they have a shared common purpose. (ii) Clearly an agreement to a duel or to shoot at each other is illegal, as no one can consent to run the risk of being killed in such a way.\nAs Lord Templeman pointed out in R v Brown (Anthony) [1994] 1 AC 212, 231, the defence of consent never availed a person who maimed the other participant in a duel: Hawkins' Pleas of the Crown 8th ed (1824), vol 1, ch 15.\nIn Attorney Generals Reference (No 6 of 1980) [1981] 1 QB 715, it was made clear that it is not in the public interest that people should try to cause or should cause each other harm for no good reason.\nIt is immaterial whether the act occurs in private or in public; it is an assault if actual bodily harm is intended or caused. (iii) There can be an agreement to use unlawful violence by two opposing and antagonistic persons, illegal though it is.\nIn R v Coney (1882) 8 QBD 534, all the judges were agreed that both prize fighters were guilty of an assault on each other.\nAlthough each would be guilty as a principal of a separate offence, it is arguable that the two prize fighters have a simple agreement to exchange blows and to that extent share a common purpose to hit and be hit. (iv) The question would then arise, if it was accepted that two prize fighters can have an agreement to hit and be hit, as to whether the use of lethal weapons made a difference.\nIf there really is an agreement to shoot and be shot at, it is arguable that it does not.\nJust as in the case of prize fighters, each hoped that the other would be wounded or killed, but that he would not be.\nBut the fact that each hoped for a different outcome, did not necessarily mean that they did not share a common purpose of shooting and being shot at. (emphasis added)\nThe Court of Appeal went on to consider issues of policy: 74 There is at the heart of this issue a question of policy.\nDoes the justice and effectiveness of the criminal justice system require the imposition of liability in cases of genuinely agreed duels by acceptance that there can be a joint enterprise of the first type between opposing persons if they agree not only to hit but to be hit? 75 But there is also a second question.\nAt para 58, we referred, in the context of the judge's directions to the jury, to the wider implications for criminal liability for death or injury or damage that occurs in the course of a fight between two gangs.\nSpelling that second question out may assist. i) Say a home group meet an away group, each seeing that the other is armed with sticks and bars.\nThey begin a fight. ii) In the course of the fight members of the home group use bars intentionally to cause really serious injuries to a member of the away group and in the course of doing so injure an innocent bystander; each receives really serious injuries from which he dies. iii) It could readily be inferred that all those engaged in the fight foresaw that there was a real possibility that one of those engaged in the fight or an innocent bystander might be caused serious bodily injury by being intentionally struck by one of those fighting with a bar in the course of the fight.\nWhat are the circumstances in which the members of the away group bear criminal responsibility for the death of the member of their group or the innocent bystander caused by the home group? The court commented that both of these issues of policy were questions for the future.\nBecause of a change of tack by the Crown in this court the time has now come to consider them.\nThe Crown case before this Court\nIn the alternative Mr Altman has sought to rely upon the doctrine of\nBefore this Court Mr Altman QC for the Crown has sought to revive the case that he had abandoned at the trial and had not sought to advance before the Court of Appeal.\nParas 30 to 48 of his written case are devoted to arguing that the respondent had been an accessory to Bandana Mans attempt to kill him and thus shared Bandana Mans liability, as a result of the doctrine of transferred malice, for the murder of Miss Pniewska.\nThis radical change of case is perhaps inspired by the obiter comments of the Court of Appeal and by commentary on those comments in [2011] Crim L R 151, 156.\nparasitic accessory liability that had been rejected by the Court of Appeal.\nDiscussion: Parasitic accessory liability in public order offences\nWe propose to start by considering Mr Altmans attempt to rely upon the doctrine of parasitic accessory liability.\nWe shall first of all explore the reasoning of the Court of Appeal in concluding that this was not a viable route to convicting the respondent of murder.\nWe shall then draw attention to a further significant difficulty that Mr Altman faces in seeking to rely upon this doctrine.\nThe nature of the offence of affray\nAffray was a common law offence with its origin many centuries ago.\nBy the middle of the twentieth century it had been lost from sight, for as Lord Goddard CJ remarked at p 559 of R v Sharp; R v Johnson, [1957] 1 QB 552, the first case in which the offence resurfaced, there seemed to be no reported case which dealt with it.\nThat case involved a fight between the two defendants in a public place in the presence of a large number of spectators.\nThey were jointly indicted on a charge of affray and convicted.\nOn the basis of distinguished and venerable commentaries Lord Goddard identified the offence of affray as one committed where two or more persons fought in a public place to the terror of the Kings subjects.\nIn that case the convictions of the two appellants were quashed on the ground that each claimed to have been acting in self defence, and this defence had not been left to the jury.\nLord Goddard held at p 561: If two men are found fighting in a street one must be able to say that the other attacked him and that he was only defending himself.\nIf he was only defending himself and not attacking that is not a fight and consequently not an affray.\nThis comment proved to be an over simplification.\nHaving been rediscovered, affray became a very popular charge, being used on literally thousands of occasions, and in due course received consideration by the House of Lords.\nIn R v Button; R v Swain [1966] AC 591 the issue was whether an affray had to take place in a public place.\nThe House held that it did not.\nLord Gardiner LC, giving the only reasoned speech, held at p 625 that the essence of the offence was that two or more fought together to the terror of the Queens subjects.\nIn R v Taylor (Vincent) [1973] AC 964 the House of Lords, disapproving the dictum of Lord Goddard in Sharp and Johnson, held that a single defendant could be guilty of affray if he fought with another, who lawfully defended himself.\nLord Morris of Borth y Gest put the matter as follows at p 991: But if two men are seen to be fighting in a street with the result that terror is caused to the Queens subjects and if it has all come about because one is an aggressor while the other was merely defending himself I see no reason why the aggressor should be immune from conviction for affray.\nThose who see the fighting may have no means of deciding how it came about or whose fault it was.\nThey may not be able to appreciate that one man is merely defending himself and doing his best to disengage.\nThe terror and alarm caused to them by the fighting will not be any the less because the fact may be that one man of the two was only of necessity engaged in the fighting.\nIn 1983 the Law Commission published a report, HC 85; Law Com No 123, on Offences Relating to Public Order.\nThey recommended that the common law offence of affray should be preserved in an Act that would replace the common law offences of riot, unlawful assembly and affray.\nIn the draft Bill appended to the Report they defined the offence of affray as follows: 3(1) Where two or more persons use or threaten unlawful violence against each other, or one or more persons use or threaten unlawful violence against another, and their conduct is such as would cause a person of reasonable firmness present at the scene to fear for his personal safety, each of those persons commits the offence of affray.\nThis was followed by a White Paper, May 1985 Cmnd 9510, entitled Review of Public Order Law.\nThis stated at para 3.15 that the Government was content to accept the Law Commissions proposed statutory definition of affray.\nUnfortunately the draftsman of what was to become the Public Order Act 1986 appears to have thought that he could improve on the drafting of the Law Commission.\nThus the definition of affray in section 3 of that Act is as follows: (1) A person is guilty of affray if he uses or threatens unlawful violence towards another and his conduct is such as would cause a person of reasonable firmness present at the scene to fear for his personal safety. (2) Where 2 or more persons use or threaten the unlawful violence, it is the conduct of them taken together that must be considered for the purposes of subsection (1).\nWe have emphasised the words the unlawful violence because they gave rise to considerable debate on this appeal.\nThey are hard to reconcile with the passage that we have quoted from the speech of Lord Morris in R v Taylor.\nMore significantly, if given their natural meaning, they would appear to suggest that two defendants can only be jointly liable on a single count of affray if they join in using violence towards another; if they fight each other each commits an individual offence of affray, but they are not guilty of a joint offence.\nThis would be nonsensical.\nWe do not consider that the Act has altered the common law offence of affray in this way.\nThe joint offence of affray can be founded on the common product of individual conduct, viz violence capable of causing fear, and does not require any common intention or purpose on the part of the joint participants.\nSection 6(2) sets out the mens rea of the offence as follows: A person is guilty of violent disorder or affray only if he intends to use or threaten violence or is aware that his conduct may be violent or threaten violence.\nThus an affray need not involve any common enterprise or common purpose.\nThe Court of Appeal rightly held that parasitic accessory liability must be founded on a common unlawful enterprise or purpose.\nIt is joining in this common enterprise that renders the conduct of the accomplice an encouragement to the principal to commit the additional offence, thereby justifying the conviction of the accomplice.\nBecause affray does not necessarily involve any common purpose it cannot automatically constitute a foundation for parasitic accessory liability.\nThe Court of Appeal left open, however, the possibility that, on the facts of an individual case, affray may be the product of a common purpose or enterprise capable of providing a foundation for parasitic accessory liability.\nA duel was given as an example of such a situation.\nSo might the facts of the present case if they evidenced an agreement to shoot and be shot at.\nThe court held, however, that this possibility had not been left to the jury.\nMany public order offences constitute a spontaneous outburst of reciprocal violence, often fuelled by alcohol.\nThey can, however, involve a common purpose indeed such a common purpose is an element of the offence of riot.\nIt is not uncommon for groups of youths, supporters of rival football clubs for example, to plan to meet in order to do battle.\nIt may be that most involved in such a skirmish have no wish to cause serious injury.\nThere will, however, be an obvious possibility that one or more of those involved may go beyond the common intention of the majority of the combatants and deliberately cause serious injury.\nIf such an event occurs and a victim suffers serious injury, or even dies, are all who were present guilty of causing grievous bodily harm, or murder where the victim dies, by reason of the doctrine of parasitic accessory liability? It is this question that the Court of Appeal raised, but left unanswered.\nFor reasons that we shall explain the facts of this case do not require an answer to the question, despite the reformulation of the Crowns case.\nWe would consider it undesirable, however, if a practice developed of relying on the doctrine of parasitic accessory liability to charge with murder parties to an affray who had not themselves intended that it would result in serious injury.\nNo issue of parasitic accessory liability arises in this case\nParasitic accessory liability arises where (i) D1 and D2 have a common intention to commit crime A (ii) D1, as an incident of committing crime A, commits crime B, and (iii) D2 had foreseen the possibility that he might do so.\nHere there was no crime A and crime B.\nIt cannot be said that the two protagonists had a joint intention to commit violence of a type that fell short of the violence committed.\nEither Bandana Man and the respondent had no common intention, or there was a common intention to have a shoot out.\nIf they intended to have a shoot out, then each necessarily accepted that the other would shoot at him with the intention to kill or cause serious injury.\nNeither intended that the other should kill him but each accepted the risk that he might do so.\nThe Crown sought to suggest that there was a joint intention to have an affray, which was crime A, and that the killing by Bandana Man was crime B, for which the respondent was liable as an accessory because it was within his contemplation as a possible, albeit unintended, incident of crime A.\nThe fallacy of this argument is that, if there was a joint intention to have an affray, that intention was to have an affray by shooting at each other with homicidal intent.\nIt is artificial to treat the intention to have an affray as a separate intention from the intention to have a potentially homicidal shooting match.\nThe victim rule\nWhy was the Crown so keen to establish liability under the doctrine of parasitic accessory liability? The answer is, we believe, that the Crown believed that this route would enable it to by pass what was perceived to be a barrier to the direct route to the respondents liability for murder.\nThe direct route was as follows: i) Bandana Man attempted to kill the respondent; ii) By agreeing to the shoot out, the respondent aided and abetted Bandana Man in this attempted murder; iii) Bandana Man accidentally killed Miss Pniewska instead of the respondent.\nUnder the doctrine of transferred malice he was guilty of her murder. iv) The doctrine of transferred malice applied equally to the respondent as aider and abetter of Bandana Mans attempted murder.\nHe also was guilty of Miss Pniewskas murder.\nThe Crown believed that there was a barrier to this direct route to the respondents liability for murder.\nThis was the application of the victim rule.\nMr Altman, when discussing the law with the judge, stated that the respondent could not aid and abet his own attempted murder.\nIf this proposition correctly represents the law, we do not see how the Crown can avoid its effect by invoking the doctrine of parasitic accessory liability.\nParasitic accessory liability does not differ in principle from the more common basis for finding someone guilty of aiding, abetting, counselling or procuring the commission of a crime.\nIn so far as the law precludes conviction for aiding and abetting a crime in respect of which the defendant is the victim, it must surely do so whatever the route by which the defendant would otherwise be held to have been an accomplice.\nWe turn then to consider the Crowns new case, which is that the conviction of the respondent can be justified on the basis that the respondent aided and abetted the commission of the murder by actively encouraging Bandana Man to shoot at him.\nIn relation to this case it seems to us that the issues for the Court are as follows: i) Does the victim rule preclude the conviction of a defendant for aiding and abetting a crime in respect of which he is the victim, even where the crime is not designed to protect a particular class of which the victim is a member? If yes, ii) Does the victim rule preclude the conviction of a defendant for aiding and abetting a crime in respect of which he was the intended victim, but where the actual victim is a third party? iii) If the victim rule did not preclude the respondents conviction for aiding and abetting the murder of Miss Pniewska, was the judges direction to the jury a sound basis for the jurys guilty verdict?\nThe scope of the victim rule\nThe first question to consider under this head is whether there is any statutory bar to prosecuting the respondent for being party to a crime in respect of which he was the intended victim.\nSo stated this perhaps begs the question, for it presupposes that the respondent was a prospective victim for the purpose of the victim rule.\nIf the first question produces a negative reply, it will then be necessary to consider whether there either is, or should be, a victim rule under the existing common law, or the common law as this court should develop it.\nThe origin of the victim rule appears to lie in the decision in Tyrrell see para 18 above.\nThe decision in that case can best be interpreted as being based on a term to be implied into the Criminal Law Amendment Act, based as the reasoning was on the implied intention of Parliament.\nThe decision does, however, illustrate the application of the general rule defined by Professor Glanville Williams, as set out at para 17 above.\nSection 2(1) of the Criminal Law Act 1977, set out at para 19 above, applies a wider principle than Glanville Williams formulation of the victim rule, if victim is given the wide meaning of any person who will be harmed by the offence.\nThe scope of the word victim in that context has not, however, received judicial consideration so far as we are aware.\nIf it is given the wide meaning it would seem to produce the surprising result that a conspiracy by two persons that one will commit a terrorist atrocity as a suicide bomber, or to set fire to a house owned by one of them in furtherance of some ulterior motive, would appear not to subject either to criminal liability.\nThere is a case for confining the meaning of victim to persons of a class that the relevant Act is intended to protect, thus bringing section 2(1) into accord with the victim rule, as defined by Glanville Williams.\nAt all events, section 2(1) is confined to the crime of conspiracy and can have no direct application to the facts of this case.\nThe case for giving a narrow construction to victim in section 2(1) of the Criminal Law Act 1977 is perhaps strengthened by the limited exemption from criminal liability conferred by section 51 of the Serious Crime Act 2007, which we have set out at para 19 above.\nThis section gave effect to a recommendation of the Law Commission that the principle in Tyrrell should apply to proposed offences of encouraging or assisting crime see 12(4) of Halsburys Statutes, 4th ed, at paras 401 and 408.\nThis provision also has no application to the facts of this case.\nIt follows that there is no applicable statutory victim rule that precludes conviction of the respondent on the basis that he aided and abetted Bandana Mans attempt to kill him or cause him serious injury.\nIs there, or should there be a common law rule that does so?\nThe fact that Parliament found it necessary to enact section 2(1) of the 1977 Act and section 51 of the 2007 Act is cogent indication that there is no common law rule that precludes conviction of a defendant of being party to a crime of which he was the actual or intended victim.\nWe are satisfied that there is no such rule.\nThis is evident from the fact that, under common law, attempted suicide was a crime, as was aiding and abetting suicide.\nThe victim of a successful suicide attempt could not, of course, be prosecuted, but if in an attempt to commit suicide, the defendant killed a third person, he committed the crime of murder under the doctrine of transferred malice see R v Hopwood (1913) 8 Cr App R 143 and R v Spence (1957) 41 Cr App R 80.\nWe can see no reason why this Court should consider extending the common law so as to protect from conviction any defendant who is, or is intended to be, harmed by the crime that he commits, or attempts to commit.\nSuch an extension would defeat the intention of Parliament in circumscribing the victim rule in section 51 of the 2007 Act.\nIn R v Brown (Anthony) [1994] 1 AC 212 sado masochists were held to have been rightly convicted of causing injury to others who willingly consented to the injuries that they received.\nThere would have been no bar to conviction of the latter of having aided and abetted the infliction of those injuries upon themselves.\nIt is no doubt appropriate for prosecuting authorities to consider carefully whether there is justification for prosecuting anyone as party to a crime where he is the victim, or intended victim of that crime, but that is not to say that the actual or intended victim of a crime should on that ground alone be absolved from criminal responsibility in relation to it.\nAs Lord Lane CJ observed in Attorney Generals Reference (N0 6 of 1980) [1981] QB 715, 719: it is not in the public interest that people should try to cause, or should cause, each other actual bodily harm for no good reason\nThe victim rule and transferred malice\nIn the light of the conclusion that we have just reached, no question arises as to the application of the victim rule where, although the intended victim of the crime to which the defendant is party is the defendant himself, the actual victim proves to be a third party.\nWas the judges direction to the jury a sound basis for their guilty verdict?\nIf the respondent aided, abetted, counselled and procured Bandana Man to shoot at him he was, on my analysis, guilty of aiding and abetting the attempted murder of himself.\nHad he been killed by Bandana Man, he would have been a party to his own murder.\nAlthough he had not intended that Bandana Man should succeed in hitting him, complicity in his attempt to do so would have rendered him a party to the successful achievement of that attempt.\nAs it was, Bandana Man accidentally shot Miss Pniewska.\nUnder the doctrine of transferred malice he was liable for her murder.\nUnder the same doctrine, the respondent, if he had aided abetted, counselled and procured the attempt, was party to the murder that resulted.\nDoes it follow that, having regard to the terms of the judges directions, the jury must have been satisfied that the respondent had aided, abetted, counselled and procured Bandana Man to shoot at him with murderous intent? If so, his conviction can stand.\nIf not, the Court of Appeal correctly quashed it.\nIn his ruling that there was a case to go to the jury the judge ruled that that it could not be said that the defendant actively encouraged Bandana Man to shoot at him.\nHe could not be said to have encouraged Bandana Man to fire at him, although he might have provoked this.\nPerhaps it was with this passage of his ruling in mind that the Court of Appeal observed at para 59 that the jury was never asked to confront the question whether the shared common purpose was not only to shoot but be shot at.\nIn the next paragraph the Court of Appeal observed that, the judge was, in effect, leaving to the jury a limited common purpose limiting it to an exchange of gun fire which did not extend to the gunman being hit.\nHaving carefully considered the passages in the judges summing up that we have set out at para 23 above we do not consider that they support the Court of Appeals conclusion.\nIt may well be that the intention of the judge was to direct the jury to consider whether there was a common intention to have an affray that fell short of an intention to shoot at each other and be shot at.\nFor the reasons that we have given this would have been an incredible scenario.\nEither there was no joint plan or agreement at all, or there was a common intention to shoot at one another, which can only mean to shoot and be shot at.\nWhat matters, however, is not the route that the judge considered would lead to a conviction, but the direction that he gave to the jury.\nHe directed the jury that, in order to convict they had to be satisfied that there was a plan or agreement to have a shoot out whether made beforehandor made on the spur of the moment when they saw each other and fired at each other from the steps and the car park respectively.\nThis direction did not permit the jury to convict if they believed that one of the protagonists might have been the aggressor and the other merely responding in self defence.\nIt was an unequivocal direction that the jury could convict only if they were satisfied that the protagonists had formed a mutual plan or agreement to have a gun fight in which each would attempt to kill or seriously injure the other.\nIf the jury were satisfied of this, the consequence in law was that each of the protagonists was party, not merely to his own attempt to kill or seriously injure the other, but to the others attempt to kill or seriously injure him.\nContrary to the finding of the Court of Appeal, the direction of the judge required the jury to consider whether they were satisfied that the respondent and Bandana Man had a common plan or agreement to shoot at each other and be shot at.\nIf they were so satisfied, and their verdict indicates that they were, this was a proper basis for finding that the respondent was guilty of murder.\nIn arguing at the close of the prosecution case that there was a case of simple aiding and abetting to go to the jury Mr Altman sought to draw an analogy with a duel.\nThere is indeed a close analogy between a consensual gunfight and a duel.\nIn the case of a duel all who are present and who lend encouragement to the duel will be guilty of aiding and abetting each of the protagonists in his attempt to kill or injure the other.\nIf one is killed, all who gave encouragement will be guilty of murder, and this includes the seconds on each side see R v Young and Webber (1838) 8 C & P 644.\nIt logically follows that each protagonist will be party to the violence, or attempted violence, inflicted on himself by his opponent.\nThe same is true of a prize fight.\nIn R v Coney (1882) 8 QBD 534 each protagonist was held guilty of assaulting the other and a number of bystanders were held to have encouraged, and thus to have been guilty of aiding and abetting, the assaults of both.\nOnce again each protagonist could properly have been held guilty of aiding and abetting the assault by the other upon himself.\nA guilty verdict in this case involves a combination of common law principles in relation to aiding and abetting and the common law doctrine of transferred malice, In Attorney Generals Reference (No 3 of 1994) [1998] AC 245, 261 Lord Mustill commented of the latter doctrine: Like many of its kind this is useful enough to yield rough justice, in particular cases, and it can sensibly be retained notwithstanding its lack of any sound intellectual basis.\nBut it is another matter to build a new rule upon it.\nWe have considered whether to hold the respondent guilty of murder would be so far at odds with what the public would be likely to consider the requirements of justice as to call for a reappraisal of the application of the doctrine in this case.\nWe have concluded to the contrary.\nOn the jurys verdict the respondent and Bandana Man had chosen to indulge in a gunfight in a public place, each intending to kill or cause serious injury to the other, in circumstances where there was a foreseeable risk that this result would be suffered by an innocent bystander.\nIt was a matter of fortuity which of the two fired what proved to be the fatal shot.\nIn other circumstances it might have been impossible to deduce which of the two had done so.\nIn these circumstances it seems to us to accord with the demands of justice rather than to conflict with them that the two gunmen should each be liable for Miss Pniewskas murder.\nWe have considered the judgments of Lord Brown and Lord Clarke.\nThey essentially agree with our conclusions.\nEach, however, considers that the defendant was liable as a principal to the agreed joint activity of shooting with intent to kill or cause serious injury, rather than as an accessory to the act of firing the shot.\nThis is not a difference of substance.\nIt may well be that, in terms of the common law, Bandana Man was a principal in the first degree and the respondent was a principal in the second degree see Archbold, 2011 edition, para 18 1.\nBut as Archbold remarks at para 18.6: the distinction between a joint principal and an abettor is sometimes difficult, and unnecessary, to draw.\nWhether the respondent is correctly described as a principal or an accessory is irrelevant to his guilt.\nIn R v Giannetto [1997] 1 Cr. App. 1 the appellant was convicted of murdering his wife.\nThe Crown was unable to say whether he had inflicted the fatal injuries himself or, at the very least, had arranged for someone else to do so.\nOn this basis however he was guilty of her murder either as a principal or as an accessory.\nFollowing his conviction the appellant argued that the judge had erred in law when he failed to direct the jury that they must be unanimous as to which of the two versions of events advanced by the Crown they accepted.\nIf the jury were not sure which of the two alternatives they found proved, then the appellant was entitled to be acquitted.\nAfter an examination of the authorities, the submission was rejected.\nIf the jury does convict it may do so with some jurors satisfied that the defendant was actually the killer, but all will be satisfied that if not himself the killer at least he encouraged and by reason of the statutory provision in the 1861 Act no more is necessary to prove the offence. (per Kennedy LJ at 5) This decision simply reflects the reality that whether an offence is committed as a principal or as an accessory, the offence is the same offence and the defendant is guilty of it.\nThere may be many situations in which it will be important to distinguish between the principal and the accessory, but this is not such a case.\nOn the jurys verdict, both men agreed to the joint enterprise of having a shoot out.\nWhether, on strict analysis, that made the respondent guilty as a principal to Bandana Mans actus reus of firing the fatal shot, or guilty as one who had aided, abetted counselled or procured his firing of that shot creates no practical difficulty on the facts of this case and does not affect the result.\nFor these reasons we would answer the certified question in the affirmative, allow this appeal and restore the respondents conviction for murder.\nLORD BROWN\nThe central question for decision on this appeal can be shortly posed.\nTwo armed men (let us call them A and B) confront one another in a south London car park and there engage in an unlawful gunfight, each with the intention of killing or at least seriously injuring the other.\nNeither is acting in self defence.\nRather the gunfight was agreed, either pre arranged or resulting from a spur of the moment decision by both.\nNeither in fact succeeds in hitting his adversary but in the course of their crossfire a passerby (C), one of several people in the vicinity, is accidentally killed.\nB it was who fired the fatal bullet and indisputably he is guilty of Cs murder: the principle of transferred malice so dictates.\nBut is A too guilty of Cs murder? That is the critical question before us.\nA here is the respondent, Mr Gnango (the successful appellant below), B is Bandana Man (as he has been called throughout these proceedings), and C is an unfortunate Polish careworker, killed on her way home from work.\nAlthough the facts of this case are more fully described in Lord Phillips judgment, the appeal to my mind must necessarily be decided by reference to the bare scenario already outlined, not the many surrounding details that can all too easily obscure rather than clarify the real issue arising.\nAnd to my mind the all important consideration here is that both A and B were intentionally engaged in a potentially lethal unlawful gunfight (a shoot out as it has also been described) in the course of which an innocent passerby was killed.\nThe general public would in my opinion be astonished and appalled if in those circumstances the law attached liability for the death only to the gunman who actually fired the fatal shot (which, indeed, it would not always be possible to determine).\nIs he alone to be regarded as guilty of the victims murder? Is the other gunman really to be regarded as blameless and exonerated from all criminal liability for that killing? Does the decision of the Court of Appeal here, allowing As appeal against his conviction for murder, really represent the law of the land?\nTo my mind the answer to these questions is a plain no.\nRealistically this case is indistinguishable from the succession of authorities establishing criminal liability on the part of anyone who willingly involves himself in the use of unlawful violence between protagonists intent on killing or seriously injuring each other, be they duellers, prize fighters or sado masochists see respectively R v Young & Webber (1838) 8 C & P 644, R v Coney (1882) 8 QBD 534 and R v Brown (Anthony) [1994] 1 AC 212.\nIt is the very purpose of those engaging in these various activities that injuries will occur.\nThe suggestion that certain of the perpetrators of such consensual violence, merely because they are also its prospective victims, cannot be liable for it, whether as principals or accessories by virtue of the decision in R v Tyrrell [1894] 1 QB 710 (discussed by Lord Phillips and Lord Judge at para 18 of their judgment), cannot be right.\nThe principle underlying criminal liability for duelling, prize fighting and so forth is not to be understood simply as the protection of those most directly at risk of the injuries intended.\nRather it is the protection of society generally from the damaging consequences of such injuries and the discouragement of violent conduct as a whole.\nAnother powerful illustration of the principle (discussed by Lord Phillips and Lord Judge at para 52) is the law with regard to suicide (modified although that now is).\nSuch being the rationale for criminal liability in this line of cases, how could the principle not encompass also the present case? Insofar as there are factual differences between this case and an old fashioned duel most notably the absence here of the civilities and formalities characterising a duel and the spur of the moment nature (if such it was) of the decision here to engage in a gunfight (ie to shoot and, inevitably, be shot at) none of these suggest any lesser criminality for whatever injuries may result than in the case of a duel itself.\nQuite the contrary, indeed.\nThe public interest in criminalising the violence engaged in is yet more obvious: here there were others about so that the risk of harm was by no means confined merely to the protagonists themselves.\nFor my part I am not disposed to analyse As liability for Cs murder here in accessory terms as the aider or abetter, counsellor or procurer of Bs attempt to kill him (A himself) whose liability for Cs death thus arises, Tyrrell constituting no obstacle, under the doctrine of transferred malice.\nRather it seems to me that A is liable for Cs murder as a principal a direct participant engaged by agreement in unlawful violence (like a duel, a prize fight or sado masochism) specifically designed to cause and in fact causing death or serious injury.\nBut whichever analysis is adopted, As liability for Cs murder seems to me clear and I would regard our criminal law as seriously defective were it otherwise.\nDoes it follow that criminal responsibility for death would attach as widely as was envisaged by the Court of Appeal in this case, and which so plainly concerned them as a matter of policy (see paras 74 and 75 of the judgment below, cited in full by Lord Phillips and Lord Judge at para 28 of their judgment)? In my judgment not. In the scenario there described it could not be said, as here clearly it can, that the very purpose of such a fight is that death or serious injury shall result.\nFor these reasons I too would answer the certified question in the affirmative, allow this appeal and restore the respondents conviction for murder.\nLORD CLARKE\nLord Phillips and Lord Judge have set out the facts in some detail.\nI shall not therefore repeat them.\nLord Brown says at para 68 that the all important consideration here is that both the respondent and Bandana Man were intentionally engaged in a potentially lethal unlawful gunfight or shoot out, in which each intended to kill or seriously injure the other.\nI agree that there was evidence upon which the jury could so conclude.\nIt is not in dispute that if they had agreed to fight a duel with guns and either had inadvertently shot and killed a passer by in the course of the duel they would both be guilty of murder.\nIt follows, as I see it, in agreement with Lord Phillips, Lord Judge and Lord Brown, that if the respondent and Bandana Man agreed to the shoot out, they were both guilty of murder, even though the victim was killed by a shot fired by Bandana Man and not by the respondent and even though Bandana Man intended to kill or seriously injure the respondent who was the other party to the agreement.\nIn so far as the trial judge, Cooke J, reached a different conclusion, I respectfully disagree.\nAs I see it, this analysis does not depend upon a conclusion that the respondent was aiding, abetting, counselling or procuring Bandana Man but simply on the proposition that the victim was shot and killed in the course of the respondent carrying out the agreement between the two men as principals to shoot and be shot at, just as in a duel.\nIn a passage quoted by Lord Phillips and Lord Judge at para 21 the trial judge, Cooke J, rejected the submission that the respondent actively encouraged Bandana Man to shoot at him.\nHe concluded that, by shooting at Bandana Man, the respondent might have provoked further firing but he did not encourage it.\nI agree that there is a distinction in principle between provoking a person to do something and encouraging or aiding and abetting him to do it.\nThe question is whether the judge directed the jury correctly.\nThat depends upon the language he used.\nThe relevant passage is quoted by Lord Phillips and Lord Judge at para 23.\nThe whole passage is important but the critical parts seem to me to be these: Where a criminal offence is committed by two or more people, each of them may play a different part in that offence, but if they are in it together as part of a joint plan or joint agreement to commit it, each is guilty of the planned offence.\nThe words plan or agreement that I have just used do not mean that there has to be any formality about it.\nAn agreement to commit an offence may arise on the spur of the moment.\nNothing needs to be said at all.\nIt can be made with a nod or a wink or just a knowing look or by taking the first step in committing an offence in which the other person then joins, so that it can be inferred from their behaviour.\nNow here it is said by the prosecution that Bandana Man and the defendant planned to use unlawful violence towards another by having a shoot out, whether that plan was made beforehand and the meeting was pre arranged or was made on the spur of the moment when they saw each other and fired at each other from the steps and the car respectively.\nIf you are sure that Bandana Man and the defendant joined together to commit such unlawful violence by having a gunfight, whether pre planned or whether on the spur of the moment on the top of the steps and the side of the car, and that this joint enterprise came into being before Magda was killed by a shot from Bandana Man, then the defendant would be guilty of murder also, along with Bandana Man, provided the other requirements are satisfied.\nSo if you are sure that Bandana Man and the defendant were in a joint enterprise to cause an affray, to use unlawful violence against each other by having a gunfight and by firing at each other, whether this joint enterprise was the result of a pre planned meeting or arose on the spur of the moment when they saw each other, and that in the course of that joint enterprise fight, Magda was murdered by Bandana Man on the basis of transferred malice, as I have explained it to you, and that the defendant realised and the prosecution say that he must have realised that in the course of their joint enterprise gunfight, Bandana Man might kill with the requisite intention for murder, then the defendant would also be guilty of murder.\nAs Lord Phillips and Lord Judge have explained, the judge had ruled that it was open to the jury to find that the respondent and Bandana Man were engaged on a joint enterprise to commit an affray and that, if the jury found that the respondent foresaw that Bandana Man might shoot and kill an innocent passer by this would found a verdict of murder on the part of the respondent.\nI agree with Lord Phillips and Lord Judge (at para 42) that no issue of what they call parasitic accessory liability could arise here because it cannot be said that the two protagonists had a joint intention to commit violence of a type that fell short of the violence committed.\nEither they had no common intention, or the common intention was to have a shoot out, which involved each necessarily accepting that the other would shoot at him with the intention to kill or cause serious injury.\nIt was thus open to the jury to find that there was an agreement to that effect which may have been made on the spur of the moment but was in any event made before Bandana Man shot and killed the victim, Miss Pniewska.\nMy only concern has been whether, in the light of the judges ruling, he intended to direct the jury that they could convict if the common intention fell short of an intention to shoot and be shot at.\nHowever, I agree with the conclusion of Lord Phillips and Lord Judge at para 57 that it is not realistic to think that the jury could have found such a common intention and with their conclusion at para 58 that the direction the judge in fact gave was an unequivocal direction that the jury could only convict if they were sure that the protagonists had formed a mutual plan or agreement to have a gun fight in which each would attempt to kill or seriously injure the other.\nIt follows that I would not accept the conclusions of the Court of Appeal to the contrary.\nAt paras 55 to 60 Lord Phillips and Lord Judge return to the relevance of aiding and abetting.\nFor the reasons I have given, I do not think that this is a case of aiding and abetting.\nIt is a case of an agreement to shoot and be shot at just like the agreement between the principal protagonists to a duel.\nIt does not seem to me that any assistance is to be gained by a consideration of the position of the seconds at a duel or of those present at a duel or a prize fight.\nIn reaching these conclusions, I entirely agree with Lord Browns conclusions at paras 69 to 71.\nLike him, I am not disposed to analyse the respondents liability for murder in accessory terms but as a principal to a joint enterprise (that is an agreement) to engage in unlawful violence specifically designed to cause death or serious injury, where death occurs as a result.\nI would be inclined to describe this as a form of principal and not secondary liability, but if it is a form of secondary liability, so be it.\nI also agree with Lord Brown that such a conclusion is consistent with public policy and, for the reasons he gives at para 72, does not extend criminal responsibility for death as widely as the Court of Appeal envisaged at paras 74 and 75 of their judgment.\nFor these reasons, I too would allow the appeal and restore the respondents conviction for murder.\nBy way of postscript I would like to mention another possible basis of liability for murder which was touched upon in argument.\nIt arises out of a consideration of the decision of the Court of Appeal in R v Pagett (1983) 76 Cr App Rep 279 to which Lord Judge drew attention in the course of the argument.\nIt appears to me to be at least arguable that it was or would have been open to the jury to conclude that one of the effective causes of the death of the victim was the respondent shooting at Bandana Man.\nThis is on the basis that it provoked (or caused) Bandana Man to shoot back with intent to kill or cause serious harm to the respondent as a result of which the victim was shot and killed.\nThis analysis does not depend upon the respondent and Bandana Man being parties to a joint enterprise.\nThe argument to the contrary would be that the sole cause of the death of the victim was that she was shot by Bandana Man and that the fact that he may have been returning fire directed at him by the respondent is irrelevant.\nThe argument would be that, even if Bandana Man would not have shot and killed the victim if he had not been shot at by the respondent, the deliberate and criminal act of Bandana Man in shooting back and killing the victim was a novus actus interveniens which broke the chain of causation between the shots fired by the respondent and the death of the victim.\nIn Pagett the appellant shot at police officers who were attempting to arrest him for various serious offences.\nThe appellant had with him a 16 year old girl who was pregnant by him.\nAgainst her will he used her body to shield him from any retaliation by the officers.\nThe officers returned his fire and as a result the girl was killed.\nThe appellant was charged with her murder.\nThe trial judge left both murder and manslaughter to the jury.\nThe appellant was acquitted of murder but convicted of manslaughter.\nIn the Court of Appeal, which comprised Robert Goff LJ and Cantley and Farquarson JJ, the appellant challenged the judges directions on causation.\nThe judgment of the court was given by Robert Goff LJ.\nIt was held that it was for the judge to direct the jury as to the relevant principles relating to causation and then leave it to the jury to decide whether or not, in the light of those principles, the relevant causal link had been established.\nIn the rare case in which it was necessary to direct the jurys minds to the question of causation, it was usually enough to direct them simply that in law the accuseds act need not be the sole cause, or even the main cause, of the victims death, it being enough that the act contributed significantly to that result.\nHowever, Robert Goff LJ said this at p 288: Occasionally a specific issue of causation may arise.\nOne such case is where, although an act of the accused constitutes a causa sine qua non of (or necessary condition for) the death of the victim, nevertheless the intervention of a third person may be regarded as the sole cause of the victim's death, thereby relieving the accused of criminal responsibility.\nSuch intervention, if it has such an effect, has often been described by lawyers as a novus actus interveniens.\nWe are aware that this time honoured Latin term has been the subject of criticism.\nWe are also aware that attempts have been made to translate it into English; though no simple translation has proved satisfactory, really because the Latin term has become a term of art which conveys to lawyers the crucial feature that there has not merely been an intervening act of another person, but that that act was so independent of the act of the accused that it should be regarded in law as the cause of the victim's death, to the exclusion of the act of the accused.\nAt the risk of scholarly criticism, we shall for the purposes of this judgment continue to use the Latin term.\nThe decision in Pagett is however instructive: see pp 291 292.\nThe judge directed the jury that, in order to convict the appellant, it was necessary that they should find both that he fired at the police officers and thereby caused them to fire back and that he used the girl as a shield by force and against her will.\nThe court held that that direction was generous to the appellant because either of those acts would have constituted the actus reus, whether of murder or manslaughter causing the victims death.\nSo, as Robert Goff LJ put it at p 291, if the jury were sure that, if the victim was killed by a shot fired from the gun of a police officer who, acting in reasonable self defence, fired his gun in response to a lethal attack by the appellant, it would be open to them to convict him of murder or manslaughter as the case may be.\nThis case is not on all fours with Pagett because Bandana Man was not acting in reasonable self defence.\nHowever, once the respondent became aware that Bandana Man had a gun and was willing to use it, even assuming that there was no joint enterprise, it was undoubtedly foreseeable that, if the respondent continued shooting at Bandana Man, he would shoot back with intent to kill him or cause serious harm.\nIndeed, the jurys verdict shows that the respondent foresaw precisely that.\nIn these circumstances, it was open to the jury to conclude that the respondents firing at Bandana Man was a cause of the latter shooting back.\nIt was the very thing that might have been expected.\nThere are of course many cases in the books which consider the correct approach to the suggestion that there has been a novus actus interveniens.\nMany of them are claims in tort but the principles seem to me to be much the same.\nI refer only to the well known judgment of Lord Wright in the Court of Appeal in The Oropesa [1943] P 32.\nAfter noting at p 37 that human action does not itself sever the chain of causation and referring to a number of the cases, Lord Wright said at p 39: To break the chain of causation it must be shown that there is something which I will call ultroneous, something unwarrantable, a new cause which disturbs the sequence of events, something which can be described as either unreasonable or extraneous or extrinsic.\nI doubt whether the law can be stated more precisely than that.\nTo my mind, the decision by Bandana Man to shoot at the respondent was not extraneous or ultroneous but the very thing that the respondent must have expected.\nThe mere fact that the immediate cause of the death was a criminal and deliberate act on the part of Bandana Man does not as a matter of law break the chain of causation: see eg, in the context of tort, Gray v Thames Trains Ltd [2009] EWHL 33, [2009] 1 AC 1339 per Lord Hoffmann at paras 27 29 and Corr v IBC Vehicles Ltd [2008] UKHL 13, [2008] AC 884.\nAll depends upon the circumstances of the particular case.\nIn these circumstances, as I see it, the case could have been left to the jury on the basis that it was open to them to hold that the respondent was guilty of murder if they were sure that his act in shooting at Bandana Man was a cause of Bandana Man shooting at him with intent to kill him or cause him serious harm and the victim was killed as a result.\nIt seems to me to be very likely that the jury would have concluded, as Robert Goff LJ put it, that the respondents act in shooting at Bandana Man contributed significantly to Bandana Man shooting at him with intent to kill or seriously injure him and thus to his killing the victim.\nHowever, since the case was not put to the jury on this basis, I would not allow this appeal on the basis of causation but on the basis discussed in paras 74 to 82 above.\nLORD DYSON\nThe facts have been fully set out by Lord Phillips and Lord Judge.\nSeveral possible bases for upholding the respondents conviction call for consideration.\nThe first is the basis on which the case was left by the judge to the jury and on which they convicted.\nThis is that the respondent and Bandana Man participated in the commission of an affray and that in the course of it Bandana Man committed an offence (murder) which the respondent had foreseen he might commit.\nLike Lord Phillips and Lord Judge, I shall adopt Sir John Smiths phrase of parasitic accessory liability for this.\nThe second is that the respondent aided and abetted Bandana Man to shoot at him (by encouraging him to do so).\nThis is a basis on which Lord Phillips and Lord Judge would uphold the conviction, although in his ruling the judge said that his view of the facts was that the respondent did not encourage Bandana Man to shoot at him and that accordingly he would not leave the issue of aiding and abetting to the jury.\nThe third basis is that the respondent and Bandana Man were liable as joint principals for the murder.\nThis is the basis on which Lord Brown and Lord Clarke would uphold the conviction.\nLord Clarke has suggested a fourth possible route, namely that the respondent caused Bandana Man to shoot at him and therefore to kill Magda Pniewska.\nParasitic accessory liability\nThe ingredients for parasitic accessory liability are that two parties participate in the commission of crime A and, in the course of committing it, D1 commits crime B which D2 foresees that he might commit.\nThe Court of Appeal rejected this as a basis for upholding the conviction in the present case on the grounds that it was necessary to show that the respondent and Bandana Man agreed to commit the affray and shared a common purpose in committing it (para 51).\nThey said (para 59) that it was not realistic to say that they acted in concert to cause fear; they acted independently and antagonistically in a manner which did so.\nAbsent a shared purpose to shoot and be shot at, the submission made by the appellant was correct that there was no room on the facts for any other common purpose.\nThe jury was never asked to confront the question whether the shared purpose was not only to shoot, but to be shot at.\nI agree with the comments by Professor Ormerod in R v Gnango [2011] Crim LR 151 and by Professor Virgo in The doctrine of joint enterprise liability Archbold Review, Issue 10, 14 December 2010 that, in order to establish parasitic accessory liability, there was no need for the prosecution to prove that there was a common purpose that each man intended to shoot and to be shot at.\nIt was sufficient to establish a common purpose to commit an affray.\nConsequently, a common purpose to fight or threaten a fight in a public place would be a sufficient common purpose to engage the parasitic accessory liability principle.\nBut at paras 42 and 43, Lord Phillips and Lord Judge have identified a different flaw in the parasitic accessory liability argument.\nThey say that there is no room for the application of this principle in the present case, because on the facts of this case it is artificial to treat the intention to have an affray as separate from the intention to have a potentially homicidal shooting match.\nI agree.\nThere is no reason in general why the parasitic accessory liability principle cannot be applied where crime A is affray and crime B is murder.\nAll that is required is proof of (i) a common purpose to commit an affray which is shared by D1 and D2 in the sense that they have agreed to commit the offence and (ii) a murder committed by D1 in the course of the affray the commission of which is foreseen as a possibility by D2.\nSuppose, for example, that a group of youths is involved in a fist fight in a public place and they are all aware that one member of the group is armed with a knife.\nLet us further suppose that they are all guilty of causing an affray and that the youth who has the knife uses it with the intention to kill or cause really serious harm to kill another member of the group.\nAll the members of the group who foresee that he might use the knife to commit a murder would also be liable for the murder.\nThe fact that they were also guilty of an affray would be no bar to their liability for murder.\nOn the facts of this case, however, the Crown chose to put their case on the basis that the affray was the use of unlawful violence in a public place by having a gun fight and by firing at each other (summing up p 15 16).\nI agree with Lord Phillips and Lord Judge that the way that the Crown chose to put its case left no room for the application of the parasitic accessory liability principle here.\nAiding and abetting\nThe Crown sought to persuade the judge to leave the case to the jury on the alternative basis that, by shooting at Bandana Man, the respondent encouraged him to shoot back at him and fire the fatal shot; and that he was guilty of the murder of Ms Pniewska as an accessory and by application of the transferred malice principle.\nThe judges view of the facts was that this was not a route open to the jury to finding the respondent guilty of murder.\nAs he said in his ruling, in reality on the evidence, [the respondent] fired at Bandana Man in the hope of killing him or causing him grievous bodily harm, frightening him, or arguably, in self defence.\nHe cannot be said to have encouraged the other to fire back, whatever the order of shots as the jury might ultimately find them to be.\nHe might have provoked further firing, but he did not encourage it.\nDespite the judges declared intention (as expressed in his ruling) not to leave aiding and abetting to the jury, Lord Phillips and Lord Judge say that a basis on which the jurys verdict can be upheld is that they must have found that the respondent aided and abetted Bandana Man to shoot at him with intent to kill or cause really serious harm.\nAt para 59 they draw an analogy with a duel and a prize fight.\nIf the jurys view of the facts was that this case was indeed analogous to a duel (ie that the respondent and Bandana Man had a common purpose to shoot and be shot at), then I agree with the reasoning of Lord Phillips and Lord Judge.\nIt is important to distinguish between a combat which is analogous to a duel and a mere fight.\nAn essential element of the former is an agreement by the combatants to fight each other.\nThey encourage each other to fight.\nThe judge was right to distinguish between encouragement and provocation.\nIf A shoots back at B because he has been provoked by Bs shooting to do so, that is very different from saying that A shoots back at B because he has been encouraged to do so pursuant to an agreement to have a shoot out.\nThe question is whether the jury must have decided that the respondent and Bandana Man had a common purpose to shoot and be shot at and that by their words and\/or conduct they encouraged each other to that end.\nThe Court of Appeals view of the facts was that the respondent and Bandana man had no such common purpose: in other words, that this was not analogous to a duel.\nThat was also the view of the judge as expressed in his ruling.\nBut what matters, of course, is what the jury decided.\nThat can only be determined by a consideration of their verdict in the light of the summing up, which must be interpreted in a sensible way and without regard to any ruling that preceded it (of which the jury would have been ignorant).\nWhat counts is what the judge said in his summing up, and not what he intended to say or what he intended the words that he used to mean.\nBut where it is suggested that a summing up bears a meaning which differs from what the judge intended, it must be scrutinised with particular care.\nIn his summing up, the judge did not direct the jury on aiding and abetting.\nHe did not ask them in terms to consider whether, by shooting back, the respondent encouraged Bandana Man in turn to shoot back at him with intent to do so.\nIn view of his ruling, these omissions on the part of the judge were not by an oversight: they were quite deliberate.\nBut the question is whether, although the issue of aiding and abetting by encouragement was not before the jury in terms, they showed by their verdict on the issue that was before them (parasitic accessory liability) that they were sure that the respondent and Bandana Man had a common purpose to shoot and be shot at and encouraged each other to give effect to that purpose.\nThis question has caused me considerable anxiety, not least because (i) this was a murder charge, (ii) a finding of aiding and abetting by encouragement did not accord with this careful judges assessment of the facts and (iii) he did not direct the jury explicitly on the aiding and abetting issue.\nBut I have been persuaded by the reasoning of Lord Phillips and Lord Judge that the jury must nevertheless have been satisfied that there was an agreement between the respondent and Bandana Man to shoot and be shot at and that they encouraged each other to carry that agreement into effect.\nThe jury were directed that they had to be sure that the respondent and Bandana Man planned to use unlawful violence towards each other by having a shootout whether that plan was made beforehand and the meeting was pre arranged or was made on the spur of the moment when they saw each other and fired at each other from the steps and the car respectively.\nThe judge gave the standard direction for joint enterprise (in the context of parasitic accessory liability) that the offence (in this case affray by gunfight) had to be the joint commission of an offence by two or more people who are in it together as part of a joint plan.\nIn my view, a shootout pursuant to a plan must mean an exchange of fire pursuant to an agreement to shoot and be shot at; and persons who agree to shoot at each other must by virtue of their agreement intend to encourage each other to do so.\nIt differs from a simple exchange of fire.\nNor is it relevant that each of the participants hopes that his shot will prove fatal and that there will be no return of fire.\nThe fact that the jury convicted the respondent of the murder of Ms Pniewska following the judges directions must mean that, if they had been asked in terms whether the respondent and Bandana Man (i) agreed to shoot and be shot at and (ii) thereby encouraged each other to that end (intending to do so), they would have answered both questions in the affirmative.\nIn other words, the jury showed by their verdict that they considered that this was analogous to a duel.\nI would, therefore, uphold the conviction on the basis that the jury must have been satisfied that the respondent aided and abetted the murder of Ms Pniewska by encouraging Bandana Man to shoot at him in the course of the planned shootout.\nLiability as a joint principal\nThis is the route favoured by Lord Brown and Lord Clarke and accepted as an alternative by Lord Phillips and Lord Judge.\nThey say that the respondent is liable by reason of his participation by agreement in unlawful violence specifically designed to cause and causing death or serious injury.\nFor the reasons that I have given, I am persuaded that the jury must have been sure that Bandana Man and the respondent exchanged fire pursuant to an agreement to have a shoot out, ie an agreement to shoot and be shot at.\nThat is why in my view Lord Phillips and Lord Judge are right to say that in this case the difference between holding the respondent liable as a principal to an agreed joint activity rather than as an accessory is not a difference of substance.\nEither way, the Crown had to prove that the respondent and Bandana Man agreed to shoot and be shot at with the necessary intent.\nIt follows that, for the reasons I have given, the jury must have been sure that the respondent participated with Bandana Man in an agreed shoot out or agreement to shoot and be shot at with the necessary intent.\nAccordingly, if the jury had been asked whether the respondent was guilty of the murder of Ms Pniewska on the basis that he had acted in concert with Bandana Man in shooting at each other pursuant to an agreement to shoot and be shot at, in my view, in the light of the terms of the summing up, they would have answered that question in the affirmative.\nI would, therefore, uphold the conviction on this basis too.\nCausation\nLord Clarke has suggested, as an alternative, that the respondent caused Bandana Man to shoot back at him and thereby contributed to the death.\nThis way of putting the case was not left to the jury and causation was a matter for the jury to determine.\nFurthermore, we heard very little argument on this point.\nIt seems to me that, if Bandana Mans act of shooting at the respondent was a free, deliberate and informed act, it broke the chain of causation between the respondents shooting at him and his shooting and killing Ms Pniewska: see R v Kennedy (No 2) [2007] UKHL 38; [2008] AC 269.\nAs Professor Ormerod points out in his article (loc cit), it might be argued that Bandana Mans act of shooting was not a free, deliberate and informed act because he was acting in self defence.\nBut that seems very difficult on the facts of this case.\nIt might also be argued that, even if Bandana Man was acting in a free, deliberate and informed manner, that is irrelevant if he and the respondent were acting in concert: see R v Latif [1996] 1 WLR 104, 115.\nNone of these issues was explored by the jury.\nI agree with Lord Clarke that we cannot uphold the conviction on the basis that the respondent caused Bandana Man to fire the fatal shot.\nConclusion\nI would, therefore, allow the appeal and restore the conviction.\nIn doing so, I wish to emphasise that the judge is not to be criticised for directing the jury in the way that he did.\nThis was a very difficult case.\nI would add that, although I have disagreed with the analysis of the Court of Appeal, it contains a most useful discussion of some of the complex issues that arise in this area of the law.\nLORD KERR\nThe respondent to this appeal, Armel Gnango, was convicted of the murder on Tuesday, 2 October 2007, of a 26 year old Polish care worker, Magda Pniewska.\nShe had been walking home from her place of employment when she was killed by a single shot to the head.\nShe was an entirely innocent young woman.\nHer death is an appalling tragedy.\nThe shot which killed Ms Pniewska was fired by a person known throughout the proceedings by the somewhat unfortunate soubriquet of Bandana man.\nI shall refer to him as B. He and Gnango had exchanged fire and it was in the course of this that Ms Pniewska was shot.\nIn their judgment, Lord Phillips and Lord Judge have outlined all the relevant facts and I need not dilate further on them.\nThe Court of Appeal quashed the murder conviction.\nIt certified a point of law of public general importance.\nIts terms have been set out by Lord Phillips and Lord Judge in para 1 of their judgment and it is unnecessary to repeat them.\nVarious bases on which Gnango might or should be found guilty of the murder of Ms Pniewska have been canvassed in the course of argument and in the judgments of the other members of the court.\nI have had the great advantage of reading these judgments in draft form.\nJoint affray\nIn paras 32 35 of their judgment, Lord Phillips and Lord Judge have traced the evolution of the statutory offence of affray from its common law origins.\nAs he has pointed out, the Law Commission had recommended that the common law offence of affray should be preserved in an enactment and had suggested that it should be defined as the use or threat of unlawful violence by two or more persons against each other or by the use or threat of such violence by one or more persons against another.\nAlthough the government expressed satisfaction with this definition, there was a significant omission in the final form of the provision that appeared in the legislation from that proposed by the Law Commission.\nIt contained no reference to the use or threat of violence by two persons against each other.\nInstead, section 3(1) dealt only with the basis of a single individuals guilt.\nA person was to be guilty if he used or threatened unlawful violence towards another.\nLord Phillips and Lord Judge consider that the use of the words unlawful violence in subsection (2) of section 3, if given their natural meaning, would lead to the conclusion that two defendants could only be jointly liable of affray if they join in using violence against another.\nBut it seems to me that this conclusion is the consequence not so much of the use of the words unlawful violence in subsection (2) as the unavoidable result of the requirement in subsection (1) that, for a person to be guilty of affray, he must have offered violence to another.\nTherefore, I have difficulty with Lord Phillips and Lord Judges conclusion that the joint offence of affray can be founded on the common product of individual conduct, if this is to be applied to the use of violence by two persons against each other.\nUsing or threatening violence towards another must mean that in the case of a joint offence of affray the violence of those guilty of it is directed towards another person or other persons, not against each other.\nThis may produce an anomalous result, as Lord Phillips and Lord Judge have suggested, but it seems to me to be the inescapable conclusion that section 3(1) impels.\nFor a joint offence of affray to occur, the person represented by the word another in s 3(1) of the 1986 Act must be someone other than the person offering the violence.\nIt may be correct, as Lord Phillips and Lord Judge have stated (in para 38), that there does not need to be a common intention for a joint offence of affray but the activity comprising the actus reus of the offence, to be capable of giving rise to joint liability, must be directed towards the same target.\nThis is the unavoidable consequence of the stipulation that the violence must be used or threatened to another.\nOn this analysis, Gnango and B committed separate offences of affray.\nA joint affray is not, in my opinion, available as a source of liability for Gnango.\nIn any event for parasitic accessory liability to arise, Gnango and B would have to have a common intention to commit an affray, if affray is the crime on which Gnango and B are to be said to have jointly embarked.\nWhether or not a common intention is required for a joint offence of affray, it is most certainly required for parasitic accessory liability.\nEven if it were possible, therefore, for them to be convicted of joint affray without a common intention to commit that offence, for the offence to provide the basis of parasitic accessory liability, it would have to be proved that they had a shared intention.\nAs Lord Phillips and Lord Judge stated in para 38, the Court of Appeal was right to hold that this form of liability depends on the existence of a common unlawful enterprise or purpose.\nAlthough I disagree with Lord Phillips and Lord Judge that there can be a joint affray based on violence offered by two protagonists to each other, I do agree with him that participation in a joint affray cannot automatically constitute a foundation for parasitic accessory liability.\nThe essence of parasitic accessory liability is that there is a common purpose and in the course of furthering that common purpose, the principal goes beyond what was agreed but the secondary participant foresaw the possibility of this occurring.\nThe sine qua non of parasitic accessory liability, therefore, is the existence of an common purpose.\nAiding and abetting\nLord Phillips, Lord Judge and Lord Dyson have concluded that, although it was not left to the jury by the trial judge, the effect of their verdict is that Gnango was guilty because he aided and abetted B to fire at him.\nThis was on the basis that both shared a common intention to shoot at one another.\nIn particular, each intended to shoot at the other and to be shot at by him.\nThe Court of Appeal concluded that the jury was never asked to confront the question whether the shared common purpose was not only to shoot, but to be shot at (para 59 of the Court of Appeals judgment).\nThis is unquestionably correct.\nThe jury was not invited at any time during the judges carefully composed charge to address the question whether the shared intention included what seems to be the supremely important element of the avowed aiding and abetting of this offence the agreement to be shot at.\nThe judge had refused to allow aiding and abetting to go to the jury because he considered that it could not reasonably be concluded that Gnango had encouraged B to fire at him.\nThe mens rea of aiding and abetting is an intention by ones act to assist the principal in the commission of his offence.\nThus at para 18 18 of Archbold 2011 edition: To establish aiding and abetting on the basis of encouragement, it must be proved that the defendant intended to encourage and wilfully did encourage the crime committed.\nMere continued voluntary presence at the scene of a crime, even though it was not accidental, does not of itself necessarily amount to encouragement; but the fact that a person was voluntarily and purposely present witnessing the commission of a crime and offered no opposition, though he might reasonably be expected to prevent it and had the power to do so, or at least express his dissent, might in some circumstances afford cogent evidence upon which a jury would be justified in finding that he wilfully encouraged and so aided and abetted, but it would be purely a question of fact for the jury whether he did so or not: R v Clarkson, 55 Cr App R 445, Ct MAC.\nSince mere presence at the scene of a crime can in certain circumstances be enough to justify a finding of guilt, it is perhaps difficult to see why Gnangos remaining at the scene and firing the gun at B could not amount, in law, to encouragement.\nIt seems likely, however, that the judge considered that the notion of someone encouraging another to fire at him was so at odds with common experience as to be unbefitting of the jurys consideration as a possible basis of liability for in his ruling he observed: it cannot be said, in my judgment, that the defendant actively encouraged [B] to shoot at him, and even if he did, it would be a real oddity for a victim of an attempted murder to be a secondary party to that attempt.\nBe that as it may, the above passage from Archbold makes clear that, to be satisfied that Gnango intended to assist or encourage B to shoot at him, the jury would have to address directly not only the question whether his actions did encourage B to do so, but also whether he intended that B should do so see also Archbold at 17 67, what needs to be proved is an intention to render assistance to another.\nIf the jury was not invited to consider whether Gnango had that intention, the conclusion that their verdict admits of no view other than that Gnango intended to assist B in firing at him is somewhat startling and one which could only be reached after very careful examination of possible alternative explanations for the verdict.\nThe judge told the jury that the prosecution case was that there was a plan on the part of Gnango and B to have what he described as a shoot out: Now here it is said by the prosecution that Bandana Man and the defendant planned to use unlawful violence towards [one] another by having a shoot out, whether that plan was made beforehand and the meeting was pre arranged or was made on the spur of the moment when they saw each other and fired at each other from the steps and the car respectively.\nA little later in his charge he gave this critical direction: If you are sure that Bandana Man and the defendant joined together to commit such unlawful violence by having a gunfight, whether pre planned or whether on the spur of the moment on the top of the steps and the side of the car, and that this joint enterprise came into being before Magda was killed by a shot from Bandana Man, then the defendant would be guilty of murder also, along with Bandana Man.\nAt para 58 Lord Phillips and Lord Judge have said that this amounted to an unequivocal direction that the jury could only convict if they were satisfied that Gnango and B had planned to have a gun fight in which each would attempt to kill or seriously injure the other.\nHe suggests that if the jury was satisfied of this, it meant in law that both were party not merely to his own attempt to kill or seriously injure the other but to the others attempt to kill or seriously injure him.\nLord Dyson expressed essentially the same view at para 101 where he said: In my view, a shootout pursuant to a plan must mean an exchange of fire pursuant to an agreement to shoot and be shot at; and persons who agree to shoot at each other must by virtue of their agreement intend to encourage each other to do so.\nThe terms of any plan are critical to any conclusion that the parties to it must be taken to have encouraged each other to shoot.\nBut an anterior question must be addressed.\nCan it be said that solely because there was an exchange of fire, this must be on foot of a plan? Agreement to shoot it out with an opponent, if reached in advance, would be such a plan although there is no evidence that this is what happened here.\nBut where there has been what has been described as a spontaneous agreement to engage in a shoot out, the question arises whether this can truly be said to be the product of an agreement in any real sense.\nIs it not at least as likely to be the result of a sudden, simultaneously reached, coincident intention by the two protagonists to fire at each other? I do not consider that because there was a shoot out (whatever that term may mean) and because the jury were asked to consider that Gnango and B joined together to commit unlawful violence, by returning a verdict of guilty, the jury must be taken to have concluded that there was a plan in the sense of an agreement between them.\nBut even if the jurys verdict can be taken as evidence of their conclusion that there had been a plan or agreement between Gnango and B, does it follow that an element of that plan must be that they agreed to be shot at, as well as to shoot? Agreeing to a shoot out does not necessarily mean agreeing to be shot at.\nThis is particularly so where the plan takes the form of (and here it could only take the form of) an instantaneous meeting of minds between Gnango and B on their first catching sight of each other on the occasion of the gunfight.\nThat type of situation is quite different from a duel where participants meet at a pre arranged place and an appointed time.\nThe essence of a duel conducted with firearms is that there should be an exchange of fire.\nThe parties to the duel anticipate and may be said to impliedly consent to being fired on as well as firing.\nBut there is no basis on which to infer that such was the intention of the two protagonists here, much less to conclude that the jurys verdict can only be consistent with such implicit intention on the part of Gnango and B. It is at least just as likely that neither agreed to be fired on and that both hoped that they would avoid that unpleasant eventuality by hitting the target with their own shot.\nPut shortly, when the only material that the jury had to go on was that there was a shoot out, it is, in my view, impossible to conclude that the finding of guilt can only be explained on the basis that it had been proved that there was a plan between Gnango and B to shoot and be shot at.\nEven if it were possible so to conclude, however, it does not follow that this amounted to an intention on the part of Gnango or B to assist or encourage each other to shoot.\nOne might be alive to the very real risk that firing, if the target was not hit, would prompt return fire, but that is a significantly different thing from saying that this was encouragement to fire back.\nBeing prepared to run the risk does not equate with encouraging an opponent to fire at you.\nBefore, therefore, one could be confident that the jurys verdict meant that they had found it established that Gnango had intended to encourage B to fire, it would have been necessary for them to receive directions about that vital component of aiding and abetting.\nAs the judge said, when ruling that he would not allow this to go to the jury as a possible basis of liability, on the evidence, the defendant fired at Bandana Man in the hope of killing him or causing him grievous bodily harm, frightening him, or arguably, in self defence.\nBeing shot at was hardly likely to have been a desired outcome on the part of Gnango.\nIntending to encourage B to fire at him was even less likely.\nThis point was made by Graham Virgo in an article, The Doctrine of Joint Enterprise Liability, on the Court of Appeals decision in this case which appeared in Archbold Review 2010 Issue 10, p 6: if the appellant had, by his act of shooting at the opponent, encouraged him to shoot back, if the appellant had foreseen that the opponent might shoot with the intention for murder and then the opponent's shot had accidentally hit and killed a third party, the appellant could be guilty of murder as an accessory by virtue of the transferred malice doctrine The only difficulty with this analysis relates to whether the appellant's shooting at the opponent could have been regarded as a positive encouragement to shoot back.\nDid the appellant want the opponent to shoot back at him or did he only want to kill or seriously injure the opponent? This is why the Court of Appeal's analysis of an intent to shoot and be shot at was relevant, but it was relevant to accessorial liability and not to the identification of a common purpose.\nOn the facts it would have been difficult to establish such encouragement of the opponent to shoot back, but it is conceivable that such encouragement could be identified if the appellant intended some kind of duel.\nIt is, of course, true that, in considering whether there was an intention to encourage, intent must be clearly distinguished from desire or motive.\nIn a trilogy of cases, R v Moloney [1985] AC 905; R v Hancock [1986] AC 455; and R v Woollin [1999] 1 AC 82 the House of Lords held that intention is not restricted to consequences that are wanted or desired, but includes consequences which a defendant might not want to ensue, but which the jury find (a) are the virtually certain result of the defendants actions (barring some unforeseen intervention); and (b) are consequences which the defendant appreciated were virtually certain to occur.\nBefore such an oblique intention could form the basis of a jurys verdict, of course, precise directions to this effect would have to be given.\nIn the absence of a specific direction on Gnangos intention to encourage B to shoot at him, I do not consider that the verdict of the jury can be upheld on the basis that it was founded on their conclusion that he either had the requisite intention or that the virtually certain result of his firing at B was that he would return fire and that Gnango knew that this was virtually certain to occur.\nThis is particularly so because there is an obvious explanation for the jurys verdict other than that they concluded that there had been a plan which included an intention on the part of Gnango and B to encourage the other to shoot at him.\nThe judge had put to the jury that if they were satisfied that Gnango and B had participated by agreement in an affray, in the course of which Gnango foresaw that B might commit intentional grievous bodily harm or kill, he could be found guilty on that account.\nFor the reasons given by Lord Phillips, Lord Judge and Lord Dyson, with which I agree, this form of parasitic accessory liability was not a basis on which the jury could convict.\nBut it seems to be likely in the extreme that this is the basis on which they did convict.\nThat being so, there was no occasion for them to consider whether the requisite intention on the part of Gnango to found a verdict of guilty on the basis of aiding and abetting was present.\nNor can their verdict be considered to supply the necessary ingredients of liability on that basis.\nLiability as a joint principal\nIt is important at the start of this discussion to recognise the clear distinction that must be drawn between the concepts of joint principal liability and joint enterprise.\nJoint principal offending is a species of primary liability.\nIn Smith & Hogans Criminal Law (2011) 13th ed the following definition of joint principals is given: D1 and D2 are joint principal offenders where each does an act which is a cause of the actus reus.\nUnlike the position in a joint enterprise, no common purpose is required in order to render those who cause or contribute to a cause of the actus reus guilty as joint principals.\nWhat is required is that each must contribute by his own act to the commission of the offence with the necessary mens rea.\nBy contrast, the doctrine of joint enterprise arises in situations where there are two offences, the first being that which has been jointly embarked on and the second the unplanned but foreseen offence committed by one of the participants alone.\nIt is therefore par excellence a species of secondary liability as Hughes LJ explained in A, B, C and D (Joint Enterprise) [2010] EWCA Crim 1622; [2011] QB 841 where he said at para 37: It is necessary to remember that guilt based upon common enterprise is a form of secondary liability.\nThe principle is that D2 is implicated in the guilt of D1 not only for the agreed crime A but for the further crime B which he foresaw D1 might commit in the course of A.\nThis form of liability therefore arises only where D1 has committed the further crime B.\nThe two models are therefore, if not mutually exclusive, at least conceptually distinct.\nTo speak of joint principal offenders being involved in a joint enterprise is, at least potentially, misleading.\nThe essential ingredient for joint principal offending is a contribution to the cause of the actus reus.\nIf this is absent, the fact that there is a common purpose or a joint enterprise cannot transform the offending into joint principal liability.\nThe actus reus in this case was the killing of Ms Pniewska.\nTo be guilty of that offence as a joint principal, it would have to be shown that Gnango caused or contributed to a cause of her death.\nWith great respect to the views of Lord Brown and Lord Clarke, it is not sufficient that he be shown to be engaged by agreement in violence designed to cause death or serious injury.\nThe crucial question is whether he caused or contributed to the death of the victim.\nThis is not an issue which was put to the jury and a conclusion as to whether Gnangos actions caused or contributed to Ms Pniewskas death cannot be inferred from their verdict.\nIn any event, major difficulties of proof lie in the way of a case that Gnangos actions were an effective cause of the killing of the victim.\nAs a thesis it depends on the proposition that B fired the fatal shot because he was caused to do so by Gnango firing on him.\nThat proposition faces the immediate problem that B fired on Gnango first.\nIt is, one might suppose, possible to assert that, notwithstanding this, Bs continued firing at Gnango was caused by the latters return of fire.\nBut that claim encounters the difficulty that was identified by Lord Bingham in R v Kennedy No 2 [2008] 1 AC 269 where he said at para 14: The criminal law generally assumes the existence of free will.\nThe law recognises certain exceptions, in the case of the young, those who for any reason are not fully responsible for their actions, and the vulnerable, and it acknowledges situations of duress and necessity, as also of deception and mistake.\nBut, generally speaking, informed adults of sound mind are treated as autonomous beings able to make their own decisions how they will act Thus D is not to be treated as causing V to act in a certain way if V makes a voluntary and informed decision to act in that way rather than another.\nThere are many classic statements to this effect.\nIn his article Finis for Novus Actus? [1989] CLJ 391, 392, Professor Glanville Williams wrote: I may suggest reasons to you for doing something; I may urge you to do it, tell you it will pay you to do it, tell you it is your duty to do it.\nMy efforts may perhaps make it very much more likely that you will do it.\nBut they do not cause you to do it, in the sense in which one causes a kettle of water to boil by putting it on the stove.\nYour volitional act is regarded (within the doctrine of responsibility) as setting a new chain of causation going, irrespective of what has happened before.\nIn chapter XII of Causation in the Law, 2nd ed (1985), p 326, Hart & Honor wrote: The free, deliberate, and informed intervention of a second person, who intends to exploit the situation created by the first, but is not acting in concert with him, is normally held to relieve the first actor of criminal responsibility.\nThis statement was cited by the House with approval in R v Latif [1996] 1 WLR 104, 115.\nThe principle is fundamental and not controversial.\nIf B fired at Gnango first, it seems to me highly questionable (at least) that Gnangos returning fire caused B to fire again.\nThe first shot surely betokened an intention on the part of B to fire at and to hit Gnango, irrespective of whether Gnango fired back.\nIt might be said, to borrow the words of Professor Glanville Williams, that Gnangos firing on B made it much more likely that B would fire again, but that is not enough to show that B was caused to fire because of Gnangos shot.\nI do not consider, therefore, that Gnango can be guilty of the murder of Ms Pniewska as a joint principal.\nConclusion\nI would dismiss the appeal.\n","output":"The facts of this case were extraordinary and tragic.\nOn 2 October 2007, a 26 year old Polish care worker, Magda Pniewska, was walking home from a nursing home through a car park in New Cross, South London.\nShe was on the telephone to her sister when she was shot in the head and killed.\nThe shot was fired in an exchange of fire in the car park between two gunmen, B and Mr Gnango, neither of whom had been aiming at Magda.\nThey had been shooting at each other.\nScientific evidence showed that the single bullet to Magdas head had come from Bs and not Mr Gnangos gun.\nB was clearly guilty of murder under the doctrine of transferred malice.\nB however was never caught.\nMr Gnango was charged with and convicted of murder following trial aged 17.\nOn his appeal, the Court of Appeal overturned his conviction.\nThe Court held that joint enterprise liability for murder, the basis on which the Court considered his conviction to rest, could not arise on the facts.\nIn considering the appeal by the Crown, the Supreme Court was asked to address the following question: If D1 and D2 voluntarily engage in fighting each other, each intending to kill or cause grievous bodily harm to the other and each foreseeing that the other has the reciprocal intention, and if D1 mistakenly kills V in the course of the fight, in what circumstances, if any, is D2 guilty of the offence of murdering V?\nThe Supreme Court allows the appeal by a 6 1 majority (Lord Kerr dissenting) and restores Mr Gnangos conviction for murder.\nLord Phillips and Lord Judge together give the leading judgment of the Court, with which Lord Wilson agrees.\nThe trial judge had directed the jury that, in order to convict, they had to be satisfied that there was a plan or an agreement to have a shoot out, whether made beforehand or on the spur of the moment when Mr Gnango and B saw and fired at each other in the car park [23, 57].\nThis was an unequivocal direction that the jury could convict only if they were satisfied that Mr Gnango and B had formed a mutual plan or agreement to have a gunfight, i.e. to shoot at each other and be shot at, in which each would attempt to kill or seriously injure the other.\nThe jurys verdict indicates that they were so satisfied.\nAccordingly, this is a proper basis for finding that Mr Gnango aided and abetted the murder of the deceased by aiding and abetting B to shoot at him (i.e. Mr Gnango) [55 60].\nThe trial judges direction had properly been given on application of the principle of transferred malice: where a defendant intends to kill or cause serious injury to one victim, V1, but accidentally kills another, V2, he will be guilty of the murder of V2 [16, 60].\nThe application of this principle in the circumstances accords with the demands of justice: Mr Gnango and B had chosen to indulge in a gunfight in a public place, each intending to kill or cause serious injury to the other, in circumstances\nwhere there was a foreseeable risk that this result would be suffered by an innocent bystander.\nIt was a matter of fortuity which of the two fired what proved to be the fatal shot [61].\nThere is no applicable statutory or common law bar that precludes conviction of Mr Gnango on the basis that he aided and abetted Bs attempt to kill him (i.e. Mr Gnango) or cause him serious injury [51 52].\nFurther, the Court can see no reason why it should extend the common law to protect from conviction any defendant who is, or is intended to be, harmed by the crime that he commits or attempts to commit [53].\nFinally, whether Mr Gnango is correctly described as a principal or an accessory to the murder of the deceased is irrelevant to his guilt [62].\nThis is not such a case where it is important to distinguish between the principal and the accessory: the offence is the same offence and the defendant is guilty of it [63].\nLord Brown gives a concurring judgment.\nHe holds that the all important consideration here is that both Mr Gnango and B were intentionally engaged in a potentially lethal unlawful gunfight.\nThe general public would be astonished and appalled if in those circumstances the law attached liability for the death only to the gunman who actually fired the fatal shot (which it would not always be possible to determine) [68].\nLord Brown characterises Mr Gnangos liability for murder as that not of an accessory but a principal: a direct participant engaged by agreement in unlawful violence specifically designed to cause and in fact causing death [71].\nLord Clarke gives a concurring judgment.\nHe agrees with Lord Brown that Mr Gnango is guilty of murder not as an accessory but as a principal to an agreement to engage in unlawful violence specifically designed to cause death or serious injury, where death occurs as a result [81].\nLord Dyson gives a concurring judgment.\nHe holds that the jury must have been satisfied that there was an agreement between Mr Gnango and B to shoot at each other and be shot at [103], and that Mr Gnango aided and abetted the murder of the deceased by encouraging B to shoot at him in the course of the planned shoot out [104].\nLord Kerr gives the sole dissenting judgment of the Court.\nHe holds that the jury was not invited at any time during the trial judges summing up to address the question of whether the shared common purpose between Mr Gnango and B included the important element of the avowed aiding and abetting: the agreement to be shot at [115].\nThe exchange of fire between the gunmen was at least as likely to be the result of a sudden, simultaneously reached, coincident intention by them to fire at each other as it was to be the result of an agreement to shoot and be shot at [121].\nIf the jury did not conclude that there was an agreement to shoot and be shot at, there is no sound basis of accessory liability on which to uphold their verdict [126].\nIn any event, an agreement to shoot and be shot at does not necessarily amount to an intention to assist or encourage the other to shoot.\nThe jury would have needed to receive specific directions which they did not about this vital component of aiding and abetting [123].\nFurther, Lord Kerr considers that there is no sound basis for holding that Mr Gnango is liable for murder as a principal, since he had not by his own act caused or contributed to the commission of the offence with the necessary mens rea [127, 130].\nAccordingly, Lord Kerr would dismiss the appeal.\n","id":68}
{"input":"The Childrens Investment Fund Foundation (UK) (CIFF) is a charitable company with more than $4bn in assets helping children in developing countries.\nIt 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.\nTo 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.\nCIFF, Sir Christopher and Ms Cooper entered into a grant agreement (the Grant Agreement) for this purpose on 25 July 2015.\nThe main legal issues in the case stem from the special combination of three factors.\nFirst, 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.\nSecond, 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.\nI will call such companies guarantee companies.\nAs 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.\nDr Lehtimki, the first respondent and a central figure in this appeal, is a member of CIFF, as are Sir Christopher and Ms Cooper.\nThey were the original subscribers to the memorandum of association.\nCIFF has no other members.\nThird, 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.\nIn very brief outline, Sir Geoffrey Vos, the Chancellor of the High Court\n[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).\nDr Lehtimki, however, prefers to be free to exercise his own judgment on how to vote as a member.\nHe appealed to the Court of Appeal to set aside this part of the Chancellors order.\nThe 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.\nThe other respondents to this appeal are Sir Christopher, CIFF and HM Attorney General.\nDr Lehtimki and Sir Christopher argue that the appeal should be dismissed and the decision of the Court of Appeal upheld on additional grounds.\nThis 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.\nIn particular, they contend that the Court of Appeal was wrong to conclude that the members of CIFF owe fiduciary duties.\nCIFF 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).\nThe 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.\nIn 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.\nOn 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)\nBecause 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.\nRequirements for making the Grant\nThe 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.\nThe Grant Agreement is conditional on either the Charity Commission having approved or made no objection to this payment or the approval of the court.\nBoth Sir Christopher and Ms Cooper agreed separately to donate $40m to BWP.\nMs Coopers agreement in this regard was conditional on the making of the Grant.\nPrior 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.\nSir 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.\nFor 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.\nBy a Deed of Resignation dated 9 July 2015, Ms Cooper agreed to resign as a member and trustee of CIFF.\nThat resignation will be effective when the court approves or refuses to approve the Grant.\nThe 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.\nThe 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))\nMoreover, under section 201 of the 2011 Act, the Grant requires the consent of the Charity Commission.\nSection 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);\nsection 217 (payments to directors for loss of\nThe means by which the Grant is made must also comply with CIFFs own constitution, which consists of its memorandum and articles of association.\nThe memorandum of association of CIFF contains various prohibitions on trustees receiving benefits from CIFF.\nIn 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.\nThe articles of association of CIFF provide for the appointment of trustees who perform the functions of both directors of the company and charity trustees.\nThe trustees are authorised by the articles of CIFF to manage its operations (see article 6.8 of CIFFs articles of association).\nSome 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.\nThe 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).\nOnly Dr Lehtimki will vote at the meeting of CIFF on the section 217\nresolution\nBecause 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.\nThe 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.\nThe decisions of the Chancellor and the Court of Appeal\nCIFF applied to the Charity Commission for approval of the overall transaction.\nThe 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.\n(a) Judgment of the Chancellor\nGrant 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.\nThe 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.\nHe 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.\nThe Chancellor found that that was the nature of the application which CIFF was making.\nOn 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.\nThe Chancellor held, at para 128, that in the unique circumstances of this extremely unusual case, the Grant was in the best interests of CIFF.\nIn 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.\nThe Chancellor referred to the considerable talents of Ms Cooper.\nThe 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).\nSection 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.\nThere was no applicable exception from these provisions.\nTherefore the 2006 Act requires CIFF to disclose the Grant to members and obtain their approval by resolution.\nThis is now common ground, and I will refer to the required resolution as the section 217 resolution.\nAs the Chancellor put it, section 217 of the 2006 Act applies as much to charitable companies as it does to ordinary trading companies.\nReasons 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.\nDr Lehtimki filed a witness statement on 17 May 2017 in which he explained his difficulties and concerns about voting to approve the Grant.\nThese 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.\nThe Chancellor wanted to ensure that the courts decision was not overridden by an unaccountable membership (Judgment, para 38).\nThe 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).\nDr Lehtimki did not consider that he was bound to vote in favour of the section 217 resolution (para 132).\nThe 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.\nEven 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.\nSee 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.\nHowever, 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.\nThe 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.\nIn 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).\nHe further held that the members could not use assets for non charitable purposes.\nAccepting, 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.\nAccordingly, 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.\nThe 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.\nThe 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.\nHe 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.\nIn addition, the Attorney General and the Charity Commission considered that such a direction could be made.\n(b) Judgment of the Court of Appeal\nThe 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.\nOn the question whether a member was a fiduciary, the Court of Appeal distinguished the decision in Bolton v Madden (1873) LR 9 QB 55.\nIt 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.\nIt accepted, however, that the position might be different in relation to companies with a large membership, which it called mass membership charities: 46.\nIt does not necessarily follow that members of charities such as the National Trust also have fiduciary obligations.\nSince we are not dealing with such an organisation, we do not need to decide whether their members are in the same position as CIFFs.\nThere 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.\nThat 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.\nThe Court of Appeal held that the members of a charitable company have no proprietary rights.\nAs 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.\nIt 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.\nIn 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.\nIt 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).\nA 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).\nThe 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).\nA CIO has a separate legal personality from the individual trustees, and limited liability.\nLike a charitable company, a CIO has two tiers of governance: (1) the trustees and (2) the members.\nOn incorporation, the CIO is registered only with the Charity Commission so it is not subject to dual regulation under the 2006 Act.\nSection 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.\nHowever, the Court of Appeal allowed the appeal on the basis of the non intervention principle (described in para 36 below).\nThe 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.\nAdditionally, 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.\nThe 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.\nThere 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).\nIt was therefore reasonably open to Dr Lehtimki to disagree.\nIssues on this appeal\nOn 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.\nDr Lehtimki has not surrendered his discretion as a member of CIFF as to how to vote on the section 217 resolution.\nThe overarching question on this appeal is whether the Chancellor could in law make the direction.\nLeaving 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.\nFirst, 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.\nThis is a threshold question.\nBoth 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.\nI 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.\nTo whom is he a fiduciary? What obligations does he owe as a fiduciary?\nSecond, 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.\nThe Court of Appeal decided this issue against the appellant, but Lord Pannick QC contends that it was wrong in law to do so.\nThe 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.\nA 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.\nHowever, 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.\nThe order which the Chancellor made against Dr Lehtimki was a direction that he should vote in a particular way on the section 217 resolution.\nLord 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.\nHowever, 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.\nLord 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.\nI 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.\nThird, 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.\nThe appellant appeals against the Court of Appeals ruling on this issue.\nDiscussion Summary of conclusions\nIn my judgment, the three issues should be decided in the appellants\nfavour.\nI have summarised my reasons at the end of this judgment.\nI will now consider each of the three issues in turn.\nIssue 1: Is Dr Lehtimki qua member of CIFF a fiduciary?\n(1) What the term fiduciary means and why it matters in this context\nThe question whether a person is a fiduciary is important because of the duties which follow.\nBut 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.\nEquity 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).\nThe words infinite and relentless aptly indicate the capacity of equity to develop to meet new challenges.\nOver the years these duties were also imposed on directors, agents, solicitors and others.\nThe 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.\nThere 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.\nHe owes essentially the duty of single minded loyalty to his beneficiary, meaning that he cannot exercise any power so as to benefit himself.\nIn 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.\nThe distinguishing obligation of a fiduciary is the obligation of loyalty.\nThe principal is entitled to the single minded loyalty of his fiduciary.\nThis core liability has several facets.\nA 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.\nThis is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations.\nThey are the defining characteristics of the fiduciary.\nSo the distinguishing obligation of a fiduciary is that he must act only for the benefit of another in matters covered by his fiduciary duty.\nThat means that he cannot at the same time act for himself.\nIf a person is a fiduciary then, as part of his core responsibility, he must\nnot 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).\nThe 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.\nSection 178(2) of the 2006 Act expressly makes this a fiduciary duty in the case of company directors.\nIt is not necessary to consider whether these duties are fiduciary duties in all cases.\nIt is not enough that a person has agreed to perform certain duties by agreement.\nAs 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.\nThe 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\nexclusion of his or her own or a third partys interest\nThis formulation introduces the additional concept of reasonable expectation of abnegation of self interest.\nReasonable expectation may not be appropriate in every case, but it is, with that qualification, consistent with the duty of single minded loyalty.\nThere was a suggestion in this case that a member would not expect to find that he was a fiduciary.\nHowever, 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.\nThis 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.)\nLeading 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.\nThis 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.\nHowever, 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.\nFor 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.\nI 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.\nThe Court of Appeal in this case also expressed that view.\nAs 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.\nThe 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).\nMy 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.\nA 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).\nThis is only one of the situations in which a fiduciary duty may arise.\nIt is important to examine the very specific context in which it is said that a fiduciary duty arises.\nThis 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\n(a) Backdrop\nIt 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.\nThere is also little scholarship or textbook commentary on this issue.\nHowever, 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).\nI consider each signpost in turn.\n(b) Liberal approach taken to charities by the courts\nThe 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.\nAs 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.\nCharitable uses or trusts form a distinct head of equity.\nTheir 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.\nExamples 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.\nThe 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 .\nSo, too, in Gaudiya Mission v Brahmachary [1998] Ch 341, 350, Mummery LJ observed that [u]nder English law charity has always received special treatment.\nThe 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.\n(c) The recognition of charitable companies by Parliament\nAn 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.\nThe legislature has modelled charitable companies on the normal registered UK company.\nThus, 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.\nSection 193 of the 2011 Act then provides that: In this Act charitable company means a charity which is a company.\nIt is a short step from this to see that the provisions of the 2006 Act, for\nexample 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.\nIn some cases, however, the 2011 Act makes further or different provision.\nThese provisions are engrafted on to the model established by the companies legislation so that charitable companies may be subject to two levels of regulation.\nA 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.\nAlteration 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\nconnected with them\nThere is nothing surprising in this section, or indeed in section 30(2) of the Charities Act 1960, now section 197 of the 2011 Act.\nSection 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.\nA 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.\nThe 2011 Act remedies the consequences for charitable companies.\nThe 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).\nSection 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.\nIn 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).\nNeither the 2006 Act nor the 2011 Act further analyses the effect of the incorporation of a charity.\nOne can speculate as to how this dual system of legislative regulation came about.\nIt 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.\nThis 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.\nThis system continues to exist (see now section 251 of the 2011 Act).\nSome 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.\nThe 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.\nIt 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.\nThat 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.\nTo 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.\nThis 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).\nThis provision assumed that on incorporation the charity continued, but now encased in corporate form.\nIt 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.\nThe 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.\nThose companies do not have a founding statute of their own but are subject to a mosaic of statutory provisions.\nAnother 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.\nOn 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.\nThis brings me to the important Liverpool and District case. (d) The Liverpool and District case and wider points to be drawn from\nThe issue of the relationship of charity law to company law came to a head in the Liverpool and District case.\nA charitable company had been formed to provide a hospital and promote research into diseases of the heart and other ailments.\nIts 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.\nOn the formation of the National Health Service, the hospital which it ran was transferred to the National Health Service.\nThe company continued to do research until it discontinued its activities and was wound up on the petition of the Attorney General.\nAt 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.\nSo 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.\nOne of the arguments was that the assets of the charity did not belong to the company.\nThe matter came before Slade J who considered the law in great depth.\nSlade J concluded that the companys relationship to its assets was analogous to that of a trustee.\nIt was not a trustee in the strict sense.\nIt retained a beneficial interest in its assets and so they fell to be applied in accordance with the Companies Acts.\nHowever, the members had agreed to the memorandum of association and therefore this took effect and was binding on them.\nEven 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.\nFinally, the court had jurisdiction now to order that assets be applied cy prs.\nThis 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.\nSlade J accordingly directed that the companys assets should be applied cy prs.\nIn reaching his decision, Slade J relied on the judgment of Buckley LJ in\ntwo important cases which it is convenient to mention here.\nThe 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.\nThe 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.\nHowever, 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.\nThe 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.\nThat 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.\nThis 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.\nWhere a charity has been incorporated by Royal Charter, the Crown may amend its constitution or vary its permitted objects by granting a supplemental charter.\nWhere 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.\nWhere 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.\nIn 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.\nThe 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.\nThe court could, for instance, restrain trustees from applying charitable funds in breach of trust by means of an injunction.\nIn 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.\nOr, 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.\nIn 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.\nAny 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.\nI 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)\nLord 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.\nA 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.\nThe court could make a scheme even if the charity was not a trust in the strict sense.\nSlade 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.\nThe 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.\nIn 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.\nIn 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.\nIn 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.\nIn 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.\nI do not think that it is a decision which is of assistance for present purposes.\nThat 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.\nIt 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.\nIt would be a break with a long standing tradition if this court was to depart from that approach.\nIt 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.\nNo party to these proceedings has challenged the authority of this important case.\nThis decision was cited with approval by Lord Walker in Chinachem.\nIt recognised that registered companies could be charities, and that meant that the new charitable vehicle had to meet both the charitable and corporate model.\nThe 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.\nThe 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).\nSo, members could not assert rights in disregard of their contractual obligations to the charity.\nThe 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.\nThe 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?\nWhile 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.\nThe 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.\nMr 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.\nMr Pearce submits that the members of CIFF have a range of powers.\nThe 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.\nThe members of CIFF fall squarely within the test of who is a fiduciary set out in Grimaldi.\nThe obligations of the members are to serve the purposes of the charity.\nIt 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.\n(4) My conclusions on the question whether a member is a fiduciary\nThe question who is a fiduciary has been considered above and I need not repeat those points again.\nThe 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.\nIn 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.\nMoreover, such restrictions are generally contained in the memorandum and articles of association of charitable companies.\nThe 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.\nIn 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.\nThe decision in Liverpool and District was an important decision because it set the direction of travel.\nSlade J gave precedence to the fact that a member had agreed to become a member of a charity.\nThe 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.\nThus, the fiduciary duties which a member owes are tailored by the memorandum and articles.\nThere 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.\nFiduciary duties take effect subject to the restrictions imposed by the nature of the corporate form which constitutes the charity.\nTrust law allows the fiduciary duties to be diminished by an appropriate means and to an appropriate extent.\nAs 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.\nAs 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.\nIf 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.\nIn 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.\nThe 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.\nSo, 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.\nI 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.\nThe 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.\nIn the present case, the memorandum of association as registered on incorporation contains exceptions from the no conflict and no profit principles.\nThere 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.\nThe exceptions include for example reasonable and proper remuneration for goods or services supplied to CIFF: see clause 5 of CIFFs memorandum of association.\nThe 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.\nThe 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.\nThe 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).\nThe provisions of the memorandum of association are a further indication that members should be treated as fiduciaries.\nIt 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.\nSo, it would require a good reason not to conclude that members are fiduciaries.\nA 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.\nMoreover, 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.\nThat releases him from the no profit principle.\nIt 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.\nThe point is rightly made that members of companies are not normally fiduciaries in relation to any of their powers.\nOn 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.\nThere are, however, limitations on how a member may use his voting rights.\nFor 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.\nThe 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.\nIn 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.\nIt 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.\nThese conditions are always implied, and are seldom, if ever, expressed.\nIn 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.\nThe principle is no different in relation to companies which do not have a share capital.\nHowever, 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.\nTo 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.\nWhat 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.\nThat is because the resolution involves a disposition of assets that would otherwise be available for application by CIFF towards those objects.\nThere is no basis for saying that a member was intended to have any separate interest in this transaction.\nOn Dr Lehtimkis case he neither provided those assets nor has any legitimate competing interest in the application of those assets.\nThat does not mean to say that he would be bound to approach every members resolution of CIFF with only the charitable beneficiaries in mind.\nThere may be some resolutions where a member may be able to take other interests into account as well.\nIt 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).\nThe duty as I have found it to be exactly matches what Dr Lehtimki for instance considers is required of him.\nMore importantly it is also surely what both a potential beneficiary and member of the public would expect him to do.\nMoreover, 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.\nThat is no doubt because of their potential to benefit society and the public at large in a very major way.\nThis is an appropriate consideration in this case because a charity must be established for public benefit.\nSir 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.\nThe 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)\nI 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.\nThat would include, for example, particulars of the proposed transaction: see section 217(3) read with section 215(3) of the 2006 Act.\nI 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).\nThat 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.\nIt is essentially a contract and statute based model of fiduciary duty.\nThe 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).\nThe 2011 Act (in addition to the general law) provides additional restrictions, but they are mainly from outside the structure.\nMr Henderson submits that it is unnecessary for a member of a charitable company to be a fiduciary.\nHe 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.\nMr 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).\nBut I do not consider that it is necessary to go that far.\nIf Dr Lehtimki is a fiduciary, then a well known set of rules and remedies come into play.\nIt will be easier for the court to exercise its inherent jurisdiction over charities, and the law of charities will be more internally coherent.\nOn 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.\nI 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.\nAlso, 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.\nAs 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).\nBut 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.)\nIt is not suggested that Dr Lehtimki has any conflict of interest in voting on the resolution.\nBut suppose that he was going to be a trustee or member of BWP.\nThis is not an interest which the memorandum or articles of CIFF has pre authorised.\nThe Companies Acts do not provide for the disclosure of this kind of interest by him as a member of CIFF.\nMoreover, 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.\nBut, certainly, he would not be able to vote as a member on any resolution concerning the benefit.\nThis problem does not require to be resolved in the present case.\nI do not, however, consider that it is correct to say, as Mr Henderson argues, that this problem undermines the initial conclusion.\nThe 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.\nThe 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.\nIt 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.\nIt 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.\nSection 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.\nIn 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.\nDanckwerts 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.\nThey could not therefore authorise a benefit for themselves.\nThey had to act in a fiduciary manner on behalf of the charitable trusts (p 571).\nTherefore, in that case, the governor and directors could only proceed by way of scheme.\nMr 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.\nThe 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.\nIn 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.\nThe company was formed for charitable purposes but, because of the rights of the preference shareholders, those purposes were not exclusively charitable.\nThus, the company failed in its bid to establish that it was a charity.\nOn 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.\nThe 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).\nThe 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.\nSuppose, 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.\nThis is at no cost to the charity since the member pays an annual subscription to cover this cost.\nSuppose that the charity proposes a resolution at the annual meeting of the charity to reduce the opening hours of the separate area.\nIt 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.\nMr 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.\nThat is a completely different arrangement from anything to do with having a constitutional role in the affairs of the charity.\nThe 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.\nThe 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.\nWhile charities must be for public benefit, minor incidental benefits may be permitted.\nParliament 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.\nSo, Parliament has recognised that charities do sometimes, and without losing their charitable status, give members minor benefits in exchange for donations.\nThose 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.\nIn Bolton v Madden LR 9 QB 55, the subscribers obtained the right to vote in exchange for their subscription.\nMr Morpuss submits that members of CIFF had to use their section 217 power for a proper purpose but were not fiduciaries.\nThat 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.\nIn 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.\nI 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.\nMr 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.\nThe 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.\nThat 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).\nThe issue was the lawfulness of an agreement to vote in favour of each others choice of charitable object.\nThere 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.\nWhen 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.\nOne 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.\nSo 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.\nBut 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.\nMass membership charitable companies\nThe above principles apply to charitable companies large or small.\nOn 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.\nSince there is no comprehensive or statutory definition of such charities, the qualification made by the Court of Appeal introduced an element of uncertainty.\nIt 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.\nApplication of the principles to the facts of this case\nIn 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.\nThe 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.\nOn the one hand there is a clear benefit in resolving the historic governance problems and achieving finality.\nOn the other hand transferring $360m to BWP comes at a cost.\nHow big a cost is unknown, particularly given the lack of available information in relation to BWP and its very limited track record.\nIt may be large, and that is my biggest concern.\nI 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.\nHowever, I remain concerned about the cost of achieving that end.\nIt is for that reason that I consider this a difficult decision.\nIf 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.\nI 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.\nThese are telling passages.\nDr Lehtimki has rightly identified the charitable purposes and recognised the need to exercise his right to vote in their interests.\nAs I see it, he implicitly recognises what is in law a fiduciary duty.\nHe does not indicate that there is any practical difficulty in recognising or performing the obligations attached to his right to vote.\nThose are important obligations and, given their fiduciary nature, there is an onus on the court to consider carefully how they are enforced.\nIt is of the essence of a fiduciary obligation that it should be capable of effective enforcement by the court.\nIssue 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?\nThe competing positions of the parties\nThis 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.\nThe 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.\nHe made a direction against Dr Lehtimki for the reasons explained above.\nThose reasons are not open to challenge in this case.\nThe 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.\nThat makes this issue particularly difficult because in the case of private trusts the court rarely intervenes in the exercise of discretionary judgment.\nIn 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.\nThe 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.\nLord 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.\nThere is a long established jurisdiction to deal with alienations of property interests.\nThe views of the Attorney General are material.\nThe powers of the court are not confined to a scheme.\nLord 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.\nLikewise, 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.\nLord 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.\nThe main principle should be that the jurisdiction should be exercised for the welfare of the beneficiaries and the trust estate.\nHe submits that this is a general principle.\nAccordingly, 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.\nMr Morpuss carried the burden of the case against the appellant for the first and fourth respondents on this issue.\nHe 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.\nThe members had not surrendered their discretion to the court.\nMoreover, there was no question of any threatened or actual breach of duty.\nAll the court could do in exercise of its special charitable jurisdiction was to direct a scheme, which it did not do.\nIn 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.\nThe present case does not fall within any exception to the non intervention principle.\nExpediency 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.\nMr 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.\nIn In re J W Laing no order was made directing the trustee to perform any particular act.\nIt 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.\nAs counsel (later Buckley LJ) argued in Royal Societys Charitable Trusts, the court exercises over trusts an equitable jurisdiction.\nMr Morpuss accepts that the court can intervene in exceptional circumstances, and he submits that on the facts, the circumstances in Letterstedt were exceptional.\nThere had been a very serious over charge by trustees.\nMr 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.\nIt is not a question of what is expedient.\nFurther 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.\nHe referred to two texts: Chitty, Prerogatives of the Crown (1820), Storeys Equity Jurisprudence (1839).\nAs Slade J recognised in Liverpool and District Hospital case, the jurisdiction of the court with respect to charities could be ousted by statute.\nThe applications in the property alienation cases were to approve matters which the trustees wanted to do.\nMr Pearce submits that there are particular cases where the non intervention principle does not apply.\nExamples 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).\nBut the courts have not exhaustively defined the circumstances.\nMy conclusion on this issue\nThis 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.\nFor 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.\nIndeed, all the members of this Court agree that, if an exception to the non intervention principle is needed, it can be found.\nLord 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).\nIn 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).\nWith 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.\nAccordingly, 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.\nThe respondents arguments on this issue are formidable.\nThere 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.\nThe 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:\nLord Walker also made some important observations on a well known saying of Lord Truro LC, which encapsulates the principle: 73.\nIn 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.\nBreach 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).\nIt 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.\nApart from exceptional circumstances (such as an impasse reached by honest and reasonable trustees) only breach of fiduciary duty judicial intervention. justifies 88.\nFinally, 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.\nI have left this submission until the end because it is to my mind truly a last ditch argument.\nIt 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.\nSuch a requirement is quite unrealistic.\nIt would tip the balance much too far in making beneficiaries a special favoured class, at the expense of both legal certainty and fairness.\nIt 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.\nThe 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.\nThe trustees duty does not extend to being right (the accuracy of the conclusion arrived at) on every occasion.\nThe particular cases that Lord Truro LC had in mind may have included cases concerned with the maintenance of minor beneficiaries.\nThey 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.\nIt is to be noted that Lord Truro LC leaves room for exceptional cases in his final words.\nLord 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.\nIn 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.\nIn 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.\nBefore leaving Lord Truro LC, I note that his formulation does not contain any equivalent of the manifestly unfit test used in relation to nominations.\nThere is on his formulation no test of perversity, at most a requirement for fairness and fair consideration of the matter.\nIn 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.\nThis 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.\nThe Board considered that it was probably not possible to lay down any more definite rule than that.\nThe Board considered on the complex facts of that case that the continuance of the trustees would prevent the trust from being properly executed.\nThe 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.\nI 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.\nLord Pannick also relies on In re Ashton Charity (1856) 22 Beav 288, 52 ER 1119, and property alienation cases.\nIn 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.\nThese 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.\nHowever, it also reflects the broad principle that the courts duty is to see that charitable trusts are performed.\nThe J W Laing [1984] Ch 143 case is instructive.\nIn 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.\nDeciding that section 13 of the Charities Act 1960 was inapplicable, he approved the scheme in exercise of the inherent jurisdiction of the court.\nIn 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.\nAnother 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.\nIn 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)\nP 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.\nMr 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.\nIn 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.\nThis case is consistent therefore with the presence of an exceptional jurisdiction which goes beyond breach of duty.\nThere 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.\nThe 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.\nThe second organ wishes to make its own decision independently of the board.\nIt only has a right to vote on one element of the transaction by virtue of section 217 of the 2006 Act.\nUnder the terms of the second organs agreement with CIFF the necessary power is otherwise vested in the first organ.\nIt 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.\nThe 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.\nIn 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.\nIt 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.\nTheir title is founded on Royal Charter, and is established by Act of Parliament.\nTo 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.\nIt 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.\nThere is no authority in the books for any such proposition.\nThere 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.\nAlthough 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).\nIn 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.\nAs 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).\nSo, 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.\nIn this case, the trustees had surrendered their discretion with respect to the Grant, but Dr Lehtimki did not surrender his.\nThere is a distinction between a surrender of discretion and an application to the court for approval of a transaction without such surrender.\nIn 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.\nCoupled 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.\nIn addition, as I have shown above, the courts have always leaned in favour of giving special treatment to charities.\nThe 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.)\nThe 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.\nIn 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.\nThat 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.\nIf 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.\nAs 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.\nIt 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.\nSo, I do not consider that it provides an adequate alternative to the Chancellors order.\nThat 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.\nSection 20(2) applies to the Charity Commission.\nSection 20 (as amended by sections 6(3) and 7(3) of the Charities (Protection and Social Investment) Act 2016) provides: 20.\nIncidental 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).\nMr Morpuss contends that the Chancellors direction, if made by the Charity Commission, would fall within section 20(2).\nHe 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.\nI do not consider that the first part of this proposition is sound.\nA member is not a charity trustee as defined in the 2011 Act.\nSection 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.\nThe 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.\nIn 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.\nI reject the submission that the same restrictions as are imposed on the Charity Commission by section 20(2) apply to the courts inherent jurisdiction.\nWhat 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.\nIn my judgment, the courts inherent jurisdiction is not tailored to that of the Charity Commission.\nThe 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.\nIt 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.\nThere is no such express provision in either the 2011 Act or the 2006 Act which modifies the inherent jurisdiction engaged in this case.\nThe final point is whether the court can exercise this jurisdiction by giving a direction and without making a scheme.\nIt is said by the first and fourth respondents that to give the relief sought the court is restricted to making a scheme.\nBoth 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.\nAs 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.\nThe facts and circumstances of this case are most unusual.\nMoreover, 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.\nBut there are more modern authorities on this point.\nMr Pearce disagrees with the submission of Mr Morpuss.\nHe 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.\nHe 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)\nIn 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.\nThe latter is far wider than the former.\nIt 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.\nBuckley 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).\nI reject Mr Crows submission that this is limited to the discussion of breach of duty later in the same paragraph.\nBuckley LJs holding is in general terms.\nMoreover, 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.\nThe 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.\nIt 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.\nThe books give many instances where this has been done .\nIn 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.\nThe matter simply did not require a scheme it only required directions.\nLord Wilberforces examples relate to private trusts, but many examples can be found in relation to charities.\nOne 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.\nThere was no allegation of any misconduct by the trustee.\nLater 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).\nIn 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.\nNo 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.\nA 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).\nThat is sufficient for the purposes of this case.\nAccordingly, 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.\nThere 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.\nIssue 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?\nThe range of the arguments on this issue\nLord 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.\nAs for the first and fourth respondents, Mr Crow took the burden of their arguments on this issue.\nHe 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.\nMr 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.\nThe court had power to put in place machinery for the charity, but not to manage its activities.\nThe prohibition on the Charity Commission from managing a charity in section 20 of the 2011 Act (discussed above) reflected the policy of the courts.\nMr Crow submits that, in the absence of a breach of duty, the court does not usurp the judgmental discretion of the decision maker.\nBy 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.\nAn inherent jurisdiction is not an unlimited jurisdiction.\nThe court intervenes to approve matters which the fiduciaries wished to do: see, for example, In re Ashton Charity.\nIn 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.\nTherefore, the court could not override the members powers under section 217.\nMr Pearce submits that the direction given by the Chancellor to Dr Lehtimki was a proper exercise of that discretion.\nMr 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.\nMy conclusions on the third issue\nI 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.\nI deal here only with the issue that turns on section 217.\nThere 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.\nIn default the action taken without following the provisions of the 2006 Act will be of no effect.\nLord Pannick relies on the first and third principles, while Mr Morpuss and Mr Crow rely on the second.\nStarting 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.\nThis is apparent from the drafting of the section.\nThe 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).\nThe Government decided to propose the necessary changes in the 2006 Act on the basis of the Law Commissions report.\nMoreover, 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.\nThe 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.\nIn 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.\nLord 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.\nI see no warrant for any such assumption.\nA very large part of the relevant field is in fact covered and covered effectively.\nAnd there may be good reasons why Parliament should leave some companies with freedom of maneuver in this particular matter.\nThere 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.\nI 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.\nSo, 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.\nThere 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.\nFurthermore, 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).\nWhile 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.\nIn 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.\nThe question how he votes is usually an exercise of his discretion in which the court cannot interfere (see generally Issue 2, above).\nHowever, 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.\nThe court is called upon to approve the exercise of that discretion.\nThe 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.\nIn those circumstances the field for the operation of public law in this case is exhausted.\nThe section 217 resolution becomes a matter of the internal management of the company.\nSo, 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.\nThis 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.\nSection 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.\nThere is no interference with the statutory scheme in the 2006 Act because there still must be a resolution for the purposes of section 217.\nIn the same way, a resolution has to be passed even where a member is effectively disenfranchised because another member has weighted voting rights.\nThat 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.\nLikewise, there is no interference with the statutory scheme in the 2011 Act.\nThe court does not dispense with the separate requirement in section 201 of that Act for the prior written consent of the Charity Commission.\nIf 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.\nMr 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.\nThe 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.\nThe 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.\nThe 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.\nOf course, the law applies in the same way whether a fiduciary has Dr Lehtimkis knowledge and skills or not.\nThe 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.\nAs 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.\nMoreover, 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.\nThe court must look at all the circumstances and the full context of the potential exercise of discretion.\nIn 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.\nLooking 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.\nWOULD THE COURT HAVE JURISDICTION TO DIRECT DR LEHTIMKI TO VOTE IN FAVOUR OF THE SECTION 217 RESOLUTION ON THE BREACH OF FIDUCIARY DUTY ROUTE?\nLord Briggs concurring judgment on the breach of duty route\nI have had the benefit of reading Lord Briggs judgment.\nLord 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.\nLord Wilson and Lord Kitchin agree with Lord Briggs.\nI respectfully disagree.\nIn 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).\nAlthough 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).\nThe duty of the fiduciary is then to use his powers so as to give effect to the courts decision (para 218).\nIn Lord Briggs judgment, there is no longer any legitimate debate on the question that the court has decided (para 218).\nLord Briggs considers that the members only option if he cannot vote for the section 217 resolution is to resign (para 218).\nMoreover, 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.\nDr Lehtimki ceases to be entitled under section 217 to overrule the trustee directors (para 221).\nIn 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.\nThe views of the Chancellor and of the Court of Appeal\nLord Briggs founds his conclusion on the judgment of the Chancellor.\nAs 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.\nThus, 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.\nThat discretion has now been exercised.\nThe discretion so exercised binds the charity and the charitable company, CIFF.\nIts management is only divided between trustees and members for specific purposes.\nHere 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.\nThat 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.\nThe 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.\nWhen 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)\nThe Court of Appeal disagreed with the Chancellor.\nMoreover, 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).\nSubmissions on the breach of duty route\nThe only party to this appeal to advocate the breach of duty route before this Court was Ms Cooper, and then only fleetingly.\nMr Morpuss brief rejection of this route was to my mind convincing.\nThe approval given by the court in this case is only on the surrender by the trustees (with the Charity Commissions approval) of their discretion.\nOn Mr Morpuss submission, the court did not have jurisdiction as against the member simply because it had jurisdiction as against the trustees.\nHe went on to describe that proposition as bootstrapping.\nBasis of jurisdiction must logically precede the conclusion of breach of duty\nI emphasise that word jurisdiction, which means, as already explained, the courts supervisory jurisdiction over charities.\nThe Chancellor had no jurisdiction to make an order against Dr Lehtimki unless he was threatening to act in breach of his duty.\nBut Dr Lehtimki was not threatening to act in breach of this duty.\nThe Court of Appeal so found.\nThe fiduciarys duty is subjective, namely to do that which he considers to be in the best interests of the objects of the charity.\nThe importance of a subjective duty is that it is the fiduciary, and not the court, which decides which option to take.\nThe 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)?\nThe order of the Chancellor to approve the Grant was an exercise of the discretion which had been surrendered to him by the trustees.\nThe 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).\nDr Lehtimki chose not to surrender his discretion to the court and the trustees had no power to surrender his discretion for him.\nOn that the position in this court remains the same as it was before the Chancellor.\nWhen 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.\nSo the jurisdiction has to be found in some other way.\nLord 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.\nThe Chancellor made a mandatory order against him to that effect.\nBut the order approving the Grant could not alter his powers in that way.\nIf 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.\nIt 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.\nFurthermore, the point is not one of form.\nJurisdiction 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.\nTo do otherwise is, with respect, circular.\nTherefore, as I analyse it, the breach of duty route cannot be followed because there is no jurisdiction.\nThe court must first establish jurisdiction by finding, if it properly can, an exception to the non intervention principle.\nThat may explain why counsel made detailed submissions on this principle to almost the complete exclusion of the breach of duty route.\nThe courts approval may be frustrated by the action of non fiduciaries\nThe exceptions to the non intervention principle only enable the court to make orders against fiduciaries.\nIt 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.\nIf 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.\nSo too with the Charity Commission.\nThe 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.\nIn 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.\nWhen 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.\nNone 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.\nThe 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.\nIn 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.\nThe Charity Commission must make its own decision on the materials available to it though no doubt it would take into account the courts decision.\nHowever unlikely, it is open to it to come to a different conclusion, and if it does, the Grant will not proceed.\nAvoiding a blanket approach to breach of duty\nThe 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.\nOnce 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.\nEven 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.\nThe importance of the subjective test for breach of fiduciary duty\nThe subjective nature of the fiduciarys duty is very important to the operation of charity law.\nThe court does not interfere in a dispute as to how a charity is to be administered: see paras 120 122 above.\nThe 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.\nAs explained, any departure from the non intervention principle calls for caution.\nFurthermore, 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.\nThus, 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.\nIt 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.\nIf 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.\nTo act on any other principle would be to deter all prudent persons from becoming trustees of charities.\nThere are practical reasons for the courts benevolent approach, and the reasons are equally valid in support of the subjective nature of the fiduciarys duty.\nLord Eldon explains that the reason for the courts benevolence is to encourage people to become trustees of charities.\nAnother 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.\nThe court may not have the same detailed experience and knowledge of the charity as the officers and members have.\nThe 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.\nImportance of my more nuanced approach in membership charities\nAnother 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.\nThe 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.\nThe 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.\nAs already indicated, this is contrary to the ethos of a membership charity.\nThe 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.\nSociety 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.\nThat principle should in my judgment prevail over any disagreement with or disapproval of Dr Lehtimkis conduct in this matter.\nThe trustees surrendered their own discretion to the court, not that of Dr Lehtimki.\nThe Chancellor was therefore not exercising any corporate power conferred on the members or any other person.\nIn my judgment the court should be very circumspect in overriding protections written into the articles or conferred on members by the Companies Acts.\nAppropriate restraint is reflected in the non intervention principle.\nDeadlocked trustees are not an analogous situation\nLord 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.\nIn those cases, the court has only a single body of fiduciaries before it.\nIn this case, there are two: (i) the trustees and (ii) the members of CIFF.\nAs a matter of corporate law, the trustees do not control the members powers (see para 14 above).\nIn 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).\nA material change of circumstances would undermine the basis on which the\ndirection has been made\nLord 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.\nAn 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.\nA 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.\nOnce 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).\nSo to conclude would be to prejudge the issue.\nOn 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.\nConclusions on the breach of duty route\nThe 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.\nUnless there is an applicable exception to the non intervention principle, there is no jurisdiction.\nAnd 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.\nRather, it should satisfy itself that it is justified in concluding that there is an appropriate exception to the non intervention principle.\nThat is the principled way to ensure that a member cannot exercise a veto on the courts approval of the Grant.\nMoreover, 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.\nLord Briggs response is that the test has to be objective in these circumstances.\nBut the effect of that approach is to make a fundamental change in the members duty.\nIt 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.\nThe 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.\nIn 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.\nThe members who take a different view from the court will be compelled to return to the court to justify their approach.\nThe onus should not be on them to do so.\nThe 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.\nAccordingly, 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.\nRespectfully, I consider that the non intervention principle has to be observed even in this case.\nThe court can only make a direction against Dr Lehtimki if it is satisfied that there is an applicable exception to that principle.\nI am so satisfied for the reasons that I have given.\nSUMMARY OF MY OVERALL CONCLUSIONS\nOn 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.\nThe 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.\nI 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.\nThose circumstances must be worked out as and when they arise.\nOn 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.\nAny departure from this principle must be approached with considerable caution by the court.\nLitigation 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.\nHowever, in my judgment, the present case is a rare exception to that principle.\nThe 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.\nI 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.\nOn 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.\nI therefore conclude that the Court of Appeal was in error in not making the direction.\nHowever, 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).\nI would allow the appeal to the extent explained in this judgment.\nLORD BRIGGS: (with whom Lord Wilson and Lord Kitchin agree)\nI 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.\nI 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.\nCIFF is a charitable company, falling under the courts special jurisdiction in relation to charities.\nLike a charitable trust CIFF is only a charity because its objects (ie its purposes) as laid down by its constitution are exclusively charitable.\nThe furtherance of those purposes is entrusted primarily to its trustees.\nAlthough 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.\nIf (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.\nIf 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.\nIf the court concludes that it is, then it will follow that those purposes will not best be furthered by that transaction not going ahead.\nThe 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.\nBut 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.\nIt ceases to be a question for debate.\nIt 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.\nIt 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.\nWhere 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.\nSection 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.\nSection 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.\nSection 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.\nBoth 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.\nSuch 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.\nThe court will not be affected by fellow feeling of the type which might affect the directors or trustees.\nIf the court gets the decision wrong, there is an appellate process in place to put it right.\nIt is common ground that the Charity Commission may defer to the court under section 201 in such a case.\nIt 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.\nBut 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.\nThat 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.\nNor 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.\nApplied to the facts of the present case, the analysis is as follows.\nThe management of CIFF was gravely threatened by the most unfortunate falling out between its generous and dedicated founders, Sir Christopher and Ms Cooper.\nWhat 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.\nCIFF was under the control of five trustees, including Sir Christopher and Ms Cooper.\nThe latter two were, along with Dr Lehtimki, the only members of CIFF.\nFor 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.\nBut 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.\nAgain for understandable reasons, Sir Christopher and Ms Cooper declined to participate in voting as members.\nSo the question whether to vote in favour of the making of the Grant fell upon the shoulders of Dr Lehtimki.\nThe 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.\nThe Charity Commission understandably took no active part itself.\nThe 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.\nHe found that a difficult decision, about which relevant fiduciaries, including in particular Dr Lehtimki, could reasonably differ without thereby being in breach of duty.\nBut there has been no challenge to that decision.\nWhen 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.\nSpeaking 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.\nWhen 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.\nI agree.\nI must say something very briefly about the two principal grounds on which that direction has been challenged, successfully, in the Court of Appeal.\nThe 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.\nOn 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.\nThere 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.\nLike Lady Arden I would prefer to leave these issues to a case where they might affect the outcome.\nIn the case of CIFF, its constitution confers no particular benefits on its members which would bring that question into play.\nThe 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.\nIt 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.\nLady Arden deals with this ground on the assumption that Dr Lehtimkis stance involved neither a breach nor a threatened breach of his fiduciary duty.\nOn 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.\nIn 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.\nIf 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.\nBut I am unable to accept the premise.\nI 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.\nThus 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.\nIt 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.\nBut 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.\nIt 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.\nBut 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.\nThis 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.\nBut 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.\nThe 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.\nIf he finds that he cannot in conscience do so, then he should resign.\nThere 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.\nThe 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.\nThe 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.\nWhere 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.\nIf necessary the court may direct them to do so.\nFor 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.\nIt 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.\nIt is said that his joinder as a party, otherwise than at his request, does not detract from that entitlement.\nI respectfully disagree, for the following reasons.\nFirst, the court was not merely resolving some internal disagreement among the trustees.\nIt 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.\nCIFF was, in recognition of that, joined as a party, for the purpose of being bound by the outcome.\nAs 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.\nWhile 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.\nSecondly, 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.\nThis 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.\nThere 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.\nFor 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.\nThirdly 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.\nIt 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.\nThe 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).\nIt 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.\nThat 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.\nLady Arden was kind enough to read a draft of my judgment, which ended at para 224 above.\nShe has, in paras 174 and following of her judgment set out at length why she disagrees with the breach of duty route.\nI must explain why I have not been persuaded by her analysis.\nI mean no disrespect by doing so briefly.\nFirst 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.\nBut 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.\nLady 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.\nI agree.\nBut 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.\nLady Arden acknowledges, at para 178, that the breach of duty point was, albeit briefly, taken on Ms Coopers behalf in her Grounds of Appeal.\nThe 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.\nSo the point remained to be decided, even though little was thereafter said about it during the hearing.\nMore 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.\nTrue it is that the Court of Appeal disagreed with the Chancellors reasoning, but that is why there is an appeal to this court.\nIt 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.\nThere was no such unanimity in the present case.\nI 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.\nFirst, the Charity Commission is not a fiduciary subject to the courts general jurisdiction in relation to breach of duty.\nIt is a separate public body with its own statutory jurisdiction.\nSecondly the Charity Commission was not joined as a party to the proceedings, or heard on the merits of the Grant.\nThe 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.\nLeaving 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.\nLady 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.\nThus 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.\nI 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.\nBut the test for breach of fiduciary duty has never been purely subjective.\nThe fiduciarys belief has to be both bona fide and reasonable, if he or she is to act upon it without risking breach of duty.\nIn 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.\nHonesty and sincerity are not the same as prudence and reasonableness.\nWhere 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.\nNor 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.\nHe 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.\nNo one is suggesting that Dr Lehtimki should be punished.\nNor 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.\nThe 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.\nI 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.\nBut 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.\nThat this is just such a case is the foundation of Lady Ardens judgment as much as it is of mine.\nI do not think that this very unusual case will tend to shift the balance of power away from members towards management and the court.\nIn 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.\nIn fact the originators of the proposal to make the Grant, Sir Christopher and Ms Cooper, were both members as well as trustees.\nI would therefore allow the appeal, and restore the Order made by the Chancellor, essentially for the reasons which he gave.\nLORD REED:\nWith 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.\n","output":"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.\nCIFF has a board of trustees (directors), and members.\nGovernance issues emerged when their marriage broke down.\nThe 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.\nUnder 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.\nThe Charity Commission authorised the trustees of CIFF to obtain the approval of the court.\nSo, the trustees started proceedings in the name of CIFF and surrendered their discretion on the transaction to the court.\nAs to s.217, the members of CIFF were Sir Christopher, Ms Cooper and Dr Lehtimki.\nOnly Dr Lehtimki as the sole non conflicted member, would vote on the resolution (the resolution) to approve the Grant.\nDr Lehtimki (a party to the trustees proceedings) did not surrender his discretion or make his voting intentions clear.\nThe 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.\nHe accepted that a reasonable fiduciary could disagree with this conclusion.\nAs 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.\nThe 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.\nHe ordered Dr Lehtimki to vote in favour of the resolution.\nThe 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.\nThe Court of Appeal discharged the order against Dr Lehtimki.\nMs Cooper appeals to the Supreme Court and seeks an order requiring Dr Lehtimki to vote in favour of the resolution.\nDr 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.\nThe 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.\nThe distinguishing characteristic of a fiduciary is that he owes a single minded duty of loyalty in matters covered by his duty [44].\nA member of a charitable company in principle owes this duty.\nA 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.\nThe 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.\nSo, the duty is essentially a contract and statute based model [92].\nThe 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].\nIssue 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.\nThe Chancellor was right that the member no longer has a free vote.\nThe charitys fiduciaries (whether or not parties) were obliged to use their powers to ensure that the courts decision was implemented.\nIt would be a plain breach of duty for a fiduciary not to follow that decision [207 208].\nIf the decision was wrong, it could be appealed [210].\nThe 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.\nThis is no longer the case where a court has decided the issue [218].\nIf 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].\nLady 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].\nShe rejects the majoritys analysis.\nThe order approving the Grant did not give jurisdiction to make an order directing Dr Lehtimki to vote on the beach of duty basis [180].\nMoreover, a members duty is subjective: Dr Lehtimki did not threaten to breach that duty.\nThere 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].\nThe 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.\nIn addition, when the vote is taken, circumstances may have changed [194].\nIssue 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.\nCharities operate within a public law framework, where the court does not in general substitute its own judgment for that of the decisionmaker.\nHowever, 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.\nIn 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].\n","id":69}
{"input":"1. Highbury Poultry Farm Produce Ltd (HPFPL) operates a poultry slaughterhouse in Shropshire under the approval of the Food Standards Agency.\nThe average throughput is 75,000 chickens per day, equating to 19.5m or so chickens per annum.\nThe birds have their legs shackled to a moving line and are then submitted to a number of sequential processes, including stunning, bleeding and scalding.\nOn each of 31 August, 12 September and 5 October 2016 a chicken went into the scalding tank (where its feathers would be removed) while still alive because, after stunning, its neck had not been properly cut by a certificated operative.\nHPFPL was charged with two offences in respect of each of the three incidents.\nThe two offences were particularised as follows: 1.\nHighbury Poultry Farm Produce Ltd being the business operator of the slaughterhouse, failed to comply with a specified EU provision, namely article 3 of Regulation (EC) No 1099\/2009, which required that animals should be spared avoidable pain, distress or suffering during their killing and related operations, in that a bird that had been subject to simple stunning was not stuck and bled out before being processed, contrary to regulation 30(1)(g) of the Welfare of Animals at the Time of Killing (England) Regulations 2015. 2.\nHighbury Poultry Farm Produce Ltd being the business operator of a slaughterhouse, failed to comply with a specified EU provision, namely article 15(1) of Regulation (EC) No 1099\/2009, which required you to comply with the operational rules for slaughterhouses laid down in Annex III of the said Regulation, including point 3.2 setting down requirements for the bleeding of animals, in that, following the simple stunning of a chicken, there was a failure to systematically sever the carotid arteries or the vessels from which they arise and the animals entered the scalding tank without the absence of signs of life having been verified, contrary to regulation 30(1)(g) of the Welfare of Animals at the Time of Killing (England) Regulations 2015.\nHPFPL raised a preliminary point of law which became sub divided into two related issues: (1) whether the offences under regulation 30(1)(g) require proof of mens rea (ie proof that the defendant had knowledge of the factual circumstances constituting the alleged offence) and (2) whether the prosecution must prove a culpable act or omission on the part of the defendant.\nHaving heard the case in November 2017, District Judge Cadbury, sitting at Telford Magistrates Court, handed down his ruling on 9 January 2018.\nHe held that these offences did not require proof of mens rea or culpability on the part of HPFPL.\nRather they were offences of strict liability.\nOn 19 March 2018 District Judge Cadbury stated a case seeking the opinion of the Divisional Court of the Queens Bench Division of the High Court on the following two questions: 1.\nDid I err in ruling that proof of an offence contrary to regulation 30(1)(g) of the Welfare of Animals at the Time of Killing (England) Regulations 2015 did not require the prosecution to prove mens rea on the part of the business operator? 2.\nDid I err in ruling that the prosecution was not required to prove a culpable act and\/or omission on the part of the business operator when prosecuted for offences alleged to be contrary to [regulation 30(1)(g) of the] Welfare of Animals at the Time of Killing (England) Regulations 2015?\nGiven concerns as to the applicability of the case stated procedure to a situation where the Magistrates Court had not made a final determination of guilt, HPFPL also brought judicial review proceedings in the Divisional Court against District Judge Cadburys ruling.\nIn its judgment, [2018] EWHC 3122 (Admin), the Divisional Court (Hickinbottom LJ and Jay J) decided that the correct way to proceed was via judicial review.\nOn the substantive matter, it dismissed HPFPLs application for judicial review because the District Judge was correct to have decided the preliminary issue of law in favour of the Crown Prosecution Service.\nIt decided that the offences are ones of strict liability and do not require proof of mens rea or culpability by the business operator.\nHPFPL now appeals to the Supreme Court against that decision of the Divisional Court dismissing its application for judicial review.\nWhile recognising that the same questions would be answered in the same way whichever of the two procedures was used, the Divisional Court decided that the case stated procedure could not here be used because the Magistrates Court had not made a final determination whether HPFPL was guilty or not.\nThere has been no appeal against that decision on procedure and it is therefore unnecessary to say anything more about it.\nWhat this court has to determine is whether the Divisional Court and District Judge Cadbury were correct to decide that the two offences charged under regulation 30(1)(g) of the Welfare of Animals at the Time of Killing (England) Regulations 2015 (SI 2015\/1782) (WATOK Regulations 2015) namely the breach by HPFPL, as a business operator, of, first, article 3(1) and, secondly, article 15(1), Annex III, point 3.2, of Regulation (EC) No 1099\/2009 on the protection of animals at the time of killing (the EU Regulation) are offences of strict liability so that negligence by the business operator does not have to be proved.\nIt is helpful to set out immediately the precise provisions that create the two offences with which we are concerned.\nRegulation 30(1)(g) of the WATOK Regulations 2015 reads: It is an offence to contravene, or to cause or permit a person to contravene [] a provision of the EU Regulation specified in (g) Schedule 5 .\nSchedule 5 specifies, inter alia: article 3(1) of the EU Regulation; and article 15(1), Annex III, point 3.2, of the EU Regulation.\nThe first offence refers to article 3(1) of the EU Regulation which reads: Animals shall be spared any avoidable pain, distress or suffering during their killing and related operations.\nThe second offence refers to article 15(1), Annex III, point 3.2 of the EU Regulation.\nArticle 15(1) reads: Business operators shall ensure that the operational rules for slaughterhouses set out in Annex III are complied with.\nBy Annex III, point 3.2: In case of simple stunning the two carotid arteries or the vessels from which they arise shall be systematically severed Further dressing or scalding shall only be performed once the absence of signs of life of the animal has been verified.\nThis judgment will proceed from the general to the particular.\nThat is, before moving to look in detail at the correct interpretation of the two offences, one needs to clarify whether the relevant principles for the interpretation of legislation are those of EU law or domestic law or both.\nThe judgment therefore starts by examining, in some depth, the relationship between the EU Regulation and the WATOK Regulations 2015.\nIt will then look briefly at whether the imposition of strict liability in the context of criminal law is contrary to EU law before turning to examine the two offences. 2.\nThe relationship between the EU Regulation and the WATOK Regulations 2015\n(1) One bite of the cherry\nStephen Hockman QC for HPFPL submitted that, even if he failed to show that negligence is required under the EU Regulation, he could still succeed in arguing that negligence is required under the domestic regulation; and that, in interpreting a legislative provision under domestic law, it is well established that there is a presumption that a crime requires mens rea or culpability (see, for example, Sweet v Parsley [1970] AC 132, Gammon (Hong Kong) Ltd v Attorney General of Hong Kong [1985] AC 1, and B (A Minor) v Director of Public Prosecutions [2000] 2 AC 428).\nThe Divisional Court accepted that that two bites of the cherry approach is correct.\nJay J said, at para 56: [T]he EU Regulation does not create any criminal offences.\nThese are created by member states in line with their own legislative techniques and established approaches to the criminal law whilst at the same time adhering at all material times to the language, principles and policies of the EU Regulation Ultimately, the analysis must come down to regulation 30(1)(g) of our domestic legislation, but Mr Hockman was fully entitled to attempt two bites of the cherry: first of all, to seek to persuade us that the obligations on business operators under EU law are not absolute; and, secondly, that in any event domestic law does not create offences of strict liability in this regard.\nAnd later, at para 73, having rejected Mr Hockmans submissions that the EU Regulation required negligence, Jay J said: [M]y rejection of Mr Hockmans first group of submissions cannot be regarded as conclusive.\nHe has, as has been pointed out, a second bite of the cherry.\nUltimately, the answer to this case hinges on whether regulation 30(1)(g) requires proof of mens rea.\nI agree with those submissions of Mr Perry for reasons which will now be set\nDavid Perry QC for the Crown Prosecution Service submitted that that was not the correct approach.\nThe interpretation of the EU Regulation should be the beginning and the end of the enquiry.\nAccording to Mr Perry, the correct way to think about the relationship between the EU Regulation and the domestic regulations in this case is that the domestic regulations are merely the mechanism whereby the EU Regulation is given effect in this jurisdiction.\nIt is therefore the interpretation of the EU Regulation that matters.\nThe cases in domestic law on the presumption that a crime requires mens rea or culpability are not directly relevant.\nHPFPL has only one bite of the cherry.\nout in some detail.\nIt is trite law that an EU Regulation has direct effect in a member state without the need for domestic enactment.\nNevertheless, the combination of EU Regulation and domestic regulations is commonplace where detailed rules are being imposed and the only discretion being left to the member state is in relation to the penalties to be imposed for contravention of those rules.\nLooked at another way, in general (subject to the exceptions in article 83 of the Treaty on the Functioning of the EU) the EU does not have competence to impose criminal penalties (see, for example, Commission of the European Communities v Council of the European Union (Case C 176\/03) [2005] ECR I 7879, para 47).\nIn line with this, it would appear that an EU Regulation in the area of animal welfare could not have created a free standing crime in a member state.\nThe EU Regulation therefore laid down the detail of the duties imposed while leaving the member states with the discretion to decide whether to create criminal offences, by imposing criminal penalties, in their domestic legislation.\nThe relevant discretion is provided for in article 23.\nThis reads as follows: The member states shall lay down the rules on penalties applicable to infringements of this Regulation The penalties provided for must be effective, proportionate and dissuasive.\nIn principle, it would have been possible for a member state to implement this EU Regulation by imposing only civil or administrative penalties, provided such penalties were effective, proportionate and dissuasive.\nHowever, the implementation of the EU Regulation in England by the WATOK Regulations 2015 perhaps not least so as to ensure effectiveness has been by imposing criminal penalties thereby making infringements of the rules criminal offences.\nOf course, it is the UK, not England, that is the member state, but animal welfare is a devolved area within the UK legislative arrangements so that each of England, Wales, Scotland and Northern Ireland has its own regulations (which are materially identical so far as the provisions relevant to this appeal are concerned).\nIt is of central importance that, while the member states have a discretion as regards penalties, they have no discretion to lower the standards required by the EU Regulation.\nWe regard it as untenable to interpret article 23 as allowing member states to lower the standards imposed in so far as they have decided to implement the EU Regulation through criminal, rather than non criminal, penalties.\nIt follows that, if the EU Regulation imposes strict liability, the domestic regulation must (as a matter of EU law) do the same; and certainly, without a clear indication in the domestic regulation that the EU Regulation is being departed from, the best interpretation of the domestic legislation must be that it is merely the mechanism for implementing what has been laid down in the EU Regulation.\nIndeed, applying the Marleasing principle (set out in Marleasing SA v La Comercial Internacional de Alimentacin SA (Case C 106\/89) [1990] ECR I 4135), even if there are words in a domestic regulation that, on their face, depart from what an EU Regulation requires, the courts of a member state are required, if at all possible, to interpret the words of the domestic regulation so as to conform with that EU Regulation.\nIn any event, in this case, the words of the relevant domestic regulation make clear that it is implementing whatever standards are imposed by Schedule 5 to the EU Regulation: ie regulation 30(1)(g) precisely specifies that It is an offence to contravene a provision of the EU Regulation specified in Schedule 5.\nIn my view, therefore, if HPFPL fails to establish that negligence is required\nunder the EU Regulation (ie if, contrary to Mr Hockmans submissions, the EU Regulation imposes strict liability), HPFPL cannot then succeed on the basis that, in any event, the domestic regulation requires negligence and does not impose strict liability.\nThere can be no question of the domestic regulation imposing a lower standard (ie negligence rather than strict liability) than that laid down by the EU Regulation because to do so would contravene the requirement of EU law for proper implementation of the EU Regulation.\nMr Hockman prayed in aid Criminal Proceedings against Vandevenne (Case C 7\/90) [1993] 3 CMLR 608.\nThat case dealt with Council Regulation (EEC) No 3820\/85 which imposed maximum driving times for lorry drivers.\nThe European Court of Justice (the ECJ) held that article 15, which imposed a duty on employers to use best endeavours to ensure that their drivers took the required rest breaks, left member states free to enact domestic legislation imposing strict criminal liability on employers.\nIn other words, member states were held to be free to impose a stricter standard in domestic criminal law than that laid down in Regulation No 3820\/85.\nBut that decision does not help Mr Hockman because it recognises only the reverse of what he is arguing for.\nThe ECJ held that the domestic legislation validly imposed a stricter, not a lower, standard than Regulation No 3820\/85.\nTherefore, the correct approach in this case, as submitted by Mr Perry, is that HPFPL has only one bite of the cherry.\nIt needs to establish that on the correct interpretation of the EU Regulation, as implemented through the domestic regulations, the offences require negligence and are not offences of strict liability.\n(2) EU law principles of legislative interpretation\nIt follows from the acceptance of Mr Perrys submissions (set out in para 12 above) that the relevant principles of legislative interpretation to be applied here are the principles of legislative interpretation established by the ECJ or the Court of Justice of the European Union (the CJEU) which I shall refer to as the EU law principles of legislative interpretation not the English law principles of statutory interpretation.\nIn R v Henn [1981] AC 850, 905, Lord Diplock referred to: the danger of an English court applying English canons of statutory construction to the interpretation of the Treaty or, for that matter, of Regulations or Directives.\nThis was said in the context of the Court of Appeals not having been referred to relevant decisions of the ECJ on the meaning of article 30 (concerned with quantitative restrictions on imports) in the Treaty establishing the European Economic Community (also known as the Treaty of Rome).\nSimilarly, in the Scottish case of Westwater v Thomson 1993 SLT 703, 709 710, Lord Justice General Hope (as he then was), sitting in the High Court of Justiciary (Appeal), said the following: Counsel for the respondents last point was that we should construe these rules strictly in the respondents favour in view of their penal consequences.\nBut that submission is inconsistent with Community law which leaves it to the member state to take whatever steps it thinks appropriate, whether penal or otherwise, to give effect to Community legislation.\nCommunity legislation as such is not penal in character and it must be applied uniformly throughout the Community.\nFor us to attempt to construe it by reference to domestic rules about the construction of penal legislation would be to apply rules of construction which have no part to play in the construction of regulations issued either by the Council or the Commission.\nIn R v Henn [1981] AC 850, 904H Lord Diplock issued a warning against the danger of an English court applying English canons of statutory construction to the interpretation of the treaty or for that matter of Community regulations or directives.\nMore recently, in Assange v Swedish Prosecution Authority (Nos 1 and 2) [2012] UKSC 22; [2012] 2 AC 471, in the context of interpreting an EU Framework Decision, Lord Phillips of Worth Matravers at para 15 said: The approach to interpretation must be one that would be acceptable to all the member states who have to strive to identify a uniform meaning of the Decision. [O]ne cannot simply apply the canons for construction or even the principles that apply to interpreting domestic legislation.\nIt is clear, therefore, that, in so far as they are different (and it is unnecessary in this case to try to pinpoint what the precise differences might be), the domestic rules of statutory interpretation are here displaced by the EU law principles of legislative interpretation.\nAlthough one is interpreting domestic criminal regulations, those regulations, because they implement the EU Regulation, must be interpreted by applying the principles laid down in EU law.\nA contrary approach would undermine the objective of harmonisation (which involves, among other things, ensuring that an autonomous meaning is applied to terms used in EU law so as to impose uniform standards across the EU).\nIt is therefore the courts task in this case to apply EU law principles of legislative interpretation.\nWhat then are those principles?\nIn the context of it being permissible, under EU principles of legislative interpretation, to consider the recitals, which expressly set out the objectives of the EU Regulation, Mr Hockman referred us to Omejc v Republika Slovenija (Case C 536\/09) [2011] ECR I 5367.\nIn what has now become a commonly cited formulation, the CJEU said the following at para 21: according to the Courts settled case law, in interpreting a provision of European Union law, it is necessary to consider not only its wording but also its context and the objectives pursued by the rules of which it is part .\nIn R v V [2011] EWCA Crim 2342, which concerned UK regulations implementing an EU Regulation by imposing strict criminal liability in relation to the transportation of waste, Cranston J giving the judgment of the Court of Appeal (Criminal Division) said at para 19: When interpreting European Union legislative instruments, an English court does not deploy the ordinary principles of statutory construction but rather those so called principles of teleological construction established by the jurisprudence of the Court of Justice of the European Union.\nOne aspect of that is that the substantive provisions of an instrument are to be interpreted in the light of its objectives, which are most readily available in the recitals.\nLord Phillips in Assange v Swedish Prosecution Authority (Nos 1 and 2), at para 15, helpfully pointed out that relevant factors to consider, in interpreting European legislation, are: the terms of the instrument, including its preamble; the usual meaning of the expressions used with a comparison of the different languages of the instrument; the purpose and general scheme of the instrument; and the preparatory materials.\nIt would appear that the most important point to have in mind is that the teleological approach to legislative interpretation adopted by the ECJ and CJEU means that there is a heavy stress on seeking to ensure that the interpretation of the words fulfils the purpose of the legislative provision and, more generally, the purposes of the EU.\nFor helpful discussions see, for example, T Koopmans, The Theory of Interpretation and the Court of Justice, in Judicial Review in European Union Law, eds D OKeeffe and A Bavasso (2000), p 45, especially at p 54; and Professor John Bell, writing the section headed European teleological approaches, in English Private Law, 3rd ed (2013), ed A Burrows, paras 1.36 1.39.\nEU law and strict liability in the context of criminal law\nBefore I move on to consider the application of the EU law principles of legislative interpretation to the two offences in issue, it is important to clarify, lest there be any doubt about this, that, just as one can have strict liability in domestic criminal law (despite there being a presumption that a crime requires mens rea or culpability) so the imposition of strict liability in the context of criminal law is not contrary to EU law (even though a principle of nulla poena sine culpa or no punishment without fault may be applicable: see the reference to this principle in, for example, Kserei Champignon Hofmeister GmbH & Co KG v Hauptzollamt Hamburg Jonas (Case C 210\/00) [2002] ECR I 6453, paras 35, 44, 49 and 52).\nI have already indicated that, in general, the EU does not have competence in relation to creating crimes.\nBut the fact that EU law is not averse to strict liability in the context of criminal law is well illustrated by Public Prosecutor v Hansen & Son I\/S (Case C 326\/88) [1992] ICR 277.\nIn that case, the ECJ considered whether the imposition by a member state of strict criminal liability for breach of a provision of Community law was compatible with the EU principle of proportionality.\nThe case concerned Council Regulation (EEC) No 543\/69, which imposed maximum driving limits for lorry drivers (and was the predecessor of the Regulation considered in the Vandevenne case, referred to above at para 17).\nDenmark enacted legislation holding employers strictly liable in criminal law for the breach by their employees of those limits.\nA Danish court referred the question whether the Regulation precluded national legislation imposing strict criminal liability.\nThe ECJ concluded that member states had a discretion to include provisions imposing such liability.\nAt paras 19 20 the court said the following: 19. it is necessary to bear in mind, first, that a system of strict liability may prompt the employer to organise the work of his employees in such a way as to ensure compliance with the Regulation and, secondly, that road safety, which, according to the third and ninth recitals in the preamble to Regulation No 543\/69, is one of the objectives of that Regulation, is a matter of public interest which may justify the imposition of a fine on the employer for infringements committed by his employees and a system of strict criminal liability.\nHence the imposition of a fine, which is consistent with the duty of co operation referred to in article 5 of the EEC Treaty, is not disproportionate to the objective pursued.\nThe application of the principle of proportionality to the amount of the fine has not been called in question in this case. 20.\nIt follows from all the foregoing considerations that neither [Regulation 543\/69] nor the general principles of Community law preclude the application of national provisions under which an employer whose drivers infringe articles 7(2) and 11 of the Regulation may be the subject of a criminal penalty notwithstanding the fact that the infringement cannot be imputed to an intentional wrongful act or to negligence on the employers part, on condition that the penalty provided for is similar to those imposed in the event of infringement of provisions of national law of similar nature and importance and is proportionate to the seriousness of the infringement committed.\nThe two relevant offences\nHaving established that the court must apply EU law principles of legislative interpretation with their heavy emphasis on effecting the purpose of the relevant provisions and that the imposition of strict liability in the context of criminal law is not contrary to EU law, I can now turn to the interpretation of the two offences in this case.\nThe two offences charged under regulation 30(1)(g) of the WATOK Regulations 2015 are the breach by HPFPL as a business operator of, first, article 3(1) of the EU Regulation (the first offence) and, secondly, article 15(1), Annex III, point 3.2, of the EU Regulation (the second offence).\nI have set out in para 9 above the precise provisions that create the two offences.\nI should make clear as a prelude to what follows that, although there have been decisions of the CJEU on the EU Regulation (and by the ECJ on the predecessors of the EU Regulation), none of those decisions is relevant to the questions that this court has to decide.\nI have also derived no assistance from either the preparatory materials to the EU Regulation or other language versions of the EU Regulation.\n(1) The second offence\nFor reasons that will become apparent, it is convenient to consider the second offence first.\nOn the face of it, the relevant words of article 15(1), Annex III, point 3.2 impose strict liability.\nBy article 15(1), business operators shall ensure that the operational rules are complied with.\nAnd the operational rules are specified in Annex III, point 3.2 in very clear and precise terms: the two carotid arteries or the vessels shall be systematically severed.\nThere is no hint that business operators shall be liable only if the operational rules are intentionally or negligently infringed.\nIf strict liability were not being imposed, words importing culpability could have easily been included; but they have not been.\nNor is there anything in the context of the EU Regulation as a whole (and see para 43 below for what I say about recital (2)) that would indicate that intention or negligence is required in relation to this offence.\nTrue it is that some of the provisions are concerned to impose monitoring and system checking and, in that sense, may be said to be concerned with imposing due diligence.\nBut that is in no sense inconsistent with recognising that other provisions (including those creating the second offence) go beyond requiring due diligence.\nThat the best interpretation is that strict liability is being imposed is reinforced when, in accordance with the heavy emphasis placed on this by EU law principles of legislative interpretation, one concentrates on the purpose of the provision.\nStrict liability imposes a clear and easily enforceable standard and is therefore in line with a principal goal of uniformity across the EU.\nIn contrast, enforcing a negligence standard would potentially be prone to difficulty.\nIndeed, it is not even clear what would here be meant by a negligence standard.\nIn particular, would one be requiring negligence by an operative and then attaching blame vicariously on the business operator? If so, there may be a serious difficulty in identifying the relevant operative, not least where the operations are mechanical.\nI tend to agree with the main point made by Karl Laird in his short commentary on the decision of the Divisional Court in this case at [2019] Crim LR 528, 530.\nAlbeit apparently viewing the issue as one of domestic statutory interpretation, he wrote that if strict liability were rejected the aim in enacting [the offence] would have been fatally undermined, given the difficulty in pinpointing the individual upon whom the requisite state of mind must be attributed.\nMoreover, although one might argue this both ways and without empirical evidence one cannot be confident which side of the argument is to be preferred it is at least plausible that imposing strict liability (rather than negligence) acts as an incentive to improve standards.\nFor a helpful consideration of the arguments both ways, in the context of a decision that accepted the merits of a half way house whereby a defendant would be permitted a defence of due diligence to what would otherwise be a strict liability offence, see the judgment of Dickson J, giving the judgment of the Supreme Court of Canada, in R v City of Sault Ste Marie [1978] 2 SCR 1299, especially at pp 1310 1312.\nIf one were to reason by analogy from domestic statutory interpretation, it is noteworthy that one is not here concerned with traditional core criminal offences but rather with what have sometimes been termed, in the context of domestic criminal law, regulatory offences.\nThese are offences created by statute and, in modern times, primarily enforced by regulators (in this case the Food Standards Agency) either alone or in combination with the Crown Prosecution Service.\nIn domestic law, strict liability has often been regarded as less problematic in relation to such regulatory offences: see, for example, Blackstones Criminal Practice, 2020 ed, para A2.22 citing Parker v Alder [1899] 1 QB 20.\nLooking at the words used in the EU Regulation, in their context and especially in the light of the purpose of the Regulation, it is therefore my view that, applying EU law principles of legislative interpretation and bearing in mind that imposing strict criminal liability is not contrary to EU law, the second offence is correctly interpreted as imposing strict liability.\n(2) The first offence\nTo put this offence in context, it is helpful to set out some parts of article 3(2) and the whole of article 3(3) as well as article 3(1).\nGeneral requirements for killing and related operations 1.\nAnimals shall be spared any avoidable pain, distress or suffering during their killing and related operations.\nFor the purposes of paragraph 1, business operators 2. shall, in particular, take the necessary measures to ensure that animals (b) are protected from injury (d) do not show signs of avoidable pain or fear or exhibit abnormal behaviour Facilities used for killing and related operations shall be 3. designed, constructed, maintained and operated so as to ensure compliance with the obligations set out in paragraphs 1 and 2 under the expected conditions of activity of the facility throughout the year.\nOn the face of it, the relevant words of article 3(1) impose strict liability: animals shall be spared avoidable pain, distress or suffering.\nThis use of the passive voice leaves no obvious room for a requirement of intention or negligence.\nAnd the requirement that the pain, distress or suffering is avoidable would be met where the business operator has contravened a specific operational rule (as here) which is designed to ensure the avoidance of pain, distress or suffering.\nThat the words of article 3(1) are imposing strict liability gains strong support from the rest of article 3 which in article 3(2) and 3(3) uses the verb to ensure.\nSo the relevant words of article 3(2) are shall take the necessary measures to ensure that; and the relevant words of article 3(3) are shall be operated so as to ensure compliance with .\nThe reasoning in paras 34 36 above, there put forward to support the view that the second offence imposes strict liability, is equally relevant and forceful in relation to the first offence.\nLeaving aside recital (2), it is therefore clear, in my view, that article 3(1) imposes strict liability.\nBefore looking at recital (2), one point should be clarified.\nIn his short judgment in the Divisional Court agreeing with Jay J, Hickinbottom LJ, at para 97, appeared to suggest that, for the purposes of article 3(1), there is an irrebuttable presumption a deeming provision that where the second offence has been committed (ie where the two carotid arteries or the vessels from which they arise were not systematically severed) the bird, despite being stunned, has inevitably been caused avoidable pain, distress or suffering.\nIt may be that Hickinbottom LJ was here focussing solely on whether the pain, distress or suffering was avoidable rather than on whether pain, distress or suffering was experienced.\nBut in so far as his words might be interpreted as referring to the experiencing of the pain, distress or suffering, I do not agree with what he said.\nIf there is any doubt (in relation to the first offence) about the bird experiencing pain, distress or suffering, that will be a matter for the prosecution to prove in the normal way.\nThere is no reason to interpret article 3(1) as laying down that pain, distress or suffering has inevitably been experienced.\nNote also that, while the phrase irrebuttable presumption is commonly used by lawyers in various contexts, I would suggest that it is best avoided because, as Hickinbottom LJ indicated by his immediate reference to a deeming provision, it has nothing to do with presumptions in the true sense and simply means that there is a legal rule to that effect.\nTurning now to recital (2), this reads: Whereas: Killing animals may induce pain, distress, fear or other forms of suffering to the animals even under the best available technical conditions.\nCertain operations related to the killing may be stressful and any stunning technique presents certain drawbacks.\nBusiness operators or any person involved in the killing of animals should take the necessary measures to avoid pain and minimise the distress and suffering of animals during the slaughtering or killing process, taking into account the best practices in the field and the methods permitted under this Regulation.\nTherefore, pain, distress or suffering should be considered as avoidable when business operators or any person involved in the killing of animals breach one of the requirements of this Regulation or use permitted practices without reflecting the state of the art, thereby inducing by negligence or intention pain, distress or suffering to the animals. (Emphasis added)\nMr Hockman submitted that recital (2) provides a definition of what is meant by avoidable pain, distress or suffering in article 3(1) and that that definition requires negligence or intention because those are the express words used in recital (2).\nIndeed, Mr Hockman went further and submitted that this recital is of general relevance to the whole of the EU Regulation so that one should treat it as being relevant to the second offence and not just the first.\nWhile it is clear that recital (2) is seeking to explain the purpose of article 3, I accept that article 3 lays down a general requirement, not least because it is headed general requirements for killing and related operations.\nHowever, even if that general requirement does impose a standard of negligence or intention, rather than strict liability, that is not inconsistent with the imposition of strict liability by other specific provisions (including those creating the second offence).\nIrrespective of the detailed arguments analysed below, I therefore see no good reason to read recital (2) as affecting my reasoning, set out above, on the second offence.\nBut what about the central submission of Mr Hockman that recital (2) expressly requires one to read into article 3(1) a requirement of negligence or intention? In the Divisional Court Jay J rejected this submission by preferring two alternative interpretations of recital (2).\nFirst, Jay J said, at para 58: I would read the subordinate clause thereby inducing as qualifying [the] second limb rather than the first.\nJay J was therefore interpreting the clauses as saying the following: Pain, distress or suffering should be considered as avoidable when business operators or any person involved in the killing of animals (i) breach one of the requirements of this Regulation or (ii) use permitted practices without reflecting the state of the art, thereby inducing by negligence or intention, pain, distress or suffering to the animals.\nThe problem with this first interpretation is that it is clear that the breach of one of the requirements of the EU Regulation has to be causally linked to the pain, distress or suffering to the animals.\nWithout such a causal link a breach of the Regulation might have nothing to do with any such pain, suffering or distress.\nFor example, a breach of the provision of the EU Regulation requiring there to be an animal welfare officer or requiring operatives to be certified cannot, in the abstract, without any causal link, mean that there has been relevant pain, distress or suffering.\nIt follows that the phrase thereby inducing pain, distress or suffering to the animals has to qualify the first limb as well as the second.\nJay J gave a second, alternative, interpretation at paras 58 59: In any event, I certainly would not read this subordinate clause as setting forth an essential component of all regulatory breaches Even if this clause does not merely cover the second limb of the final sentence of the recital, all that it is doing is saying that a breach of the Regulation will usually entail fault.\nThat second interpretation is compelling.\nThe words are making clear that a breach of article 3(1) will usually entail fault but they are not laying down that fault is an essential element.\nAn equally persuasive and slightly different way of putting this is that negligence or intention are being provided as examples of the ways, and not as an exhaustive list of the ways, in which a breach of the Regulation, or a failure to use permitted practices reflecting the state of the art, induces pain, distress or suffering that should have been avoided.\nIt is also important to stress that the words negligence or intention are in a\nrecital and are not in the operative provisions of the EU Regulation.\nIt is clear that under EU law principles of legislative interpretation, one can take a recital into account in interpreting a relevant provision of the Regulation: see, for example, Omejc v Republika Slovenija (Case C 536\/09) [2011] ECR I 5367, para 26.\nThere is also no doubt that, under EU law principles of legislative interpretation, the recitals are of considerable importance.\nAs one is applying the teleological approach, the express setting out of the purposes is bound to be highly significant.\nHowever, what one has here is a clear provision of the EU Regulation, imposing strict liability, and a somewhat ambiguous provision in the recital referring to negligence or intention.\nIn that situation, it appears to be well established that the recital should be interpreted in such a way as not to contradict the Regulation.\nFor example, in Criminal Proceedings against Caronna (Case C 7\/11) EU:C:2012:396, the CJEU stated as follows at para 40: the preamble to a European Union act cannot be relied on either as a ground for derogating from the actual provisions of the act in question or for interpreting them in a manner clearly contrary to their wording (Case C 308\/97 Manfredi [1998] ECR I 7685, para 30; Case C 136\/04 Deutsche Milch Kontor [2005] ECR I 10095, para 32; and Case C 134\/08 Tyson Parketthandel [2009] ECR I 2875, para 16).\nR (International Air Transport Association) v Department of Transport (Case C 344\/04) [2006] 2 CMLR 20 is a particularly clear illustration of this approach to recitals.\nThe case concerned Regulation (EC) No 261\/2004.\nArticles 5, 6 and 7 established rules on the immediate compensation and assistance to be given by airlines to passengers who were denied boarding or whose flights had been cancelled or delayed.\nRecital (14) of the Regulation read as follows: (14) As under the Montreal Convention, obligations on operating air carriers should be limited or excluded in cases where an event has been caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.\nSuch circumstances may, in particular, occur in cases of political instability, meteorological conditions incompatible with the operation of the flight concerned, security risks, unexpected flight safety shortcomings and strikes that affect the operation of an operating air carrier.\nThe claimant airline associations sought judicial review of the UK Department of Transports implementation of articles 5, 6 and 7.\nThey claimed, among other things, that those articles infringed the principle of legal certainty.\nOne of their arguments, summarised by the ECJ at para 75, was that Regulation No 261\/2004 envisages, in an inconsistent manner in the 14th and 15th recitals in its preamble, that extraordinary circumstances may limit or exclude an operating air carriers liability in the event of cancellation of, or long delays to, flights whereas articles 5 and 6 of the regulation, which govern its obligations in such a case, do not accept such a defence to liability except with regard to the obligation to pay compensation.\nThe ECJ rejected this argument on the basis that the operative provisions were clear.\nIt stated as follows in para 76: while the preamble to a Community measure may explain the latters content (see Alliance for Natural Health [(R (Alliance for Natural Health) v Secretary of State for Health (Cases C 154\/04 and C 155\/04) [2005] 2 CMLR 61)], para 91), it cannot be relied upon as a ground for derogating from the actual provisions of the measure in question (Case C 162\/97 Nilsson and Others [1998] ECR I 7477, para 54; and Case C 136\/04 Deutsches Milch Kontor [2005] ECR I 10095, para 32). [T]he wording of those recitals indeed gives the impression that, generally, operating air carriers should be released from all their obligations in the event of extraordinary circumstances, and it accordingly gives rise to a certain ambiguity between the intention thus expressed by the Community legislature and the actual content of articles 5 and 6 of Regulation No 261\/2004 which do not make this defence to liability so general in character.\nHowever, such an ambiguity does not extend so far as to render incoherent the system set up by those two articles, which are themselves entirely unambiguous.\nApplying EU law principles of legislative interpretation, therefore, the unclear recital (2) does not override the clear article 3(1).\nFinally, there is a further background (or contextual) consideration that supports the interpretation of the first offence as imposing strict liability.\nArticle 28 of the EU Regulation repealed Directive 93\/119\/EC.\nThat Directive set out the previous EU law on the protection of animals at the time of slaughter or killing.\nArticle 3 of that Directive read: Animals shall be spared any avoidable excitement, pain or suffering during movement, lairaging, restraint, stunning, slaughter or killing.\nBy article 5(1): Solipeds, ruminants, pigs, rabbits and poultry brought into slaughterhouses for slaughter shall be (d) bled in accordance with the provisions of Annex D. Under Annex D, para 2: All animals which have been stunned must be bled by incising at least one of the carotid arteries or the vessels from which they arise.\nThe recital relevant to article 3 read simply as follows: Whereas at the time of slaughter or killing animals should be spared any avoidable pain or suffering.\nThe important point for present purposes is that that relevant recital the forerunner of recital (2) in the EU Regulation with which we are concerned did not include the words negligence or intention in relation to the avoidable pain or suffering.\nThere was also no other hint in that Directive that it was an essential element of avoidable pain or suffering that it was caused by negligence or intention.\nIt would therefore appear that that previous Directive required member states to impose strict liability.\nAs it is highly unlikely that the EU would have made its animal welfare requirements less stringent under the EU Regulation than under the Directive it replaced, this adds further support to the strict liability interpretation of article 3(1).\nLooking at the words used in the EU Regulation, in their context and especially in the light of the purpose of the Regulation, it is therefore my view that, applying EU law principles of legislative interpretation and bearing in mind that imposing strict criminal liability is not contrary to EU law, the first offence, like the second offence, is correctly interpreted as imposing strict liability.\nFinal observations and conclusion\nI agree with what Jay J said at para 88 of his judgment in the Divisional Court: [T]he EU Regulation should be seen as setting forth a comprehensive code or rule book which must be complied with by the business operator at all material times.\nOn the facts of the present case, there was a strict obligation to sever the main arteries systematically, and a concomitant strict obligation to spare these birds avoidable pain.\nThe Divisional Court went on to reach the same strict liability conclusion applying domestic law.\nAlthough that two bites of the cherry approach was incorrect I add, by way of footnote, that had it been correct to apply domestic law, I would have agreed with the Divisional Courts view that the presumption of mens rea or culpability was here rebutted.\nNeither counsel asked the court to make a reference to the CJEU on the questions raised.\nSuch a reference is neither required nor appropriate because the matter is acte clair.\nFor the reasons I have given, the two offences in issue are offences imposing strict liability on the business operator.\nThere is no requirement to prove negligence.\nAlthough my reasoning differs in some respects from that of the Divisional Court, the appeal of HPFPL is dismissed.\nThe criminal proceedings must now proceed before District Judge Cadbury to be finally determined on the basis of whatever further evidence the parties wish to adduce.\n","output":"Highbury Poultry Farm Produce Ltd (HPFPL) operates a poultry slaughterhouse.\nThe average throughput is 75,000 chickens per day, equating to 19,500,000 or so chickens per annum.\nThe birds have their legs shackled to a moving line and are then submitted to a number of sequential processes, including stunning, bleeding and scalding.\nOn 31 August, 12 September and 5 October 2016 a chicken went into the scalding tank (where its feathers would be removed) while still alive because its neck had not been properly cut by a certified operative.\nHPFPL was charged with two offences in respect of each of the three incidents: failure to comply with article 3 of Regulation (EC) No 1099\/2009 (the EU Regulation), (i) which required that animals should be spared avoidable suffering during their killing, contrary to regulation 30(1)(g) of the Welfare of Animals at the Time of Killing (England) Regulations 2015 (the WATOK Regulations 2015); and failure to comply with article 15(1) of the EU Regulation by failing to sever the carotid arteries and verify that the animal presented no signs of life before scalding, contrary to regulation 30(1)(g) of the WATOK Regulations 2015.\nThe trial judge dismissed HPFPLs argument that regulation 30(1)(g) of the WATOK Regulations required proof of mens rea (ie proof that the defendant had knowledge of the factual circumstances constituting the alleged offence) or culpability on the part of the defendant.\nHPFPL challenged this ruling by way of judicial review.\nThe Divisional Court found that there was a presumption that the WATOK Regulations 2015 required proof of mens rea, but that this presumption was displaced, not least due to social concern regarding animal welfare.\nHPFPL appealed to the Supreme Court.\nThe Supreme Court unanimously dismisses the appeal.\nLord Burrows gives the sole judgment.\nThe Court holds that both offences are offences of strict liability.\nNegligence by the business operator does not have to be proved.\nRegulation 30(1)(g) of the WATOK Regulations provides that it is an offence to contravene the EU Regulation.\nArticle 3(1) of the EU Regulation provides that Animals shall be spared any avoidable pain,\n(ii) distress or suffering during their killing and related operations.\nArticle 15(1), Annex III, point 3.2 of the EU Regulation provides that in case of simple stunning the two carotid arteries or the vessels from which they arise shall be systematically severed Further dressing or scalding shall only be performed once the absence of signs of life of the animal has been verified [9].\nHPFPL submitted that it was sufficient for negligence to be required under either the EU Regulation or the WATOK Regulation.\nAs to the latter, in interpreting a domestic legal provision, there is a presumption that a crime requires mens rea or culpability [11].\nHowever, the Court holds that the WATOK Regulations are no more than the mechanism through which the EU Regulation is given effect in domestic law.\nIt is solely the interpretation of the EU Regulation that matters.\nIn general, an EU regulation leaves Member States with the discretion to decide whether to create criminal offences in their domestic legislation.\nThe WATOK Regulations 2015 create such offences [14].\nHowever, while member states have a discretion as regards penalties, they have no discretion to lower the standards required by the EU regulation in question.\nIf the EU regulation imposes strict liability, the domestic regulation must do the same [15].\nThus, if HPFPL fails to establish that negligence is required under the EU Regulation, then it cannot succeed on the basis that, in any event, regulation 30(1)(g) of the WATOK Regulations 2015 requires negligence and does not impose strict liability [16].\nThe EU Regulation has to be interpreted in accordance with EU law principles [19].\nInsofar as they are different, domestic rules of statutory interpretation are displaced by those principles [23].\nThe teleological approach to legislative interpretation required by EU law means that there is a heavy stress on seeking to ensure that the interpretation of the words fulfils the purposes of the legislative provision and, more generally, the purposes of the EU [27].\nThe imposition of strict liability in the context of criminal law is not contrary to EU law [28].\nThe wording of article 15(1), requiring the severing of the carotid arteries, suggests the imposition of strict liability.\nThere is no hint that business operators shall be liable only if the operational rules are intentionally or negligently infringed [33].\nThis interpretation is supported by the purpose of the provision.\nStrict liability imposes a clear and easily enforceable standard, uniform across the EU, and avoids the difficulty in pinpointing the individual upon whom the requisite state of mind must be attributed [34].\nArticle 15(1) therefore imposes strict liability [37].\nThe wording of article 3(1), requiring animals to be spared any avoidable suffering during their killing, also suggests strict liability [39].\nRecital (2) to the EU Regulation, despite mentioning suffering being induced by negligence or intention, does not affect the wording of article 3(1).\nIt merely clarifies that a breach of article 3(1) will usually entail fault.\nNegligence or intention are examples of the ways in which a breach of the EU Regulation induces suffering, but they do not form an exhaustive list [48].\nThe recitals to an EU regulation cannot be interpreted in such a way as to contradict the clear wording of that regulation [49].\nFurther, the earlier incarnation of the EU Regulation, Directive 93\/119\/EEC, did not include the words negligence or intention in the relevant recital.\nIt is highly unlikely that the EU would have made its animal welfare requirements less strict under the EU Regulation than under the Directive it replaced [52].\nArticle 3(1) therefore also imposes strict liability [53].\n","id":70}
{"input":"The three appellants in these two appeals were each convicted of murder.\nEach had his conviction quashed pursuant to a reference to the Court of Appeal by the Criminal Cases Review Commission (CCRC) in the exercise of its powers under Part II of the Criminal Appeal Act 1995 (the 1995 Act).\nIn each case no order was made for a retrial.\nEach claimed compensation from the Secretary of State pursuant to section 133 of the Criminal Justice Act 1988 (section 133).\nThat section applies to England and Wales, to Northern Ireland and to Scotland.\nI shall not refer to provisions which cater for differences of procedure in Scotland.\nThe most material part of that section provides: (1)when a person has been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice, the Secretary of State shall pay compensation for the miscarriage of justice to the person who has suffered punishment as a result of such conviction In each case the claim for compensation was refused by the Secretary of State, whose decisions were upheld on judicial review both at first instance and on appeal.\nThe common issue that arises in relation to each appeal is the meaning of miscarriage of justice in section 133.\nIn the case of Adams there is a second issue, which is the meaning of a new or newly discovered fact.\nLord Hope has set out the background to the statutory right to compensation provided by section 133 and I need not repeat his summary.\nLord Kerr has set out in detail the relevant facts in the appeals of Mr MacDermott and Mr McCartney and I gratefully adopt his account of these.\nIt remains for me to summarise the facts relevant to the appeal of Mr Adams.\nThey can be shortly stated.\nA more detailed summary can be found in the extract of the judgment of Simon J at first instance, annexed to the judgment of the Court of Appeal [2009] EWCA Civ 1291; [2010] QB 460.\nThe facts in Mr Adams appeal\nOn 18 May 1993 Mr Adams was convicted in the Crown Court at Newcastle of the murder of a man called Jack Royal and sentenced to life imprisonment.\nHe appealed to the Court of Appeal and on 16 January 1998 his appeal was dismissed.\nSome nine years later his case was referred to the Court of Appeal by the CCRC on three grounds.\nThe first, and only material ground, was that incompetent defence representation had deprived him of a fair trial.\nOn 12 January 2007 the Court of Appeal allowed his appeal on this ground.\nThe relevant shortcomings in the conduct of Mr Adams defence were, in large measure, the result of a late change of his counsel.\nThis was made when those originally instructed to represent him had to withdraw from the case because of a conflict of interest.\nThose instructed to replace them were hard pressed to prepare for the trial and failed to consider relevant unused material.\nSome of this had been disclosed by the prosecution.\nSome was available on a computer database known as the Holmes database.\nThe case against Mr Adams was essentially based on the evidence of a single witness, Mr Kevin Thompson.\nHis evidence was supported by that of two police officers.\nIt was the defence case that Mr Thompson was lying, that he had entered into a deal with the police to give evidence against Mr Adams, and that he had been fed with information about Mr Royals murder by the police.\nThe evidence which had been overlooked by defence counsel would have provided valuable assistance in cross examining Mr Thompson and the two police officers.\nThe Court of Appeal concluded that, had it been available and deployed, the jury might not have been satisfied of Mr Adams guilt.\nAccordingly the court quashed the conviction, but in doing so stated expressly that they were not to be taken as finding that, if the failings on the part of the defence lawyers had not occurred, Mr Adams would inevitably have been acquitted: [2007] 1 Cr App R 449 at para 157.\nMiscarriage of Justice\nSection 133(1) reproduces, in almost identical wording, the following provision in article 14(6) of the International Covenant on Civil and Political Rights 1966, which this country ratified in May 1976 (article 14(6) of the ICCPR).\nI shall emphasise the material differences: When a person has by a final decision been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice, the person who has suffered punishment as a result of such\nconviction shall be compensated according to law\nThe reference to a final decision is accommodated by a provision in section 133(5) which defines reversed as referring to a conviction which has been quashed on an appeal out of time or on a reference under the 1995 Act.\nThe possible meanings of miscarriage of justice\nThe meaning of miscarriage of justice in section 133 received consideration by the House of Lords in R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18; [2005] 1 AC 1, when rejecting a claim for compensation by Mr Mullen.\nHe had been convicted of terrorist offences.\nHis conviction had been quashed by an appeal out of time.\nThis was not because there was any doubt that he had committed the offences of which he was convicted.\nHis conviction was quashed because he had been seized and brought to this country from Zimbabwe in circumstances that had involved a flagrant abuse of power.\nIt was not suggested that there was any defect in the trial process itself.\nThe House held that in these circumstances Mr Mullens conviction had not been quashed on the ground of a miscarriage of justice within the meaning of section 133.\nLord Steyn expressed the view that this phrase only extended to the conviction of someone subsequently shown to be innocent.\nLord Bingham of Cornhill expressed doubt as to whether this was correct.\nBoth were agreed that section 133 was enacted to give effect to article 14(6) and that the meaning of the latter should govern the interpretation of the section.\nThey were not, however, agreed as to the meaning of article 14(6).\nLord Rodger of Earlsferry accepted the interpretation reached by Lord Steyn.\nLord Walker of Gestingthorpe considered that Lord Steyn had given powerful reasons for his conclusion, but preferred not to go beyond the limited common ground for allowing the appeal.\nLord Scott expressed no view on the difference between Lord Bingham and Lord Steyn.\nMiscarriage of justice is a phrase that is capable of having a number of different meanings.\nIn giving the judgment of the Court of Appeal in relation to Adams case Dyson LJ divided the circumstances in which convictions may be quashed on the basis of the discovery of fresh evidence into four categories, which I shall summarise in my own words. (1) Where the fresh evidence shows clearly that the defendant is innocent of the crime of which he has been convicted. (2) Where the fresh evidence is such that, had it been available at the time of the trial, no reasonable jury could properly have convicted the defendant. (3) Where the fresh evidence renders the conviction unsafe in that, had it been available at the time of the trial, a reasonable jury might or might not have convicted the defendant. (4) Where something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who should not have been convicted.\nThese four categories have provided a useful framework for discussion.\nThere are relatively few domestic authorities that bear on the meaning of miscarriage of justice in section 133 and none which provides a definitive answer.\nIn these circumstances, before considering those authorities, I propose to consider extrinsic sources that might be expected to assist with the interpretation of this phrase.\nParliamentary material\nMr Bailin QC, appearing for JUSTICE as intervener, submits that a statement made by Earl Ferrers, the Minister of State at the Home Office, throws light on the meaning of miscarriage of justice.\nThe statement was made in the course of debate on the clause that was to become section 133: see Hansard (HL Debates), 22 July 1988, cols 1630 1632.\nAt the outset Earl Ferrers explained that the object of the clause was to give statutory effect to the United Kingdoms obligations under article 14.\nLord Hutchinson of Lullington then asked the very question that lies at the heart of these appeals.\nHe contrasted a new fact which resulted in the quashing of a conviction because it raised a lurking doubt in the mind of the Court of Appeal about the safety of the conviction and a new fact which caused the Secretary of State to advise that a defendant should be pardoned because he had been shown to be innocent.\nWhich, he asked, amounted to a miscarriage of justice under the clause? This, he stated, was a crucial point.\nIf it is not contempt of Parliament to observe that Lord Bingham, in his judicial capacity, was uncertain of the answer to this question, after giving it detailed consideration in Mullen, it is not, I hope, contempt of Parliament to suggest that Earl Ferrers, when faced with the question ex improviso in the course of debate, may have had to seek assistance from an official before giving the answer.\nAt all events the answer that he gave was: The normal course is to refer cases to the Court of Appeal and to regard its view as binding.\nMr Bailin submits that, in accordance with Lord Hopes observations on the use that can be made of parliamentary material in R v A (No 2) [2002] 1 AC 45 at para 81, this statement binds the Secretary of State to accept that the question of whether there has been a miscarriage of justice must be determined from the judgment of the Court of Appeal in the particular case and that, as the Court of Appeal does not and cannot rule on whether the defendant is innocent, that cannot be the test of whether there has been a miscarriage of justice.\nI do not accept this submission.\nThe reply given by Earl Ferrers did not answer the question posed by Lord Hutchinson.\nTo be blunt it made no sense.\nIt affords no guidance on the meaning in section 133 of miscarriage of justice.\nThe relevant part of the debate clearly indicates that the intention of Parliament in enacting section 133 was to give effect to the obligation imposed by article 14(6).\nIt does not suggest that Parliament intended that the meaning of section 133 should differ in any way from the meaning of article 14(6).\nThis reinforces the rule of statutory interpretation that raises a presumption that, where a statute is passed in order to give effect to the obligations of the United Kingdom under an international convention, the statute should be given a meaning that conforms to that of the convention: see Salomon v Customs and Excise Commissioners [1967] 2 QB 116, 141 and Bennion on Statutory Interpretation, 5th ed (2008), section 221.6.\nWhat then is the meaning of miscarriage of justice in article 14(6)? In answering this question the provisions of the Vienna Convention on the Law of Treaties should be applied: see Fothergill v Monarch Airlines Ltd [1981] AC 251, 283, per Lord Diplock.\nThe interpretation of Article 14(6)\nAs the wording of the English text of article 14(6) is virtually identical to that of section 133, the former throws no light on the meaning of the latter.\nArticle 33 of the Vienna Convention permits reference to the text of a convention in an alternative authenticated language.\nIn Mullen Lord Steyn at para 47 derived assistance from the French text of article 14(6).\nThis uses the phrase une erreur judiciare for miscarriage of justice.\nLord Steyn stated that this was a technical expression indicating a miscarriage of justice in the sense of the conviction of someone who was innocent.\nHe did not explain the basis for this assertion and Lord Bingham did not agree with it.\nHe expressed the view at para 9 that erreur judiciare could be understood as equivalent to miscarriage of justice in its broad sense.\nLord Binghams interpretation of the French text is to be preferred to that of Lord Steyn.\nThe difference between them received detailed consideration by Girvan LJ in In re Boyles Application [2008] NICA 35 at paras 11 13.\nHe concluded that the French term was as elastic as the English miscarriage of justice.\nIn his written case at para 4.32 Mr Tam QC for the Secretary of State invited the Court to reject Girvan LJs analysis of the French law.\nIn these circumstances the Court allowed Mr Owen to adduce a witness statement from Dr Cristina Mauro, who teaches Criminal Procedure as an Assistant Professor at Universit Panthon Assas at Paris.\nShe confirmed that Girvan LJs interpretation of erreur judiciare was correct, and Mr Tam accepted this to be the case.\nHad the French text given a more precise meaning to article 14(6) than the English this would have been a legitimate aid to the interpretation of the latter.\nAs it is the French text leaves us no further forward.\nArticle 31(3)(b) of the Vienna Convention also permits one to take into account any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation.\nLord Steyn, Girvan LJ and Dr Mauro, in progressively greater detail, have examined articles 622 to 626 of the French Code de Procdure Pnale, which give effect to article 14(6).\nOnce again the analysis of the latter two is to be preferred to that of Lord Steyn.\nThis indicates that in France a conviction will be reviewed where a new element gives rise to serious doubts about guilt and that the reviewing court can then either quash the conviction on the ground that the new element proves that the defendant is not guilty or direct a retrial.\nCompensation will be recoverable in the former event or, if there is a retrial, if this results in an acquittal.\nThis practice on the part of only one of the many signatories to the ICCPR does not provide a guide to the meaning of article 14(6) but it does demonstrate that proof of innocence has not been universally adopted as the test of entitlement to compensation.\nIt has not been suggested that there is any consistency of practice on the part of the signatories that assists in determining the meaning of article 14(6).\nIf it is not possible to deduce the meaning of article 14(6) from subsequent practice in its application, what of the travaux prparatoires? Article 32 of the Vienna Convention permits recourse to these where necessary to determine the meaning to be attributed to the term of a treaty in the light of its object and purpose see article 31.\nThe Court has been provided with relevant comments on the travaux in The Right to a Fair Trial under the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights by D Weissbrodt (2001) and Guide to the Travaux Prparatoires of the International Covenant on Civil and Political Rights by M Bossuyt (1987).\nSo far as the precise meaning of miscarriage of justice is concerned the travaux are inconclusive.\nThey disclose that Mrs Roosevelt was opposed to the inclusion of article 14(6) on the ground that its implementation would cause significant technical difficulties because of the diversity of national legislation.\nThey show concern by some, including the British delegate, that the provision should not create an obligation to pay compensation when a conviction was reversed on appeal.\nOf most significance is the rejection by 22 votes to 11 with 40 abstentions of an amended provision initially proposed by Israel, with input from France and Afghanistan.\nThis reads: The judicial recognition of the innocence of a convicted person shall confer on him the right to request the award of compensation in accordance with the law in respect of any damage caused him by the conviction.\nWhile this provides no positive indication of precisely what the state parties intended miscarriage of justice to mean, it makes it difficult to argue that they intended it to mean conviction of the innocent.\nLord Bingham suggested at para 9 in Mullen that the phrase miscarriage of justice may have commended itself to the parties because of the latitude of interpretation that it offered and it seems to me that this may well be the case.\nIt is, I believe, possible to make some more positive conclusions about what it was that the states who were involved in the drafting of article 14(6) were trying to achieve.\nThey were concerned with the emergence of a new fact after the completion of the trial process, including review on appeal.\nArticle 14(5) provides that everyone convicted of a crime shall have the right to have his conviction and sentence reviewed by a higher tribunal according to law.\nArticle 14(6) applies to the discovery of a new fact after that final decision.\nCompensation was only payable where the new fact demonstrated conclusively that there had been a miscarriage of justice.\nThus miscarriage of justice had to be the kind of event that one could sensibly require to be proved conclusively.\nArticle 14 is, in general, concerned with the right to a fair trial.\nMost of its provisions relate to procedure.\nOne might have expected article 14(6) similarly to have been concerned with the consequences of shortcomings in procedure.\nThe travaux do not suggest that this was the primary concern of the delegates.\nIt is perhaps significant that Mrs Roosevelt and Ms Bowie did not consider that the provision belonged in the Covenant and suggested deleting it.\nWhat the delegates appear to have been primarily concerned about was not errors of procedure, but the emergence of fresh facts that were inconsistent with the conviction of the defendant.\nThus, at the outset, the Philippines suggested that the circumstances in which the provision should apply should be spelt out and that these should be where the true offender had confessed and there were no reasonable grounds to doubt his confession or where the fact or event which was the basis of the conviction was shown beyond reasonable doubt never to have taken place.\nA comment by Mrs Roosevelt that compensation should be denied to someone who deliberately concealed facts which would have exonerated him if discovered (my emphasis) is a further example of this approach, as is the proposed amendment to which I have referred at para 19 above.\nThe fact remains, however, that this amendment was not carried and that the travaux show concern on the part of some delegates that the provision under discussion would allow compensation to persons who were clearly guilty but whose conviction had been annulled for reasons of form or procedure while others appear to have considered that the provision should provide a guarantee for lawful process.\nThe travaux clearly demonstrate that the parties intended article 14(6) to cover the situation where a newly discovered fact demonstrated conclusively that the defendant was innocent of the crime of which he had been convicted.\nThey were not, however, prepared to agree an interpretation which restricted the ambit of article 14(6) to this situation.\nIn the 14th and final session it is recorded that most of the Committee agreed that only adequate legislation could solve the technical difficulties involved in the problem of compensation for a miscarriage of justice.\nThus, while the principle was agreed that there should be compensation for the consequences of a conviction reversed on the ground of conclusive proof of a miscarriage of justice as a result of the discovery of new evidence after the conclusion of the criminal process, and that this would cover the case of a convicted man who was shown to be innocent, it seems to have been left to the individual parties by domestic legislation to identify the precise parameters of the miscarriage of justice that would give rise to a right to compensation.\nThe words according to law were added to the article by a late amendment.\nIt would have been possible for the contracting parties to have agreed that any person whose conviction was reversed by reason of a newly discovered fact should be given compensation for the consequences of the conviction.\nThis could have been justified on the basis that the reversal of the conviction raised a presumption of innocence and that compensation should be paid on the basis of that presumption.\nThe parties did not take that course.\nThe fact that they did not do so, and the requirement that the miscarriage of justice should be established conclusively, indicates so it seems to me, an anxiety not to agree to an entitlement to compensation that would result in compensation being paid to those who had in fact committed the crimes of which they were convicted, at least on a substantial scale.\nIn these circumstances the fact that section 133 is intended to give effect to the obligation imposed by article 14(6) is of limited assistance in interpreting that section.\nIt would not be right, however, when interpreting section 133 to lose sight of the fact that it is giving effect to a convention agreed by parties with varying systems of criminal justice.\nArticle 14(6) is applicable to criminal trials in jurisdictions that have jury trials and jurisdictions that do not, to civil and to common law jurisdictions.\nThe meaning given to miscarriage of justice should be one that is capable of application to the systems of criminal justice of the other parties to the covenant.\nI have not found any other extrinsic material to be of assistance.\nIn Mullen Lord Bingham at para 9(3) considered the jurisprudence of the United Nations Human Rights Committee and concluded that this did not assist.\nHe reached the same conclusion in relation to the explanatory report of the Steering Committee for Human Rights in relation to article 3 of the Seventh Protocol to the European Convention on Human Rights.\nI agree with Lord Bingham for the reasons which he gave.\nMullen\nI now turn to consider the decision of the House of Lords in Mullen.\nThis task has been undertaken in a little detail by Lord Hope, which shortens the comments that I wish to make on this decision.\nThe reason why the appeal in Mullen did not succeed was that the House of Lords were unanimous in holding that the abuse of power that had led to the quashing of Mr Mullens conviction did not fall within the definition of miscarriage of justice, whatever the meaning of that phrase.\nAt para 8 Lord Bingham said: It is for failures of the trial process that the Secretary of State is bound, by section 133 and article 14(6), to pay compensation.\nOn that limited ground I would hold that he is not bound to pay compensation under section 133.\nIt was this statement that led Mr Owen to advance, initially, an argument that section 133 was directed at some failure in the trial process.\nThis led him to submit that if, after an impeccably conducted trial, the discovery of DNA evidence demonstrated conclusively that the convicted defendant was innocent, no claim for compensation would lie under section 133.\nHe was right subsequently to acknowledge that this could not be correct, but that acknowledgement raised a question as to the validity of Lord Binghams observation that section 133 applied to failures of the trial process.\nI also question that statement.\nIt is not the failure of the trial process that constitutes a miscarriage of justice, but the wrongful conviction that may be caused by it.\nA wrongful conviction is capable of amounting to a miscarriage of justice whether or not it has been caused by a failure of the trial process.\nI do not believe that Lord Bingham can have intended to exclude from the ambit of section 133 convictions quashed as the result of the discovery of new facts in circumstances where there has been no failure of the trial process.\nThat, I believe, is the situation with which section 133 is, at least primarily, concerned.\nThere is a question as to the assistance that is to be derived from the following earlier comments in para 4 of Lord Binghams judgment: The expression wrongful convictions is not a legal term of art and it has no settled meaning.\nPlainly the expression includes the conviction of those who are innocent of the crime of which they have been convicted.\nBut in ordinary parlance the expression would, I think, be extended to those who, whether guilty or not, should clearly not have been convicted at their trials.\nIt is impossible and unnecessary to identify the manifold reasons why a defendant may be convicted when he should not have been.\nIt may be because the evidence against him was fabricated or perjured.\nIt may be because flawed expert evidence was relied on to secure conviction.\nIt may be because evidence helpful to the defence was concealed or withheld.\nIt may be because the jury was the subject of malicious interference.\nIt may be because of judicial unfairness or misdirection.\nIn cases of this kind, it may, or more often may not, be possible to say that a defendant is innocent, but it is possible to say that he has been wrongly convicted.\nThe common factor in such cases is that something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who should not have been convicted.\nIn R (Clibery) v Secretary of State for the Home Department [2007] EWHC 1855 (Admin) at para 25 I stated that in this passage Lord Bingham was identifying the types of miscarriage of justice that would fall within section 133.\nOn reflection I believe that I was wrong.\nAs Lord Hope has pointed out in para 90 Lord Bingham was discussing the meaning of wrongful conviction in the context of the previous ex gratia scheme.\nThere is a further point to be made in relation to para 4 of Lord Binghams speech.\nHe has included in the catalogue of cases resulting in the conviction of someone who should not have been convicted the case of a judicial misdirection.\nA judicial misdirection could not be a new or newly discovered fact, but if it were it would fall into Dyson LJs third category.\nSo might a conviction based on flawed expert evidence: see R (Allen) (formerly Harris)) v Secretary of State for Justice [2008] EWCA Civ 808; [2009] 2 All ER 1.\nThus para 4 would appear to embrace all four of Dyson LJs categories.\nIn para 9 Lord Bingham observed, when considering section 133, that, while miscarriage of justice can be used to describe the conviction of the demonstrably innocent, it can be and has been used to describe cases in which defendants, guilty or not, certainly should not have been convicted.\nThis also has been treated by some as expressing Lord Binghams view of the scope of section 133, but I do not think that it is clear that this was so.\nIn these circumstances, I agree with Lord Hope that Lord Binghams speech does not provide significant positive assistance in interpreting miscarriage of justice in section 133.\nIt is of assistance in respect of his comments on Lord Steyns answer to that question.\nLord Steyns conclusion in Mullen that miscarriage of justice was restricted to the conviction of an innocent person was largely founded on his misreading of the French text of article 14(6) and of the position in France.\nShorn of that support, his speech does not provide compelling justification for his conclusion.\nFor all these reasons I do not believe that Mullen helps very much in determining the meaning of miscarriage of justice in section 133.\nThe cases that have followed Mullen, including those before this Court, have proceeded on the basis that Lord Bingham had laid down an alternative test to that of Lord Steyn, and concluded, in each case, that neither test was satisfied.\nIn the circumstances there is nothing to be gained by considering those decisions.\nI agree with Lord Hope that a fresh approach is required.\nI propose to adopt the four categories identified by Dyson LJ as the framework for discussion.\nThe nature of the exercise\nThe wording of section 133, following that of article 14(6), might suggest that the terms of the judgment of the court that reverses the conviction will establish whether the entitlement to compensation has been made out.\nIt speaks of a conviction being reversed on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice (emphasis added).\nThat is not, however, the test for quashing a conviction in this jurisdiction.\nThe words on the ground that must, if they are to make sense, be read as in circumstances where.\nSection 133(1) provides that the compensation will be paid by the Secretary of State, and section 133(2) provides for a two year time limit for application for compensation to the Secretary of State.\nThus it is for the Secretary of State to decide whether the requirements of section 133 are satisfied, an exercise which is, of course, subject to judicial review.\nThe Secretary of State first has to consider whether a new or newly discovered fact has led to the quashing of a conviction.\nIf it has, he then has to consider whether that fact shows beyond reasonable doubt that there has been a miscarriage of justice, applying the true meaning of that phrase.\nThe Secretary of State will plainly have regard to the terms of the judgment that quashes the conviction, but ultimately he has to form his own conclusion on whether section 133 is satisfied.\nThe object of the exercise\nI think that the primary object of section 133, as of article 14(6), is clear.\nIt is to provide entitlement to compensation to a person who has been convicted and punished for a crime that he did not commit.\nBut there is a subsidiary object of the section.\nThis is that compensation should not be paid to a person who has been convicted and punished for a crime that he did commit.\nThe problem with achieving both objects is that the quashing of a conviction does not of itself prove that the person whose conviction has been quashed did not commit the crime of which he was convicted.\nThus it is not satisfactory to make the mere quashing of a conviction the trigger for the payment of compensation.\nIt was this problem which led to the adoption of the imprecise language of article 14(6), which has been reproduced in section 133.\nIn interpreting section 133 it is right to have in mind the two conflicting objectives.\nIt is necessary to consider whether the wording of the section permits a balance to be struck between these two objectives and, if so, how and where that balance should be struck.\nI turn to consider Dyson LJs four categories having in mind these considerations.\nI shall deviate from the order in which he set them out.\nCategory 4: where something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who\nshould not have been convicted\nThis category is derived from Lord Binghams speech in Mullen.\nAs I have explained, I do not believe that he put it forward as falling within the scope of section 133.\nAs I understand it, the category embraces an abuse of process so egregious that it calls for the quashing of a conviction, even if it does not put in doubt the guilt of the convicted person.\nI would not interpret miscarriage of justice in section 133 as embracing such a situation.\nIt has no bearing on what I have identified as the primary purpose of the section, which is the compensation of those who have been convicted of a crime which they did not commit.\nIf it were treated as falling within section 133 this would also be likely to defeat the subsidiary object of section 133, for it would result in the payment of compensation to criminals whose guilt was not in doubt.\nCategory 3: Fresh evidence rendering the conviction unsafe\nDyson LJ propounded this test as requiring consideration of whether a fair minded jury could properly convict if there were to be a trial which included the fresh evidence.\nThis raises the question, which I shall consider further when I come to category 2, of whether section 133 requires the Secretary of State to consider the reaction to fresh evidence of a fair minded jury.\nPut another way, the situation under consideration is one where the fresh evidence reduces the strength of the case that led to the claimants conviction, but does not diminish it to the point where there is no longer a significant case against him.\nI would not place this category within the scope of section 133 for two reasons.\nThe first is that it gives no sensible meaning to the requirement that the miscarriage of justice must be shown beyond reasonable doubt, or conclusively in the wording of article 14(6).\nIt makes no sense to require that the new evidence must show conclusively that the case against the claimant is less compelling.\nIt is tantamount to requiring the Secretary of State to be certain that he is uncertain of the claimants guilt.\nMy second reason is that, if category 3 were adopted as the right definition of miscarriage of justice, it would not strike a fair balance between the two objectives of section 133.\nThe category of those who are convicted on evidence which appears to establish guilt beyond reasonable doubt, but who have their convictions quashed because of fresh evidence that throws into question the safety of their convictions, will include a significant number who in fact committed the offences of which they were convicted.\nThis is the inevitable consequence of a system which requires guilt to be proved beyond reasonable doubt.\nWhen these two factors are considered together they lead to the conclusion that section 133 does not, on its true interpretation, apply to category 3.\nCategory 1: Fresh evidence that shows clearly that the defendant is innocent of the\ncrime of which he was convicted\nHaving considered the categories which were at one extremity of Dyson LJs list, I now turn to the category at the other.\nPlainly section 133 will embrace this category, but does it provide the exclusive definition of miscarriage of justice in that section? There are a number of points to be made in favour of this suggestion.\nThe first is that it gives section 133 a perfectly natural and logical meaning, indeed it is the meaning that the man in the street would be likely to accord to the wording of section 133.\nMore particularly, if miscarriage of justice is read as meaning the conviction of someone who is innocent, it makes perfect sense of the requirement that the new fact should prove this beyond reasonable doubt.\nNext it gives section 133 a meaning which is eminently practicable.\nObjection has been made to category 1 on the ground that it is not the role of the Court of Appeal, when reviewing a conviction, to rule whether the defendant is innocent of the crime of which he was convicted.\nIn R v McIlkenny (1991) 93 Cr App R 287, 311 Lloyd LJ observed that the Court of Appeal was neither obliged nor entitled to state that an appellant was innocent.\nIts task was simply to decide whether the verdict of the jury could stand.\nHe described this as a point of great constitutional importance.\nI think that he was right.\nThe point was well put by the Court of Appeal for Ontario in R v Mullins Johnson 2007 ONCA 720; 87 OR (3d) 425.\nThe appellant had been convicted of murder of his 4 year old niece and served 12 years in prison.\nHis conviction was based on expert evidence that the autopsy indicated that the young girl had been sexually abused and suffocated.\nSubsequent medical evidence totally discredited the evidence given at the trial, so that it became clear that there was no reliable pathological evidence either of sexual abuse or of homicidal asphyxia of the child.\nThe case was referred to the Court of Appeal on terms that it should treat it as an appeal on fresh evidence.\nIn a passage which merits citation in full, the Court explained why it would not be proper for it in these circumstances to make a declaration that the appellant was in fact innocent: 22 The fresh evidence shows that the appellants conviction was the result of a rush to judgment based on flawed scientific opinion.\nWith the entering of an acquittal, the appellants legal innocence has been re established.\nThe fresh evidence is compelling in demonstrating that no crime was committed against Valin Johnson and that the appellant did not commit any crime.\nFor that reason an acquittal is the proper result. 23 There are not in Canadian law two kinds of acquittals: those based on the Crown having failed to prove its case beyond a reasonable doubt and those where the accused has been shown to be factually innocent.\nWe adopt the comments of the former Chief Justice of Canada in The Lamer Commission of Inquiry Pertaining to the Cases of: Ronald Dalton, Gregory Parsons, Randy Druken, Annex 3, pp. 342: [A] criminal trial does not address factual innocence.\nThe criminal trial is to determine whether the Crown has proven its case beyond a reasonable doubt.\nIf so, the accused is guilty.\nIf not, the accused is found not guilty.\nThere 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.\nThe 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.\nThe terms of the Reference to this court are clear: we are hearing this case as if it were an appeal.\nWhile we are entitled to express our reasons for the result in clear and strong terms, as we have done, we cannot make a formal legal declaration of the appellants factual innocence. 25 In addition to the jurisdictional issue, there are important policy reasons for not, in effect, recognizing a third verdict, other than guilty or not guilty, of factually innocent.\nThe most compelling, and, in our view, conclusive reason is the impact it would have on other persons found not guilty by criminal courts.\nAs Professor Kent Roach observed in a report he prepared for the Commission of Inquiry into Certain Aspects of the Trial and Conviction of James Driskell, there is a genuine concern that determinations and declarations of wrongful convictions could degrade the meaning of the not guilty verdict (p 39).\nTo recognize a third verdict in the criminal trial process would, in effect, create two classes of people: those found to be factually innocent and those who benefited from the presumption of innocence and the high standard of proof beyond a reasonable doubt.\nBut the decision whether there has been a miscarriage of justice within section 133 is not for the court but for the Secretary of State.\nHe should have no difficulty in deciding whether new evidence that has led to the quashing of a conviction shows beyond reasonable doubt that the defendant was innocent of the crime of which he was convicted.\nWhere the prosecution has satisfied the jury beyond reasonable doubt that a defendant is guilty, evidence that demonstrates beyond reasonable doubt that he was in fact innocent will not be equivocal.\nEven though it is not for the Court of Appeal, when quashing the conviction, to express its opinion that the defendant is innocent, the reasons given for quashing the conviction are unlikely to leave any doubt of this, just as was the position in Mullins Johnson.\nThe other obvious point in favour of category 1 is that it precludes all possibility of a defendant who in fact committed the crime of which he was convicted receiving compensation for the consequences of his conviction.\nIf this is to be treated as being of paramount importance, then category 1 is the only satisfactory interpretation of section 133.\nThe Law Commission of New Zealand in its 1998 Report No 49 on Compensating the Wrongly Convicted advised at para 127 A requirement to prove innocence is, however, necessary to prevent the guilty claimant, acquitted on a technicality, from profiting from the crime.\nIt recognises that it is a persons innocence which provides the justification for compensation in the first place.\nThis brings me to the last point that is advanced in favour of category 1.\nIt is argued that it is not in practice possible to draw a line between category 2 and category 3.\nUnless category 1 is adopted as the correct interpretation of section 133, defendants whose convictions are quashed on technicalities will profit from compensation.\nI shall consider this argument when I deal with category 2.\nThe first argument against restricting the ambit of section 133 to category 1 is that the parties to article 14(6) voted against an amendment which would have done this.\nThe second is that this will deprive some defendants who are in fact innocent and who succeed in having their convictions quashed on the grounds of fresh evidence from obtaining compensation.\nIt will exclude from entitlement to compensation those who no longer seem likely to be guilty, but whose innocence is not established beyond reasonable doubt.\nThis is a heavy price to pay for ensuring that no guilty person is ever the recipient of compensation.\nDoes category 2, or some similar formulation of miscarriage of justice, provide a more satisfactory approach to the desire to provide compensation to the innocent without rewarding the guilty that both accords with the language of the section and is workable in practice? Category 2: Fresh evidence such that, had it been available at the trial no\nreasonable jury could convict the defendant\nThis category applies to the evidence, including the fresh evidence, the test that a judge has to apply when considering an application at the end of the prosecution case for dismissal of a charge on the ground that the defendant has no case to answer.\nIt focuses on the evidence before the jury.\nIf the fresh evidence were always evidence of primary fact, or new expert evidence, the test might be satisfactory.\nThe position is not, however, as simple as that.\nThe new evidence that leads to the quashing of a conviction is very often not primary evidence that bears directly on whether the defendant committed the crime of which he was convicted, but evidence that bears on the credibility of those who provided the primary evidence on which he was convicted.\nBoth of the appeals before the Court fall into this category.\nSo does the example of category 2 given by Dyson LJ: fresh evidence which undermines the creditworthiness of the sole witness for the prosecution.\nHere one can run into a problem that is peculiar to the criminal procedures that apply in common law jurisdictions.\nUnder common law procedures the evidence that is permitted to be placed before the jury is screened by a number of rules that are designed to avoid the risk that the jury will be unfairly prejudiced and to ensure that the trial is fair.\nThus section 78 of the Police and Criminal Evidence Act 1984 gives the judge a general jurisdiction to exclude evidence on the grounds of fairness and section 76A of the same Act contains a little code governing the admissibility of a confession.\nSo does section 8(2) of the Northern Ireland (Emergency Provisions) Act 1978, which was applicable to the critical evidence adduced against the defendants in the second appeal.\nOften it will be appropriate for the judge to hold a voir dire in order to decide whether or not evidence can be admitted.\nThe question of whether there is evidence upon which a jury can properly convict is taken after the judge has screened from the jury evidence which, under the relevant procedural code, he has ruled to be inadmissible.\nThat is often a difficult judicial task.\nI do not believe that section 133 should be so interpreted as to impose on the Secretary of Sate the task of deciding whether the fresh evidence would have rendered inadmissible the primary evidence to which it related, in order to answer the question whether there would have been a case upon which a reasonable jury could convict.\nThere is a further difficulty with category 2.\nThe question of whether a reasonable jury could properly convict falls to be answered having regard to the fact that a jury must be satisfied of guilt beyond reasonable doubt.\nSection 133 requires the Secretary of State to be satisfied beyond reasonable doubt that a miscarriage of justice has occurred.\nCategory 2 thus operates as follows: compensation will be payable where the Secretary of State is satisfied beyond reasonable doubt that no reasonable jury could have been satisfied beyond reasonable doubt that the defendant was guilty.\nThis does not seem a very sensible test.\nThe final point to make about category 2 is that it applies a test the result of which depends critically on common law procedural rules.\nAs the test is derived from article 14(6), it would be preferable if it were one more readily applicable in other jurisdictions.\nFor these reasons I do not consider the second category, as formulated by Dyson LJ, provides a satisfactory definition of miscarriage of justice.\nI would replace it with a more robust test of miscarriage of justice.\nA new fact will show that a miscarriage of justice has occurred when it so undermines the evidence against the defendant that no conviction could possibly be based upon it.\nThis is a matter to which the test of satisfaction beyond reasonable doubt can readily be applied.\nThis test will not guarantee that all those who are entitled to compensation are in fact innocent.\nIt will, however, ensure that when innocent defendants are convicted on evidence which is subsequently discredited, they are not precluded from obtaining compensation because they cannot prove their innocence beyond reasonable doubt.\nI find this a more satisfactory outcome than that produced by category 1.\nI believe that it is a test that is workable in practice and which will readily distinguish those to whom it applies from those in category 3.\nIt is also an interpretation of miscarriage of justice which is capable of universal application.\nRetrial\nThe provisions in relation to retrial introduced into section 133 in the circumstances described by Lord Hope at paras 103 and 104 of his judgment raise a problem.\nA retrial will only be ordered where, although it quashes the defendants conviction on the grounds of fresh evidence, the Court of Appeal considers that there remains a case against him that is fit for trial.\nAssuming that they are correct in that view, the fresh evidence could never fall within the scope of section 133 if it is right to interpret that section as being limited to either category 1 or category 2, as formulated by Dyson LJ or as I have reformulated it.\nThe introduction into the section of the provisions in relation to retrial would make more sense if section 133 embraced category 3.\nIn that case, however, one might have expected compensation to be payable automatically if the retrial ended in an acquittal, but the amended section 133 does not so provide.\nIt does not follow, however, that category 1 or category 2 cannot stand with section 133, as amended.\nEntitlement to compensation does not turn on the view that the Court of Appeal takes of the new evidence.\nThe defendant may contend, even where a retrial is ordered, that the fresh evidence proves his innocence.\nAlthough the Court of Appeal is not persuaded of this, it may become apparent in the course of the retrial that the defendant is correct.\nThus the provisions in relation to retrial make sense, even if category 1 or category 2 represents the correct interpretation of miscarriage of justice.\nArticle 6(2) of the European Convention on Human Rights\nThe Strasbourg Court has stated that one of the functions of article 6(2) is to protect an acquitted persons reputation from statements or acts that follow an acquittal which would seem to undermine it see Taliadorou and Stylianou v Cyprus (Application Nos 39627\/05 and 39631\/05) (unreported) 16 October 2008, at para 26.\nThe Courts expansion of what would seem to be a rule intended to be part of the guarantee of a fair trial into something coming close to a principle of the law of defamation is one of the more remarkable examples of the fact that the Convention is a living instrument.\nMr Owen QC for Mr Adams referred the Court to a series of decisions of the Strasbourg Court in which it was held to be a violation of article 6(2) for a state to refuse compensation to which an applicant who had been held in preventative detention was normally entitled on acquittal at the end of a criminal trial on the ground that his acquittal did not establish his innocence.\nLord Hope has summarised the details and effect of those authorities.\nMr Owen argued that their effect was that, once Mr Adams conviction had been quashed, he was entitled to be treated as innocent in the context of his claim for compensation.\nA rather different argument based on article 6(2) was rejected by Lord Steyn in Mullen at para 44.\nMr Owen first advanced the present argument when appearing for the claimant in R(Allen) (formerly Harris)) v Secretary of State for Justice [2009] 2 All ER 1.\nIn that case the claimants claim for compensation under section 133 was rejected on the grounds that his case satisfied neither Lord Steyns test in Mullen nor the test that Lord Bingham had been thought to advance in that case.\nGiving the only reasoned judgment, Hughes LJ comprehensively rejected Mr Owens argument based on article 6(2) for a series of ten reasons.\nOn the present appeals Lord Hope has held that reliance on article 6(2) is misplaced for reasons that have much in common with those of Hughes LJ.\nI agree with both of them.\nI would add this.\nThe appellants claims are for compensation pursuant to the provisions of section 133.\nOn no view does that section make the right to compensation conditional on proof of innocence by a claimant.\nThe right to compensation depends upon a new or newly discovered fact showing beyond reasonable doubt that a miscarriage of justice has occurred.\nWhatever the precise meaning of miscarriage of justice the issue in the individual case will be whether it was conclusively demonstrated by the new fact.\nThe issue will not be whether or not the claimant was in fact innocent.\nThe presumption of innocence will not be infringed.\nNewly discovered fact\nMr Adams appeal raises a second issue.\nWere the facts that led to the quashing of his conviction newly discovered despite the fact that they were contained in documents disclosed to his legal representatives before his trial or available on the Holmes database? The phrase newly discovered raises a further difficult problem of interpretation, for it does not indicate to whom the discovery must be new.\nProcedure Act 1993.\nSection 9(6) of that Act provides: Ireland has given effect to article 14(6) by section 9 of the Criminal newly discovered fact means ( a ) where a conviction was quashed by the Court on an application under section 2 or a convicted person was pardoned as a result of a petition under section 7, or has been acquitted in any re trial, a fact which was discovered by him or came to his notice after the relevant appeal proceedings had been finally determined or a fact the significance of which was not appreciated by the convicted person or his advisers during the trial or appeal proceedings.\nI would adopt this generous interpretation of newly discovered fact.\nSection 133(1), following the almost identical wording of article 14(6), ends with the proviso : unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted.\nThis proviso is significant in more than one way.\nFirst, the use of the word non disclosure would seem to equate the new discovery with disclosure.\nThe latter word has a broad ambit and, in context, suggests to me the bringing of a fact into the public domain and, in particular, the disclosure of that fact to the court.\nSecondly, I read the provision as excluding a right to compensation where the person convicted has deliberately prevented the disclosure of the relevant fact, or where the non discovery of that fact is otherwise attributable to his own fault.\nWe are envisaging a situation where a claimant has been convicted, and may well have served a lengthy term of imprisonment, in circumstances where it has now been discovered that a fact existed which either demonstrates that he was innocent or, at least, undermines the case that the prosecution brought against him.\nIf he was aware of this fact but did not draw it to the attention of his lawyers, and he did not deliberately conceal it (which would bring the fact within the proviso), this will either be because the significance of the fact was not reasonably apparent or because it was not apparent to him.\nMany who are brought before the criminal courts are illiterate, ill educated, suffering from one or another form of mental illness or of limited intellectual ability.\nA person who has been wrongly convicted should not be penalised should this be attributable to any of these matters.\nIt is for those reasons that I would adopt the same interpretation of newly discovered fact as the Irish legislature.\nConclusions\nIt has always been common ground that Mr Adams case falls into category 3.\nThe newly discovered facts (as I would hold them to be) in his case do not show that a miscarriage of justice has occurred within the meaning that I would give to that phrase in section 133.\nAccordingly, I would dismiss his appeal.\nThe newly discovered facts in the case of Mr McCartney and Mr MacDermott, as described by Lord Kerr, so undermine the evidence against them that no conviction could possibly be based upon it.\nThere can be no reasonable doubt of this.\nAccordingly I would allow their appeal and hold that they are entitled to compensation pursuant to the provisions of section 133.\nLORD HOPE\nI accept with gratitude Lord Phillips description of the facts in the case of Andrew Adams and Lord Kerrs description of the facts in the cases of Eamonn MacDermott and Raymond McCartney.\nWith that advantage I can go straight to the issues of principle that these cases have raised.\nMention should also be made of Barry George, who was granted permission to intervene in this appeal.\nOn 2 July 2001 he was convicted of the murder on 26 April 1999 of the television presenter Jill Dando, who was killed by a single shot to the head as she was about to enter her home in Fulham.\nHis appeal against conviction was dismissed on 29 July 2002: [2002] EWCA Crim 1923.\nA major part of the Crowns case against him was that a single particle of firearms discharge, which matched particles found in the cartridge case of the bullet which killed Miss Dando, in her coat and in samples of her hair, had been found nearly 12 months later in the pocket of a coat owned and worn by Mr George.\nFollowing a review of his case, the Criminal Cases Review Commission decided to refer his conviction to the Court of Appeal under section 9 of the Criminal Appeal Act 1995 on the ground that new evidence called into question the evidence at the trial about the firearms discharge and the significance that had apparently been attached to that evidence.\nNew reports obtained from the Forensic Science Service had shown that it had no evidential value in the case against Mr George.\nOn 15 November 2007 the Court of Appeal quashed the conviction and ordered a retrial: [2007] EWCA Crim 2722.\nThe evidence of the firearms discharge was not admitted at the trial.\nOn 1 August 2008 the jury by a unanimous verdict found Mr George not guilty.\nOn the day of the acquittal the Crown Prosecution Service issued a press statement in which it was stated that Mr George now had the right to be regarded as an innocent man.\nOn 7 October 2009 Mr George applied for compensation under section 133 of the Criminal Justice Act 1988.\nBy letter dated 15 January 2010 the Secretary of State for Justice told Mr George that he was not prepared to authorise an award of compensation as the new forensic evidence did not prove beyond reasonable doubt that he was innocent.\nHe referred to the fact that in its judgment of 15 November 2007 the Court of Appeal stated that in the absence of the evidence of the firearms discharge there was circumstantial evidence capable of implicating Mr George, and that it had ordered a retrial which defence counsel conceded should take place.\nMr George applied for judicial review of that decision on 14 April 2010.\nOn 25 August 2010 Collins J granted permission.\nBut he stayed the proceedings pending the decision of this Court as to the meaning of miscarriage of justice in section 133 of the 1988 Act.\nMr Glen QC for Mr George submitted that it was sufficient to entitle a person to an award of compensation under that section that his conviction had been reversed on the ground of a new or newly discovered fact and that, in the event of his being subjected to a retrial, he had been acquitted of the offence.\nAs that was what had happened in his case it should be made clear by this Court in its judgment that, where a person had suffered punishment in such circumstances, compensation should be paid to him under the scheme that had been set up by the statute.\nWith that introduction I can go straight to the issues of principle that these cases have raised.\nBackground\nThe background to the introduction of a statutory right to compensation for miscarriages of justice by section 133 of the Criminal Justice Act 1988 was described in In re McFarland [2004] UKHL 17, [2004] 1 WLR 1289, paras 6 9 by Lord Bingham of Cornhill and R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18, [2005] 1 AC 1, paras 25 28 by Lord Steyn.\nLord Bingham drew attention in McFarland, para 6, to the underlying principles.\nIn any liberal democratic state there will be those who are accused of crime and are acquitted at trial, or whose convictions are reversed following an appeal.\nThose affected will have suffered the stigma of being accused and the trauma of standing trial and of imprisonment before the process is brought to an end.\nIn principle it might seem that the state, which initiated the unsuccessful prosecution, should compensate those who have been acquitted, or at least some of them.\nHow this was to be done and in what circumstances was much debated before the current system was adopted: see David Harris, The Right to a Fair Trial in Criminal Proceedings as a Human Right (1967) 16 ICLQ 352, 372 375.\nIt was, as Lord Steyn said in Mullen, para 52, a process of evolution.\nFirst, there was the adoption on 16 December 1966 of the International Covenant on Civil and Political Rights (the ICCPR), article 14(6) of which made provision for what it described as compensation according to law to a person whose conviction had been reversed or had been pardoned in the circumstances to which it referred and who had suffered punishment as a result of such a conviction.\nThe ICCPR was ratified by the United Kingdom on 20 May 1976.\nOn 29 July 1976 the Home Secretary (Mr Roy Jenkins) set out in a written answer the procedure which was being adopted for the making of ex gratia payments in recognition of the hardship caused by what he referred to as a wrongful conviction: Hansard (HC Debates), WA cols 328 330.\nThree weeks later, on 20 August 1976, the ICCPR entered into force.\nThereafter the United Kingdom continued to fulfil its international obligations under article 14(6) under the ex gratia scheme.\nThe scheme was put onto a more formal basis on 29 November 1985: see Hansard (HC Debates), WA cols 689 690.\nThe then Home Secretary (Mr Douglas Hurd) said that he would be prepared to pay compensation where this was required by the international obligations, and that he remained prepared to pay compensation to people who did not fall within the terms of article 14(6) but who had spent a period in custody following a wrongful conviction or charge, where he was satisfied that it had resulted from serious default on the part of a member of a police force or of some other public authority.\nHe said that the Secretary of State for Northern Ireland intended to follow a similar practice.\nA similar scheme was already in operation in Scotland.\nThere was however international pressure on the United Kingdom to put its obligations under article 14(6) on a statutory footing: see R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18, [2005] 1 AC 1, para 28 by Lord Steyn.\nThe response to it was section 133 of the Criminal Justice Act 1988.\nThe new statutory right superseded in part the existing scheme for ex gratia payments, which remained in being until April 2006, when it was terminated both in England and Wales and Northern Ireland.\nThis has had the inevitable, but unfortunate, consequence that claimants in those jurisdictions are now dependent solely upon the scheme provided by the statute.\nThe ex gratia scheme which has been operated in Scotland by the Scottish Ministers still remains in force there, alongside the system for the payment of compensation in respect of all reversals of convictions that fall within section 133 of the 1988 Act.\nThis enables those against whom criminal proceedings were taken which can properly be regarded with hindsight as wrongful to be compensated even though their cases cannot be brought within the terms of the statute.\nThe way the scheme is currently operated in England and Wales was set out by the Minister of State (Lord McNally) in a written answer which was published on 1 March 2011 (Hansard (HL Debates), WA col 318), in which he said: Compensation is paid under [section 133] where a conviction is quashed following an out of time appeal or following a reference by the Criminal Cases Review Commission to the relevant appeal court on the basis that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice.\nSection 133 fully meets our international obligations.\nThe Government do not operate a compensation scheme for those who have convictions quashed at in time appeals or those who are acquitted at trial.\nFigures disclosed by the Ministry of Justice about the number of applications received and the number of applications approved in England and Wales show that there has been a very substantial drop in the number of applications approved since the abolition of the ex gratia scheme in 2006.\nThe system prior to that date was that all applications were considered first under section 133 and then, if not approved, were considered under the ex gratia scheme.\nThe following table shows all applications for compensation received since May 2004 and those which were approved under section 133 : Year 2004 05 2005 06 2006 07 2007 08 2008 09 2009 10\nThe statutory scheme\nArticle 14(6) of the ICCPR provides: Total Applications Received 88 74 39 40 38 37 Applications Approved Under s 133 39 21 23 7 7 1 When a person has by a final decision been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice, the person who has suffered punishment as a result of such conviction shall be compensated according to law, unless it is proved that the non disclosure of the unknown fact in time is wholly or partly attributable to him.\nThe wording of section 133(1) of the 1988 Act follows that of article 14(6).\nIt provides: (1) Subject to subsection (2) below, when a person has been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice, the Secretary of State shall pay compensation to the person who has suffered punishment as a result of such conviction or, if he is dead, to his personal representatives, unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted.\nSubsection (2) provides that no payment of compensation is to be made unless an application for compensation is made to the Secretary of State, for which a time limit of two years beginning with the date when the persons conviction is reversed or he is pardoned was introduced in relation to England and Wales and Northern Ireland by section 61(3) of the Criminal Justice and Immigration Act 2008.\nSection 133(5) of the 1988 Act, as amended by paragraph 16(4) of Schedule 2 to the Criminal Appeal Act 1995, provides: In this section reversed shall be construed as referring to a conviction having been quashed or set aside (a) on an appeal out of time; or (b) on a reference (i) (ii) under section 194B of the Criminal Procedure (Scotland) Act under the Criminal Appeal Act 1995; or 1995.\nSubsection (5A), which was inserted in relation to England and Wales and Northern Ireland by section 61(5) of the Criminal Justice and Immigration Act 2008, provides: (5A) But in a case where (a) a persons conviction for an offence is quashed on an appeal out of time, and (b) the person is to be subject to a retrial, the conviction is not to be treated for the purposes of this section as reversed unless and until the person is acquitted of all offences at the retrial or the prosecution indicates that it has decided not to proceed with the retrial.\nTo be entitled to compensation under section 133(1) the claimant must show that he has been convicted of a criminal offence and that subsequently his conviction has been reversed on an appeal out of time or on a reference by the CCRC, or he has been pardoned: on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice.\nThe words that I have quoted from the subsection differ from the equivalent part of article 14(6) of the ICCPR in one respect only.\nThe statute uses the phrase beyond reasonable doubt where article 14(6) uses the word conclusively.\nOne might have thought at first sight that, when applications for compensation were made to the Secretary of State, such simple wording could be applied to each case without much difficulty.\nBut that has proved not to be the case, as can be seen from the speeches in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1, where the meaning of the words miscarriage of justice was under scrutiny.\nLord Bingham said that he would hesitate to accept the submission of the Secretary of State that section 133 obliged him to pay compensation only when a defendant, finally acquitted in the circumstances satisfying the statutory conditions, is shown beyond reasonable doubt to be innocent of the crime of which he had been convicted: para 9.\nLord Steyn, on the other hand, said that the words miscarriage of justice extend only to cases where the person concerned is acknowledged to be clearly innocent: para 56.\nThen there are the words new or newly discovered fact.\nWhat is a fact for this purpose? And to whom does it have to be new or by whom does it have to be newly discovered? The meaning of those words is in issue in the appeal by Adams, whose conviction was reversed because of a failure by his representatives to make themselves aware of and make use of three pieces of important material at his trial which had been made available to them by the prosecution but of which Adams himself was not aware.\nThe issue as to what is meant by the words miscarriage of justice is common to his appeal and the appeals of MacDermott and McCartney.\nIt will be convenient to examine this issue first.\nMiscarriage of justice\nAttempts have been made in subsequent cases to reconcile the differing views as to the meaning of miscarriage of justice that were expressed in Mullen: see R (Murphy) v Secretary of State for the Home Department [2005] EWHC 140 (Admin), [2005] 1 WLR 3516; R (Clibery) v Secretary of State for the Home Department [2007] EWHC 1855 (Admin); In re Boyles Application [2008] NICA 35; R (Allen) (formerly Harris) v Secretary of State for Justice [2008] EWCA Civ 808, [2009] 2 All ER 1; R (Siddall) v Secretary of State for Justice [2009] EWHC 482 (Admin).\nIn the Court of Appeal in Adamss case Dyson LJ said that, like Lord Phillips of Worth Matravers CJ in Cliberys case and Richards J in Murphy, he did not propose to express a view as to whether Lord Binghams interpretation was to be preferred to that of Lord Steyn: R (Adams) v Secretary of State for the Home Department [2009] EWCA Civ 1291, [2010] QB 460, para 42.\nThe assumption has been that Lord Binghams reference in para 4 of his speech in Mullen to something having gone seriously wrong in the investigation of the offence or the conduct of the trial could be taken as a test of whether the right to compensation under section 133 was available that could sit alongside that preferred by Lord Steyn.\nIn Allen, para 26 Hughes LJ said that this was made the plainer by Lord Binghams references to a defendant who should clearly not have been convicted in para 4 and who certainly should not have been convicted in para 9(1).\nDyson LJ set the scene for a discussion of this issue in these appeals in para 19 of his judgment in R (Adams) v Secretary of State for the Home Department [2009] EWCA Civ 1291, [2010] QB 460, when he said: The question what is meant by miscarriage of justice has not been resolved by the courts.\nAs Toulson LJ said when giving permission to appeal in the present case, there are at least three classes of case where the Court of Appeal allows an appeal against conviction on the basis of fresh evidence.\nI shall call them category 1, category 2 and category 3 cases.\nA category 1 case is where the court is sure that the defendant is innocent of the crime of which he has been convicted.\nAn obvious example is where DNA evidence, not obtainable at the trial, shows beyond reasonable doubt that the defendant was not guilty of the offence.\nA category 2 case is where the fresh evidence shows that he was wrongly convicted in the sense that, had the fresh evidence been available, no reasonable jury could properly have convicted.\nAn example is where the prosecution case rested entirely on the evidence of a witness who was put forward as a witness of truth and fresh evidence undermines the creditworthiness of that witness, so that no fair minded jury could properly have convicted on the evidence of that witness.\nIt does not follow in a category 2 case that the defendant was innocent.\nA category 3 case is where the fresh evidence is such that the conviction cannot be regarded as safe, but the court cannot say that no fair minded jury could properly convict if there were to be a trial which included the fresh evidence.\nThe court concludes that a fair minded jury might convict or it might acquit.\nThere is a fourth category of case to which Lord Bingham referred in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1.\nThis is where a conviction is quashed because something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who should not have been convicted.\nThis list of the different types of case where appeals are allowed according to the practice of the Court of Appeal (Criminal Division) was used in argument to focus the positions adopted by either side in these appeals.\nIt was assisted later in the judgment by an acknowledgment that there were two limbs to Lord Binghams interpretation as set out in his speech in Mullen, para 4: [2010] QB 460, para 43.\nThe first limb was where the person was innocent of the crime of which he had been convicted: category 1 according to Toulson LJs analysis.\nThe second limb was where something had gone seriously wrong in the investigation or the conduct of the trial and the person should clearly not have been convicted.\nFor the Secretaries of State it was submitted that only cases falling within category 1 would satisfy the requirements of section 133(1).\nFor Adams Mr Owen QC submitted that it was not possible to draw a clear line between categories 2 and 3, so it was sufficient for him to bring his case within category 3.\nIn any event, he submitted that Lord Binghams interpretation of the phrase in his second limb in Mullen was to be preferred, that proof of innocence was not required and that his case came within category 4.\nCounsel for the appellants McCartney and MacDermott submitted that Lord Binghams interpretation was to be preferred, and that their cases too fell within his second limb and category 4.\nIt would be wrong to regard the way these categories were identified and described by the Court of Appeal as a substitute for looking at the language of section 133(1) itself and reaching our own view as to its effect.\nLord Bingham said in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1, para 2 that he would allow the Secretary of States appeal on a narrow ground which made it unnecessary for him to reach a concluded view as to whether the right to compensation under the statute was available only to those who were innocent of the crime of which they had been convicted.\nWe do not have that luxury in the cases that are before us in these appeals.\nA choice has to be made.\nIt is time to take a fresh look at the arguments.\nOur task is made less onerous, although no less difficult, by the fact that the materials that were said to be relevant were discussed so fully by Lord Bingham and Lord Steyn in Mullen.\nIt is striking how little assistance they were able to derive from the materials that were before the House.\nOn many points both Lord Steyn and Lord Bingham were in agreement.\nThey were agreed that the wording of section 133(1) was intended, as Lord Bingham put it in para 9, to reflect article 14(6).\nIn para 5 he said that the parties were rightly agreed that the key to interpretation of section 133 was a correct understanding of article 14(6).\nThey were also agreed that, as Lord Bingham said in para 9(1), the expression miscarriage of justice is not a legal term of article Taken on its own and out of context, it has no settled meaning.\nLord Steyn said that the expression had to be looked at in the relevant international context, and that the only relevant context here was the international meaning of the words in article 14(6) on which section 133 is based: para 36.\nThe question then was, what did the materials reveal as to its international meaning?\nThe travaux prparatoires disclosed no consensus of opinion on the meaning to be given to it.\nLord Steyn said that they were neutral and did not assist in any way on the proper construction of article 14(6): para 54.\nLord Bingham seems to have seen this as a possible pointer towards a more generous interpretation.\nHe said that the expression miscarriage of justice may have commended itself because of the latitude of interpretation that it offered: para 9(2).\nBut this was no more than a straw in the wind.\nThe jurisprudence of the United Nations Human Rights Committee was of little assistance either indeed, Lord Steyn does not mention it at all.\nAnd there was no consensus of academic opinion on the issue.\nIn this situation Lord Steyn resorted first to an examination of article 14(6) on its own terms: para 45.\nLord Bingham did not undertake this exercise.\nInstead he took as his starting point the statements that Mr Jenkins and Mr Hurd made when they were explaining the ex gratia scheme to Parliament: para 4.\nAs he said at the outset of this paragraph, they were addressing the subject of wrongful convictions and charges.\nHe observed that, like the expression miscarriage of justice, the expression wrongful convictions is not a legal term of art and it has no settled meaning.\nHe then set out to describe in some detail the situations to which in ordinary parlance, as he put it, the expression would be taken to extend.\nHere we find the first and second limbs, as Dyson LJ in the Court of Appeal described them at [2010] QB 460, para 43, set out.\nThe first is the conviction of those who are innocent of the crime of which they were convicted.\nThe second embraces cases where those who, whether guilty or not, should not have been convicted.\nThe manifold reasons where this might happen were impossible and unnecessary to identify.\nThe common factor however was that something had gone seriously wrong in the investigation of the offence or the conduct of the trial.\nIt is important not to lose sight of the fact that Lord Bingham was not seeking in para 4 to describe what, in the context of article 14(6), was meant by the expression miscarriage of justice.\nHe was concentrating here on the expression wrongful conviction in the statements about the ex gratia scheme.\nHe did not refer to the fact that it is a precondition of the right to compensation under article 14(6), and in its turn section 133, that the conviction was reversed because of a new or newly discovered fact.\nThe descriptions of the ex gratia scheme did not mention this as a prerequisite.\nQuite what part this discussion had to play in the interpretation of article 14(6), to which he turned in para 5, is unclear.\nHe took account of the fact that in the course of his statement Mr Hurd recited the terms of, and undertook to observe, article 14(6): para 5.\nThere is an indication in that paragraph that he saw the only difference between that part of Mr Hurds statement and the enactment of section 133 as being that the right to be compensated should more obviously be, as article 14(6) requires, according to law.\nBut, as he said at the end of that paragraph, the task of the House was to interpret section 133.\nHe did not say and it would have been surprising if he had done that the key to this was to be found in Mr Hurds description of the cases where he was willing to pay compensation for a wrongful conviction under the ex gratia scheme.\nWhen he said at the end of para 8 that it is for failures of the trial process that the Secretary of State is bound by section 133 and article 14(6) to pay compensation, he was not offering a considered view as to what those provisions actually mean.\nHe was explaining why, because there was no failure in the trial process, he could decide the case against Mullen on that limited ground without forming a concluded view as to what the convicted person had to show to be entitled to compensation.\nIn R (Clibery) v Secretary of State for the Home Department [2007] EWHC 1855 (Admin), para 25, Lord Phillips of Worth Matravers CJ said that in para 4 of his speech in Mullen Lord Bingham considered two different situations, each of which he (that is, Lord Bingham) considered fell within the description of miscarriage of justice in section 133 of the 1988 Act.\nIt is true, as Lord Phillips went on to point out, that in para 6 of his speech Lord Bingham referred to the core right with which article 14(6) is concerned as the right to a fair trial.\nBut I think, with respect, that Lord Phillips was wrong to say that in para 4 of his speech Lord Bingham was considering what was meant by miscarriage of justice in section 133, as he himself has accepted: see para 30, above.\nHughes LJ drew attention to this point in R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1, para 25.\nHe said that it must be remembered that in Mullen both the statutory and the ex gratia schemes were under consideration.\nIn my opinion the value of Lord Binghams speech in Mullen lies not in any attempt on his part to subject section 133 to textual analysis, for he did not do this.\nIt is to be found in the reasons he gave for hesitating to accept the argument for the Secretary of State that section 133 was satisfied only when the defendant was shown beyond reasonable doubt to have been innocent of the crime of which he had been convicted, and in particular in the three points on which he disagreed with Lord Steyn.\nLord Steyns textual analysis of article 14(6) begins with a warning that there was no overarching purpose of compensating all who are wrongly convicted.\nFor the reasons he gives in para 45, the fundamental right under article 14(6) is narrowly circumscribed.\nThere was no intention to compensate all those whose convictions were quashed within the ordinary time limits, only those whose convictions were quashed on appeal out of time.\nAnd this was only where a new or newly discovered fact showed conclusively that there had been a miscarriage of justice.\nHaving made this point, he then concentrated in para 46 on the requirement that the new or newly discovered fact must show conclusively (or beyond reasonable doubt in the language of section 133) that there has been a miscarriage of justice.\nHe said that this filtered out cases of two kinds, (1) where there may have been a wrongful conviction and (2) where it is only probable that there may have been a wrongful conviction.\nHe concluded that the only relevant context pointed to a narrow interpretation, that is to say the case where innocence is demonstrated.\nThis approach leans very heavily on the use of the word conclusively.\nThat word certainly points towards a narrow interpretation.\nBut it does not point inevitably to the demonstration of innocence as the only case that could qualify for compensation under the article.\nThe fact that a person who has been pardoned is brought within the scheme does not have that effect either.\nIt would plainly have been wrong to exclude those who are pardoned from the scheme when those whose convictions have been reversed are given the benefit of it.\nBut the reversal of a conviction and a pardon are processes which are distinct from each other.\nIt does not follow from the mere fact that they are both covered by the same scheme that the only reversals of convictions that can be contemplated are those which would otherwise have deserved a pardon.\nLord Steyn might have examined these points more fully, had he not been persuaded by two considerations to which he then turned that he had found the right answer.\nThe first was the use of the words une erreur judiciaire in the French text of the ICCPR.\nIn para 47 of his speech in Mullen Lord Steyn said that this was a technical expression indicating a miscarriage of justice in the sense of the conviction of the innocent.\nIn para 9(4) of his speech Lord Bingham expressed some unease about this, as he contrasted these words with the reference to un condamn reconnu innocent in article 626 of the French Code de Procdure Pnale.\nHe said that the expression une erreur judiciaire could be understood as equivalent to miscarriage of justice in its broad sense, and that it was not obviously apt to denote proof of innocence.\nIn In re Boyles Application [2008] NICA 35, para 11 Girvan LJ said that he considered that Lord Binghams hesitation in not accepting Lord Steyns stringent requirement of proof of innocence was justified.\nIn para 12 he pointed out that the term erreur judiciaire is defined by Grard Cornu in his Vocabulaire Juridique, 7th ed (1998), as une erreur de fait commise par une juridiction de jugement dans son appreciation de la culpabilit dune personne poursuivie.\nIn para 13 he enlarged on Lord Binghams reference to article 626 of the Code de Procdure Pnale, pointing out that it did not require proof of innocence but rather that, where a defendants conviction is quashed and he is subsequently acquitted, he is reconnu innocent in consequence in other words, the annulment of the conviction itself leads to the establishment of his innocence.\nAlthough Mr Tam QC for the Secretary of State sought to defend Lord Steyns interpretation in his written case, he accepted in the course of Mr Owens oral argument that it was probably incorrect.\nFor my part, I think that Girvan LJs researches have shown that Lord Steyns understanding of the words une erreur judiciaire in the French text of article 14(6), for which he gave no authority, was mistaken.\nThe second consideration on which Lord Steyn relied was an observation in para 25 of an explanatory report by the Steering Committee for Human Rights appointed by the Council of Europe which accompanied the Seventh Protocol of the European Convention when it was published in November 1984: Mullen, para 48.\nIt said of article 3, which follows the wording of article 14(6) of the ICCPR, that the intention was that states would be obliged to compensate persons only in clear cases of miscarriage of justice, in the sense that there would be an acknowledgment that the person concerned was clearly innocent.\nHaving noted that in the introduction to the report it was stated that participation in the Protocol would not affect the application of provisions containing obligations under any other international instrument, Lord Steyn said that the explanatory report nevertheless had great persuasive value in the process of interpretation.\nIn para 9(4), on the other hand, Lord Bingham set out five reasons for thinking that this passage does not bear the weight that Lord Steyn attached to it.\nAmong those reasons are two which seem to me to be particularly significant.\nFirst, many more states are parties to the ICCPR than to the European Convention or the Seventh Protocol, which the United Kingdom has not signed or ratified.\nSecond, para 25 does not appear to be altogether consistent with para 23, which suggests that a miscarriage of justice occurs where there is a serious failure in the judicial process involving grave prejudice to the convicted person.\nFurthermore, as Lord Bingham noted in para 9(5), van Dijk and van Hoof, Theory and Practice of the European Convention on Human Rights, 3rd ed (1998), p 689 take a different view, suggesting that the explanatory reports interpretation is too strict and that reversal of the conviction on the ground that new facts have been discovered which introduce a reasonable doubt as to the guilt of the accused is enough.\nLord Steyn said in para 48 that the explanatory report had great persuasive value.\nI think that, for the reasons Lord Bingham gives, this overstates the position.\nThe better view is that it lends some support the Secretary of States argument, but that it must be for the court to work out for itself what the words mean.\nThere was one further difficulty about Lord Steyns interpretation to which Lord Bingham drew attention in para 9(6).\nThis is that courts of appeal, although well used to deciding whether convictions are safe or whether reasonable doubts exist about their safety, are not called upon to decide whether a defendant is innocent and in practice rarely do so.\nIn R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1, para 40(iii) Hughes LJ said that cases where the innocence of the convicted defendant is genuinely demonstrated beyond reasonable doubt by the new or newly discovered fact will be identifiable in that court and the judgment will, in virtually every case, make this plain.\nI do not think that this entirely meets Lord Binghams point.\nI have no doubt that there will be cases of the kind that Hughes LJ describes.\nBut it remains true that courts of appeal are not called upon to say whether or not a defendant was innocent, and it is at least questionable whether restricting the right to compensation to cases where the establishment of innocence is apparent from the courts judgment imposes too severe a test for the entitlement to compensation.\nA fresh analysis\nIf one accepts, as I would do, Lord Binghams reasons for doubting whether Lord Steyn was right to find support for his reading of article 14(6) in the French text and in para 25 of the explanatory committees report on article 3 of the Seventh Protocol, one is driven back to the language of the article itself as to what the words miscarriage of justice mean.\nTaken by itself this phrase can have a wide meaning.\nIt is the sole ground on which convictions can be brought under review of the High Court of Justiciary in Scotland: Criminal Procedure (Scotland) Act 1995, section 106(3).\nBut the fact that these words are linked to what is shown conclusively by a new or newly discovered fact clearly excludes cases where there may have been a wrongful conviction and the court is persuaded on this ground only that it is unsafe.\nIt clearly includes cases where the innocence of the defendant is clearly demonstrated.\nBut the article does not state in terms that the only criterion is innocence.\nIndeed, the test of innocence had appeared in previous drafts but it was not adopted.\nI would hold, in agreement with Lord Phillips (see para 55 above) that it includes also cases where the new or newly discovered fact shows that the evidence against the defendant has been so undermined that no conviction could possibly be based upon it.\nIn that situation it will have been shown conclusively that the defendant had no case to answer, so the prosecution should not have been brought in the first place.\nThere is an important difference between these two categories.\nIt is one thing to be able to assert that the defendant is clearly innocent.\nCases of that kind have become more common and much more easily recognised since the introduction into the criminal courts, long after article 14(6) of the ICCPR was ratified in 1976, of DNA evidence.\nIt seems unlikely that the possibility of demonstrating innocence in this way was contemplated when the test in article 14(6) was being formulated.\nWatson and Crick published their discovery of the double helix in 1951, but DNA profiling was not developed until 1984 and it was not until 1988 that it was used to convict Colin Pitchfork and to clear the prime suspect in the Enderby Murders case.\nThe state should not, of course, subject those who are clearly innocent to punishment and it is clearly right that they should be compensated if it does so.\nBut it is just as clear that it should not subject to the criminal process those against whom a prosecution would be bound to fail because the evidence was so undermined that no conviction could possibly be based upon it.\nIf the new or newly discovered fact shows conclusively that the case was of that kind, it would seem right in principle that compensation should be payable even though it is not possible to say that the defendant was clearly innocent.\nI do not think that the wording of article 14(6) excludes this, and it seems to me that its narrowly circumscribed language permits it.\nThe range of cases that will fall into the category that I have just described is limited by the requirement that directs attention only to the evidence which was the basis for the conviction and asks whether the new or newly discovered fact has completely undermined that evidence.\nIt is limited also by the fact that the new or newly discovered fact must be the reason for reversing the conviction.\nThis suggests that it must be the sole reason, but I do not see the fact that the appellate court may have given several reasons for reversing the conviction as presenting a difficulty.\nAll the other reasons that it has given will have to be disregarded.\nThe question will be whether the new or newly discovered fact, taken by itself, was enough to show conclusively that there was a miscarriage of justice because no conviction could possibly have been based on the evidence which was used to obtain it.\nFor these reasons it is plain that category 1 in Dyson LJs list (see para 83, above) falls within the scope of section 133.\nI think that it is equally plain that category 4 (Lord Binghams second limb) does not, as it is taken from para 4 of Lord Binghams speech in Mullen where he was discussing what was included within the phrase wrongful convictions, not what was meant by section 133.\nThis leaves category 2, where the fresh evidence shows that the defendant was wrongly convicted in the sense that, had the fresh evidence been available, no reasonable jury could properly have convicted; and category 3, where the fresh evidence is such that the conviction cannot be regarded as safe, but the court cannot say that no fair minded jury could properly convict if there were to be a trial which included the fresh evidence.\nBearing in mind that we must form our own view as to what section 133 means, can the wording of that section on a correct understanding of article 14(6) include either or both of these categories?\nI have put the words fresh evidence, which of course echo the wording of section 23 of the Criminal Appeal Act 1968 (see also section 106(3) of the Criminal Procedure (Scotland) Act 1995), into inverted commas because they depart from the words of section 133.\nThe statute, like article 14(6), refers to a new, or newly discovered fact, not to fresh evidence.\nAnd it must be a fact which shows beyond reasonable doubt, or conclusively, that there was a miscarriage of justice.\nFresh evidence does not attain that status until the matter to which it relates has been proved or has been admitted to be true.\nFresh evidence that justifies the conclusion referred to in category 3 will usually not be, and certainly need not be, of that character.\nIf it shows that the conviction is merely unsafe, the court may order a retrial.\nUnder our system of trial by jury there will be no way of knowing, beyond reasonable doubt, whether it was a new or newly discovered fact that led to the acquittal.\nFor these reasons I would exclude category 3 from the scope of section 133.\nThis leaves category 2.\nAs Hughes LJ indicates in R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1, para 40(iii), we are dealing here with a new or newly discovered fact that is identifiable as such by the Court of Appeal.\nCategory 2, as described in Dyson LJs list, is of course accurate as a description of what happens according to the Court of Appeals practice.\nBut it is too broadly framed for use as a reliable guide to what falls within the scope of section 133 read with article 14(6).\nIt lacks the limiting factors indicated by the words new or newly discovered fact and shows conclusively.\nIt may not be easy in practice to distinguish cases that fall within it from those that fall within category 3.\nSo in my opinion a more precise, and more exacting, formula must be found.\nI am uneasy too about requiring the Secretary of State, whose function it is to administer the scheme under the statute, to apply a test which refers to what a reasonable jury would do.\nThis is a judgment that is best left to the courts.\nWhile he will be guided by what the appellate court said when it reversed the conviction, he is entitled to look at the new or newly discovered fact for himself and draw his own conclusions as to its consequences so long as they are not in conflict with what the court has said in its judgment.\nThis brings me back to what I said in para 94 above.\nFor the reasons I give there I would rephrase category 2, so that it fits with the narrowly circumscribed language of article 14(6) and section 133.\nI would limit it to cases where the new or newly discovered fact shows conclusively that there was a miscarriage of justice because the evidence that was used to obtain the conviction was so undermined by the new or newly discovered fact that no conviction could possibly be based upon it.\nThis would include cases where the prosecution depended on a confession statement which was later shown by a new or newly discovered fact to have been inadmissible because, as the defendant had maintained all along, it was extracted from him by improper means.\nIt may be quite impossible to say in such a case that he was, beyond reasonable doubt, innocent.\nBut, as the evidence against him has been completely undermined, it can be said that it has been shown beyond reasonable doubt, or conclusively, that there has been a miscarriage of justice in his case which was as great as it would have been if he had in fact been innocent, because in neither case should he have been prosecuted at all.\nRetrial\nSection 133(5A), which was inserted by section 61 of the Criminal Justice and Immigration Act 2008, changed the timetable as to when a persons conviction was to be taken to have been reversed in a case where a retrial is ordered.\nThis amendment has to be read with the amendment which was made at the same time to section 133(2) by inserting a time limit for making an application for compensation under section 133.\nThis is a period of two years beginning with the date when the conviction is reversed.\nSection 133(5A) provides that where the person is to be subject to a new trial the conviction is not to be treated as reversed unless and until the person is acquitted of all offences at the retrial or the prosecution indicates that it has decided not to proceed with the retrial.\nThis provision introduces a feature of the statutory scheme which was not before the House in Mullen.\nBut I do not think that it affects Lord Steyns interpretation of section 133, or the qualification which I would make to it to include cases where the prosecution should never have been brought.\nIt is not to be taken as suggesting that compensation is payable in every case where the appellate court has ordered a new trial because it is satisfied that the conviction was unsafe in the light of fresh evidence.\nWhat it does, as it seems to me, is to allow for the possibility that something may emerge either before or during the retrial which would require compensation to be paid.\nNor is it to be taken as suggesting that compensation is payable in every case, such as that of Mr George, where the person was acquitted at his retrial.\nThe tests laid down in section 133(1) must still be applied.\nIt is only where a new fact or a newly discovered fact shows conclusively that the person was innocent or that the prosecution should never have been brought that there will be a right to compensation.\nThis will not be the case where a retrial has been ordered, and it may not be apparent from the jurys verdict at the retrial.\nThe fact that it returned a verdict of not guilty will not be enough.\nBut if new facts emerge during the retrial process that have the effect of showing conclusively that the person was innocent or that the prosecution should never have been brought they can be taken into account, even though they emerged after the date when the conviction was reversed by the Court of Appeal.\nNew or newly discovered fact\nA question that is raised in Adamss case is to whom these words are addressed.\nHis appeal was allowed by the Court of Appeal on the basis that, owing to inadequacies in the conduct of his case by his then legal team, there had been a failure by them to discover and make use at the trial of three pieces of important material which had been made available to them by the prosecution but of which Adams himself was not aware: [2007] 1 Cr App R 449, para 155.\nIn other words, this was material that was available at the trial but not used.\nCould it be said that these were new or newly discovered facts? His case is that all he needed to show was that he himself was unaware of them.\nThey were new to him because they were not revealed to him by his legal team.\nThey did not have to be new, as the Secretary of State maintains, to everyone involved in the trial.\nThe Divisional Court (Maurice Kay LJ and Simon J) held that the Secretary of State was right to reject Adamss claim for compensation on the ground that his conviction was not quashed because of a new or newly discovered fact: [2009] EWHC 156 (Admin).\nThe Court of Appeal (Waller, Dyson and Lloyd LJJ) disagreed, for three reasons: [2010] QB 460, paras 14 16.\nFirst, it was difficult to accept that those who drafted the article intended to deny compensation to a person whose conviction was reversed on the basis of material which was available to his legal team and would have shown that he was innocent.\nSecond, there was no need to interpret the phrase in a way that yielded such an extreme result.\nThird, the focus of the language was on the convicted person.\nThere was no mention of his legal representatives in the article.\nSo compensation was not to be denied to him if facts emerged that were new to him, although they were known to his legal representatives.\nI do not think that the language of article 14(6) bears this interpretation.\nIt seems to me that the focus of attention is on what was known or not known to the trial court, not to the convicted person.\nThe assumption is that the trial court did not take the fact into account because it was not known or had not been discovered at the time of the trial.\nIf this was attributable wholly or in part to the convicted person because he deliberately chose not to reveal what he knew to his defence team compensation must be denied to him, as the coda to article 14(6) makes clear.\nBut, leaving that point out of account, the only relevant questions are whether it was not available to the trial court because it was not known then at all or whether, although knowable, it had not been discovered by the time of the trial.\nMaterial that has been disclosed to the defence by the time of the trial cannot be said to be new or to have been newly discovered when it is taken into account at the stage of the out of time appeal.\nTo focus on the state of mind of the convicted person goes too far.\nIt ignores the fact that in practice the defendants legal representatives are unlikely to have discussed with him every piece of information that they come across in the course of their preparation for and conduct of the trial.\nI agree with Lord Judge that a fact is not new or newly discovered for the purposes of section 133 just because the defendant himself, who was previously unaware of that fact, ceases to be ignorant of it.\nDoes denial of compensation infringe the presumption of innocence?\nMr Owen submitted that a narrow interpretation of article 14(6) would conflict with the presumption of innocence in article 6(2) of the European Convention.\nHe relied on a series of decisions by the European Court of Human Rights which show that the presumption of innocence may be violated in particular circumstances where, following an acquittal, a court or other authority expresses an opinion of continuing suspicion which amounts in substance to a determination of guilt of the person concerned: Sekanina v Austria (1993) 17 EHRR 221; Leutscher v The Netherlands (1996) 24 EHRR 181; Rushiti v Austria (2000) 33 EHRR 1331; Weixelbraun v Austria (2001) 36 EHRR 799; Orr v Norway (Application No 31283\/04) (unreported) 15 May 2008; and Hammern v Norway (Application No 30287\/96) (unreported) 11 February 2003.\nThese cases, other than Orr v Norway, were examined in Mullen by Lord Bingham in para 10 and by Lord Steyn in paras 41 44.\nMr Owen said that the reasons that Lord Steyn gave for finding these cases of no assistance on the question as to whether article 6(2) requires an expansive interpretation of article 3 of the Seventh Protocol or of article 14(6) of the ICCPR were correct but irrelevant.\nLord Bingham on the other hand said in para 10 that they were of no assistance, since Mullens acquittal was based on matters entirely unrelated to the merits of the accusation against him.\nSo it was open to this court to take a fresh look at the issue.\nAs Mr Tam for the Secretary of State pointed out, article 6(2) applies according to its own terms to the criminal process.\nThe Strasbourg cases show that its jurisprudence is designed to protect the criminal acquittal in proceedings that are closely linked to the criminal process itself.\nIn Sekanina v Austria (1993) 17 EHRR 221, para 30, for example, the court said that the voicing of suspicions regarding a persons innocence is conceivable as long as the conclusion of criminal proceedings has not resulted in a decision on the merits but that it was no longer admissible to rely on such suspicions once an acquittal has become final.\nThat was a case where the applicant had been charged with murder and remanded in custody but was subsequently acquitted at his trial.\nHis claim for compensation was dismissed on the ground that there were still strong suspicions regarding his guilt.\nThe problem was that Austrian legislation and practice linked the two questions the criminal responsibility of the accused and the right to compensation to such a degree that the decision on the latter issue could be seen to be regarded as a consequence and, to some extent, the concomitant of the decision on the former: para 22.\nThe court was careful to point out in para 25, however, that the situation in that case was not comparable to that governed by article 3 of the Seventh Protocol.\nThis distinction shows that a person might properly be refused compensation under that article, and thus under article 14(6) of the ICCPR which marches together with article 3 of the Seventh Protocol, without violating the presumption of innocence under article 6(2).\nThe same approach was taken in Hammern v Norway (Application No 30287\/96) 11 February 2003 where the conditions for obtaining compensation were linked to the issue of criminal responsibility in such a manner, by the same court sitting largely in the same formation, so as to bring the proceedings within the scope of article 6(2): para 46.\nA further example of this line of reasoning is provided by Y v Norway (2003) 41 EHRR 87, where the applicant was acquitted by the High Court which then went on to refuse his claim for compensation the next day on the ground that it was clearly probable that he had committed the offences with which he had been charged.\nSo too in Orr v Norway (Application No 31283\/04) 15 May 2008, where the High Court dealt with the acquittal and the payment of compensation to the complainant in two clearly distinct parts of its judgment, but in several places highlighted that the standard of proof for civil liability to pay compensation was less strict than for criminal liability: para 52.\nThis was held in para 53 to cast doubt on the correctness of the acquittal.\nThe principle that is applied is that it is not open to the state to undermine the effect of the acquittal.\nWhat article 14(6) does not do is forbid comments on the underlying facts of the case in subsequent proceedings of a different kind, such as a civil claim of damages, when it is necessary to find out what happened.\nThe system that article 14(6) of the ICCPR provides does not cross the forbidden boundary.\nThe 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.\nAs Lord Steyn pointed out in Mullen, paras 41 43, in none of the cases from Austria or Norway, nor in Leutscher v The Netherlands 24 EHRR 181, was the court called upon to consider the interaction between article 6(2) and article 3 of the Seventh Protocol.\nOn the contrary, the fact that the court was careful to emphasise in Sekanina v Austria, para 25 that the situation in that case was not comparable to that governed by article 3 of the Seventh Protocol is an important pointer to the conclusion that, as Lord Steyn put it in Mullen, para 44, article 14(6) and section 133 of the 1988 Act are in the category of lex specialis and that the general provision for a presumption of innocence does not have any impact on them.\nA refusal of compensation under section 133 on the basis that the innocence of the convicted person has not been clearly demonstrated, or that it has not been shown that the proceedings should not have been brought at all, does not have the effect of undermining the acquittal.\nConclusions\nI would dismiss the appeal by Adams on the ground that the phrase new or newly discovered fact does not encompass the material that was available to but not used at the trial by the convicted persons legal representatives.\nBut I would add that the second limb of the test that has been attributed to Lord Bingham because of what he said in para 4 of his speech in Mullen, on which Mr Owen relied, does not meet the requirements of article 14(6).\nSo, even if the material in question could be said to have been newly discovered, his case would not have entitled him to compensation under the statute.\nI would allow the appeals by McCartney and MacDermott, for the reasons given by Lord Kerr.\nIt is not possible to say in their cases that the newly discovered facts show conclusively that they were innocent of the crimes of which they were convicted.\nBut it is possible to say, in the light of the newly discovered facts, that these were proceedings that ought not to have been brought because the evidence against them has been so completely undermined that no conviction could possibly be based upon it.\nI would hold that their cases fall within the narrowly circumscribed language of article 14(6) and section 133 of the 1988 Act, and they are entitled to be compensated.\nLADY HALE\nI agree that a miscarriage of justice in section 133 of the Criminal Justice Act 1988 (see para 1 above) should be interpreted as proposed by Lord Phillips in para 55 of his judgment.\nThe phrase is clearly capable of bearing a wider meaning than conclusive proof of innocence.\nBoth the inspiration for section 133, in article 14(6) of the ICCPR (see para 6 above) and the meaning of miscarriage of justice in domestic law in 1988 support a wider meaning.\nThe drafters of article 14(6) rejected all attempts to confine it to proof of innocence.\nIn 1988, the Criminal Appeal Act 1968 permitted the Court of Appeal to dismiss an appeal if they considered that no miscarriage of justice has actually occurred (section 2(1) before its amendment by the Criminal Appeal Act 1995).\nThis points strongly to the meaning of miscarriage of justice as the conviction of someone who ought not to have been convicted.\nThe addition in section 133 of the requirement that this be shown beyond reasonable doubt (in substitution for conclusively in article 14(6)) indicates that this refers to someone who definitely should not have been convicted rather than to someone who might or might not have been convicted had we known then what we know now.\nAs I understand it, Lord Phillips formulation, with which both Lord Hope and Lord Kerr agree, would limit the concept to a person who should not have been convicted because the evidence against him has been completely undermined.\nUnlike Lord Clarke, therefore, he would not include a person who should not have been convicted because the prosecution was an abuse of process.\nI agree with Lord Phillips that the object of this particular exercise is to compensate people who cannot be shown to be guilty rather than to provide some wider redress for shortcomings in the system.\nI do sympathise with Lord Browns palpable sense of outrage that Lord Phillips test may result in a few people who are in fact guilty receiving compensation.\nHis approach would of course result in a few people who are in fact innocent receiving no compensation.\nI say a few because the numbers seeking compensation are in any event very small.\nBut Lord Phillips approach is the more consistent with the fundamental principles upon which our criminal law has been based for centuries.\nInnocence as such is not a concept known to our criminal justice system.\nWe distinguish between the guilty and the not guilty.\nA person is only guilty if the state can prove his guilt beyond reasonable doubt.\nThis is, as Viscount Sankey LC so famously put it in Woolmington v Director of Public Prosecutions [1935] AC 462, at p 481, the golden thread which is always to be seen throughout the web of the English criminal law.\nOnly then is the state entitled to punish him.\nOtherwise he is not guilty, irrespective of whether he is in fact innocent.\nIf it can be conclusively shown that the state was not entitled to punish a person, it seems to me that he should be entitled to compensation for having been punished.\nHe does not have to prove his innocence at his trial and it seems wrong in principle that he should be required to prove his innocence now.\nOf course, it is not enough that the evidence supporting his conviction has been fatally undermined.\nThis has to be because of a new or newly discovered fact.\nOn this point, I also agree with Lord Phillips, who adopts the definition contained in section 9(6) of the Criminal Procedure Act 1993 in Ireland (see para 60).\nThis means that the person convicted either did not know or did not appreciate the significance of the information in question.\nIt seems difficult to make sense of the proviso to section 133(1) unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted in any other way.\nFor these reasons, in agreement with Lord Phillips, I would dismiss Mr Adams appeal but allow the appeals of Mr MacDermott and Mr McCartney.\nThe evidence against Mr Adams has not been so undermined that no conviction could possibly be based upon it, whereas Lord Kerr has demonstrated that this is indeed the case with Mr MacDermott and Mr McCartney.\nLORD KERR The appeals of Eamonn MacDermott and Raymond McCartney\nIntroduction\nOn 12 January 1979, after a trial by a judge, sitting without a jury at Belfast City Commission, Raymond Pius McCartney was convicted of two offences of murder and one of membership of the Irish Republican Army.\nThe two murder victims were Geoffrey Agate and Detective Constable Liam Patrick McNulty.\nMr McCartney was sentenced to life imprisonment on each of the murder counts and to five years imprisonment for the offence of membership of a proscribed organisation.\nOn the same date and at the same court Eamonn MacDermott was convicted of various offences including the murder of Detective Constable McNulty.\nHe was sentenced to life imprisonment for that offence and to various terms of imprisonment for the other offences.\nThe sole evidence on which Mr McCartney and Mr MacDermott were convicted consisted of written and verbal admissions that they were said to have made during interviews by police.\nBoth contested the admissibility of the statements, alleging that they had either been the product of ill treatment by interviewing police officers or that they had been concocted.\nThe admissibility of the statements was considered by the trial judge after a long voire dire hearing.\nHe rejected the allegations of the appellants and stated that he was satisfied that neither had been ill treated.\nThe judge also considered whether to exercise his residual discretion to exclude the statements from evidence if he considered it proper to do so.\nHe concluded that it would not be proper to do so and the statements were duly admitted.\nAn appeal by Mr MacDermott and Mr McCartney against their convictions was dismissed by the Court of Appeal in Northern Ireland (Jones LJ, Gibson LJ and Kelly J) on 29 September 1982.\nBoth spent several years in prison.\nOn 18 January 2006 the Criminal Cases Review Commission referred the convictions of Mr MacDermott and Mr McCartney to the Court of Appeal.\nOn 15 February 2007 their convictions were quashed, the Court of Appeal declaring that they had a distinct feeling of unease about their safety.\nFollowing the quashing of their convictions by the Court of Appeal, Mr McCartney and Mr MacDermott applied to the Secretary of State for Northern Ireland for compensation under section 133 of the Criminal Justice Act 1988 on the basis that they had been victims of a miscarriage of justice.\nThe applications were refused.\nThey then sought judicial review of that decision.\nThe application for judicial review was rejected by Weatherup J on 25 June 2009.\nAn appeal against that decision was dismissed by the Court of Appeal in Northern Ireland (Morgan LCJ, Girvan LJ and Coghlin LJ) on 8 February 2010.\nThe appellants trials\nMr McCartney\nMr McCartneys case on trial had been that he did not make any verbal admissions and that the two written statements attributed to him had been fabricated by police officers.\nHe claimed that he had been ill treated before each statement had been written out.\nHe had refused to sign them but he had initialled the caution that appeared at the head of the first statement and had drawn a line and had written the words \"end of statement\" at the concluding part of the second statement.\nMr McCartney claimed that his ill treatment began during the second of a series of interviews that took place in Castlereagh Police Office between 3 and 7 February 1977.\nThe ill treatment continued during a number (although not all) of the succeeding interviews.\nTwo police officers in particular were identified by him as having been the most persistent and determined perpetrators.\nHe gave evidence that he had been told that they had been specially chosen in order to extract confessions from him.\nThe suggestion was made by Mr McCartneys counsel that proper supervision of interviews had broken down and that a concerted campaign of abuse had been conducted in order to obtain confessions that would lead to convictions.\nThe interviewing police officers denied that they had been guilty of any form of ill treatment.\nSuperior officers rejected the suggestion that there had been any lack of supervision or that particular officers were chosen in order to extract confessions.\nIt was accepted, however, that a new team of detectives had been selected to continue interviews with Mr McCartney on the second day of interviewing.\nThis new team was chosen, according to one of the senior officers in charge of interviews, because Mr McCartney, despite having shown signs of co operation on the first evening of interviews, had evinced a less co operative attitude the following day.\nThe detectives thus selected were those identified by Mr McCartney as his principal abusers.\nDuring the course of Mr McCartneys trial, an application was made on his behalf for leave to call three witnesses who had been arrested at the same time as he and who had been interviewed at Castlereagh Police Office during the same period.\nIn the event, two of the witnesses gave evidence.\nOne of these was a man called John Thomas Pius Donnelly.\nHe had been arrested at the same time as Mr McCartney.\nHe was interviewed about and subsequently charged with one of the murders of which Mr McCartney was later convicted.\nHe was also charged with having caused an explosion.\nFor reasons that will appear presently, the charges against Mr Donnelly were not proceeded with and he did not stand trial.\nDuring the trial of Mr McCartney and Mr MacDermott, Mr Donnelly gave evidence that he had been subjected to serious assaults during his interviews and had sustained significant injuries in consequence.\nAlthough the detectives who, according to Mr Donnelly, had assaulted him, Detective Constable French and Detective Constable Newell, were not those who were alleged to have ill treated Mr McCartney, they were members of the group of officers who had been conducting interviews into the murders of Mr Agate and Detective Constable McNulty.\nDetective Constable French had interviewed Mr MacDermott and had recorded the most significant statement of admission from him.\nMr MacDermott alleged that he had been assaulted by Detective Constable French and by the officer who accompanied him, Detective Constable Dalton.\nThis second detective had also interviewed Mr McCartney and Mr McCartney claimed to have been assaulted by him also.\nOn 6 February 1977, after he had been interviewed for several days, two doctors carried out a joint examination of Mr Donnelly.\nOne of them was a forensic medical officer, retained by the police.\nNo fewer than ten areas of injury on Mr Donnellys body were recorded.\nSubstantial bruising, particularly in the abdominal area was found.\nThe trial judge observed that both doctors were shocked and horrified by what they found on examination.\nHow Mr Donnellys injuries had been caused was the subject of acute controversy on trial.\nIt was trenchantly put to him by counsel for the prosecution that some had been sustained during a series of struggles while he was being taken to and from interview rooms and that the remaining injuries were self inflicted.\nThis was a highly significant cross examination when seen in the light of the subsequently discovered reasons that the charges against Mr Donnelly had not been proceeded with.\nThe decision not to proceed with the prosecution of Mr Donnelly was itself highly significant for he was alleged to have made verbal and written admissions of murder and causing an explosion.\nThe second witness, Hugh Brady, also gave evidence of having been assaulted during interviews which took place during the same period as those of Mr McCartney and Mr Donnelly.\nOne of the detectives identified by Mr Brady as having assaulted him (Detective Constable Dalton) had also interviewed Mr McCartney and, as noted at para 126 above, Mr McCartney claimed that he too had been assaulted by this officer.\nMr Brady was also found on medical examination to have multiple injuries, most notably bruising of the abdomen and a burn to his hand which he claimed had been caused by the hand being forcibly held against a hot radiator.\nOne of the doctors who examined him, Dr Hendron, who had been retained by Mr Bradys solicitors, concluded his medical report by saying that he had no doubt that Mr Brady had been assaulted, although he conceded during cross examination at the trial of Mr McCartney and Mr MacDermott that Mr Brady may have exaggerated.\nOther doctors who examined Mr Brady believed that he had exaggerated and gave evidence to that effect.\nMr Brady did not make admissions and was not charged with any offences.\nUnder cross examination at the trial of Mr McCartney and Mr MacDermott it was also suggested to him that his injuries had been self inflicted.\nThe trial judge, MacDermott J, did not find him an impressive witness for reasons that I will turn to presently.\nMr McCartney was examined by two doctors, Dr Henderson, the Force medical officer and Dr Hendron, who attended at the request of Mr McCartneys solicitors.\nThe medical examination took place shortly after the tenth interview which had ended at 5.20 pm on 6 February 1977.\nA linear abrasion, 1 1\/4 inches long was observed in the centre of McCartney's forehead, with two further small abrasions above and below it.\nDr Hendron noted that Mr McCartneys right cheek was red and puffy.\nDr Henderson had no note of this but on the form used to record the findings on examination he wrote \"claimed struck on face no evidence of any bruises\".\nThe mark on Mr McCartney's forehead was superficial; it was considered to have been present for a couple of days and was of a type that could be caused by a finger nail.\nWhen asked for his conclusions on the evidence, Dr Hendron stated that he had no doubt that Mr McCartney had been assaulted.\nMr MacDermott\nMr MacDermott had been arrested on 31 January 1977 and his interviews took place in Strand Road Police Station in Derry between the date of his arrest and 2 February.\nHe claimed that he had been beaten before making admissions and had been abused and threatened on his way to the interview room.\nHe also gave evidence that the principal statement of admission had been prepared by a detective officer while he, MacDermott, lay on a bed.\nIt was claimed that his mental resolve had been so eroded by the assaults and threats that by the time the statement was being recorded, he did not care what it contained.\nMr MacDermott was examined by a number of doctors, including his own father who was a general medical practitioner.\nNo significant signs of physical injury were found.\nHe was observed to have tenderness of the jaw and ears which, he claimed, had been areas of assault.\nHe also exhibited signs of anxiety tension.\nTowards the end of the trial, the judge asked counsel for the prosecution about the charges against Donnelly.\nHe said, Am I right in saying that the position is that he was charged and then what happened? The court was informed that no evidence was being offered? Counsel for the prosecution replied, He was never returned for trial.\nThe charges were not proceeded with.\nIn a lengthy judgment the trial judge found that neither Mr McCartney nor Mr MacDermott had been ill treated as they had alleged.\nIndeed, in relation to Mr McCartney, the judge declared that his certain conclusion [was] that the Crown has satisfied me beyond reasonable doubt that McCartney was not ill treated and in relation to Mr MacDermott that he was absolutely satisfied that he had not been ill treated in any way or threatened.\nThe judge fully accepted the evidence of the police officers denying ill treatment at all times.\nIn relation to Mr Donnelly, the judge said that he was satisfied that the police had not assaulted or ill treated him.\nMr Brady was condemned as a dishonest and unreliable witness whose evidence the judge found did not assist in deciding whether Mr McCartney had been ill treated.\nDr Hendron had expressed the strong opinion that Mr McCartney, Mr Donnelly and Mr Brady had been assaulted by police officers.\nMacDermott J said this about the doctors evidence: There is no doubt in my mind that Dr. Hendron believes, I am sure genuinely, that McCartney, Brady, Donnelly and others have been ill treated at Castlereagh, and such a conclusion could be reached by anyone who is prepared to form a conclusion after hearing only what might be described as one side of the case.\nTo my mind, Dr. Hendron's evidence throughout was coloured by this belief and lacked the professional objectivity displayed later by other doctors\nRobert Barclay\nOn 2 January 1977 Robert Barclay was arrested and taken to Omagh Police Station where he was interviewed over a number of days by Detective Constables French and Newell (the same officers who had interviewed Mr Donnelly approximately one month later).\nMr Barclay was said to have made admissions during these interviews.\nHe also complained of ill treatment at the hands of both detective officers.\nHe alleged that they assaulted him by slapping him and punching him and that they had threatened him.\nOn 2 December 1977, after a trial in which he gave evidence that he had been assaulted by the officers, Mr Barclay was convicted on foot of the admissions that he had made during interview.\nHe appealed his convictions.\nA solicitor had given evidence on his trial that when he saw Mr Barclay in court on 4 January he had a black eye.\nTwo doctors who had examined him while he was at Omagh Police Station found signs of injury.\nOn 12 April 1978, the then Lord Chief Justice of Northern Ireland, Lord Lowry, delivering the judgment of the Court of Appeal, quashed the convictions.\nAlthough no written judgment appears to have been given, Lord Lowry was recorded as having said: It is not possible to exclude the conclusion that the injuries found on the accused were inflicted at Omagh Police Station and this renders inadmissible any statement made by him.\nSubsequently, Mr Barclay brought a private prosecution against Detective Constable French and Detective Constable Newell.\nIn his judgment, which was delivered on 25 April 1979, the trial judge in that case accepted that there was a strong prima facie case that Mr Barclay had been assaulted.\nHe said that Mr Barclay had undoubtedly sustained injuries in Omagh Police Station.\nHe referred, however, to Mr Barclays admission that, on other occasions quite unconnected with the proceedings against the police officers, he had been dishonest.\nAlso, on certain matters relating to his interviews by the detectives (such as, for instance, which of them had taken the notes of the interview) Mr Barclay was found by the judge to have been inaccurate.\nBut the medical evidence that was called on the prosecution of the police officers was found to be consistent with Mr Barclays allegations.\nThe judge said, however, that he could not be certain that the injuries had occurred at the time that Mr Barclay alleged they had been inflicted.\nThe effect of the evidence made it unlikely that they were self inflicted but this was a possibility in the estimation of the judge.\nTherefore, on the basis that there was a reasonable doubt as to their guilt, he considered that he was left with no alternative but to acquit the officers.\nAlthough the private prosecution of Detective Constables French and Newell took place after the trial of Mr McCartney and Mr MacDermott, Mr Barclays appeal against his convictions had succeeded before their trial began.\nTheir trial commenced on 18 September 1978.\nOf course, no reference to Mr Barclays successful appeal was made during the trial of Mr McCartney and Mr MacDermott.\nThere is no reason to believe that anything was known of that by those involved in their trial.\nOn the contrary, the fact that such a relevant circumstance was not referred to is a clear indication that nothing was known about it.\nThe reasons that the prosecution of John Donnelly did not proceed\nIn a memorandum of 29 June 1977, Mr Roy Junkin, then an assistant director in the Department of the Director of Public Prosecutions, considered the prospects of success for the prosecution of Mr Donnelly.\nHe concluded that a court would not accept that the statement of admission made by Mr Donnelly was voluntary.\nHe therefore recommended that the prosecution should not proceed.\nThat recommendation was accepted by Mr Junkins superior, Mr George McLaughlin, to whom the memorandum had been addressed and a direction of no prosecution was duly issued.\nMr Donnelly was interviewed about his complaint of ill treatment after being informed that the prosecution against him was not to proceed.\nFollowing the interview, Mr Junkin considered the papers again.\nIn a further memorandum to Mr McLaughlin dated 6 October 1977, Mr Junkin reviewed all the evidence including that obtained from Mr Donnelly during the interview about his complaint.\nHe stated that he had no doubt that Donnelly was assaulted whilst in police custody at Castlereagh.\nThe only detective identified by Mr Donnelly was Detective Constable Newell.\nHe had claimed that this was the only police officer who had disclosed his name.\nSince this police officer had interviewed Mr Donnelly with Detective Constable French and since Mr Donnelly had said that both Detective Constable Newell and the other officer present had assaulted him, Mr Junkin recommended that both be prosecuted for assault.\nIn his response to Mr Junkins recommendation, Mr McLaughlin, in a memorandum dated 10 March 1978 (6 months before the trial of Mr McCartney and Mr MacDermott began), agreed that there was no doubt that Mr Donnelly had been assaulted while in custody at Castlereagh.\nBut Mr McLaughlin concluded that not all of Mr Donnellys complaints were supported by findings on medical examination.\nHe also considered that because 8 or 9 other police officers had interviewed Mr Donnelly the prosecution would not be able to establish that any particular injury had been inflicted by Detective Constables Newell and French.\nHe therefore declined to accept Mr Junkins recommendation that the officers be prosecuted.\nThe quashing of the appellants convictions\nOn the hearing before the Court of Appeal of the reference by CCRC, Ms McDermott QC, appearing on behalf of Mr McCartney, submitted that if counsel for the prosecution had known the reason that the prosecution of Donnelly had been discontinued, he would not have put to him in cross examination that his injuries were self inflicted.\nThis submission does not appear to have been countered by counsel who appeared for the Crown on the hearing of the reference and it does not feature in the conclusions expressed by the Court of Appeal in its judgment on the reference.\nAt the same hearing, counsel for the appellant Mr MacDermott drew attention to what he suggested was a striking similarity between the manner in which, on Mr Donnellys account, a statement was taken from him by Detective Constable French and the way in which, according to Mr MacDermott, the most important statement of admission had been recorded from him by the same police officer.\nGenerally, it was submitted that if the trial judge had been aware of the reasons that Mr Donnelly had not been prosecuted (viz that an assistant director in the office of the DPP and a senior assistant director considered that he had certainly been assaulted by police officers) he would not have admitted the confession statements.\nIt was suggested that the judge would have formed a more favourable view of the evidence of Mr Donnelly and Mr Brady and would have considered that the police officers credibility was wholly undermined.\nThe Court of Appeal gave its decision on these arguments in the final paragraph of its judgment as follows: We cannot rule out the possibility that the evidence of the police officers may have been discredited by evidence that is now available.\nThe admission in evidence of MacDermott's confessions depended upon the acceptance by the judge of the evidence of DC French.\nIf the judge had known of the finding of a prima facie case in the prosecution brought by Mr Barclay against DC French he may well have reached a different conclusion.\nTo this is to be added the striking similarity between the description given by Donnelly and MacDermott as to the manner in which their admissions were recorded.\nIf the allegations by Donnelly had been supported and strengthened by the new evidence this could have served also to discredit the evidence given by the police officers in McCartney's case.\nIn both cases we are left with a distinct feeling of unease about the safety of their convictions based as they were on admissions and the convictions must therefore be quashed.\nThe challenge to the refusal of compensation\nOn 7 November 2007 a letter in the following terms was sent to Mr McCartneys solicitors in response to the application that they had made on his behalf for compensation under section 133 of the 1988 Act: The Secretary of State has not yet reached a decision about the application; before he does so I would like to give you the opportunity to comment in writing on the views set out below.\nUnder section 133 compensation is payable to an applicant where his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice.\nMr McCartneys convictions were, we believe, reversed within the meaning of section 133, by the decision of the Court of Appeal on 15 February 2007.\nWe also tend to the view that this reversal was based on a new or newly discovered fact.\nHowever, in light of the available case law on these matters, we believe that your client has so far failed to establish that a new or newly discovered fact has shown beyond reasonable doubt that there has been a miscarriage of justice either on the basis that your client is demonstrably innocent or on the basis of a failure of the trial process.\nFurther representations were made on behalf of Mr McCartney.\nRejecting these, a letter dated 16 May 2008 sent on behalf of the Secretary of State, communicated his decision that Mr McCartney was not eligible under section 133.\nIt contained the following passage: The reasons for that decision are those as previously set out in my letter of 7 November.\nIn your further representations you made two main points.\nFirstly, you suggest that there was a comprehensive failure to disclose material critical to Mr McCartney's defence.\nThe Secretary of State does not consider that anything went wrong with the investigation of the offence or in the conduct of the trial so as to result in a failure of the trial process.\nSecondly, you suggest that the tape of the appeal should be listened to.\nIt is the written judgment of the CoA that sets out the basis for the decision that a conviction was unsafe and therefore the basis on which the Secretary of State decides if the conditions for statutory compensation are fulfilled.\nSimilar letters were sent to solicitors acting for Mr MacDermott.\nThese solicitors also made further representations and on 17 November 2008 a final responding letter was sent in which the following appeared: We have now considered the other points you put to us on 1 August in relation to the Boyle case [In re Boyles Application [2008] NICA 35].\nThe majority of the Court of Appeal in that case posed the test of whether the claimant should not have been convicted.\nWe do not believe that the terms of the Court of Appeal's judgment in your client's appeal mean that he should not have been convicted.\nTherefore, the Boyle case does not alter the Secretary of State's decision that your client is not entitled to compensation.\nBoth appellants sought judicial review of the Secretary of States decision.\nThese applications were dismissed by Weatherup J, although it is clear that he felt that they might have succeeded if he had felt able to apply the test which, he considered, had been propounded by Lord Bingham in R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18, [2005] 1 AC 1.\nWeatherup J considered that there were two types of new or newly discovered fact (necessary as a prerequisite for eligibility under section 133, as explained by Lord Hope in paras 79 and 81 of his judgment).\nThe first was the evidence that it had been accepted by the assistant director and the senior assistant director in the DPPs office that Mr Donnelly had been assaulted and that this would have tended to throw doubt on the credibility of the police witnesses.\nThe second type was described by the judge in paras 23 and 24 of his judgment: 23another part of the new evidence relating to the prosecution of Donnelly concerned the manner in which his evidence was dealt with at the trial.\nWhen Donnelly was called as a defence witness, counsel for the DPP, rather than proceeding on the position of the DPP officials dealing with the prosecution of Donnelly, adopted and put to Donnelly in cross examination the police approach rejected by those officials, namely that Donnelly had received injuries after an attack on police officers and that some injuries were also self inflicted.\nFurther, when the trial judge was considering the evidence of Donnelly, he asked counsel for the DPP about the absence of a prosecution of Donnelly and a complete reply was not furnished.\nIt is important to note that this was a non jury Diplock trial.\nIt is apparent that the tria1 Judge was inviting counsel to disclose, as delicately as the situation demanded, whether there was a reason for the decision not to prosecute that related to matters other than the alleged ill treatment of Donnelly, in respect of which the answer of counsel implied that there was.\nThe trial judge was not told that the DPP had concluded that Donnelly had been ill treated, that his confession was not to be considered as being voluntary and there was no other evidence against him.\nThere is no suggestion that counsel in the applicants trial had been made aware of the DPP position relating to the prosecution of Donnelly.\nHad counsel for the DPP been aware of the DPPs approach to the prosecution of Donnelly two aspects of the trial would have been different.\nFirst of all, the cross examination of Donnelly would have taken a different course and counsel would not have put to Donnelly that his injuries had been occasioned by defensive action by the police and by his own hand.\nSecondly, the submission of counsel for the DPP in relation to the prosecution of Donnelly would not have rested on the bald assertion that the prosecution was not proceeded with but should have indicated the basis of the DPP decision. 24 Thus the issue of the treatment of the Donnelly evidence is not directly a matter about the credibility of the evidence given by the police officers, nor is it directly a matter about withholding disclosure from the defence.\nRather it is a matter about the conduct of the prosecution in relation to the evidence of a witness who was central to the defence challenge to the voluntariness of the admissions on which the applicants were convicted.\nIn light of the above discussion of the Donnelly evidence there is a basis for concluding that something had gone seriously wrong with the conduct of the trial.\nThis is a matter that is capable of satisfying the wider interpretation of miscarriage of justice expounded by Lord Bingham.\nIt is evident from these passages that Weatherup J considered that it would have been quite wrong for prosecuting counsel, had he known of the reasons that Mr Donnelly had not been prosecuted, to pursue the line of questioning that he did.\nOn the hearing of the appeal before this court Mr Maguire QC, who appeared on behalf of the Secretary of State for Northern Ireland, was unable to confirm that Crown counsel was unaware of the reasons that the prosecution of Mr Donnelly was not pursued but I share Weatherup Js view that this is the only possible explanation for his having cross examined Mr Donnelly as he did.\nMr Junkin and Mr McLaughlin had concluded that Mr Donnelly had been assaulted by police officers.\nIf that view (which was the product of extensive consideration of all the relevant material) had been communicated to prosecuting counsel, it would have been improper for him to advance a case which was quite at odds with the conclusion that had been reached by two experienced officers in the department of the Director of Public Prosecutions.\nAt a more fundamental level, however, it was not open to the prosecuting authority to adopt a different stance in relation to Mr Donnellys evidence according to the context in which it was being considered or, as Lord Rodger so pertinently put it during argument, to face both ways.\nThe decision not to prosecute Mr Donnelly on a charge of murder and one of causing an explosion when, according to police evidence, he had voluntarily admitted to both was a momentous one.\nIt is unsurprising that Mr Junkin and Mr McLaughlin only felt able to take that course because they were convinced that he had been assaulted by police officers.\nIt is simply incompatible with the prosecutions duty of fairness for a different position to be taken thereafter as to the manner in which Mr Donnellys injuries were caused unless there was fresh evidence that warranted a different view.\nIn this instance there was no such evidence.\nWeatherup J was therefore perfectly right when he said that something had gone seriously wrong with the conduct of the trial.\nCrown counsel ought to have been aware of the DPPs position on this and, if he had been, cross examination of Mr Donnelly challenging his account of how he sustained his injuries would not have taken place.\nAlthough Weatherup J concluded that the circumstances of the reversal of the appellants convictions were capable of satisfying the test that Lord Bingham had propounded for eligibility for compensation under section 133, he felt bound to follow more recent authority in England and Wales, particularly R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 1 Cr App R 36 which had expressed a clear preference for the test advocated by Lord Steyn in Mullen.\nThe appellants appeal against the decision of Weatherup J was dismissed by the Court of Appeal.\nThat court did not share Weatherup Js view that the circumstances revealed by the judgment which had quashed the appellants convictions were sufficient to satisfy Lord Binghams formulation of the correct test.\nThe conclusions of the court are contained in para 15 of the judgment of the Lord Chief Justice: In the second category of cases it is necessary to demonstrate that something has gone seriously wrong in the conduct of the trial resulting in the conviction of someone who should not have been convicted.\nIn this case the new facts upon which the appellants rely raise issues about the credibility of one police officer and one other witness.\nIt is not possible to come to any conclusion as to whether the new facts would have led to a different outcome in respect of the assessment of either witness.\nThe new evidence was sufficient to give rise to unease about the safety of the conviction but this is a case in which at its height it can only be said that the appellants might not have been convicted.\nSuch a case lies outside either of the categories identified by Lord Bingham.\nThat is also the reasoning of the decision in Boyles Application [2008] NICA 35 by which we are bound.\nShould the appellants have been acquitted?\nIn re Boyles Application [2008] NICA 35 was an appeal in which the appellant claimed entitlement to compensation under section 133 and the ex gratia scheme which was then still extant.\nSome years after the appellants conviction a note taken of one of a series of interviews had been shown by electrostatic detection apparatus (ESDA) testing techniques to have been made at a time other than that claimed by police officers.\nAnother version of the note for that single interview existed, contrary to the denials of the interviewing police officers.\nThe differences were not substantial and nothing which was inculpatory of the appellant had been written in to the version of the notes that had been presented to the court and which the police officers claimed was the only note of the interview.\nNevertheless, because the police officers had firmly denied that a different version had been prepared and because that had been shown to be incorrect, it was considered that doubt had been thrown on their credibility and the appellants conviction could not be regarded as safe.\nIn dismissing Mr Boyles appeal against the finding that he was not eligible to apply for compensation under section 133, the Court of Appeal said at para 22: it is impossible for the appellant to assert that he should not have been convicted.\nOne can certainly say that the police officers should not have given the evidence that they did.\nOne may even say with confidence that the trial judge is bound to have taken an entirely different view of their credibility from the extremely favourable impression that he appears to have formed.\nBut it is impossible to conclude that the appellant would not have been found guilty (much less that he should have been acquitted) if evidence of the other version of the interview notes had been given.\nThe circumstances in the Boyle case were obviously and markedly different from those that arise in the present appeals of Mr McCartney and Mr MacDermott.\nThe most that could be said in Boyle was that the newly discovered fact (that there was a different version of the notes of a single interview) cast doubt on the credibility of the police officers who asserted to the contrary.\nBy contrast, although the Court of Appeal which quashed Mr McCartneys and Mr MacDermotts convictions expressed itself in a restrained fashion, there is simply no doubt that these appellants ought not to have been convicted.\nFor the reasons that I have given, it was not open to prosecuting counsel to challenge Mr Donnellys account that he had been assaulted by police officers.\nI am satisfied that he would not have done so if he had been aware of the true circumstances in which the decision not to continue with the prosecution of Mr Donnelly had been taken.\nMr Donnellys evidence that he had been assaulted would therefore have been received without challenge.\nThat evidence, if uncontradicted, is bound to have changed the entire course of the trial.\nIt could not have done less than establish the reasonable possibility that Detective Constable French had assaulted Mr Donnelly and that he had recorded a statement purporting to come from him but which was not given at Mr Donnellys dictation.\nWhen those inevitable findings were brought to bear on Mr MacDermotts case they could not have done other than create a doubt as to the voluntariness of his admissions.\nSection 8(2) of the Northern Ireland (Emergency Provisions) Act 1978 was in force at the date of the trial.\nIt provided: If, in any such proceedings [ie criminal proceedings for a scheduled offence] where the prosecution proposes to give in evidence a statement made by the accused, prima facie evidence is adduced that the accused was subjected to torture or to inhuman or degrading treatment in order to induce him to make the statement, the court shall, unless the prosecution satisfies it that the statement was not so obtained (a) exclude the statement, or (b) if the statement has been received in evidence, either (i) continue the trial disregarding the statement; or (ii) direct that the trial shall be restarted before a differently constituted court (before which the statement in question shall be inadmissible).\nThe trial judge had reminded himself of this provision at the beginning of his judgment.\nHe said that the appellants had raised a prima facie case as required by the section and that, in those circumstances, the burden passes to the Crown to satisfy me beyond reasonable doubt that the statement, whose admissibility is challenged, was not obtained by ill treatment.\nIn other words, a prima facie case of ill treatment having been established the burden rests squarely on the Crown of satisfying me (and by that I mean satisfying me beyond reasonable doubt) that the accused was not ill treated.\nIn making these observations the trial judge was reflecting the well known statement of the law in this area provided by Lowry LCJ in R v Hetherington [1975] NI 164, 168 where he said: It is not for the defence to prove but for the prosecution to disprove beyond reasonable doubt in relation to each accused that he was not subject even to any degrading treatment in order to induce him to make a statement on which the Crown rely, the decision under section 6(2) [the precursor of section 8(2) of the 1978 Act] must be based solely on how the statement is proved to have been obtained and not on whether it was true.\nThe prosecution would therefore have had to prove beyond reasonable doubt that the statements made by Mr McCartney and Mr MacDermott had not been obtained by any degrading treatment whatever.\nIt can now be seen that this would have been an impossible task had the full facts and circumstances come to light.\nA person detained at the same time as Mr McCartney had been assaulted while in Castlereagh Police Office during the same period; the police officers who carried out the assaults on Mr Donnelly were part of the group of officers who were investigating the murders with which Mr McCartney was charged; one of the officers who had assaulted Mr Donnelly had been accused by Mr MacDermott of assaulting him; and the other officer who, according to Mr MacDermott, had assaulted him, had also interviewed Mr McCartney and had been accused of assault by him.\nQuite apart from these considerations, two further factors of substantial importance must be taken into account.\nFirstly, by the time that Mr McCartney and Mr MacDermott stood trial, Mr Barclays conviction, based on statements of admission allegedly obtained by Detective Constable French and Detective Constable Newell on interview, had been quashed.\nIf the trial judge had been aware that this conviction had been quashed because the possibility that Mr Barclay had been assaulted by these two officers could not be excluded (which was the necessary implication from the finding of the Court of Appeal) he could not have concluded with the same firmness that he did that Detective Constable French had not engaged in ill treatment of Mr MacDermott.\nSecondly, once it was established, even as a reasonable possibility, that Mr Donnelly had been assaulted, the judges view of Dr Hendrons evidence could not have remained as he had expressed it in his judgment.\nDr Hendron had stated unequivocally that he was convinced that Mr McCartney, Mr Donnelly and Mr Brady had been assaulted.\nThe judge found that this opinion was sincerely held but that Dr Hendrons evidence was coloured by his conviction that the men had been attacked and on that account his testimony lacked professional objectivity.\nIf it had become known that the doctors view about Mr Donnelly was shared by an assistant director and a senior assistant director in the department of the Director of Public Prosecutions, it is not likely that his opinion would have been dismissed in the manner that it was by the trial judge.\nThe combined effect of all these factors makes it inevitable, in my opinion, that, had the judge been fully acquainted with all the material information about the reasons for the decision not to continue the prosecution of Mr Donnelly and the circumstances of the quashing of Mr Barclays convictions, he would not have convicted the appellants.\nShould the appellants have been prosecuted?\nNot only should the appellants have been acquitted, in my opinion they should not have been put to their trial.\nIf prosecuting counsel had become aware of the shadow that necessarily fell on Detective Constable Frenchs evidence by the decision not to proceed with the prosecution of Mr Donnelly and by the quashing of Mr Barclays conviction, it is, in my view, inevitable that he could not have proffered this officer as a witness of truth on the issue of whether Mr MacDermott had been ill treated.\nMoreover, the conclusion of Mr Junkin and Mr McLaughlin that Mr Donnelly had been assaulted cast significant doubt on the evidence of the entire interviewing team.\nAlthough Mr McLaughlin considered that there was insufficient evidence to charge Detective Constables French and Newell, he was of the clear view that Mr Donnelly had been physically attacked by some police officers.\nIt was therefore the case that the office of the Director of Public Prosecutions had determined that some officers within the team that conducted interviews of Mr Donnelly, Mr Brady and Mr McCartney had been guilty of assault on Mr Donnelly.\nMr Brady alleged that he had been assaulted in much the same manner as Mr Donnelly had been.\nDespite this, he had not made admissions.\nHe had no personal advantage to gain by fabricating his account of the attacks on him.\nThe trial judge found, however, that he was prepared to do so in order to help a friend (Mr McCartney) and because of his animus towards the police.\nI cannot believe that the judge would have reached that view if he had known that the DPP had concluded that Mr Donnelly had been assaulted and that Mr Barclays conviction had been quashed because of the reasonable possibility that two members of the same interviewing team had also assaulted him.\nLikewise, I cannot believe that if experienced Crown counsel had been aware of these matters he would have done other than advise that the prosecution of Mr McCartney and Mr MacDermott should not proceed.\nThat prosecution was only viable if there was a realistic prospect of the Crown establishing beyond reasonable doubt that Mr McCartney and Mr MacDermott had not been ill treated.\nAny objective assessment of all the circumstances as they are now known was bound to have resulted in the conclusion that there was no such prospect.\nIn reaching this view I intend no criticism whatever of counsel who, for the reasons that I have given, must have been wholly unaware of why it had been decided not to prosecute Mr Donnelly.\nHe must also have been ignorant of the fact that Mr Barclays conviction had been quashed and of the circumstances in which that had occurred.\nA fortiori, no criticism of the trial judge is warranted.\nOn the contrary, he made what in retrospect was an astute and pertinent inquiry as to why Mr Donnelly had not been prosecuted and was not given the information which, if it had been provided, would certainly have led to a completely different outcome.\nWhile it might be said that the assistant director and the senior assistant director in the department of the Director of Public Prosecutions ought to have been alive to the impact that their conclusion about the assaults on Mr Donnelly was bound to have on the propriety of proceeding with the prosecution of Mr McCartney and Mr MacDermott, there is no reason to suppose that they were aware of the quashing of Mr Barclays convictions or of the evidence of Mr Brady.\nNeither is discussed in the exchange of memoranda between Mr Junkin and Mr McLaughlin.\nThese are matters which have played a significant part in leading me to the conclusion that the prosecution of Mr McCartney and Mr MacDermott ought not to have taken place.\nIn deciding that the appellants ought not to have been convicted and, indeed, ought not to have been required to stand trial, I have gone beyond the findings of the Court of Appeal which quashed their convictions.\nOn one reading, the letter of 16 May 2008 sent on behalf of the Secretary of State suggests that the judgment of the Court of Appeal provides the exclusive basis on which the Secretary of State decides if the conditions for statutory compensation are fulfilled.\nAnd much was made in the course of argument of an answer given by Earl Ferrers in the course of the passage through the House of Lords of the Bill which ultimately became the 1988 Act.\nEarl Ferrers answer was to the effect that the Secretary of State would regard the Court of Appeals view as to whether there had been a miscarriage of justice as binding.\nIn my opinion, the decision as to whether the statutory conditions have been fulfilled is one for the Secretary of State to make and he may not relinquish that decision to the Court of Appeal.\nTrue, of course, it is that the material on which the decision is taken will derive in most cases from the judgment of the Court of Appeal.\nTrue it also is that it would not be appropriate for the Secretary of State to depart from the reasoning that underlies that judgment unless for good reason it is shown to be erroneous but the Secretary of State must make his own decision based on all relevant information touching on the question whether there has been a miscarriage of justice.\nIn the present appeals, Weatherup J considered that it was open to him to examine the question whether there had been a miscarriage of justice not merely by reference to what the Court of Appeal had said but by taking into account the circumstances revealed by its judgment.\nAt para 20 of his judgment he said: Counsel for the respondent contends that there is nothing in the judgment of the Court of Appeal indicating that the applicants should not have been convicted.\nIt should not be expected that a Court of Appeal will state in terms that an appellant should not have been convicted.\nThe approach of the Court of Appeal on an appeal against conviction is concerned with whether that conviction is unsafe.\nIn taking the cue from the Court of Appeal in determining a successful appellants entitlement to compensation it is necessary to have regard to the circumstances set out in the judgment of the Court of Appeal as well as the wording adopted in the judgment in relation to the position of the appellant.\nI agree with these observations and they appear, implicitly at least, to have been approved by the Court of Appeal.\nAs Weatherup J stated, the task of the Court of Appeal is not to decide whether the appellant should have been convicted, much less to determine whether the appellant is innocent.\nIt is to decide whether the conviction is safe.\nThe decision whether there has been a miscarriage of justice (whatever meaning is to be given to that phrase) of necessity takes place on a different basis and on foot of consideration of issues beyond those which sound only on whether the conviction is safe.\nSection 133\nAs Lord Hope has said, it has been possible until now for courts to avoid a final resolution of the question of what is required in order to establish entitlement to compensation under section 133 of the 1988 Act.\nMust a person whose conviction has been reversed as the result of a new or newly discovered fact show that he was innocent (Lord Steyns view in Mullen) or can eligibility arise in somewhat wider circumstances (Lord Binghams provisional opinion)? These appeals require this court to confront that debate and to resolve that conflict.\nFor the reasons given by Lord Hope and Lord Clarke, with which I agree, the analysis of Lord Bingham in Mullen as to the possible scope of section 133 is to be preferred to that of Lord Steyn.\nI cannot accept that the section imposes a requirement to prove innocence.\nIn the first place, not only does such a requirement involve an exercise that is alien to our system of criminal justice, that system of justice does not provide a forum in which assertion of innocence may be advanced.\nAn appeal against conviction heard by the Court of Appeal Criminal Division is statutorily required to focus on the question whether the conviction under challenge is safe.\nIn a number of cases, evidence may emerge which conclusively demonstrates that the appellant was wholly innocent of the crime of which he or she was convicted but that will inevitably be incidental to the primary purpose of the appeal.\nThe Court of Appeal has no function or power to make a pronouncement of innocence.\nIt may observe that the effect of the material considered in the course of the appeal is demonstrative of innocence but it has no statutory function to make a finding to that effect: R v McIlkenny (1991) 93 Cr App R 287.\nIt is therefore not surprising that in New Zealand when the Law Commission proposed that a prerequisite of establishing entitlement to compensation for a wrongful conviction was proof of innocence, it was careful to recommend that a tribunal be set up in which that issue could be frankly addressed and confidently determined: see New Zealand Law Commission Report No 49 (1988) Compensating the Wrongly Convicted paras 124 127 and 136 137.\nIn Canada in 1988 Federal\/Provincial Guidelines on Compensation for Wrongly Convicted and Imprisoned Persons likewise required that there be proof of innocence in order to qualify under the ex gratia scheme operated there.\nIn the case of Dumont v Canada (Communication 1467\/2006, 21 May 2010) the UN Human Rights Committee held that the failure of the state authorities to establish a procedure for conducting an investigation to examine whether the applicant was innocent and to possibly identify the real perpetrator constituted a breach of article 2(3) of ICCPR read in conjunction with article 14(6).\nArticle 2(3)(a) requires that state authorities provide an effective remedy in the form of access to a procedure in which adequate compensation can be claimed.\nThe respondents in this case rely on the experience in New Zealand and Canada in support of their argument that a miscarriage of justice within the meaning of article 14(6) of the Covenant occurs only when the convicted person is in fact innocent of the offence with which he is charged.\nThe Human Rights Committee in Dumont, while recording the states submission to that effect, reached its decision without adjudicating on it.\nThe New Zealand Law Commissions report does not suggest that article 14(6) must be given that meaning.\nOn the contrary para 71 of the report states that article 14(6) while an important normative statement by the international community and a reference point for domestic compensation schemes was not relied on as a model for the Commissions recommended scheme.\nThere was no unanimity as to the meaning to be given to miscarriage of justice among the delegates who were involved in the negotiations which led to the adoption of ICCPR: see para 9(2) of Lord Binghams speech in Mullen.\nAs he observed, it is possible that the expression commended itself because of the latitude in interpretation which it offered.\nOr, as the New Zealand Law Commission put it, it is a normative statement which provides a general template for domestic provisions in the subscribing states which can vary as to content.\nCertainly, while the travaux prparatoires may be regarded as neutral on the meaning of the expression, it is unquestionably clear from these that every proposal that its ambit should be confined to compensating those whose innocence was established was roundly defeated.\nAgainst that background, it would be a surprising conclusion that article 14(6) had the very effect that a majority of delegates clearly did not intend.\nThe twin theses on which Lord Steyn relied to support his conclusion that proof of innocence was required in order to establish entitlement to compensation under section 133 have been subject to scrupulous examination in paras 93 and 94 of Lord Hopes judgment.\nFor the reasons that appear there, with which I fully agree, these arguments can no longer be regarded as sound.\nI also agree with Lord Clarkes reasons for rejecting Lord Steyns formulation of the test.\nAs Lord Clarke has pointed out, if Parliament had intended that a proof of innocence test was to be preferred, that could surely have been easily prescribed.\nThe debate as to whether such a test was appropriate had been extensively referred to in the travaux prparatoires and it is to be presumed that Parliament was aware of this when it came to enact section 133.\nConfining the application of the section to those who could show that they were innocent was, in any event, a perfectly obvious option.\nThe failure to articulate that test in the legislation can only be explained on the basis that Parliament decided not to choose that option.\nThis conclusion is fortified by the consideration that the expression miscarriage of justice, although its meaning may vary according to context, is a very familiar one in our system of law.\nIn no other context has it been used to connote proof of innocence.\nI am therefore satisfied that proof of innocence cannot be the criterion on which entitlement to compensation under section 133 is to be determined.\nRejection of this hypothesis brings with it the need to determine how miscarriage of justice is to be interpreted.\nAs Lord Hope has said, a fresh analysis is required and for the reasons that he gives the answer is not necessarily provided by the speech of Lord Bingham in Mullen.\nThe use of the word conclusively in article 14(6) of ICCPR and the expression beyond reasonable doubt lends support to the view that the section does not contemplate that all whose convictions have been quashed and who satisfy the other requirements of the section will be entitled to compensation.\nOn this there is no dispute between the parties to these appeals.\nLord Hope has proposed that the section should be interpreted as targeting those cases where, as a consequence of the state of affairs revealed by the new or newly discovered fact, it can be concluded that no prosecution ought to have taken place.\nLord Clarke prefers to define the category of eligibility as extending to those cases where the new or newly discovered fact leads inexorably to the conclusion that no jury, properly directed, would have convicted.\nAs a matter of practical experience, there may be little difference as to which of these tests should be applied.\nBut it is important that, if possible, clear guidance be given by this court as to the circumstances in which the section should be held to apply.\nLord Hope has pointed out that requiring the Secretary of State to apply a test which refers to what a reasonable jury would do is not appropriate since this is a matter best left to the courts.\nLord Clarke, on the other hand, suggests that a test which requires the Secretary of State to focus on whether the claimant should never have been prosecuted runs the risk of the inquiry wrongly focusing on the propriety of the decision to prosecute by reference to the circumstances that obtained when the decision was taken.\nThere is substance in both concerns.\nI believe that a simple test can cater for these concerns and will also faithfully reflect the intention of article 14 (6) and section 133 that only truly deserving applicants should be included in the compensatory scheme.\nThe test which I would have proposed was: whether, on the facts as they now stand revealed, it can be concluded beyond reasonable doubt that the applicant should not have been convicted.\nLord Phillips has suggested that the test should be worded in the following way: the new fact shows that a miscarriage of justice has occurred when it so undermines the evidence against the defendant that no conviction could possibly be based upon it.\nThis appears to me to achieve the same result as the test which I would have proposed and I am therefore quite content to subscribe to his formulation.\nThe proper application of either test ties entitlement to compensation firmly to the true factual situation.\nProcedural deficiencies that led to irregularities in the trial or errors in the investigation of offences will not suffice to establish entitlement to compensation.\nA claimant for compensation will not need to prove that he was innocent of the crime but he will have to show that, on the basis of the facts as they are now known, he should not have been convicted or that conviction could not possibly be based on those facts.\nOf course, if innocence can be proved, the test, on either formulation, will be amply satisfied.\nThe adoption of a single, simple test dispenses with the need to consider possible categories of entitlement which, I believe, tends more to confuse than to enlighten.\nAs it happens, although it is possible to construct from Lord Binghams observations a fourth category of case beyond the three that were identified by Toulson LJ in giving permission to appeal in the Adams case, I do not believe that Lord Bingham intended that this be considered a freestanding category.\nNew or newly discovered fact\nI find myself in complete agreement with the reasoning of Dyson LJ on this issue in the judgment of the Court of Appeal in Adams [2010] QB 460, paras 14 16 and with what Lord Phillips has had to say on the matter in paras 59 63 of his judgment.\nThe newly discovered limb of the requirement clearly, to my mind, connotes discovery by the party who prays it in aid to demonstrate that he should not have been convicted.\nIt would be wholly anomalous, as Dyson LJ has pointed out, that a person whose innocence can be conclusively proved, should be deprived of compensation simply because his lawyers failed to communicate the vital information or failed to grasp its significance.\nDoes denial of compensation infringe the presumption of innocence?\nLord Hope has dealt comprehensively with the arguments made by the appellants on this issue in paras 108 to 111 of his judgment.\nI agree with his reasons for rejecting the arguments.\nThere is nothing further that I could usefully say on the topic.\nConclusions\nI would allow the appeals of Mr McCartney and Mr MacDermott.\nFor the reasons that I have given, I am satisfied that, on the facts as they are now known, they should not have been convicted.\nAs it happens, I am also satisfied that they ought not to have been prosecuted and their cases therefore fulfil the requirement that Lord Hope has formulated.\nClearly they also satisfy the test preferred by Lord Clarke of being cases in which no reasonable jury, properly directed, could convict.\nLike Lord Phillips and Lord Hope I consider that both are entitled to be compensated under section 133.\nAlthough I would hold that the material on which Mr Adams relied constituted a newly discovered fact, I do not consider that he has demonstrated that, on the facts as they now stand revealed, it can be concluded beyond reasonable doubt that he should not have been convicted.\nI would dismiss his appeal.\nLORD CLARKE\nIntroduction\nI gratefully adopt Lord Hopes description of the background to the introduction of the statutory right to compensation for miscarriages for justice in section 133 of the Criminal Justice Act 1988 in the light of article 14(6) of the ICCPR.\nHe has set out the relevant provisions of section 133 and article 14(6).\nI shall not therefore repeat them.\nThe principal issues for decision in this appeal are the meaning of the expressions miscarriage of justice and new or newly discovered fact in those provisions.\nMiscarriage of justice\nThe meaning of this expression has been considered in a number of cases as described by Lord Hope.\nI agree with him that it is helpful to consider its meaning in the present context by reference to the categories identified by Toulson LJ when giving permission to appeal to the Court of Appeal in the Adams appeal which are described by Dyson LJ [2010] QB 460, at para 19 of his judgment which is quoted in full by Lord Hope.\nDyson LJ described the categories of case thus: A category 1 case is where the court is sure that the defendant is innocent of the crime of which he has been convicted.\nAn obvious example is where DNA evidence, not obtainable at the time of trial, shows beyond doubt that the defendant was not guilty of the offence.\nA category 2 case is where the fresh evidence shows that he was wrongly convicted in the sense that, had the fresh evidence been available at the trial, no reasonable jury could properly have convicted.\nAn example is where the prosecution case rested entirely on the evidence of a witness who was put forward as a witness of truth and fresh evidence undermines the creditworthiness of that witness, so that no fair minded jury could properly have convicted on the evidence of that witness.\nIt does not follow in a category 2 case that the defendant was innocent.\nA category 3 case is where the fresh evidence is such that the conviction cannot be regarded as safe, but the court cannot say that no fair minded jury could properly convict if there were to be a trial which included the fresh evidence.\nThe court concludes that a fair minded jury might convict or it might acquit.\nThere is a fourth category of case to which Lord Bingham referred in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1.\nThis is where a conviction is quashed because something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who should not have been convicted.\nThe respondents say that there is only a miscarriage of justice within the meaning of article 14(6) and section 133 in a category 1 case.\nThey say that the provision that the new or newly discovered fact must show conclusively (in article 14(6)) or beyond reasonable doubt (in section 133(1)) that there has been a miscarriage of justice points to the conclusion that it is only where the claimant can prove his innocence that there has been a miscarriage of justice.\nThe appellants say, by contrast, that the words conclusively and beyond reasonable doubt do not inform the meaning of miscarriage of justice but only indicate the standard of proving the miscarriage of justice, once its meaning has been established.\nThey say that if the Court of Appeal allows an appeal in any of the three categories of case there will have been a miscarriage of justice, unless the claimant is convicted at a retrial.\nAnother possibility is, of course, that section 133 applies in a category 1 and a category 2 case, but not to a category 3 case.\nCategory 1 proof of innocence\nI turn first to the question whether the expression miscarriage of justice is confined to the case where the claimant can prove beyond reasonable doubt that he was innocent.\nThis was of course the view espoused by Lord Steyn in Mullen.\nLord Bingham expressed a different view in that case, albeit without reaching a firm conclusion, and Lord Hope has taken a different view in this case.\nI agree with him.\nTo my mind there is nothing in either the language or the context to limit the meaning of miscarriage of justice to the case where the claimant can prove that he was innocent.\nIf that is so, it is not for the court to limit the meaning because its own view is that it would be desirable to do so as a matter of policy.\nSuch matters of policy are for Parliament and not for the courts.\nIt is common ground that the expression is capable of a broader meaning than that espoused by Lord Steyn.\nFor reasons which I explain below, to my mind the natural meaning is broader, but I will begin with the context because I appreciate that, as has famously been said, context is everything.\nThe context of section 133 is of course article 14(6).\nBoth Lord Steyn and Lord Bingham considered the travaux prparatoires in Mullen.\nIn para 9(2) of his speech Lord Bingham said this: The House was referred to the travaux prparatoires of the negotiations which culminated in adoption of the ICCPR.\nIt is plain that some delegates contended that compensation should not be paid save to those who were shown to be innocent, and such delegates found no difficulty in expressing this very simple principle.\nBut it is equally plain, as Mr Pleming submitted, that every proposal to that effect was voted down.\nThe travaux disclose no consensus of opinion on the meaning to be given to this expression.\nIt may be that the expression commended itself because of the latitude in interpretation which it offered.\nIt is common ground that the expression miscarriage of justice in article 14(6) and therefore section 133(1) should if possible be given an autonomous meaning.\nAlthough the travaux are far from conclusive, they do seem to me to point the way because, as Lord Bingham put it, every proposal that innocence should be the test was turned down.\nSo, if the expression is to be given an autonomous meaning, it cannot be limited to cases where innocence can be shown.\nIt follows that I do not agree with Lord Steyns view that the travaux do not assist in any way.\nOn the contrary, they assist on the first question in this appeal, namely whether proof of innocence should be the test.\nI agree with Lord Steyn (at para 35) that there is no foundation in the language of article 14(6) and section 133, or by reference to any relevant external aids to construction, for the suggestion that Parliament intended to use the words miscarriage of justice in any wider sense than it bears in article 14(6) and that Parliament intended to give effect to the United Kingdoms international obligations in article 14(6) and no more.\nI would add and no less.\nParliament used the same or almost the same language, so that there is to my mind no warrant for holding that it intended to confer narrower rights to compensation than those afforded by article 14(6).\nAs Lord Hope observes at para 91, Lord Steyn correctly said at para 45 that both article 14(6) and section 133 show that there was no overarching purpose of compensating all who are wrongly convicted.\nThis is demonstrated by the fact that compensation only arises at all in the case of appeals out of time and by the indispensable pre condition that a new or newly discovered fact shows conclusively (or beyond reasonable doubt) that there has been a miscarriage of justice.\nSo, for example, in the case of a recognition that an earlier dismissal of an appeal was wrong, the case falls outside article 14(6).\nThat is so, however palpable the error in the first appellate decision may have been, and however severe the punishment that the victim suffered unjustly.\nAs Lord Steyn put it, those considerations demonstrate that the fundamental right under article 14(6) was unquestionably narrowly circumscribed.\nPara 46 is the only paragraph in which Lord Steyn focuses on the relevant language.\nIn it, as Lord Hope explains at paras 91 and 92, Lord Steyn focused on the language of article 14(6) and section 133, and in particular on the use of conclusively and beyond reasonable doubt respectively.\nHe said that that language filters out cases where it is only established that there may have been a wrongful conviction and cases where it is only probable that there has been a wrongful conviction.\nHe observed that those two categories would include the vast majority of cases where an appeal is allowed out of time.\nHe concluded that those considerations militated against an expansive interpretation of miscarriage of justice and ultimately held that: While accepting that in other contexts a miscarriage of justice is capable of bearing a narrower or wider meaning, the only relevant context points to a narrow interpretation, viz, the case where innocence is demonstrated.\nI accept that the language points to a narrow construction but not that it is restricted to the case where innocence is demonstrated.\nIndeed, to my mind Lord Steyn did not point to any reason why the right to compensation should be so confined.\nThere is nothing in the language or the context to lead to the conclusion that cases in category 2 should be excluded.\nYet the expression miscarriage of justice naturally includes such a case.\nIndeed it seems to me to be the paradigm case.\nA criminal trial is concerned (and concerned only) with the question whether the prosecution has proved beyond reasonable doubt to the satisfaction of the jury that the defendant is guilty of the offence charged.\nIf the new or newly discovered fact shows that, in the light of it, no reasonable jury, properly directed, could have convicted the accused, to my mind his conviction would, in ordinary language, be a miscarriage of justice.\nI see no reason why such a case should not be a miscarriage of justice within the meaning of article 14(6) or section 133(1).\nNone of Lord Steyns reasoning leads to the conclusion that it is not.\nHe himself did not address this possibility.\nIn paras 91 to 95 Lord Hope has given his reasons for disagreeing with Lord Steyn that innocence must be proved.\nI agree with them.\nI would very briefly summarise my own reasons (in addition to those already given) in this way. (a) (b) If Parliament had intended to limit miscarriages of justice to cases where the claimant could prove innocence, it would have been easy to say so.\nAs Lord Bingham put it in Mullen at para 9(2) quoted above, those delegates who wished to limit compensation in that way found no difficulty in expressing this very simple principle.\nIn para 9(1) Lord Bingham noted that when what was to become section 133 was debated in the House of Lords, the minister, Earl Ferrers, was pressed by Lord Hutchinson QC to say whether a miscarriage of justice connoted the innocence of a defendant or the raising of a doubt about his guilt, but the minister said nothing to suggest that compensation would be payable only to the innocent: Hansard (HL Debates), 22 July 1988, cols 1631 1634. (c) Lord Steyns reliance upon the words une erreur judiciaire in the French text of article 14(6) was unsound for the reasons given by Lord Hope at para 93. (d) The five reasons given by Lord Bingham in para 9(4) of Mullen for thinking that reliance upon para 25 of the explanatory report prepared by a committee of experts on human rights with reference to article 3 of the Seventh Protocol was not of the persuasive value which Lord Steyn identified are convincing: see Lord Hope at para 94. (e) Little assistance is to be gained from either the jurisprudence of the United Nations Human Rights Committee or academic opinion. (f) Courts of appeal are not called upon to decide whether defendants are innocent: see Lord Bingham at para 9(6) and Lord Hope at para 95.\nIf, as I believe is the case, Lord Steyns test is too narrow, the question arises what is the correct construction of the expression miscarriage of justice in this context.\nI will consider the possibilities in turn.\nCategory 2 no reasonable jury properly directed could convict\nCategory 2 would of course include category 1, but not vice versa.\nMr Owen QC submitted that cases in this category would involve a miscarriage of justice, although he also sought to include category 3, to which I will return.\nI have already expressed my view that there is nothing in the language or context of article 14(6) or section 133 to exclude category 2 and that the expression naturally includes it.\nAbsent any clear indication in the language or context, it is to my mind permissible to have regard to the approach to it within the United Kingdom.\nIn 1988 the Court of Appeal in England and Wales determined criminal appeals by reference to the unamended section 2(1) of the Criminal Appeal Act 1968.\nThe proviso to that subsection provided that, notwithstanding that the Court of Appeal were of the opinion that the point raised in the appeal might be decided in favour of the appellant, they may dismiss the appeal if they consider that no miscarriage of justice has actually occurred.\nIn R v Secretary of State for the Home Department, Ex p Bateman (1994) 7 Admin LR 175 the Court of Appeal (Sir Thomas Bingham MR, Farquharson and Simon Brown LJJ) dismissed an appeal from an order of the Divisional Court refusing judicial review of a decision refusing the appellant compensation under section 133.\nHe had been convicted of several counts of receiving stolen goods and sentenced to six years imprisonment.\nHe had appealed to the Court of Appeal on the ground that he had been convicted on the basis of evidence in statement form given by witnesses from New Zealand.\nHis appeal failed.\nSome time later his case was referred back to the Court of Appeal under section 17 of the Criminal Appeal Act 1968.\nThis time his appeal succeeded on what was essentially the same ground as that which had failed before and his convictions were quashed.\nIn the Court of Appeal he argued inter alia that the second Court of Appeal must have regarded his conviction as a miscarriage of justice because they would otherwise have applied the proviso.\nSir Thomas Bingham (with whom the other members of the court agreed) said this: Therefore, it follows, he says, that he is a victim of a miscarriage of justice and from that it follows that he is entitled to compensation.\nTo deny him compensation is, he argues, to undermine his acquittal and the presumption of innocence which flows from the fact that his convictions have been quashed.\nI am, for my part, unable to accept that argument, although I hasten to assure Mr Bateman that in doing so I have no intention whatever to undermine the effect of the quashing of his convictions.\nHe is entitled to be treated, for all purposes, as if he had never been convicted.\nNor do I wish to suggest that Mr Bateman is not the victim of what the man in the street would regard as a miscarriage of justice.\nHe has been imprisoned for three and a half years when he should not have been convicted or imprisoned at all on the second decision of the Court of Appeal (Criminal Division).\nThe man in the street would regard that as a miscarriage of justice and so would I.\nBut that is not, in my judgment, the question.\nThe question is whether the miscarriage of justice from which Mr Bateman has suffered is one that has the characteristics which the Act lays down as a pre condition of the statutory right to demand compensation.\nThat, therefore, is the question to which I now turn.\nThe Master of the Rolls then held that there was no new or newly discovered fact, so that Mr Bateman could not satisfy the relevant criteria under section 133.\nThe relevance of the statement quoted above is that it supports the conclusion that the Master of the Rolls accepted that there had been a miscarriage of justice within the meaning of section 133, which in turn supports the conclusion that that expression is not limited to cases in which the claimant can prove his innocence.\nIt is perhaps the forerunner of Lord Binghams approach in Mullen.\nA similar conclusion can be drawn from the terms of section 106, of the Criminal Procedure (Scotland) Act 1995, which sets out the test for criminal appeals in Scotland.\nBy subsection (3) it provides: By an appeal under subsection (1) above a person may bring under review of the High Court any alleged miscarriage of justice, which may include such a miscarriage based on (a) subject to subsections 3A to 3D below, the existence and significance of evidence which was not heard at the original proceedings; and (b) the jurys having returned a verdict which no reasonable jury, properly directed, could have returned.\nIt can thus be seen that a miscarriage of justice for the purposes of a fresh evidence appeal in Scotland includes the case where the jurys verdict is one which no reasonable jury, properly directed, could have returned.\nThat is of course a category 2 case.\nSection 106(3) is thus an example of the expression miscarriage of justice being used in a very similar context to that with which we are concerned.\nIt has been suggested that to include category 2 within the test of miscarriage of justice in section 133 would cause difficulties of application.\nFor my part, I would not accept that suggestion.\nIt is a test used at the end of the prosecution case in countless criminal trials in England and Wales.\nMoreover, it is used in the Court of Appeal in England and Wales.\nWhile it is not the question for decision in an English appeal because the question is now simply whether the conviction is safe, it is plainly relevant when a retrial is sought.\nThe Court of Appeal would not make an order for a retrial if it formed the view that the effect of the new or newly discovered evidence led to the conclusion that no reasonable jury, properly directed, could convict.\nMoreover, so far as I am aware, this test has caused no difficulty in criminal appeals in Scotland.\nIt is a test which is familiar to the criminal trial and appeal process, which the proposed test of innocence is not.\nAs Lord Hope has observed at para 95, in R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1 at para 40(iii) Hughes LJ said that cases where the innocence of the convicted defendant is genuinely demonstrated beyond reasonable doubt by the new or newly discovered fact the Court of Appeal will, in virtually every case, make that plain.\nHowever, that may not be the case and, as Lord Hope says, the Court of Appeal is not bound to say whether or not a defendant is innocent.\nIn this regard there is authority for the proposition that the Court of Appeal is neither obliged nor entitled to say whether an appellant is innocent: see R v McIlkenny (1991) 93 Cr App R 287 at 310 311.\nWhether that is correct or not, I agree with Lord Hope that, to put it no higher, it is at least questionable whether it can be right to restrict the entitlement to compensation to cases where the establishment of innocence is apparent from the Court of Appeals judgment.\nIt is of interest in the context of this debate to note that it is common ground that it was only after the decision in Mullen that Secretaries of State have applied an innocence test and that they do not do so in Scotland even now.\nIt was suggested in argument that it is not appropriate for the Secretary of State, and not a court, to make judgments of this kind.\nHowever, section 133(3) expressly provides that the question whether there is a right to compensation shall be determined by the Secretary of State.\nNobody has suggested that it is not appropriate for the Secretary of State to decide whether the claimant has proved that the new or newly discovered fact shows that he is innocent.\nIt does not seem to me to be any less appropriate for the Secretary of State to decide whether he has proved that it shows that no reasonable jury could have convicted him.\nIn reaching his or her conclusion the Secretary of State is of course bound to have regard to what the Court of Appeal which reverses the conviction has said.\nIn In re McFarland [2004] UKHL 17, [2004] 1 WLR 1289 Lord Bingham said at para 16, albeit in the context of a claim under the ex gratia scheme, that the Secretary of State must properly be guided by the judgment of the Court of Appeal.\nHowever, it seems to me that it is for the Secretary of State to have regard to all relevant material when deciding whether the claimant has established beyond reasonable doubt that, in the light of the new or newly discovered fact, no reasonable jury, properly directed, could have convicted him.\nI see no reason why the Secretary of State could not decide that question, whether on the grounds of innocence or otherwise.\nAs I see it, the matter has to be tested as at the date of the reversal, having regard both to the evidence that was available at the trial and to the new or newly discovered facts.\nI would include in the evidence available at the trial, all such evidence, not just that adduced on behalf of the prosecution, but also that adduced during the defence case.\nI would therefore include admissions made by the defendant in cross examination in a case in which the new evidence showed that the case should have been stopped.\nThe question is whether, on that material, he had a case to answer or, put another way, whether a reasonable jury properly directed could have convicted him.\nIf he proves beyond reasonable doubt that the answer to those questions is no, he is in my opinion entitled to compensation under section 133 on the basis that there has been a miscarriage of justice.\nI entirely accept that the cases in which compensation can be claimed are limited by the necessity to satisfy the criteria in the section and by the need to show beyond reasonable doubt that the new or newly discovered fact demonstrates, in the light of the other material before the court that no reasonable jury, properly directed, could have convicted him.\nThe Secretary of State would of course have to be satisfied that the alleged fact was indeed a fact.\nI should add by way of postscript that, as I see it, category 2 potentially includes a case where the new or newly discovered fact is such that, if it had been known at the trial, the trial judge would have stopped the trial on the ground of abuse of process.\nIf the Court of Appeal concluded that a new trial could not properly be ordered on the basis that it was not possible to cure the abuse, so that no reasonable jury, properly directed, could convict, there would, in my opinion have been a miscarriage of justice within section 133.\nIt seems to me that this must be within the kind of miscarriage of justice which Lord Bingham had in mind in Mullen, namely where a conviction is quashed because something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who certainly should not have been convicted.\nSince Mullen, some doubt has been expressed as to whether the basis upon which it was decided is correct.\nSee, for example, R (Siddall) v Secretary of State for Justice [2009] EWHC 482 (Admin) per Leveson LJ at paras 47 48.\nThe basis on which it was decided by the majority, comprising Lord Bingham, Lord Scott, Lord Rodger and Lord Walker was that Mr Mullens conviction had been reversed by the Court of Appeal on the ground that there had been an abuse of executive power and not any failure in the trial process: see per Lord Bingham at para 8, Lord Scott at para 65, Lord Rodger at para 69 and Lord Walker at para 70.\nIn particular, Lord Bingham said that it was for failures in the trial process that the Secretary of State is bound by article 14(6) and section 133 to pay compensation.\nHe distinguished those from abuse of executive power.\nHe did so by reference to R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42 per Lord Griffiths at pp 61 62 and R v Looseley [2001] 1 WLR 2060 at para 40.\nLord Scott said that the Court of Appeal had not reversed the conviction because there had been any failure in the trial process but because, prior to the commencement of the trial process, there had been serious abuse of executive power which had led to the removal of the claimant from Zimbabwe to this country and thus enabled the trial to take place.\nAlthough Leveson LJ observed that this distinction has its difficulties and noted that Lord Steyn said at para 57 that, if that abuse had been disclosed the trial would have been stopped, and in its written submissions Justice suggested that Mullen might now be decided differently on its facts.\nThere is I think scope for argument in the future as to whether there is a class of cases in which the section would not apply, of which Mullen is an example.\nThey are cases in which it has been held that the trial should not be permitted to proceed, not because of anything related to the case against the defendant, but because to permit it would offend against the rule of law or would seriously affect the integrity of the administration of justice.\nIn quashing Mullens conviction Rose LJ, giving the judgment of the Court of Appeal, said at [2000] QB 520, 535 536: This court recognises the immense degree of public revulsion which has, quite properly, attached to the activities of those who have assisted and furthered the violent operations of the IRA and other terrorist organisations.\nIn the discretionary exercise, great weight must therefore be attached to the nature of the offence involved in this case.\nAgainst that, however, the conduct of the security services and police in procuring the unlawful deportation of the defendant in the manner which has been described represents, in the view of this court, a blatant and extremely serious failure to adhere to the rule of law with regard to the production of a defendant for prosecution in the English courts.\nThe need to discourage such conduct on the part of those who are responsible for criminal prosecutions is a matter of public policy to which, as appears from R v Horseferry Road Magistrates' Court, Ex p Bennett [1994] 1 AC 42 and R v Latif [1996] 1 WLR 104, very considerable weight must be attached.\nIt appears to me to be at least arguable that such a case would not fall within section 133.\nNone of the cases before the Court in these appeals is such a case.\nI recognise that Lord Phillips rejects category 2 as a test and that he has suggested an alternative test.\nHowever, section 133 inevitably requires the Secretary of State to consider the effect of the new or newly discovered fact upon the other evidence before the court and thus on the validity of the conviction.\nThis involves the evaluation of the evidence in its legal context.\nIt also expressly requires the Secretary of State to decide whether in the light of all the evidence the claimant has shown beyond reasonable doubt that there has been a miscarriage of justice.\nIn considering all these questions, the Secretary of State can of course always take such advice as is appropriate.\nI remain of the view that category 2 is an appropriate formulation of the test and that the position is or should be as stated above.\nCompensation is only payable where, in the light of the new or newly discovered fact, no reasonable jury, properly directed, could have convicted or, subject perhaps to the point made in para 215 above, where the new or newly discovered fact would have led the judge to stop the case on the ground of abuse in the trial process.\nHowever, I recognise that Lord Phillips suggests replacing the category 2 test with a more robust test.\nIt is that a new fact will show that a miscarriage of justice has occurred when it so undermines the evidence against the defendant that no conviction could possibly be based upon it.\nI have assumed that the second it means the evidence against the defendant.\nTo my mind that test is consistent with the category 2 test identified above because, in such a case, no reasonable jury properly directed, could convict the defendant.\nFor that reason and on that basis, I would accept the proposed test, with which Lord Hope, Baroness Hale and Lord Kerr agree.\nCategory 3 unsafe conviction\nSection 2(1) of the Criminal Appeal Act 1968, as substituted by section 2(1) of the Criminal Appeal Act 1995, provides that the Court of Appeal shall allow an appeal if they think the conviction is unsafe.\nThe proviso in the previous section 2(1) was repealed.\nMr Owen submitted that where a qualifying appeal is allowed on the basis that the claimant has shown beyond reasonable doubt that the conviction was unsafe because of a new or newly discovered fact, it follows that there was a miscarriage of justice within the meaning of section 133.\nIt is certainly possible to construe the expression miscarriage of justice as wide enough to include such a case.\nI do not however think that Parliament can have intended the expression to have such a wide meaning in section 133(1) because it would have been easy for the section to have been drafted in such a way as to include every case where the relevant appeal was allowed on the basis of a new or newly discovered fact.\nMoreover none of the courts which have considered section 133 have suggested that it might have such a wide meaning: see the cases referred to by Lord Hope at para 82.\nIn particular, the formulation of the test by Lord Bingham in Mullen does not encompass every case where the conviction was held to be unsafe on the basis of new evidence.\nHis formulation was that there is a miscarriage of justice where a conviction is quashed because something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who certainly should not have been convicted.\nIt is not possible to say that, merely because a conviction has been quashed because it was unsafe, the appellant should not have been convicted.\nA conviction may be unsafe because the Court of Appeal concludes that, but for the successful ground of appeal, the jury might not have convicted.\nIndeed, this is by far the most common case in which an appeal is allowed.\nIt is a category 3 case in which, as Dyson LJ put it in the passage quoted above, a fair minded jury might convict or might acquit.\nIn such a case I do not think that one can say as a matter of course that the defendant should not have been convicted.\nIt seems to me that it is only in a category 2 case (which of course includes a category 1 case) that it can be said that a person should not have been convicted.\nIt can be so held in such a case because it follows from the conclusion that no reasonable jury, properly directed, could have convicted the defendant that he should not have been convicted.\nAny lesser test is to my mind too uncertain and would not satisfy the statutory test that, in order to be entitled to compensation, the claimant must prove beyond reasonable doubt that there has been a miscarriage of justice.\nIf he might have been convicted by a jury on all the evidence including the new or newly discovered fact, he cannot show for sure that there has been a miscarriage of justice within section 133(1).\nRetrial\nSection 133(5A) was not part of section 133 when Mullen was decided.\nIt makes it clear that, where the claimant succeeds on appeal but is convicted at a retrial, he is not entitled to compensation because his conviction has not been reversed.\nIf his appeal succeeds and the Court of Appeal orders a retrial, but the prosecution decides not to proceed with the retrial, the conviction is treated a reversed when it so indicates.\nIn these circumstances, the position is as described above.\nIf a retrial takes place and the claimant is acquitted of all offences at a retrial, there is scope for debate as to the position.\nBy subsection (5A) the conviction is treated as reversed when he is so acquitted.\nIt is not necessary to decide this question in this appeal but it is my provisional view that the same approach as described above would apply.\nThus, in order to be entitled to compensation, he would have to prove beyond reasonable doubt that on the basis of the new or newly discovered fact no reasonable jury would have convicted him.\nNew or newly discovered fact\nThe question is what is meant by a new or newly discovered fact.\nIn particular the question is what is meant by a newly discovered fact.\nMr Tam QC submitted that a fact which was known to the prosecution and knowable to the defence because it was available to them, but which they did not know because they did not take the steps they should have taken to examine the evidence was not a newly discovered fact.\nI would not accept that submission.\nIf the fact was not in fact discovered at or before the trial or at an in time appeal but was discovered thereafter, it follows that it was a newly discovered fact.\nThe question is whether it was discovered earlier, not whether it was discoverable earlier.\nIn my opinion the fact that it was discovered by the prosecution before the appeal is irrelevant.\nIn neither of the appeals before the Supreme Court were the relevant facts discovered by the defendants or their lawyers at or before the trial or the in time appeal.\nIt follows that they were newly discovered facts.\nThe fact that in the Adams case they were discoverable by the defendants lawyers is irrelevant.\nAs I see it, therefore, on the facts of these appeals this part of the test is satisfied.\nHowever, there was much debate as to whether it is possible for a fact to be a newly discovered fact if it was known to the defendants lawyers.\nIn my opinion it is.\nSection 133(1) is subject to the proviso unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted.\nThe proviso does not apply if the non disclosure of the fact was attributable to his lawyers.\nIt could have done so.\nAs Dyson LJ explained at paras 14 16 of his judgment, there is no mention of the convicted persons legal advisers in article 14(6) or section 133, whereas article 14(3) does refer to legal advisers.\nMoreover, there is no suggestion that the person convicted in section 133(1) includes his lawyers.\nIn my opinion the Court of Appeal correctly held that knowledge of the fact by the defendants lawyers would not prevent it being a newly discovered fact.\nI note in this regard that in a case where the fact was known to the defendants lawyers and not used at the trial, the failure to use it would be very relevant to the question whether the evidence of the fact would be admissible under section 23 of the Criminal Appeal Act 1968.\nIt might well be held that in the light of the fact that the lawyers failed to deploy it, it was not necessary or expedient in the interests of justice to admit it on an appeal.\nIn that event the appeal would not be allowed or the conviction reversed on the basis of it.\nThe remaining question is whether it is possible for a fact to be a newly discovered fact if it was known to the defendant himself at trial or at an in time appeal.\nThe Court of Appeal held that it was, for the reasons given by Dyson LJ at paras 14 to 18.\nI agree.\nSection 133(1) contains the proviso unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted.\nThis proviso would not be necessary if the question whether evidence was new or newly discovered were tested by reference to the knowledge of the convicted person himself.\nThe proviso seems to me to assume that a fact may be newly discovered even though it is known to the defendant at the relevant time.\nOtherwise it would have very little effect because it would only apply where the defendant did not know the fact but its non disclosure was attributable to him.\nSuch a situation is perhaps theoretically possible but the natural meaning of the proviso is that it covers the case where the defendant is aware of the fact at the relevant time but does not deploy it either personally or through his lawyers.\nSo understood, the proviso seems to me to point to the conclusion that a fact may be a newly discovered fact even if it was known to the defendant himself at trial or at an in time appeal.\nFor these reasons I agree with Lord Hopes conclusion at para 107 and Lord Phillips conclusion at para 62 that the relevant knowledge is that of the trial court, but do not agree with Lord Hopes conclusion, also at para 107, that material disclosed to the defence by the time of the trial cannot be said to have been newly discovered when it is taken into account at the stage of the out of time appeal.\nFor the reasons given earlier, it is my view that material that was not discovered either by the defendant or his lawyers but was discovered only after the in time appeal was newly discovered on the simple basis that, whether or not it ought to have been discovered, it was not in fact discovered.\nThat was the position in both the Adams appeal and the Northern Irish appeals.\nArticle 6(2) of the European Convention of Human Rights\nOther members of the Court have considered the issues under this head in some detail.\nThe European Court of Human Rights (ECtHR) has applied article 6(2) in cases which are not covered by its language.\nFor my part, I do not think that this is a case in which it is necessary or would be appropriate to analyse that jurisprudence in detail.\nI will only say that I am not at present persuaded that article 14(6) and section 133 are a form of lex specialis to which article 6(2) can never be relevant.\nFor present purposes I shall simply assume that it is in principle possible for article 6(2) to apply to proceedings under section 133.\nI can see that it is inappropriate, to put it no higher, to impute criminal liability to a person who has been acquitted.\nIn each of the cases in which a claim for compensation arises under section 133(1) the claimants conviction has been reversed by the Court of Appeal in an out of time appeal.\nSection 2(3) of the Criminal Appeal Act 1968 (as substituted in 1995) provides: (3) An order of the Court of Appeal quashing a conviction shall, except when under section 7 below the appellant is ordered to be retried, operate as a direction to the court of trial to enter, instead of the record of conviction, a judgment and verdict of acquittal.\nThus the effect of the reversal of the conviction by the order of the Court of Appeal quashing it, is that the person concerned is formally acquitted.\nIn these circumstances the court hearing and determining a claim for compensation under section 133(1) must not say or do anything inconsistent with the claimants acquittal.\nIf the analysis set out above is adopted, there is no risk of its doing so.\nThe question in each case is whether the claimant has proved beyond reasonable doubt that the new or newly discovered fact has demonstrated that there was a miscarriage of justice on the basis that no reasonable jury, properly directed, could convict him.\nThe trial of that question does not in any way affect or impugn the acquittal of the claimant as provided by section 2(3) of the Criminal Appeal Act 1968 quoted above.\nThe question at such a trial is different and so is the burden of proof.\nThe position is not unlike a civil process where a claimant seeks damages from a defendant who has been acquitted of, say, causing grievous bodily harm to A at a criminal trial.\nUnder English law it is permissible for A to seek damages from the defendant on the ground that he was unlawfully injured by him, alleging all the same facts as had been relied upon at the criminal trial.\nThe critical difference between the two processes is that at the criminal trial the prosecution has to prove guilt beyond reasonable doubt, whereas at the civil trial A only has to prove liability on the balance of probabilities.\nThe ECtHR has expressly recognised that civil proceedings of that kind do not infringe article 6(2) of the Convention: see eg Y v Norway (2003) 41 EHRR 87, where the court expressly said at para 41 that, while the acquittal from criminal liability ought to be maintained in compensation proceedings, it should not preclude the establishment of civil liability to pay compensation arising out of the same facts on the basis of a less strict burden of proof.\nIt did add in para 42 that, if the national decision on compensation contains a statement imputing the criminal liability of the respondent party, this could raise an issue falling within the ambit of article 6(2) of the Convention.\nSee also Bok v The Netherlands, (Application No 45482\/06), 18 January 2011.\nSimilarly, here, where, at any rate on the analysis set out above, there is no question of anything said or done in the section 133 proceedings impugning the acquittal in the criminal proceedings, I see nothing in article 6(2) which is in any way inconsistent with the conclusions I have reached.\nDisposal\nI agree with Lord Phillips, Lord Hope, Baroness Hale and Lord Kerr that the appeal in the Adams case must be dismissed.\nLord Phillips has set out the relevant facts.\nAs Dyson LJ observed at para 59, the Court of Appeal allowed the appeal because the undeployed material was important and might have led the jury to acquit.\nThe decision to quash the conviction was founded on the potential that the undeployed material had for affecting the jurys verdict.\nIt was thus a category 3 case and, for the reasons given earlier, section 133(1) does not cover such a case.\nI also agree that the appeals in the Northern Irish cases should be allowed.\nLord Kerr has set out the facts in some detail.\nThey show, at any rate to my mind, that, in the light of the newly discovered facts, no reasonable jury, properly directed, could have convicted them.\nDISSENTING JUDGMENTS LORD JUDGE\nThe legislation\nSection 133(1) of the Criminal Justice Act 1988 (section 133) provides: when a person has been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice, the Secretary of State shall pay compensation for the miscarriage of justice to the person who has suffered punishment as a result of such conviction or, if he is dead, to his personal representatives, unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted.\nReversed refers to a conviction which is quashed on an appeal out of time or following a reference by the Criminal Cases Review Commission (section 133(5)).\nBy section 133(2) compensation is not payable unless the application for compensation has been made: Before the end of the period of 2 years beginning with the date on which the convictionis reversed or he is pardoned.\nThis limitation was inserted by sections 61(1) (3) and (9) of the Criminal Justice and Immigration Act 2008 and came into force on 1 December 2008.\nSimultaneously, in accordance with section 61(1), (2), (5) and (9) of the 2008 Act, provision was made for the cases where the conviction is quashed on an appeal out of time, and a retrial ordered, so that: The conviction is not to be treatedas reversed unless and until the person is acquitted of all offences at the retrial or the prosecution indicates that it has decided not to proceed with the retrial. (Section 133(5A))\nThe determination whether there is an entitlement to compensation is vested exclusively in the Secretary of State, (section 133(3)) who in exceptional circumstances may extend the time for making an application. (section 133(2A))\nWhen section 133 was enacted an ex gratia system operated in tandem with it.\nIn England and Wales and Northern Ireland, but not in Scotland, the ex gratia scheme was abolished in 2006.\nIn his article Compensation for Wrongful Imprisonment [2010] Crim LR 805, Professor John Spencer QC convincingly criticised the narrowness of and consequent anomalies which arise from the limitations of the statutory scheme.\nNo alternative remedy is provided unless, perhaps, and subject to limitation periods, where malpractice in the investigative process is established, the victim may pursue a remedy in tort, or when the individual suffered a wrongful conviction as a consequence of negligence by his legal advisors, a claim in damages may be available.\nIn short, the statutory scheme does not preclude any relevant action which may, in theory, be available in tort, but it is in any event unsupported by the ex gratia scheme.\nNevertheless we must analyse section 133 and the ambit of the scheme for the payment of compensation without reference to its anomalies and disadvantages.\nWhen it was examined by the House of Lords in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1 the meaning and effect of section 133 produced contradictory opinions with no authoritative decision.\nLord Steyn concluded that the statutory scheme was confined to cases where the person concerned was clearly innocent.\nLord Bingham of Cornhill, while agreeing with the result, for carefully explained reasons, hesitated to accept this restriction on the ambit of the statutory scheme.\nThe differences between their respective approaches to the problem have been considered and examined in a number of subsequent decisions, of which the most recent is R (Allen (formerly Harris) v Secretary of State for Justice [2009] 1 Cr App R 36.\nThey must finally be resolved now.\nAs we are not agreed, without embarking on what would be a repetitious discourse of much of the voluminous material drawn to our attention, I shall briefly explain the reasons why I agree with Lord Steyn.\nIn Mullen the parties were agreed that the interpretation of section 133 required what was described as a correct understanding of article 14(6) of the International Covenant on Civil and Political Rights, dated 16 December 1966. (ICCPR) That view was adopted by the House of Lords and it is unchallenged in the present proceedings.\nArticle 14(6) provides: When a person has by a final decision been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the grounds that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice, the person who has suffered punishment as a result of such conviction shall be compensated according to law, unless it is proved that the non disclosure of the unknown fact in time is wholly or partly attributable to him.\nIn short, the enactment of section 133 in virtually identical terms represented the response of the United Kingdom to a Treaty obligation.\nOne further Treaty provision needs immediate attention.\nIn November 1984 article 3 of Protocol 7 to the Convention of Human Rights also made what was effectively an identical provision to article 14(6) of the ICCPR.\nWhen a person has by a final decision been convicted of a criminal offence and when subsequently his conviction has been reversed, or he has been pardoned, on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice, the person who has suffered punishment as a result of such conviction shall be compensated according to the law or the practice of the State concerned, unless it is proved that the non disclosure of the unknown fact in time is wholly or partly attributable to him.\nArticle 3, Protocol 7 will become relevant when the jurisprudence of the European Court of Human Rights falls to be considered.\nIn the context of a statutory provision reflecting the international obligations undertaken by the United Kingdom, it would be productive of confusion for the phrase miscarriage of justice to be analysed by reference to the many different ways in which, looking at our own statutes which enable convictions to be quashed, and the language used, sometimes loosely, in the course of numerous judgments bearing on these questions.\nThe phrase reflects an autonomous concept, in which the words miscarriage of justice reflect the international obligations of the United Kingdom under article 14(6).\nLike article 14(6), section 133 distinguishes the reversal of the conviction (or a pardon) and a miscarriage of justice.\nWithin the section itself, as with article 14(6), these concepts are distinct.\nEven if the remaining pre conditions to the payment of compensation are established, the reversal of the conviction is an essential prerequisite to but is not conclusive of the entitlement to compensation.\nIn short, for the purposes of section 133 the reversal of the conviction and the consequent revival of the legal presumption of innocence is not synonymous with a miscarriage of justice.\nTherefore before compensation is payable under the statutory scheme more than the reversal of the conviction is required.\nThe requirement is that a miscarriage of justice must be demonstrated beyond reasonable doubt.\nIn my view the use of this phrase was deliberate and significant.\nThe phrase is not relevant to the evidential question whether the conviction has been reversed and it is not directed to any individual feature or aspect of the investigation or trial processes.\nIf the reversal of the conviction alone were sufficient, that fact would be proved beyond reasonable doubt by the court record, and if any specific feature of the investigation or trial processes were relevant, appropriate provision could readily have been made in section 133 itself.\nInstead the phrase describes the characteristics or attributes of the miscarriage of justice which must be established.\nThe word conclusively in article 14(6) was not repeated.\nRather the familiar description of the standard of proof in criminal cases and, significantly in the context of a claim for the payment of compensation (normally a civil claim), the standard normally applied to the prosecution in the criminal justice process was imposed on the defendant.\nFor this purpose the balance of probabilities was expressly ignored.\nAccordingly, for section 133 to apply, following a conviction of an offence which was proved beyond reasonable doubt, the emergence of a new or newly discovered fact should demonstrate not only that the conviction was unsafe, or that the investigative or trial processes were defective, but that justice had surely miscarried.\nIn the present context, the ultimate and sure miscarriage of justice is the conviction and incarceration of the truly innocent.\nThis leads me to the conclusion that as a matter of construction the operation of the compensation scheme under section 133 is confined to miscarriages of justice in which the defendant was convicted of an offence of which he was truly innocent.\nIn my judgment nothing less will do, and no alternative or half way house or compromise solution consistent with this clear statutory provision is available.\nI must therefore address some of the contentions which suggest that this construction is over restrictive.\nThe unsafe conviction\nMr Tim Owen QC highlighted the absence of word innocent from section 133.\nThe omission reflects not only the autonomous concept of miscarriage of justice, but more significantly, the absence of an innocent verdict in the criminal justice process.\nThe defendant is either proved to be guilty of the crime alleged, or he is entitled to a not guilty verdict and acquittal.\nA verdict of innocent is unknown.\nOn acquittal, or the reversal of a conviction, the presumption of innocence revives.\nIt applies when the jury considers that there is a high probability that the defendant is guilty, and indeed to cases like Mullen, whose conviction was quashed notwithstanding the assessment of the court that he was undoubtedly guilty.\nJust because it is a concept to which the criminal justice process is not directed, the word innocent could have no place in section 133.\nThe only ground for quashing a conviction in the Court of Appeal Criminal Division (the Court) is that it is unsafe.\nThere are however occasions when a new or newly discovered fact may well demonstrate the factual innocence of the appellant.\nAnd if it does, the judgment of the court may say so.\nI respectfully disagree with the observation in R v McIlkenny (1991) 93 Cr App R 287 that the court is not entitled to state that an appellant is innocent.\nThe processes of the Court of Appeal do not allow for a formal declaration of factual innocence, any more than the trial process recognises a verdict of innocent.\nHowever there can surely be no stronger case for doubting the safety of a conviction than evidence which unmistakenably demonstrates that the appellant is in truth an innocent man or woman. (See R v Fergus (1994) 98 Cr App R 313: R v Hodgson [2009] EWCA Crim 490.) Although the conviction is quashed not on the ground that the defendant is innocent, but because his conviction is unsafe, the terms of the judgment should conscientiously reflect the true reasons for its decision that the conviction should indeed be quashed as unsafe.\nAt the risk of stating the obvious, the decision whether to quash a conviction is for the Court: so are all features of the trial process, and indeed any order for retrial.\nIf the end of the judicial process is that the conviction is quashed, or if following a retrial, the defendant is acquitted, the administrative decision whether compensation is payable for a miscarriage of justice is vested exclusively in the Secretary of State.\nThe determination is not limited to some kind of administrative assessment of the circumstances in which the judicial process has come to an end.\nTherefore while the Secretary of State should pay the closest possible attention to the terms of the judgment of the Court, whatever the terms in which the judgment is expressed, when making the decision whether a miscarriage of justice has occurred, he is not confined to the judgment of the Court.\nRetrial\nThe circumstances in which a retrial will be ordered following the quashing of a conviction vary enormously.\nThe single question is whether in a fact specific context the interests of justice should lead to such an order.\nDealing with it generally it is most unusual for an order for retrial to be made many years after conviction, or when the sentence imposed at the original trial has been or is close to being completed.\nOn the other hand, again dealing with it generally, where a conviction is recent, and the sentence substantial, and the evidence relied on the prosecution is likely to be available at the retrial, then a retrial may well be ordered.\nExceptions can be found both ways.\nAt the risk of repetition, the decision is fact specific.\nIt can however be confidently stated that it would be inconceivable for the Crown to seek or the Court to order a new trial if it were made clear in the terms of the judgment that the conviction was being quashed on the basis that the fresh evidence demonstrated that the defendant was innocent.\nThis reinforces my view that if that conclusion is justified, the court is entitled to say so in its judgment.\nThese considerations bring me to section 133(5A).\nThis subsection addresses the newly introduced statutory time limit in which an application for compensation may be made in the context of an order for retrial.\nIf for any reason (including the conclusion of the Court that the defendant is truly innocent) no order for retrial is made, time runs from the date when the conviction is quashed.\nIf however (again, for whatever reason) the order quashing the conviction is accompanied by an order for retrial, notwithstanding the presumption of innocence, for the purposes of the scheme for the payment of compensation the conviction is not reversed or quashed and the time for making an application is accordingly postponed until the retrial process is completed.\nThis enables first, the defendant to concentrate his attention on the forthcoming retrial.\nSecond, it is conclusive of the question (adversely to the defendant) if he is convicted, when his position is exactly the same as it would have been if the original conviction had not been quashed.\nThird, if he is acquitted, the process may provide the Secretary of State with further material on which to base his determination.\nIn my judgment section 133(5A) has no bearing on the proper construction of the words beyond reasonable doubt that there has been a miscarriage of justice, and the entitlement to compensation under the statutory scheme was not expanded with effect from 1 December 2008 when section 133(5A) came into force.\nThat was not the purpose of this new inserted provision which was directed to the consequences of the introduction of the new timetable within which applications should be made.\nIt was procedural only.\nEuropean Court of Human Rights\nIn my judgment the jurisprudence of the European Court of Human Rights drawn to our attention by Mr Owen does not bear on the issues which arise in this litigation.\nAs already indicated once a conviction has been reversed the presumption of innocence applies.\nSubject only to the provisions of sections 76 83 of the Criminal Justice Act 2003 the rule against double jeopardy applies and the defendant cannot be prosecuted a second time for an offence of which he has been acquitted, or when his conviction has been reversed and for the purposes of the administration of criminal justice the prosecution process is at an end.\nNevertheless the acquittal, or the successful appeal against conviction, does not operate as an absolute bar to litigation.\nIt remains open to any individual to assert that notwithstanding the acquittal or quashing of the conviction, the defendant was guilty.\nThat is what Lord Steyn said about Mullen in his judgment in that case.\nA defendant who has been acquitted of rape may face proceedings for damages by the complainant and she may successfully establish on the balance of probabilities that he did indeed rape her and is liable in damages.\nIn proceedings for defamation on the basis that the defendants innocence is questioned, the acquittal does not create an irrebuttable presumption that the assertion cannot be justified and must be unjustifiable.\nArticle 3, Protocol 7 forms part of the Convention.\nIt must be read together with the Convention.\nThe jurisprudence of the European Court of Human Rights relied on by Mr Owen was not directed to and did not address the provisions of article 3, Protocol 7.\nIf the decisions he relied on apply in the present case it will in effect mean that the reversal of the conviction carries with it an obligation to pay compensation in accordance with section 133, although such a conclusion would be inconsistent with the wording of article 3, Protocol 7 itself.\nBok v The Netherlands (Application No 45482\/06) (unreported) 18 January 2011 confirms that it does not.\nSection 133 therefore provides an individual whose conviction has been reversed with the opportunity (but no obligation) to make a claim for compensation based on a statutory test which is effectively identical to the provisions of the European Convention.\nThe Secretary of State must allow or reject the application in accordance with that test.\nConviction Impossible\nThis heading is used to encompass some of the alternative ways of approaching the concept of miscarriage of justice adopted in the majority judgments which have reached the conclusion that the phrase has a rather broader ambit than I do.\nA newly discovered fact which demonstrates that the prosecution against the defendant is shredded to the extent that no conviction could have been based on it, or that no evidence would properly have been offered or, if there had been a trial, there would have been no case to answer at the close of the prosecution case, is likely to provide powerful material which may lead the Secretary of State to conclude that the defendant is indeed innocent.\nHowever that conclusion does not automatically follow, and unless it does, section 133 does not apply.\nIn short, these considerations are of evidential significance, maybe of crucial evidential significance, but not determinative.\nThere are a variety of different circumstances in which the Court may make a decision on appeal in relation to decisions at trial that what appeared to be powerful evidence for the Crown should have been excluded.\nFor example, in the light of some newly discovered fact the Court may conclude that the decision of the trial judge to allow crucial prosecution eye witnesses to give their evidence anonymously was wrong, or no longer tenable: without that evidence there would be no case against the defendant.\nThe Court may order a retrial, but without the protection of an anonymity order, the crucial witnesses may then refuse to give evidence at all.\nAccordingly no further evidence would be offered against the defendant.\nIn my judgment it should not, and it would not, follow that the defendant would be entitled to compensation.\nSimilar considerations would arise if, on the basis of fresh evidence, the Court concluded that the judge had wrongly admitted crucial hearsay evidence without which there would have been no prosecution.\nTaking the matter further, R v Smith [1999] 2 Cr App R 238 illustrates the difficulty of equating the no case to answer situation with the concept of miscarriage of justice within section 133.\nThe judge rejected a submission that there was no case to answer.\nThe Court concluded that he was wrong and went on to examine the question, what if a submission is wrongly rejected but the defendant is cross examined into admitting his guilt? It concluded that the conviction would still be unsafe because the defendant was entitled to be acquitted at the close of the prosecution case.\nIt would be surprising if notwithstanding his own sworn admission of guilt, the discovery of a new fact which demonstrated that the decision that there was a case to answer was wrong, should be followed by the payment of compensation.\nAgain, where fresh evidence is advanced on behalf of the appellant which undermines the safety of the conviction, and indeed puts into question a substantial part of the prosecutions case, the prosecution may seek to adduce fresh evidence demonstrative of guilt.\nThe jurisdiction to permit the Crown to do so is available (for example, see R v Hanratty [2002] EWCA Crim 1141; [2002] 3 All ER 534).\nIn the interests of justice the Court may order a new trial to enable all the issues to be resolved by a jury notwithstanding that, standing on its own, the original evidence advanced by the Crown was no longer sufficient to found a case for the appellant to answer.\nFinally, I must return to Mullen itself, which at [1999] 2 Cr App R 143 sets out the reasons why the conviction was quashed.\nThe matters which constituted the abuse of process occurred before Mullen was returned from Zimbabwe to this jurisdiction.\nThe British authorities procured his deportation by unlawful means, in breach of public international law.\nThe prosecution itself was held to be unlawful.\nMullen therefore should not have been charged, let alone prosecuted to trial.\nYet the House of Lords was agreed that he was not entitled to compensation, and I wholeheartedly agree.\nConsiderations like these underline some of the practical difficulties with any approach to the construction of section 133 which goes beyond the limits suggested by Lord Steyn in his judgment in Mullen, that compensation within the statutory scheme is payable only when the defendant was convicted of an offence of which he was truly innocent, and therefore beyond reasonable doubt the victim of a miscarriage of justice.\nIn my judgment the principle is that section 133 is concerned with the fact rather than the presumption of innocence in the context of the administrative decision to be made by the Secretary of State.\nIt is not related to different (and if so which?) aspects of the trial processes, or the likely or possible impact which the new or newly discovered fact would have had on the decision to prosecute or on the forensic processes which culminated in conviction.\nTheir practical effect is demonstrated in the case of MacDermott and McCartney.\nThe confessions on which the prosecution relied would have been inadmissible if they had been made not as a result of violence, but rather of inducements.\nAssuming for present purposes that the newly discovered material demonstrated that Donnelly had been offered identical inducements to those which MacDermott and McCartney had asserted at their trials, their convictions would have been no less liable to be quashed than they were in the light of the fresh evidence relating to police violence.\nAs there was no evidence beyond their inadmissible confession there would have been no basis for any prosecution.\nAnd there would, if they were prosecuted, have been no case for either to answer.\nYet, in the context of an inducement or inducements, there might, if the confessions were sufficiently detailed, be no reason to doubt that the confessions were true, even if inadmissible.\nIn my judgment their cases would not qualify for compensation.\nWe are here dealing not with inducements which cast doubt on the voluntariliness of the confessions, but with violence.\nThe newly discovered material would have borne on the decision of the trial judge whether the defendants confessions were voluntary or not.\nThe fresh evidence led the Court of Appeal in Northern Ireland to conclude that if it had been available at trial there was a realistic possibility that the evidence of the police officers (who asserted that there had been no intimidation of the defendants, and no grounds for doubting that the confession statements were voluntary) may have been discredited.\nIf so the statements would have been excluded from consideration, and there would then have been no prosecution and no case for either of them to answer.\nIn principle, however, the impact on the admissibility of their confessions would have been the same, whether they responded to inducements to confess or succumbed to violence.\nAlthough I share the distinct unease of the Court of Appeal in Northern Ireland about the circumstances in which the confessions were made by the appellants, it does not follow that the Secretary of State was obliged to conclude that they were innocent for the purposes and within the ambit of section 133.\nNew or newly discovered fact\nIn the discussion about the meaning of new or newly discovered fact the rival contentions went too far.\nIt would be unrealistic, and removed from the realities of the conduct of the defence at trial that his legal advisers should inform the defendant personally of each and every fact and matter to which their attention is drawn by the prosecution.\nWhen all is said and done, the defence advocate is not a mouthpiece or echo chamber for his client.\nThe responsibility for giving advice and assisting the defendant to make whatever decisions which he must make for himself is one aspect of the responsibilities: the deployment of evidence and argument on his behalf is another.\nSometimes the lines overlap, but often they do not.\nIt therefore follows that merely because the defendant himself is personally ignorant of a particular fact, it is not new or newly discovered when the defendant personally ceases to be ignorant of it.\nOn the other hand, when the prosecution has complied with all its obligations in relation to disclosure of material to the defence lawyers, and they, for whatever reason, do not then deploy material which appears to be adverse to the prosecution or which would assist the defendant, that material should not automatically be excluded from the ambit of the section on the basis of prosecutorial compliance with its disclosure obligations.\nRather the approach should coincide with the circumstances in which fresh evidence is sought to be deployed before the Court in accordance with section 23 of the Criminal Appeal Act 1968.\nThis normally predicates that there should be a reasonable explanation for the earlier failure to adduce the evidence at the trial.\nIn the present case, it is clear from the judgment of the Court in Adams that the conviction was quashed on the basis of fresh evidence in circumstances in which, notwithstanding that the prosecution had fully performed its responsibilities in relation to disclosure, Adamss legal team had failed adequately to respond and fulfil theirs.\nIn my judgment that failure or omission was a new or newly discovered fact within the ambit of section 133.\nConclusion\nIn my judgment the appeal of Adams should be dismissed: as to the appeals of MacDermott and McCartney, I should have agreed with Lord Browns proposal that they should be remitted to the Secretary of State for further consideration.\nLORD BROWN (with whom Lord Rodger agrees)\nI have had the advantage of reading in draft the judgment of Lord Judge, the Lord Chief Justice, and, agreeing with it as I do, I shall try not to repeat the bulk of its reasoning.\nSo troubled am I, however, that apparently ours is the minority view on these appeals that I wish to add some additional thoughts of my own.\nThat section 133 of the Criminal Justice Act 1988 was intended to give effect to the United Kingdoms international obligation under article 14(6) of the International Covenant on Civil and Political Rights 1966 is, of course, plain and obvious.\nSection 133(1) omits the phrase in article 14(6) by a final decision reflecting it instead in the definition of reversal in section 133(5) by referring there to an appeal out of time or on a reference and substitutes for the word conclusively in article 14(6) the hallowed expression beyond reasonable doubt.\nOtherwise the language of the two provisions is virtually identical.\nIt is clear, therefore, that the right to compensation arises only when each of four conditions is satisfied: (i) the conviction is quashed on an appeal out of time or a reference (not, therefore, when a timeous appeal succeeds, nor, of course, on an acquittal at trial); (ii) the appeal succeeds on the ground of a new or newly discovered fact; (iii) the appellant was in no way responsible for the previous non disclosure of that fact; and (iv) that fact shows beyond reasonable doubt that there has been a miscarriage of justice.\nThe critical question for decision here, of course, is what precisely is meant in this context by a miscarriage of justice.\nAs to this, whilst recognising that the expression has an autonomous meaning, I share the view expressed in several of the judgments that there is no real assistance to be derived here from any of the extrinsic material, for example, the travaux or other states practices.\nRather, as Lord Bingham suggested in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1, 27, para 9(2): It may be that the expression [miscarriage of justice] commended itself because of the latitude in interpretation which it offered.\nThat being so, it was perfectly open to the UK to introduce legislation intended to compensate only those shown to be clearly innocent of the crime of which they had been convicted and in this connection I see no reason to ignore the explanatory report relating to article 3 of Protocol 7 to the European Convention on Human Rights (an article almost precisely reproducing the language of article 14(6)) which, at para 25, states: The intention is that states would be obliged to compensate persons only in clear cases of miscarriage of justice, in the sense that there would be acknowledgment that the person concerned was clearly innocent.\nTrue, the UK never ratified Protocol 7 and I am far from suggesting that the explanatory report shows plainly that section 133(1) is to be construed in the way para 25 suggests.\nBut it does surely show that this is both a permissible view to take of the extent of the article 14(6) obligation undertaken by the UK and a perfectly possible construction of section 133(1) itself.\nBefore turning more particularly to whether it is the right construction, it is I think worth pointing out too that the provision whereby those benefiting from article 14(6) are entitled to be compensated according to law similarly accords to individual states a wide discretion as to how such compensation is to be assessed.\nAs to this the UKs approach seems to me notably generous.\nIn reaching his assessment, the Secretary of States assessor is directed to apply principles analogous to those governing the assessment of damages for civil wrongs including, therefore, claims for wrongful imprisonment although a deduction may be made on account of the claimants criminal record.\nAn illustration of the size of the awards liable to be made in these cases is provided by R (OBrien) v Independent Assessor [2007] UKHL 10; [2007] 2 AC 312 concerning compensation claims arising out of the wrongful conviction of the Hickey brothers and others for the murder of Carl Bridgewater at Yew Tree Farm.\nThe first instance decision in that case [2003] EWHC 855 (Admin) shows net final compensation assessments there of 990,000 for Michael Hickey and 506,220 for Vincent Hickey (wrongfully detained in prison respectively for just under thirteen years and something under fourteen years see para 8 of Lord Binghams judgment in the House of Lords).\nWhat, then, is the correct interpretation of a miscarriage of justice in section 133(1)? More particularly, is it: (i) the conviction of an innocent defendant, or (ii) the conviction of a defendant who, by a new fact, so undermines the evidence against him as to show that, on the undermined evidence, he could not possibly have been convicted essentially Lord Phillips (category 2) formulation (at para 55), apparently now subscribed to by the majority of the court.\nI mention only those two possible constructions since no member of the court appears to favour any yet wider construction of section 133 so as to embrace also cases where the fresh evidence renders the conviction unsafe in that, had it been available at the time of the trial, a reasonable jury might or might not have convicted the defendant (Lord Phillips category 3 at para 9).\nStrikingly, and to my mind significantly, it was this wider construction that not just the appellants but also Mr Alex Bailin QC for the Intervener, JUSTICE, were urging upon the court; indeed, both Mr Owen QC for Mr Adams and Mr Bailin expressly submitted that there was no logical or principled dividing line between categories 2 and 3.\nAnd to my mind they were right to do so.\nOf course, innocence as such (factual as opposed to presumptive) is not a concept known to the criminal law.\nBut nor too, in the context of criminal appeals, is the notion of a prosecution case so undermined that no jury could possibly convict.\nThe criminal court deals only in the safety of convictions.\nOn a fresh evidence appeal the sole question the court asks itself is whether the conviction is unsafe (essentially the lurking doubt test).\nIf the case is a difficult one it sometimes finds it helpful to test its view by asking whether the evidence, if given at the trial, might reasonably have affected the decision of the trial jury to convict R v Pendleton [2001] UKHL 66; [2002] 1 WLR 72, 83, para 19.\nThe ultimate and only question, however, is for the court: is the verdict unsafe? The question raised by section 133, by contrast, is not one for the criminal court but rather one entirely for the Secretary of State.\nSimilarly, no member of the court appears to suggest that Mullen itself was wrongly decided.\nLord Steyn, of course, reached his decision there (to allow the Secretary of States appeal and reinstate the decision of the Divisional Court) on the ground that section 133 compensates only those who are clearly innocent whereas Lord Bingham reached his on the altogether narrower ground that: It is for failures of the trial process that the Secretary of State is bound . to pay compensation (para 8).\nMr Mullens conviction was, of course, quashed not because of anything that had gone wrong in the trial process but because he would not have been on trial at all but for having been unlawfully returned to this country.\nCertainly Lord Bingham disagreed with Lord Steyns approach.\nBut it cannot be pretended that Lord Binghams own approach supports the particular formulation suggested by the majority in the present case.\nMy own reasoning in the Divisional Court in Mullen [2002] 1 WLR 1857, 1864 was essentially that later to be adopted by Lord Steyn: 25 What was shown beyond reasonable doubt here was that there had been an abuse of process in bringing the claimant to trial.\nThat was the newly discovered fact.\nBut that fact did not itself show beyond reasonable doubt that there had been a miscarriage of justice.\nAll that it showed was that the court needed to conduct a discretionary exercise to decide in effect which of two important public interests should prevail: the public interest in trying, convicting and punishing the guilty or that in discouraging breaches of the rule of law and preserving the integrity of the criminal justice system.\nIt preferred the latter.\nTrue, it had no doubt that the balance came down decisively in the defendants favour.\nBut that was by no means to find that he was innocent, still less that he was plainly so.\nRather it was a judgment that the lawful administration of justice would be affronted by his remaining convicted and imprisoned. 26 In short, a miscarriage of justice in the context of section 133 means, in my judgment, the wrongful conviction of an innocent accused.\nCompensation goes only to those ultimately proved innocent, not to all those whose convictions are adjudged unsafe.\nThe quashing of the claimants conviction in this case was a vindication of the rule of law, not the righting of a mistaken verdict.\nAs I shall come to suggest, the quashing of the conviction in many cases which would fall within the majoritys formulation for compensation here is more properly to be characterised as a vindication of the rule of law than as the righting of a mistaken verdict.\nPar excellence, indeed, this seems to me to be so in cases where confession statements, even though perhaps demonstrably true (by referring, say, to facts known only to the perpetrator of the crime) are excluded because of intimidation or inducement see particularly in this regard paras 264 and 265 of Lord Judges judgment.\nMy reasons for remaining precisely of the view I expressed in the Divisional Court in Mullen are essentially a combination of the considerations in favour of the category 1 test (that of innocence) and the considerations weighing against the category 2 test (that of critical evidence undermined).\nAs for the factors favouring the test of innocence, it is difficult to improve upon those listed by Lord Phillips at paras 43 48 of his judgment.\nAs Lord Phillips there points out, this construction gives section 133 a perfectly natural and logical meaning, indeed it is the meaning that the man in the street would be likely to accord to the wording of section 133 (para 43); it makes perfect sense of the requirement that the new facts should prove this beyond reasonable doubt (para 44); and it gives section 133 a meaning which is eminently practicable (para 45).\nIt seems to me unnecessary to decide whether Lloyd LJ was right to say in R v McIlkenny (1991) 93 Cr App R 287, 311 that the Court of Appeal is not entitled to state that an appellant is innocent a point on which Lord Phillips (at para 45) and Lord Judge (at para 251) disagree.\nThe all important consideration in this respect is, as Lord Phillips says, that it is for the Secretary of State, not the Court of Appeal, to decide whether there has in fact been a miscarriage of justice (and, therefore, on the innocence test, whether the fresh evidence shows beyond reasonable doubt that the defendant was innocent) and the reasons given for quashing the conviction are unlikely to leave any doubt of this (para 46).\nAs, moreover, Lord Phillips observes (at para 47) the innocence test will ensure that a guilty defendant is not compensated for the consequences of his conviction.\nIf I may revert to the man in the street, he would, I think, be appalled at a construction which, on the contrary, would not infrequently result in the compensation of the guilty, sometimes, as already indicated, to the extent of hundreds of thousands of pounds.\nAs for the factors weighing against the category 2 test, prominent amongst these is undoubtedly the converse of the point just made, the fact that it would result in very substantial compensation for many defendants who are in truth guilty.\nI have already instanced (para 275 above and paras 264 and 265 of Lord Judges judgment) those whose confession statements (even if true) come to be undermined.\nEqually this is so in cases where it comes to be seen that anonymous or hearsay evidence should not have been allowed (see particularly in this regard para 260 of Lord Judges judgment).\nThis point, indeed, can be illustrated by the facts of R v Secretary of State for the Home Department, Ex p Bateman (1994) 7 Admin LR 175 (where, as Lord Clarke notes at para 199, I was sitting in the Court of Appeal with Sir Thomas Bingham MR and Farquharson LJ).\nMr Batemans appeal for compensation failed in the event because the success of his second criminal appeal owed nothing to a new or newly discovered fact.\nObiter, however, the Master of the Rolls suggested that he had suffered a miscarriage of justice.\nOn an appeal out of time his conviction had been quashed because certain statements had been wrongly admitted in evidence at trial.\nThese were statements from important New Zealand witnesses whom he had wanted called and cross examined.\nBut why, I am now inclined to ask, should a successful appellant be compensated in those circumstances? The case against him might well have become more, rather than less, damning had the witnesses indeed been called and given their evidence orally (as was held should have happened).\nOne other case I want to mention which to my mind strikingly illustrates the dangers of adopting the category 2 construction is a recent decision of this court.\nThe case concerned the conviction of each of two brothers (A and B) for murder and two robberies following, as later investigations and a reference by the Criminal Cases Review Commission were to show, police misconduct of the gravest kind (most notably by colluding with the main prosecution witness).\nOn a second appeal some twelve years after conviction there was accordingly no dispute but that As and Bs convictions had to be quashed.\nThe only issue for the Court of Appeal had been whether A should be retried, this time not on the basis of the irredeemably tainted evidence given at his original trial but rather based on a series of admissions of guilt he had made following his conviction and the failure of his first appeal.\nBecause the decision upheld by the majority in this court was to order a retrial, the reporting of the detailed judgments both of the Court of Appeal and of this court has had to be delayed.\nAs, however, these judgments make plain, although B could not be retried (he having made no confession of guilt), the guilt of both was in reality plain.\nTrue, the most critical evidence in the case against them had been that of a supergrass (without whose evidence, indeed, it was agreed that there could have been no prosecution at all), upon whose evidence the Crown could no longer rely because of the polices misconduct in conferring upon him a whole host of benefits to secure his continuing cooperation in the brothers prosecution at trial.\nBut his evidence had been supported by a jigsaw of other pieces of evidence.\nThat said, however, in the language of the majoritys category 2 test, no conviction could possibly be based upon it.\nIs it then to be said that B must be compensated for the twelve years or so he spent in prison before being released at his second appeal? And, indeed, that A too would have had to be compensated had the Court of Appeal not decided to order his retrial? Will the Court of Appeal in future, when deciding at the conclusion of an out of time appeal whether the interests of justice require a retrial, have to factor in the consideration that, unless a retrial is ordered, the successful appellant will or may be found entitled to compensation under the majoritys approach to section 133?\nThe other centrally important consideration militating against a category 2 construction of section 133 is the difficulty indeed, to my mind, impossibility of reconciling this with the language of the section as a whole, and most especially with its requirement that the new facts establish a miscarriage of justice beyond reasonable doubt.\nIt seems to me nonsensical to suggest that the category 2 test is one that can sensibly be satisfied (or not) beyond reasonable doubt.\nFor good measure although, I accept, less conclusively the alternative basis of entitlement to compensation provided for by the section, namely a pardon, naturally connotes innocence rather than some less exacting test.\nEven the language of a new or newly discovered fact (rather than fresh evidence) to my mind tends to suggest the revelation of something clear and certain namely innocence, rather than merely the undermining of the prosecutions overall case.\nI entirely accept, of course, that a new fact which does so undermine this case as to show that the appellant could not properly have been convicted on the evidence in fact adduced against him may well in many cases suggest actual innocence and duly persuade the Secretary of State of this.\nLord Judge expressly recognises this at para 259 of his judgment.\nBut what if, say, as a result of inadmissible intercept evidence or other reliable intelligence the Secretary of State reasonably believes (perhaps, indeed, is convinced) that the appellant is in fact guilty.\nMust he nevertheless compensate him? I would hope and respectfully maintain not.\nNaturally I recognise that the application of the innocence test will exclude from compensation a few who are in fact innocent.\nEven on the majoritys test, of course, some who are innocent will be excluded.\nThat, however, seems to me preferable to compensating a considerable number (although mercifully not so many as would be compensated on the category 3 approach) who are guilty.\nAfter all, this whole compensation scheme operates by creating only a narrow and exceptional class who qualify.\nThe claimant qualifies only by producing a new or newly discovered fact.\nAnd only if his conviction is quashed on a reference or an appeal out of time. (It will, indeed, often be a matter of chance whether an appeal is out of time the lawyers may simply have missed the time limit.) Why should the state not have a scheme which compensates only the comparatively few who plainly can demonstrate their innocence and, as I have shown, compensate them generously rather than a larger number who may or may not be innocent? That, at all events, is the scheme which in my opinion Parliament enacted here.\nOn certain of the questions raised there is nothing I wish to add to what Lord Judge has said.\nI agree with him (at para 252) about the material to be considered by the Secretary of State (indeed, as to this, I agree too with what Lord Phillips says at para 36 of his judgment, subject only to applying the correct test).\nI agree with all that Lord Judge says (at para 254) as to the relevance here of section 133(5A).\nI agree with him too (at paras 255 and 256) about the relevance of the Strasbourg jurisprudence in this context. (It hardly needs pointing out that, were the Strasbourg cases to present a problem, they would do so no less for the majority than for the minority view.) And I agree with Lord Judges approach (at paras 266 and 267) to a new or newly discovered fact.\nIn common, as I understand it, with every other member of the Court, I too would dismiss Mr Adamss appeal.\nHad Lord Judges and my view as to the meaning of section 133 prevailed, I would have been inclined to remit Mr MacDermotts and Mr McCartneys compensation claims to the Secretary of State for his further consideration in the light of our judgments and more particularly of Lord Kerrs masterly analysis of the facts of those two cases.\nLORD WALKER\nI agree with the judgments of Lord Judge and Lord Brown.\n","output":"Section 133 of the Criminal Justice Act 1988 (s 133) provides that the Secretary of State for Justice shall pay compensation 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.\nIt was enacted to give effect to Article 14(6) of the International Covenant on Civil and Political Rights 1966 (Article 14(6)), which the United Kingdom ratified in May 1976.\nArticle 14(6) also refers to a miscarriage of justice.\nThe principal issue in these appeals was the meaning of this phrase in this context; in particular whether compensation should only be given if someone was subsequently shown conclusively to have been innocent of the offence.\nThe three appellants each claimed compensation following the quashing of their convictions for murder by the Court of Appeal.\nIn each case the claim was refused on the ground that the appellant had not shown that a miscarriage of justice had occurred.\nIn Mr Adams case, it was also refused on the ground that he had not shown that his conviction had been reversed by reason of a new or newly discovered fact.\nMr Adams was convicted on 18 May 1993 of the murder of Jack Royal.\nHis conviction was referred to the Court of Appeal in 2007 on the ground that incompetent defence representation had deprived him of a fair trial.\nHis representatives had failed to consider unused material provided by the police which would have assisted in undermining the evidence given by the sole prosecution witness.\nThe Court of Appeal found that if this had been done the jury might not have been satisfied of Mr Adams guilt, although he would not inevitably have been acquitted.\nMr McCartney was convicted of the murders of Geoffrey Agate and DC Liam McNulty, and Mr MacDermott that of DC McNulty, on 12 January 1979.\nThe sole evidence was their admissions during interviews with the police.\nThey alleged that these had been made after ill treatment and called other witnesses who claimed to have suffered similar treatment from the same group of police officers.\nThe judge rejected their evidence.\nHe had been told that a prosecution brought against one of these witnesses had not been proceeded with.\nBut he was not told that this was because senior officers in the Department of the Director of Public Prosecutions considered that he had been assaulted by police officers to obtain his confession and that a conviction in another case, based on a confession obtained in similar circumstances and involving one of the same officers, had been quashed.\nThe Court of Appeal in Northern Ireland quashed the convictions of Mr McCartney and Mr MacDermott on 15 February 2007 on the ground that this new evidence left it with a distinct feeling of unease about the safety of their convictions.\nThe Supreme Court unanimously dismisses the appeal of Mr Adams and by a majority (Lord Rodger, Lord Walker, Lord Brown and Lord Judge dissenting) allows the appeals of Mr MacDermott and Mr McCartney.\nThe majority hold that a miscarriage of justice has occurred for the purposes of s 133 when a new or newly discovered fact shows conclusively that the evidence against a defendant has been so undermined that no conviction could possibly be based upon it.\nMiscarriage of justice Miscarriage of justice was a phrase capable of a number of different meanings.\nIt was useful to consider four categories of cases in which the Court of Appeal would quash a conviction on the basis of fresh evidence: Where it showed a defendant was innocent of the crime (category 1) Where it was such that, had it been available at the time of the trial, no reasonable jury could properly have convicted the defendant (category 2) Where it rendered the conviction unsafe in that, had it been available at the trial, a reasonable jury might or might not have convicted the defendant (category 3) Where something had 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 (category 4) [9] The primary object of s133, and of Article 14(6), was clearly to compensate a person who had been convicted and punished for a crime which he did not commit.\nA subsidiary objective was not to compensate someone who had in fact committed the crime [37].\nCategory 4 fell outside this purpose as it dealt with abuses of process so shocking that the conviction should be quashed even if it did not put in doubt the guilt of the convicted person [38].\nCategory 3 was also outside s 133 because the miscarriage of justice had to be shown beyond reasonable doubt.\nCategory 3 would include a significant number who had in fact committed the offences, as an inevitable consequence of a system which required guilt to be proved beyond reasonable doubt [42].\nCategory 1 cases were clearly covered by s 133.\nHowever, the majority (Lord Phillips, Lord Hope, Lady Hale, Lord Kerr and Lord Clarke) held that the ambit of s 133 was not restricted to category 1 as it would deprive of compensation some defendants who were in fact innocent but could not establish this beyond reasonable doubt.\nA wider scope was plainly intended at the time of the drafting of Article 14(6).\nEven though it would not guarantee that all those entitled to compensation were in fact innocent, the test for miscarriage of justice in s 133 (in more robust terms than category 2) was as follows: A new or newly discovered fact will show conclusively that a miscarriage of justice has occurred when it so undermines the evidence against the defendant that no conviction could possibly be based upon it [55].\nA miscarriage of justice in a case of that kind would be as great as it would have been if he had in fact been innocent, because in neither case would he have been prosecuted at all [102].\nFour justices dissented on this issue.\nLord Judge considered that the words beyond reasonable doubt in s 133 meant that the miscarriage of justice was the conviction and incarceration of the truly innocent [248].\nLord Brown considered that there was no logical or principled dividing line between categories 2 and 3 [274] and the arguments in favour of an interpretation limited to category 1 were compelling [277].\nLord Rodger agreed with Lord Brown, and Lord Walker agreed with Lord Brown and Lord Judge.\nApplication of s 133 to cases involving a retrial An amendment to s 133 (subsection 5A) which referred to a retrial changed the timetable for a claim for compensation.\nIt did not mean that compensation was payable in every case in which a retrial had been ordered and the defendant then acquitted, as was argued by counsel for the intervener Barry George.\nThe same test was to be applied.\nThe amendment allowed for the possibility that something might emerge in the retrial which would require compensation [104].\nNew or newly discovered fact Lord Phillips (with whom Lady Hale, Lord Kerr and Lord Clarke agreed) held that the phrase new or newly discovered fact should be interpreted generously in accordance with the effect given to Article 14(6) by legislation in Ireland as including facts the significance of which was not appreciated by the convicted person or his advisers during the trial [60].\nLord Hope disagreed, considering that material disclosed to the defence by the time of the trial could not be said to be new and the focus on the state of mind of the convicted person went too far [107].\nLord Judge (with whom Lords Brown, Rodger and Walker agreed) preferred an approach which coincided with the test for admission of fresh evidence before the Court of Appeal, which required a reasonable explanation for the failure to adduce the evidence at the trial.\nThis had been satisfied by Mr Adams in his case [281].\nDisposal of the appeals Mr Adams appeal was unanimously dismissed on the ground that his was a category 3 case and did not fall within s 133.\nThe majority allowed the appeals of Mr McCartney and Mr MacDermott as it had been shown conclusively that the evidence against them had been so undermined that no conviction could possibly be based upon it.\nThe minority would have remitted their cases to the Secretary of State for further consideration in the light of the judgment.\n","id":71}
{"input":"This appeal concerns the effect of the default clause in a standard form of contract which is widely used in the grain trade.\nOn 10 June 2010 the respondents, Nidera BV, whom I shall call the buyers, entered into a contract with the appellants, Bunge SA (the sellers), to buy 25,000 metric tonnes (+\/ 10% in buyers option) of Russian milling wheat crop 2010, FOB Novorossiysk.\nThe shipment period was August 2010, but there were provisions for narrowing that period by notice.\nIn the event it was narrowed to 23 30 August 2010.\nThe contract incorporated GAFTA Form 49 (as in effect from 1 January 2006), which is the standard form of FOB sale contract of the Grain and Feed Trade Association, for goods delivered from central or Eastern Europe in bulk or bags.\nClauses 13 and 20 of GAFTA 49 are the main provisions relevant to the present dispute.\nThey provided: 13.\nPROHIBITION In case of prohibition of export, blockade or hostilities or in case of any executive or legislative act done by or on behalf of the government of the country of origin of the goods, or of the country from which the goods are to be shipped, restricting export, whether partially or otherwise, any such restriction shall be deemed by both parties toapply to this contract and to the extent of such total or partial restriction to prevent fulfilment whether by shipment or by any other means whatsoever and to that extent this contract or any unfulfilled portion thereof shall be cancelled.\nSellers shall advise buyers without delay with the reasons therefor and, if required, Sellers must produce proof to justify the cancellation. 20.\nDEFAULT In default of fulfilment of contract by either party, the following provisions shall apply: (a) The party other than the defaulter shall, at their discretion have the right, after serving notice on the defaulter, to sell or purchase, as the case may be, against the defaulter, and such sale or purchase shall establish the default price. (b) If either party be dissatisfied with such default price or if the right at (a) above is not exercisedand damages cannot be mutually agreed, then the assessment of damages shall be settled by arbitration. (c) The damages payable shall be based on, but not limited to the difference betweenthe contract price and either the default price established under (a) above or upon the actual or estimated value of the goods on the date of default established under (b) above. (d) In all cases the damages shall, in addition, include any proven additional expenses which would directly and naturally result in the ordinary course of events from the defaulter's breach of contract, but shall in no case include loss of profit on any sub contracts made by the party defaulted against or others unless the arbitrator(s) or board of appeal, having regard to special circumstances, shall in his\/their sole and absolute discretion think fit. (e) Damages, if any, shall be computed on the quantity called for, but if no such quantity has been declared then on the mean contract quantity and any option available to either party shall be deemed to have been exercised accordingly in favour of the mean contract quantity.\nOn 5 August 2010 Russia introduced a legislative embargo on exports of wheat from its territory, which was to run from 15 August to 31 December 2010.\nOn 9 August 2010, the sellers notified the buyers of the embargo and purported to declare the contract cancelled.\nThe buyers did not accept that the sellers were entitled to cancel the contract at that stage.\nThey treated the purported cancellation as a repudiation, which they accepted on 11 August 2010.\nOn the following day, the sellers offered to reinstate the contract on the same terms, but the buyers would not agree.\nInstead, they began arbitration proceedings under the GAFTA rules, in support of a claim for damages of US$3,062,500.\nThe proceedings below\nAt the hearing of the arbitration, there was a measure of common ground about the basis for assessing damages.\nIt was agreed (i) that clause 20 applied to anticipatory repudiation, (ii) that the buyers had not bought against the sellers pursuant to sub clause (a); (iii) that the date of default for the purpose of clause 20(c) was 11 August 2010, when the sellers repudiation was accepted, and (iv) that the difference between the contract and the market price at that date was US$3,062,500.\nThe sellers case was that they had been entitled to terminate the contract under clause 13 upon the announcement of the export ban, and that even if the termination was premature, the fact that shipment under the contract would have been subject to the ban when the time for shipment came meant that no loss had been suffered.\nGAFTAs first tier arbitration tribunal issued its award on 1 November 2011.\nIt held that the sellers had repudiated the contract because their notice of cancellation was premature.\nThe embargo might have been lifted in time to permit shipment within the laycan period.\nIt was therefore impossible to say, as at the date when the sellers cancelled, that shipment would necessarily be prevented by the embargo.\nBut the tribunal declined to award substantial damages.\nThey held, in agreement with the sellers, that none had been suffered because in fact the embargo was not lifted.\nIt followed that the contract would have been cancelled in any event when the time came for delivery.\nBoth parties appealed to the GAFTA Appeal Board, which issued its own award on 22 June 2012.\nThe Board agreed with the first tier tribunal that the sellers had repudiated the contract by cancelling too early.\nIt accepted that if the contract had not been repudiated on 9 August 2010 it would have been cancelled because of the embargo.\nBut it awarded damages of US$3,062,500, representing the difference between the contract and the market price on 11 August 2010, the date that the repudiation was accepted.\nIn the Appeal Boards view, such an award was required by clause 20(c) of GAFTA 49.\nThe sellers argument, as summarised in the Appeal Boards award, was that at common law it was necessary to take account of events occurring after the breach which showed that the same loss would have been suffered even without the repudiation.\nThey relied on Maredelanto Compania Naviera SA v Bergbau Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164, and Golden Strait Corporation v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 AC 535.\nThe issues were (i) whether that was indeed the position at common law in the case of a contract of this kind; and (ii) if so, whether the common law principle had any application to a contract containing clause 20.\nThe Appeal Board doubted whether at common law subsequent events would be relevant to the assessment of damages under a contract for the sale of a single cargo, as opposed to a contract for delivery by instalments.\nBut they considered that the issue on damages turned wholly on the effect of clause 20 as that clause was commonly understood in the trade.\nThey concluded that sub clause (c) was intended to produce an easily understood and readily applied formula for computing damages in a case where agreement was not reached under sub clauses (a) and (b).\nThat formula might produce a figure more or less than the actual loss.\nProceeding from the common ground that the default date for the purpose of sub clause (c) was 11 August 2010 and from the parties agreement on figures, they awarded the full amount of the buyers claim.\nThis conclusion was also determinative, in the view of the Appeal Board, of the sellers further argument that the buyers had failed to mitigate their loss by accepting the sellers offer to reinstate the contract on the same terms.\nAs the Appeal Board saw it, the buyers acted reasonably in rejecting the offer, because at the time it was made they had a vested right to a large sum by way of damages and acceptance of the offer would have substituted a right to delivery that would probably have been defeated by the embargo.\nOn 10 October 2012, Andrew Smith J gave permission to appeal against the award under section 69 of the Arbitration Act 1996, limited to the following issues: 2.1.\nIs the application of the GAFTA prohibition clause limited to a case where it can be seen after the event that performance of the contract has in fact been prevented by the prohibition in question? 2.2.\nDoes the GAFTA default clause exclude common law principles for the assessment of damages for anticipatory repudiatory breach and in particular (i) the principle of mitigation and\/or (ii) the compensation principle identified in The Golden Victory [2007] 2 AC 353? 2.3.\nIs the overriding compensatory principle established by The Golden Victory limited to instalment contracts? 2.4.\nWas the board wrong in law to conclude that the buyers rejection of the sellers offer to reinstate the contract did not constitute a failure to mitigate on the ground that the sellers did not offer to reinstate the contract on different and more favourable terms than contained in the original contract?\nHamblen J, who heard the appeal in the Commercial Court, dismissed the appeal on issues 2.1, 2.2 and 2.4: [2013] EWHC 84 (Comm); [2013] 1 Lloyds Rep 621.\nSince he agreed with the Appeal Board that clause 20 determined the measure of damages whether or not it produced a result corresponding to the common law, he held that issue 2.3 did not arise.\nBut he shared the doubts of the Appeal Board about the application of The Golden Victory to a contract for a single cargo, observing that this was very much an open question.\nIn the Court of Appeal, the sellers abandoned their arguments on mitigation (issues 2.2(i) and 2.4).\nOn the remaining issues, the Court of Appeal (Moore Bick, Floyd and Clarke LJJ) affirmed the decision of Hamblen J: [2013] EWCA Civ 1628; [2014] 1 Lloyds Rep 404.\nThe common law\nAnticipatory breach of contract, probably more accurately referred to as renunciation, is a concept which can be traced back to the earliest years of the common law but was first coherently formulated in terms of legal principle in Hochster v De la Tour (1853) 2 E & B 678 in England and Howie v Anderson (1848) 10 D 355 in Scotland.\nIn its modern form it is a response to the pragmatic concern of Victorian judges to avoid the waste of economic resources implicit in any inflexible rule which required the parties to go through the motions of performing a contract which was for practical purposes dead.\nThe same concern informs much of the law of contract, notably in the area of frustration and remedies.\nThe early rules of pleading, reflecting the terms of the contract, had required the plaintiff in an action for damages to plead that he had tendered performance of any obligation to be performed by him as a condition precedent to the defaulting partys obligation.\nBut as Lord Campbell explained in Hochster v De la Tour, the effect of the renunciation of a contract in advance of the time agreed for performance was (i) to confer on the injured party an option to accept the renunciation as bringing the contract to an end and to treat himself as discharged from that time onward from further performance; (ii) to enable the injured party to deal with the financial consequences by suing for damages at once, without waiting for the time fixed for performance; and (iii) to bring forward the injured partys duty to mitigate to the time when the renunciation was accepted.\nAn accepted renunciation gives rise to particular problems of legal analysis when it comes to the assessment of damages.\nAs Lord Mustill observed in a characteristically sardonic comment on recent case law: there is every reason to be wary about applying the ordinary rules of damages for breach of contract to this special type of breach unlike the position regarding actual breach I do not see how damages for an anticipatory breach can be awarded with any semblance of intellectual rigour without at least an attempt to inquire into what was the breach to which the damages are attached, and what kind of breach it was which could be committed before there was any present obligation to perform. the common law has never succeeded in finding a solution which is both theoretically sound and capable of producing sensible results in practice.\nThe attempt was, to all intents and purposes, given up a long time ago, and the courts have been content to employ that powerful but dangerous weapon of the common law, a fiction. in the field of anticipatory repudiation, a breach was simply assumed to have occurred when the repudiatory conduct took place, and at least where there was an available market for the goods or services in question those responsible for assessing damages were content to look directly to a comparison between the current market prices or rates and those prescribed by the contract, without any inquiry into why this comparison was being made.\nM Mustill, The Golden Victory Some Reflections (2008) 124 LQR 569, 571 572.\nThe fundamental principle of the common law of damages is the compensatory principle, which requires that the injured party is so far as money can do it to be placed in the same situation with respect to damages as if the contract had been performed: Robinson v Harman (1848) 1 Exch 850, 855 (Parke B).\nIn a contract of sale where there is an available market, this is ordinarily achieved by comparing the contract price with the price that would have been agreed under a notional substitute contract assumed to have been entered into in its place at the market rate but otherwise on the same terms.\nSection 51 of the Sale of Goods Act 1979 provides: 51.\nDamages for non delivery (1) Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non delivery. (2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller's breach of contract. (3) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered, or (if no time was fixed) then at the time of the refusal to deliver.\nSection 50 contains corresponding provisions for non acceptance by the buyer.\nSections 50 and 51 reproduce the corresponding provisions of the Sale of Goods Act 1893, and reflect common law principles which had already been established at the time of the earlier Act.\nSection 51(2) states the compensatory principle in the context of a sellers non delivery.\nSubsection (3) states the prima facie measure of damages where there is an available market, but it is not so much a rule as a technique which is prima facie to be treated as satisfying the general principle expressed in subsection (2).\nIt is not obvious from the terms of the section how it is to apply to a case where by reason of an accepted renunciation the contract has come to an end in advance of the contractual time for delivery.\nThat situation gives rise to two potential questions which are not always sufficiently distinguished in the case law.\nThe first question is: assuming that there is an available market, as at what date is the market price to be determined for the purpose of assessing damages? It is clear that once that date is determined, any subsequent change in the market price is irrelevant.\nMost of the case law on the measure of damages for the repudiation of a contract of sale arises out of disputes about the relevant market price, and this is what judges speaking of the breach date rule are usually referring to.\nThe second question is: in what if any circumstances will it be relevant to take account of contingencies (other than a change in the market price) if subsequent events show that they would have reduced the value of performance, perhaps to nothing, even without the defaulters renunciation? This may happen, for example, if the injured party would have been unable to perform it when the time for performance arrived, or if the defaulter would have been relieved of the obligation to perform by frustration or under the express terms.\nThe answer to the first question, although like section 51(3) it is only a prima facie answer, is that where there is an available market for the goods, the market price is determined as at the contractual date of delivery, unless the buyer should have mitigated by going into the market and entering into a substitute contract at some earlier stage: Garnac Grain Co Inc v HMF Faur & Fairclough Ltd [1968] AC 1130, 1168; Tai Hing Cotton Mill Ltd v Kamsing Knitting Factory [1979] AC 91, 102.\nNormally, however, the injured party will be required to mitigate his loss by going into the market for a substitute contract as soon as is reasonable after the original contract was terminated.\nDamages will then be assessed by reference to the price which he obtained.\nIf he chooses not to do so, damages will generally be assessed by reference to the market price at the time when he should have done: Koch Marine Inc v dAmica Societa di Navigazione (The Elena DAmico) [1980] 1 Lloyds 75, 87, 89.\nThe result is that in practice where there is a renunciation and an available market, the relevant market price for the purposes of assessing damages will generally be determined not by the prima facie measure but by the principles of mitigation.\nThe answer to the second question was given initially by the Court of Appeal in Maredelanto Compania Naviera SA v Bergbau Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164 and then by the House of Lords in Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 AC 353.\nIn the first of these cases the Court of Appeal held that on the assumption that the voyage charterers of The Mihalis Angelos had repudiated the contract they were nevertheless not liable for substantial damages.\nThis was because if the contract had continued they would have terminated it lawfully for breach of a condition as to the time of the vessels arrival at the port of delivery.\nLord Denning and Edmund Davies LJ put the matter entirely generally.\nIn Lord Dennings words (at p 196), You must take into account all contingencies which might have reduced or extinguished the loss.\nBut difficulty arose from the suggestion of Megaw LJ (at pp 209 210) that the result turned on the fact that the vessel was predestined to arrive late at the port of delivery.\nThe subsequent decision in The Golden Victory disposed of the argument, based on Megaw LJs dictum, that a subsequent event which would have reduced or extinguished the loss had to be inevitable, viewed at the time when the repudiation was accepted.\nThe facts were that a seven year time charter had been brought to an end by the charterers repudiation in the course of performance some four years before its contractual terms but only fourteen months before it would have been cancelled in any event under a war clause.\nAt the time when the charterers repudiation was accepted, war was far from inevitable.\nIt was found to be no more than a possibility.\nThe question was how long it should be assumed, in those circumstances, that the charterparty would have lasted if it had not been wrongfully terminated.\nThe House held by a majority that the overriding principle (or lodestar) was the compensatory principle.\nIrrespective of the date as at which the market price was ascertained, it was necessary to take account of contingencies known at the date of the arbitrators assessment to have occurred, if their effect was that the contract would have been lawfully terminated at or before its contractual term.\nIt followed that damages were to be assessed on the assumption that the charter would have lasted for another 14 months.\nThe reasoning has to some extent been obscured by the focus on the implications of the so called breach date rule and on the competing demands of certainty and compensation.\nThe real difference between the majority and the minority turned on the question what was being valued for the purpose assessing damages.\nThe majority were valuing the chartered service that would actually have been performed if the charterparty had not been wrongfully brought to a premature end.\nOn that footing, the notional substitute contract, whenever it was made and at whatever market rate, would have made no difference because it would have been subject to the same war clause as the original contract: see Lord Scott of Foscote at para 37, and Lord Brown of Eaton under Heywood at paras 76 78 and 82.\nThe minority on the other hand considered that one should value not the chartered service which would actually have been performed, but the charterparty itself, assessed at the time that it was terminated, by reference to the terms of a notional substitute concluded as soon as possible after the termination of the original.\nThat would vary, not according to the actual outcome, but according to the outcomes which were perceived as possible or probable at the time that the notional substitute contract was made.\nThe possibility or probability of war would then be factored into the price agreed in the substitute contract: see Lord Bingham of Cornhill at paras 22 and Lord Walker of Gestingthorpe at paras 45 46.\nI think that the majoritys view on this point was correct.\nSections 50 and 51 of the Sale of Goods Act, like the corresponding principles of the common law, are concerned with the price of the goods or services which would have been delivered under the contract.\nThey are not concerned with the value of the contract as an article of commerce in itself.\nAs Lord Brown observed at paras 82 83, even if the charterparty rights could have been sold for a capital sum, this was not a proper basis for assessing loss, and an assessment which proceeded as if it were would extend the effect of the available market rule well beyond its proper scope.\nThe leading speech for the majority, which was delivered by Lord Scott of Foscote, contains dicta which have sometimes been taken to suggest a distinction between a contract for a one off sale and a contract for the supply of goods or services over a period of time: see paras 34 35.\nThese dicta influenced both the Appeal Board and Hamblen J in the present case.\nBut I do not think that Lord Scott was suggesting that the underlying principle was any different in the case of a one off sale.\nWhere the only question is the relevant date for taking the market price, the financial consequences of the breach may be said to crystallise at that date.\nBut where, after that date, some supervening event occurs which shows that that neither the original contract (had it continued) nor the notional substitute contract at the market price would ever have been performed, the concept of crystallising the assessment of damages at that price is unhelpful.\nThe occurrence of the supervening event would have reduced the value of performance, possibly to nothing, even if the contract had not been wrongfully terminated and whatever the relevant market price.\nThe nature of that problem does not differ according to whether the contract provides for a single act of performance or several successive ones.\nNor, as it seems to me, is there any principled reason why the majoritys solution should be any different in the two cases.\nIf a distinction were to be made between them, it is difficult to see how The Mihalis Angelos, which concerned a contract for a single voyage, could have been decided as it was.\nAs Lord Scott observed in The Golden Victory at para 36, the compensatory principle would be equally offended by disregarding subsequent events serving to reduce or eliminate the loss under any anticipatory breach the acceptance of which had terminated an executory contract.\nThe most that can be said about one off contracts of sale is that the facts may be different.\nIn particular, if the injured party goes into the market and enters into a substitute contract by way of mitigation, it will not necessarily be subject to the same contingencies as the original contract.\nThe principle upheld in The Golden Victory has come in for a certain amount of academic criticism and judicial doubt.\nTo my mind both the criticism and the doubt are unjustified.\nThe most comprehensive and influential critic has been Professor Treitel.\nHis views were set out in their fullest form in a case note on the decision of the Court of Appeal, which had reached the same conclusion as the majority of the Appellate Committee: see Assessment of Damages for Wrongful Repudiation, (2007) 123 LQR 9.\nProfessor Treitels case note was cited to the Appellate Committee but evidently did not move them.\nHis main criticisms were, first, that the decision failed to distinguish between the different supervening events (successful mitigation by the defaulting party, inability of the innocent party to perform, cancellation under an express provision) which may serve to reduce or extinguish the loss; secondly, that it took no account of the collateral motives that might have moved the party who had repudiated the contract to cancel it lawfully at a later stage if it had continued; and, thirdly, that it attached insufficient weight to the commercial value of certainty.\nI am no more convinced by these criticisms than the Appellate Committee was in The Golden Victory.\nThe principle which the Committee applied was neither new nor heterodox.\nThere is no principled reason why, in order to determine the value of the contractual performance which has been lost by the repudiation, one should not consider what would have happened if the repudiation had not occurred.\nOn the contrary, this seems to be fundamental to any assessment of damages designed to compensate the injured party for the consequences of the breach.\nIf the contract had not been repudiated, it would have been lawfully cancellable.\nIf it was lawfully cancellable, the charterer would have been entitled to avail himself of that right regardless of his motive.\nThe only question is whether he would in fact have done so, a question which in practice would probably have been determined by his financial interest.\nCommercial certainty is undoubtedly important, although its significance will inevitably vary from one contract to another.\nBut it can rarely be thought to justify an award of substantial damages to someone who has not suffered any.\nAs Lord Mance pointed out in the Court of Appeal in The Golden Victory [2006] 1 WLR 533, para 24, the degree of uncertainty involved in that case was no greater than the uncertainty inherent in the contract itself.\nThe parties obligations were always defeasible in the uncertain event of war, just as their obligations under the contract presently in issue were always defeasible in the uncertain event of an export embargo.\nClause 20 of GAFTA 49\nMr Rainey QC, who appeared before us for the sellers, submitted that there was a strong presumption that an express damages clause was not intended to depart from the compensatory principle applied in The Golden Victory.\nUnless the contract provided otherwise in clear terms, damages would not be awarded where no loss had been sustained.\nThis was not, he said, inconsistent with clause 20, which only required the assessment of damages to be based on the difference between the contract price and the market price or value at the relevant time.\nHe proposed that effect should be given to the parties presumed intention to adhere to the compensatory principle by distinguishing between two stages of the inquiry, namely (i) whether any loss has been sustained as a result of the breach, and (ii) if so, how much loss had been suffered.\nClause 20, he suggested, was concerned with stage (ii) but not stage (i).\nTwo preliminary observations are called for.\nThe first is that damages clauses are commonly intended to avoid disputes about damages, either by prescribing a fixed measure of loss (as in the case of a liquidated damages clause) or by a providing a mechanical formula in place of the more nuanced and fact sensitive approach of the common law (as in clause 20 of GAFTA 49).\nIn either case, it is inherent in the clause that it may produce a different result from the common law.\nFor that reason there can be no scope for a presumption that the parties intended the clause to produce the same measure of damages as the compensatory principle would produce at common law.\nThe mere fact that in some cases its application will over or under estimate the injured partys loss is nothing to the point.\nSuch clauses necessarily assume that the parties are willing to take the rough with the smooth.\nHowever, I would accept a more moderate version of Mr Raineys presumption.\nA damages clause may be assumed, in the absence of clear words, not to have been intended to operate arbitrarily, for example by producing a result unrelated to anything which the parties can reasonably have expected to approximate to the true loss.\nThe second preliminary observation is that such clauses are not necessarily to be regarded as complete codes for the assessment of damages.\nA damages clause, like any other contractual provision, is conclusive of the matters with which it deals.\nIt may also implicitly exclude considerations which, although not directly within its scope, cannot be applied consistently with its terms.\nBut it is a question of construction whether the mere fact that it deals with damages means that it must have been intended to do so exhaustively, thereby impliedly excluding any considerations which it has not expressly addressed.\nTo treat a damages clause as a complete code in this all embracing sense is to tax the foresight of the draftsman in a way which is rarely appropriate unless the alternative is to undermine the coherence or utility of the clause.\nClause 20(a) (c) of GAFTA 49 is concerned with the determination of the difference between the contract price of the goods and their market price or value.\nDetailed analysis of the way that it works does not affect the outcome of this appeal, and argument on the point was largely foreclosed by the way that the case was put to the arbitrators.\nBut given the importance of the GAFTA default clause, it is right to deal with it.\nThe position may in my view be summarised as follows: (1) The clause applies, as its opening words declare, in default of fulfilment of contract by either party.\nAs a matter of ordinary language, the fulfilment of the contract means its performance, and default of fulfilment means its non performance.\nThis is the sense in which fulfilment is used throughout GAFTA 49.\nThus clause 4 deals with brokerage, and provides that it is payable contract fulfilled or not fulfilled, but not if such non fulfilment is due to the (lawful) cancellation of the contract under the prohibition or force majeure clauses.\nClause 13, the prohibition clause, provides that prohibition of export, blockade or of hostilities will cause the contract to be cancelled if and so far as it prevents fulfilment whether by shipment or by any other means whatsoever.\nClause 14 is a more general force majeure clause applicable to cases where the execution of this contract or any unfulfilled portion thereof is prevented by specified categories of event.\nClause 22 provides for the closing out of the contract in the event of insolvency supervening before fulfilment of this contract.\nIn each of these contexts the fulfilment of the contract clearly refers to the performance of the parties contractual obligations, and non fulfilment or default of fulfilment to their non performance.\nThe use of the same term in the opening words of clause 20 indicates that that clause is concerned with non performance.\nFor this purpose, it does not matter whether the contract has not been performed because it was repudiated in advance of the time for performance, or because it was simply not performed when that time arrived.\nIn either case, there is nothing other than contractual performance which can be said not to have been fulfilled. (2) Clause 20(a) gives the injured party the option, at its discretion, of selling or buying (as the case may be) against the defaulter, in which case the sale or purchase price will be the default price.\nEither party is at liberty to reject the default price, if there is one, as the basis for assessing damages.\nIf either (i) there is no default price, because the injured party did not go into the market to buy or sell against the defaulter, or else (ii) there is a default price but one of the parties is dissatisfied with it, then damages must go to arbitration in accordance with sub clause (c). (3) Sub clause (c) provides for two alternative bases of assessment by the arbitrators.\nThe first, which applies if a default price has been established but not accepted, is the difference between the default price and the contract price.\nIn other words, if the injured party has gone into the market and bought or sold against the defaulter, the arbitrators may accept that the default price should be used to calculate damages, notwithstanding the objections of one or other party or even both of them.\nThe second basis of assessment is the difference between the contract price and the actual or estimated value of the contract goods at the date of default.\nThis means the date of the default of fulfilment referred to in the opening words of clause 20, ie the date on which the contract should have been fulfilled by performance in accordance with its terms. (The words established under (b) above merely refer to the value settled by arbitration, that being the only basis on which (b) provides for a value to be fixed.) (4) The combined effect of sub clauses (a), (b) and (c) is therefore to produce a measure of damages which differs in two main respects from the common law paradigm.\nThe first is that the injured party is not required to mitigate by going into the market and buying or selling against the defaulter, but has a discretion whether to do so.\nDamages can be assessed as at the date when the injured party accepted the repudiation only if he actually went into the market to fix a price at that date.\nThe second is that if the injured party has not in fact gone into the market and made a substitute contract the contract price falls to be compared not with the market price of the goods but with their actual or estimated value.\nThis may be assessed by reference to the market price of different but comparable goods, for example goods of different origin or shipment date.\nMr Rainey submits that this careful scheme is concerned only with the question how much loss has been suffered, and that it applies only once it has been determined on a preliminary inquiry that there has been at least some loss.\nIt does not apply if at common law there has been none.\nI do not accept this.\nIn my view there is one question, namely how much loss has been suffered.\nZero is simply one possible answer to that question.\nMr Raineys approach does not even secure the consistent application of the compensatory principle which is said to be its justification.\nIf the clause produces a high figure for the injured partys loss, it would fall to be applied if the figure calculated in accordance with the compensatory principle was low but not if it was zero.\nIf, for example, the injured party had suffered some modest out of pocket expenses recoverable under sub clause (d), that would result in the application of the clause to the whole of the rest of the claim, however much its effect was to overstate the actual loss.\nThese consequences seem at least as arbitrary and anomalous as those of which Mr Raineys clients complain.\nThe real distinction in my opinion is not between cases where there would be some damage at common law and cases where there would be none.\nIt is between the two questions which I have identified at para 16 above.\nAs applied to facts like these, they are, first, what is the relevant market price or value of the goods for the purposes of assessing damages? And, secondly, in what circumstances is it relevant to take account of contingencies, other than changes in the market price or value of the goods, which would have prevented the goods from being delivered whatever the market price or value, with the result that the buyer would have suffered the same loss in any event?\nLeaving aside the provisions of sub clause (d) relating to additional expenses and losses on sub contracts, which have no bearing on the present issue, clause 20 is concerned only with the first of these questions.\nSub clauses (a) to (c) constitute an elaborate, indeed a complete, code for determining the market price or value of the goods that either were actually purchased by way of mitigation or might have been purchased under a notional substitute contract.\nThe clause does not deal at all with the effect of subsequent events which would have resulted in the original contract not being performed in any event.\nThe effect of these events could be excluded from consideration only if clause 20 were treated as a complete code not just for determining the relevant market price or value but for every aspect of the assessment of damages.\nIn my opinion clause 20 cannot be viewed in that way.\nIn the first place, it neither provides nor assumes that assessment will depend only on the difference between the contract price and the relevant market price or value.\nIt provides that the damages payable shall be based on that difference.\nIt does not exclude every other consideration which may be relevant to determine the injured partys actual loss.\nThe clause is consistent with a conclusion that because of a subsequent supervening event the contract would never have been performed and the same loss would have been suffered even if it had not been renounced.\nSecondly, this is what one would in any event infer from the limited subject matter of the clause.\nClause 20 is not sufficiently comprehensive to be regarded as a complete code covering the entire field of damages.\nSub clause (c) covers the same territory as sections 50(3) and 51(3) of the Sales of Goods Act, and sub clauses (a) and (b) cover the territory occupied by the common law principles concerning the mitigation of losses arising from price movements.\nBut this is very far from the entire field.\nThese provisions bring a valuable measure of certainty to issues arising from price movements which have given rise to difficulty and dispute at common law for 150 years.\nThat is a valuable purpose which the clause achieves whatever the answer to the question now before us.\nBut clause 20 is not concerned with bases of assessment which do not depend on the terms of a notional substitute contract or on any determination of the market price: for example expenses incurred by the buyer in the course of performance, which are not occasioned by the breach of contract but have been rendered futile by it, and would normally be recoverable as an alternative to the prima facie measure.\nMoreover, although the clause deals with the injured partys duty to mitigate by going into the market to buy or sell against the defaulter, it does not deal with any other aspect of mitigation.\nIt therefore leaves open the possibility that damages may be affected by a successful act of mitigation on the part of the injured party or by an offer from the defaulter which it would have been reasonable for the injured party to accept.\nLikewise, in my opinion, clause 20 neither addresses nor excludes the consideration of supervening events (other than price movements) which operate to reduce or extinguish the loss.\nA similar conclusion was reached in two decisions concerning similar default clauses, both of which I respectfully regard as consistent with principle.\nBem Dis A Turk S\/A TR v International Agri Trade Co Ltd (The Selda) [1998] 1 Lloyds Rep 416 (Clarke J), [1999] 1 Lloyds Rep 729 (CA) arose out of the sellers repudiation of a C&F contract containing an earlier version of the GAFTA default clause, which was similar to clause 20 but did not include the provision of sub clause (d) allowing the recovery of expenses occasioned by the breach.\nThe buyers made no claim for damages based on the difference between the contract price and the market price or value, presumably because the market had moved in their favour since the original contract was made.\nThey claimed only the expenses occasioned by the repudiation.\nThey recovered them from the arbitrators, and the award was affirmed by both Clarke J and the Court of Appeal.\nAmong the arguments which were rejected at all three stages was that the default clause was a complete code covering the whole field of damages.\nThis was because it was concerned only with the computation of damages based on the difference between the contract price and the market price or value, or on the losses incurred on sub contracts.\nA claim for expenses lay outside its scope and was not therefore implicitly excluded.\nThe argument rejected in The Selda was that the default clause impliedly excluded any head of loss which it did not expressly allow, and some significance was attached to the analogy with exclusion clauses drawn by Lord Diplock in Gilbert Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689, 717 718.\nBut I think that the analysis would have been the same in the converse case, where it was suggested that the clause impliedly required the award of a head of damage which has not been suffered.\nThis was the position in Novasen SA v Alimenta SA [2013] 1 Lloyds Rep 647, the facts of which were indistinguishable from those of the present case.\nThe contract incorporated a standard form of the Federation of Oil, Seeds and Fats Associations which included a default clause similar to clause 20(a) (c) and (e) of GAFTA 49, except that the difference between the contract and the market price was expressed to be the maximum measure of damages.\nThe issue was whether a loss computed in accordance with the clause had been extinguished by the later operation of an export ban at the contractual point of shipment.\nPopplewell J held that it had, on the ground that nothing in the clause required a loss calculated in accordance with the default clause to be awarded to the injured party if supervening events showed that it had not been suffered.\nThis result seems to me to be consistent with principle.\nThe alternative is to allow the clause to operate arbitrarily as a means of recovering what may be very substantial damages in circumstances where there has been no loss at all.\nIn the present case, the sellers jumped the gun.\nThey repudiated the contract by anticipating that the Russian export ban would prevent shipment at a time when this was not yet clear.\nBut fortunately for them their assumption was in the event proved to have been correct.\nThe ban would have prevented shipment when the time came.\nThe buyers did nothing in consequence of the termination, since they chose not to go into the market to replace the goods.\nThey therefore lost nothing, and the arbitrators should not have felt inhibited from saying so.\nConclusion\nIn my opinion the answer to question 2.3 in Andrew Smith Js order granting permission to appeal from the award is that the compensatory principle established in The Golden Victory is not limited to instalment contracts, and that the GAFTA Appeal Board was in error in thinking that it was.\nThe answer to question 2.2(ii) in the order is that the default clause in GAFTA 49 does not exclude the principle identified in The Golden Victory [2007] 2 AC 353.\nIn both respects, the correct conclusion had been reached in the first tier award.\nIt follows that I would allow this appeal and vary the award of the Appeal Board by excising so much of it as awards substantial damages to the buyers and substituting an award of nominal damages in the sum of US$5.\nThe parties should be directed to deal in writing with the question whether the award should also be varied so far as it awarded costs against the sellers (para 6.4), and with the incidence of costs of the proceedings following the award.\nLORD TOULSON: (with whom Lord Neuberger, Lord Mance and Lord Clarke agree)\nThe appellants (the sellers) contracted to sell to the respondents (the buyers) 25,000 metric tonnes of Russian milling wheat FOB Novorossiysk.\nThe contract incorporated the GAFTA 49 form of contract designed for the delivery of goods from central and Eastern Europe in bulk or bags on FOB terms.\nThe appeal raises questions about the construction of a clause of the contract and about the applicability and correctness of the decision of the majority of the House of Lords in Golden Strait Corporation v Nippon Yusen Kubisha Kaisha (The Golden Victory) [2007] UKHL 12, [2007] 2 AC 353.\nI agree with the conclusions of Lord Sumption, but because we are disagreeing with the judgments of the Court of Appeal, Hamblen J and the GAFTA Appeal Board, and the decision in The Golden Victory has generated much debate, I will set out my reasoning in my own words.\nGAFTA 49 includes these terms: 13.\nPROHIBITION In case of prohibition of export, blockade or hostilities or in case of any executive or legislative act done by or on behalf of the government of the country of origin of the goods, or the country from which the goods are to be shipped, restricting export, whether partially or otherwise, any such restriction shall be deemed by both parties to apply to this contract and to the extent of such total or partial restriction to prevent fulfilment whether by shipment or by any other means whatsoever and to that extent this contract or any unfulfilled portion thereof shall be cancelled.\nSellers shall advise buyers without delay with the reasons therefor and, if required, Sellers must produce proof to justify the cancellation. 20.\nDEFAULT In default of fulfilment of contract by either party, the following provisions shall apply: (a) The party other than the defaulter shall, at their discretion have the right, after serving notice on the defaulter, to sell or purchase, as the case, may be, against the defaulter, and such sale or purchase shall establish the default price. (b) If either party shall be dissatisfied with such default price or if the right at (a) above is not exercised and damages cannot be mutually agreed, then the assessment of damages shall be settled by arbitration. (c) The damages shall be based on, but not limited to, the difference between the contract price and either the default price established under (a) above or upon the actual or estimated value of the goods on the date of default established under (b) above. (d) In all cases the damages shall, in addition, include any proven additional expenses which would directly and naturally result in the ordinary course of events from the defaulters breach of contract, but shall in no case include loss of profit on any sub contracts made by the party defaulted against or others unless the arbitrator(s) or board of appeal, having regard to special circumstances, shall in his\/their sole and absolute discretion think fit. (e) Damages, if any, shall be computed on the quantity called for, but if no such quantity has been declared then on the mean contract quantity and any option available to either party shall be deemed to have been exercised in favour of the mean contract quantity. 24.\nARBITRATION (a) Any and all disputes arising out of or under this contract or any claim regarding the interpretation or execution of this contract shall be determined by arbitration in accordance with\nthe GAFTA Arbitration Rules\nThe contract was made on 10 June 2010 and provided for delivery in August 2010.\nThe delivery period was later narrowed to between 23 and 30 August 2010.\nOn 5 August 2010 the buyers nominated a vessel to take delivery, but on the same day the Russian government announced the passing of a resolution imposing a prohibition on the export of agricultural products including wheat from the territory of the Russian Federation between 15 August and 31 December 2010.\nOn 9 August 2010 the sellers sent an email to the buyers notifying them of the export ban and saying that the contract was therefore cancelled under GAFTA 49, clause 13.\nThis was a mistake.\nThe notification was sent six days before the ban was due to come into effect and 14 days before the start of the contractual delivery period.\nIt was not beyond the bounds of possibility that the ban might in the meantime be lifted, and the sellers therefore jumped the gun by their unqualified statement that the contract was cancelled.\nOn 11 August 2010 the buyers responded by saying that the sellers email was a repudiation of the contract, which the buyers accepted; that the sellers were now in default; and that the buyers claim would follow shortly.\nOn 12 August 2010 the sellers replied expressing puzzlement over the buyers position.\nThey said that their earlier email had been sent in accordance with the prohibition clause, since under the ban it would not be possible to deliver the goods, and they stated that they would perform the contract if the ban were lifted or changed.\nThey queried whether the buyers truly believed that it was sensible to incur the costs of chartering a vessel and presenting it for loading, but they stated that they formally offered to reinstate the contract on all its terms including the prohibition clause.\nThe buyers declined the sellers offer.\nThe export ban was not lifted but was later extended.\nIt is not now in dispute that the buyers were entitled as a matter of law to treat the sellers email of 9 August 2010 as a wrongful repudiation of the contract.\nA fair minded outsider would say that the buyers suffered no loss from the sellers mistake in prematurely treating the export ban as making the performance of the contract impossible.\nAs soon as the sellers received the buyers email on 11 August 2010 treating the contract as repudiated, the sellers immediately made it plain that the original terms remained available to the buyers (not that it would have made the slightest commercial difference to the buyers whether they accepted them since the ban remained in place, as both parties no doubt expected).\nBy contrast, arbitration proceedings have resulted in an award to the buyers of US$3,062,500, which has been upheld by judgments of Hamblen J and the Court of Appeal (respectively [2013] EWHC 84 (Comm); [2013] 1 Lloyds Rep 621 and [2013] EWCA Civ 1628; [2014] 1 Lloyds Rep 404).\nIt is necessary to explain how this has happened in order to understand the issues before this court.\nThe contract price of the wheat was $160 per metric tonne.\nBefore the first tier GAFTA arbitration panel the buyers relied on statements from two brokers putting the market value of wheat at the termination of the contract as $285 and $280 respectively.\nThe buyers contended for a midway figure of $282.50.\nThe sellers did not contest that evidence but they argued that the buyers had suffered no loss since the contract would have been cancelled in any event.\nThe first tier panel accepted the sellers argument and rejected the buyers claim.\nThe GAFTA Appeal Board allowed the buyers appeal.\nIt is important to understand what was agreed and what was in issue.\nParagraph 5.7 of the appeal award recorded the following points, which I will break up into sub paragraphs: i) It was common ground that an anticipatory repudiatory breach of a contract for the sale of goods on GAFTA terms is a default within the meaning of the default clause. ii) It was also common ground that the date of the default for the purposes of the default clause was the date on which the repudiation is accepted as bringing the contract to an end. iii) Here the relevant date was 11 August 2010. iv) The buyers market evidence was not challenged by the sellers. v) Neither side suggested any other figure as the correct measure of damages and it was a question whether the buyers recover the full sum claimed, ie $3,062,500, or whether they recover nothing.\nIn its award the appeal panel said that the default clause is designed to achieve certainty and it observed that this object is reinforced by clause 20(e), which avoids inquiry as to the quantity that would have been shipped but for the default.\nThe sellers argued that the first tier tribunal had been right to reject the buyers claim for the reasons given by it, that is to say, because the ban remained in place and the lost contract would therefore have been cancelled in due course in any event.\nThe sellers relied in support of their argument on the decision of the majority of the House of Lords in The Golden Victory.\nThe appeal panel held that the fact that the contract would subsequently have been cancelled was irrelevant, since the default clause required the loss to be assessed on the date of default, which was agreed to be 11 August 2010.\nThe sellers applied for and were given permission to appeal to the High Court on the following points of law: i) Is the application of the GAFTA prohibition clause limited to a case where it can be seen after the event that performance of the contract has in fact been prevented by the prohibition in question? ii) Does the GAFTA default clause exclude common law principles for the assessment of damages for anticipatory breach and in particular (i) the principle of mitigation and\/or (ii) the compensation principle identified in The Golden Victory? iii) Victory limited to instalment contracts? iv) Was the Board wrong in law to conclude that the buyers rejection of the sellers offer to reinstate the contract did not constitute a failure to mitigate on the ground that the sellers did not offer to reinstate the contract on different and more favourable terms than contained in the original contract?\nIs the overriding compensatory principle established by The Golden\nThe first question related to liability.\nHamblen J decided it in the buyers favour and it is no longer in issue.\nThe other questions related to damages.\nThe sellers argued that on common law principles the buyers had suffered no loss and were entitled to no more than nominal damages for two reasons.\nFirst, The Golden Victory established that whether loss had been suffered as a result of the early termination of a contract depends on what would have happened in the absence of that termination.\nSecondly, by offering to reinstate the contract on its original terms the sellers had offered to restore to the buyers precisely what any damages claim would assert had been lost.\nThe buyers rejection of the offer was a failure properly to mitigate.\nThe sellers further argued that the operation of those common law principles was not excluded by the default clause.\nFirst, there was a distinction to be drawn between proof of loss and the assessment of its amount.\nThe default clause went only to the assessment of quantum.\nIt did not displace the application of common law principles in deciding whether there was a loss to be assessed.\nSecondly, the words based on in clause 20(c) did not exclude the operation of common law principles of compensation or the doctrine of mitigation.\nHamblen J rejected the sellers argument about the effect of the default clause.\nHe did not accept that there was a clear dividing line between the causation and assessment of loss.\nThe default clause prescribed how damages were to be assessed and the Appeal Board had correctly applied it.\nOn the mitigation issue he added that the Board had found that the buyers had acted reasonably and their finding was a finding of fact which could not be appealed.\nHe described it as an open question whether The Golden Victory approach was applicable to a one off contract of sale of goods, but it was not necessary for him to decide the third question on which permission to appeal had been given.\nThe judgment of the Court of Appeal was given by Moore Bick LJ, with whom Floyd and Christopher Clarke LJJ agreed.\nHe dealt with the issue of damages quite briefly.\nCounsel who appeared for the sellers (not Mr Simon Rainey, QC) raised the issue whether the opening words of the default clause In default of fulfilment of contract limited the operation of the clause to breaches by non delivery or non acceptance, rather than a default resulting from an accepted repudiation of the contract.\nHe recognised that this argument had not been advanced before the Appeal Board or the judge, but he reserved his position on it.\nHis main argument was that the default rule was to be read as being subject to the compensatory principle applied in The Golden Victory and that, since the export ban had remained in force throughout the contractual shipment period, the sellers would have been unable to perform the contract in any event and the buyers had suffered no loss.\nHe also repeated the argument advanced before Hamblen J about the distinction between the proof of loss and measurement of loss.\nMoore Bick LJ recorded that the sellers did not challenge the judges decision on mitigation.\nOn the points about damages which the sellers argued, the Court of Appeal upheld the reasoning and conclusions of Hamblen J.\nLike him, it expressed no view about the effect of the decision in The Golden Victory.\nThe parties have agreed that the issues on this appeal can be summarised as follows: Issue 1: On the assumption, in the sellers favour, that The Golden Victory applies to the present case and that the buyers on the facts of the present case would be entitled only to recover nominal damages for the sellers default absent the GAFTA default clause, does that clause entitle the buyers to recover damages in the sum awarded by the GAFTA Appeal Board? Issue 2: If not, is the assumption valid (it being the buyers contention that it is not valid, but the sellers contention that it is valid)?\nI will take issue 1 first.\nThe question turns on the meaning to be given to the words of clause 20(c) The damages shall be based on, but not limited to, the difference between .\nAccording to the buyers argument, clause 20 is a complete code; and these words set a minimum level of damages equal to the difference between a) the contract price and b) the default price or estimated value of the goods, in addition to which the claimant may recover other expenses provided that they are not too remote and do not include loss on a subcontract save in exceptional circumstances.\nAccording to the sellers argument, the words based on are not to be read as fixed at or consist of but permit a more flexible approach.\nOn this construction, the provision does not set a floor below which damages may not fall; it prescribes one or other method of valuation of the goods as a baseline for the calculation of damages but no more.\nIt therefore does not preclude a tribunal from adopting the approach which was taken by the first tier panel.\nBefore considering the particular problem in the present case, it is instructive to consider a situation in which at the time of the breach there is no available market for the purchase or sale of goods answering precisely to the description of the contract goods.\nMr Philip Edey QC on behalf of the buyers submitted that under clause 20(a) the party which is not in breach may decide to sell or purchase against the defaulter goods which are not identical to the contract goods.\nMr Rainey on behalf of the sellers submitted the opposite.\nOne answer would be that the innocent party, if he is a buyer, is entitled to purchase non identical goods and hold the seller liable for damages equal to the difference in price, without any adjustment even if the replacement goods are of a higher quality than the contract goods.\nAnother answer would be that under clause 20(a) the replacement goods have to be precisely the same.\nA third answer would be that the price of goods bought as a replacement, even if not identical, provides the basis or foundation for calculating damages, but that adjustment should be made for the superior quality of the replacement goods in order to avoid over compensation and to achieve a just result.\nThe first answer is not one which the parties could reasonably have intended.\nThe second and third answers would lead to the same practical result.\nEither the clause was premised on there being an available market for identical goods, in the absence of which ordinary common law principles would apply for the assessment of damages, or else the clause accommodates the situation by the words based on affording the necessary flexibility to make a fair adjustment.\nI prefer the former interpretation, because it seems most likely that the purpose of this part of the clause is to provide a surrogate for the valuation of the contract goods, which presupposes that they are identical, but the point is academic.\nIn the present case the hypothetical contract on which the buyers claim for damages was based was on identical terms, save as to price, but the contract and its notional substitute were extremely unlikely to be capable of fulfilment for reasons beyond the control of the parties.\nThe contract stood to be automatically cancelled unless the Russian government ban was raised.\nThe clause does not in terms address such a situation.\nAs in the previous example there are three possible answers.\nOne is that however improbable it may have been that the ban would be lifted, the language of the clause precludes that factor from being taken into consideration.\nThe second is that the clause is concerned only with placing a mathematical value on the goods, assuming the contract to be capable of performance, and that it is not intended to oust the application of ordinary common law principles where that assumption is inappropriate.\nThe third is that the language of the clause has sufficient flexibility to make a fair adjustment in the assessment of what the buyers have lost.\nAgain, the second and third answers would lead to the same outcome.\nIn disagreement with the appeal panel, the judge and the Court of Appeal, I do not consider that the language of the clause is sufficiently clear to have the preclusive effect for which the buyers contend.\nIn my view the second, or (if I am wrong) the third, is a more reasonable interpretation.\nThe first construction would require the tribunal to adopt a blinkered approach to the facts, which would place the buyers financially in a far better position than if the breach had not occurred.\nThis is most unlikely to have been the drafters intention.\nIt is far more likely that the drafter had in mind the usual situation of a non delivery or non acceptance of goods for which there was an available market.\nI am reinforced in this view by the judgment of Clarke J in Bem Dis A Turk S\/A TR v International Agri Trade Co Ltd (The Selda) [1998] 1 Lloyds Rep 416, where he held that the words shall be based on were not to be construed as synonymous with shall consist exclusively of or shall be limited to. (His judgment was approved by the Court of Appeal at [1999] 1 Lloyds Rep 729).\nI also reject the argument that the clause precludes the operation of the common law principle regarding mitigation of loss, but, perhaps unfortunately, the I would therefore answer issue 1 in the sellers favour and turn to issue 2 application of the principle to the facts of this case has not been the subject of argument before this court.\nconcerning The Golden Victory.\nThe Golden Victory was a case of wrongful repudiation of a time charter by the charterers.\nThe charter contained a war clause entitling either party to cancel the charter if war or hostilities broke out between any of a number of countries including the USA, UK and Iraq.\nAt the time of the repudiation in December 2001 there was a minimum period of nearly four years to run under the contract.\nA reasonably well informed person would have regarded the outbreak of hostilities between the USA or UK and Iraq as a possibility but no higher.\nIn fact, hostilities began in March 2003.\nIn October 2004 the arbitrator delivered an award declaring that no damages were recoverable in respect of the period from March 2003 onwards.\nHis decision was upheld on appeal by the judge, the Court of Appeal and a majority of the House of Lords.\nTheir decisions are reported at [2005] EWHC 161 (Comm), [2005] 1 Lloyds Rep 443; [2005] EWCA 1190, [2006] 1 WLR 533; and [2007] UKHL 12, [2007] 2 AC 353.\nIn a succinct judgment Langley J held that the arbitrators award accorded with the basic compensatory rule for the assessment of damages.\nThe charterparty which the owners lost was subject to the uncertainty of the war clause.\nIf the owners recovered damages for the period after the outbreak of hostilities they would be recovering more than the charterparty was worth to them.\nThat essential reasoning was affirmed by the Court of Appeal and a majority of the House of Lords.\nIn giving the judgment of the Court of Appeal, Lord Mance (with whom Auld and Tuckey LJJ agreed) said about the available market rule at para 27: The purpose of that rule is to fix a rate which then falls to be compared with the original charter rate.\nIn this way, the owners are put back notionally in the same position as they would have been under the original charter.\nAssuming that the owners grant a substitute charter, they can operate the vessel subject to that charter or dispose of her with it, as they like.\nBut the aim in assessing damages on such an assumption is not to eliminate from consideration any of the original charter terms, or any effect which they might have had.\nIndeed, the market rate for a substitute charter must be ascertained by postulating a charterparty which corresponds as closely as possible with the actual charterparty: cf Arta Shipping Co Ltd v Thai Europe Tapioca Service Ltd (The Johnny) [1977] 2 Lloyds Rep 1, 4, per Sir David Cairns.\nIn the House of Lords the majority comprised Lords Scott, Carswell and Brown.\nLords Bingham and Walker dissented.\nLord Scott, at para 36, described the lodestar as being that the damages should represent the value of the contractual benefits of which the claimant had been deprived by the breach of contract, no less but also no more.\nIt had been accepted in argument that the owners charterparty rights would not in practice have been marketable for a capital sum.\nThe contractual benefit to the owners, of which they were deprived by the repudiatory breach, was the right to receive the hire rate during the currency of the charterparty, but that right was subject to the war clause.\nThe owners were seeking compensation exceeding the value of the benefits of which they were deprived.\nLord Scott contrasted the case with that of a contract for a one off sale.\nHe said, at para 34, that the assessment at date of breach rule is particularly appropriate in such a case where there is an available market, by reference to which the amount of the loss can be fixed, but he noted that even here some period must normally be allowed for arrangements for a substitute sale to be made (Kaines (UK) Ltd v Osterreichische Warrenhandelgesellschaft [1993] 2 Lloyds Rep 1).\nBut, he said at paras 35 and 36, in a case of a contract for the supply of goods over an extended period, or any anticipatory breach the acceptance of which terminated an executory contract, the application of the breach date rule may not be apt because [t]he contractual benefit for the loss of which the victim of the breach can seek compensation cannot escape the uncertainties of the future.\nLord Brown, agreeing with Lord Scott, emphasised that any hypothetical substitute contract would have been subject to the same conditions as the repudiated contract.\nAlthough the arbitrator had said that if the owners had sold the vessel with the benefit of a four year charter the value of that charter would have been taken into account with war being regarded as no more than a possibility, the measure of loss did not fall to be crystallised on the basis of a hypothetical sale of the vessel herself.\nLord Bingham (with whom Lord Walker agreed) took as his starting point that an injured party such as the owners may not, generally speaking, recover damages against a repudiator such as the charterers for loss which he could reasonably have avoided by taking reasonable commercial steps to mitigate his loss.\nThus, where there was an available market for the chartering of vessels, the injured partys loss would be calculated on the assumption that he had, within a reasonable time of accepting the repudiation, taken reasonable commercial steps to obtain alternative employment for the vessel for the best consideration reasonably available, and damages would ordinarily be assessed at that date.\nIn support of this approach he referred to the decision of Robert Goff J in The Elena DAmico [1980] 1 Lloyds Rep 75, which he described as authoritative.\nLord Bingham accepted that the courts had been willing to depart from the general rule about the date of assessment if the court judged it necessary or just to do so in order to give effect to the compensatory principle.\nHe accepted too that if at the date of acceptance of a repudiatory breach the court judged that the contract was bound to be lawfully cancelled in the near future it would be proper to award only nominal damages.\nThis would not involve taking into account later events, but merely recognising that the value of the contract in such circumstances was nil.\nIn that respect he regarded the Court of Appeals decision in Maredelanto Cia Naviera SA v Bergbau Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164 as entirely orthodox.\nHe also accepted that the value of a contract in the market may be reduced if terminable on an event which the market judges to be likely but not certain.\nLord Bingham attached critical significance to what he said was the clear and crucial finding of the arbitrator that what the owners lost was a charterparty with slightly less than four years to run and that on the arbitrators finding it was marketable on that basis (para 22).\nWhile acknowledging that the value of a contract in the market may be reduced if terminable on an event which the market judges to be likely, he said but that was not what the arbitrator found to be the fact in this case.\nI have difficulty with this part of Lord Binghams reasoning.\nAccording to the law reporters note, counsel for the owners had submitted that they had lost a charterparty with slightly less than four years to run and that had they sold the vessel on that day the value which they would have received would have been calculated on that basis.\nBut that value would have been undiminished if the owners had re chartered the vessel on identical terms, and there was no suggestion that the owners could not have done so.\nIndeed, Lord Mance noted in his judgment in the Court of Appeal, at para 12, that counsel for the owners submitted that it had to be assumed for present purposes that the owners could, within a relatively short time, have arranged a substitute charter for the balance of the charter period.\nSo the charterers repudiation would not have brought about a loss in the marketable value of the vessel with a substitute charter.\nNor would the repudiation have affected the potential duration of the charterparty.\nIn neither respect, therefore, were the owners financially worse off by reason of the charterers repudiation.\nBecause the issue raised by the arbitrators award was confined to whether the assessment of damages should take account of the period after the outbreak of hostilities in Iraq, the House of Lords was not directly concerned with the supplementary question how damages in respect of that period were to be assessed.\nLord Bingham did not address that question beyond observing that it would of course be very difficult to calculate loss of profit prospectively over a four year period, but an injured party could recover damages for loss of a chance of obtaining a benefit and that the difficulty of accurate calculation was not a bar to recovery.\nIn his review of the authorities Lord Bingham referred with approval to a decision of mine in Dampskibsselskabet Norden A\/S v Andre & Cie (Norden v Andre) [2003] EWHC 84 (Comm), [2003] 1 Lloyds Rep 287, as an example of the application of the general principle.\nIn that case a forward freight agreement (FFA) for a period of 12 months was terminated by reason of the defendants breach in the third month.\nThe claimant sought damages equal to the amount to which it would have been entitled under the contract if it had run its full course, amounting to over US$750,000.\nThe evidence established that there was an available market in which the claimant could have obtained a substitute contract or contracts at average price amounting to a little over $185,000.\nI held that the amount recoverable was the lesser figure, following the analysis of the relevant legal principles in the judgment of Robert Goff J in The Elena DAmico.\nThe fundamental principle for the assessment of damages in cases of breach of contract (reiterated in The Elena DAmico) is the principle of restitutio in integrum within the limits expressed in Hadley v Baxendale (1854) 9 Exch 341.\nIn the present case the sellers offered the buyers total restitution in integrum immediately upon the termination of the contract.\nThere was no finding by the Appeal Board that the offer was not genuine, and on the fundamental compensatory principle it provides a full answer to the claim.\nSecondary to the fundamental restitutionary principle, in various types of case there is a normal measure of recovery which the courts have developed to give effect to that principle.\nThe Elena DAmico, like The Golden Victory, involved the premature wrongful repudiation of a charterparty.\nThe judge held that if there was at the time of termination an available market for chartering in a substitute vessel, damages would normally be assessed on the basis of the difference between the contract rate for the balance of the contract period and the market rate for a substitute charter.\nHe arrived at this result by analogy with cases of sale of goods or shares in which either the seller failed to deliver or the buyer failed to accept delivery: Jamal v Moolla Dawood Sons and Co [1916] 1 AC 175 and Campbell Mostyn (Provisions) Ltd v Barnett Trading Co [1954] 1 Lloyds Rep 65.\nThe broad principle deducible from The Elena DAmico and the cases there considered is that where a contract is discharged by reason of one partys breach, and that partys unperformed obligation is of a kind for which there exists an available market in which the innocent party could obtain a substitute contract, the innocent partys loss will ordinarily be measured by the extent to which his financial position would be worse off under the substitute contract than under the original contract.\nThe rationale is that in such a situation that measure represents the loss which may fairly and reasonably be considered as arising naturally, ie according to the ordinary course of things, from the breach of contract (Hadley v Baxendale).\nIt is fair and reasonable because it reflects the wrong for which the guilty party has been responsible and the resulting financial disadvantage to the innocent party at the date of the breach.\nThe guilty party has been responsible for depriving the innocent party of the benefit of performance under the original contract (and is simultaneously released from his own unperformed obligations).\nThe availability of a substitute market enables a market valuation to be made of what the innocent party has lost, and a line thereby to be drawn under the transaction.\nWhether the innocent party thereafter in fact enters into a substitute contract is a separate matter.\nHe has, in effect, a second choice whether to enter the market similar to the choice which first existed at the time of the original contract, but at the new rate prevailing (the difference being the basis of the normal measure of damages).\nThe option to re enter or stay out of the market arises from the breach, but it does not follow that there is a causal connection between the breach and his decision whether to re enter or to stay out of the market, so as to make the guilty party responsible for that decision and its consequences.\nThe guilty party is not liable to the innocent party for the adverse effect of market changes after the innocent party has had a free choice whether to re enter the market, nor is the innocent party required to give credit to the guilty party for any subsequent market movement in favour of the innocent party.\nThe speculation which way the market will go is the speculation of the claimant.\nIt is well recognised that the so called duty to mitigate is not a duty in the sense that the innocent party owes an obligation to the guilty party to do so (Darbishire v Warran [1963] 1 WLR 1067, 1075, per Pearson LJ).\nRather, it is an aspect of the principle of causation that the contract breaker will not be held to have caused loss which the claimant could reasonably have avoided.\nThere are three important things to note about measurement of damages by reference to an available market.\nFirst it presupposes the existence of an available market in which to obtain a substitute contract.\nSecondly, it presupposes that the substitute contract is a true substitute.\nThe claimant is not entitled to charge the defendant with the cost of obtaining superior benefits to those which the defendant contracted to provide.\nThirdly (and in the present case most importantly), the purpose of the exercise is to measure the extent to which the claimant is (or would be) financially worse off under the substitute contract than under the original contract.\nDepending on the nature of the market, cases in which this method is appropriate may include an anticipatory repudiatory breach of a one off contract of sale, a contract of sale in instalments or a period contract.\nA single unconditional contract of purchase or sale of a commodity in the futures market is an example of the first.\nThe accepted repudiation by the buyer or seller amounts to the premature closing out of the transaction.\nThe innocent party can then use the market to put himself back in the same position at a price which will reflect the markets assessment of the value of the contract.\nThe same may apply equally in the case of a periodic futures agreement (Norden v Andre).\nHowever, in this case the lost contract and its hypothetical substitute were subject to automatic cancellation unless the Russian government ban was lifted, and the extent to which the buyers were worse off by loss of the original contract could not be measured by a simple comparison of the contract price with the price of a hypothetical substitute contract.\nThe fundamental compensatory principle makes it axiomatic that any method of assessment of damages must reflect the nature of the bargain which the innocent party has lost as a result of the repudiation.\nIn this case the bargain was subject to a high risk of cancellation.\nLeaving aside for the purposes of this discussion the sellers offer to reinstate the contract, what the buyers lost was the chance of obtaining a benefit in the event of the export ban being lifted before the delivery period, only in which case would the contract have been capable of lawful performance.\nIn The Golden Victory Lord Bingham observed, uncontroversially, that although it may be difficult to calculate a loss prospectively, an injured party can recover damages for the loss of a chance of obtaining a benefit.\nHe also acknowledged that the market value of a contract may be reduced if terminable on an event which the market judges to be likely but not certain.\nBut how is the chance to be valued if there is no market risk index to which the court can refer? (In this case the Appeal Board merely found that there was a possibility that the ban might be lifted or relaxed in some way.) The assessment would have to be made by the arbitrator or judge doing the best he can.\nShould the assessment be made on the facts as known at the date of the assessment or should the tribunal apply a retrospective assessment of how the chances would have appeared at the date of the repudiation? I see no virtue in such circumstances in the court attempting some form of retrospective assessment of prospective risk when the answer is known.\nTo do so would run counter to the fundamental compensatory principle.\nIn The Golden Victory Lord Bingham acknowledged that the saying you need not gaze into the crystal ball when you can read the book is in many contexts a sound approach in law as in life.\nHe did not consider that approach to be appropriate in that particular context because of the available market rule.\nI have given my reasons for not regarding that rule as apt for the circumstances of this case, by contrast with cases such as The Elena DAmico and Norton v Andre.\nMr Edey submitted that the present case is distinguishable from The Golden Victory because it involved a single sale rather than a period contract, but I can see no logical foundation for the distinction.\nIt is founded on the passage in Lord Scotts judgment where he distinguished the charterparty in that case with a simple contract for a one off sale, but I take him to have been referring to the simple case of repudiation by non delivery or non acceptance.\nIt makes no sense to differentiate between a contract for a single sale or for more than one sale.\nThe relevant criterion is whether the contract is reasonably replaceable by a substitute contract at a readily ascertainable market price, in which case it will ordinarily be right to measure the innocent partys loss by reference to the substitute contract.\nAlternatively, Mr Edey submitted that the majority of the House of Lords were wrong in The Golden Victory.\nHe suggested that it was inconsistent with the decisions of the House of Lords in Gill and Duffus SA v Berger and Co Inc (No 2) [1984] AC 382 and Fercometal SARL v Mediterranean Shipping Co SA (The Simona) [1989] AC 788.\nNeither of those cases was directly concerned with the assessment of damages for the anticipatory breach of a contract which was subject to a condition likely to cause its cancellation.\nIt was common ground in The Golden Victory that the risk of cancellation was potentially relevant to the assessment of damages.\nThe difference was whether (as the minority held) it was irrelevant on the facts because it did not affect the market value of the contract at the date of breach, or (as the majority held) proper application of the compensatory principle made it right to take into account the facts known at the date of assessment.\nFor the reasons given I support the decision of Langley J, the Court of Appeal and the majority of the House of Lords.\nAccordingly, I agree with Lord Sumption as to the disposal of this appeal.\n","output":"GAFTA Form 49 is the standard form of FOB sale contract of the Grain and Feed Trade Association for goods delivered from central or eastern Europe in bulk or bags. (Under an FOB sale contract, the seller agrees to pay to deliver the goods free on board the purchasers chosen transporter.) This appeal is about the Default Clause in GAFTA 49, which provides in part: DEFAULT In default of fulfilment of contract by either party, the following provisions shall apply: (a) The party other than the defaulter shall, at their discretion have the right, after serving a notice on the defaulter, to sell or purchase, as the case may be, against the defaulter, and such sale or purchase shall establish the default price. (b) If either party be dissatisfied with such default price or if the right at (a) above is not exercised and damages cannot be mutually agreed, then the assessment of damages shall be settled by arbitration. (c) The damages payable shall be based on, but not limited to, the difference between the contract price and either the default price established under (a) above or upon the actual or estimated value of the goods, on the date of default, established under (b) above.\nNidera BV, the buyers, entered into a contract with Bunge SA, the sellers, under which they agreed to buy 25,000 tonnes (+\/ 10% in buyers option) of Russian milling wheat crop 2010, FOB Novorossiysk (a port in Russia).\nThe shipment period was 23 30 August 2010.\nThe contract incorporated GAFTA 49.\nOn 5 August 2010, Russia introduced a legislative embargo on exports of wheat from its territory, which was to run from 15 August to 31 December 2010.\nThe sellers notified the buyers of the embargo on 9 August 2010 and purported to declare the contract cancelled under GAFTA 49s Prohibition Clause.\nThe buyers maintained that the sellers were not yet entitled to cancel the contract and treated the purported cancellation as a repudiation of the contract, which they accepted on 11 August 2010.\nThe sellers offered to reinstate the contract on the same terms on 12 August 2010, but the buyers refused and began arbitration proceedings under the GAFTA rules.\nAt the arbitration, the parties agreed that the Default Clause applied to anticipatory repudiation, that the buyers had not bought against the sellers pursuant to sub clause (a), that the date of default for the purpose of sub clause (c) was 11 August 2010, and that the difference between the contract and the market price at that date was US$3,062,500.\nThe sellers no longer dispute that they were in breach of contract and the only issue between the parties concerns damages.\nThe first tier panel held that the buyers were not entitled to a substantial damages award, because the embargo was still in place when the time for delivery arrived and so the contract would have been cancelled in any event.\nThe GAFTA Appeal Board accepted that the contract would have been cancelled in any event, but held that the buyers were entitled under sub clause (c) of the Default Clause to a damages award of US$3,062,500, reflecting the difference between the contract price and the market price on the agreed date of default.\nThe sellers appeal was dismissed by both Hamblen J and the Court of Appeal.\nThe Supreme Court unanimously allows the appeal.\nLord Sumption gives the leading judgment.\nLord Toulson agrees with Lord Sumption but sets out his reasoning in his own words.\nLord Neuberger, Lord Mance and Lord Clarke all agree with both Lord Sumption and Lord Toulson.\nLord Sumption first addresses the position at common law.\nThe fundamental principle of the common law of damages is the compensatory principle.\nThe cases have addressed two questions relating to the calculation of damages at common law following an anticipatory breach.\nFirst, where there is an available market, the prima facie measure of damages is the difference between the contract price and the market price of the goods at the time when they ought to have been delivered, unless the buyer should have mitigated by going into the market and entering into a substituted contract at some earlier stage, in which case damages will be assessed with reference to the market price at that earlier date.\nOnce the relevant market price has been determined, any subsequent change in the market price is irrelevant.\nSecond, as the House of Lords explained in The Golden Victory [2007] 2 AC 353, it will be relevant to take account of contingencies other than a change in the market price if subsequent events known at the time of the judges or arbitrators assessment would have reduced the value of performance, perhaps to nothing, even without the defaulters renunciation.\nThis principle applies to contracts both for the supply of goods or services over a period of time and for one off sales. [12 23] Lord Sumption then considers the effect of the GAFTA 49 Default Clause.\nDamages clauses are not necessarily intended to be complete codes for the assessment of damages.\nIn this case, the clause applies in default of contractual performance, and to anticipatory breach as well as actual breach.\nThe combined effect of sub clauses (a), (b) and (c) of the Default Clause differs from the common law, first, in that they give the injured party a discretion about whether to go into the market to buy or sell against the defaulter, so that damages are required to be assessed as at the date when the injured party accepted an anticipatory repudiation only if he actually went into the market to fix a price at that date; and, secondly, in that they provide that the relevant comparator is the actual or estimated value of the goods rather than their market price. [24 28] The Default Clause provides a complete code for determining the market price or value of the goods that falls to be compared with the contract price.\nIt does not deal at all with the effect of subsequent events which would have resulted in the original contract not being performed in any event, to which the common law still applies. [29 31] Applying The Golden Victory to this case, the buyers in fact lost nothing and should receive only nominal damages in the sum of US$5. [35 36] Lord Toulson agrees with Lord Sumption and holds that the language of the Default Clause is not sufficiently clear to preclude the application of The Golden Victory.\nThe most reasonable interpretation is that the clause is concerned only with placing a mathematical value on the goods, assuming the contract to be capable of performance, and that it is not intended to oust the application of ordinary common law principles where that assumption is inappropriate.\nHe also rejects the argument that the clause precludes the operation of the common law mitigation of loss principle, but the application of this principle was not the subject of argument before this court. [58 62] Where a contract is discharged by reason of one partys breach, and there exists an available market in which the innocent party could obtain a substitute contract, the innocent partys loss will ordinarily be measured by the extent to which his financial position would be worse off under the substitute contract than under the original contract.\nWhether the innocent party in fact enters into a substitute contract is a separate matter.\nThe assessment should be made on the facts as known at the date of the assessment, as the House of Lords held in The Golden Victory and consistently with the fundamental compensatory principle.\nThe Golden Victory applies to one off sales. [63 89]\n","id":72}
{"input":"This appeal raises a point of pure statutory construction relating to the manner in which election expenses are required to be calculated and declared.\nIt 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.\nThe defendants face charges of knowingly making false declarations in relation to election expenses, or aiding and abetting or encouraging or assisting such offences.\nThe 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).\nThe criminal trial, although technically begun by the preparatory hearing, has yet to take place, and no jury has yet been sworn.\nNo one can yet know what the real issues will turn out to be at that trial.\nNo one can yet know what the evidence will be, still less which facts will be disputed and which common ground.\nThe present question of statutory construction may arise at the trial, or it may not.\nIf it does arise, it is unknown at this stage what its impact may be on the trial.\nFor 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.\nIt is also for this reason that there are automatic statutory restrictions in the 1996 Act upon reporting of preparatory hearings and any appeals therefrom.\nThis judgment is public and can be reported in the usual way.\nBut 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.\nThe Certified Question\nThe 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?\nWhilst 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.\nPolitical parties are often national in organisation.\nAt 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.\nAt such an election, the legislation imposes separate limits on the expenditure which is permitted to the candidate locally and to the party nationally.\nBoth 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.\nBut national party activity will typically amount to some support for the constituency candidates standing in its interests.\nEspecially if the constituency is regarded by a party as marginal, the activities of the national party in the constituency may well be extensive.\nSo 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.\nThe 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.\nAn illustration of the question is given by what was described by the judge as the battlebus issue.\nIf 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.\nAnyone 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.\nThe 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.\nThis judgment is, however, confined to that certified question.\nThe legislation\nSince the 19th century, legislation has imposed limits upon a candidates election expenses.\nThe current statute is the Representation of the People Act 1983 (RPA 1983).\nSome 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.\nUntil 2000 there were no rules about national expenditure by political parties.\nThey were introduced by the Political Parties, Elections and Referendums Act 2000 (PPERA 2000).\nThat Act also made some amendments to RPA 1983.\nThe two statutes adopt similar general schemes to control expenses.\nThe 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.\nIn the case of constituency expenses, those persons are the candidate, his agent, and others if authorised by either of them.\nIn the case of party expenses, those persons are the party treasurer and deputy treasurer, or others if authorised by either.\nSimilarly, 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.\nIn the case of the constituency, that person is the appointed election agent of the candidate.\nIn the case of party expenditure, it is the party treasurer.\nMoreover, the returns must be accompanied by formal declarations of accuracy.\nThose 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.\nThese are sometimes referred to, although not in all the statutes, as notional expenditure.\nAs will be seen, the certified question in this case asks about the relationship between the second and fifth of these controls.\nIt 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.\nWhen 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.\nThe 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).\nIt 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.\nThe mutual exclusion of party expenses and local candidate expenses is, however, achieved by subsection (7), to which the foregoing definition is expressly made subject.\nThat 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].\nThe principal debate in this appeal centres on two provisions of RPA 1983, sections 90ZA and 90C.\nAs the numeration suggests, both are additions to the statute as originally enacted.\nSection 90C was added with effect from July 2001 by section 134(1) of PPERA 2000.\nSection 90ZA was inserted by section 27(2) the Electoral Administration Act 2006 and came into force in September 2006.\nSection 90ZA of RPA 1983 contains the current meaning of election expenses (ie, in relation to general elections, those incurred by constituency candidates).\nIt 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)\nSection 90C of RPA 1983 contains provision for things supplied to a candidate either free of charge or at a discount.\nIt 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.\nThere 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.\nThe latter expenditure is called controlled expenditure.\nThese provisions are, like those relating to constituency candidates and central parties, relatively complex.\nIt 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.\nControlled expenditure, campaign expenditure and candidates election expenses are, once again, made mutually exclusive, each with the others, by section 87(1) of PPERA 2000.\nFor each type of regulated expenditure, the statutes require a return.\nIn the case of election expenses by a candidate, the duty to make the return falls on the candidates appointed election agent.\nSection 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.\nReturn 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.\nThe return must, by section 82(1) and (2), be accompanied by declarations by both the agent and the candidate that it is accurate.\nThe potential consequences of failure to deliver an accurate return and declaration are serious.\nBy 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.\nThe former carries imprisonment and a fine, by section 168.\nThe latter carries a fine, by section 169.\nBoth 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).\nThe rival submissions\nThe 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)).\nIf 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.\nThe 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.\nAuthorisation is, say the defendants, a central feature, throughout the legislation, of responsibility for electioneering expenses.\nSection 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.\nSay 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.\nBoth parties also relied on consequentialist arguments supporting the construction for which they contended.\nThe Crown suggested that unless its construction is adopted the evasion of controls on expenditure would be encouraged.\nIt 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.\nFor 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.\nAnalysis\nIt 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.\nIn 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.\nSimilar 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).\nThe same concept is employed in what the defendants contend is the crucial section relating to constituency election expenses, namely section 90ZA(4) RPA 1983.\nThat, 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.\nThis 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.\nThe duty to make a return under section 81 arises when expenses are thus incurred, but not otherwise.\nThe 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.\nAnd 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.\nWhat 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.\nIt 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).\nIt 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.\nThe 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.\nThe 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.\nThe defendants contend that they do.\nThe Court of Appeal was persuaded that they were right.\nIn the end this depends on the words of the statute.\nSection 90C asks, by subsections (1)(a) and (b), three questions about the expenditure it is considering.\nIf 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.\nThat is a deeming provision.\nIf 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.\nThe 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.\nThe questions posed by subsections (1)(a) and (b) are: 1.\nWere 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.\nWere they made use of by or on behalf of the candidate? (subsection (1)(b)) and 3.\nIf 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)).\nThere 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.\nThe test is a different one from that in section 90ZA(4) for expenses actually incurred.\nThe test is use, by or on behalf of the candidate (although see para 25 below).\nThis analysis is confirmed by the express provision in section 90ZA(1) that the definition of election expenses there provided is subject to section 90C.\nWhat 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.\nBut section 90C(2) includes also as expenses incurred by the candidate those which satisfy the conditions of section 90C(1)(a) and (b).\nIn 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.\nThere 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.\nThe third condition\/question is an essential part of the operation of section 90C.\nUnless 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.\nIt is not, however, necessary to adopt the defendants construction of the Act in order for the third condition\/question to have content.\nIt 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).\nThose 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.\nThe 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.\nThose are, however, not necessarily inconsistent provisions.\nIt 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.\nThat 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).\nThe Court of Appeal drew attention to the second condition\/question set out in para 18 above, posed by section 90C(1)(b).\nIt 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.\nIt 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.\nThere is a plainly deliberate difference of expression between subsections (1)(a)(ii) and (1)(b).\nThe services (etc) have, by (1)(a)(ii) to be provided for the use or benefit of the candidate (emphasis added).\nBut their cost only counts as notional expenditure if they are made use of by or on behalf of the candidate: subsection (1)(b).\nMr 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.\nOrdinarily, one would also expect that it would involve conscious activity.\nIt 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.\nCare 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.\nIt 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).\nThere 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.\nThe legislation contains provisions also for regulating donations.\nIn 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).\nIn 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.\nThe provision of free or discounted services may also amount to a donation see paragraph 2(1)(e) of Schedule 2A.\nThe maker of a donation may commit an offence if he makes it to someone other than the candidate or agent.\nThe 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.\nNo 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.\nIt 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.\nThat, 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.\nBut it affords no reason for importing the terms of section 90ZA(4) into section 90C.\nRather, the donation provisions are broadly consistent with the construction of section 90C here set out.\nIt 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.\nThere 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.\nDeliberate evasion would equally be deterred on the construction advanced by the defendants.\nIt 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.\nBut 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.\nMoreover, 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.\nThe plain reading of the Act here set out cannot be displaced by possibly inconvenient or even newly recognised consequences.\nIt 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.\nIt 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.\nIt 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.\nThe 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.\nThe fact that they are mutually exclusive does not, as the defendants at one point submitted, mean that all expenditure defaults to constituency expenses.\nIndeed, 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.\nThe point that the candidate and election agent risk the commission of criminal offences is well made.\nCriminal liability is no small matter even if regulatory statutes sometimes invoke it as if it were less significant than it is.\nBut 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.\nThe 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.\nThe 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.\nConclusion\nFor 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.\nThe test for the operation of section 90C is the threefold one set out above (see para 18).\nReporting restrictions\nthe 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.\nSection 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.\nThe 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.\nThose restrictions apply to the hearing of this appeal.\nThe court is satisfied that there is no reason to modify them in the present case, except to permit the reporting of this judgment.\nUntil the conclusion of the trial, nothing may be reported except the following:\n","output":"This pre trial appeal concerns a point of pure statutory construction.\nThe Respondents face charges of knowingly making false declarations in relation to election expenses, or aiding and abetting or encouraging or assisting such offences.\nThe parties asked the judge to determine the point on a preparatory hearing, pursuant to Part III of the Criminal Procedure and Investigations Act 1996.\nThe 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?\nThe 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.\nThe Supreme Court unanimously allows the appeal, answering the certified question in the negative.\nLord Hughes gives the judgment with which the other justices agree.\nThe concept of authorisation of expenses is frequently resorted to in the legislation [16].\nThe critical question is whether this concept also governs the notional expenditure provision in section 90C of RPA 1983 [17].\nSection 90C asks, by subsections (1)(a) and (b), three questions about the notional expenditure it is considering.\nIf 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.\nThe questions, which equally apply to goods, property or facilities, are: 1.\nWere 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.\nWere they made use of by or on behalf of the candidate; and 3.\nIf 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.\nThe test is whether the goods, property or facilities are used by, or on behalf of, the candidate.\nThis differs from the test in section 90ZA(4) of RPA 1983 for expenses actually incurred which does require authorisation.\nThe 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].\nSection 90ZA(1) confirms this analysis by the express provision that the definition of election expenses therein is subject to section 90C.\nRather 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].\nThe plain reading of the Act cannot be displaced by possibly inconvenient or even newly recognised consequences [27 28].\nThe point that the candidate and election agent risk the commission of criminal offences is well made.\nThe more serious offence of knowingly making false declarations requires a dishonest state of mind.\nWhile 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].\n","id":73}
{"input":"This appeal is concerned with a challenge to the legality of legislation of the Scottish Parliament which deprives a person, A, who is accused of sexual activity with an under aged person, B, of the defence that he or she reasonably believed that B was over the age of 16, if the police had previously charged A with a relevant sexual offence.\nThe appellant raises a compatibility issue, which is a question, arising in criminal proceedings, as to whether an Act of the Scottish Parliament or any provision of an Act of the Scottish Parliament is incompatible with any of the Convention rights: section 288ZA(2)(b) of the Criminal Procedure (Scotland) Act 1995 (the CPSA 1995).\nConvention rights are the rights set out in the articles of the European Convention on Human Rights (ECHR) which are listed in section 1(1) of the Human Rights Act 1998, and include the rights in articles 6, 8 and 14 of the ECHR which are the subject of this appeal.\nThe compatibility issue raises a question of legality because section 29 of the Scotland Act 1998 provides: (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 it is incompatible with any of the Convention (d) rights\nThe legislative provisions\nSections 28 to 37 of the Sexual Offences (Scotland) Act 2009 (the 2009 Act) create various sexual offences against older children, who are children who have attained the age of 13 years but who have not attained the age of 16 years.\nSection 39 provides the qualified defence (the reasonable belief defence), as follows: (1) It is a defence to a charge in proceedings (a) against A under any of sections 28 to 37(1) that A reasonably believed that B had attained the age of 16 years, The defence is qualified because subsection (2) provides: (2) But (a) the defence under subsection 1(a) is not available to A if A has previously been charged by the (i) police with a relevant sexual offence, (ia) if A has a previous conviction for a relevant foreign offence committed against a person under the age of 16, or (ii) sexual harm order.\nif there is in force in respect of A a risk of\nThe relevant sexual offences to which section 39(2)(a) refers are set out in 34 paragraphs in Schedule 1 to the 2009 Act and cover a wide range of sexual offences against children under the age of 16 in Scotland, England and Wales or under the age of 17 in Northern Ireland.\nIn relation to offences under the 2009 Act, paragraph 1 of Schedule 1 includes in the phrase relevant sexual offences: Any of the following offences under this Act an offence under Part 1 against a person under (a) the age of 16, (b) an offence under Part 4 (but not an offence of engaging while an older child in sexual conduct with or towards another older child (section 37(1)) or engaging while an older child in consensual sexual conduct with another older child (section 37(4)), (c) under the age of 16, (d) sexual abuse of trust of a mentally disordered person (section 46) of a person under the age of 16. sexual abuse of trust (section 42) of a person Offences in Part 1 of the 2009 Act, to which paragraph 1 of Schedule 1 refers, cover both consensual and non consensual sexual activity.\nThey range from rape to indecent communications, exposure of ones genitals and voyeurism.\nThose offences can be committed against a person of any age but paragraph 1(a) of Schedule 1 makes them a relevant sexual offence only if the victim is under the age of 16.\nParagraph 15 of Schedule 1 lists common law offences against a person under the age of 16, which have been replaced by offences under the 2009 Act, including lewd, indecent or libidinous practice or behaviour.\nThe history of the reasonable belief defence\nSince 1885 our law has recognised the possibility of an honest mistake as to a young persons age and has allowed a reasonable belief defence in some form.\nSection 5 of the Criminal Law Amendment Act 1885 (the 1885 Act) created the offence of unlawful carnal knowledge of a girl between the ages of 13 and 16 but that offence was subject to a defence that the accused had reasonable cause to believe that the girl was aged 16 or over.\nThe defence was restricted by section 2 of the Criminal Law Amendment Act 1922 (the 1922 Act) to a man aged 23 or under and was available only on the first occasion that he was charged with the offence under section 5 of the 1885 Act.\nThe law was restated in Scotland in section 4 of the Sexual Offences (Scotland) Act 1976 so that the reasonable belief defence was available only when the accused man was under the age of 24 and had not previously been charged with a like offence.\nThe offences which were like offences were defined as (i) having or attempting to have unlawful sexual intercourse with a girl aged between 13 and 16, and (ii) permitting a girl under the age of 16 to use premises for sexual intercourse.\nThe law was restated without any substantive change in section 5 of the Criminal Law (Consolidation) (Scotland) Act 1995 (the 1995 Act).\nAlthough there was no Scottish judicial authority on the point, it was widely understood that the prior charge in the relevant provisions of the legislation, including the 1995 Act, referred to a charge at a trial in Scottish proceedings.\nIn English law there was judicial authority that it referred to a charge at committal proceedings: R v Rider [1954] 1 WLR 463.\nIn the highly respected textbook, Sir Gerald Gordon, The Criminal Law of Scotland, 3rd ed (2000), para 36.06, it was stated: These words [ie previously charged] have not generally been judicially defined in Scotland.\nThey could refer to a charge by the police, an appearance on petition or complaint at the instance of the procurator fiscal, or an appearance on indictment.\nIn England it has been held that where a man appears before a magistrate in committal proceedings that is a previous charge, being an appearance before a competent court, except where he is committed for trial, in which case the trial itself is his first charge. [fn: R v Rider [1954] 1 WLR 463] The nearest Scots equivalent to committal proceedings is an appearance on petition, but it is unlikely that such an appearance would be regarded as a previous charge for the purposes of the subsection, particularly as it does not nowadays involve any adjudication on the case by the court.\nIn practice, therefore, a man may not be regarded as having been previously charged with an offence unless he has previously stood trial for it.\nIn recent years Scots law and English law have diverged.\nIn England and Wales section 6 of the Sexual Offences Act 1956 made the offence of unlawful sexual intercourse with a girl between the ages of 13 and 16 subject to exceptions which included the exception that the defendant was under the age of 24, had not previously been charged with a like offence, and believed on reasonable grounds that the girl was aged 16 or over.\nIn this Act a like offence was the offence of unlawful sexual intercourse with a girl aged between 13 and 16 or an attempt to commit that offence.\nUnder the Sexual Offences Act 2003 the absence of reasonable belief as to age is made part of the definition of many sexual offences by persons aged 18 or over against children aged between 13 and 16.\nUnder that Act the prosecution must establish that absence of belief against all such defendants, regardless of their age.\nThe existence of a previous charge is no longer relevant in English law.\nIn 2006 the Scottish Law Commission published a Discussion Paper on Rape and Other Sexual Offences (Scot Law Com DP No 131) in which it described the reasonable belief defence, which was confined to accused persons under the age of 24, as unprincipled and suggested that it was a political compromise which led to the enactment of the 1922 Act.\nIt proposed (a) that the age of the accused person should not be a formal restriction on the raising of the defence, and (b) that the fact that the accused may have raised the reasonable belief defence before should go to the accused persons credibility and not be a restriction on the raising of the defence (paras 5.63 5.67).\nThe Scottish Law Commission in its Report on Rape and Other Sexual Offences (2007) (Scot Law Com No 209) recommended that there should be a defence to an offence relating to sexual activity with a child aged between 13 and 16 that the accused believed on reasonable grounds that the child was 16 or older (para 4.64).\nThe Commission saw merit in the view that the Crown should in appropriate cases be allowed to lead evidence that the accused had previously been charged with a like offence whenever the accused raised the defence for a second time, in order to test the accused persons credibility rather than to disallow the defence (paras 4.61 4.62).\nIt recommended that the accused should bear an evidential, but not a legal, burden of establishing that defence (para 4.74).\nThe rationale of the current legislation\nThe Scottish Parliament in enacting the 2009 Act took up the Scottish Law Commissions recommendation that the reasonable belief defence should be available regardless of the age of the accused person.\nBut it chose to reformulate the previous charge proviso in two material respects.\nFirst, as section 39(2)(a)(i) expressly states, a prior police charge is sufficient to disentitle the accused to the reasonable belief defence; a charge at trial is not necessary.\nSecondly, the prior charge is not confined to the like offences to which I referred in para 5 above, but extends to all of the relevant sexual offences in Schedule 1 to the 2009 Act (para 4 above).\nIn the Policy Memorandum to the Bill the Scottish Government explained the policy and their rejection of the Scottish Law Commissions recommendation.\nThey stated (a) that the proposed restriction on the reasonable belief defence reflected the then current law in preventing someone who had been charged with a like offence from using the defence (paras 131 132) and (b) that the restriction was being re enacted because they were concerned that its removal could enable serial predators to evade conviction (para 135).\nBoth statements are problematic.\nFirst, the assertion (in paras 131 132) that the Bills restriction of the defence reflected the current law was incorrect because the range of relevant sexual offences extended far beyond the like offences of the prior law.\nSecondly, as I will show, the Lord Advocate has not attempted to defend the impugned provision on the basis that its purpose was to prevent serial sexual predators repeatedly exploiting the defence.\nIn evidence to the Scottish Parliament, the Scottish Governments Bill Team Leader adopted the line of the Policy Memorandum by asserting that the purpose of the restriction of the defence was to prevent a serial sexual predator who relied on that defence on a previous occasion but was acquitted of all charges from using the same defence to evade conviction on a subsequent offence or offences (Subordinate Legislation Committee, 28 October 2008, col 392).\nBut, immediately afterwards, a representative from the Scottish Government Legal Directorate expressed a different view as to the purpose of the restriction.\nHe described the prior charge as a shot across the bows and as effectively [putting the accused person] on notice to be careful not to engage in sexual activity with another person who was under the age of 16 and thereby discouraging them from engaging in such activity (Subordinate Legislation Committee, 28 October 2008, cols 392 393).\nThe Lord Advocate in his written case in this appeal did not attempt to defend the reasoning in the Policy Memorandum and relied instead on the latter rationale which the Scottish Government had presented to the Parliament, stating (para 19): The defence is excluded where the accused has been charged by the police with a relevant sexual offence and has therefore received an official warning about sexual offences with children.\nIn his careful oral submissions, the Lord Advocate again founded on the rationale of an official warning that one must make sure that ones sexual partner was aged 16 or over.\nThe factual background to the appeal\nIn 2009, when the appellant was aged 14, the police charged him with two charges of lewd and libidinous practices at common law and one contravention of section 6 of the Criminal Law (Consolidation) (Scotland) Act 1995, which concerned indecent behaviour towards a girl aged between 12 and 16.\nOne of the common law charges involved the allegation of showing online pornographic images to a young boy.\nThe other common law charge and the statutory charge involved the allegations of exposing his penis to, and chasing after, three other children, who were girls aged 4, 12 and 13.\nThe police reported the case to the Procurator Fiscal and a decision was made not to prosecute the appellant.\nInstead, the case was referred to the Childrens Reporter.\nThe outcome of this referral is unknown as there are no extant records, but it is legitimate to infer that the case did not proceed to a Childrens Hearing.\nIn July 2015, when the appellant was aged 19, he appeared on petition on charges of having shortly before engaged in sexual intercourse with a girl who was then aged 14 years and 11 months, contrary to sections 28 and 30 of the 2009 Act.\nHe does not deny that sexual intercourse took place.\nHis only defence to the charges is that at the time he reasonably believed that the girl had attained the age of 16 years.\nIn other words, he wishes to plead the reasonable belief defence in section 39(1)(a) of the 2009 Act.\nBut section 39(2)(a)(i) of the 2009 Act, if lawful, has the effect that the reasonable belief defence is not available to him.\nHe has therefore challenged the legality of that statutory provision by raising a compatibility issue.\nThe prior proceedings\nSheriff Joan Kerr, Sheriff of Glasgow and Strathkelvin at Glasgow, referred the compatibility issue to the High Court under section 288ZB of the CPSA 1995.\nIn the reference Sheriff Kerr asked whether article 8 of the ECHR was engaged by the prohibition against utilising the reasonable belief defence and, if so, whether the interference was compatible with the appellants article 8 right; whether the lack of a mechanism to challenge the validity of the police charge would result in his trial being unfair under article 6 of the ECHR; and whether the prohibition applied when the police charged a child and the Lord Advocate did not instruct a prosecution on the charge.\nOn 26 February 2016 the Appeal Court of the High Court of Justiciary (the Lord Justice General (Lord Carloway), Lady Dorrian and Lord Bracadale) issued their opinion on the reference.\nIn that opinion the court rejected the appellants submission that the prohibition on raising the reasonable belief defence created a presumption of guilt and held that, absent any relevant complaint of procedural unfairness, the appellant was not within the ambit of article 6 of the ECHR.\nThe court held that the appellants decision as an adult to engage in sexual activity with a child under the age of 16 did not engage the protection of article 8 of the ECHR.\nIt held that, even if article 8 were engaged, the interference was both in accordance with the law and proportionate.\nThe court stated (para 25): The purpose of section 39(2)(a)(i) is to give legal significance to a charge by the police as a shot across the bow.\nAn individual is entitled to plead ignorance of a childs true age on one occasion only.\nIf the provision were not framed to cover charges, as distinct from convictions, the aim of protecting children from adults who may prey on their vulnerability may not be realised.\nThe defence could be utilised over and over again.\nThis would undermine the purpose of the provision.\nThere is nothing disproportionate about the measure.\nHad article 8 been engaged, the interference would have been justified under article 8(2).\nThe court answered the questions accordingly.\nThe appellant applied for leave to appeal to this court.\nOn 24 March 2016 the High Court of Justiciary issued a statement of reasons on the application to appeal to this court.\nIt held that the ground of appeal concerning article 6 of the ECHR was not arguable but that the ground relating to article 8 was, and that the latter raised a matter of general public importance.\nThe High Court therefore granted leave to appeal to this court.\nThe challenge and the response\nMr Aidan ONeill QC for the appellant advances four arguments.\nFirst, he argues that section 39(2)(a)(i) of the 2009 Act (the impugned provision) is incompatible with article 6(2) of the ECHR because it breaches the presumption of innocence.\nSecondly, he submits that the impugned provision is incompatible with article 8 of the ECHR because it is not rationally connected to a legitimate aim, because it is not in accordance with the law, because there were less intrusive means of achieving the desired result and because it is disproportionate in its effect on the protected right.\nThirdly, he argues that it unjustifiably discriminated (a) between those persons who had been previously charged with a relevant sexual offence and those who had not and (b) between UK nationals and others: article 14 read with article 8 of the ECHR.\nHis fourth submission is that the impugned provision failed to distinguish between accused persons who had previously been charged as children and those who had previously been charged as adults, contrary to article 14 read with article 8 of the ECHR.\nThe court also has the benefit of submissions by Ms Morag Ross, advocate (now QC), on behalf of the charity, Community Law Advice Network, which aims to improve life chances for children and young people in Scotland by obtaining for them access to legal advice and securing the recognition and enforcement of their rights.\nHer submissions focus on the challenge under article 8 of the ECHR, and describe how offending by a child is treated differently from adult offending under the childrens hearing system, which has existed in Scotland for over 50 years and which treats the welfare of the child as a paramount consideration.\nShe submits that the rationale of an official warning has no place in such a scheme.\nThere are less intrusive means of achieving the legitimate aims of protecting older children from sexual activity and predation.\nThe impugned provision does not strike a fair balance between the public interest and the accused persons article 8 rights.\nIn essence, her submission is that the impugned provisions interference with a persons article 8 rights when he or she has committed the relevant sexual offence as a child is not justified.\nThe Lord Advocate, in response, argues that the appellants circumstances do not come within the ambit of article 6.\nContrary to the opinion of the High Court of Justiciary, he accepts that the appeal comes within the ambit of article 8 of the ECHR because the prosecutor relied on the earlier police charges in the course of the criminal proceedings against the appellant and disclosed the charges to the court.\nIn essence, he submits that the impugned provision strikes a fair balance between the accused persons rights and the public interest in the prevention of crime, the protection of health and morals, and the protection of the rights and freedoms of others.\nHe also submits that any difference in treatment or absence of difference, on which the appellant founds, is objectively justified and so meets the requirements of article 14.\nThe appellant whilst a child has been afforded the special treatment which the criminal justice system gave to children.\nReliance on the 2009 charges once he had become an adult does not upset the fair balance which the Parliament had struck.\nDiscussion\n(i) Article 6 of the ECHR\nLike the High Court, I am satisfied that the impugned provision is not within the ambit of article 6, which guarantees that a trial will be procedurally fair.\nThe impugned provision did not, as the appellants counsel asserts, create an irrebuttable presumption that the appellant did not have a reasonable belief as to the age of the girl with whom he had sexual intercourse, thereby overriding the presumption of innocence in breach of article 6(2) of the ECHR which provides: Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.\nInstead, the impugned provision, when applicable, makes the offences under sections 28 and 30 strict liability offences by treating as irrelevant the accused persons state of knowledge of the victims age.\nThe creation of what amounts to a strict liability offence in relation to the victims age in such circumstances does not violate article 6(2) of the ECHR, which is concerned with procedural guarantees and not with the substantive elements of a criminal offence: R v G [2009] AC 92, paras 27 31 per Lord Hope, para 46 per Lady Hale; Salabiaku v France (1988) 13 EHRR 379, para 27; and G v United Kingdom (2011) 53 EHRR SE 25, paras 26 27 (which was a case concerning the strict liability offence of sexual intercourse with a child under the age of 13).\nThe European Court of Human Rights (ECtHR) concluded in para 29 of G v United Kingdom that the court does not consider that Parliaments decision not to make available a defence based on reasonable belief that the complainant was aged 13 or over can give rise to any issue under article 6(1) or (2) of the Convention.\nIn my view, that reasoning applies, mutatis mutandis, to the decision of the Scottish Parliament in its enactment of the impugned provision.\n(ii) Article 8 of the ECHR\nArticle 8 of the 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.\nAs I have said, the Lord Advocate concedes that in this case the impugned provision fell within the ambit of article 8 because the prosecutor relied on the earlier police charge in the course of the criminal proceedings and disclosed its existence to the court.\nIn my view that concession is rightly made.\nI would go further: the recording for possible later use of the charges involved interference with the appellants article 8 rights which may have to be justified.\nIn S v United Kingdom (2008) 48 EHRR 1169 the Grand Chamber of the ECtHR held that, save in exceptional circumstances, the retention by the police of DNA samples and fingerprints taken from persons who were suspected but never convicted of a criminal offence represented an interference with their article 8 rights.\nIn Bouchacourt v France (Application No 5335\/06) [2009] ECHR 2276 (unreported), a case which concerned material on a sex offenders register, the ECtHR in a judgment given on 17 December 2009 declared (para 57) that the retention by a public authority of data relating to a persons private life by itself represented interference with that persons article 8 rights.\nIn R (T) v Chief Constable of Greater Manchester Police [2014] UKSC 35; [2015] AC 49, Lord Wilson at para 21 referred to those cases but left open the question whether retention by a public authority of data relating to private life which were not sensitive amounted to an interference with article 8 rights.\nIt is not necessary to resolve that issue in this appeal as a criminal charge relating to a sexual offence is sensitive personal data under domestic law: Data Protection Act 1998, section 2.\nFurther support for this view of the ambit of article 8 can be found in the judgments of the ECtHR in Rotaru v Romania (2000) 8 BHRC 449, para 46 and MM v United Kingdom [2012] ECHR 24029\/07, para 159, which Lord Reed discussed in R (T) (above) between paras 95 and 112.\nSee also Leander v Sweden (1987) 9 EHRR 433, para 48 and Amann v Switzerland (2000) 30 EHRR 843, para 69.\nIn this case, however, it is sufficient to focus only on the disclosure of the charge in court.\nIt is necessary to consider, first, whether the impugned provision is in accordance with the law and, secondly, whether it was necessary in the interests of one or more of the desirable outcomes set out in article 8(2).\nThe second issue involves a consideration (i) whether the objective of the impugned provision is sufficiently important to justify the limitation of the appellants right under article 8(1), (ii) whether there is a rational connection between the impugned provision and that legitimate aim or objective, (iii) whether a less intrusive measure could have been used without unacceptably compromising the achievement of the objective, and (iv) whether the impact of the rights infringement is proportionate, having regard to the likely benefit of the impugned provision.\nIn accordance with the law: It is well established that in order to be in accordance with the law under article 8(2) of the ECHR the measure must not only have some basis in domestic law but also be accessible to the person concerned and foreseeable as to its effects.\nThere is a clear basis in domestic law in the 2009 Act, which is an enactment of a democratic legislature.\nThe additional qualitative requirements of accessibility and foreseeability have two elements: (i) a rule must be formulated with sufficient precision to enable any individual, with appropriate advice when needed, to regulate his or her conduct and (ii) the rule must be sufficiently precise to give legal protection against arbitrariness.\nIn relation to the latter element, there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined: R (T) (above), para 114 per Lord Reed.\nThe impugned provision innovates on the prior law by making a criminal charge by a police officer the basis for excluding the reasonable belief defence.\nThe Lord Advocate explains that police officers are trained to charge an individual with an offence if they are satisfied that there is sufficient evidence that a crime has been committed.\nThere is no formal guidance on charging people with criminal offences and no distinction is made between adults and children.\nHe informs the court that this appeal has alerted him to the lack of any guidelines on charging children and that he has instructed a review of whether such guidelines are required.\nIf the only rationale of the impugned provision was to prevent a person asserting a reasonable belief defence more than once, the provision could have arbitrary results because it could deprive a person of that defence when he or she had never used it in the past.\nBut the rationale, which the Lord Advocate advances and which is supported by what the representative of the Scottish Governments Legal Directorate told the Parliament, is that the charge by the police officer gives the person charged an official warning that consensual sexual activity with children between the ages of 13 and 16 is an offence.\nOn the hypothesis that there was a warning or notice, the rule that a person once warned would not in future be able to advance the reasonable belief defence would in my view be sufficiently accessible to enable the person charged to regulate his or her conduct and thus be in accordance with the law.\nFinally on the topic of the requirement to be in accordance with the law, I do not accept the submission of the appellants counsel that the impugned provision gives rise to arbitrary results because a prior charge could relate to an alleged offence which occurred after the occurrence which is the subject of the criminal proceedings in which the accused person wishes to advance the reasonable belief defence.\nIt is straightforward to interpret the impugned provision in a way which avoids that absurd result by reading A has previously been charged with a relevant sexual offence to refer to an offence which is alleged to have occurred before the events which are the subject matter of the proceedings in which the accused person seeks to advance the defence.\nThus, as a prior charge can act as a relevant warning, I consider the provision to be in accordance with the law.\nThe problem in this case, which is relevant to the issue of proportionality, is that the prior charges, which were not charges of consensual sexual activity with a child aged between 13 and 16, did not by themselves provide such a warning.\nNecessary for the prevention of crime, the protection of health or morals, and the protection of the rights of others: (i) The importance of the aims: Of the public purposes listed in article 8(2) as possible justifications for an interference with an article 8(1) right, the prevention of crime, the protection of health or morals, and the protection of the rights of others, in this case potential victims of sexual offending, appear the most relevant.\nThe aims of the legislation, as the Lord Advocate submits, include the protection of children from premature sexual activity, young teenage pregnancy, sexually transmitted diseases, and also exploitation and abuse.\nIt also seeks to deter adults from sexual activity with children under the age of 16.\nThose aims are undoubtedly legitimate and are consistent with the states positive obligation to protect children from exploitation and abuse.\nThe aims are, in my view, sufficiently important to justify some limitation of the appellants right to privacy.\n(ii) Rational connection: As a matter of policy both the United Kingdom Parliament and the Scottish Parliament have not sought to criminalise all sexual activity between an adult and children between the ages of 13 and 16, recognising the possibility of reasonable mistake as to age.\nIn the 2003 Act in England and Wales and in the 2009 Act in Scotland the democratic legislatures have created strict liability offences where sexual activity is with children under the age of 13, but have allowed a role for honest belief as to age to exclude criminal liability where that activity is with older children.\nIn English law the prosecution must exclude such honest belief (para 7 above); in Scots law a reasonable belief defence is available so long as the accused person has not been charged with an earlier relevant sexual offence (paras 10 and 11 above).\nThe rational connection between the restriction of the reasonable belief defence in the impugned provision and the legitimate aims of protecting children and deterring adults from sexual activity with older children principally, but not exclusively, depends on the extent to which the prior police charge can operate as a warning to the person so charged.\nThere are no operating procedures which require police officers to give any particular warning.\nInstead, the official warning or notice on which the Lord Advocate relies is (if it exists at all) an implied notice as it is left to the charged person to infer from the particular charge that consensual sexual activity with older children is a criminal activity.\nUntil the 2009 Act was enacted, the prior charge which excluded the reasonable belief defence in a charge of sexual intercourse with an older child was a charge of a like offence, ie principally, having or attempting to have (consensual) sexual intercourse with an older child (para 5 above).\nAs I have said, it was generally accepted that the relevant charge had to proceed to trial before the reasonable belief defence was excluded.\nIn the 2009 Act, by contrast, the charge can relate to a wide range of relevant sexual offences in Schedule 1, involving both consensual and non consensual sexual activity and including offences, such as coercing a person into looking at a sexual image, sexual exposure or voyeurism (sections 6, 8 and 9), in which the age of the victim is not an essential component.\nThe sexual offence in, for example, Part 1 of the Act becomes a relevant sexual offence under Schedule 1 if the victim is in fact under the age of 16.\nThus, while the police officer in formulating the charge of a sexual offence may follow the practice in a formal charge in an indictment by narrating the date of birth of the victim, if a child, in cases where that persons age is not an essential component of the crime, the charge itself would contain no further warning about the criminality of consensual sexual activity with an older child.\nIn addition, it is striking that Schedule 1, Part 1, paragraph 1(b) excludes from the list of relevant sexual offences those which prima facie would have been most relevant as a warning to a person who, like the appellant, committed the prior offence while still aged between 13 and 16, namely the offences of older children engaging in sexual conduct with each other: section 37(1) and (4).\nIn my view there will in many cases be no rational connection between the suggested warning and the deterrence of the person who is charged from consensual sexual activity with older children, because there will not be an adequate basis in the charge from which the charged person can infer the official warning about sexual behaviour with children under 16, for which the Lord Advocate contends.\nOn the other hand, the limitation of the availability of the reasonable belief defence, which may often be difficult for the Crown to disprove, is rationally connected with the protection of children from sexual activity and predation, because it creates strict liability offences which are easier for the Crown to prove.\nIt may therefore contribute towards the aim stated in the Policy Memorandum of preventing serial sexual predators evading conviction by repeated use of the reasonable belief defence.\nI conclude therefore that the impugned provision does not infringe the appellants article 8 right because of an absence of rational connection.\n(iii) Less intrusive means: Mr ONeill submits that the Parliament could sufficiently have achieved the legitimate aims of protecting older children from sexual activity and deterring adults from such activity with them by other means which would not interfere with the appellants article 8 right to the same extent.\nHe puts forward four possibilities.\nHe suggests that the reasonable belief defence could be disallowed either if the accused person has been convicted of a relevant sexual offence or if the accused has actually relied on the defence in court on a previous occasion.\nAlternatively, the Parliament could have adopted the recommendation of the Scottish Law Commission to allow the Crown to challenge the credibility of the accused if he or she has attempted to raise a reasonable belief defence in earlier criminal proceedings.\nFinally, he suggests that if the mere fact of a police charge were to be used as the basis for modifying the individuals defences, its effect could be confined, for example, to imposing a legal burden rather than merely an evidential burden on the accused to establish the existence of the reasonable belief.\nI am not persuaded.\nIt is important to recall that the question of whether the Parliament could have used a less intrusive measure does not involve the court in identifying the alternative measure which is least intrusive.\nThe court allows the legislature a margin of discretion and asks whether the limitation on the article 8 right is one which it was reasonable for the Parliament to propose: Bank Mellat v HM Treasury (No 2) [2013] UKSC 38, [2014] AC 700, para 75 per Lord Reed; Animal Defenders International v United Kingdom (2013) 57 EHRR 21, para 110.\nHad the 2009 Act provided that the reasonable belief defence would not be available if on an earlier occasion the accused had been charged with an offence which itself objectively entailed a warning of the illegality of consensual sexual activity with older children, the fact that there were other options, which were less intrusive, to restrict the availability of that defence would not cause an infringement of the individuals article 8 right.\nThe problem for the Lord Advocate in this appeal is where to find such a warning.\n(iv) Proportionality: The Scottish Parliament has sought to strike a balance between protecting young people under the age of 16 from both premature sexual activity and predation on the one hand and the recognition that it might be harsh to criminalise an honest mistake when an older child appears older than his or her true age.\nIt has expanded the reasonable belief defence by making it available to accused persons regardless of their age.\nBut it has set a limit on the defence by excluding it when the accused person has previously been charged with a relevant sexual offence.\nAs I have said, the principal rationale now advanced for the use of the prior charge to limit the availability of the defence is that the charge amounts to an official warning about sexual offences with children as the Lord Advocate states in his written case.\nThe balance, which this court is enjoined to address, is different.\nIt is the question of a fair balance between the public interest and the individuals right to respect for his or her private life under article 8.\nThe question for the court is, in other words, whether the impact of the infringement of that right is proportionate, having regard to the likely benefit of the impugned provision.\nIn addressing this question, I acknowledge that the Scottish Parliament might have chosen to make sexual activity with older children a strict liability offence by excluding altogether the reasonable belief defence.\nBut it did not.\nInstead, it chose to use as a limit on the defence the prior police charge of a relevant sexual offence, thereby bringing the limitation in the impugned provision within the ambit of article 8.\ndefence and its effect on the appellants article 8 right I bear in mind that it will almost always be possible for the courts to conclude that a more precisely tailored bright line rule might have been devised than the one selected by the body to which the choice has been democratically entrusted and which, unlike the courts, is politically accountable for that choice. the courts are not called on to substitute judicial opinions for legislative or executive ones as to the place at which to draw a precise line.\nIn addressing the limit which the Parliament has chosen to place on the (R (Tigere) v Secretary of State for Business, Innovation and Skills [2015] UKSC 57, [2015] 1 WLR 3820, para 93 per Lord Sumption and Lord Reed (in a dissenting judgment)).\nI also have regard to the fact that once a police officer has charged a person with a relevant sexual offence, the record of that charge will remain available to exclude the reasonable belief defence for the rest of that persons life.\nI am satisfied that in principle a warning by a police officer that sexual activity with older children, including consensual activity, was a criminal offence, could form a basis for the exclusion of the reasonable belief defence without infringing an accused persons article 8 right.\nThe problem in this case is that there does not appear to have been such a warning.\nThe relevant sexual offences with which the appellant was charged when he was aged 14 (para 13 above) were common law offences which could be committed only against children under the age of puberty and a statutory offence which could be committed only against girls aged 12 or over and under 16.\nTo that extent, he, when a child, was given notice that certain sexual activity involving children was criminal.\nBut the charges, which involved showing online pornographic images to a young boy and the exposure of his genitals to girls, did not involve consensual sexual activity with an older child and could not amount to an implicit warning that such activity was an offence.\nThere is no suggestion that the police officer gave any explicit warning that such consensual activity amounted to an offence or that in future any such sexual activity with an older child would be a strict liability offence because the reasonable belief defence would not be available.\nNo charge was laid against the appellant at a trial.\nInstead, the case was referred to the Childrens Reporter, who appears to have decided to take no action.\nIn my view the use of the prior charges in this case to exclude the reasonable belief defence amounts to a disproportionate interference with the appellants article 8 right because the prior charges did not give the official warning or official notice, which is the only rationale of the impugned provision which the Lord Advocate seeks to defend.\nIf the appellant had in the past been charged with an offence of consensual sexual activity under section 37 of the 2009 Act and that offence had been listed as a relevant sexual offence, it would clearly be arguable that he had been given sufficient notice to meet the rationale of an official warning.\nSimilarly, if an adult had been charged with the equivalent of a like offence under the prior law, there would clearly be scope for finding that there had been an implicit warning which would justify a restriction of the defence by the Parliament.\nBut that is not what happened in this case.\nWhen discussing whether there was a rational connection between the impugned provision and the legitimate aim, I have observed that the list of relevant sexual offences includes charges in which the age of the victim is not an essential component, extends far beyond consensual sexual activity with an older child and excludes charges relating to sexual conduct (including consensual conduct) under section 37 of the 2009 Act, which might be most relevant to a person of the appellants age when he was first charged.\nThis suggests that the impugned provision is likely in many other cases to give rise to infringements of article 8 because of the absence of a warning.\nDiscrimination: article 8 and article 14\nHaving reached the conclusions which I have in relation to proportionality, it is not necessary to discuss this alternative challenge.\nConclusion and remedy\nI am satisfied that section 39(2)(a)(i) of the 2009 Act is incompatible with Convention rights in its application to the appellant because it interferes disproportionately with his article 8 right (paras 43 44).\nIt is likely to do so in all other cases where the prior charge does not objectively give the relevant warning.\nI do not consider that it is possible to invoke section 101 of the Scotland Act 1998 to interpret the impugned provision narrowly so as to bring it within the competence of the Parliament.\nThe courts power under section 102 of the Scotland Act 1998 to suspend or vary the effect of its decision on a compatibility issue is to be exercised by the High Court of Justiciary: Scotland Act 1998, section 102(5A).\nCourt of Justiciary.\nLORD REED: (with whom Lord Kerr, Lord Wilson and Lord Hughes agree)\nWhen the provision which became section 39(2)(a)(i) of the Sexual Offences (Scotland) Act 2009 was introduced into the Scottish Parliament, as part of the Sexual Offences (Scotland) Bill, the Parliament was told, in the Scottish Governments policy memorandum which accompanied the Bill: I would therefore allow the appeal and remit the proceedings to the High The Bill provides that it shall be a defence to a charge of sexual activity with an older child that the accused reasonably believed that the child was 16 years old or older.\nThis is similar to what the SLC [Scottish Law Commission] proposed but differs by restricting the use of the defence to those not previously charged with a like offence.\nThis reflects the current law, where the defence is allowed in respect of a charge of intercourse with a girl under 16, but it is a requirement that the accused had not previously been charged with a like offence. (paras 131 132)\nAs Lord Hodge has explained, however, the new provision departed from the then current law in two important respects.\nFirst, it restricted the defence to those not previously charged by the police, whereas the then current law (contained in section 5 of the Criminal Law (Consolidation) (Scotland) Act 1995), as generally understood, restricted the defence to those who had not previously stood trial.\nThat was a significant change, since people who are charged by the police are not necessarily brought to trial.\nThe present case provides an example: the appellant was charged by the police when he was 14, but was not prosecuted.\nInstead, like most children in such circumstances, he was referred to the Childrens Reporter, who seemingly decided to take no action.\nSecondly, the defence was previously restricted to those not previously charged with a like offence, defined as meaning (i) having or attempting to have unlawful sexual intercourse with a girl aged between 13 and 16, and (ii) permitting a girl under the age of 16 to use premises for sexual intercourse.\nThe new provision, on the other hand, restricted the defence to those not previously charged with a relevant sexual offence, defined in Schedule 1 to the 2009 Act so as to include a far wider range of offences.\nThat was another important change.\nAs to the policy justifying the provision, the policy memorandum explained that the Scottish Government disagreed with the Scottish Law Commissions recommendation that there should be no restriction on the availability of the defence, and stated: We were concerned that removing this restriction could enable serial sexual predators to evade conviction and have therefore re instated it. (para 135) In evidence to the Scottish Parliament, the Scottish Governments Bill Team Leader explained the thinking more fully: Now, as regards the relevant offence and its restriction, the defence is restricted to those not previously . charged by the police with a relevant offence to prevent a serial sexual predator who relied on that defence on a previous occasion but was acquitted of all charges from using the same defence to evade conviction on a subsequent offence or offences.\nIn each individual instance, the accuseds claim of mistaken belief as to the childs age may appear to be reasonable.\nHowever, when considered together, the accused's behaviour would indicate that he or she was deliberately preying on children. (Subordinate Legislation Committee, 28 October 2008, col 392) So the policy justification was to prevent the defence from being exploited by serial sexual predators.\nNo one could quarrel with that objective.\nThe problem is that it cannot provide a legally tenable justification for the measure which was introduced and enacted.\nIndeed, the Lord Advocate has not attempted to defend the rationale put forward in the policy memorandum and in the Bill Team Leaders evidence.\nThe difficulty with that rationale is that the restriction on the availability of the defence is not confined to persons who relied on the defence on a previous occasion, or even to persons who could conceivably have relied on the defence on a previous occasion.\nFor example, a person who, like the appellant, was previously charged with offences against children under the age of puberty could not possibly have relied on a defence that he reasonably believed that the victims were 16 or older, since that would not be a defence to the charge.\nThe justification for the interference with article 8 rights\nThe need for a legally defensible justification for the provision arises from the fact, conceded on behalf of the Crown, that the application of section 39(2)(a)(i) involves an interference with rights guaranteed by article 8 of the European Convention on Human Rights, since it involves the disclosure of information about an earlier police charge.\nThat concession departs from the Crowns position before the courts below.\nGiven that concession, it is legally necessary for the interference to be justified under article 8(2).\nThe justification which is now put forward was first advanced in evidence given to the Scottish Parliament by a representative of the Scottish Government Legal Directorate.\nIt was not, however, the policy which underlay the drafting of the provision and was set out in the policy memorandum, namely to prevent the defence from being exploited by serial sexual predators.\nUnsurprisingly, the justification now put forward does not fit particularly well with a provision which was drafted with a different rationale in mind.\nThe justification now put forward is that where the accused has been charged by the police with a relevant sexual offence [he] has therefore received an official warning about sexual offences with children.\nIt is argued that such a warning alerts the person charged to the importance of a young persons age in relation to sexual behaviour, and therefore justifies depriving that person, if he is later charged with one of the sexual offences against older children set out in sections 28 to 37 of the 2009 Act, of the defence that he reasonably believed that the complainer was 16 or older.\nOn that basis, it is argued that the disclosure of the previous charge is justified in the interests of protecting older children from sexual exploitation.\nIn considering this justification, it is important to understand that sections 28 to 37 are concerned primarily with consensual sexual behaviour involving older children.\nNon consensual offences, such as rape or sexual assault, are dealt with elsewhere in the 2009 Act.\nFor example, a boy and girl of 15 who willingly have sexual intercourse together are both guilty of an offence under section 37.\nSection 39(1), which provides the defence taken away by section 39(2)(a)(i), provides the boy and the girl with a defence if they reasonably believed that their partner was 16 or older.\nIf, on the other hand, the girl did not consent to sexual intercourse, the offence would be rape, which is dealt with in section 1 of the 2009 Act.\nNo question of a defence under section 39(1) would arise: it is, of course, no defence to a charge of rape that the rapist was mistaken as to his victims age.\nSimilarly, a boy of 16 who touches sexually a girl of 15, with her consent, commits an offence under section 30 of the 2009 Act.\nIf he reasonably believed that she was 16 or older, he has a defence under section 39(1), unless he is deprived of it under section 39(2)(a)(i).\nIf, on the other hand, the girl did not consent to being touched, the offence would be sexual assault, which is dealt with in section 3 of the 2009 Act.\nNo question of a defence under section 39(1) could arise: a mistake as to the age of the victim is irrelevant to the question whether she was assaulted or not.\nThere are also some offences in sections 28 to 37 which can be committed either consensually or not (such as causing a child aged over 13 but under 16 to look at a sexual image), but in practice the offences charged under those sections are primarily concerned with sexual activities involving two or more willing parties.\nIt is because even willing children need to be protected from premature sexual activities that these offences have been created; and it is because of the possibility that a person can make a reasonable mistake as to the age of an older child that the defence in section 39(1) has been provided.\nConsidered against that background, the fundamental problem with the justification now put forward for depriving a person of the defence namely, that by being previously charged with a relevant sexual offence, he has been alerted to the importance of making sure that his partner in sexual activities is over the age of consent is readily apparent.\nThe problem is that relevant sexual offences are defined in Schedule 1 to the 2009 Act as including almost all sexual offences, provided they were committed against a person under the age of 16.\nThat made sense when the policy was to prevent the defence from being exploited by serial sexual predators.\nBut it does not make sense if the justification is that the person charged has been warned about the importance of the age of consent.\nThat is because the age of the victim is irrelevant to many sexual offences.\nAs I have explained, rape and sexual assault, for example, are offences whatever the age of the victim; and the same is true of many other offences concerned with non consensual sexual activities.\nA person who is charged with an offence of that nature, even if the complainer is aged under 16, is not in consequence put on notice that consensual sexual activity with a person of that age is equally unlawful.\nAn analogous problem arises also where the relevant sexual offence is one which can be committed only against younger children.\nFor example, a person who is accused of having sexual intercourse with a girl under 13 will be charged with the rape of a young child, under section 18 of the 2009 Act.\nNo question arises of a defence under section 39(1): sexual intercourse with a child under 13 is an offence of strict liability.\nIt is difficult to regard such a charge as constituting a warning of the need to make sure that an older girl who is sexually mature and willing to engage in sexual intercourse is 16 or older.\nThis point also arises in relation to the common law offences with which the appellant was charged when he was 14, since they could be committed only against children under the age of puberty.\nEven the statutory offence with which he was then charged, although one which could only be committed against someone aged between 12 and 16, was concerned with non consensual conduct.\nOn what basis could it be said that his being charged with offences of those kinds alerted him to the importance of ensuring that an older person who was willing to engage in consensual sexual behaviour with him was over the age of consent?\nIn short, the difficulty arises from the width of the definition of relevant sexual offences in Schedule 1 to the 2009 Act.\nSince such offences are not confined to sexual conduct which is illegal because it is with children in the relevant age group, prior charges of such offences cannot be taken to have alerted the accused to the importance of making sure that a person is over 16 before engaging in the sexual activities which are criminalised by sections 28 to 37.\nIn addition, since the offences listed in Schedule 1 include non consensual offences, prior charges cannot be taken to have alerted the accused to the importance of age in the context of consensual sexual conduct.\nThe difficulty is underlined by the fact that relevant sexual offences are defined in paragraph 1(b) of Schedule 1 so as to exclude consensual sexual activities between older children.\nFor example, a 15 year old who has previously been charged with having sexual intercourse with another 15 year old is not deprived of the defence.\nYet that is the clearest example of a situation where the charge alerts the person charged to the importance of the age of consent when engaging in consensual sexual behaviour.\nThe explanation, presumably, is that it was considered inappropriate to apply the serial sexual predator policy to offenders who were themselves children at the time of a previous charge involving consensual behaviour with another child.\nIt follows that the interference with the right guaranteed by article 8 which is implicitly authorised by section 39(2)(a)(i) cannot be regarded as proportionate in cases (such as the present case) where the necessary link between the prior charge and the supposed warning does not exist.\nThis problem cannot be resolved by interpreting the legislation narrowly: it can only be resolved by further legislation.\nIt follows that section 39(2)(a)(i) must be held to be incompatible with article 8 and therefore not law.\nGiven that conclusion, and bearing in mind also that the Lord Advocate has instructed a review in relation to the charging of children, it is unnecessary to reach a concluded view on the challenge under article 14.\nConclusion\nFor these reasons, and those given by Lord Hodge, I agree that the appeal against the decision of the High Court of Justiciary should be allowed, and that the proceedings should be remitted to that court.\n","output":"In 2009, when the appellant was aged 14, the police charged him with two charges of lewd and libidinous practices at common law and one contravention of section 6 of the Criminal Law (Consolidation) (Scotland) Act 1995.\nOne of the common law charges involved the allegation of showing online pornographic images to a young boy.\nThe other common law charge and the statutory charge involved the allegation of exposing his penis to, and chasing after, three other children, who were girls aged 4, 12 and 13.\nThe police reported the case to the Procurator Fiscal but a decision was made not to prosecute the appellant.\nIn July 2015, when the appellant was aged 19, he was charged with having sexual intercourse with a girl who was aged 14 years and 11 months, contrary to sections 28 and 30 of the Sexual Offences (Scotland) Act 2009 (the 2009 Act).\nThe appellant did not deny that sexual intercourse had taken place, but sought to rely on the defence in section 39(1)(a) of the 2009 Act that at the time he reasonably believed that the girl was aged 16.\nHowever, section 39(2)(a)(i) of the 2009 Act provides that the reasonable belief defence is not available to an individual who has previously been charged by the police with a relevant sexual offence.\nThe relevant sexual offences are set out in Schedule 1 to the 2009 Act and cover a wide range of sexual offences, both consensual and non consensual, and include offences in which the age of the victim is not an essential component of the crime.\nThe definition excludes consensual sexual activities between older children.\nThe offences with which the appellant had been charged in 2009 fell within the meaning of a relevant sexual offence and the appellant could not therefore plead the reasonable belief defence.\nHe argued that section 39(2)(a)(i) was not compatible with his rights as set out in the European Convention on Human Rights and therefore, in accordance with section 29 of the Scotland Act 1998, was outside the competence of the Scottish Parliament and was not law.\nHe argued that that the provision breached both the presumption of innocence in Article 6(2) and his Article 8 right to privacy, and was unjustifiably discriminatory for the purposes of Article 14 read with Article 8.\nThe Lord Advocate argued that any interference with the appellants Convention rights was justified in the interests of protecting older children from sexual exploitation.\nHe argued that the prior charge acts as an official warning, alerting the person charged to the importance of a young persons age in relation to sexual behaviour, and therefore justifies depriving that person, if later charged with a sexual offence against an older child set out in section 28 to 37 of the 2009 Act, of the reasonable belief defence.\nThe Supreme Court unanimously allows ABs appeal and remits the proceedings to the High Court of Justiciary.\nLord Hodge gives the lead judgment, with which the other Justices agree.\nLord Reed gives a concurring judgment, with which Lord Kerr, Lord Wilson and Lord Hughes agree.\nArticle 6 Section 39(2)(a)(i) is not within the ambit of Article 6.\nSection 39(2)(a)(i) did not create an irrebuttable presumption that the appellant did not have a reasonable belief as to the age of the girl with whom he had sexual intercourse, thereby overriding the presumption of innocence in Article 6(2).\nThe provision created what amounts to a strict liability offence, by treating as irrelevant the accused persons knowledge of the victims age.\nSuch an offence does not violate Article 6(2), which is concerned with procedural guarantees and not with the substantive elements of a criminal offence [21].\nArticle 8 There was an interference with Article 8 which requires to be justified under Article 8(2) because the prosecutor relied on the earlier police charge in the criminal proceedings [23 24, 56 57].\nLord Hodge concludes that section 39(2)(a)(i) is incompatible with the appellants Article 8 rights [47].\nThe exclusion of the reasonable belief defence in this case is a disproportionate interference with the appellants Article 8 rights because the prior charges did not give the official warning or notice that consensual sexual activity with children between the ages of 13 and 16 is an offence [44].\nThose prior charges were not charges of sexual activity with a child aged between 13 and 16 and therefore did not provide such a warning [29].\nThe list of relevant sexual offences includes charges in which the age of the victim is not an essential component, extends far beyond consensual sexual activity with an older child and excludes charges where the charged person was an older child at the time of the charge.\nThis suggests that section 32(2)(a)(i) is likely in many other cases to give rise to infringements of article 8 because the prior charge does not objectively give the relevant warning [45, 47].\nLord Reed agrees that the interference with the Article 8 right is not proportionate where the necessary link between the prior charge and the supposed warning does not exist [66].\nThe difficulty arises from the width of the definition of relevant sexual offences.\nSince such offences are not confined to sexual conduct which is illegal because it is with children, prior charges of such offences cannot be taken to have alerted the accused to the importance of making sure that a person is over 16 before engaging in sexual activities.\nFurther, since the definition includes non consensual offences, prior charges relating to those offences cannot be taken to have alerted the accused to the importance of age in the context of consensual sexual conduct [64].\nThe definition also excludes consensual sexual activities between older children, perhaps the clearest example of a situation where the charge alerts the person charged to the importance of the age of consent when engaging in consensual sexual behaviour [65].\nArticle 14 In light of the conclusions in relation to Article 8, it is unnecessary to discuss this challenge [46, 67].\nRemedy It is not possible to interpret section 39(2)(a)(i) narrowly to bring it within the competence of the Parliament [48, 66].\nSection 39(2)(a)(i) is therefore not law [66] and proceedings are remitted to the High Court of Justiciary to exercise the power to suspend or vary the effect of this decision [49 50].\n","id":74}
{"input":"These appeals raise important and difficult issues in the field of equity and trust law.\nBoth appeals raise issues about the so called rule in Hastings Bass.\nOne appeal (Pitt) also raises issues as to the courts jurisdiction to set aside a voluntary disposition on the ground of mistake.\nIt is now generally recognized that the label the rule in Hastings Bass is a misnomer.\nThe decision of the Court of Appeal in In re Hastings Bass, decd [1975] Ch 25 can be seen, on analysis, to be concerned with a different category of the techniques by which trust law controls the exercise of fiduciary powers.\nThat decision is concerned with the scope of the power itself, rather than with the nature of the decision making process which led to its being exercised in a particular way (see R C Nolan, Controlling Fiduciary Power [2009] CLJ 293, especially pp 294 295 and 306 309).\nThe rule would be more aptly called the rule in Mettoy, from the decision of Warner J in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587.\nBut the misnomer is by now so familiar that it is best to continue to use it, inapposite though it is.\nAs Mettoy illustrates, the rule is concerned with trustees who make decisions without having given proper consideration to relevant matters which they ought to have taken into consideration.\nIt has also been applied to other fiduciaries (in Pitt Mrs Pitt was acting as a receiver appointed by the Court of Protection).\nMettoy was concerned with the rules of an occupational pension scheme, as are some other cases on the rule.\nBut since the turn of the century there have been several cases concerned with family trusts, and in particular with taxplanning arrangements involving trusts, where the arrangements have for one reason or another proved unexpectedly disadvantageous, and the court has been asked to restore the status quo ante under the Hastings Bass rule.\nFutter is such a case, as Norris J pointed out in blunt terms at the beginning of his judgment, [2010] EWHC 449 Ch, [2010] STC 982, para 2: This is another application by trustees who wish to assert that they have acted in an un trustee like fashion and so have failed properly to exercise a power vested in them.\nThe trustees wish to take advantage of this failure to perform their duties in order to enable the beneficiaries to avoid paying the tax liability consequent upon the trustees decision.\nPut like that (and I am conscious that that is not the only way in which the situation may be described) the possibility is raised that the development of the rule may have been diverted from its true course.\nThese appeals are the first cases on the Hastings Bass rule in which the Commissioners of HM Revenue and Customs (the Revenue, so as to include their predecessors, the Commissioners of Inland Revenue) have been joined as parties in the proceedings.\nIt is the Revenue that has taken on the task of challenging, if not the existence, at least the limits of the Hastings Bass rule.\nIt is no coincidence that the judgment of the Court of Appeal in these two appeals (which were heard together in that court also) is the first fully considered judgment above first instance level, and the first to come on further appeal to the Supreme Court (Mettoy was not cited to the Court of Appeal in Stannard v Fisons Pension Trust Ltd [1991] Pen LR 225, discussed in para 34 below).\nRescission of a voluntary disposition on the ground of mistake is, by contrast, a topic on which there is a good deal of authority, including a decision of the House of Lords, Ogilvie v Allen (1899) 15 TLR 294.\nBut some of the authorities are quite old, and others are debatable.\nThere has been much discussion of the distinction drawn by Millett J in Gibbon v Mitchell [1990] 1 WLR 1304, 1309, between a relevant mistake having to be as to the effect of the transaction itself and not merely as to its consequences or the advantages to be gained by entering into it.\nSo here too review by the Supreme Court is appropriate.\nThis court has therefore had to consider a large volume of case law, culminating in the judgment of Lloyd LJ in the Court of Appeal in these appeals: [2011] EWCA Civ 197, [2012] Ch 132.\nThat judgment, described by Longmore LJ, para 227, as remarkable, and by Mummery LJ, para 230, as a very fine comprehensive and clarifying judgment, runs to 226 paragraphs.\nI share their admiration, and I agree with Lloyd LJs main conclusions as to the scope of the Hastings Bass rule, and the outcome of the appeals on that issue.\nBut I will say at once that I take a different view of the disposal of the appeal in Pitt on the mistake issue.\nBefore any detailed consideration of the case law it may be helpful to identify, in general terms, some of the principal topics in the appeals.\nIt has often been said (for instance, by Norris J in Futter, para 21) that the rule in Hastings Bass is not founded in the law of mistake, and in his judgment Lloyd LJ dealt with them as almost completely separate topics.\nThey do cover different areas, in that the Hastings Bass rule is restricted to decisions by trustees and other fiduciaries, and does not necessarily require the decision maker to be under a positive misapprehension: mere absence of thought may be sufficient.\nThe courts wider jurisdiction to rescind a transaction on the ground of mistake is not limited to transactions entered into by fiduciaries, and does generally require there to have been something that can be identified as an operative mistake.\nThe significance of fault in the error or inadvertence is a further point of distinction.\nNevertheless there is a degree of overlap between the two principles in their practical application.\nIn some of the first instance cases on the Hastings Bass rule judges have drawn attention, with evident surprise, to the absence of any alternative claim for relief by way of rectification or rescission on the ground of mistake.\nIn some of the cases (such as Abacus Trust Co (Isle of Man) v Barr [2003] EWHC 114 (Ch), [2003] Ch 409, the facts of which are summarized at paras 36 and 37 below) rescission on the ground of mistake would seem to have been the natural remedy for the trustees to seek.\nThere must be some suspicion that reliance on the Hastings Bass rule has come to be seen as something of a soft option, or at any rate as a safer option, at a time when it was supposed, wrongly, that the application of the rule did not require the granting of a remedy which was discretionary in the sense that it might be withheld because some equitable defence was established.\nThe way in which the law seemed to be developing, especially in cases concerned with unsuccessful tax planning arrangements, led one legal scholar (Professor Charles Mitchell, Reining in the rule in In Re Hastings Bass, (2006) 122 LQR 35, 41 42) to ask: Why should a beneficiary be placed in a stronger position than the outright legal owner of property if he wishes to unwind a transaction to which he has given his consent, but which turns out to have unforeseen tax disadvantages? Professor Mitchell went on to comment, presciently: The courts will have to look elsewhere for the means of reining in the rule in Re Hastings Bass, most probably to the equitable bars to unwinding a transaction that would come into play if it were decisively recognised that the rule renders transactions voidable rather than void.\nThis court now has the opportunity of confirming the Court of Appeals recognition of that essential point.\nTHE HASTINGS BASS RULE\nThe three strands of the problem\nappeals as In the Court of Appeal [2012] Ch 132, para 227 Longmore LJ described the . examples of that comparatively rare instance of the law taking a seriously wrong turn, of that wrong turn being not infrequently acted on over a 20 year period but this court being able to reverse that error and put the law back on the right course.\nIf the law did take a seriously wrong turning it was because a number of first instance judges were persuaded that three separate strands of legal doctrine, all largely associated with practice in the Chancery Division, should be spun or plaited together so as to produce a new rule.\nThe first strand of legal doctrine starts with the entirely familiar proposition that trustees, in the exercise of their fiduciary discretions, are under constraints which do not apply to adult individuals disposing of their own property.\nI made some uncontroversial observations about this in Scott v National Trust for Places of Historic Interest or Natural Beauty [1998] 2 All ER 705, 717: Certain points are clear beyond argument.\nTrustees must act in good faith, responsibly and reasonably.\nThey must inform themselves, before making a decision, of matters which are relevant to the decision.\nThese matters may not be limited to simple matters of fact but will, on occasion (indeed, quite often) include taking advice from appropriate experts, whether the experts are lawyers, accountants, actuaries, surveyors, scientists or whomsoever.\nIt is, however for advisers to advise and for trustees to decide: trustees may not (except in so far as they are authorised to do so) delegate the exercise of their discretions, even to experts.\nThis sometimes creates real difficulties, especially when lay trustees have to digest and assess expert advice on a highly technical matter (to take merely one instance, the disposal of actuarial surplus in a superannuation fund).\nThe same principles apply, at least in a modified manner, to other persons acting in a fiduciary capacity.\nThere are superficial similarities between what the law requires of trustees in their decision making and what it requires of decision makers in the field of public law.\nThis was noted by the Court of Appeal in its judgment, delivered by Chadwick LJ, in Edge v Pensions Ombudsman [2000] Ch 602, 628 629.\nIt was also noted by Lord Woolf MR in Equitable Life Assurance Society v Hyman [2002] 1 AC 408, para 20.\nThe analogy cannot however be pressed too far.\nIndeed it was expressly disapproved by the Court of Appeal in these appeals (Lloyd LJ at para 77 and Mummery LJ at para 235).\nIn Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409, para 29 Lightman J identified three important differences as the discretionary nature of relief on judicial review, a different approach to nullity, and strict time limits.\nThe second strand is that a voluntary disposition (typically a gift, outright or in settlement) may be set aside on the ground of mistake.\nAs already noted, this branch of equitable jurisdiction is distinct from the Hastings Bass rule, but similar issues arise as to the nature and gravity of the relevant error or inadvertence, and in practice they sometimes overlap.\nThe mistake jurisdiction was considered as a separate issue in paras 164 to 220 of Lloyd LJs judgment.\nHe identified the correct test as derived in part from the judgment of Lindley LJ in Ogilvie v Littleboy (1897) 13 TLR 399, 400 (approved by the House of Lords as Ogilvie v Allen (1899) 15 TLR 294), a case which emerged from the shadows to be cited to the court after a century of obscurity.\nHe also considered recent decisions including Gibbon v Mitchell [1990] 1 WLR 1304 and In re Griffiths decd [2008] EWHC 118 (Ch), [2009] Ch 162.\nThe third strand of legal doctrine, and the most abstruse one, is concerned with the partial validity of an instrument which cannot be entirely valid because it infringes some general rule of law.\nIt is an issue which arises, often under the rubric of severance, in many different areas of law.\nOne example is contract law, especially in the context of illegal restraints on trade (see the judgment of Jonathan Sumption QC in Marshall v NM Financial Management Ltd [1995] 1 WLR 1461, upheld by the Court of Appeal [1997] 1 WLR 1527).\nAnother example is bye laws held to be partly ultra vires (see the speech of Lord Bridge in Director of Public Prosecutions v Hutchinson [1990] 2 AC 783).\nIn the field of trust law the most common invalidating factor, until the\nPerpetuities and Accumulations Act 1964, was the unreformed rule against perpetuities, or remoteness of vesting.\nThis applied relentlessly both to dispositions of property made by settlors or testators of property at their free disposal, and to dispositions made in the exercise of special (that is, restricted) powers of appointment over settled property.\nSpecial powers of appointment might be exercisable either by individual donees (for instance, by a parent with a life interest in favour of children with interests in expectancy) or by the trustees as a body.\nBut in either case the power could be exercised only within the limits, and for the purposes, marked out by the donor of the power.\nAnd in either case the interests appointed had to conform to the rule against perpetuities as it applied to lives in being at the time of the creation of the power (that is, the date of the original settlement, or the date of the testators death).\nThese matters were once familiar (indeed, elementary) to almost all chancery practitioners.\nLaw and practice at the chancery bar have moved on.\nThe rule against perpetuities has lost its terrors since the Perpetuities and Accumulations Act 1964 (which was almost completely non retrospective) gradually came to apply to more and more trusts, followed by the Perpetuities and Accumulations Act 2009.\nFamily trusts are now a shrinking enclave designated as private client work, and pensions trusts, burdened by increasingly complex regulatory statutes, are another enclave reserved for pensions specialists.\nBut in order to investigate the origins of the disputed rule in In re Hastings Bass it is necessary to revisit, without much nostalgia, this area of trust law as it was about 50 years ago.\nThere was a body of fairly arid case law, now almost entirely obsolete, about the validity of interests in settled property which were ulterior to but not dependent on antecedent interests which infringed the rule against perpetuities.\nIn re Hubbards Will Trusts [1963] Ch 275 and In re Bucktons Settlement Trusts [1964] Ch 497 are examples from just before the enactment of the reforming statute.\nIn re Abrahams Will Trusts [1969] 1 Ch 463 and In re Hastings Bass, decd [1975] Ch 42, discussed below, can be seen as a final chapter in that case law.\nThere is one further background matter to be noted.\nUnder traditional family settlements, when the modern type of discretionary settlement was still fairly rare, the most common dispositive power exercisable by trustees was the power of advancement.\nThis is a power to accelerate the interest of a beneficiary interested in capital, exercisable with the consent of any beneficiary with a prior interest (typically a parent with a prior life interest).\nSuch powers were so much common form that section 32 of the Trustee Act 1925 provided a default power, which could be excluded or (as often happened) extended by the trust instrument.\nThe power was typically exercisable by a payment or transfer to or for the advancement or benefit of the beneficiary.\nIn In re Pilkingtons Will Trusts [1964] AC 612 the House of Lords, differing from the judge on one point and from the Court of Appeal on another, held that a power in those terms could (in principle, and apart from the rule against perpetuities) be exercised for the benefit of a minor beneficiary (the testators nephews daughter, who was only two years old when the proceedings started in 1959) by a transfer of up to half of her expectant share, with her fathers consent, to the trustees of a new settlement under which she would attain a vested interest in capital at 30.\nThis would lawfully avoid estate duty on her fathers death if he lived for a further five years.\nBut the House of Lords also held that the new settlement must, for the purposes of the rule against perpetuities, be treated as if it were an appointment made under a special power conferred by the testators will.\nThe trusts of the new settlement did not meet that requirement as the child was not a life in being at the testators death in 1935.\nBut valid trusts to much the same effect could have been achieved (and may eventually have been put in place) by referring to the alternative contingency of survival until 21 years after her fathers death, as he was alive in 1935.\nVestey, Abrahams and Hastings Bass\nIn the Court of Appeal Lloyd LJ correctly identified the decision of the Court of Appeal in In re Vesteys Settlement [1951] Ch 209 and that of Cross J in In re Abrahams Will Trusts [1969] 1 Ch 463 as the most important precursors to the decision of the Court of Appeal in In re Hastings Bass [1975] Ch 25.\nLloyd LJ analysed these three cases very thoroughly at paras 33 to 67 of his judgment.\nBecause his analysis is so full and accurate I can deal with the cases more briefly, especially as to the facts.\nIt is worth noting that although all three cases had an important tax element, in each case the trustees misunderstanding was not about tax law.\nIt was about the general law: in the first case about the effect of section 31 of the Trustee Act 1925, and in the other two about the effect of the rule against perpetuities.\nIn Vestey the trustees of a large settlement made by Lord Vestey and his brother Sir Edmund Vestey exercised their discretion over the allocation of income with the apparent intention of income being accumulated during the minorities of a number of beneficiaries.\nThey set out to do this by a sort of framework resolution that income should belong to the minor beneficiaries in specified shares, followed by further half yearly resolutions to the effect that income was not required for the beneficiaries maintenance, and should therefore be accumulated under section 31 of the Trustee Act 1925.\nThe difficulty was that the language of section 31 did not really fit such a situation.\nAt first instance Harman J held that the resolutions were ineffective.\nThat result would have avoided surtax but left the income in limbo (Evershed MRs suggestion in the Court of Appeal that the income would have been held on a resulting trust for the settlors seems, with respect, very doubtful).\nBut the minor beneficiaries appealed, and the Court of Appeal gave effect to the framework resolution, treating the references to accumulation under section 31 as peripheral.\nEvershed MR stated ([1951] Ch 209, 220 to 221): I do not think it can or ought to be said that if, as I hold, the trustees wrongly thought that section 31 would operate, then a result is produced substantially or essentially different from that which was intended.\nThe result was that for the period covered by the trustees resolutions, the minor beneficiaries got their income, but the Revenue got their surtax on that income.\nAbrahams and Hastings Bass were both cases about plans to save estate duty by terminating a life interest and passing on settled property to the next generation.\nThe plans (carried out in 1957 and 1958 respectively) were on the same general lines as that in Pilkington, the first instance decision in which ([1959] Ch 699, Danckwerts J) had provided an encouraging precedent (the Revenue were joined in the proceedings and given leave to appeal in 1960).\nThe Revenue were also parties to the Abrahams and Hastings Bass cases, and in each case (ironically, in view of later developments, as Norris J pointed out) it was the Revenue which argued for the complete invalidation of the resettlement, partly through the direct operation of the rule against perpetuities, and partly (as an argument against severance) because the effect of the operation of the rule is wholly to alter the character of the settlement, as Cross J put it in Abrahams at p 485.\nCross J rejected an argument approximating an advancement by way of resettlement to the exercise of a power of appointment.\nAlthough they were treated in the same way for perpetuity purposes, in his view the similarity ended there (p. 485 D E): The interests given to separate objects of an ordinary special power are separate interests, but all the interests created in Caroles fund were intended as part and parcel of a single benefit to her.\nCross J held, therefore, that there was no valid exercise of the power of advancement.\nIn Hastings Bass the Court of Appeal, in a single judgment delivered by Buckley LJ, took a different view of a similar duty saving transaction.\nThe true ratio of the decision has been much debated, both in forensic argument and by legal scholars.\nIt has been considered twice by Lloyd LJ, first in Sieff v Fox [2005] EWHC 1312 (Ch), [2005] 1 WLR 3811 paras 43 and 44 (his last first instance case before his promotion to the Court of Appeal) and again, at much greater length, in his judgment in this case (paras 46 to 67).\nIt is perhaps simplest to start with what Hastings Bass did not decide.\nIt was not about mistake.\nAlthough one case on mistake (Wollaston v King (1869) LR 8 Eq 165) was cited, it was not referred to in the judgment.\nIt would not have been enough for the Revenue to establish that the exercise of the trustees power might have been voidable at the instance of a beneficiary.\nThe Revenue could succeed only by establishing that there had been no valid advancement at all.\nNor did the decision turn on any inquiry into what was actually in the minds of the trustees in exercising the power of advancement.\nThere seems to have been no evidence of this, and in Buckley LJs discussion at pp 39 41 (extensively quoted by Lloyd LJ at paras 53 56) the recurrent theme is what the trustees, as reasonable trustees, should or would have considered or intended.\nThe third negative point to make is that Hastings Bass did not overrule Abrahams.\nIt was distinguished on the basis that in Abrahams the attenuated residue of the sub settlement not struck down by the rule against perpetuities may not have been for the benefit of the beneficiary in question.\nBut Buckley LJ did differ from Cross Js view that the benefit conferred by an advance by way of resettlement was of a monolithic character, preferring the view that it was a bundle of benefits of different characters.\nIf and so far as it is an issue of severability, it is obviously easier to sever part of a bundle than part of a monolith.\nBuckley LJs own statement of the principle of the decision in Hastings Bass seems to be the passage at p 41 which has often been cited in later cases: To sum up the preceding observations, in our judgment, where by the terms of a trust (as under section 32) a trustee is given a discretion as to some matter under which he acts in good faith, the court should not interfere with his action notwithstanding that it does not have the full effect which he intended, unless (1) what he has achieved is unauthorised by the power conferred upon him, or (2) it is clear that he would not have acted as he did (a) had he not taken into account considerations which he should not have taken into account, or (b) had he not failed to take into account considerations which he ought to have taken into account.\nLloyd LJ did not accept that as the true ratio.\nHe thought that the Court of Appeal had already decided the case on the ground that the advancement, so far as not struck down by the rule against perpetuities, must stand unless it could not, in that attenuated form, reasonably be regarded as beneficial to the advancee.\nThat is an objective test which does not call for an inquiry into the actual states of mind of the trustees.\nLloyd LJ expanded this line of thought in para 66: If the problem to be resolved is what is the effect on an operation such as an advancement of the failure of some of the intended provisions, because of external factors such as perpetuity, it is not useful to ask what the trustees would have thought and done if they had known about the problem.\nThe answer to that question is almost certainly that they would have done something different, which would not have run into the perpetuity or other difficulty.\nIt is for that reason that the test has to be objective, by reference to whether that which was done, with all its defects and consequent limitations, is capable of being regarded as beneficial to the intended object, or not.\nIf it is so capable, then it satisfies the requirement of the power that it should be for that persons benefit.\nOtherwise it does not satisfy that requirement.\nIn the latter case it would follow that it is outside the scope of the power, it is not an exercise of the power at all, and it cannot take effect under that power.\nOn this analysis, limb (1) of Buckley LJs statement of principle covers the whole ground, and limb (2) adds nothing.\nI respectfully agree with Lloyd LJs criticism of the statement of principle.\nI think it is also open to criticism for the generality of its reference to unintended consequences (notwithstanding that it does not have the full effect which he intended).\nThat is a far reaching extrapolation from one case about section 31 of the Trustee Act 1925 and two cases about the rule against perpetuities.\nIt set ajar a door that was pushed wide open in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587 and other later cases.\nMettoy\nIn Mettoy Warner J applied the supposed new principle in the context of an occupational pension scheme, and in circumstances where the trustees exercise of a discretionary power was within the scope of that power.\nThere was no invalidating factor, such as the rule against perpetuities, applicable under the general law.\nIn doing so Warner J dismissed two significant arguments for limiting the scope of the new principle.\nThe employer, Mettoy Co Plc, and the trustees of its pension scheme had in 1983 executed a deed to replace a 1980 deed (and some supplementary deeds) which were ineffective because of an error about the trusteeship.\nThe rules scheduled to the 1980 deed included rule 13, providing for the winding up of the scheme in certain circumstances, the priority of claims in the winding up and the disposal of any ultimate surplus.\nThis rule differed from an earlier winding up rule in several respects.\nMost materially, the discretion to use any ultimate surplus in augmenting benefits was to be exercisable by the employer (instead of by the trustees, as provided by the earlier rule).\nMoreover, in 1983 Mettoys financial position was precarious (as a result of an ill advised diversification from die cast model vehicles into personal computers) so that winding up of the scheme was much more than a remote possibility.\nIn the event the scheme had to be wound up in 1984.\nThe trustees issued an originating summons raising a number of questions, the most important being (in effect) whether the 1983 deed was wholly invalid, or valid except for rule 13, or valid except that the power of augmentation remained exercisable by the trustees.\nThese questions arose because the trustees had admittedly not considered, or been advised about, the significance of rule 13.\nIn response to another question raised by the originating summons, Warner J held that the power of augmentation was, even when exercisable by the employer, a fiduciary power.\nOn that basis it was not clear that the trustees, if they had fully considered the matter, would have objected to the change effected by rule 13 ([1990] 1WLR 1587, 1628A 1630A).\nBut by then Warner J had upheld (in a passage from pp1621G to 1626A) the existence of a principle which may be labelled the rule in Hastings Bass.\nHe took Buckley LJs statement of principle in that case (set out at para 24 above) and reformulated it in positive terms, and so far as relevant to the facts of the case, as follows (p 1621H): where a trustee acts under a discretion given to him by the terms of the trust, the court will interfere with his action if it is clear that he would not have acted as he did had he not failed to take into account considerations which he ought to have taken into account.\nWarner J rejected the submissions of Mr Edward Nugee QC, recorded at pp 1622G to 1623G, that the principle, although existent, was of very narrow scope, and that the cases of Vestey, Abrahams and Hastings Bass (together with Pilkington, where there was a proposal for a resettlement rather than a completed transaction): . were about the consequences of what [Mr Nugee] referred to as an excessive execution of a power, ie the purported exercise of a power in a way that the law rendered partially ineffective.\nWarner J dismissed this argument at p1624B C: If, as I believe, the reason for the application of the principle is the failure by the trustees to take into account considerations that they ought to have taken into account, it cannot matter whether that failure is due to their having overlooked (or to their legal advisers having overlooked) some relevant rule of law or limit on their discretion, or is due to some other cause.\nWarner J also dismissed what he called Mr Nugees all or nothing argument (pp 1624H 1625A).\nIn some cases the court would have to declare void the whole of some purported exercise of discretion by trustees.\nBut in other cases (for instance where the trustees would have decided, had they thought about it properly, to omit some particular provision from a deed) the appropriate course would be to declare that provision alone to be void.\nAt p 1626D Warner J referred to the all important third question: what would the trustees have done if they had considered the matters that they failed to consider? His meticulous review of the oral and documentary evidence, including the cross examination of Mr Lillyman (who was at all material times closely involved as the employers company secretary and a director of the corporate trustee) shows that he was concerned to establish, so far as he could, what these particular trustees (and not some hypothetical reasonable trustees) would have done.\nHis approach was subjective, not objective.\nI respectfully agree with Lloyd LJs view that the basis on which Mettoy was decided cannot be found in the reasoning which led to the decision in Hastings Bass.\nIt can claim to be an application of Buckley LJs summary statement of principle, but only if that statement is taken out of context and in isolation from the earlier part of the judgment.\nIf the principle applied by Warner J merits a name at all, it should be called the rule in Mettoy.\nBut the rule as formulated by Warner J has given rise to many difficulties, both in principle and in practice.\nFrom Mettoy to Sieff\nMettoy was not much considered by the court during the 1990s.\nIt was cited but not referred to in the judgment of the Court of Appeal in Edge v Pensions Ombudsman [2000] Ch 602.\nThat decision, on an appeal by the Pensions Ombudsman from the judgment of Sir Richard Scott V C [1998] Ch 512, was largely concerned with the jurisdiction of the Pensions Ombudsman under Part X of the Pension Schemes Act 1993.\nThe general tenor of the Court of Appeals judgment is that neither the Ombudsman nor the court has power to intervene in decisions made by trustees unless they have acted in breach of duty.\nThat can be seen as putting down a marker that Lloyd LJ has since recognised.\nIn Stannard v Fisons Pension Trusts Ltd [1991] Pen LR 225, in which Hastings Bass but not Mettoy was cited, the Court of Appeal modified Buckley LJs formulation, without any full discussion of the point, by putting the test in terms of what the trustees might, rather than would, have done if fully informed.\nThe facts were that trustees had taken a decision about transfer values on the basis of an out of date valuation of the pension fund.\nThe Court of Appeals modification of the test seems questionable since the legal significance of the error must have depended on the scale of the change in market value rather than on the precise nature of the trustees hypothetical second thoughts.\nIt was not until about the year 2000 that Hastings Bass and Mettoy began to be called in aid in cases where tax planning arrangements involving trusts had gone wrong.\nThe first case seems to have been Green v Cobham, decided by Jonathan Parker J in January 2000 but reported at [2002] STC 820, followed by Abacus Trust Co (Isle of Man) v National Society for the Prevention of Cruelty to Children [2001] STC 1344 (Patten J) and Breadner v Granville Grossman [2001] Ch 523 (Park J).\nBreadner was an unsuccessful attempt to extend the principle so as to circumvent a missed time limit for the exercise of a power of appointment.\nPark J observed at para 61: There must surely be some limits.\nIt cannot be right that whenever trustees do something which they later regret and think that they ought not to have done, they can say that they never did it in the first place.\nThe most important decisions, prior to the present appeals, are the decisions of Lightman J in Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409 and Lloyd LJ in Sieff v Fox [2005] 1 WLR 3811.\nIn the former case Mr Barr had participated in a management buy out of an engineering company and in 1992 he had settled his shares in the buy out vehicle, held through an Isle of Man holding company, in a settlement of which Abacus Trust Co (Isle of Man) (Abacus) was trustee.\nAbacus was administered by the Isle of Man firm of Coopers & Lybrand (C&L (IoM)).\nC&L (IoM) had close links with the English firm of Coopers & Lybrand, which advised on the buy out.\nMr Ward Thompson of the English firm was Mr Barrs main contact.\nUnder the settlement Mr Barr had a life interest, but Abacus as trustee had an overriding power of appointment in favour of a wide class of beneficiaries.\nVery soon after the creation of the settlement Mr Barr told Mr Ward Thompson that he wished 40% of the trust fund to be appointed on discretionary trusts in favour of his sons and their families, to the exclusion of himself and any wife of his.\nThrough some misunderstanding this was conveyed to C&L (IoM) as a wish for 60% of the fund to be appointed, and on 22 April 1992 an appointment in that form was made.\nThe mistake was discovered in August 1992 but nothing was done to try to remedy it until 2002.\nIn the meantime, in 1994 the buy out vehicle was floated on the London Stock Exchange and the holding company controlled by Abacus embarked on a programme of sales of its shares.\nThe judgment of Lightman J is impressively brief and incisive.\nHe pointed out that Abacus was not seeking either rectification or rescission for mistake, and added in relation to the Hastings Bass rule (para 13): But in considering the ambit of the rule it is necessary to bear in mind that it is only one of the protections afforded to beneficiaries in respect of the due administration of the trust by the trustees.\nIt is also important to have in mind that equity does not afford a trustee or a beneficiary a free pass to rescind a decision which subsequently proves unpalatable or unfortunate and substitute another.\nRelief is only available if the necessary conditions for its grant are satisfied.\nHe referred to the authorities already discussed and observed that he did not need to resolve the issue posed by Stannard, since (para 20) clearly the trustee would not have appointed 60% of the trust fund if it had known of the settlors true wishes.\nHe then addressed four issues: (1) whether there had to be a fundamental mistake; (2) whether the rule applied if there was any relevant mistake or ignorance on the part of the trustee, regardless of how it arose (and in particular, regardless of any breach of duty on the part of the trustee); (3) following from the last point, whether the rule applied on the facts of the case before him; and (4) whether, if the rule applied, the appointment was void or voidable.\nOn the first issue Lightman J decided, correctly in my view, that a fundamental mistake was not necessary.\nA fundamental, or at least serious mistake may be necessary for rescission on the ground of mistake (that is relevant to the second ground of appeal in Pitt), but for the rule which Abacus was invoking (para 21): the rule does not require that the relevant consideration unconsidered by the trustee should make a fundamental difference between the facts as perceived by the trustee and the facts as they should have been perceived.\nAll that is required in this regard is that the unconsidered relevant considerations would or might have affected the trustees decision, and in a case such as the present that the trustee would or might have made a different appointment or no appointment at all.\nBut as his decision on the second point shows, it must be sufficiently serious as to amount to a breach of duty.\nOn the second issue, Lightman J held that a breach of duty on the part of the trustee is essential to the application of the rule (para 23): What has to be established is that the trustee in making his decision has, in the language of Warner J in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587, 1625, failed to consider what he was under a duty to consider.\nIf the trustee has in accordance with his duty identified the relevant considerations and used all proper care and diligence in obtaining the relevant information and advice relating to those considerations, the trustee can be in no breach of duty and its decision cannot be impugned merely because in fact that information turns out to be partial or incorrect.\nThat is in my view a correct statement of the law, and an important step towards correcting the tendency of some of the earlier first instance decisions.\nIf in exercising a fiduciary power trustees have been given, and have acted on, information or advice from an apparently trustworthy source, and what the trustees purport to do is within the scope of their power, the only direct remedy available (either to the trustees themselves, or to a disadvantaged beneficiary) must be based on mistake (there may be an indirect remedy in the form of a claim against one or more advisers for damages for breach of professional duties of care).\nThis serves to emphasise that the so called rule in Hastings Bass was not in play in that case, or in Abrahams.\nIn those two cases the trustees were not at fault in failing to foresee the House of Lords decision in Pilkington several years later.\nBut they purported to exercise their power of advancement in a way that was beyond the scope of that power, since it was contrary to the general law (that is the rule against perpetuities as clarified in Pilkington).\nThe issue (resolved differently in Abrahams and Hastings Bass) was whether the parts of the resettlement not void for perpetuity were sufficient to amount to a proper exercise of the power of advancement.\nIn Mettoy and Barr, by contrast, it was never in doubt that the relevant deed fell within the scope of the trustees power.\nThis point is clearly made in paras 92 and 93 of Lloyd LJs judgment in the Court of Appeal.\nOn the third issue Lightman J held that Abacus was in breach of duty, mainly because it had to take responsibility for Mr Ward Thompson, who (para 27) has declined to give evidence and answer the case made or suggest a different scenario.\nThis part of the judgment turns on the particular facts of the case, but they are typical of many such cases, and I shall return to them in discussing the difficulties that still beset this area of the law.\nOn the fourth issue Lightman J held that in cases where the rule applies (as opposed to cases of equitable non est factum such as Turner v Turner [1984] Ch 100) it makes the trustees disposition voidable, not void.\nThe Court of Appeal agreed with his analysis, and so do I. The rule, properly understood, depends on breach of duty in the performance of something that is within the scope of the trustees powers, not in the trustees doing something that they had no power to do at all.\nBeneficiaries may lose their right to complain of a breach of trust by complicity, by laches or acquiescence or in other ways.\nLightman J adjourned the case, expressing the hope (para 34) that a compromise would be possible.\nThe absence of any further reported decision suggests that his hope was realised.\nIn Sieff v Fox [2005] 1 WLR 3811 Lloyd LJ (as he had become by the time he handed down his lengthy reserved judgment) fully considered all the authorities mentioned above, and other authorities on mistake.\nI can take his judgment fairly briefly because he had occasion to reconsider it, and on one important point to depart from it, in his judgment in the Court of Appeal in these appeals.\nThe case related to valuable land and chattels comprised in the Bedford settled estates, and the facts as to the trusts, and their tax implications, are very complicated.\nIt is sufficient to note two points.\nFirst, the critical appointment (made in 2001 by the trustees in favour of Lord Howland, and with a view to a resettlement by him) required the consent of Lord Howland himself.\nIn deciding whether or not to give consent Lord Howland was not acting in a fiduciary capacity.\nHis consent (given in ignorance of some of the implications, including adverse tax consequences) was challenged, successfully, on the ground of mistake (see paras 115 and 119 (vii) of the judgment of Lloyd LJ).\nIn his discussion of mistake, Lloyd LJ relied (paras 98 to 101) on Ogilvie v Littleboy (1897) 13 TLR 399, upheld on appeal as Ogilvie v Allen (1899) 15 TLR 294.\nThe trustees exercise of their power of appointment was challenged, also successfully, under the Hastings Bass rule (see para 114, and compare para 119 (vi)).\nThe second point to note is that Lloyd LJ was inclined to differ from Lightman J as to the need for the vitiating element in a fiduciary decision to amount to a breach of trust.\nLloyd LJ referred to the trustees in Abrahams not being at fault in failing to foresee that the first instance decision in Pilkington would be reversed on an appeal made out of time.\nBut Abrahams was a case in which the purported exercise of the trustees power was outside its proper scope, because it infringed the rule against perpetuities.\nThis is the point on which Lloyd LJ has modified the provisional view which he expressed in Sieff v Fox.\nFutter v Futter: The facts and the first instance decision\nThe appeal in Futter is concerned with incorrect advice given by solicitors as to the effect of provisions, primarily in section 87 of the Taxation of Chargeable Gains Act 1992 (TCGA), charging capital gains tax in respect of gains realised by non resident trustees.\nThere were two settlements, the No 3 settlement and the No 5 settlement, made by Mr Mark Futter in 1985.\nInitially both settlements had non resident trustees, but in 2004 Mr Futter and Mr Cutbill, both resident in the United Kingdom, were appointed as trustees of the two settlements.\nMr Cutbill was a partner in the London solicitors which gave the tax advice.\nAt that stage both settlements had stockpiled gains that is, gains realised while the trust was not resident, and not yet distributed to the beneficiaries or brought in to charge for capital gains tax purposes.\nOn the advice of the solicitors, the new, resident trustees on 31 March 2008 distributed the whole capital of the No 3 settlement to Mr Futter, in exercise of a power of enlargement, and on 3 April 2008 distributed 36,000 from the No 5 settlement to Mr Futters three children in equal shares, in exercise of a power of advancement.\nEach of these transactions was squarely within the scope of the relevant power.\nMr Futter and Mr Cutbill understood (correctly) that the stockpiled gains would in consequence be attributed to Mr Futter and his children as if they were gains realised by those beneficiaries themselves.\nThey also believed (incorrectly) that these attributed gains would be absorbed by allowable losses which they had realised so that no eventual tax liability would arise.\nThis overlooked the effect of section 2(4) of TCGA as amended (the relevant amendment, for those interested in the fine detail, was that made by Schedule 21, para 2 of the Finance Act 1998, and not the further amendment made by Schedule 2, para 24 of the Finance Act 2008, which applied only from 5 April 2008).\nThe result was a large capital gains tax liability for Mr Futter and a modest one for his children.\nMr Futter and Mr Cutbill applied, as trustees of the two settlements, to have the deed of enlargement and the deeds of advancement declared void.\nThe first four defendants, the beneficiaries, did not appear.\nThe fifth defendant, the Revenue, resisted the application.\nNorris J began his judgment in spirited fashion, as already noted (para 3 above).\nHowever he went on to state that it was not an occasion for a first instance judge to reconsider a developed rule.\nHe took the judgment of Lloyd LJ in Sieff v Fox as the leading authority on the rule, as had Sir Andrew Park in Smithson v Hamilton [2008] 1 WLR 1453, para 52, and as had Mr Robert Englehart QC in Pitt v Holt [2010] 1 WLR 1199, para 18.\nThe Revenues submissions were similar to those advanced in Pitt (para 57 below), apart from the receivership point.\nAs it happens the first instance judgment in Pitt was given on the first day of the first instance hearing in Futter, so that there was no real opportunity for revision of the Revenues case.\nAs recorded in the judgment of Norris J the Revenue had three main lines of argument.\nThe first was that the decision of the trustees was not in any meaningful sense different from what they intended (apart from the tax consequences).\nThis argument echoed the distinction drawn by Millett J in Gibbon v Mitchell [1990] 1 WLR 1304, 1309 1310, between effect and consequences.\nNorris J rejected this argument on the ground that mistake was a different ground for relief, and that under the Hastings Bass rule tax consequences are rightly regarded as something that trustees must take into account in exercising their discretions.\nThe Revenues second line of argument focused on the significance of the trustees error.\nIt was to some extent a variation on the first argument, and it was rejected on similar grounds.\nThe Revenues third submission (not pressed) was that so far from considering capital gains tax, the trustees had it in the forefront of their minds: the problem was that the advice was wrong (para 28).\nBut wrong advice on tax consequences could, the judge said, lead to a perfectly orthodox application of the rule.\nNorris J held that the deeds were void, not voidable.\nHe referred briefly (para 32) to the judgment of Lightman J in Barr, but noted that his reasoning (based on the trustees being at fault) was not accepted by Lloyd LJ in Sieff v Fox.\nNevertheless Norris J considered (para 33) that the rigours of the void analysis could be mitigated by the application of equitable principles.\nPitt v Holt: The facts and the first instance decision\nThe facts relevant to the Pitt appeal are set out at length in the judgment of Lloyd LJ at paras 147 to 159, to which reference may be made for further detail.\nThe claim was made by the personal representatives of Mr Derek Pitt, who died in 2007 aged 74.\nIn 1990 he had suffered very serious head injuries in a road traffic accident, resulting in his mental incapacity.\nHis wife, Mrs Patricia Pitt, was appointed as his receiver under the Mental Health Act 1983, and on his death she became one of his personal representatives, and the only beneficiary interested in his estate.\nMr Pitts claim for damages for his injuries was compromised by a structured settlement, approved by the court, in the sum of 1.2m.\nMrs Pitts solicitors sought advice from Frenkel Topping, a firm of financial advisers said to have specialist experience of structured settlements.\nThey advised that the damages should be settled in a discretionary settlement, and this was done, with the authority of the Court of Protection, in 1994.\nThe trust was referred to as the Derek Pitt Special Needs Trust (the SNT).\nFrenkel Topping gave their advice in a written report to Mrs Pitt (as receiver) which was made available to the Official Solicitor, who represented her husband in the application to the Court of Protection.\nThe report referred to various advantages which the SNT was expected to secure, and it mentioned income tax and capital gains tax in its illustrative forecasts.\nBut the report made no reference whatsoever to inheritance tax.\nThe SNT could have been established without any immediate inheritance tax liability if (i) it had been an interest in possession trust or (ii) it had been a discretionary trust complying with section 89 of the Inheritance Tax Act 1984.\nIn order to comply with section 89 its terms should have provided that at least half of the settled property applied during Mr Pitts lifetime was applied for his benefit.\nBut the SNT as drafted and executed contained no such restriction.\nThe consequence was an immediate liability to inheritance tax of the order of 100,000, with the prospect of a further tax charge on the tenth anniversary in 2004.\nThe deputy judge (Mr Robert Englehart QC) observed that by 2010 the total tax, together with interest and penalties (if exacted) must have amounted to between 200,000 and 300,000.\nMrs Pitt and her advisers became aware of the inheritance tax liabilities in 2003.\nIn 2006 Mr Pitt (by a litigation friend) and the trustees of the SNT commenced proceedings against Frenkel Topping claiming damages for professional negligence.\nMr Pitt died in 2007.\nAfter taking further advice his personal representatives (who were also two of the trustees of the SNT) commenced proceedings seeking to have the SNT set aside either under the Hastings Bass rule, or on the ground of mistake.\nThe first defendant was the remaining trustee of the SNT (who took no part in the proceedings) and the second defendant was the Revenue (which actively opposed the application).\nEvidence was given in writing and there was no cross examination.\nIn his judgment the deputy judge discussed the principal authorities on the Hastings Bass rule and observed (para 22) that three matters were not in dispute.\nFirst, it was agreed that the rule could apply without the need to identify a breach of duty on the part of the trustees or their advisers (so following Sieff v Fox rather than Barr).\nSecond, it was unnecessary on the facts of the case to decide whether the application of the rule rendered a transaction void or voidable.\nThird, the rule would apply only if it was established that Mrs Pitt, if properly advised, would not have set up the SNT (rather than merely might not have done so).\nThe principal arguments for the Revenue were that the rule did not in any case apply to a receiver (as opposed to a formally constituted trustee); that the rule applied only to a limited class of cases where the immediate purpose of the act in question was not achieved; and that tax consequences were never a sufficient basis for the application of the rule.\nThe deputy judge rejected these submissions, holding that a receiver, as a fiduciary, was in essentially the same position as a trustee, and that the weight of the first instance authorities supported a wider version of the rule.\nHe set aside the SNT on that ground.\nHe indicated that he was not satisfied that there was any real mistake, as opposed to a failure to think about tax at all.\nEven if there was a mistake of any sort, it was only a mistake as to the consequences of the transaction, rather than its effect.\nLloyd LJs judgment on the Hastings Bass rule\nI have already indicated my general agreement with Lloyd LJs judgment on the Hastings Bass issue.\nParagraphs 1 to 28 contain an introduction and a summary of the facts of the two appeals.\nParagraphs 29 to 67 consider Vestey, Abrahams and Hastings Bass.\nThey come to the conclusion, with which I fully agree, that Buckley LJs statement of the supposed rule (para 24 above) was wider than the true principle of the actual decision in Hastings Bass.\nParagraphs 68 to 91 consider more recent authorities, including Mettoy and Barr.\nAll this is in a sense preliminary.\nLloyd LJs essential reasoning and conclusions are at paragraphs 92 to 131.\nHe then applied what he saw as the correct principle to the facts of Futter (paras 132 to 145) and Pitt (paras 146 to 163).\nHe then dealt with the issue of mistake, raised by the respondents notice in Pitt (paras 164 to 223).\nThe outcome was that both appeals were allowed (paras 224 to 226).\nLongmore LJ and Mummery LJ both gave short concurring judgments expressing full agreement.\nMummery LJ added a clear summary of five salient points (paras 233 to 238).\nIn the core of his judgment Lloyd LJ correctly spelled out the very\nimportant distinction between an error by trustees in going beyond the scope of a power (for which I shall use the traditional term excessive execution) and an error in failing to give proper consideration to relevant matters in making a decision which is within the scope of the relevant power (which I shall term inadequate deliberation).\nHastings Bass and Mettoy were, as he rightly observed, cases in quite different categories.\nThe former was a case of excessive execution and the latter might have been, but in the end was not, a case of inadequate deliberation.\nLloyd LJ therefore withdrew his doubts about the conclusions that Lightman J had reached in Barr.\nLloyd LJ then addressed the difficult question of how a fraudulent appointment (that is, an appointment ostensibly within the scope of a power, but made for an improper purpose) is to be fitted into the classification.\nThe exercise of an equitable power may be fraudulent in this sense whether or not the person exercising it is a fiduciary.\nA well known example of trustees exercising a power for an improper purpose is provided by In Re Pauling [1964] Ch 303, in which a power ostensibly exercisable for the benefit of young adult beneficiaries was used to distribute trust capital to be frittered away on their improvident parents living expenses.\nThere is Court of Appeal authority that a fraudulent appointment is void rather than voidable: Cloutte v Storey [1911] 1 Ch 18.\nIn that case the appointee under an improper appointment had charged his equitable interest as security for a loan (and in doing so made two false statutory declarations as to the genuineness of the appointment).\nIt was held that the lender had no security, even though it had no notice of the equitable fraud.\nIt is an authority which has bedevilled discussion of the true nature of the Hastings Bass rule.\nLightman J found the judgment of Farwell LJ problematic (Barr, para 31) and Lloyd LJ shared his reservations (para 98).\nSo do I.\nIt is hard to know what to make of Farwell LJs observations [1911] 1 Ch 18, 31: If an appointment is void at law, no title at law can be founded on it; but this is not so in equity: the mere fact that the appointment is void does not prevent a Court of Equity from having regard to it: eg, an appointment under a limited power to a stranger is void, but equity may cause effect to be given to it by means of the doctrine of election.\nThe decision in Cloutte v Storey may have to be revisited one day.\nFor present purposes it is sufficient to note that a fraudulent appointment (that is, one shown to have been made for a positively improper purpose) may need a separate pigeon hole somewhere between the categories of excessive execution and inadequate deliberation.\nIn paragraphs 102 to 118, Lloyd LJ considered the duties of trustees in\nexercising their discretion, and in particular the relevance of tax considerations.\nHe referred to some well known authorities including In re Badens Deed Trusts [1971] AC 424.\nThat case was directly concerned with the correct test for certainty of objects of a discretionary trust (or trust power) but the speech of Lord Wilberforce contains, at pp 448 457, a general discussion of fiduciary discretions which has been very influential in the development of the law.\nThis includes a passage at pp 456 457 as to the Courts intervention if trustees fail to exercise a trust power (that is, a discretion which it is their duty to exercise in some way).\nAfter referring to Lord Upjohns opinion Lord Wilberforce said: I would venture to amplify this by saying that the court, if called upon to execute the trust power, will do so in the manner best calculated to give effect to the settlors or testators intentions.\nIt may do so by appointing new trustees, or by authorising or directing representative persons of the classes of beneficiaries to prepare a scheme of distribution, or even, should the proper basis of distribution appear by itself directing the trustees so to distribute.\nLloyd LJ did not refer to that particular passage, but Warner J had done so in Mettoy [1990] 1 WLR 1587, 1617 1618, since in that case a decision as to the exercise of the power to augment benefits would have to be taken by someone.\nThe passage serves as a reminder that where trustees have been in breach of duty by exercising a discretion with inadequate deliberation, setting aside their decision may not be the only course open to the court.\nIn discussing what trustees should take into account, Lloyd LJ observed that\nthe older cases tended to focus, not on what should be taken into account, but on what should not be taken into account.\nHe instanced two cases.\nOne was Klug v Klug [1918] 2 Ch 67, where one of the trustees strongly disapproved of her daughters choice of husband, and for that reason refused to concur with the Public Trustee in exercising a power of advancement in her favour.\nThe court overrode her objection because she had not considered whether or not it would be for her daughters welfare that the advance should be made.\nShe had therefore made no proper exercise of her discretion.\nThe other case was In re Lofthouse (An Infant) (1885) 29 Ch D 921, in which income of a fund was available for the maintenance of a five year old girl whose mother had died very shortly after her birth.\nHer father had remarried and had three children by his second marriage.\nBacon V C and the trustees (of the will of the girls maternal grandmother) evidently took very different views of how the father would spend the income if it was all paid to him for his eldest childs maintenance.\nThe case was resolved by agreement in the Court of Appeal.\nThe old cases as to the maintenance of children are rather exceptional, especially where the position was complicated by the child in question being a ward of court, as in In re Hodges (1878) 7 Ch D 754.\nSome judicial pronouncements in these cases should not be taken out of context.\nAt para 115 Lloyd LJ reaffirmed the view that he had expressed in Sieff v Fox, para 86, that fiscal consequences may be relevant considerations which the trustees ought to take into account.\nI agree.\nIn the private client world trusts are mostly established by and for wealthy families for whom taxes (whether on capital, capital gains or income) are a constant preoccupation.\nIt might be said, especially by those who still regard family trusts as potentially beneficial to society as a whole, that the greater danger is not of trustees thinking too little about tax, but of tax and tax avoidance driving out consideration of other relevant matters.\nThat is particularly true of offshore trusts.\nThey are usually run by corporate trustees whose officers and staff (especially if they change with any frequency) may know relatively little about the settlor, and even less about the settlors family.\nThe settlors wishes are always a material consideration in the exercise of fiduciary discretions.\nBut if they were to displace all independent judgment on the part of the trustees themselves (or in the case of a corporate trustee, by its responsible officers and staff) the decision making process would be open to serious question.\nThe Barr case (2003) Ch 409 illustrates the potential difficulties of unquestioning acceptance of the settlors supposed wishes.\nIt is interesting, in this context, to compare the facts of some of the offshore cases with those of Turner v Turner [1984] Ch 100.\nThat was a case in which a farmer made a discretionary settlement which he did not understand, and appointed as trustees family friends who never realised that they had any responsibility at all except to do as the settlor asked.\nThey thought that it would be intruding into the settlors affairs if they were to read the documents that they were asked to sign (see at pp 106 108).\nAnyone familiar with the duties of trustees may find this hard to contemplate (as Mervyn Davies J did, at p 109).\nBut it may be that some offshore trustees come close to seeing their essential duty as unquestioning obedience to the settlors wishes.\nThe Barr case also illustrates another practical difficulty in the application of the Hastings Bass rule as it has developed.\nLightman J was in my view right to decide that when the vitiating error is inadequate deliberation on relevant matters (rather than mistake) the inadequacy must be sufficiently serious as to amount to a breach of duty; and Lloyd LJ was right to change the contrary view which he had expressed in Sieff v Fox.\nIt would set the bar too high (or too low, depending on the spectators point of view) to apply the Hastings Bass rule whenever trustees fall short of the highest standards of mature deliberation and judgment.\nWhere, as in Barr, the trustee is a body corporate acting as a sort of in house facility provided by a firm of professional advisers, it may be hard to decide whether the separate juristic personality of the trustee insulates it from responsibility for the errors of individual professionals within the firm.\nA rather similar problem arose on the facts of Futter.\nIt is a striking feature of the development of the Hastings Bass rule that it has led to trustees asserting and relying on their own failings, or those of their advisers, in seeking the assistance of the court.\nThis was pointed out in no uncertain terms by Norris J in his first instance judgment in Futter, quoted in para 3 above.\nThere may be cases in which there is for practical purposes no other suitable person to bring the matter before the court, but I agree with Lloyd LJs observation (para 130) that in general it would be inappropriate for trustees to take the initiative in commencing proceedings of this nature.\nThey should not regard them as uncontroversial proceedings in which they can confidently expect to recover their costs out of the trust fund.\nLloyd LJ stated the correct principle, as he saw it, at para 127: It seems to me that the principled and correct approach to these cases is, first, that the trustees act is not void, but that it may be voidable.\nIt will be voidable if, and only if, it can be shown to have been done in breach of fiduciary duty on the part of the trustees.\nIf it is voidable, then it may be capable of being set aside at the suit of a beneficiary, but this would be subject to equitable defences and to the courts discretion.\nThe trustees duty to take relevant matters into account is a fiduciary duty, so an act done as a result of a breach of that duty is voidable.\nFiscal considerations will often be among the relevant matters which ought to be taken into account.\nHowever, if the trustees seek advice (in general or in specific terms) from apparently competent advisers as to the implications of the course they are taking, and follow the advice so obtained, then, in the absence of any other basis for a challenge, I would hold that the trustees are not in breach of their fiduciary duty for failure to have regard to relevant matters if the failure occurs because it turns out that the advice given to them was materially wrong.\nAccordingly, in such a case I would not regard the trustees act, done in reliance on that advice, as being vitiated by the error and therefore voidable.\nThe requirement for breach of duty\nIn this court Mr Robert Ham QC undertook the main burden of the argument for the appellants on the Hastings Bass rule.\nMr Christopher Nugee QC adopted Mr Hams submissions, and added some of his own, but concentrated his argument on the issue of mistake.\nMr Hams submissions centred on whether the courts jurisdiction under the Hastings Bass rule is exercisable only if there is a breach of fiduciary duty on the part of the trustees (or other relevant fiduciary).\nHe argued that this is a novel requirement which leads to arbitrary and unfair distinctions, especially in cases where incorrect advice on tax has been given by professional advisers who may or may not themselves be trustees.\nMr Ham also had subsidiary but important arguments about the attribution to trustees of fault on the part of their advisers, and about the identification of relevant considerations for the purposes of the rule.\nMr Ham contended that the supposed need for establishing a breach of fiduciary duty, before the Hastings Bass rule can come into play, was a novel requirement introduced in 2003 by Lightman J in his judgment in Barr.\nReference to paras 16 to 20 of his judgment shows that Lightman J was relying on a number of earlier authorities, including the decision of the Court of Appeal in Edge [2000] Ch 602, 627 628, and the decision of Warner J in Mettoy [1990] 1 WLR 1587, 1625: In a case such as this, where it is claimed that the rule in Hastings Bass applies, three questions arise: (1) What were the trustees under a duty to consider? (2) Did they fail to consider it? (3) If so, what would they have done if they had considered it?\nIn 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.\nBreach 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).\nIt 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.\nApart from exceptional circumstances (such as an impasse reached by honest and reasonable trustees) only breach of fiduciary duty justifies judicial intervention.\nMr Ham relied heavily on the decision of the Court of Appeal in Kerr v British Leyland (Staff) Trustees Ltd (1986) [2001] WTLR 1071.\nIn that case Mr Kerr, a member of the British Leyland staff pension scheme, suffered from angina and claimed a disability benefit payable on permanent disability (defined as so that no further employment of any kind is possible).\nThe scheme had a group policy with Legal & General, which obtained separate medical advice and indicated that it would reject the claim.\nThe corporate trustee of the pension scheme decided to follow Legal & General in rejecting the claim.\nMr Kerr took proceedings challenging the trustees decision, and was successful at first instance.\nThe Court of Appeal dismissed the corporate trustees appeal.\nIn doing so Fox LJ (with whom Mustill LJ and Caulfield J agreed) made plain that the corporate trustees board was not at fault.\nThere had been a failure of communication.\nAs to the judges declaration that Mr Kerr was entitled to a pension, Fox LJ stated (p 1080): I do not think he was entitled to do that.\nThe decision whether to accept the claim is one for the trustee and not for the court.\nIt seems to me that, in the present case, the decision of the trustee was simply ineffective since the board did not carry out their duty to give a properly informed consideration to the claim.\nThat however does not entitle the Court to substitute its own view of the claim for that of the trustee.\nI would, therefore, discharge the order of the judge and substitute an order that the decision of the trustees on 28 June 1978 to reject Mr Kerrs claim was of no effect and that the trustee should reconsider the claim.\nThe Kerr case is of interest since (though not reported for 15 years) it is an early example, antedating Mettoy, of the application of something like the Hastings Bass rule.\nBut I think it is important to note that under the British Leyland scheme the corporate trustee did not have any real discretion about disability benefit.\nIt had to exercise a judgment on an issue of fact (permanent disability from any employment).\nThat is an issue on which the court would be much more ready to intervene if the trustee had failed to grasp the real facts.\nIt is an intermediate situation which is arguably closer to a mistaken judgment on an issue of fact than to the defective exercise of a discretion.\nKerr may be compared with Mihlenstedt v Barclays Bank International Ltd [1989] IRLR 522.\nThat was a comparable case except that there was a preliminary issue of construction as to whether the relevant rule (which began Early retirement due to ill health will be permitted only when . ) imported a wider discretion.\nThe Court of Appeal decided that the language of the rule was that of obligation and entitlement, and that the judge had erred in supposing that there was a wider discretion.\nBut on the facts the majority of the Court of Appeal held that the trustee had not formed its opinion on an erroneous basis.\nMr Hams fallback position was that if a breach of duty was an essential requirement, there could be a breach without fault on the part of any individual trustee being established.\nThis general argument was developed in several different directions.\nI would identify these (though there was some overlap) as (1) strict liability (2) agency (3) resulting absurdity and (4) a special meaning of relevant.\nThese points are considered below, in turn.\nMr Nugee, in supporting Mr Hams position, attached most weight to the argument on strict liability.\nIt is undoubtedly correct that trustees may be liable for breach of trust even though they have acted in accordance with skilled professional advice.\nSuch advice cannot protect trustees from potential liability for a loss to the trust fund resulting from a decision that is, judged objectively, beyond the trustees powers and detrimental to the trust (though professional advice may lead to their obtaining relief under section 61 of the Trustee Act 1925).\nAn example mentioned in argument is Dunn v Flood (1885) 28 Ch D 586, in which trustees had sold by auction 73 plots of freehold land at Reading, subject to special conditions which the court held to be severely depreciatory (as Fry LJ put it at p594, eminently calculated to frighten away purchasers).\nThe Court of Appeal, upholding North J, refused to force a doubtful title on a reluctant purchaser.\nThe fact that the trustees had consulted respectable solicitors was no excuse.\nIt was not a reasonable exercise of discretion (Baggallay LJ and Bowen LJ at p592; Fry LJ at pp593 594).\nBut the trustees breach of duty was not in the manner of their decision making (as to which we know nothing other than that they consulted respectable solicitors) but the loss to the trust property that their unreasonable decision appeared to have caused.\nFurther examples are provided by the decision of the Court of Appeal in Perrins v Bellamy [1899] 1 Ch 797 and that of the Privy Council, on appeal from the Supreme Court of Victoria, in National Trustees Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373.\nThese cases, discussed by Lloyd LJ at para 124 of his judgment, were both examples of action taken by trustees on professional advice which was unequivocally incorrect: one a sale of leaseholds when the trustees had no power of sale; the other a distribution (resulting from some extraordinary slip by solicitors of high standing) of a deceased beneficiarys vested share to persons who were not entitled to it under the intestacy law of Victoria in force at the beneficiarys death.\nAs Lloyd LJ observed, the issue in these cases: is altogether different, as it seems to me, from the question whether, if trustees take advice properly, and act on that advice in a matter which is within their powers, the fact that the advice has misled them as to the true position in a relevant respect means that they acted in breach of fiduciary duty.\nI respectfully agree.\nTrustees may be liable, even if they have obtained apparently competent professional advice, if they act outside the scope of their powers (excessive execution), or contrary to the general law (for example, in the Australian case, the law regulating entitlement on intestacy).\nThat can be seen as a form of strict liability in that it is imposed regardless of personal fault.\nTrustees may also be in breach of duty in failing to give proper consideration to the exercise of their discretionary powers, and a failure to take professional advice may amount to, or contribute to, a flawed decision making process.\nBut it would be contrary to principle and authority to impose a form of strict liability on trustees who conscientiously obtain and follow, in making a decision which is within the scope of their powers, apparently competent professional advice which turns out to be wrong.\nSuch a result cannot be achieved by the route of attributing any fault on the part of professional advisers to the trustees as their supposed principals.\nSolicitors can and do act as agents in some clearly defined functions, usually of a ministerial nature, such as the receipt and transmission of clients funds, and the giving and taking of undertakings on behalf of clients.\nBut they do not and may not act as agents in the exercise of fiduciary discretions.\nAs I said in Scott [1998] 2 All ER 705, 717: It is however for advisers to advise and for trustees to decide: trustees may not (except insofar as they are authorised to do so) delegate the exercise of their discretions, even to experts.\nMr Ham relied on some observations of Warner J in Mettoy [1990] 1 WLR 1587, 1625 1626: But the question is not in my view to what extent trustees may in practice have to rely on professional advice.\nThe duty to take into account all material considerations is that of the trustees.\nThe extent of that duty is not affected by the amount or quality of the professional advice they may seek or obtain.\nIn In Re Hastings Bass [1975] Ch 25 it was not relevant to what extent the trustees themselves were able to form an opinion on the effect of the rule against perpetuities.\nThis passage was noted by Lloyd LJ in his discussion of the cases (para 71) but receives only a passing mention in para 124, the part of his judgment which discusses the significance of professional advice.\nI have difficulty with these observations of Warner J.\nThey occur in the part of his judgment dealing with the first of the three questions that he had posed (para 72 above) and probably they must be read in that context.\nMoreover the last sentence at p1626 A B suggests that Warner J was not clearly distinguishing the category of excessive execution in Hastings Bass itself from the category of inadequate deliberation relevant to the issue before him.\nIf his remarks cannot be limited to their context then I would say that Warner J was wrong in disregarding the amount or quality of professional advice obtained by trustees, when the question relates to a decision within the scope of the trustees powers.\nMr Ham submitted that a refusal to attribute to trustees fault on the part of their advisers or agents leads to counter intuitive and arbitrary distinctions.\nHe instanced an error in a letter setting out the settlors wishes (a variation of the facts in Barr).\nOn that particular example, such an error might be a sufficient ground for a voluntary disposition to be set aside on the ground of mistake, regardless of where responsibility for the error lay.\nBut I would accept that there have been, and no doubt will be in the future, cases in which small variations in the facts lead to surprisingly different outcomes.\nThat is inevitable in an area where the law has to balance the need to protect beneficiaries against aberrant conduct by trustees (the policy behind the Hastings Bass rule) with the competing interests of legal certainty, and of not imposing too stringent a test in judging trustees decision making.\nThere is indeed a striking contrast between the courts conclusions as to the position of Mr Ward Thompson in Barr and that of Mr Cutbill in Futter.\nMr Ward Thompsons position was considered in detail by Lightman J [2003] Ch 409, para 27: He was the one point of contact between on the one side the settlor and on the other side C & L, C & L Isle of Man, the trustee and the protector.\nFor all practical purposes he was the emanation and only representative of C & L, C & L Isle of Man, the trustee and the protector in all their dealings with the settlor.\nC & L was through itself and its associated firm, C & L Isle of Man and its vehicles, the trustee and the protector, providing the settlor with a total corporate and trust holding service.\nAs is common ground the solicitors who drafted the appointment were acting on behalf of the trustee: Mr Ward Thompson in giving instructions for its preparation in the circumstances can only have done so acting as agent for the trustee.\nThese findings (based, it appears, on witness statements not tested by cross examination) show that it was an unusual situation in which Mr Ward Thompson had an exceptionally important role.\nThe judges conclusion was reinforced by another passage in para 27: I should add that my view is reinforced by the consideration that any ambiguity in the structure and arrangements ought to be resolved in favour of the settlor: (1) the C & L side were responsible for the structure and arrangements; (2) Mr Ward Thompson has declined to assist the court; and (3) the trustee perhaps surprisingly failed to seek from the settlor an expression of his wishes in documentary form or provide him with a copy of the proposed appointment before it was executed.\nIn short, on the material before me, on the third issue I am satisfied that the trustee failed in its fiduciary duty to ascertain the true wishes of the settlor to which the appointment was intended to give effect and accordingly the rule is brought into play.\nCases of this sort will call for detailed fact finding by the judge, and sometimes no doubt for cross examination.\nBarr may be contrasted with Abacus Trust Company (Isle of Man) Ltd v NSPCC [2001] STC 1344, in which an artificial tax avoidance scheme failed because a deed of appointment was executed on 3 April 1998, contrary to the clear advice of leading counsel that it should not be executed until after the end of the 1997 98 financial year.\nOn Wednesday, 1 April 1998 the appointment was faxed to the corporate trustee in the Isle of Man by an English solicitor with the suggestion that it should be executed on Friday (naturally taken as 3 April).\nBut a director of the corporate trustee had attended the consultation with leading counsel, and had received a note of it, which he did not refer to when he received the fax.\nPatten J applied the Hastings Bass rule without finding it necessary to reach any clear conclusion about breach of duty, which was not then recognised as an essential requirement.\nIn Futter Mr Cutbill, a partner in a London firm of solicitors, was involved both as a trustee and as a solicitor advising the trustees.\nThe facts as to his involvement were found at first instance by Norris J [2010] STC 982.\nIt so happened, as already mentioned, that the judgment of Mr Engelhart QC in Pitt was given on 18 January 2010, the first day of the hearing in Futter.\nIn Pitt it had been common ground ([2010] 1 WLR 1199, para 22) that there was no need to identify a breach of duty by the trustees.\nIt is not clear from Norris Js judgment whether the same incorrect concession was made and accepted before him.\nBut Norris J seems to have accepted Sieff v Fox as the leading authority from which to obtain guidance, and Barr received only a passing mention (on the void or voidable? issue) in his judgment.\nNorris J did not therefore make any clear finding about breach of fiduciary duty.\nHe simply recorded and accepted Mr Cutbills written evidence, which included the statement that [Mr Futter] and I failed to pay any regard to the provisions of section 2(4) [TCGA] at the time, and therefore failed to consider the full tax implications.\nThe Court of Appeal was therefore in as good a position as Norris J to make a finding about breach of duty on the part of the trustees.\nThis Court has before it all the written evidence and exhibits that were before the judge, and in the absence of concurrent findings below it is also in a position to make findings, if necessary, on that issue.\nI will return to it below when dealing with the disposal of the Futter appeal.\nFinally, 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.\nI have left this submission until the end because it is to my mind truly a last ditch argument.\nIt involves taking the principle of strict liability for ultra vires acts (paras 81 to 84 above) out of context and applying it in a different area, so as to require trustees to show infallibility of judgment.\nSuch a requirement is quite unrealistic.\nIt would tip the balance much too far in making beneficiaries a special favoured class, at the expense of both legal certainty and fairness.\nIt 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.\nThe 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.\nThe trustees duty does not extend to being right (the accuracy of the conclusion arrived at) on every occasion.\nThe particular cases that the Lord Chancellor had in mind may have included cases concerned with the maintenance of minor beneficiaries.\nThey may also have included cases (such as Kerr v British Leyland (Staff) Trustees Ltd) in which the trustees have to make a particular factual judgment, rather than exercise a wide discretion.\nAs a first footnote on the topic of fault, I would mention that in para 128 of his judgment, Lloyd LJ observed that a claim by beneficiaries against trustees may often be precluded by an exoneration clause in the trust instrument.\nMr Philip Jones QC (for the Revenue) disputed this, pointing out that even if a trustee is exonerated from liability to pay equitable compensation, he is still liable to injunctive relief to prevent a threatened breach of trust, and personal and proprietary remedies may be available against persons who receive assets distributed in breach of trust.\nMoreover an exoneration clause does not protect a trustee against removal from office by order of the court.\nThe Futter No 3 and No 5 settlements contain exoneration clauses in conventional terms, stating that in the professed execution of the trusts and powers hereof no trustee shall be liable for a breach of trust arising from a mistake or omission made by him in good faith.\nI would not treat that clause as ousting the application of the Hastings Bass rule, if it were otherwise applicable.\nAs a second footnote, there was some discussion in the course of argument as to the significance, in situations of this sort, of a possible claim for damages against professional advisers for financial loss caused by incorrect advice (or incorrect implementation of instructions).\nMr Nugee referred to Walker v Geo H Medlicott & Son [1999] 1 WLR 727, in which a strong Court of Appeal dismissed on two grounds a claim for damages for professional negligence in preparing a will.\nThe second ground was that the aggrieved claimants proper course was to mitigate his damage by seeking rectification of the will.\nThat decision may reflect the courts view of the particular facts of the case, and the feeling that if the drafting of the will had gone wrong other beneficiaries under it should not obtain adventitious benefits.\nIn principle the possibility that trustees may have a claim for damages should have no effect on the operation of the Hastings Bass rule.\nIn practice it will be rare for trustees to have so strong a claim that they can be confident of obtaining a full indemnity for their beneficiaries loss and their own costs.\nIn the Pitt case this court was told that the claim against Frenkel Topping has been settled.\nHad it gone to trial the claim, even if successful in establishing duty and breach, might have faced difficulties over causation, since Mrs Pitt executed the SNT under the authority of an order of the Court of Protection, which had considered its terms.\nThat courts apparent lack of awareness of the importance of section 89 of the Inheritance Act 1984 is one of the most remarkable features of the whole sorry story.\nWould or Might?\nIn his statement of the correct principle (para 127 of the judgment, set out in para 70 above) Lloyd LJ did not provide an answer to the would or might? debate.\nThat was not, I think, an oversight.\nThe Hastings Bass rule is centred on the failure of trustees to perform their decision making function.\nIt is that which founds the courts jurisdiction to intervene if it thinks fit to do so.\nWhether the court will intervene is another matter.\nBuckley LJs statement of principle in Hastings Bass (para 24 above) cannot be regarded as clear and definitive guidance, since Buckley LJ was considering a different matter the validity of a severed part of a disposition, the other part of which was void for perpetuity.\nIn Mettoy itself the trustees had wholly failed to consider (or even to be aware of) an important change in the new rules (affecting the destination of surplus in a winding up of the scheme), at a time when winding up was a real possibility.\nBut Warner J (applying Buckley LJs would not formulation) declined to set aside the adoption of the new rules, because the power over surplus remained a fiduciary power.\nIt has been suggested (partly in order to accommodate the decision of the Court of Appeal in Stannard, para 34 above) that would not is the appropriate test for family trusts, but that a different might not test (stricter from the point of view of the trustees, less demanding for the beneficiaries) is appropriate for pensions trusts, since members of a pension scheme are not volunteers, but have contractual rights.\nThat is an ingenious suggestion, and in practice the court may sometimes think it right to proceed in that way.\nBut as a matter of principle there must be a high degree of flexibility in the range of the courts possible responses.\nIt is common ground that relief can be granted on terms.\nIn some cases the court may wish to know what further disposition the trustees would be minded to make, if relief is granted, and to require an undertaking to that effect (see In re Badens Deed Trusts [1971] AC 424, referred to in para 63 above).\nTo lay down a rigid rule of either would not or might not would inhibit the court in seeking the best practical solution in the application of the Hastings Bass rule in a variety of different factual situations.\nVoid or Voidable?\nCounsel on both sides readily admitted that they had hesitated over this point, but in the end they were all in agreement that Lloyd LJ was right in holding (para 99) that, if an exercise by trustees of a discretionary power is within the terms of the power, but the trustees have in some way breached their duties in respect of that exercise, then (unless it is a case of a fraud on the power) the trustees act is not void but it may be voidable at the instance of a beneficiary who is adversely affected.\nIn my judgment that is plainly right, and in the absence of further argument on the point it is unnecessary to add much to it.\nThe issue has been clouded, in the past, by the difficult case of Cloutte v Storey, a case on appointments that are fraudulent in the equitable sense, that is made for a positively improper purpose.\nHere we are concerned not with equitable fraud, nor with dispositions which exceed the scope of the power, or infringe the general law (such as the rule against perpetuity).\nWe are in an area in which the court has an equitable jurisdiction of a discretionary nature, although the discretion is not at large, but must be exercised in accordance with well settled principles.\nThe working out of these principles will raise problems which must be dealt with on a case by case basis.\nThe mistake claim in Pitt involves a problem of that sort.\nBut it is unnecessary and inappropriate to prolong what is already a very long judgment by further discussion of problems that are not now before this court.\nDisposal of the Hastings Bass issues\nIn Futter the essential issue was whether the trustees of the No 3 and No 5 settlements, in deciding to take the steps which they took in March and April 2008, failed in their duty to take relevant considerations into account.\nCapital gains tax was a relevant consideration.\nIndeed, it is fairly plain that it was the paramount consideration, and the trustees thought about it a great deal.\nBut the tax advice which they received and acted on was wrong, because an amendment to section 2(4) of TCGA had been overlooked.\nAs Lloyd LJ put it succinctly (para 138): They did not overlook the need to think about CGT.\nThey were given advice on the right point.\nThe problem was that the advice was wrong.\nThe only complication was that Mr Cutbill (the solicitor trustee) was a member of both teams: the solicitors giving the erroneous advice, and the trustees receiving and acting on it.\nI agree with the Court of Appeal that it would be artificial to distinguish between the two trustees, who acted together in making and effectuating their decisions.\nI would if necessary go further and hold that the documentary evidence indicates that most if not all of the technical tax advice given by his firm came not from Mr Cutbill but from the assistant solicitor who was working with him, from January 2008, in a review of a number of different Futter family settlements.\nUntil 27 March 2008 it was supposed, wrongly, that the No 3 settlements stockpiled gains were relatively small, and the fact that they amounted to about 188,000 led to a last minute change of plan.\nOn 28 March 2008 there was a telephone conversation between the assistant solicitor and Mr Bunce, Mr Futters accountant, at which, without reference to Mr Cutbill, she definitely confirmed that Mr Futters personal losses could be set off against the section 87 gains.\nMr Cutbill seems to have been, very properly, reluctant to put the blame on a junior member of his firm, and of course his firm must take legal responsibility for any actionable mistake by any of its fee earners.\nBut the documents in exhibit CDC 1 to Mr Cutbills witness statement tend to confirm that he should not, as a trustee of the No 3 and No 5 settlements, be treated as having been personally in breach of fiduciary duty.\nIn Pitt the position was even clearer.\nAs her husbands receiver under the Mental Health Act 1983 Mrs Pitt was in a fiduciary position but there is no suggestion that she had any professional qualifications.\nShe devoted herself, alternating with a carer, to looking after her disabled husband.\nAs anyone in that position would, she took professional advice from solicitors and specialist consultants.\nAfter hearing from her legal advisers and the Official Solicitor the Court of Protection made an order on 1 September 1994 authorising (not directing) her to execute the SNT and she acted on that authority on 1 November 1994 (the date in para 161 of Lloyd LJs judgment seems to be an error; compare para 151).\nShe had taken supposedly expert advice and followed it.\nThere is no reason to hold that she personally failed in the exercise of her fiduciary duty.\nUnfortunately the advice was unsound.\nas it turns on the Hastings Bass rule.\nI would therefore dismiss the appeal in Futter, and the appeal in Pitt so far RESCISSION ON THE GROUND OF MISTAKE\nMrs Ogilvies litigation\nIn this part of his judgment Lloyd LJ began with the litigation conducted by Mrs Ogilvie at the end of the 19th century.\nMrs Ogilvie was a very rich widow who had in 1887 executed two deeds settling large funds for charitable purposes.\nShe was described by Byrne J (in the transcript included in the appendix printed for the eventual appeal to the House of Lords, pp 862 863) as undoubtedly a good woman of business, shrewd, clever and intelligent, having been accustomed to assist her husband in business matters.\nShe had a proper sense of the responsibilities of great wealth, she was charitable and munificent.\nShe had strong views on certain subjects, was impatient of any attempt to thwart or control her, and though perhaps at times inclined to be somewhat changeable, she was firm and decided as to her course of action when she had made up her mind and laid down what she terms her law in respect to any matter.\nSeven years later she brought an action to have the deeds set aside.\nShe relied on grounds summarized by Byrne J (p 862) as follows: (1) That she had not preserved to her the absolute power of disposing of the capital, including the land, as she thought fit during her life, and that notwithstanding express instructions to the contrary. (2) That she had not a similar absolute power in respect to income. (3) That she is liable to interference by the Charity Commissioners and by her own Trustees, and to be called upon by them to account for her administration of the income and that notwithstanding express instructions to the contrary. (4) That she has not the power to apply moneys originally dedicated to London institutions to Suffolk institutions. (5) That she was not fully and properly advised and that she did not fairly understand the nature and effect of the documents she executed.\nThese grounds were fully explored in the pleadings, in interrogatories, and in cross examination at the nine day trial.\nOriginally there was an alternative claim for rectification but her counsel did not rely on that claim, although it seems (pp 903 905) that the Attorney General (who appeared in person at every stage of the proceedings) made an open offer for the case to be disposed of uncontentiously on that basis.\nByrne J gave a judgment, over 50 pages long in the transcript, in which he said (p 901), The case is entirely wanting in any of those elements of fraud, undue influence, concealments of facts from the donor, want of separate and independent advice, surprise or pressure, which, or some of which, are commonly to be met with in cases of attempts to set aside or rectify voluntary instruments.\nThe judge rejected almost entirely the criticisms that Mrs Ogilvie directed towards her legal advisers: The utmost that could be suggested against Mr Smith is that he misunderstood his instructions, or that he was guilty of error of judgment in not having with more insistence determined to see his client personally, and against Mr Smith, Mr Harding, Mr Sutherland, and their counsel, that possibly they allowed their natural and perfectly unselfish wish to see the charitable scheme carried through to permit them to neglect informing the plaintiff of every trouble and difficulty of detail which arose in the matter. (Mr Smith was the London solicitor of Mrs Ogilvie, who lived in Suffolk; Mr Harding was a respected member of the Society of Friends, who gave her advice; and Mr Sutherland was her late husbands confidential clerk.) Her action was dismissed.\nShe appealed to the Court of Appeal, where in view of the trial judges clear findings the argument seems to have been more closely focused as mistake.\nGiving the judgment of the Court of Appeal Lindley LJ said (Ogilvie v Littleboy (1897) 13 TLR 399, 400): Gifts cannot be revoked, nor can deeds of gift be set aside, simply because the donors wish that they had not made them and would like to have back the property given.\nWhere there is no fraud, no undue influence, no fiduciary relation between donor and donee, no mistake induced by those who derive any benefit by it, a gift, whether by mere delivery or by deed, is binding on the donor .\nIn the absence of all circumstances of suspicion a donor can only obtain back property which he has given away by showing that he was under some mistake of so serious a character as to render it unjust on the part of the donee to retain the property given to him.\nMrs Ogilvies grounds of complaint seem to have been revised a little.\nThe alleged mistakes as to the application of capital or income for non charitable purposes, and as to the jurisdiction of the Charity Commissioners, could not be sustained on the judges findings.\nAs to the fourth ground (relating to sales of land) the Court of Appeal held that the mistake, such as it was, cannot be regarded as so material as to affect the validity of the deeds.\nThe fifth ground had been reformulated as a failure by her advisers to warn her that members of the Society of Friends might be unwilling to become trustees.\nAs to this Lindley LJ observed (p 401): But, assuming the danger to be real, assuming that it was an error of judgment not to call the plaintiffs attention to it, is such an omission enough to entitle her to have the deeds set aside? We are not aware of any legal principle which goes this length or anything like it.\nThe complaint is not that her intentions have not been carried out; it is that a possible danger known to her advisers was not pointed out to her.\nSo the appeal was dismissed, as was a further appeal to the House of Lords (Ogilvie v Allen (1899) 15 TLR 294).\nLord Halsbury LC said (p 295): The appellant, a lady, was desirous of establishing certain charities, and she now contends that, though she did intend to devote her money to charity, certain specific intentions as to management, control, independence of control, and the like were such essential and important considerations to her mind that in these respects she was misled, and now seeks to get rid of the effect of her deeds upon that allegation.\nSuch questions, doubtless, may arise under circumstances where misunderstanding on both sides may render it unjust to the giver that the gift should be retained.\nIt appears to me that there are no such circumstances here.\nI entirely concur with the judgment delivered by the present Master of the Rolls .\nSo did Lord Macnaghten, who said that Lindley LJs judgment deals with the case so fully and so satisfactorily that there is nothing more to be added.\nLord Morris concurred.\nLloyd LJ reviewed and discussed other 19th century and modern authorities, including the first instance decisions in Gibbon v Mitchell [1990] 1 WLR 1304 and In re Griffiths, decd [2009] Ch 162.\nHe questioned the result in the latter case.\nThe framework of his conclusion (paras 210 and 211) was that for the exercise of the equitable jurisdiction to set aside a voluntary disposition there must be (1) a mistake, which is (2) of the relevant type and (3) sufficiently serious to satisfy the Ogilvie v Littleboy test.\nThat is a convenient framework against which to consider the authorities, although there is obviously some overlap between the three heads.\nIn general a mistake as to the essential nature of a transaction is likely to be more serious than a mistake as to its consequences.\nWhat is a mistake?\nFor present purposes a mistake must be distinguished from mere ignorance or inadvertence, and also from what scholars in the field of unjust enrichment refer to as misprediction (see Seah, Mispredictions, Mistakes and the Law of Unjust Enrichment [2007] RLR 93; the expression may have first received judicial currency in Dextra Bank & Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193).\nThese distinctions are reasonably clear in a general sort of way, but they tend to get blurred when it comes to facts of particular cases.\nThe editors of Goff and Jones, The Law of Unjust Enrichment, 8th ed. (2011) para 9 11 comment that the distinction between mistake and misprediction can lead to some uncomfortably fine distinctions, and the same is true of the distinction between mistake and ignorance.\nForgetfulness, inadvertence or ignorance is not, as such, a mistake, but it can lead to a false belief or assumption which the law will recognise as a mistake.\nThe Court of Appeal of Victoria has held that mistake certainly comprehends a mistaken belief arising from inadvertence to or ignorance of a specific fact or legal requirement: Ormiston JA in Hookway v Racing Victoria Ltd [2005] VSCA 310, (2005) 13 VR 444, 450.\nThat case was on the borderline between voluntary disposition and contract.\nIt concerned prize money for a horse race which was paid to the wrong owner because the official in charge of prize money was ignorant of a recent change in the rules of racing (permitting an appeal against disqualification after a drugs test).\nHe made a mistake as to the real winner.\nThe best known English authority on this point is Lady Hood of Avalon v Mackinnon [1909] 1 Ch 476.\nUnder a settlement Lord and Lady Hood had a joint power of appointment, and later Lady Hood as the survivor had a sole power of appointment, in favour of the children and remoter issue of their marriage.\nThey had two daughters.\nIn 1888 half the trust fund had been appointed (subject to the prior life interests of Lord and Lady Hood) to their elder daughter on her marriage, and had been resettled by her.\nIn 1902 and 1904, after Lord Hoods death, Lady Hood appointed a total of 8,600 to her younger daughter.\nThen, wishing to achieve equality, as she thought, between her daughters, and entirely forgetting the 1888 appointment, she appointed a further 8,600 to her elder daughter (so inevitably producing inequality, unless the appointment were set aside).\nThe elder daughter did not oppose Lady Hoods action for rescission of the last appointment, but the trustees of the resettlement (which contained an after acquired property covenant) did oppose it.\nEve J granted relief, stating (pp 483 484): Having regard to the facts which I have stated, I must assume that Lady Hood, intending only to bring about equality between her daughters, was labouring under a mistake when she thought that equality would be brought about by the execution of the deed appointing 8,600 to her elder daughter.\nIt was obviously a mistake, because the effect of the execution of that deed was to bring about that which Lady Hood never intended and never contemplated.\nIn his judgment Eve J referred at length to the decision of the Court of Appeal in Barrow v Isaacs & Son [1891] 1 QB 417.\nIn that case the Court of Appeal declined to grant relief, on the ground of mistake, from forfeiture of a lease for breach of a covenant against underletting.\nThe solicitors acting for a respectable tenant had overlooked the covenant and the premises had been sublet to a respectable sub tenant.\nBoth Lord Esher MR and Kay LJ commented that there was no legal definition of mistake.\nLord Esher MR said (at pp 420 421) that the head tenant had had a mere passive state of mind: I should say that mere forgetfulness is not mistake at all in ordinary language.\nI cannot find any decision in Courts of Equity which has ever stated that mere forgetfulness is mistake against which equity would relieve.\nBut Kay LJ (with whom Lopes LJ agreed) seems to have taken the view that there was a mistake which equity had power to relieve, although in the circumstances of the case the court declined to grant relief.\nThe power to relieve would, it seems, have been based on the conscious belief or tacit assumption that the underletting was lawful.\nThe fullest academic treatment of this topic is in Goff & Jones at paras 9 32 to 9 42.\nThe editors distinguish between incorrect conscious beliefs, incorrect tacit assumptions, and true cases of mere causative ignorance (causative in the sense that but for his ignorance the person in question would not have acted as he did).\nThe deputy judges first instance decision in Pitt [2010] 1 WLR 1190, para 50 is suggested as an example of mere causative ignorance: If someone does not apply his mind to a point at all, it is difficult to say that there has been some real mistake about it.\nThe Court of Appeal adopted a different view of the facts, treating the case (para 216) as one of an incorrect conscious belief on the part of Mrs Pitt that the SNT had no adverse tax consequences.\nThe editors of Goff & Jones are, on balance, in favour of treating mere causative ignorance as sufficient.\nThey comment (at para 9 41, in answering a floodgates objection): . denying relief for mere causative ignorance produces a boundary line which may be difficult to draw in practice, and which is susceptible to judicial manipulation, according to whether it is felt that relief should be afforded with the courts finding or declining to find incorrect conscious beliefs or tacit assumptions according to the courts perception of the merits of the claim.\nIt may indeed be difficult to draw the line between mere causative ignorance and a mistaken conscious belief or a mistaken tacit assumption.\nI would hold that mere ignorance, even if causative, is insufficient, but that the court, in carrying out its task of finding the facts, should not shrink from drawing the inference of conscious belief or tacit assumption when there is evidence to support such an inference.\nI shall return (paras 127 and 128 below) to the suggestion that this may involve judicial manipulation.\nA misprediction relates to some possible future event, whereas a legally significant mistake normally relates to some past or present matter of fact or law.\nBut here too the distinction may not be clear on the facts of a particular case.\nThe issue which divided the House of Lords in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 was whether (as Lord Hoffmann put it at p398) the correct view was that, a person who pays in accordance with what was then a settled view of the law has not made a mistake and that his state of mind could be better described as a failure to predict the outcome of some future event (sc a decision of this House) than a mistake about the existing state of the law.\nThere is another interesting discussion of this point in the judgments given in the Court of Appeal in Brennan v Bolt Burdon [2005] QB 303.\nA problem about the boundary between mistake and misprediction arose in In re Griffiths, decd [2009] Ch 162, a decision of Lewison J. Like Sieff v Fox and some other cases on the Hastings Bass rule, it was a case in which the Revenue was invited to intervene but declined to do so, despite the large sum of inheritance tax at stake.\nThe case was therefore heard without adversarial argument as to the law or the facts.\nLloyd LJ commented (para 198) that he did not criticise the judge, given the limited argument before him, but that he did question his conclusion.\nI agree with both limbs of that comment.\nIt is important to note the sequence of events in In re Griffiths.\nMr Griffiths had a valuable holding in Iota, a property company (whose shares did not attract business assets relief).\nHe was aged 73 when, in January 2003, he and his wife took advice about tax planning.\nThey received a lengthy report setting out various options.\nMost involved making potentially exempt transfers, which progressively reduce inheritance tax on qualifying gifts if the donor survives for three years, and avoid tax entirely if the donor survives for seven years after making the gift.\nThe report recommended that seven year term insurance cover should be obtained.\nMr Griffiths decided to take various steps, the most important of which was a settlement of Iota shares worth over 2.6m.\nThis was effected by a two stage process which was completed in February 2004.\nHe decided not to obtain term insurance.\nUnfortunately he was diagnosed with lung cancer in October 2004, and died in April 2005.\nHad he done nothing, the Iota shares would have formed part of his residuary estate, in which his wife took a life interest, and no inheritance tax would have been payable on his death.\nIn those circumstances his executor commenced proceedings asking that the dispositions should be set aside on the ground of mistake ([2009] Ch 162, para 6): The relevant mistake on which they rely is that Mr Griffiths mistakenly believed, at the time of the transfers, that there was a real chance that he would survive for seven years, whereas in fact at that time his state of health was such that he had no real chance of surviving that long.\nThe medical evidence (in the form of letters from his general practitioner, from a consultant oncologist and from a consultant rheumatologist) was inconclusive, but the GP expressed the view that it was extremely unlikely that the cancer was present in April 2003.\nOn this evidence the judge found that in April 2003 Mr Griffiths had a life expectancy of between seven and nine years.\nHe went on to observe (para 18): It is unfortunate that in a case involving 1m worth of tax a proper medical report was not placed before the court and that the claimants are compelled to rely on a single sentence in a letter from [the oncologist].\nAlthough I have hesitated about this finding, I am prepared to find, by a narrow margin that he was suffering from lung cancer on 3 February 2004; and that following the onset of lung cancer at that time his life expectancy did not exceed three years in February 2004.\nHad the facts been contested, I might not have felt able to make this finding.\nOn the rather uncertain foundation of that finding the judge decided that the assignment of 3 February 2004 should be set aside (para 30): By that time Mr Griffiths was suffering from lung cancer about which he was unaware.\nHe did therefore make a mistake about his state of health.\nHad he known in February 2004 that he was suffering from lung cancer he would also have known that his chance of surviving for three years, let alone for seven years, was remote.\nIn those circumstances I am persuaded that he would not have acted as he did by transferring his reversionary interest in the shares to trustees.\nThe judge did not say whether this was (in the Goff & Jones formulation) an incorrect conscious belief or an incorrect tacit assumption.\nThe editors of that work (para 9 36) treat it as a tacit assumption but it seems close to the residual category of mere causative ignorance.\nHad the judge not made his hairs breadth finding about the presence of cancer in February 2004 it would have been a case of misprediction, not essentially different from a failure to predict a fatal road accident.\nLloyd LJ observed (para 198) that it was strongly arguable that, having declined to follow the financial consultants recommendation of term insurance, Mr Griffiths was taking the risk of deterioration of his health and failure to survive the statutory period.\nWhat type of mistake?\nSome uncontroversial points can be noted briefly.\nIt does not matter if the mistake is due to carelessness on the part of the person making the voluntary disposition, unless the circumstances are such as to show that he deliberately ran the risk, or must be taken to have run the risk, of being wrong. (There is an illuminating discussion of this point in Lord Hoffmanns speech in Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558, paras 24 30).\nNor need the mistake be known to (still less induced by) the person or persons taking a benefit under the disposition.\nThe fact that a unilateral mistake is sufficient (without the additional ingredient of misrepresentation or fraud) to make a gift voidable has been attributed to gifts being outside the laws special concern for the sanctity of contracts (OSullivan, Elliott and Zakrzewski, The Law of Rescission (2007) para 29.22): It is apparent from the foregoing survey that vitiated consent permits the rescission of gifts when unaccompanied by the additional factors that must be present in order to render a contract voidable.\nThe reason is that the laws interest in protecting bargains, and in the security of contracts, is not engaged in the case of a gift, even if made by deed.\nConversely, the fact that a purely unilateral mistake may be sufficient to found relief is arguably a good reason for the court to apply a more stringent test as to the seriousness of the mistake before granting relief.\nThe Revenues printed case (paras 70 to 74) seeks to play down the distinction between mistake in the law of contract and its role in equitable rescission of voluntary dispositions.\nIt seeks to build boldly on the decision of the Court of Appeal in Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd (The Great Peace) [2002] EWCA Civ 1407, [2003] QB 679, which did not follow (and has effectively overruled) Solle v Butcher [1950] 1 KB 671.\nThe argument is that logic requires that a deed which transfers property for no consideration can be set aside only for a mistake of a fundamental nature that would render a contract void.\nMr Jones did not cite any authority for this heterodox submission, and there is high authority (starting with Ogilvie v Allen) against it.\nEquity will grant specific performance of a covenant only if it is supported by valuable consideration.\nThis includes the marriage consideration, but only if the covenant is being enforced by or on behalf of a person or persons within the scope of the marriage consideration.\nThe traditional rules of equity were considered and explained by the Court of Appeal in Attorney General v Jacobs [1895] 2 KB 341, an account duty case, and In re Cooks Settlement Trusts [1965] Ch 902, a decision of Buckley J, illustrates their application within living memory.\nThey are necessary to the understanding of cases like Ellis v Ellis (1909) 26 TLR 166, where the after acquired property covenant in Mrs Elliss marriage settlement was enforceable in equity, because there were children of the marriage.\nBut the notion that any voluntary disposition should be accorded the same protection as a commercial bargain, simply because it is made under seal, is insupportable.\nLeaving aside for the present the degree of seriousness of the mistake, there is also controversy about its nature (or characteristics), especially as to the distinction between effect and consequences drawn by Millett J in Gibbon v Mitchell [1990] 1 WLR 1304.\nIn that case two funds (Mays fund and Henrys fund) were settled in 1946 by Mr Henry Gibbons parents on the occasion of the marriage of his sister May.\nThe funds were settled on May and Henry respectively for life, on the statutory protective trusts in section 33 of the Trustee Act 1925 (with a modification in the case of Henrys fund), but with power for May to surrender her protected life interest so as to accelerate the interests of her children once they had attained vested interests.\nFor some unknown reason there was no corresponding power in respect of Henrys fund.\nThe consequence was that a purported surrender by Mr Gibbon would cause a forfeiture of his fixed interest and bring into operation a discretionary trust affecting income during the rest of his life.\nIn 1987 Mr Gibbon was a prosperous farmer aged 69, with two adult children.\nHe wished to take steps to save inheritance tax and was advised by his accountants and solicitors to surrender his life interest, and at the same time release two powers of appointment, so as to accelerate his childrens interests.\nThis advice was expressed in terms of enabling Henrys fund to pass immediately to the two children.\nHis professional advisers failed to recognise, until after the deed of surrender had been executed, that the protective trusts provided a trap.\nMr Gibbon applied to the court to have the deed of surrender set aside on the ground of mistake, and also for relief under the Variation of Trusts Act 1958.\nMillett J set the surrender aside, and varied the trust by lifting the protective trusts.\nIn his judgment he referred to several of the older authorities, in most of which solicitors had misunderstood or gone beyond their instructions: Meadows v Meadows (1853) 16 Beav 401, Walker v Armstrong (1856) 8 De G M & G 531, Ellis v Ellis (1909) 26 TLR 166 and In re Waltons Settlement [1922] 2 Ch 509.\nOgilvie v Littleboy was not cited.\nMillett J set out the principle which he drew from them at p1309: In my judgment, these cases show that, wherever there is a voluntary transaction by which one party intends to confer a bounty on another, the deed will be set aside if the court is satisfied that the disponor did not intend the transaction to have the effect which it did.\nIt will be set aside for mistake whether the mistake is a mistake of law or a fact, so long as the mistake is as to the effect of the transaction itself and not merely as to its consequences or the advantages to be gained by entering into it.\nIt will be observed that this formulation does not include the Ogilvie v Littleboy requirement of seriousness, except so far as it might be argued that any mistake as to the effect of a disposition is likely to be relatively serious.\nMillett Js judgment has been very influential.\nIt is a mark of the high respect in which he is held that an extempore first instance judgment, not (so far as appears from the judgment) based on much adversarial argument, is cited as one of the key authorities in most of the standard works on equity and trusts, including Snell, 32nd ed. (2010) 11 008, 22 052; Lewin, 18th ed. (2008) 4 58, 29 231; Underhill and Hayton, 18th ed. (2010) 15 28 to 15 34; and Thomas and Hudson, 2nd ed. (2010) 20.37.\nBut the source from which Millett Js statement of principle is derived is far from clear and it has been the subject of some criticism, both from legal scholars and in more recent decisions of the court.\nIt is generally agreed that effect must mean legal effect (in the sense of the legal character or nature of a transaction).\nIn Dent v Dent [1996] 1 WLR 683, 693 the deputy judge (David Young QC) understood it as the purpose or object of a transaction.\nSeveral other first instance judges have commented that the distinction between effect and consequences is not always clear, including Davis J in Anker Petersen v Christensen [2002] WTLR 313, 330.\nLawrence Collins J went further in AMP (UK) plc v Barker [2001] WTLR 1237, para 70, saying of the distinction: If anything, it is simply a formula designed to ensure that the policy involved in equitable relief is effectuated to keep it within reasonable bounds and to ensure that it is not used simply when parties are mistaken about the commercial effects of their transactions or have second thoughts about them.\nOn that view it comes close to Lindley LJs more general requirement for the mistake to be serious.\nIn Wolff v Wolff [2004] STC 1633, Mann J considered (para 23) that the test was not a limiting factor, and (para 26) noted that Lawrence Collins J had referred to commercial consequences, not legal consequences.\nLloyd LJ has now reviewed Gibbon v Mitchell twice, first in Sieff v Fox and then in Pitt v Holt.\nIn Sieff v Fox, Ogilvie v Littleboy was brought to light after a long period of obscurity (though it is mentioned in Peter Birks Introduction to the Law of Restitution, first published in 1985).\nLloyd LJ noted (para 106) that a test based on the legal effect of a transaction could not cover the tax consequences of a transaction, but that Lindley LJs more general test in Ogilvie v Littleboy might do so.\nHe expressed no final view because of the special circumstances of the case before him ([2005] 1 WLR 3811, para 116).\nIn Pitt v Holt Lloyd LJ went further.\nHe expressed the view (para 208) that some recent cases about offshore trusts did not accord with English law: Clarkson v Barclays Private Bank and Trust (Isle of Man) Ltd [2007] WTLR 1703; In re Betsam Trust [2009] WTLR 1489; and In re A Trust [2009] JLR 447.\nHe accepted the distinction made by Millett J in Gibbon v Mitchell but extended it (para 210) by formulating it as a requirement . that, for the equitable jurisdiction to set aside a voluntary disposition for mistake to be invoked, there must be a mistake on the part of the donor either as to the legal effect of the disposition or as to an existing fact which is basic to the transaction.\nThis extension seems to have been primarily to accommodate cases such as Lady Hood of Avalon, where there was (para 206) a fundamental error of fact, in relation to a point which lay at the heart of the transaction.\nHe also seems to have had in mind the New Zealand case of University of Canterbury v Attorney General [1995] 1 NZLR 78, which is discussed at para 199 of his judgment.\nThe special feature of that case was that the University had to some extent encouraged, or at least failed to correct, the donors error; it wished to return the gift but the Attorney General, representing the public interest in charity, opposed that course.\nIn addition, the mistake must, Lloyd LJ said, meet the Ogilvie v Littleboy test of sufficient gravity.\nThis approach has been criticised by the editors of Goff & Jones, paras 9 101 to 9 106.\nI do not agree with all these criticisms of what the editors refer to as the Court of Appeals stricter, hybrid approach.\nBut I can see no reason why a mistake of law which is basic to the transaction (but is not a mistake as to the transactions legal character or nature) should not also be included, even though such cases would probably be rare.\nIf the Gibbon v Mitchell test is further widened in that way it is questionable whether it adds anything significant to the Ogilvie v Littleboy test.\nI would provisionally conclude that the true requirement is simply for there to be a causative mistake of sufficient gravity; and, as additional guidance to judges in finding and evaluating the facts of any particular case, that the test will normally be satisfied only when there is a mistake either as to the legal character or nature of a transaction, or as to some matter of fact or law which is basic to the transaction.\nTo confirm the Gibbon v Mitchell test as formulated by Millett J would in my view leave the law in an uncertain state, as the first instance decisions mentioned in para 119 above tend to demonstrate.\nIt would also be contrary to the general disinclination of equity to insist on rigid classifications expressed in abstract terms.\nEquity, unlike many continental systems, has not adopted Roman laws classification of mistakes: error in negotio (the nature of the intended transaction), error in corpore (the subject matter of the transaction), error in persona (the identity of the other party to the transaction) and error in substantia (the quality of the subject matter).\nThe Gibbon v Mitchell test, at any rate if applied narrowly, would cover only the first of these categories.\nBut in some situations errors in other categories may be just as basic and just as serious in their consequences.\nThe conscience test\nLindley LJs test in Ogilvie v Littleboy, quoted at para 101 above, requires the gravity of the causative mistake to be assessed in terms of injustice or, to use equitys cumbersome but familiar term, unconscionableness.\nSimilarly Millett J said in Gibbon v Mitchell [1990] 1 WLR 1304, 1310: Equity acts on the conscience.\nThe parties [in] whose interest it would be to oppose the setting aside of the deed are the unborn future children of Mr Gibbon and the objects of discretionary trusts to arise on forfeiture, that is to say his grandchildren, nephews and nieces.\nThey are all volunteers.\nIn my judgment they could not conscionably insist upon their legal rights under the deed once they had become aware of the circumstances in which they had acquired them.\nThe evaluation of what is or would be unconscionable must be objective.\nMillett J identified precisely the class of beneficiaries in whose interest it would be for the forfeiture to stand (apart from tax considerations which made it disadvantageous for the whole family), but he did not do so in order to embark on the impossible task of establishing the state of the consciences of minor and unborn beneficiaries.\nNor (apart from a defence of change of position) would the relative prosperity of the donor and the donees be relevant, except so far as it was part of the mistake (as in Lord Scotts example in Deutsche Morgan Grenfell Group Plc v Inland Revenue Courts [2007] 1 AC 558, para 87: A gift of 1,000 by A to B where B is believed to be impecunious but is in fact a person of substantial wealth).\nThe gravity of the mistake must be assessed by a close examination of the facts, whether or not they are tested by cross examination, including the circumstances of the mistake and its consequences for the person who made the vitiated disposition.\nOther findings of fact may also have to be made in relation to change of position or other matters relevant to the exercise of the courts discretion.\nJustice Paul Finn wrote in a paper, Equitable Doctrine and Discretion in Remedies published in Restitution: Past, Present and Future (1998): The courts quite consciously now are propounding what are acceptable standards of conduct to be exhibited in our relationships and dealings with others .\nA clear consequence of this emphasis on standards (and not on rules) is a far more instance specific evaluation of conduct.\nThe injustice (or unfairness or unconscionableness) of leaving a mistaken disposition uncorrected must be evaluated objectively, but with an intense focus (in Lord Steyns well known phrase in In re S (A Child) [2005] 1 AC 593, para 17) on the facts of the particular case.\nThat is why it is impossible, in my view, to give more than the most tentative answer to the problems posed by Professor Andrew Burrows in his Restatement of the English Law of Unjust Enrichment (2013) p 66: we simply do not know enough about the facts.\nI add a postscript as to the criticism made by the editors of Goff & Jones (para 9 41), already quoted at para 108 above, of a boundary line which may be difficult to draw in practice, and which is susceptible to judicial manipulation, according to whether it is felt that relief should be afforded with the courts finding or declining to find incorrect conscious beliefs or tacit assumptions according to the courts perception of the merits of the claim.\nThere is some force in this, although the term manipulation is a bit harsh.\nThe fact that a unilateral mistake is sufficient means that the court may have to make findings as to the state of mind, at some time in the past, of a claimant with a lively personal interest in establishing that there was a serious causative mistake.\nThis will often be a difficult task.\nBut as a criticism of the Court of Appeal in Pitt I would reject it.\nThe case was heard on affidavit evidence, without cross examination, and the Court of Appeal was in as good a position as the deputy judge to draw inferences and make findings of fact.\nMore generally, the apparent suggestion that the court ought not to form a view about the merits of a claim seems to me to go wide of the mark.\nIn a passage in Gillett v Holt [2001] Ch 210, 225, since approved by the House of Lords (see especially the speech of Lord Neuberger, with which the rest of the House agreed, in Fisher v Brooker [2009] 1 WLR 1764, para 63) I said in discussing proprietary estoppel that although its elements (assurance, reliance and detriment) may have to be considered separately they cannot be treated as watertight compartments: . the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine.\nIn the end the court must look at the matter in the round.\nIn my opinion the same is true of the equitable doctrine of mistake.\nThe court cannot decide the issue of what is unconscionable by an elaborate set of rules.\nIt must consider in the round the existence of a distinct mistake (as compared with total ignorance or disappointed expectations), its degree of centrality to the transaction in question and the seriousness of its consequences, and make an evaluative judgment whether it would be unconscionable, or unjust, to leave the mistake uncorrected.\nThe court may and must form a judgment about the justice of the case.\nMistakes about tax\nIn this court Mr Jones applied for and obtained permission to raise two points which had not been raised below.\nThe first (to be found in paras 80 to 95 of the Revenues case) was that a mistake which relates exclusively to tax cannot in any circumstances be relieved.\nThis submission, for which no direct authority was cited, was said to be based on Parliaments general intention, in enacting tax statutes, that tax should be paid on some transaction of a specified type, whether or not the taxpayer is aware of the tax liability.\nMistake of law is not a defence, Mr Jones submitted, to tax lawfully due and payable.\nIn my opinion that submission begs the question, since if a transaction is set aside the Court is in effect deciding that a transaction of the specified description is not to be treated as having occurred.\nIn the case of inheritance tax, this is expressly provided by section 150 of the Inheritance Tax Act 1984.\nThat section is expressed in general terms as applying where a transfer has by virtue of any enactment or rule of law been set aside as voidable or otherwise defeasible, and the effect is that tax which would not have been paid or payable if the relevant transfer had been void ab initio is to be repaid, or cease to be payable.\nThere is no exception in section 150 for avoidance on the ground of a mistake about tax.\nMore generally, Mr Joness submission that tax is somehow in a different category is at odds with the approach of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558: see the speech of Lord Hope at para 44 and my own observations at paras 133 and 140.\nSo far as Mr Jones cites any authority for his submission, he has referred, but only as an aside, to the decision of the Court of Appeal in Racal Group Services Ltd v Ashmore [1995] STC 1151.\nThat was a claim to rectification.\nRectification is a closely guarded remedy, strictly limited to some clearly established disparity between the words of a legal document, and the intentions of the parties to it.\nIt is not concerned with consequences.\nSo far as anything in Racal is relevant to the different equitable remedy of rescission on the ground of mistake, it is relevant, not to establishing the existence of a mistake, but to the courts discretion to withhold relief in cases where it would be inappropriate for the court to grant it.\nThat is Mr Joness second new point and it is considered below.\nI would therefore reject the first new point as much too wide, and unsupported by principle or authority.\nBut it is still necessary to consider whether there are some types of mistake about tax which should not attract relief.\nTax mitigation or tax avoidance was the motive behind almost all of the Hastings Bass cases that were concerned with family trusts (as opposed to pensions trusts).\nIn Gibbon v Mitchell there was a mistake as to the legal effect of the transaction, which was to plunge the family into the trap of forfeiture under the protective trusts, rather than to achieve the immediate acceleration of the adult childrens interests.\nBut the seriousness of the consequences of the mistake was greatly enhanced by the inheritance tax implications.\nOn the test proposed above, consequences (including tax consequences) are relevant to the gravity of a mistake, whether or not they are (in Lloyd LJs phrase) basic to the transaction.\nIn Pitt the special tax advantage available under section 89 of the Inheritance Tax Act 1984 was a valuable one, and its loss was certainly a serious matter for Mrs Pitt, both as her husbands receiver and on her own account as his wife and carer and as the eventual beneficiary of his estate.\nLloyd LJ accepted that (para 215).\nHe was also prepared to accept (para 216) that Mrs Pitt had an incorrect conscious belief, or made an incorrect tacit assumption, that the proposed SNT (which had been the subject of advice from two professional firms, and approved by the Court of Protection) had no adverse tax effects.\nIt was on the issue of mistake as to effect or as to consequence? (para 217) that Lloyd LJ felt obliged to withhold relief.\nHe saw the tax liability, even though it was immediate and backed by a statutory charge (imposed by section 237 of the Inheritance Tax Act 1984) on the property of the SNT, as no more than a consequence (para 218): The legal effect [of the disposition] was the creation of the Special Needs Trust, on its particular terms, and the fact that the lump sum and the annuity were settled upon those terms.\nAn irony of the situation is that if the SNT had been framed so as to comply with section 89 (requiring at least half of the property applied during Mr Pitts lifetime to be applied for his benefit) it would most probably have made no difference to the distribution of capital or income during his lifetime (as the deputy judge noted in para 13 of his judgment, in dismissing a Revenue argument that Mrs Pitt might have decided not to take advantage of section 89).\nIt has not been suggested that the primary purpose of the SNT was other than Mr Pitts welfare and benefit, and the maintenance of his wife as his carer.\nThe SNT could have complied with section 89 without any artificiality or abuse of the statutory relief.\nIt was precisely the sort of trust to which Parliament intended to grant relief by section 89.\nIn Futter this court declined to permit the appellants to raise for the first time the issue of mistake, primarily because there was no sufficient evidential basis for considering that issue for the first time on a second appeal.\nGibbon v Mitchell received a passing mention in the judgment of Norris J [2010] STC 982, para 20, but only for the purpose of rejecting the Revenues argument that the distinction between effect and consequences was relevant to the Hastings Bass rule.\nHad mistake been raised in Futter there would have been an issue of some importance as to whether the Court should assist in extricating claimants from a tax avoidance scheme which had gone wrong.\nThe scheme adopted by Mr Futter was by no means at the extreme of artificiality (compare for instance, that in Abacus Trust Co (Isle of Man) v NSPCC [2001] STC 1344) but it was hardly an exercise in good citizenship.\nIn some cases of artificial tax avoidance the court might think it right to refuse relief, either on the ground that such claimants, acting on supposedly expert advice, must be taken to have accepted the risk that the scheme would prove ineffective, or on the ground that discretionary relief should be refused on grounds of public policy.\nSince the seminal decision of the House of Lords in WT Ramsay Ltd v IRC [1982] AC 300 there has been an increasingly strong and general recognition that artificial tax avoidance is a social evil which puts an unfair burden on the shoulders of those who do not adopt such measures.\nBut it is unnecessary to consider that further on these appeals.\nEquity does not act in vain\nMr Joness second new point was that Mrs Pitt should be refused relief because the granting of relief would serve no practical purpose, other than saving inheritance tax.\nHe cited Sir Nicolas Browne Wilkinson V C in the Spycatcher case, Attorney General v Guardian Newspapers Ltd [1987] 1 WLR 1248, 1270: It is an old maxim that equity does not act in vain.\nTo my mind that is good law and the court should not make orders which would be ineffective to achieve what they set out to do.\nIn the event the House of Lords took a different view, by a bare majority, as to whether the continuation of the interlocutory injunctions would serve any useful purpose.\nThe maxim exists, but as Mason CJ and McHugh J said in Corin v Patton (1990) 169 CLR 540, 557, Like other maxims of equity, it is not a specific rule or principle of law.\nIt is a summary statement of a broad theme which underlies equitable concepts and principles.\nThe fund subject to the SNT had many calls on its resources, with heavy professional costs and expenses as well as making provision for the welfare and care of Mr Pitt and the maintenance of his wife.\nOn his death on 25 September 2007 there was only 6,259 in the trust (the deputy judge added, para 15, that that was on Mrs Pitts case but he had earlier stated, para 4, that the material facts were not in dispute at all).\nOn Mr Pitts death this sum, subject to any outstanding liabilities, vested in his personal representatives under Clause 3 of the SNT.\nAny remaining value in the fund was therefore in the same beneficial ownership as if the SNT had been set aside by the court.\nOn 22 November 2011, after this court had granted permission for Mrs Pitt to appeal from the Court of Appeals decision, her solicitors wrote to the Solicitors Office of the Revenue drawing attention to a submission in the Revenues skeleton argument before the Court of Appeal, para 105: But, in any event, the settlement should not be set aside after this period of time, especially when the Court does not know what proprietary claim would vest in the estate against third parties.\nApparently with a view to avoiding any doubt on this point, Mrs Pitts solicitors set out the factual position as it was at that time and stated in the last paragraph of their letter: Please note that Mrs Pitt and Mr Shores [her co executor] have irrevocably instructed us to indicate, that if the Supreme Court orders that Mr Pitts settlement is set aside, no further claim (to monies or other relief), will be made by them in their capacity as Mr Pitts personal representatives, or by Mrs Pitt in her capacity as sole beneficiary of his estate, whether against the trustees (from time to time) of Mr Pitts settlement or the recipients of distributions or other payments from the trustees.\nOur clients will be satisfied with the effect of section 150 IHTA 1984 (consequent on the order setting aside Mr Pitts settlement).\nIn these circumstances Mr Jones has submitted that it would be pointless, and so contrary to equitys practical approach, to grant relief that would achieve nothing, apart from a tax advantage to Mrs Pitt.\nHe has relied on the approval by Peter Gibson LJ (with whom Sir Iain Glidewell and Kennedy LJ agreed) in Racal Group Services Ltd v Ashmore [1995] STC 1151, 1157 of what Vinelott J had said below [1994] STC 416, 425: In my judgment the principle established by these cases is that the court will make an order for the rectification of a document if satisfied that it does not give effect to the true agreement or arrangement between the parties, or to the true intention of a grantor or covenantor and if satisfied that there is an issue, capable of being contested, between the parties or between a covenantor or a grantor and the person he intended to benefit, it being irrelevant first that rectification of the document is sought or consented to by them all, and second that rectification is desired because it has beneficial fiscal consequences.\nOn the other hand, the court will not order rectification of a document as between the parties or as between a grantor or covenantor and an intended beneficiary, if their rights will be unaffected and if the only effect of the order will be to secure a fiscal benefit.\nBut Peter Gibson LJ went on to differ from Vinelott J in applying this principle.\nHe held that there was an issue capable of being contested.\nThe appeal was dismissed on another ground, that is because of the inadequacy of the evidence to satisfy the high standard of proof required for rectification.\nWhat the Court of Appeal decided in Racal was that it is sufficient, even for the closely guarded remedy of rectification, that there is a genuine issue capable of being contested, even if the parties decide that they will not in fact contest it.\nThe test for rescission on the ground of mistake cannot be stricter than that.\nUntil the solicitors letter of 22 November 2011 there was at least a possibility of third party claims arising, and the Revenue placed reliance on that as a reason for refusing relief.\nBut for the letter, the Court might, if minded to grant relief, have required an undertaking to the same effect as the one that Mrs Pitt and Mr Shores have volunteered.\nMoreover the Revenues argument ignores the fact that unless and until the SNT is set aside, there are potentially contestable issues between the Revenue and any persons who, not being purchasers for value without notice, have received distributions from the SNT.\nThe statutory charge under section 257 of the Inheritance Tax Act 1984 would prima facie give the Revenue a proprietary claim against such third parties.\nFor these reasons I would reject the Revenues second new point also.\nThe mistake claim in Pitt v Holt\nground of mistake is that set out in para 126 above, and it is satisfied in Pitt v Holt.\nThere would have been nothing artificial or abusive about Mrs Pitt establishing the SNT so as to obtain protection under section 89 of the Inheritance Tax Act 1984.\nThere was a considerable delay in the commencement of the proceedings, but the Revenue do not rely on the delay.\nThey do rely on rescission being pointless and therefore inappropriate, but I would reject that submission for the reasons set out above.\nThe deputy judge found ([2010] 1 WLR 1199, para 15) that the setting aside of the settlement would have no effect on any third party (plainly he was not here treating the Revenue as a third party).\nI would discharge the orders below and set aside the SNT on the ground of mistake.\nIn my opinion the test for setting aside a voluntary disposition on the\n","output":"These appeals raise important and difficult issues in the field of equity and trust law.\nBoth appeals raise issues about the so called rule in Hastings Bass, which is concerned with trustees who make decisions without having given proper consideration to relevant matters which they ought to have taken into account.\nIn addition, the appeal in Pitt raises issues as to the courts jurisdiction to set aside a voluntary disposition on the ground of mistake.\nIn 1985, Mr Mark Futter made two settlements.\nInitially, both settlements had non resident trustees, until, in 2004, he and Mr Cutbill, both resident in the United Kingdom, were appointed.\nIn 2008, on the advice of solicitors, Mr Futter and Mr Cutbill, in exercise of a power of enlargement, distributed the whole capital of the first settlement to Mr Futter, and, in exercise of a power of advancement, distributed 36,000 from the second settlement to Mr Futters three children in equal shares.\nIn so doing, they overlooked the effect of section 2(4) of the Taxation of Chargeable Gains Act 1992 (TCGA), which resulted in a large capital gains tax liability for Mr Futter, and a modest one for his children.\nMr Futter and Mr Cutbill, as trustees of the two settlements, applied to have the deed of enlargement and the deeds of advancement declared void, which Norris J held them to be on the basis of the rule in Hastings Bass.\nIn 1990, Mr Derek Pitt suffered very serious head injuries in a road traffic accident, resulting in his mental incapacity.\nMr Pitts claim for damages for his injuries was compromised by a court approved settlement in the sum of 1.2m.\nMr Pitts solicitors sought advice from Frankel Topping, a firm of financial advisers.\nThey advised that the damages should be settled in a discretionary settlement.\nThis was done in 1994 by the establishment of the Derek Pitt Special Needs Trust (the SNT).\nThe SNT could have been established without any immediate inheritance tax liability, but it was not.\nThe report from Frankel Topping made no reference whatsoever to inheritance tax.\nIn 2007, Mr Pitt died.\nHis personal representatives, who were also two of the trustees of the SNT, commenced proceedings to have the SNT set aside, which the deputy judge ordered on the basis of the rule in Hastings Bass.\nHowever, in so doing, he indicated that, even if there had been a mistake of any sort, it was only a mistake as to the consequences of the transaction, rather than its effect, and so he would not have granted rescission of the SNT.\nThe Revenues appeals against these decisions were heard together in the Court of Appeal.\nLloyd LJ (with whom Longmore and Mummery LJJ agreed) (i) allowed the appeals, principally on the ground that the rule in Hastings Bass was not applicable, because the respective trustees acted reasonably in reliance on what they supposed to be competent professional advice, (ii) dismissed Mrs Pitts appeal based on mistake, on the basis that rescission for mistake could only be granted if there was a serious mistake as to nature of a transaction, rather than its consequences, and a mistake as to tax consequences was not a sufficient mistake for the purposes of rescission.\nThe Supreme Court unanimously (i) dismisses the appeal in Futter, and the appeal in Pitt, so far as they turn on the rule in Hastings Bass, (ii) allows the appeal in Pitt on the ground of mistake, and sets aside the SNT.\nLord Walker gives the judgment, with which the other Justices agree.\nThe rule in Hastings Bass The rule in Hastings Bass, properly understood, depends on breach of duty in the performance of something that is within the scope of the trustees powers, not in the trustees doing something that they had no power to do at all [43].\nThe rule is centred on the failure of trustees to perform their decision making function.\nIt is that which founds the courts jurisdiction to intervene if it thinks fit to do so [91].\nAs a matter of principle there must be a high degree of flexibility in the range of the courts possible responses.\nTo lay down a rigid rule would inhibit the court in seeking the best practical solution in the application of the rule in Hastings Bass in a variety of different factual situations [92].\nFor the rule in Hastings Bass to apply, the inadequate deliberation on the part of the trustees must be sufficiently serious as to amount to a breach of fiduciary duty.\nIt is generally only a breach of duty on the part of the trustees that entitles the court to intervene.\nIt 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.\nApart from exceptional circumstances (such as an impasse reached by honest and reasonable trustees) only breach of fiduciary duty justifies judicial intervention [73].\nHowever, where trustees have been in breach of duty by exercising a discretion with inadequate deliberation, setting aside their decision may not be the only course open to the court [63].\nIt would be contrary to principle and authority to impose a form of strict liability on trustees who conscientiously obtain and follow, in making a decision which is within the scope of their powers, apparently competent professional advice which turns out to be wrong [80].\nSuch a result cannot be achieved by the route of attributing any fault on the part of professional advisers to the trustees as their supposed principals [81].\nThere have been, and no doubt will be in the future, cases in which small variations in the facts lead to surprisingly different outcomes.\nThat is inevitable in an area where the law has to balance the need to protect beneficiaries against aberrant conduct by trustees (the policy behind the rule in Hastings Bass) with the competing interests of legal certainty, and of not imposing too stringent a test in judging trustees decision making [83].\nRescission on the ground of mistake The true requirement for rescission on the ground of mistake is simply for there to be a causative mistake of sufficient gravity.\nThe test will normally be satisfied only when there is a mistake either as to the legal character or nature of a transaction, or as to some matter of fact or law which is basic to the transaction [122].\nConsequences (including tax consequences) are relevant to the gravity of a mistake [132].\nA mistake must be distinguished from mere ignorance, inadvertence, and misprediction [104].\nForgetfulness, inadvertence or ignorance is not, as such, a mistake, but it can lead to a false belief or assumption which the law will recognise as a mistake [105].\nMere ignorance, even if causative, is insufficient [108].\nHowever, the distinctions may not be clear on the facts of a particular case [109].\nIn order to satisfy the test for setting aside a voluntary disposition on the ground of mistake, the gravity of the mistake must be assessed by a close examination of the facts.\nThe injustice of leaving a mistaken disposition uncorrected must be evaluated objectively, but with an intense focus on the facts of the particular case [126].\nThe court must make an evaluative judgment whether it would be unconscionable, or unjust, to leave the mistake uncorrected, and form a judgment about the justice of the case [128].\nMrs Pitt had an incorrect conscious belief, or made an incorrect tacit assumption, that the proposed SNT had no adverse tax effects [133].\nThe SNT could have complied with statutory requirements without any artificiality or abuse of statutory relief.\nIt was precisely the sort of trust to which Parliament intended to grant relief [134].\n","id":75}
{"input":"This is an appeal from an order of the Court of Appeal (Longmore, Kitchin and Vos LJJ) dated 4 December 2014, which set aside an order of the Chancellor dated 28 February 2014 staying the present proceedings.\nThe points raised are novel and difficult, and the focus of submissions has shifted at each instance.\nThe proceedings are brought by a Cayman Islands company, Saad Investments Co Ltd, in liquidation, (SICL) and its Joint Official Liquidators (the Liquidators), appointed as such in winding up proceedings commenced in the Cayman Islands on 30 July 2009.\nThe English Companies Court has recognised the Cayman Islands winding up proceedings as a foreign main insolvency proceeding by orders under the Cross Border Insolvency Regulations 2006 (SI 2006\/1030).\nThe proceedings are against Samba Financial Group (Samba), which was served as of right within the jurisdiction on 19 August 2013, but which then applied for the proceedings to be stayed.\nThe ground then given was that there exists another forum which is clearly and distinctly more appropriate than England.\nIn the course of the appeals leading to the Supreme Court, the ground has effectively transmuted into a case that SICLs claim has no prospect of success, for a reason or reasons which will appear.\nThe parties have argued the appeal, and the Supreme Court will address it, on that basis.\nBefore the Supreme Court many of the issues which required attention below are no longer relevant.\nThe appeal can as a result be approached on the basis of assumed facts and matters which can be shortly stated.\nThey include the following.\nMr Al Sanea, a Saudi Arabian citizen and resident closely involved with SICL, was the legal owner of shares, valued at around US$318m, in five Saudi Arabian banks, one of them Samba itself.\nHe was registered as their owner in the Saudi Arabian Securities Depositary Centre.\nSICL claims that Mr Al Sanea had agreed to hold these Saudi Arabian shares at all material times on trust for SICL.\nThe trusts arose allegedly as a result of six transactions.\nIn the first transaction in 2002, Mr Al Sanea by share sale agreement agreed to transfer to SICL the beneficial ownership of the relevant shares, but to continue to hold the legal title in order to comply with legal requirements in Saudi Arabia.\nIn a second transaction in 2003, Mr Al Sanea agreed to hold legal ownership of [the relevant] shares as nominee for SICL in order to comply with the legal requirements in Saudi Arabia.\nIn the remaining four transactions, in respectively 2006, 2007 and on two occasions in 2008, Mr Al Sanea made declarations of trust for SICL in respect of the relevant shares.\nIt is now common ground, for the purposes of this appeal, that all six transactions by which Mr Al Sanea purported to constitute himself a trustee for SICL can be treated as subject to Cayman Islands law.\nIt is also common ground that the law of Saudi Arabia, where the shares are sited, does not recognise the institution of trust or a division between legal and equitable proprietary interests, although it does recognise a different institution, amaana, the precise implications of which have not been explored in evidence.\nOn 16 September 2009, Mr Al Sanea transferred all the Saudi Arabian shares to Samba, purporting thereby to discharge personal liabilities which he had towards Samba.\nThe present proceedings are brought by SICL and the Liquidators against Samba in reliance on section 127 of the Insolvency Act 1986, which provides: Avoidance of property dispositions, etc.\nIn a winding up by the court, any disposition of the companys property, and any transfer of shares, or alteration in the status of the companys members, made after the commencement of the winding up is, unless the court otherwise orders, void.\nBy section 436 of the 1986 Act the concept of property is defined in wide terms: property includes money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property;\nIn the courts below, and when the matter first came before the Supreme Court, the critical issue was identified as being whether SICL had equitable proprietary interests in the shares in respect of which Mr Al Sanea had purportedly constituted himself trustee.\nIt appears to have been assumed that, if SICL had such interests, then they were disposed of by Mr Al Saneas transfer of title in the shares to Samba.\nSambas submission was that SICL could have no such equitable proprietary interests, since the law of Saudi Arabia, the lex situs of the shares, does not recognise purely equitable proprietary interests.\nFollowing the oral hearing before it, the Supreme Court invited and received two sets of supplementary written submissions focusing more precisely on the questions (a) whether there was any disposition within section 127, even if SICL had equitable proprietary interests in the shares, and (b) why, if there was, it could not also be said that there was such a disposition, even if SICL only enjoyed personal rights in respect of the shares.\nAt all instances of this case, detailed submissions have been addressed on the Convention on the Law Applicable to Trusts and on their Recognition, scheduled to the Recognition of Trusts Act 1987.\nThese submissions focused, before the Chancellor, on article 15 and, before the Court of Appeal and Supreme Court, on both articles 4 and 15 of that Convention.\nThe 1987 Act states in section 1(1) that The provisions of the Convention set out in the Schedule shall have the force of law in the United Kingdom.\nThe Convention as scheduled contains the following provisions: CHAPTER I SCOPE Article 1 This Convention specifies the law applicable to trusts and governs their recognition.\nArticle 2 For the purposes of this Convention, the term trust refers to the legal relationship created inter vivos or on death by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.\nA trust has the following characteristics the assets constitute a separate fund and are not a (a) part of the trustees own estate; (b) title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee; the trustee has the power and the duty, in respect (c) of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law.\nThe reservation by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust.\nArticle 3 The Convention applies only to trusts created voluntarily and evidenced in writing.\nArticle 4 The Convention does not apply to preliminary issues relating to the validity of wills or of other acts by virtue of which assets are transferred to the trustee.\nArticle 5 The Convention does not apply to the extent that the law specified by Chapter II does not provide for trusts or the category of trusts involved.\nCHAPTER II APPLICABLE LAW CHAPTER III RECOGNITION Article 11 A trust created in accordance with the law specified by the preceding Chapter shall be recognised as a trust.\nSuch recognition shall imply, as a minimum, that the trust property constitutes a separate fund, that the trustee may sue and be sued in his capacity as trustee, and that he may appear or act in this capacity before a notary or any person acting in an official capacity.\nIn so far as the law applicable to the trust requires or provides, such recognition shall imply in particular that personal creditors of the trustee shall have no (a) recourse against the trust assets; (b) that the trust assets shall not form part of the trustees estate upon his insolvency or bankruptcy; (c) that the trust assets shall not form part of the matrimonial property of the trustee or his spouse nor part of the trustees estate upon his death; (d) that the trust assets may be recovered when the trustee, in breach of trust, has mingled trust assets with his own property or has alienated trust assets.\nHowever, the rights and obligations of any third party holder of the assets shall remain subject to the law determined by the choice of law rules of the forum.\nArticle 12 Where the trustee desires to register assets, movable or immovable, or documents of title to them, he shall be entitled, in so far as this is not prohibited by or inconsistent with the law of the state where registration is sought, to do so in his capacity as trustee or in such other way that the existence of the trust is disclosed.\nArticle 14 The Convention shall not prevent the application of rules of law more favourable to the recognition of trusts.\nCHAPTER IV GENERAL CLAUSES Article 15 The Convention does not prevent the application of provisions of the law designated by the conflicts rules of the forum, in so far as those provisions cannot be derogated from by voluntary act, relating in particular to the following matters the protection of minors and incapable parties; the personal and proprietary effects of marriage; succession rights, testate and intestate, especially (a) (b) (c) the indefeasible shares of spouses and relatives; (d) interests in property; (e) insolvency; (f) acting in good faith. the protection of creditors in matters of the transfer of title to property and security the protection, in other respects, of third parties If recognition of a trust is prevented by application of the preceding paragraph, the court shall try to give effect to the objects of the trust by other means.\nArticle 16 The Convention does not prevent the application of those provisions of the law of the forum which must be applied even to international situations, irrespective of rules of conflict of laws.\nArticle 17 In the Convention the word law means the rules of law in force in a state other than its rules of conflict of laws.\nArticle 18 The provisions of the Convention may be disregarded when their application would be manifestly incompatible with public policy.\nIn the Court of Appeal, the first issue under article 4 was whether this article excludes the application of the Convention to the trusts created or declared by Mr Al Sanea, bearing in mind that Saudi Arabian law does not recognise any division of legal and beneficial interests.\nSecondly, assuming the Convention to apply, SICL relied on its provisions regarding applicable law in Chapter II in submitting that the trusts were governed by Cayman Islands law.\nThat is an issue that has, for present purposes, disappeared, since the present appeal proceeds on the basis that the transactions creating or declaring the trusts were subject to Cayman Islands law.\nThirdly, assuming the Convention otherwise to apply, Samba argued in the courts below that the effect of article 15(d) was to remit the question whether, under the trusts, SICL acquired any equitable proprietary interest in the shares to Saudi Arabian law, being, it submits, the lex situs designated by English common law as the law governing questions of title.\nSamba succeeded on this point before the Chancellor (para 63), but lost before the Court of Appeal on the basis that there were triable issues whether under Saudi Arabian law the arrangements constituted by the six transactions were valid and whether any rule precluding the separation of legal and equitable title or precluding foreigners from owning Saudi Arabian property was mandatory, in the sense that it could not be derogated from within the meaning of that term in article 15.\nThe first issue, whether or not the Convention applies to the trusts, focuses on the exclusion introduced by article 4.\nSICL submits that the concept of preliminary issues relating to the validity . of other acts by virtue of which assets are transferred to the trustee goes no further than to exclude issues about the alienability, or transferability, of the assets to the trustee.\nIt submits that article 4 leaves all further issues concerning the capacity of the trustee to declare a trust in respect of the shares or to create a beneficial interest in the shares under such a declaration to be governed under the Convention by the governing law of the trust, ie for present purposes, Cayman Islands law.\nSamba on the other hand submits, drawing on passages in the travaux prparatoires, that all these issues are excluded from the Convention by article 4, and remitted accordingly to the common law, under which it submits Saudi Arabian law, as the lex situs of the shares, governs them.\nOn this issue, the Court of Appeal accepted SICLs case.\nIt held (para 55) that: Provided that the property that is made the subject of a trust can be alienated at all under the lex situs, questions as to the validity and effect of placing such assets in trust, even though the assets are shares in a civil law jurisdiction, can be determined by the governing law of the trust.\nTo put the matter in the context of this case, the declarations of trust will not be dividing the equitable and legal interests in the shares under Saudi Arabian law.\nThat is not possible.\nBut the declarations of trust may give SICL rights under the trust in respect of those shares that will have to be determined by the governing law of the trust, taking into account that under Saudi Arabian law a division of equitable and legal interests is not possible.\nAll these matters will have to be worked out at the next stage of this litigation when the court comes to consider the effect on the rights granted by the declarations of trust of the transfer to Samba which took effect under Saudi Arabian law.\nOn the present appeal, Samba criticises this passage as obscure, and submits that, in so far as it suggests that an equitable proprietary interest can exist in an asset sited in a jurisdiction which knows no such concept, it is wrong.\nIn the light of the further and more broadly ranging submissions which the Supreme Court has now received, I doubt if it matters for present purposes either whether the Convention applies or even whether SICLs interests in relation to the shares can properly be described as proprietary.\nThe limited focus in the courts below, on the issue whether the trusts gave SICL equitable proprietary interests in the shares, is largely subsumed in a more general question whether, whatever the nature of SICLs interests under the trusts, there was any disposition of property within the meaning of section 127.\nAs to what constitutes property, this is always heavily dependent on context something can be proprietary in one sense while also being non proprietary in another sense: M Conaglen, Thinking about proprietary remedies for breach of confidence (2008) Intellectual Property Quarterly 82, 89, referring to R Nolan, Equitable Property (2006) 122 LQR 232, 256 257.\nAs the Chancellor noted (para 62), there is a school of thought (which can be dated to FW Maitland, Equity a Course of Lectures (1936)) which analyses the equitable interests created by a common law trust not as proprietary, but as personal or obligational, even as against third parties.\nThe issue whether trusts are properly seen as part of the law of property or as an aspect of the law of obligations is described by Swadling in Burrows, English Private Law (3rd ed) (2013) para 4.140 as a difficult question; see also Burrows, The Law of Restitution, (3rd ed) (2011), pp 191 193, Nolan, Equitable Property (2006) 122 LQR 232.\nSupporters of a personal analysis include B McFarlane, The Structure of Property Law (2008); see also Watt, The Proprietary Effect of a Chattel Lease (2003) Conveyancer and Property Lawyer 61.\nA recent discussion of the pros and cons of each analysis appears by P Jaffey in Explaining the Trust (2015) 131 LQR 377.\nJaffey concludes that, although a trust involves personal rights against the trustee, only a proprietary analysis explains satisfactorily those aspects which concern the beneficiarys position vis vis third parties, such as the trustees creditors and recipients of unauthorised transfers of trust property.\nAs before the Chancellor, so before the Supreme Court, the parties were content to proceed on the basis of the conventional analysis that a trust creates a proprietary interest, at least to the extent that such an interest is capable of existing and being recognised in the relevant asset.\nIn this judgment, I am also content, without expressing any view about the appropriate analysis, to proceed on the same basis.\nAt common law, the nature of the interest intended to be created by a trust depends on the law governing the trust.\nThis law therefore determines whether the intention is to give a beneficiary an equitable proprietary interest in an asset held on trust or a mere right against the trustee to perform whatever functions the trust imposes upon him with regard to the use and disposal of foreign shares and income derived from them: see Dicey, Morris & Collins, The Conflict of Laws (15th ed) (2012), vol 2, para 22 048, citing Archer Shee v Garland [1931] AC 212.\nWhere the intention is to create an equitable proprietary interest, then the common law position is as stated in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, 705F, per Lord Browne Wilkinson: Once a trust is established, as from the date of its establishment the beneficiary has, in equity, a proprietary interest in the trust property, which proprietary interest will be enforceable in equity against any subsequent holder of the property (whether the original property or substituted property into which it can be traced) other than a purchaser for value of the legal interest without notice.\nThe initial inquiry is therefore whether an equity subsists, which it will prima facie do at common law, so long as the relevant property (original or substitute) does not pass into the hands of a transferee for value of the legal interest without notice of the equity.\nBut a further issue may arise under the law of the situs of the relevant property.\nThe situs or location of shares and of any equitable interest in them is in the jurisdiction where the company is incorporated or the shares are registered (which is presently unimportant, since in this case they coincide in Saudi Arabia): Dicey, op cit paras 22 044 and 22 048, Underhill and Hayton, Law of Trusts and Trustees (19th ed) para 100.128, both citing In re Berchtold [1923] 1 Ch 192, Philipson Stow v Inland Revenue Comrs [1961] AC 727, 762, per Lord Denning.\nIt is established by Court of Appeal authority (and was not challenged on this appeal) that, where under the lex situs of the relevant trust property the effect of a transfer of the property by the trustee to a third party is to override any equitable interest which would otherwise subsist, that effect should be recognised as giving the transferee a defence to any claim by the beneficiary, whether proprietary or simply restitutionary: Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1996] 1 WLR 387.\nIn that case, bona fide chargees for value of shares situated in New York and held on trust for Macmillan were thus able, by application of New York law, to take the shares free of Macmillans prior equitable interest of which the chargees had had no notice.\nAs will appear, I do not consider that any different position would result under the Convention.\nThat does not mean that a common law trust cannot or will not exist in respect of shares, simply because the lex situs may treat a disposition of the shares to a third party as overriding any interest of the beneficiary in the shares.\nA trust existed in respect of the shares in issue in Macmillan v Bishopsgate until they were disposed of under the lex situs by transfer to bona fide purchasers for value without notice.\nBut a common law trust can also exist in respect of shares, such as the Saudi Arabian shares presently in issue, even though Saudi Arabian law does not recognise equitable proprietary interests at all and may not (though this has not been investigated) give any effect at all to a common law trust.\nA common law court concerned with Cayman Islands trusts in respect of Saudi Arabian shares will give them their intended effect to the greatest extent possible, having regard to the overriding effect of any disposition under their lex situs.\nThis is so both at common law and under the Convention.\nThus, as between the immediate parties to the present trusts, Mr Al Sanea and SICL, Mr Al Sanea cannot deny the validity or effect of the trusts, or assert a right to deal with assets subject to a trust or their proceeds as his own, simply because Saudi Arabian law does not recognise the trusts as giving rise to the separate equitable proprietary interest that would exist if the shares were situated in, say, the United Kingdom or Cayman Islands.\nIf Mr Al Sanea were to be the subject of bankruptcy proceedings or a receivership in the United Kingdom or Cayman Islands, it is equally clear that his creditors could not claim that the Saudi Arabian shares formed part of his estate in bankruptcy.\nThe Supreme Court was referred to Attorney General v Jewish Colonization Association [1901] 1 QB 123 and Marlborough (Duke) v Attorney General [1945] 1 Ch 78.\nIn these cases the issue was whether foreign shares held on trust were taxable as on a succession, in the first case on the death of the settlor and the termination of his life interest, and in the second case on the death of the beneficiary of the trust.\nThis issue turned on the application of general words in section 2 of the Succession Duty Act 1853: every past, or future disposition of property shall be deemed to confer a succession.\nThe courts held these general words to be limited to property held on trust under an English law trust, but applied them even though the property consisted of foreign shares.\nIn the former case, a contrary argument raised by the taxpayer was that, under the Austrian law of the domicile of settlor (which may also have been the situs of some or all of the shares), an Austrian father cannot divest himself of property so as to impair the rights of his children to legitim, and any alienation at any time having that effect may on the death of the father be set aside (p 133).\nIt was argued that Austrian law must govern accordingly.\nBoth AL Smith MR and Collins LJ (pp 133 and 137) noted that, if such an event had occurred, then to that extent the settlement might have been ineffective.\nBut, in circumstances where it had not occurred, they held the trust to be an effective English law trust giving rise to a taxable succession on the settlors death, while recognising that the actual implementation of the trust in respect of foreign assets might in some circumstances be affected by foreign law.\nWhile these are cases from a different area of the law, their recognition of English law trusts in respect of foreign shares, subject only to any possible qualifications on their implementation arising under foreign law, is generally consistent with the analysis which I have indicated in the preceding paragraphs.\nThe validity and enforceability of English law trusts in respect of foreign assets has also been considered in an instructive series of English authorities.\nFirst, the English courts have regularly stated their willingness to enforce in personam trusts in respect of property abroad.\nAs the Earl of Selborne LC said in Ewing v Orr Ewing (1883) LR 9 App Cas 34, 40: The Courts of Equity in England are, and have always been, courts of conscience, operating in personam and not in rem; and in the exercise of this personal jurisdiction they have always been accustomed to compel the performance of contracts and trusts as to subjects which were not either locally or ratione domicilii within their jurisdiction.\nThey have done so as to land, in Scotland, in Ireland, in the Colonies, in foreign countries: Penn v Baltimore (Lord) (1750) 1 Ves Sen 444.\nSecond, they have exercised such jurisdiction, applying the principles of English law to enforce contracts and trusts relating to foreign property, even though the lex situs did not recognise such principles.\nThus, in British South Africa Co v De Beers Consolidated Mines Ltd [1910] 2 Ch 502, the Court of Appeal held that the equitable rule against clogging the equity of redemption of a mortgage applied to a contract governed by English law and would be enforced against a contracting party as regards land abroad in a state where the equity of redemption may not be recognised.\nCozens Hardy MR stated (pp 513 514): For centuries the Court of Chancery has, by virtue of its jurisdiction in personam, applied against parties to a contract or trust relating to foreign land the principles of English law, although the lex situs did not recognize such principles.\nHe cited in support Lord Cottenhams words in Ex p Pollard Mont & Ch 250: If indeed the law of the country where the land is situate should not permit or not enable the defendant to do what the court might otherwise think it right to decree, it would be useless and unjust to direct him to do the act; but when there is no such impediment the courts of this country, in the exercise of their jurisdiction over contracts made here, or in administering equities between parties residing here, act upon their own rules, and are not influenced by any consideration of what the effect of such contracts might be in the country where the lands are situate, or of the manner in which the courts of such countries might deal with such equities.\nHe continued: To take a simple case, if A by an English contract agreed to give a mortgage to secure an English debt upon land in a foreign country, the law of which country does not recognize the existence of what we call an equity of redemption, which was the case of our common law, and if a mortgage was given and duly perfected according to the lex situs, I feel no doubt that our courts would restrain the mortgagee from exercising the rights given by the foreign law and would treat the transaction as a mortgage in the sense in which that word is used by us.\nIn doing this our courts would not in any way interfere with the lex situs, but would by injunction, and if necessary by process of contempt, restrain the mortgagee from asserting those rights.\nSimilar observations would apply to a trustee, if the lex situs does not recognize trusts.\nThirdly, the situation envisaged by the last sentence of this last quotation is directly covered by Court of Appeal authority in Lightning v Lightning Electrical Contractors Ltd (1998) 23(1) Tru LI 35.\nIt concerned a claim by Mr Lightning to be the beneficiary under a resulting trust in respect of land in Scotland, bought by an English company to which he had advanced the purchase price.\nScots law, the lex situs of the land, did not recognise any equitable interest.\nThe company having gone into receivership, Mr Lightning obtained a declaration in English proceedings that the property or its proceeds of sale were held on trust for him.\nPeter Gibson LJ, giving the lead judgment, applied the Earl of Selbornes words in Ewing and endorsed the statement by Parker J in Deschamps v Miller [1908] 1 Ch 856, 863, that the court would act where there was some personal obligation arising out of contract or implied contract, fiduciary relationship or fraud, or other conduct which, in a view of a Court of Equity in this country, would be unconscionable and that whether it would do so did not depend on the law of the locus of the immovable property.\nPeter Gibson LJ also recognised that the lex situs can, under the principle recognised in Macmillan v Bishopsgate, have a significance in the case of a third party transfer.\nHe said, at p 38, that the English court had not unnaturally regarded English law as applicable to the relationship between the parties before it in the absence of any event governed by the lex situs destructive of the equitable interest being asserted.\nThe English court would thus accept jurisdiction and apply English law as the applicable law, even though the suit relates to foreign land, but: In contrast if the equity which is asserted does not exist between the parties to the English litigation, for example where there has been a transfer of the property to a third party with notice of an equity but by the lex situs governing the transfer, the transfer extinguished the plaintiffs equity, the English court could not then give relief against the third party even though he is within the jurisdiction.\nIn Lightning itself, as Peter Gibson LJ pointed out: No event governed by Scottish law [had] occurred whereby any equity arising under English law was destroyed.\nHenry and Millett LJJ agreed, the latter putting the position forcefully as follows, at p 40: If A provides money to B, both being resident in England, to purchase landed property in his own name but for and on As behalf, and B does so, the consequences of that transaction are governed by English law.\nIt would be absurd if they were governed by the law of the place where the property in question happened to be located.\nSuch a rule would lead to bizarre results if, for example, As instructions were to buy properties in more than one jurisdiction, for the consequences of the same arrangement might then be different in relation to the different properties acquired.\nIt would also lead to bizarre results if A left it to Bs discretion to choose the property to be acquired, since that would give B the unilateral power to decide on the legal consequences of the transaction which he had entered into with A.\nFourthly, all these authorities were recently and instructively examined by Roth J in Luxe Holding Ltd v Midland Resources Holding Ltd [2010] EWHC 1908 (Ch).\nThe case concerned an agreement by Midland to sell to Luxe shares in 20 companies, 17 of which were incorporated in Russia or the Ukraine, with the lex situs of the shares in them being also there.\nMidland defaulted, sold the shares in the Russian and Ukrainian companies elsewhere and, when sued by Luxe, argued that, since Russian and Ukrainian law did not recognise the concept of a beneficial interest at all, and since questions of ownership and therefore proprietary interests in shares are governed by the lex situs of the companies, it followed that whatever might have been the position if these had been shares in English companies, there were no beneficial interests in the shares which could pass to Luxe under the share sale agreement (para 30).\nAddressing this argument, Roth J noted that the sort of trust, and thus beneficial interest which arises on the sale of land or of shares in private companies, arises only because the agreement is specifically enforceable and is In a sense, therefore, the corollary of the remedy of specific performance and is not a full trust in the classic sense (para 31).\nHe continued, citing Lake v Bayliss [1974] 1 WLR 1073:\nIt is by reason of this trusteeship that the vendor who breaks his contract of sale by reselling to someone else has been held to be accountable to the first intended purchaser for the proceeds of sale. 32.\nRoth J then engaged in the following analysis, which is worthwhile quoting in extenso: 35.\nIs the application of these principles precluded by the fact that the property is held through subsidiaries in a country the law of which does not recognise the concept of a lesser proprietary interest or that it does not recognise a beneficial interest at all? The fact that Midland held the shares through subsidiaries does not in itself preclude the sale and purchase agreement from being specifically enforceable, as Midland for present purposes accepts.\nThe obligation to be enforced would be that Midland must procure that the shares are transferred.\nI do not see that this in itself would prevent the qualified trust relationship from arising. 36.\nDoes the applicability of the lex situs to questions of ownership alter the position as between the contracting parties? It is trite but nonetheless important to recall that equity acts in personam.\nThe parties here have chosen to govern the relationship as between themselves according to English law.\nUnless precluded by authority, it seems to me that as a matter of principle where the parties have expressly chosen English law and the exclusive jurisdiction of the English court, they have voluntarily subjected themselves to the English system of remedies.\nIn my judgment, it is at the very least well arguable, and if necessary I would hold, that this includes the qualified trusteeship that applies as the corollary in such a case to the availability of specific performance, unless that gave rise to a situation that was directly contrary to the lex situs in the sense of interfering with the operation of the local law.\nAfter considering British South Africa Co v De Beers Consolidated Mines Ltd and Lightning v Lightning Electrical Contractors Ltd, Roth J continued: 41.\nI do not consider that the reasoning in Lightning is confined to the particular case of a resulting trust.\nOn the contrary, it seems to me of general application.\nAnd the observation made by Millett LJ resonates in the present case, since three of the 20 companies of which Midland sold its shareholding were Guernsey or Irish companies, for which as I apprehend the lex situs recognises a beneficial interest.\nAs it happens, those companies are of negligible value, but that obviously cannot affect the principle.\nIf Midlands analysis were correct, the English court would find that Luxe had acquired as against Midland a beneficial interest in those shares but not in the shares of the other companies incorporated under a different system of law, and that it would thus have a very limited proprietary claim. 42.\nMoreover, it is accepted by Luxe that any beneficial interest in the shares sold to Troika was destroyed or terminated by that sale.\nIts claim is to the proceeds in Midlands hands.\nThus no interference with property transfers under Ukrainian (or Russian) law is involved.\nThere is no reason why equity, acting on the conscience of Midland as a proper defendant to English proceedings, cannot require that Midland holds those moneys for the benefit of Luxe.\nIt is clear therefore, that in the eyes of English law, a trust may be created, exist and be enforceable in respect of assets located in a jurisdiction, the law of which does not recognise trusts in any form.\nIn non common law jurisdictions, a similar approach may also be expected.\nIn Scotland, the civil law concept of patrimony has been developed to explain the protection of trust property held by a trustee against claims by the trustees personal creditors: Glasgow City Council v Board of Managers of Springboig St Johns School [2014] CSOH 76, para 17 per Lord Malcolm.\nFollowing Italys ratification of the Convention, Italian courts have also recognised common law trusts as creating a separate patrimony, rather than a new kind of property right: see Italy: The Trust Interno by Alexandra Braun in Haytons The International Trust (3rd ed) (2011).\nWhether Saudi Arabian law would, in any proceedings before a Saudi Arabian court, adopt a similar approach, by treating the relevant transactions as amounting to amaana, even though Saudi Arabia is not a party to the Convention and its law does not recognise distinct equitable proprietary interests, is, as the Court of Appeal noted (para 75), presently unknown: see also para 5 above.\nThe decision by Lord Hodge sitting in the Outer House in the Scottish case of Joint Administrators of Rangers Football Club Plc, Noters 2012 SLT 599 concerned contracts, made in 2011 and subject to English law, between Rangers and two English limited liability partnerships (collectively Ticketus).\nUnder the contracts, Ticketus had paid Rangers large sums for future tranches of season tickets in respect of a defined number of seats of different types at specified future matches in each of the seasons from 2011 2012 to 2014 2015.\nRangers having gone into administration, its administrators applied for directions as to whether they could be prevented from terminating the contracts.\nTicketus argued that they had acquired rights which were more than mere personal rights, and which could be enforced by specific performance.\nLord Hodge held, first, relying on the travaux prparatoires (in particular paras 55 to 57 of the Explanatory Report prepared by Professor Alfred E von Overbeck), that the concept in article 4 of the Convention of a preliminary issue relating to the validity of an act by which assets were transferred to a trustee included an issue relating to the validity of a declaration of trust.\nHe held, second, that whether the agreements between Rangers and Ticketus in respect of season tickets gave Ticketus more than purely personal rights was such an issue, and, third, that this issue fell accordingly outside the Convention and was to be determined under Scots private international law rules by reference to Scots law, as the lex situs of the future tickets to be issued and the stadium seats to which they related.\nHe went on (para 33): If I am correct in my conclusion that Scots law applies, the difficulty which Ticketus faces in asserting a trust over the proceeds of sale of the season tickets agreement tickets is that the proceeds do not yet exist.\nOn the assumption that the Ticketus agreements are sufficient to amount to a declaration by Rangers of a trust over the STA tickets and the proceeds of their sale, the non existence of both is fatal to the creation of a trust.\nWhere the truster and trustee are the same person it is our law that there must be constructive delivery of the trust subjects to himself as trustee of an irrevocable trust: see Allans Trustees v Lord Advocate 1971 SC (HL) 45, in which Lord Reid at p 64 spoke of the doing of something equivalent to delivery or transfer of the trust fund.\nThe essence of the decision was, therefore, that there was nothing which, at least in Scots law, was capable of giving rise to any form of proprietary interest or as being the subject of any trust, which was what Ticketus were claiming.\nThe decision, under Scots law, to apply Scots law to this question, does not determine the common law position or detract from Roth Js analysis in Luxe.\nThe approach taken in the second and third steps of Lord Hodges reasoning set out above is open to question, at least through English legal eyes (see also the query raised about its correctness by George L Gretton, Lord President Reid Professor at Edinburgh University, in The Laws of the Game [2012] Edinburgh Law Review 414, 418).\nBut it is unnecessary to consider this further on this appeal.\nOn an English appeal relating to common law trusts, it is the approach indicated by Roth J in Luxe and by the Court of Appeal in Lightning that is correct and applicable.\nIn the light of the above, to regard a trust as falling outside the Convention under article 4, simply because its assets consist of assets in a jurisdiction which does not recognise a division between legal and equitable proprietary interests, is wrong.\nEven if the Court of Appeal was wrong to limit article 4 to the question whether the assets were alienable, in the sense of being capable of transferable to the trustee or anyone else (see paras 12 13 above), an issue on which it is unnecessary to reach any final conclusion, there was nothing invalid about the declarations of trust.\nThere is nothing in the Convention to suggest that it was intended to be inapplicable to a trust simply because the trust was in respect of assets in a jurisdiction which does not recognise some form of separation of legal and equitable interests.\nRather, the contrary since one object of the Convention was to provide for the recognition of trusts in jurisdictions which did not themselves know the institution.\nThere must be many common law trusts which have or acquire assets in civil law or other jurisdictions which do not recognise the concept of an equitable proprietary interest in the English common law sense.\nAll that the provisions for recognition of a trust in article 11 of the Convention contemplate, as a minimum is that the trust property constitutes a separate fund.\nBut that does not mean that there must exist a concept of equitable proprietary interest or any separation of legal and equitable proprietary interests under the lex situs of the relevant assets.\nThe further provisions of article 11 remit to the law governing the trust the further consequences of recognition of a trust.\nBut article 11(d) also recognises that third parties may have acquired rights in respect of trust assets under, in particular, the lex situs of the assets, which may prevent the recovery for the benefit of the trust of trust assets which the trustee has, in breach of trust, alienated.\nThe provision in article 15 that, if recognition of a trust is prevented by the application of a provision of the law designated by the conflicts law of the forum which cannot be derogated from by voluntary act, the court shall try to give effect to the objects of the trust by other means is a further pointer towards the Conventions general aim of accommodating the institution of trust, so far as possible, with other systems.\nArticle 15 itself appears as designed to address the impact of relationships or transactions separate from the trust itself.\nThe Explanatory Report by Professor von Overbeck, which is part of the travaux prparatoires, notes (para 136) that the first paragraph of article 15 preserves the mandatory rules of the law designated by the conflicts rules of the forum for matters other than trusts.\nParagraph 138 of the Report proceeds to draw a parallel with the last sentence of article 11(d), noting that this is general, whereas article 15 is limited in application to mandatory rules.\nIn the present context, it is in my opinion the last sentence of article 11(d), not article 15(e) or (f), which is primarily applicable when determining what, if any, rights and obligations Samba may have in relation to the shares as a result of their transfer to Samba by Mr Al Sanea.\nOn the face of it, this last sentence of article 11(d) would remit to Saudi Arabian law the question whether Samba acquired free of SICLs interests under the trusts, whether or not those interests can be categorised as proprietary.\nThe existence under Saudi Arabian law of the institution of amaana might in this context prove relevant.\nThat is not however an issue presently before the Supreme Court.\nThe issue before the court in the light of the expanded submissions which it has received is whether SICL has any basis for alleging that there was a disposition of property within the meaning of section 127.\nViewing the matter in the light of the common law principles set out in paras 21 to 34 above, I would regard the present trusts not only as intended to create, but also as creating equitable proprietary interests in the Saudi Arabian shares, enforceable at common law at least as between SICL and Mr Al Sanea and anyone else other than a transferee from Mr Al Sanea in circumstances giving the transferee a good title under Saudi Arabian law.\nBut, in the context of the present issues under section 127, there is to my mind a considerable case to be made for saying that it cannot matter.\nThe definition of property in section 436 is wide enough to embrace both equitable proprietary and purely personal interests.\nSir Nicholas Browne Wilkinson V C said of section 436 in Bristol Airport Plc v Powdrill [1990] Ch 744, 759D, that It is hard to think of a wider definition of property.\nThe case concerned a chattel lease, which it was argued gave rise only to contractual rights.\nThe Vice Chancellor said (p 759E F): Although a chattel lease is a contract, it does not follow that no property lease is created in the chattel.\nThe basic equitable principle is that if, under a contract, A has certain rights over property as against the legal owner, which rights are specifically enforceable in equity, A has an equitable interest in such property.\nI have no doubt that a court would order specific performance of a contract to lease an aircraft, since each aircraft has unique features peculiar to itself.\nAccordingly in my judgment the lessee has at least an equitable right of some kind in that aircraft which falls within the statutory definition as being some description of interest arising out of, or incidental to that aircraft.\nAny equitable proprietary interest arises out of, or is incidental, to the shares.\nIn my view, a purely personal interest in having the shares dealt with by the trustee and holding the trustee to account in accordance with the trust might equally well be said to be an interest arising out of, or incidental to, property.\nIf so, the appeal could be approached on the basis that SICLs rights under the trust constituted relevant property within section 436, whether they were equitable proprietary or purely personal rights.\nIn either case, the question would arise whether the transfer by Mr Al Sanea of the shares to Samba constituted a disposition within the meaning of section 127, bearing in mind that the disposition would not affect the interests involved, unless they were overridden under Saudi Arabian law by Sambas acquisition of the shares.\nHowever, even if it is only equitable proprietary interests that are capable of being regarded as relevant property for present purposes, the key question remains whether there was any disposition of them within the meaning of section 127.\nI have found this a difficult issue.\nOn the one hand, it can be said that trust assets have been misappropriated, misapplied, dissipated or, in terms of article 11(d) of the Convention, alienated.\nSuch phrases can be found in academic textbooks.\nThus, Snells Equity (33rd ed) (2015) para 30 013 reads, under the head Misapplication: Where the breach consists in a misapplication of trust assets, the first question is whether the trustee should specifically restore the assets to the trust or restore their value by making a money payment.\nIf the trustee still has the original assets, he may effect restoration in specie by transferring them back to the trust fund.\nIf the original assets are no longer available, then the beneficiary may elect to assert a proprietary remedy over any traceable proceeds in the hands of the trustee or a third party.\nLikewise, Swadling in Burrows, English Private Law, para 4.151 reads: The recipient of rights dissipated in breach of trust does not automatically step into the trustees shoes, inheriting the powers and duties of his transferee [sic, this should presumably be transferor].\nHe is only liable to restore the rights dissipated in breach of trust, either to the former trustee, or, more likely, to other persons nominated by the beneficiaries.\nThis right of the beneficiaries to recover the trust rights is good against all transferees of rights dissipated in breach of trust bar one, the transferee of a common law right who takes in good faith, for value, and without notice, actual, implied, or constructive, of the fact of the dissipation being in breach of trust.\nIf the transferee is such a person, compendiously known as equitys darling, then the effect of the transfer will be to destroy the beneficiarys right to reconveyance.\nSICL submits that it is misleading to regard a beneficiary as owning only the equitable interest, and that he or it is entitled to the entirety of the interest in the relevant property.\nThey point out that, in other contexts, such as tax, the courts have held trust beneficiaries to be assessable to income tax on trust income on the basis that they owned the trust income: see eg Baker v Archer Shee [1927] AC 844, Corbett v Inland Revenue Comrs [1937] 1 KB 567.\nFurther, although the trustee remains accountable as such, a wrongful disposition by a trustee of trust assets does not give to the beneficiary as against the recipient of trust property the same rights as the beneficiary had under the trust as against the trustee.\nAs explained by Nolan, Equitable Property (2006) 122 LQR 232, 243, 247 and 250 and by Jaffey, Explaining the Trust, above, p 383, the beneficiary has only the right to have the trust assets restored to the original trustee, or, if the trust was a bare trust to which the rule in Saunders v Vautier (1841) 4 Beav 115, applies, to himself; see also the citation from Swadling in Burrows, English Private Law, in the previous paragraph of this judgment.\nMore generally, it can be said that section 127 introduces a prima facie right to recover any property disposed of in which SICL had the legal title, subject only to a power in the court to validate the disposition by order; and that it is well established, in the light of the pari passu principle operating in insolvency, that validation will, save in exceptional circumstances, only be ordered in relation to a disposition occurring after the inception of the winding up if there is some special circumstance which shows that the disposition in question will be (in a prospective application case) or has been (in a retrospective application case) for the benefit of the general body of unsecured creditors : Express Electrical Distributors Ltd v Beavis [2016] 1 WLR 4783, para 56, per Sales LJ.\nOn the other hand, SICLs case can be said to overlook the considerable difference which exists between an unrestricted legal title to an asset, which can normally be disposed of to a third party, and a legal title in relation to which a beneficiary has trust rights, which continue to exist and be enforceable unless and until overridden by a transfer under the lex situs as recognised in Macmillan v Bishopsgate.\nIn Ayerst v C & K (Construction) Ltd [1976] AC 167, 177G H Lord Diplock referred to the legal ownership of property subject to a trust as held by the trustee not for his own benefit but for the benefit of the cestui que trust or beneficiaries, but went on to say that Upon the creation of a trust in the strict sense as it was developed by equity the full ownership in the trust property was split into two constituent elements the legal ownership in the trustee, what came to be called the beneficial ownership in the cestui que trust.\nThe metaphor of a division or split of title needs to be approached with some caution.\nSwadling in Burrows, English Private Law, para 4.149, speaks of: the falsity of statements which talk in terms of a division or separation of rights when rights are held on trust, or even worse, of legal and equitable titles existing before the creation of the trust.\nSwadling, citing Australian authority, suggests an analysis according to which an equitable interest is not carved out of a legal estate but impressed or engrafted onto it (para 4.150).\nLikewise, in Fiduciary Ownership and Trusts in a Comparative Context (2014) ICLQ 901, Daniel Clarry refers to the concept of fiduciary ownership whenever title is held by a person in respect of property that is designated for a purpose protected by law (p 930), and suggests a concerted effort to move away from the use of dual or split ownership metaphors in trusts discourse towards the fiduciary ownership of trust property in both the common and civil law traditions (p 933).\nJaffey, op cit, p 386, also notes that one of the difficulties about the proprietary approach (which he advocates) is that it has sometimes been understood in a way that makes it seem paradoxical.\nThat is the dual ownership or split ownership approach.\nOn this approach, it is said that both the trustee and the beneficiary are owners of the trust property, the trustee at law and the beneficiary in equity.\nConsidering the position overall, clearly one cannot say that the trustee and the beneficiary are both separately the owners of the trust property, at least in the ordinary sense of ownership.\nRejecting any idea of simultaneous allocation of all the elements of ownership to both the trustee and the beneficiary, he however opts (p 387) for an analysis of distribution according to which the trustee has the right of control over the property, carrying with it the power to manage the property and to deal with it as owner vis vis other parties, signified by legal title, and the beneficiary, where there is a single beneficiary, has the right to all the benefit and enjoyment of the property, which is beneficial ownership.\nIt is unnecessary on this appeal to examine these slightly differing analyses further.\nWhat is clear, on any analysis, is that, where a trust exists, the legal and beneficial interests are distinct, and what affects the former does not necessarily affect the latter.\nWhere an asset is held on trust, the legal title remains capable of transfer to a third party, although this undoubted disposition may be in breach of trust.\nBut the trust rights, including the right to have the legal title held and applied in accordance with the terms of the trust, remain.\nThey are not disposed of.\nThey continue to be capable of enforcement unless and until the disposition of the legal title has the effect under the lex situs of the trust asset of overriding the protected trust rights.\nIf the trust rights are overridden, it is not because they have been disposed of by virtue of the transfer of the legal title.\nIt is because they were protected rights that were always limited and in certain circumstances capable of being overridden by virtue of a rule of law governing equitable rights, protecting in particular (under common law) bona fide third party purchasers for value (equitys darling in the terms of para 4.151 in Swadling in Burrows, English Private Law, cited in para 45 above).\nThe position was neatly summarised by Lloyd LJ in Independent Trustee Services Ltd v GP Noble Trustees Ltd [2012] EWCA Civ 195; [2013] Ch 91, para 106: a transferee of the legal title to property under a disposition made in breach of trust, or a successor in title to such a person, does not have the beneficial title to the property, which remains held on the original trusts, unless either the transferee, or a successor in title, was a bona fide purchaser for value without notice.\nThe trustee acting in breach of trust can transfer the legal title, but cannot vest the beneficial interest in the property in a bona fide purchaser for value without notice, since he does not own that title and is not acting in a way which enables him, under the trust, to overreach the beneficiaries equitable interest.\nDespite that inability, the availability of the bona fide purchaser defence means that a transaction in favour of a bona fide purchaser for value without notice is as effective as it would be if he could vest the beneficial title in the purchaser.\nThereafter the purchaser can deal with the asset free from any prior claim of the beneficiaries.\nIn these circumstances, I conclude that section 127 is neither aimed at, nor apt to cover, the present situation.\nSection 127 addresses cases where assets legally owned by a company in winding up are disposed of.\nThe section is necessary to enable the company to recover them, by treating the disposition as void.\nThe courts power to validate the disposition is a necessary safety valve, to cater for situations in which validation would be appropriate, bearing in mind the position of creditors as well as that of the other party to the transaction.\nAny such disposition will involve issues which arise directly between the company (embracing in that concept its creditors in liquidation) whose property is disposed of and the other party to the transaction, although the section embraces situations where the companys property is held by, for example, a director or agent and is disposed of by him to a third party: In re J Leslie Engineers Co Ltd [1976] 1 WLR 292.\nThe holder of interests such as SICLs does not need protection on the lines of section 127, in order to protect its property or to protect or enforce its interests.\nMr Al Sanea disposed of his legal interest in the shares.\nThat involved him in a breach of trust.\nBut it did not involve any disposition of SICLs property.\nSICLs property, whether it consisted of an equitable proprietary interest or personal rights to have the shares held for its benefit, continued, despite the disposal of the legal title, unless and until that disposal overrode it.\nIf the disposal overrode SICLs interest as regards a third party transferee of the legal title such as Samba, that was not because of any disposal of SICLs interest.\nIt was because SICLs interest was always limited in this respect.\nIn some circumstances, the term disposition may, as Lord Neuberger demonstrates, embrace destruction or extinction of an interest.\nIn the present context, one might also pray in aid academic descriptions of the wrongful alienation of trust property (even if it did not override any beneficial interest in such property) as a misapplication of trust assets (see Snells Equity (33rd ed), paras 30 013, 30 050 and 30 067) and a disposition in breach of trust (see Swadling in Burrows, English Private Law (3rd ed), para 4.151).\nBut the natural meaning of disposition in the context of section 127 is in my view that it refers to a transfer by a disponor to a disponee of the relevant property (here the beneficial interest), not least when the section goes on to render any disposition void unless the court otherwise orders.\nI agree with Lord Neubergers and Lord Sumptions further reasoning on this point.\nI do not, in these circumstances, see any basis for extending, or any need to extend, section 127 to cover three party situations where legal title is held and disposed of to a third party by a trustee, and the beneficiarys beneficial interest either survives or is overridden by virtue of the disposition of the legal title to the third party.\nThe law regulates, protects and circumscribes beneficial interests under a trust in a manner which is separate from and outside the scope of section 127.\nIt follows that I would allow the appeal, set aside the order made by the Court of Appeal, and declare that for the purposes of section 127 of the Insolvency Act 1986 there was no disposition of any rights of SICL in relation to the shares by virtue of their transfer to Samba.\nOn the way the case has been put to date, it would appear to follow that there should be an order either to restore the judges order of a stay of the proceedings brought by SICL and the Liquidators, or to strike out the proceedings.\nBut I would allow the parties 21 days in which to make written submissions inviting any other order, including an order for remission of the matter to the High Court to enable an application to save the proceedings by amendment of the pleadings.\nLORD NEUBERGER:\nThe assumed facts and the issue can be very shortly summarised.\nMr Al Sanea held certain shares on trust for the benefit of Saad Investments Co Ltd (SICL), and, six weeks after the compulsory winding up of SICL commenced, he transferred those shares to Samba Financial Group (Samba) in discharge of some of his liabilities to Samba.\nThe question which arises is whether, if Samba was a bona fide purchaser for value of the shares without notice of SICLs beneficial interest, the transfer, at least in so far as it relates to SICLs beneficial interest, is to be treated as void for the purposes of section 127 of the Insolvency Act 1986.\nSection 127(1) provides that a disposition of the companys property made after the commencement of the winding up is, unless the court otherwise orders, void.\nIn the case of a compulsory liquidation, the commencement of the winding up is, at least in a domestic case, the date of the presentation of the petition to wind up see section 129 of the 1986 Act.\nIn this case, however, SICL is a Cayman Islands company and the winding up petition was made to, and the winding up order was made by, the Grand Court of the Cayman Islands.\nThe case has accordingly proceeded on the basis that the commencement of the winding up was at the latest, the date of recognition of [those] foreign proceedings by the High Court of England and Wales per Sir Terence Etherton C at first instance, (2014) 16 ITELR 808, para 11.\nThere is no doubt but that SICLs equitable interest in the shares constituted property in the light of the very wide definition of that expression in section 436 of the 1986 Act, which is set out in para 7 of Lord Mances judgment.\nAs Sir Nicolas Browne Wilkinson V C said in Bristol Airport Plc v Powdrill [1990] Ch 744, 759, [i]t is hard to think of a wider definition of property.\nHaving said that, I do not think one actually needs to rely on the width of the statutory definition in section 436: one only has to consider whether section 127 would apply if SICL had purported to transfer its equitable interest in the shares after its winding up had commenced, to realise how inappropriate it would be if the definition in section 436 did not extend to equitable interests.\nThe more difficult question is whether there is in circumstances such as the present a disposition of the equitable interest in the shares, assuming that Samba was a bona fide purchaser for value of the shares without notice of that interest.\nAs Lord Mance says, where a legal estate is sold to a bona fide purchaser for value without notice, any equitable interest is not transferred to the purchaser: it is overridden, or to put it more colloquially, it is lost or disappears.\nLloyd LJ accurately summarised the position in Independent Trustee Services Ltd v GP Noble Trustees Ltd [2013] Ch 91, para 106, when he said that a trustee acting in breach of trust cannot vest the beneficial interest in the property in a bona fide purchaser for value without notice, since he does not own that title and is not acting in a way which enables him, under the trust, to overreach the beneficiaries equitable interest; but, nonetheless, the availability of the bona fide purchaser defence means that a transaction in favour of a bona fide purchaser for value without notice is as effective as it would be if he could vest the beneficial title in the purchaser.\nAs Lord Mance also points out, where the legal owner transfers the legal estate to a bona fide purchaser for value with no notice of the beneficial interest in breach of trust, the person who owned the beneficial interest does not by any means lose all its other rights.\nIn particular, it retains all its personal rights against the trustee, ie the party who sold the legal estate.\nIn other words, following the transfer of the shares in this case, SICL retained its personal rights against Mr Al Sanea, but (assuming Samba was a bona fide purchaser for value without notice and subject to section 127), SICL lost any proprietary rights or interest it had in the shares.\nThe fact that SICL retains its personal rights against Mr Al Sanea notwithstanding the loss of its beneficial interest in the shares appears to me to be irrelevant to the issue whether section 127 applies.\nIf a transaction would otherwise be a disposition within the section, there is no reason for disapplying the section merely because the company in question would not be deprived of its personal rights by the disposition.\nSimilarly, the fact that an equitable interest is more precarious than a legal interest appears to me to be nothing to the point.\nThe very purpose of section 127 is to impeach transactions which would otherwise be effective, and it seems to me to be inconsistent with that purpose to exclude from its ambit a transaction which would otherwise be lawful, and to which a particular right or interest is otherwise susceptible of being defeated.\nThere is undoubtedly a powerful argument for saying that a transfer by the legal owner of the legal estate for value in an asset to a bona fide purchaser who has no notice of the existence of an equitable interest in that asset cannot amount to a disposition of that equitable interest.\nAs already mentioned, and as Lord Mance demonstrates, there is no question of Mr Al Sanea having transferred SICLs equitable interest in the shares to Samba: he simply transferred his legal ownership of the shares to Samba, and, on the assumption that Samba was a bona fide purchaser for value without notice, the equitable interest effectively disappeared.\nIn those circumstances, at least on the basis of the meaning which it naturally conveys, section 127 simply does not apply: a disposition normally involves a disponor and a disponee, and so there has simply been no disposition.\nIndeed, in an Australian first instance decision, In re Mal Bowers Macquarie Electrical Centre Pty Ltd (in liquidation) [1974] 1 NSWLR 254, 258, Street CJ in Eq expressly so stated, albeit in a very different context from the present.\nHowever, it is fair to say that the word disposition is linguistically capable of applying to a transaction which involves the destruction or termination of an interest.\nEtymological analyses can fairly be said to be suspect in this sort of context, but it seems to me to involve a perfectly natural use of language to describe SICLs interest in the shares as having been disposed of by the transfer of those shares to a bona fide purchaser.\nAnd it is possible to claim support for such a view in relation to section 127 from respected authors.\nThus, Professor Sir Roy Goode in Principles of Corporate Insolvency Law, 4th ed (2011) at para 13 127 states that [s]ection 127 bites on beneficial ownership, not necessarily on the legal title.\nAnd at para 13 128, he says that [t]he word disposition must be given a wide meaning if the purpose of the section is to be achieved, particularly in view of the fact that there is no exception in favour of transfers for full value; particularly relevantly for present purposes, this passage continues: [d]isposition should therefore be considered to include not only any dealing in the companys assets by sale, exchange, lease, charge, gift or loan but also any other act which in reducing or extinguishing the companys rights in an asset, transfers value to another person.\nSir Roy then explains that on this basis disposition includes an agreement whereby the company surrenders a lease or gives up contractual rights.\nAnd McPhersons Law of Company Liquidation, 3rd ed (2013), para 7 015, states that section 127 only [applies to] property which belongs in equity to the company and is confined to the companys beneficial interest in property.\nThere is also some judicial support for the notion that disposition can extend to extinguishment.\nThus, Wynn Parry J said in In re Earl Leven, Inland Revenue Comrs v Williams Deacons Bank Ltd [1954] 1 WLR 1228, 1233, that [t]he word disposition, taken by itself, and used in its most extended meaning, is no doubt wide enough to include the act of extinguishment.\nHowever, he rejected such a wide interpretation of that word in the Finance Act 1940, partly because it produced a quite unexpected result and partly because in other sections of that Act it is clear that where the legislature intended that disposition should include extinguishment, it was at pains to make express provision.\nAccordingly, the extinguishment of a liability to pay insurance premiums did not amount to a disposition for the purposes of section 44(1) of the 1940 Act.\nIn another revenue case, Inland Revenue Comrs v Buchanan [1958] Ch 289, the Court of Appeal held that the surrender of a life interest under a will trust in favour of those people entitled in remainder operated as a disposition of that life interest for the purposes of sections 20 and 21 of the Finance Act 1943.\nAt p 298, Jenkins LJ specifically rejected the argument that there was no disposition because a surrender of a life interest destroys the interest and there is nothing left.\nThis again provides support for the notion that the fact that property ceases to exist as a result of a transaction does not prevent the transaction involving a disposition of that property.\nBut, of course, all depends on the statutory context and how they apply to the facts of the particular case.\nThere is also a policy argument for concluding that in a case such as the present, the equitable interest is the subject of a disposition for the purposes of section 127, particularly bearing in mind the fact that the court has a dispensing power.\nThe purpose of section 127 is to ensure that, at least once the winding up procedure has been started, a companys property is retained, in particular for the purpose of being available in order to be distributed pro rata, ie fairly, among its creditors.\nOn the face of it, at any rate, that should apply as much to property which is held for it by a third party as to property which it holds in its own name.\nIt would appear that Mr Al Sanea was a bare trustee of the shares ie the whole of the beneficial interest in the shares was vested in SICL.\nA transfer of the bare legal estate by the trustee to a purchaser with notice of the trust would not be caught, because he would only acquire the bare legal interest, which would normally be worth nothing, and no disposition of the companys property would have occurred.\nAnd a transfer by the company of its equitable interest would undoubtedly be caught by section 127 as it would involve a disposition by the company of that interest.\nIt can therefore be said to be surprising if a transfer by the trustee which involved the transferee effectively obtaining the whole of the equitable interest previously owned by the company was not caught by the section.\nNonetheless, I have reached the conclusion, in agreement with Lord Mance, that there is no disposition of an equitable interest within section 127, when there is a transfer by the legal owner of the legal estate, which is subject to that equitable interest, to a bona fide purchaser for value without notice of that equitable interest.\nAs already mentioned, the natural meaning of section 127 appears to me to carry with it the notion of a disponor transferring property to a disponee, and on that basis there was no disposition of SICLs equitable interest in the shares in this case.\nAlthough, as explained above, there are arguments for departing from the natural meaning of section 127, I consider that they are outweighed by the arguments the other way.\nIn my view, Sir Roy Goode is right when he says that the surrender of a lease or the giving up of contractual rights by a company would be a disposition within section 127, as would a surrender of a life interest (and a company can no doubt have such an interest, at least if it is contingent on an individuals life) as discussed in Buchanan.\nHowever, there are differences between a surrender (whether of a lease, contractual rights, or a life interest) and the loss of a beneficial interest on a transfer of the legal estate to a bona fide purchaser for value without notice of that interest.\nIn the former case, the person who is the disponor is the same as the person who loses the property; whereas in the latter case the disponor is, ex hypothesi, not the person who loses the property.\nAnd, in the former case the disponee is well aware of the property which is ceasing to exist: as far as he is concerned, its extinction is the purpose of the transaction; in the latter case, the disponee is, by definition, unaware of the property which is being disposed of.\nSection 127 can operate harshly so far as people dealing in good faith with a company are concerned.\nIn many cases, a person dealing with a company will be unaware that a petition has been presented (particularly if the presentation occurred very recently), and the section contains no exception for transactions in the ordinary course of business or for transactions for which the company receives full value.\nThe fact that the court will often sanction transactions in the ordinary course of business under its statutory dispensing power is by no means a wholly satisfactory answer to this.\nAs Fox LJ explained in In re SA & D Wright Ltd [1992] BCC 503, 505, when deciding whether to validate a disposition under section 127, the court must always do its best to ensure that the interests of the unsecured creditors will not be prejudiced, and, where there is said to have been a benefit in validating, the court must carry out a balancing exercise.\nAnd, as Sales LJ put it more recently in Express Electrical Distributors Ltd v Beavis [2016] 1 WLR 4783, para 56, validation will ordinarily only be granted if there is some special circumstance which shows that the disposition in question has been for the benefit of the general body of unsecured creditors.\nBut it would not merely be harsh, but positively unfair for a bona fide purchaser of a legal estate from a third party to find that, because of section 127, the transaction in question was liable to be held void owing to the existence of an equitable interest held by a company of which he had no notice.\nAs explained in para 74 above, the position is very different from the surrender of a lease or of contractual rights.\nA person taking a surrender of a lease or contractual rights from a company knows both that he is dealing with the company and that he is dealing in the lease or the rights.\nA bona fide purchaser for value of an asset without notice of a companys equitable interest in the asset would be unaware both of the company (or at least that it had an equitable interest) and of the equitable interest (as if he knew about it he would be bound by it, as he would not be a bona fide purchaser).\nSo far as the passages in the books quoted in para 67 above are concerned, it seems to me that, read in context, they do not support the view that section 127 applies in a case such as this.\nThe authors were not directing their minds to a case where the disponor was someone other than the company concerned or its agent.\nAs already mentioned, Sir Roys examples all involved the company as disponor, and the passage quoted from McPherson was directed to explaining why completion by a company of a prior contract to sell its property does not fall within section 127.\nThe dicta and decisions in the two cases referred to in paras 68 69 above must, of course, also be assessed by reference to their respective legal and factual contexts.\nIn both Earl Leven and Buchanan, the courts were construing a revenue statute, and, more importantly, the transaction involved disponors transferring property which they owned beneficially.\nAs to the other issues discussed in the judgments of Lord Mance, Lord Sumption and Lord Collins, I agree with what they say and there is nothing I can usefully add.\nLORD SUMPTION:\nThe facts to be assumed for the purposes of this appeal are that Mr Al Sanea held shares in various Saudi Arabian banks on trusts governed by Cayman Islands law for the claimant Saad Investments Co Ltd (SICL); and that on 16 September 2009, six weeks after SICL went into liquidation, he transferred them to the defendant Samba Financial Group in discharge of personal liabilities which he owed to them.\nThe transfer is said to be void under section 127 of the Insolvency Act 1986 as a disposition of the companys property made after the commencement of the winding up.\nThe appeal arises out of what is, in point of form, an application by Samba to stay the proceedings on the ground of forum non conveniens.\nBut the real ground of the application is that the proceedings are bound to fail.\nThere are four critical steps in Sambas argument: (1) The transmission of property is governed by the lex situs, which in the case of registered shares is the law of the companys incorporation, in this case Saudi Arabia.\nThis proposition is well established and was not seriously disputed: see Macmillan Inc v Bishopsgate Investment Trust Plc (No 3) [1996] 1 WLR 387.\nIt applies as much to the transmission of an equitable as to a legal interest in shares: Underhill & Hayton, The Law Relating to Trusts and Trustees, 18th ed (2010), para 100.128. (2) The law of Saudi Arabia does not recognise trusts or any other distinction between the legal and beneficial interests in property.\nIt treats the registered owner of shares in a Saudi Arabian company as their sole and entire owner.\nThis was found as a fact by the Chancellor of the High Court, and is no longer disputed. (3) It follows that an instrument purporting to create a trust over shares in a Saudi Arabian company was ineffective to do so, even though governed by a law (that of the Cayman Islands) which recognised trusts. (4) Accordingly SICL can have had no equitable interest in the shares capable of being disposed of within the meaning of section 127 of the Act.\nThe real issues raised by this argument have been obscured by the narrow basis on which it was presented in the courts below.\nThe focus of the argument was on point (3).\nAlthough point (4) was perhaps the most critical step of all, it was left to one side, and this court was initially told that it was agreed not to be in issue at this stage.\nThis was unfortunate, for it meant that the oral argument proceeded on an artificial basis.\nThere could be no proper analysis of the nature of the proprietary interest said to have been disposed of within the meaning of section 127, or of the way in which that provision operates in relation to such an interest.\nThe omission was ultimately made good after the conclusion of argument by the service of written submissions at the request of the court.\nThis means that it is possible for us to address the issue on a rather broader basis of principle than the courts below.\nIt also means that a number of the issues which featured in argument below can be seen not to arise.\nAs the beneficiary of a trust, SICL had two main legal rights.\nFirst, it had a right to have the trust administered according to its terms.\nThis was a personal right against the trustee.\nThe only relevant condition for its enforceability is that Samba should be before the court.\nSince it has been properly served with the proceedings, that condition is satisfied.\nSecondly, SICL had a true proprietary right.\nThe proprietary character of an equitable interest in property has sometimes been doubted, but in English law (which is in this respect the same as Cayman Islands law), the position must be regarded as settled.\nAn equitable interest possesses the essential hallmark of any right in rem, namely that it is good against third parties into whose hands the property or its traceable proceeds may have come, subject to the rules of equity for the protection of bona fide purchasers for value without notice: see Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, 705 (Lord Browne Wilkinson).\nThere are a number of reasons why the proprietary interest of the beneficiary may not be effective or enforceable.\nObvious examples include cases where the property or its traceable proceeds have been transferred to a bona fide purchaser for value without notice; and cases where the property has been consumed or destroyed, or has ceased to be traceable.\nBut that will not affect the beneficiarys personal rights, if any, against the trustee or his amenability to personal remedies.\nThose rights will remain enforceable, for example by an action for the restoration of the trust assets or for equitable compensation for their loss.\nThe personal and proprietary rights of the beneficiary exist independently, and neither is dependent on the continued existence of the other.\nFor this reason, the beneficiarys proprietary interest in property is of limited practical importance.\nIt is relevant only as between the beneficiary and a third party, or for the purpose of asserting a prior claim to specific assets in an insolvency.\nEven then, equity acts in personam by requiring the trustee to perform his trust or a relevant third party to account.\nThe question whether some species of proprietary interest is capable of existing is necessarily a question for the general law.\nUnless the general law recognises the possibility of such an interest, it is self evident that the parties cannot create or transfer it.\nThat necessarily provokes the question: the general law of which jurisdiction? Normally, it will be the lex situs.\nThis would be obvious in the case of land, but is equally true of shares.\nShares in a company are legal rights against that company, dependent on the law of its incorporation.\nThe principle is the same as that which applies where a person assumes a contractual obligation to transfer an interest which is incapable of existing under the lex situs.\nIt is stated in Antons Private International Law, 3rd ed (2011) at para 21.61, in a passage adopted by Lord Hodge in In re Joint Administrators of Rangers Football Club Plc 2012 SLT 599, para 19: while the contractual aspects of a contract to assign corporeal moveables are governed by the law applicable to the contractual obligation, the final question of proprietary right must be determined by the lex situs.\nNone of this, however, means that where a person assumes the liabilities of a trustee under an instrument governed by another law which recognises the concept, that instrument is void or cannot be enforced according to its terms.\nIt remains effective to create personal rights against the trustee, who may be ordered to give effect to the trust, either by specifically performing it where that can be done, or making good his breach of duty financially.\nThe law of Saudi Arabia will treat the trustee as the owner of the entire interest in the shares with all the rights that that entails, but equity will exercise its personal jurisdiction to compel him to deal with the shares in accordance with his trust.\nThe same is true of equitable obligations in respect of property which are imposed by law, where the amenability of the defendant to the personal jurisdiction of the court has always been enough to justify the enforcement of his obligations.\nIn El Ajou v Dollar Land Holdings Plc [1993] BCC 698, 715 716, the question was whether the recipient of trust money was accountable as a constructive trustee on the footing of knowing receipt when before reaching him the property had passed through the hands of persons in a number of civil law jurisdictions where equitable interests were not recognised and the legal owner was treated as having the entire interest in the property.\nThe reason was that as between the alleged constructive trustee and the beneficiary, the formers amenability to personal remedies was unaffected by any issue as to existence of rights in rem: Although equitable rights may found proprietary as well as personal claims, it has long been settled that they are classified as personal rights for the purpose of private international law.\nThe doctrine was stated by Lord Selborne LC in Ewing v Orr Ewing (1883) 9 App Cas 34 at p 40 as follows: The Courts of Equity in England are, and always have been, Courts of conscience, operating in personam and not in rem: and in the exercise of this personal jurisdiction they have always been accustomed to compel the performance of contracts and trusts as to subjects which were not either locally or ratione domicilii within their jurisdiction.\nThey have done so as to land, in Scotland, in Ireland, in the Colonies, in foreign countries In Cook Industries Inc v Galliher [1979] Ch 439, Templeman J entertained an action in which the plaintiff claimed a declaration that the defendants held a flat in Paris together with its contents in trust for the plaintiff, and made an order compelling the defendants to allow the plaintiff to inspect the flat.\nThe fact that the subject matter of the alleged trust was situate in France, a civil law country, was no bar to the jurisdiction.\nDLH is, therefore, answerable to the courts equitable jurisdiction as regards assets situate abroad, even in a civil law country An English court of equity will compel a defendant who is within the jurisdiction to treat assets in his hands as trust assets if, having regard to their history and his state of knowledge, it would be unconscionable for him to treat them as his own.\nWhere they have passed through many different hands in many different countries, they may be difficult to trace; but in my judgment neither their temporary repose in a civil law country nor their receipt by intermediate recipients outside the jurisdiction should prevent the court from treating assets in the legal ownership of a defendant within the jurisdiction as trust assets.\nIn the present case, any obligation on the part of DLH to restore to their rightful owner assets which it received in England is governed exclusively by English law, and the equitable tracing rules and the trust concept which underlies them are applicable as part of that law.\nThere is no need to consider any other system of law.\nA similar analysis was applied by the Court of Appeal in Lightning v Lightning Electrical Contractors Ltd [1998] NPC 71 and more recently by Roth J in Luxe Holding Ltd v Midland Resources Holding Ltd [2010] EWHC 1908 (Ch).\nSection 436 of the Insolvency Act 1986 defines property as including money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property.\nThese are exceptionally wide words.\nIt is plain that an equitable proprietary interest in property under a trust and a personal right to have the trusts of that property administered according to their terms are both property for the purposes of the Act, including section 127.\nSICLs problem is not that it lacked a beneficial interest in the shares but that Mr Al Sanea did not dispose of that interest by transferring the shares to Samba.\nMr Al Sanea purported to transfer the legal interest to Samba.\nThat was the only interest that he had.\nHe did not purport to dispose of SICLs interest.\nOnly SICL could do that, and it did not do so.\nThe disposition of the legal interest did not itself extinguish any equitable interest of SICL in the shares.\nIt only meant that that interest fell to be asserted against Samba, subject to the usual equitable defences.\nSambas position in law was that it took the shares on a bare trust to restore them to the beneficial owner, unless it was a bona fide purchaser for value without notice.\nSince Samba gave value in the form of the discharge of Mr Al Saneas debt, its liability to restore the shares must depend on whether they are accountable on the basis of notice.\nSection 127 is irrelevant to the disposition of the only interest which matters for present purposes, namely SICLs equitable interest in the shares.\nIt is arguable, as Lord Neuberger observes, that the transfer of the legal interest in movables may constitute a disposition of an equitable interest if its effect is that the equitable interest is extinguished.\nBut the difficulty about the argument, and the reason why I would reject it, is that equitable interests arise from equitys recognition that in some circumstances the conscience of the holder of the legal interest may be affected.\nWhen the asset is transferred to a third party, the question becomes whether the conscience of the transferee is affected.\nOn the facts pleaded in the present case, the equitable interest of SICL was defeated not by the act of the transferor (Mr Al Sanea) but by absence of anything affecting the conscience of the transferee (Samba).\nThe rules of equity which protect transferees acquiring in good faith and without notice are among the fundamental conditions on which equitable interests can exist without injustice.\nThe reality is that the transaction of 16 September 2009 was simply a transfer of the shares in breach of trust, and any rights of SICL against Samba depend on the law relating to constructive trusts and not on section 127 of the Insolvency Act.\nThe law relating to constructive trusts has achieved a high level of development, reflecting a careful balance between the competing interests engaged in such cases.\nWide as the term disposition is, the coherence of the law in this area would not be assisted by giving it a meaning inconsistent with the basic principles governing the creation and recognition of equitable interests and founded on a very different balance of the relevant interests.\nThere is no claim in this case to make Samba accountable as a constructive trustee, and no allegation of notice.\nFor that reason, the proceedings as presently framed must fail.\nI arrive at this conclusion without reference to the Convention on the Law Applicable to Trusts and on their Recognition.\nThe purpose of the Convention is to procure the recognition of the main incidents of a trust by contracting parties whose law would not otherwise recognise them.\nIt is therefore of limited significance in jurisdictions such as England and the Cayman Islands which do recognise trusts.\nIt might have modified the law of Saudi Arabia if Saudi Arabia had been party to the Convention, but it is not.\nThe argument before us turned mainly on articles 4 and 15, both of which are set out in the judgment of Lord Mance.\nBut neither of them is in point.\nArticle 4 provides that the Convention does not apply to issues as to the validity of instruments creating a trust.\nBut there is no question as to the validity of the trusts in issue here, since they are certainly valid under the law of the Cayman Islands which governs them.\nSambas argument relates not to the validity of the trusts themselves but to the existence of a proprietary interest in the trust assets having regard to the legal characteristics of those assets in Saudi Arabian law.\nBut that is irrelevant given the undoubted validity and legal sufficiency of the trustees personal obligations under Cayman Islands law.\nAs to article 15, that provision is concerned only to preserve the effect of mandatory rules of a relevant law which may be inconsistent with the recognition of some incidents of a trust.\nIt follows that the only potentially relevant provision of the Convention is article 11, which determines the extent to which obligations under a trust are to be effective in England.\nBut as between SICL and Samba it does no more than refer the latters liabilities to the law selected in accordance with the choice of law rules of the forum, in this case the law of the Cayman Islands: see article 11(d).\nI would accordingly allow the appeal.\nSubject to argument about the precise form of order, I would declare that for the purpose of section 127 of the Insolvency Act 1986 there was no disposition of any rights of SICL in relation to the shares by virtue of their transfer to Samba.\nLogically, it follows that the proceedings should be struck out.\nBut I would remit the matter to the High Court to deal with any consequential matters, in case it be contended that they can be saved by an appropriate amendment to the pleadings.\nLORD COLLINS:\nI agree with Lord Mance that this case does not raise the interesting and difficult questions on the Hague Convention which were argued, first before the Chancellor and the Court of Appeal, and then in the oral argument in this court before the parties were asked to provide written submissions on the combined effect of sections 127 and 436 of the Insolvency Act 1986.\nThis appeal came to this court as a preliminary issue on a wholly artificial basis, namely that the liability of Samba (which was in fact the whole point of the proceedings) was agreed not to be in issue at this stage (as it was put several times in the oral argument) and that the sole question was whether as between SICL and Mr Al Sanea the declarations of trust by SICL had a proprietary effect.\nBecause the liability of Samba had been expressly and artificially excluded, there was no full analysis in the full context of the question of what is meant by the expression proprietary interest, since both parties proceeded on the basis that there was a prior question as to whether SICL itself ever acquired a proprietary interest from Mr Al Sanea in the light of the assumption that Saudi Arabian law had no trust concept.\nIt is understandable why the original application before the Chancellor was for a stay of the proceedings with the ultimate object of ensuring that, if the proceedings were in Saudi Arabia, they would be bound to fail.\nIt is also understandable why a discretionary jurisdictional route was taken, since the defendant approached it as if it were a case of personal jurisdiction based solely on the presence in London of a branch of Samba, which had nothing to do with the transfer of the shares in Saudi Arabia.\nAs the Chancellor pointed out (at para 54), the claim could have been put on the basis of constructive trust if there were a sufficient factual basis, and the failure to do so emphasises the artificially narrow basis of the claim.\nBut in the light of the way the claim was formulated, the real question was not one of the proper exercise of judicial jurisdiction, but rather a question of legislative jurisdiction, namely the extra territorial scope of section 127 of the Insolvency Act 1986 and its application to the shares.\nThe combined effect of sections 127 and 436 of the Insolvency Act 1986 is that the avoidance provisions of section 127 apply to property wherever situated.\nIf this were a purely domestic case there would be no possible doubt of the effect of the declarations of trust: they give the beneficiary the paradigm of an equitable interest in property: Snells Equity, para 2 002.\nOnce a trust is established, as from the date of its establishment the beneficiary has, in equity, a proprietary interest in the trust property, which proprietary interest will be enforceable in equity against any subsequent holder of the property (whether the original property or substituted property . ): Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, at 705.\nIt was only after further submissions were requested after the hearing of the appeal that there was any exploration of the issues under section 127 of the Insolvency Act 1986.\nFor the reasons given by Lord Mance, I do not consider that there was any disposition of SICLs property.\nIt follows that the scope and effect of the Hague Convention do not fall to be decided.\nThe Hague Convention was promoted by the United Kingdom.\nIt was particularly intended to build bridges between countries of common law and countries of civil law and for common law states the principal interest [was] obviously to have the trusts created under their laws recognized in the countries which do not have this institution (von Overbeck Explanatory Report, January 1985, paras 12, 14).\nThere was exceptional interest in the Convention from states, and its conclusion owed much to the work of the fine scholar Professor Alfred von Overbeck, who died in April 2016, Mr Adair Dyer and Mr Hans van Loon (respectively later Deputy Secretary General and Secretary General of the Hague Conference on Private International Law) and Professor A E Anton and (particularly) Professor David Hayton of the UK delegation.\nBut in the event although 32 member states of the Hague Conference adopted the draft Convention, only 12 states are now parties to the Convention, and it says much about the likely principal uses of the Convention that they include Liechtenstein, Luxembourg, Monaco, San Marino and Switzerland.\nThere was considerable discussion in the travaux of the Hague Conference about whether the Convention was to apply to declarations of trust (because article 2 refers to assets being placed under the control of the trustee).\nBut there can be no doubt that it applies to declarations of trust, not only because the travaux make it clear that it was so intended, but more importantly, that is the clear effect of the Recognition of Trusts Act 1987, section 1(2), which provides that the scheduled provisions of the Hague Convention apply not only to the trusts described in articles 2 and 3, but also to all other trusts under United Kingdom law.\nThere has never been any suggestion in the authorities that an effective declaration of trust could not be made over shares in a company incorporated, or shares registered, in a country which does not recognise the trust concept.\nAttorney General v Jewish Colonisation Association [1901] 1 QB 123 and Duke of Marlborough v Attorney General [1945] Ch 78 are only indirect authority, but they have been, correctly, regarded as recognising English trusts over foreign shares irrespective of whether the place of incorporation or place of registration recognises the trust concept: cf Luxe Holding Ltd v Midland Resources Holding Ltd [2010] EWHC 1908 (Ch) (Roth J).\nBut for the reasons given by Lord Mance, this is not the occasion for considering the effect on third parties.\nI would therefore allow the appeal, and I agree with the order which Lord Mance proposes.\n","output":"The appeal has proceeded on the basis of assumed facts which include the following.\nMr Al Sanea held on trust for Saad Investments Co Ltd (SICL) shares to the value of around US$318m in various Saudi Arabian banks.\nSICL went into liquidation and Mr Akers is one of its Joint Official Liquidators.\nSix weeks after the liquidation, Mr Al Sanea transferred the shares to Samba Financial Group (Samba) in discharge of personal liabilities he owed to Samba.\nIt is assumed that (i) the trusts are governed by Cayman Islands law and (ii) the law of Saudi Arabia, where the shares are sited (the lex situs), does not recognise the institution of trust or a division between legal and proprietary interests.\nIn these proceedings brought against Samba, SICL and its Joint Official Liquidators contend that the transfers of shares were and are void under section 127 of the Insolvency Act 1986 as a disposition of the companys property made after the commencement of the winding up.\nThe appeal arises out of Sambas application to stay the proceedings on the basis that Saudi Arabia is a more appropriate forum than England, although this ground has evolved into a case that SICLs claim had no prospect of success.\nBelow, and when the matter first came before the Supreme Court, argument focused on whether an equitable proprietary interest can exist in an asset sited in a jurisdiction which knows no such concept.\nIt appears to have been assumed that, if SICL had such an interest, it was disposed of by Mr Al Saneas transfer of title in the shares to Samba.\nIn the Court of Appeal, detailed submissions were made on the Convention on the Law applicable to Trusts and on their Recognition (the Hague Convention), scheduled to the Recognition of Trusts Act 1987.\nThe Court of Appeal held that as Cayman law, unlike Saudi law, recognised the division of the legal and beneficial interests in shares, the trusts were arguably valid.\nFollowing the oral hearing before it, the Supreme Court invited and received two sets of supplementary written submissions focusing more precisely on the ultimately critical question of whether there was any disposition within section 127 even if (i) SICL had equitable interests in the shares and\/or (ii) SICL only enjoyed personal rights in respect of the shares.\nThe Supreme Court allows Sambas appeal.\nThe transfer to Samba did not dispose of any rights belonging to SICL within the meaning of section 127.\nLord Mance gives the lead judgment, with which Lord Neuberger, Lord Sumption, Lord Collins and Lord Toulson agree.\nLord Neuberger, Lord Sumption and Lord Collins also give separate concurring judgments.\nAt common law, the nature of the interest intended to be created by a trust depends on the law governing the trust [17 18].\nThe lex situs may treat a disposition of shares to a third party as overriding\nany interest of the beneficiary in the shares.\nThat does not mean, however, that a common law trust cannot or will not exist in respect of those shares [19 21].\nA trust may be created, exist and be enforced in respect of assets located in a jurisdiction such as Saudi Arabia, the law of which does not recognise trusts in any form [22 34].\nNothing in the Hague Convention alters this conclusion, unsurprisingly given that one of its aims was to provide for the recognition of trusts in jurisdictions which did not themselves know the institution [39 40].\nLord Collins (with whom Lord Sumption agrees [91]) considers that the case does not raise the interesting and difficult questions on the Hague Convention which were argued at each stage of the proceedings [93 102].\nThe definition of property in section 436 of the Insolvency Act 1986 is plainly wide enough to embrace both equitable proprietary and purely personal interests [42 43; 60; 87].\nThe question of whether there was any disposition of these interests is more difficult.\nIt can be argued that the concept extends to misappropriation of assets subject to a trust [45 50] or destruction or extinction of an equitable interest in such assets, but this is not in context the natural meaning [55].\nWhere a trust exists, the legal and beneficial interests are distinct, and what affects the former does not necessarily affect the latter.\nWhere an asset is held on trust, the legal title remains capable of transfer to a third party, although this undoubted disposition may be in breach of trust.\nBut the trust rights, including the right to have the legal title held and applied in accordance with the terms of the trust, remain.\nThey are not disposed of and continue to be capable of enforcement.\nIf the trust rights are overridden (or, as Lord Neuberger puts it, they are lost or disappear [62]), this is not attributable to the transfer of the legal title.\nIt is because they were protected rights that were always limited and in certain circumstances capable of being overridden by virtue of a rule of law governing equitable rights, protecting in particular bona fide third party purchasers for value (equitys darling) [51 52; 83; 89].\nSection 127 enables companies in winding up to recover assets legally owned by them by treating the disposition as void (subject to the courts power to validate the disposition).\nIt is neither aimed at, nor apt to cover, the present situation [53; 56].\nSince on the assumed facts Samba gave value in the form of the discharge of Mr Al Saneas debt, its liability to restore the shares depends not on section 127, but on whether it is accountable on the basis of notice [54; 56; 88].\nLord Neuberger considers that the word disposition may in some circumstances embrace destruction or extinction of an interest, notably where there has been a surrender of a lease, contractual rights or a life interest [66 69].\nThere may also be reasons of policy for concluding that section 127 applies equally in respect of property held for a company by a third party as it does to property which it holds in its own name [70].\nHowever, there are important differences between a surrender and the loss of a beneficial interest on a transfer of the legal estate to a bona fide purchaser for value without notice which would make it unfair for section 127 to apply in the latter as well as former case so as to render the transaction void.\nUnlike a person taking a surrender of a lease or contractual rights from a company, a bona fide purchaser for value without notice would, by definition, be unaware of both the company (or at least that it had an equitable interest) and of the equitable interest [74 76].\nLord Sumption notes that the law relating to constructive trusts has achieved a high level of development.\nIts coherence would not be assisted by giving the term disposition a meaning inconsistent with basic principles governing the creation and recognition of equitable interests, founded on a very different balance of the relevant interests [90].\nThe parties have 21 days to make submissions on the consequences of these conclusions, in particular as to whether the proceedings should be stayed or struck out or remitted to the High Court with a view to possible amendment to enable them to proceed on an alternative basis [57; 92; 103].\n","id":76}
{"input":"Trump International Golf Club Scotland Limited (TIGC) has developed a golf club and resort at Menie Estate and Menie Links, Balmedie, Aberdeenshire.\nIn 2011 Aberdeen Offshore Wind Farm Limited (AOWFL) applied for consent under section 36 of the Electricity Act 1989 (the 1989 Act) to construct and operate the European Offshore Wind Deployment Centre in Aberdeen Bay, off the coast of Blackdog, Aberdeenshire.\nThe application concerned the construction of up to 11 wind turbines, which might be of different sizes, with a maximum power generation of 100MW.\nThe proposed windfarm, if constructed, would be located about 3.5 kilometres from the golf resort and would be seen by people using the resort.\nTIGC, concerned that the proposed windfarm development would materially diminish the amenity of the golf resort, opposed the application.\nOn 26 March 2013 the Scottish Ministers granted consent for the development and operation of the windfarm subject to conditions.\nTIGC has challenged that decision on various grounds in the courts in Scotland without success.\nTwo grounds of challenge remain in this appeal.\nThe two grounds on which TIGC now seeks to have the consent quashed are: (i) because the Scottish Ministers had no power under the 1989 Act to grant consent to the windfarm application as only a licence holder or an exempt person may apply for and be granted a construction consent under section 36 of that Act; and (ii) because condition 14 of the consent (which requires the submission and approval of a design statement) is void for uncertainty.\nI shall refer to the first ground as the section 36 challenge and the second ground as the condition 14 challenge.\nThe section 36 challenge\nThe section 36 challenge raises a question of statutory construction.\nIn essence, TIGC relies on the wording of paragraph 3 of Schedule 9 to the 1989 Act in support of its contention that only the holder of a licence to generate, transmit, or supply electricity, which is granted under section 6 of the 1989 Act, or a person exempted under section 5 of that Act from holding such a licence, may apply for a construction consent under section 36.\nParagraph 3 of Schedule 9 (so far as relevant) provides: (1) In formulating any relevant proposals, a licence holder or a person authorised by an exemption to generate, distribute, supply or participate in the transmission of electricity (a) shall have regard to the desirability of preserving natural beauty, of conserving flora, fauna and geological or physiographical features of special interest and of protecting sites, buildings and objects of architectural, historic or archaeological interest; and (b) shall do what he reasonably can to mitigate any effect which the proposals would have on the natural beauty of the countryside or on such flora, fauna, features, sites, buildings or objects. (2) In considering any relevant proposals for which his consent is required under section 36 or 37 of this Act, the Secretary of State shall have regard to (a) paragraph (a) of sub paragraph (1) above; and (b) the extent to which the person by whom the proposals were formulated has complied with his duty under paragraph (b) of that sub paragraph. the desirability of the matters mentioned in (3) Without prejudice to sub paragraphs (1) and (2) above, in exercising any relevant functions each of the following, namely, a licence holder, a person authorised by an exemption to generate or supply electricity and the Secretary of State shall avoid, so far as possible, causing injury to fisheries or to the stock of fish in any waters.\nThe references to the Secretary of State in relation to section 36 applications in Scotland should be treated as references to the Scottish Ministers: Scotland Act 1998, section 117.\nSection 36 of the 1989 Act provides inter alia that a generating station shall not be constructed, extended or operated except in accordance with a consent which in England and Wales is granted by the Secretary of State and in Scotland by the Scottish Ministers.\nMr John Campbell QC for TIGC submits that paragraph 3 of Schedule 9 to the 1989 Act gives rise to a necessary implication that only licence holders or exempt persons may be granted a section 36 consent.\nWere it otherwise, there would be two classes of section 36 applicant, namely those with duties under paragraph 3(1) of Schedule 9 and those without such duties.\nThere is, he submits, no reason for two such classes.\nSecondly, under paragraph 3(2) of Schedule 9, the Scottish Ministers when considering any relevant proposals which require a section 36 consent, are to have regard to the extent to which the applicant has complied with his duty under paragraph 3(1)(b) of Schedule 9.\nThat presupposes that the applicant is under such a duty.\nOnly licence holders and exempt persons are under those duties.\nIf an applicant were able to obtain a section 36 consent and construct a generating station or other relevant proposal before he obtained a licence to generate, he could complete a significant development before he became subject to the environmental duties of paragraph 3 of Schedule 9.\nLooking more generally at statutory policy, Mr Campbell submits that the statutory policy is to secure that only operators who are suitably qualified in the electricity generating industry will apply for consent to construct a generating station or other development which is a relevant proposal.\nThere is, he submits, a logical progression by which, first, an applicant establishes his competence to generate electricity by obtaining a section 6 licence or a section 5 exemption, secondly, he formulates his proposals for the development in a section 36 application, thirdly, he prepares and publishes a statement (under Schedule 9, paragraph 4) setting out the manner in which he will perform the Schedule 9 paragraph 3(1) duties, before, finally, he implements the section 36 consent by constructing the relevant proposal.\nLike Lord Doherty and the First Division of the Inner House of the Court of Session, I am satisfied that this challenge fails.\nI examine first the structure of and the language used in the 1989 Act and then discuss the wider policy background to the Act.\n(i) The structure and language of the 1989 Act\nThe relevant starting point is section 4 of the 1989 Act, which makes it a criminal offence to generate electricity or to carry out other specified activities without authorisation by a licence.\nSection 5 empowers the Secretary of State to grant an exemption from the requirement of a licence.\nSection 6 empowers the Gas and Electricity Markets Authority to grant, among others, a licence to generate electricity.\nThere is no express prohibition in section 4 from constructing a generating station without a licence, as one might have expected if only licence holders or exempt persons alone were to be given a section 36 consent.\nSection 36 places no restriction on who may apply for a consent to construct a generating station.\nNeither does Schedule 8, which section 36(8) relates to consents under section 36 and also consents to the installation of overhead lines under section 37.\nSchedule 8 sets out the procedures to be followed when seeking or objecting to applications for consent or challenging a decision whether to hold a public inquiry.\nAgain, one might have expected an express restriction on the applicants for a section 36 consent in these provisions if one were intended.\nSection 38 provides: The provisions of Schedule 9 to this Act (which relate to the preservation of amenity and fisheries) shall have effect.\nParagraphs 1 and 2 of Schedule 9 relate to the preservation of amenity in England and Wales and paragraphs 3 and 4 contain similar provisions for the preservation of amenity in Scotland.\nTwo considerations point away from Mr Campbells interpretation.\nFirst, neither paragraph 1(1) or 3(1) contains any express restriction on who may apply for a section 36 consent for the construction of a generating station which is large enough to be a relevant proposal.\nIf there were to be such a restriction, I would have expected an express provision.\nSecondly, not all section 36 applications are affected by Schedule 9, but only relevant proposals, which are defined in Schedule 9, paragraph 1(3) as the construction or extension of a generating station with a capacity of not less than 10MW.\nOffshore generating stations with a capacity of 1MW or more require a section 36 consent (the Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Order 2002 ((SSI 2002\/407), article 3).\nBut they are not relevant proposals to which Schedule 9 applies if their capacity is below 10MW.\nAs offshore installations with a capacity of under 10MW can have a significant impact on the environment and amenity, this limitation suggests that Schedule 9 was not intended to be a regime for controlling the environmental effects of constructing generating stations but, as I suggest in para 20 below, is a survivor from prior legislation when the electricity generating market was organised differently.\nIn my view, Mr Campbells strongest point is that sub paragraph 3(2)(b) requires the Scottish Ministers, when considering any relevant proposals in a section 36 application, to have regard to the extent to which the licence holder or person authorised to generate by an exemption has complied with his sub paragraph 3(1)(b) duties to mitigate adverse effects.\nBut, in the absence of any indication in sub paragraph 3(1), either express or arising by necessary implication, that only a licence holder or person authorised by exemption could apply under section 36 to construct a generating station which was a relevant proposal, I do not attach significance to this point.\nIn my view sub paragraph 3(2) requires the Scottish Ministers to have regard to the environmental matters in sub paragraph 3(1)(a), whoever is the section 36 applicant.\nThis is supported by the opening words of sub paragraph 3(2): In considering any relevant proposals for which [their] consent is required.\nSub paragraph 3(2)(b) makes sense in this context if one construes it as applying only to those applicants who are under a duty under sub paragraph 3(1)(b) by reading in the words (if any) after duty so that the provision reads the Scottish Ministers shall have regard to the extent to which the person by whom the proposals were formulated has complied with his duty (if any) under paragraph (b) of sub paragraph 3(1) (emphasis added).\nUnless there were anything in the wider policy background to the 1989 Act which suggested an intention to restrict the persons who may apply under section 36, I think that the reading in of those words, which does no violence to the statutory language, makes sense of the provisions of Schedule 9.\nFinally, in this part of the challenge, Mr Campbell points out that the section 36 permission allows the applicant to operate as well as construct the generating station.\nBecause only a licensed person or a person authorised by exemption can lawfully generate electricity, he suggests that the permission to operate can only be given to a licensed or exempted person.\nI am not persuaded that that is so.\nA section 36 permission to operate is a necessary but not a sufficient precondition for generating electricity in a generating station.\nAs the Scottish Ministers submit in their written case, section 4 makes it clear that no generating station may be operated without a licence or exemption, and it is customary in statutory development consents to include conditions governing the operations of the new building.\nBy requiring a section 36 consent for operations, the 1989 Act enables the Scottish Ministers to impose conditions relating to the use of the generating station as well as its construction.\nI am therefore of the view that the structure and language of the 1989 Act does not support TIGCs case, which depends upon the courts acceptance that Parliament sought to limit who may apply for a section 36 consent by using circumlocution and implication.\n(ii) The policy background to the 1989 Act\nI am also satisfied that there is nothing in the background to the 1989 Act which requires the court to take a different view of the relevant statutory provisions.\nI have five reasons for that conclusion.\nFirst, the aim of the 1989 Act was to liberalise the market for the generation, transmission and supply of electricity in Great Britain by privatisation.\nThe White Paper, Privatisation of the Scottish Electricity Industry (1988) (Cm 327) proposed the replacement of the two Scottish public sector electricity boards by two vertically integrated private companies and envisaged that, because Scotland then had surplus generating capacity and England and Wales were projected to need substantial new capacity by 2000, the electricity industry in Scotland could compete in the British market for electricity.\nIt and the White Paper for England and Wales, Privatising Electricity (1988) (Cm 322), proposed a Britain wide regulatory system in order to promote fair competition.\nIn England and Wales the White Paper proposed competition in electricity generation by removing the effective monopoly on generation of the Central Electricity Generating Board and by transferring control and ownership of the National Grid to the distribution companies, with whom the generating companies would enter into contracts.\nThe policy did not address who would construct generating stations.\nBut it was not a necessary part of this model that the persons who sought to build the needed new generating stations were the same persons as those who later generated electricity at those stations.\nSecondly, the 1989 Act contains two separate regulatory regimes, for the construction of electricity generation stations and overhead electric lines (sections 36 and 37) on the one hand, and for the licensing and other regulation of electricity supply, including generation and transmission (inter alia sections 4, 6 and 7) on the other.\nSince the devolution of power to Scotland there have been separate regulators for those activities: the former, involving a land use permission, is in Scotland the responsibility of the Scottish Ministers; the latter, involving the regulation of electricity generation, transmission, distribution and supply in the interests of consumers (viz the 1989 Act section 3A(1) and (5)) is a reserved matter (Scotland Act 1998, section 30 and Schedule 5, Part II, section D1) and is the responsibility of the Secretary of State and the Gas and Electricity Markets Authority.\nThirdly, I am satisfied that Parliament did not create a regulatory gap by allowing persons, who are not subject to environmental duties under sub paragraph 3(1) of Schedule 9, to apply for construction consents under section 36 of the 1989 Act.\nThere is a theme in TIGCs written case which suggests that if an applicant for a section 36 consent is not under statutory environmental obligations in Schedule 9, paragraph 3(1), it is not subject to environmental constraints when constructing a generating station.\nBut this is not so.\nThe Scottish Ministers have a duty under sub paragraph 3(2)(a) of Schedule 9, when considering any application for consent under section 36 or 37 for a development which is a relevant proposal, to have regard to the desirability of the matters mentioned in sub paragraph 3(1) of that Schedule.\nIn addition, the Scottish Ministers have a wide power under section 36(5) to impose conditions in a section 36 consent and they are informed of the environmental impact of a proposed development by an environmental assessment which has been required since the commencement of the Environmental Assessment (Scotland) Regulations 1988 (SI 1988\/1221) and their amendment in 1990 to take into account the 1989 Act.\nNow the Scottish Ministers are subject to the Electricity Works (Environmental Impact Assessment) (Scotland) Regulations 2000 (SSI 2000\/320), all as Lord Doherty narrated in paras 42 to 44 of his impressive opinion.\nAs with an applicant for planning permission under the Town and Country Planning legislation, it is not necessary in order to protect the environment for an applicant for a section 36 consent to be subject to environmental duties in relation to the construction of a generating station because the authority granting the consent protects the environment by imposing conditions.\nFourthly, there was and is no need to require an applicant under section 36 to possess in advance a generating licence or an exemption in order to secure that only competent persons construct generating stations.\nSection 36(5) of the 1989 Act, which provides that the Scottish Ministers may include in a consent such conditions as appear to them to be appropriate, expressly refers to conditions as to the ownership or operation of the station.\nFurther, the skills required to construct a generating station, whether onshore or offshore, are not the same as those required for generating and supplying electricity, although the two skill sets may overlap.\nFifthly, as Mr James Mure QC explained, it has been the established practice in both of the British jurisdictions for commercial organisations to apply for and obtain section 36 consents before they seek a licence to generate electricity under section 6 of the 1989 Act or an exemption under section 5.\nNo evidence was presented that this practice has resulted in unsuitable persons applying for and obtaining section 36 consents or in any failure to protect the environment.\nA question remains as to why Parliament, when creating the new regulatory regime in the 1989 Act, should have imposed duties in Schedule 9 on licence holders and exempt persons in relation to the formulation of relevant proposals but not on other applicants for a section 36 consent for relevant proposals.\nThe answer seems to be in the prior legislative history, in which earlier statutes imposed similar duties on publicly owned electricity boards which generated electricity.\nThe 1989 Act preserved those duties by imposing them on persons authorised to generate electricity.\nLord Malcolm in the First Division discussed this in paras 52 to 57 of his opinion, which I need not repeat in this judgment.\nAccordingly, neither the language of the 1989 Act nor its policy background supports the interpretation which TIGC advances.\nI therefore turn to the challenge to the validity of condition 14 of the section 36 consent.\nThe condition 14 challenge\nCondition 14 of the section 36 consent, which the Scottish Ministers included after consulting Scottish Natural Heritage (SNH), states: Prior to the Commencement of the Development, a detailed Design Statement must be submitted by the Company to the Scottish Ministers for their written approval, after consultation by the Scottish Ministers with SNH, Marine and Coastguard Agency, Northern Lighthouse Board, National Air Traffic Services and any such other advisors as may be required at the discretion of the Scottish Ministers.\nThe Design Statement must provide guiding principles for the deployment of the wind turbines.\nThis plan must detail: (a) Layout location for each phase and each turbine; and (b) Turbine height, finishes, blade diameter and rotation speed across each phase, rows and individual turbine locations; and (c) Lighting requirements (navigation and aviation) for each turbine\/row or, as the case may be, phase including any anemometer mast; and (d) Further detailed assessment of visual impacts to inform the detailed layout and design of each location and phase of the deployment centre from selected viewpoints to be agreed with the Scottish Ministers and any such other advisors as may be required at their discretion.\nReason: to set out design principles to mitigate, as far as possible, the visual impact of the turbines.\nMr Campbell submits that the section 36 consent is invalid because condition 14 is both unenforceable and also so uncertain that it is irrational.\nHe advances three arguments in support of that contention.\nFirst, he submits that the condition is invalid because there is no mechanism by which the Scottish Ministers can force the developer to construct the windfarm in accordance with the design statement.\nHe argues that, in contrast with conditions 18, 24 and 25, there is no express statement that the developer must construct and operate the development in accordance with its terms.\nSecondly, he submits that the condition is void for uncertainty because there is no indication of what compliance with it entails.\nThirdly, even if (which he does not accept) the design statement could be enforced through the construction method statement in condition 13, which I set out in para 29 below, the power of the Scottish Ministers to agree a departure from the construction method statement means that the scope of the development is uncertain.\nThe short answer to this challenge is that if, contrary to my view, condition 14 were unenforceable, the section 36 consent would not be invalidated.\nAnnex 1 of the consent confines the development to 11 turbines each with a maximum blade tip height of 198.5 metres and Figure 1 attached to the consent shows the approved location of the 11 turbines.\nTIGC does not dispute that (subject to an argument about the final words of the condition, which I discuss below) condition 7 requires that the development be constructed and operated in accordance with, among others, the environmental statement and the supplementary environmental information statement.\nThe latter document contains design principles on the location and height of the turbines, on which the Scottish Ministers can insist by invoking condition 7.\nChapter 19 of the environmental statement contained a seascape, landscape and visual impact assessment which had been prepared after consultation with SNH, Aberdeen City Council and Aberdeenshire Council.\nIt assumed that the wind turbines would have a tip height of up to 195 metres and a rotor radius of up to 75 metres.\nIn order to take account of developing windfarm technology, in the supplementary environmental information statement AOWFL re assessed the visual impact of the development on the assumption that the maximum tip height was 198.5 metres and the maximum rotor radius was 86 metres.\nAOWFL also took account of SNHs consultation response, in which it requested a condition requiring a design statement.\nAOWFL set out objectives or design principles which it formulated after having regard to, and adapting to the offshore environment, SNHs publication, Siting and Designing Windfarms in the Landscape (2009).\nAOWFL listed its objectives such as (a) that the closest shoreward row of turbines should be relatively consistent in tip height to maintain design integrity in views from the immediate coastline and should be populated with the smallest tip heights and rotor diameter, and (b) that the largest turbines should be located further out to sea at specified locations to achieve a gradation to the lowest turbines located closest to the coastline.\nIt used those objectives to formulate three zoning scenarios and appraised their visual impact from various locations.\nThe Scottish Ministers accepted the visual impact of those scenarios.\nThus, even if condition 14 were invalid, important elements of the benefits which it promoted are contained within the supplementary environmental information statement.\nThe Scottish Ministers can insist on compliance with that document and those principles in the construction of the development.\nThe scope of the development is defined by Annex 1 of the consent and the supplementary environmental information statement sets out the principles governing the size and location of the turbines.\nCondition 14 therefore cannot be seen as a fundamental condition which determines the scope and nature of a development and which, if invalid, would in turn invalidate the consent.\nFor completeness, I observe that even if condition 14 could not be enforced so as to require AOWFL to construct the windfarm in accordance with the design statement, the condition would not be void for uncertainty.\nIt would have effect to the extent that the developer would have to produce a design statement and obtain its approval by the Scottish Ministers before it could start the development.\nIn Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, a case concerning a condition in a planning permission, Lord Denning stated (p 678): a planning condition is only void for uncertainty if it can be given no meaning or no sensible or ascertainable meaning, and not merely because it is ambiguous or leads to absurd results.\nIt is the daily task of the courts to resolve ambiguities of language and to choose between them; and to construe words so as to avoid absurdities or to put up with them.\nAnd this applies to conditions in planning permissions as well as to other documents.\nIt cannot be said that condition 14 has no ascertainable meaning.\nIndeed, TIGC accepts that it provides that the Scottish Ministers must approve the design statement before the development can commence.\nFurther, I do not accept the submission that the condition is invalid because of any uncertainty as to what amounts to compliance with its terms.\nWhat will amount to compliance with the design statement will depend on (a) its terms and (b) the way in which the Scottish Ministers incorporate its requirements into the construction method statement, which is the subject of condition 13, to which I now turn.\nWhen one construes the conditions as a whole, it is clear that the consent contains a mechanism that can enable the Scottish Ministers to enforce compliance with the condition 14 design statement in the construction of the development.\nFirst, condition 13 provides (so far as relevant): Prior to the Commencement of Development a Construction Method Statement (CMS) must be submitted by the Company to the Scottish Ministers and approved, in writing by the Scottish Ministers, following consultation [with specified advisors including SNH].\nUnless otherwise agreed in writing by the Scottish Ministers, construction of the Development must proceed in accordance with the approved CMS.\nThe CMS must include, but not be limited to, information on the following matters: (a) Commencement dates; (b) Working methods ; and (g) Design Statement.\nThe CMS must be cross referenced with the Project Environmental Management Plan, the Vessel Management Plan and the Navigational Safety Plan.\nReason: To ensure the appropriate construction management of the Development, taking into account mitigation measures to protect the environment and other users of the marine area.\nIt is thus open to the Scottish Ministers to require AOWFL to include in the CMS a statement as to how it would implement the design statement.\nThe condition refers to information on the design statement.\nThat can include information on how the method of construction will comply with it, which, once the CMS is approved, becomes obligatory.\nFurther, the listed matters are not exclusive as the condition says that the CMS must include, but not be limited to the listed topics.\nThe Scottish Ministers, after consulting SNH amongst others, can require other relevant matters which mitigate environmental impact to be included within the CMS before they approve it.\nThus condition 14 can be enforced by the use of the powers which the Scottish Ministers possess in condition 13.\nSecondly, further support for the view that the conditions envisaged that the developer would be required to comply with the design statement can be found in condition 24, which requires AOWFL to submit for approval a vessel management plan to minimise disturbance to marine mammals and birds.\nAs mentioned above, the condition requires that the development must be constructed and operated in accordance with the vessel management plan.\nIt also provides that the vessel management plan must be cross referenced with, amongst others, the CMS and the design statement.\nThus, when one reads condition 14 in the context of conditions 13 and 24 it is clear that the conditions envisaged that the Scottish Ministers could use both the CMS and the design statement to regulate the detailed design of the windfarm in the interests of environmental protection and require those constructing the generating station to comply with those statements.\nIt is not therefore necessary to consider whether one can imply into condition 14 an obligation that the construction of the development must be in accordance with the design statement.\nBut as it is an important point which Mr Campbell raises in his submissions, and as Lord Carnwath has discussed the matter more fully in his judgment, I will deal with it briefly.\nMr Campbell submits that the court should follow the approach which Sullivan J adopted to planning conditions in Sevenoaks District Council v First Secretary of State [2005] 1 P & CR 13 and hold that there is no room for implying into condition 14 a further obligation that the developer must construct the development in accordance with the design statement.\nIn agreement with Lord Carnwath, I am not persuaded that there is a complete bar on implying terms into the conditions in planning permissions, and I do not see the case law on planning conditions under planning legislation as directly applicable to conditions under the 1989 Act because of the different wording of the 1989 Act.\nWhether words are to be implied into a document depends on the interpretation of the words which the author or authors have used.\nThe first question therefore is how to interpret the express words, in this case the section 36 consent.\nThere is a modern tendency in the law to break down divisions in the rules on the interpretation of different kinds of document, both private and public, and to look for more general rules on how to ascertain the meaning of words.\nIn particular, there has been a harmonisation of the interpretation of contracts, unilateral notices, patents and also testamentary documents.\nThis can be seen, for example, in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 per Lord Clarke at paras 14 to 23 (contracts), Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 per Lord Steyn at pp 770C 771D and Lord Hoffmann at pp 779H 780F (unilateral notices), Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667, per Lord Hoffmann at paras 27 to 35 (patents), and Marley v Rawlings [2015] AC 129, per Lord Neuberger at paras 18 23 (testamentary documents).\nDifferences in the nature of documents will influence the extent to which the court may look at the factual background to assist interpretation.\nThus third parties may have an interest in a public document, such as a planning permission or a consent under section 36 of the 1989 Act, in contrast with many contracts.\nAs a result, the shared knowledge of the applicant for permission and the drafter of the condition does not have the relevance to the process of interpretation that the shared knowledge of parties to a contract, in which there may be no third party interest, has.\nThere is only limited scope for the use of extrinsic material in the interpretation of a public document, such as a planning permission or a section 36 consent: R v Ashford Borough Council, Ex p Shepway District Council [1999] PLCR 12, per Keene J at pp 19C 20B; Carter Commercial Developments Ltd v Secretary of State for Transport, Local Government and the Regions [2002] EWCA Civ 1994, [2003] JPL 1048, per Buxton LJ at para 13, at para 27 per Arden LJ.\nIt is also relevant to the process of interpretation that a failure to comply with a condition in a public law consent may give rise to criminal liability.\nIn section 36(6) of the 1989 Act the construction of a generating station otherwise than in accordance with the consent is a criminal offence.\nThis calls for clarity and precision in the drafting of conditions.\nWhen the court is concerned with the interpretation of words in a condition in a public document such as a section 36 consent, it asks itself what a reasonable reader would understand the words to mean when reading the condition in the context of the other conditions and of the consent as a whole.\nThis is an objective exercise in which the court will have regard to the natural and ordinary meaning of the relevant words, the overall purpose of the consent, any other conditions which cast light on the purpose of the relevant words, and common sense.\nWhether the court may also look at other documents that are connected with the application for the consent or are referred to in the consent will depend on the circumstances of the case, in particular the wording of the document that it is interpreting.\nOther documents may be relevant if they are incorporated into the consent by reference (as in condition 7 set out in para 38 below) or there is an ambiguity in the consent, which can be resolved, for example, by considering the application for consent.\nInterpretation is not the same as the implication of terms.\nInterpretation of the words of a document is the precursor of implication.\nIt forms the context in which the law may have to imply terms into a document, where the court concludes from its interpretation of the words used in the document that it must have been intended that the document would have a certain effect, although the words to give it that effect are absent.\nSee the decision of the Privy Council in Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 per Lord Hoffmann at paras 16 to 24 as explained by this court in Marks & Spencer plc v BNP Paribas Securities Trust Company (Jersey) Ltd [2015] UKSC 71, per Lord Neuberger at paras 22 to 30.\nWhile the court will, understandably, exercise great restraint in implying terms into public documents which have criminal sanctions, I see no principled reason for excluding implication altogether.\nIn my view assertions, such as are found in Trustees of the Walton on Thames Charities v Walton and Weybridge Urban District Council (1970) 21 P & CR 411, Salmon LJ at p 418 and Widgery LJ at p 420, and in the Sevenoaks District Council case (above), Sullivan J at para 45, that there can never be an implied condition in a planning permission are too absolute.\nTo say that is not to undervalue the importance of the advice of the Secretary of State and now the Scottish Ministers in Planning Circular 4\/98 that planning conditions should be precise and clear.\nIn paragraph 29 of Annex A to the circular it is stated: The framing of conditions requires great care, not least to ensure that a condition is enforceable.\nA condition, for example, requiring only that a landscaping scheme shall be submitted for the approval of the planning authority is incomplete since, if the applicant were to submit the scheme and even obtain approval for it, but neglect to carry it out, it is unlikely that the planning authority could actually require the scheme to be implemented.\nIn such a case, a requirement should be imposed that landscaping shall be carried out in accordance with a scheme to be approved in writing by the planning authority; and the wording of the condition must clearly require this.\nSubject to the observation that, in view of the decision in this case, the second sentence of the advice may overstate the difficulty which the planning authority might face in requiring the implementation of an approved scheme, this and the almost identical advice in the earlier Circular 11\/95, paragraph 30 in respect of England and Wales remain good advice as a planning authority which follows the advice can avoid unnecessary and possibly difficult disputes about whether terms can be implied into a condition.\nIf condition 13 had not provided that the CMS was to contain information about the design statement but, like condition 24, had required only cross references to it, I, on applying the approach to interpretation set out above, would have readily drawn the inference that the conditions of the consent read as a whole required the developer to conform to the design statement in the construction of the windfarm.\nThe combination of the obligation in condition 14 to have the design statement approved by the Scottish Ministers and what would have been the obligation to cross refer to the design statement in statements or plans under conditions 13 and 24, with which the Scottish Ministers could enforce compliance, would point inexorably towards that conclusion.\nBut, as I have said, it is not necessary to imply words into the consent as condition 13 gives the Scottish Ministers the vehicle to make the requirement explicit.\nFinally, Mr Campbell argues that the power conferred on the Scottish Ministers to alter the terms of the CMS in condition 13 (ie Unless otherwise agreed in writing by the Scottish Ministers ) invalidated the condition as it rendered the design and layout of the development uncertain.\nHe argues also that condition 7 suffers from a similar defect.\nCondition 7 provides: The Development must be constructed and operated in accordance with the terms of the Application and the the accompanying Environmental Statement Supplementary Environmental Information Statement, except in so far as amended by the terms of the section 36 consent and any direction made by the Scottish Ministers. (Emphasis added) Reason: To ensure that the Development is carried out in accordance with the application documentation. and In support of that contention he refers to two cases, Midcounties Co operative Ltd v Wyre Forest District Council [2009] EWHC 964 (Admin) and Hubert v Carmarthenshire County Council [2015] EWHC 2327 (Admin).\nI consider that his contention is unsound.\nThe flexibility conferred on the Scottish Ministers in each of those conditions to modify the way in which the windfarm is constructed and operated does not enable them to alter the nature of the approved development.\nAs I have said, the maximum size and the maximum number of the turbines and their locations are set out in Annex 1 and Figure 1 of the consent, which define the development.\nThe two cases to which Mr Campbell refers can be distinguished on that basis.\nThe parties agreed that the reference in condition 7 to a direction made by the Scottish Ministers was a reference to a lawful direction made under a statutory power, for example under section 96 of the 1989 Act.\nSuch a direction likewise may affect the manner in which the windfarm is constructed or operated, but it cannot alter the definition of the development itself.\nConclusion\nFor these reasons, I would dismiss the appeal.\nLORD MANCE:\nI agree with the judgment prepared by Lord Hodge and agree therefore that the appeal should be dismissed.\nBut I add some words with regard to the process of implication on which Lord Hodge touches in para 35 of his judgment by reference to the Privy Councils advice in Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 per Lord Hoffmann at paras 16 to 24 as explained by this court in Marks & Spencer plc v BNP Paribas Securities Trust Company (Jersey) Ltd [2015] UKSC 72 per Lord Neuberger at paras 22 to 30.\nAs Lord Neuberger indicates in para 23 in Marks & Spencer, whether an implication is necessary to give business efficacy must be judged objectively, in the light of the provisions of the contract as a whole and the surrounding circumstances at the time when the contract is made.\nBut I would not encourage advocates or courts to adopt too rigid or sequential an approach to the processes of consideration of the express terms and of consideration of the possibility of an implication.\nWithout derogating from the requirement to construe any contract as a whole, particular provisions of a contract may I think give rise to a necessary implication, which, once recognised, will itself throw light on the scope and meaning of other express provisions of the contract.\nThis applies whether one is concerned, as in this case, with a public document in the interpretation of which there is, as Lord Hodge notes in para 33, limited scope for the use of extrinsic material or with, for example, a commercial contract, where the overall aim is to give effect to the parties assumed intentions, objectively assessed by reference to the contractual language they used understood against the background of their wider relationship and the circumstances of which both must be taken to have been aware when contracting.\nIn the light of the above at least, it appears to me helpful to recognise that, in a broad sense as Lord Neuberger and Lord Clarke recognise in Marks & Spencer at paras 26 and 76, the processes of consideration of express terms and of the possibility that an implication exists are all part of an overall, and potentially iterative, process of objective construction of the contract as a whole.\nLORD CARNWATH:\nI agree that the appeal should be dismissed for the reasons given by Lord Hodge.\nI add a comment on the planning cases which have been relied on in support of the appellants strict interpretation of condition 14.\nThese cases, in particular the first Sevenoaks District Council v First Secretary of State [2005] 1 P & CR 13), are said by Mr Campbell QC for the appellants to support the submission that it is not possible by implication to add to the condition a requirement that the development be completed in accordance with the approved design statement.\nFor reasons I will explain at the end of this judgment, I do not regard the planning cases as of much assistance in relation to the issue before us, which is in a different statutory context.\nHowever, since they have been said to disclose a degree of tension between competing principles of interpretation, some guidance from this court may be of value.\nThe planning cases\nThe three cases are: Sevenoaks District Council v First Secretary of State [2005] 1 P & (i) CR 13; (ii) Hulme v Secretary of State for Communities and Local Government [2011] EWCA Civ 638; (iii) Telford and Wrekin Council v Secretary of State for Communities and Local Government [2013] EWHC 79 (Admin).\nAll three were concerned with what might be termed incomplete conditions, in that they required approval of certain matters in relation to the development in question, without fully stating the consequences.\nA similar defect is said to affect condition 14 in the present case.\nIt is convenient to start with a brief summary of each case, to explain how the incompleteness arose and how it was resolved, before discussing the principles of law which they are said to establish or illustrate.\nthe construction of a 27 hole golf course.\nIt was subject to a condition 12: In Sevenoaks the claimant had been granted outline planning permission for Prior to the commencement of the development hereby permitted details of all proposed engineering works associated with the laying out of golf courses including the creation of greens, bunkers, tees, ponds or lakes shall be submitted to and approved in writing by the district planning authority.\nThere was nothing in terms to require completion of those engineering works in accordance with the approved details.\nBy contrast condition 8, dealing with details of means of access, expressly required completion in accordance with the approved details.\nParts of the engineering works as constructed did not comply with the approved details under condition 12.\nThe authority served an enforcement notice alleging breach of the condition.\nSullivan J upheld the planning inspectors decision to allow an appeal against the notice, on the basis that the condition was unambiguously directed to submission of the details only, and not to their implementation.\nThis authority is relied on by the appellants as providing a direct parallel with the present case, which has not been displaced by the later authorities.\nIn Hulme permission had been granted for a windfarm, subject to a complex group of conditions, designed to mitigate noise, including (as it was described) blade swish.\nCondition 20 required the operator, in the event of a complaint from a local resident, to employ a consultant to assess whether the noise emissions at that dwelling exceeded the expected levels, by reference to levels specified in the condition.\nThe condition was obscurely drafted, and failed to indicate clearly what was to happen next.\nHowever, having regard to its obvious purpose and to the scheme of the conditions as a whole, Elias LJ was able to interpret it as imposing an obligation, running for the duration of the permission, to comply with the specified levels, subject to enforcement by the planning authority in the normal way (para 38).\nHe distinguished but did not overrule the decision in Sevenoaks.\nIn Telford permission had been granted for use of a building as a garden centre subject to a condition in these terms: prior to the garden centre hereby approved opening, details of the proposed types of products to be sold should be submitted to and agreed in writing by the local planning authority.\nIt was accepted that use as a garden centre was a retail use within Use Class A1, and that apart from the condition it could have been used without permission for any other use within that class.\nOn an application for a certificate of lawful use to that effect, it was held by the planning inspector that the condition was insufficiently clear to exclude the rights otherwise available under the Use Classes Order.\nBeatson LJ, sitting in the Administrative Court, refused leave to appeal against that decision.\nHe detected what he described, at para 32, as a degree of tension between the approaches in the two previous cases: The Sevenoaks case involved a condition that was considered clear and without ambiguity.\nSullivan J emphasised the need for clarity and certainty on the face of the condition, in particular because a planning permission is a public document which is likely to affect third party rights and the wider public and on which they are entitled to rely, and because breach of a condition may ultimately have criminal consequences.\nHulmes case appears to take a less strict approach in the context of words in a condition Elias LJ (at para 31) described as particularly opaque.\nThe Hulme principles\nIn both Hulme and Telford the court attempted to enunciate lists of principles said to be derived from the relevant authorities.\nIn the first, Elias LJ set out four principles, by reference to three decided cases, one at first instance, one in the Court of Appeal and one in the House of Lords.\nIn Telford, Beatson LJ managed with the assistance of the very experienced counsel before him to extract no fewer than nine principles, derived from a dozen or so authorities at different levels of the judicial hierarchy.\nWith respect to them both I see dangers in an approach which may lead to the impression that there is a special set of rules applying to planning conditions, as compared to other legal documents, or that the process is one of great complexity.\nBeatson LJ was faced with an apparent conflict between the approaches in Sevenoaks and Hulme which needed to be resolved, and I have no difficulty with his conclusion on the facts of the case before him.\nHowever, most of the judgments cited in support of his nine principles, many at first instance, turned on their own facts, and cannot be relied on as establishing any more general rules.\nIt may be useful to comment in more detail on Elias LJs summary of the relevant legal principles, and their relationship to the decision in Sevenoaks which is most directly relevant to the present case.\nThey were said by him to be not in dispute (para 13), from which I infer that he may have been reproducing a summary provided by counsel without further discussion or examination of the authorities referred to.\nThe principles were stated by him, at para 13, as follows: a) The conditions must be construed in the context of the decision letter as a whole. b) The conditions should be interpreted benevolently and not narrowly or strictly: see Carter Commercial Development Ltd v Secretary of State for the Environment [2002] EWHC 1200 (Admin), para 49 per Sullivan J, as he was. c) A condition will be void for uncertainty only if it can be given no meaning or no sensible or ascertainable meaning, and not merely because it is ambiguous or leads to absurd results per Lord Denning in Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, 678.\nThis seems to me to be an application of the benevolent construction principle. d) There is no room for an implied condition (although for reasons I discuss more fully below, the scope of this principle needs careful analysis).\nThis principle was enunciated by Widgery LJ, as he then was, in Trustees of Walton on Thames Charities v Walton and Weighbridge District Council (1970) 21 P & CR 411, 420 in the following terms: I have never heard of an implied condition in a planning permission, and I believe that no such creature exists.\nPlanning permission enures for the benefit of the land.\nIt is not simply a matter of contract between the parties.\nThere is no place, in my judgment, within the law relating to planning permission for an implied condition.\nConditions should be express; they should be clear; they should be in the document containing the permission.\nPrinciple (a) is of course uncontroversial but not peculiar to planning permissions.\nPrinciple (b) requires a little more comment, as does the citation.\nBenevolence is not a very helpful concept, since benevolence to one party may have the opposite effect on his opponent.\nBut it is equally uncontroversial, if it means no more than that, as with any other legal document, incompetent drafting should not prevent the court from giving the condition a sensible meaning if at all possible.\nOn the other hand, I suspect Sullivan J himself might have been surprised to find that principle supported by reference to his own judgment at first instance from 2002.\nThe case went to the Court of Appeal ([2002] EWCA Civ 1994), which upheld his decision but did not refer to this aspect of the judgment (see further below).\nIn fact that same principle is supported by one of the earliest Court of Appeal decisions under the Town and Country Planning Act 1947: Crisp from the Fens Ltd v Rutland County Council (1950) 1 P & CR 48, 59.\nIn that case a permission granted for a change of use of a building to use for making potato crisps was subject to a condition confining its use to that of the manufacture of potato crisps or any use within class III of [the Use Classes Order].\nThe stated reason was to ensure that the building shall not be used for general industrial purposes which would be detrimental to the amenity of the locality.\nThe relevant Use Classes Order distinguished between use as a light industrial building (class III) and as a general industrial building (class IV); the former being defined by reference to whether the processes could be carried on in any residential area without detriment to its amenity by reason of noise, smell, fumes or smoke.\nIt was held that, notwithstanding the unqualified reference in the condition to use for manufacture of potato crisps, the word other should be read into the second part of the condition (or any other use ), with the effect that class III constraints should be read as applying to both parts of the condition.\nThe court relied in particular on the clear intention, expressed in the reason, to protect the local amenities by excluding general industrial use: see p 54, per Bucknill LJ.\nAs he put it, the court should have regard to the common sense of the transaction, and to the real intention and meaning of the parties rather than criticise minutely the precise words used (p 55).\nDenning LJ added: It is a case where strict adherence to the letter would involve an error of substance (p 59).\nThe same approach was reflected in the words, again of Lord Denning, from Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, 678, cited in support of Elias LJs third principle, again in itself uncontroversial.\nHowever, it is also clear from the context that Lord Denning was not enunciating some principle special to planning conditions, as compared to other forms of legal document rather the contrary.\nIn the previous paragraph he had been considering suggested comparisons with documents such as contracts or wills.\nFollowing the passage quoted by Elias LJ, he commented: It is the daily task of the courts to resolve ambiguities of language and to choose between them; and to construe words so as to avoid absurdities or to put up with them.\nAnd this applies to conditions in planning permissions as well as to other documents. (p 678 emphasis added)\nI have more difficulty with Elias LJs fourth principle, not least because it reflects a strictness of approach apparently at odds with his two previous principles.\nThe case cited in support (Walton) arose in a very esoteric and now obsolete legal context: that of so called third schedule development (under Schedule 3 to the Town and Country Planning Act 1962, as applied by section 15(3) of the Land Compensation Act 1961).\nElias LJ explained the issue later in his judgment in Hulme (paras 36 37): That case concerned the assessment of compensation for the compulsory purchase of land under the Land Compensation Act 1961.\nThe value of the compensation depended upon the value of the deemed planning permission for the rebuilding of 50 prefabs on the land.\nThe compensating authority contended that the value with the assumed planning permission would be nil since there was to be implied a condition that any prefabs would have to be removed within ten years.\nThis was said to arise by virtue of a power under section 2 of the Housing (Temporary Accommodation) Act 1944 which enabled the Secretary of State to require the removal of prefabs after ten years unless housing conditions required that they should remain.\nThe Court of Appeal unanimously held that there could be no implied condition to that effect, and Widgery LJ made the observations to which I have referred above, and on which the appellant relies.\nElias LJ contrasted the proposed implied term in that case, which depended on reading into the planning permission an obligation which was said to arise from extrinsic circumstances, with that in the instant case which arises as a necessary implication from the language of the express conditions when read in the context of the decision letter (para 37).\nI agree with that analysis, but I would go further.\nWidgery LJ had been a leading proponent of planning law in the early decades of the new system.\nHowever, with great respect to him, I regret the elevation of these obiter comments, made in a very unusual legal and factual context, to statements of general principle.\nHe was not giving the leading judgment, and his comments went further than was necessary to decide the case.\nHis general approach is apparent from the passage immediately preceding the words quoted: The courts have said on many occasions that it is only fair to a landowner that conditions attaching to planning permissions should be clear and explicit.\nTheir effect is to work a forfeiture, and they have to be judged by the courts strict rules, like any other forfeiture. (p 420) That reflects a view, not uncommon at the time, of planning control as an interference with property rights requiring to be kept within narrow limits.\nIt is not consistent with the modern approach, nor indeed with that of earlier cases such as Crisp from the Fens and Fawcett.\nThere is no reason in my view to exclude implication as a technique of interpretation, where justified in accordance with the familiar, albeit restrictive, principles applied to other legal documents.\nIn this respect planning permissions are not in a special category.\nSevenoaks\nThere are indications that such an exclusionary rule was the basis of Sullivan Js reasoning in Sevenoaks.\nTo that extent, he was in my respectful view mistaken.\nThe inspector had recorded the appellants case as resting on the proposition that they did what the condition required of them and could not by implication be required to do more: Words cannot be introduced later to give a condition efficacy.\nThat is a contractual not a public law concept (judgment, para 10).\nThe substance of that submission seems to have been accepted by Sullivan J.\nHaving cited the statement by Widgery LJ in Walton he noted the authoritys attempt to distinguish the case, on the basis that it involved the implication of an additional condition, rather than the implication of an additional obligation to a condition already in the permission.\nThat he said, was a distinction without a difference, adding: If conditions are to be included in a public document such as a planning permission, they should be clearly and expressly imposed, so that they are plain for all to read.\nThere is no room for implication. (para 45)\nFor the reasons I have given, I consider that was too widely stated, and he was wrong to find support in Walton.\nHis approach to the issue of implication was in my view also inconsistent with the reasoning of the Court of Appeal in Crisp from the Fens, which he had cited earlier in the judgment (para 19).\nThat decision had been relied on by counsel to support the proposition that it was possible to imply words into a condition if it was necessary to do so in order to enable the condition to achieve its purpose (para 23).\nSullivan J distinguished it on the basis that the condition in that case had been found to be ambiguous, unlike his view of the condition before him.\nHe also noted the Court of Appeals references to the intention of the parties, made, he said, at a time when the 1947 Act was a novel Act.\nHe added: We no longer consider it appropriate to examine the intentions of the applicant and the local planning authority.\nThe question is: what was permitted by the local planning authority? The answer to that question is to be found by construing in a common sense way the planning permission together with such other documentary evidence as may be admissible: see per Arden LJ in Carter paras 27 and 28. (para 38).\nI have no difficulty with the approach stated in the second part of that passage, which is entirely consistent with that of the Court of Appeal in 1950.\nIt is true that at the end of his judgment, Bucknill LJ noted that it was a novel Act (p 55), but, as I read it, rather by way of explanation of the authoritys failure, than as a necessary part of his reasoning.\nDenning LJ himself emphasised the importance in general of such a condition being expressed in plain language so that any layman can understand it , but here the terms of the condition and, particularly, the reasons for it left no doubt as to its meaning (p 59).\nThe intention of the authority was apparent, not from extrinsic evidence, but from the terms of the document itself.\nIt was that which enabled words to be added by implication to the terms of the condition.\nBefore leaving this subject I should add one comment on the judgment of Arden LJ in Carter Commercial (cited by Sullivan J in the passage quoted above).\nAt the outset of her concurring judgment she said: 27.\nI start from the position that this planning permission is not to be construed like a commercial document, but is to be given the meaning that a reasonable reader would give to it, having available to him only the permission, the variation, the application form and the Lewin Fryer report referred to in condition 4 in the planning permission itself. 28.\nThe reasonable reader for this purpose is to be contrasted with, for instance, the testator into whose armchair the court is enjoined to place itself in order to construe a will, or the position of parties to a commercial contract from whose standpoint the court will construe a commercial contract having regard to all the background information reasonably available to them.\nThis is a public document, to which very different principles apply.\nShe cited the judgment of Keene J (as he then was) in R v Ashford Borough Council, Ex p Shepway District Council [1999] PLCR 12, as indicating the very strict limitations on the extrinsic material that can be used in construing an\napplication, including a permission\nI do not question the decision of the court in that case, or the reasoning on which it was based.\nAs will have become apparent, however, and in agreement also with Lord Hodge, I do not think it is right to regard the process of interpreting a planning permission as differing materially from that appropriate to other legal documents.\nAs has been seen, that was not how it was regarded by Lord Denning in Fawcett.\nAny such document of course must be interpreted in its particular legal and factual context.\nOne aspect of that context is that a planning permission is a public document which may be relied on by parties unrelated to those originally involved. (Similar considerations may apply to other forms of legal document, for example leases which may need to be interpreted many years, or decades, after the original parties have disappeared or ceased to have any interest.) It must also be borne in mind that planning conditions may be used to support criminal proceedings.\nThose are good reasons for a relatively cautious approach, for example in the well established rules limiting the categories of documents which may be used in interpreting a planning permission (helpfully summarised in the judgment of Keene J in the Shepway case at pp 19 20).\nBut such considerations arise from the legal framework within which planning permissions are granted.\nThey do not require the adoption of a completely different approach to their interpretation.\nThe statutory contexts compared\nAs I have indicated I do not in any event regard the English planning cases as providing much assistance to the resolution of the issue before us.\nThere are important differences between the two statutory schemes in respect of non compliance and its consequences.\nThe scheme of the Town and Country Planning Act 1990 (as of the Town and Country Planning (Scotland) Act 1997, which in this respect follows the English statute), as respects enforcement, is relatively complex.\nSection 57 provides that planning permission is required for the carrying out of any development of land.\nIt says nothing of the consequences of non compliance, nor is it made an offence.\nEnforcement is covered by a different group of sections (Part VII). [B]reach of planning control is defined as either (a) carrying out development without the required planning permission; or (b) failing to comply with any condition or limitation subject to which planning permission has been granted (section 171A(1)).\nEnforcement may be by means of an enforcement notice, which is required to state the paragraph of section 171A(1) within which, in the opinion of the authority, the breach falls: section 173(1)(b) (a requirement relied on by the inspector, and noted by Sullivan J, in the Sevenoaks case: para 18).\nAn alternative, in the case of contravention of a condition, is a breach of condition notice (section 187A).\nAn offence is committed by non compliance with a confirmed enforcement notice (section 179), or a breach of condition notice (section 187A(9)).\nThere is also specific provision for the planning authority to apply to the court for an injunction (or, in the Scottish Act, section 146, interdict) to restrain an apprehended breach of planning control as so defined (section 187B).\nThe scheme of the Electricity Act 1989 is much simpler.\nSection 36(1) provides that a generating station shall not be constructed, extended or operated except in accordance with a consent granted by the Secretary of State.\nSuch a consent may include such conditions as appear to the Secretary of State to be appropriate (section 36(5)).\nContravention of the provisions of the section is an offence, for which proceedings can only be commenced by the Secretary of State (section 36(6)(7)).\nI do not read this as excluding the possibility of a civil remedy if necessary to restrain an apprehended breach, at least at the suit of the Secretary of State.\nIt seems clear that that construction will not be in accordance with the consent if it does not comply with the conditions under which it was granted.\nBy contrast with the planning scheme, no distinction is drawn for this purpose between the two forms of non compliance.\nThe same approach would extend in my view to any matters requiring subsequent approval under the conditions, in so far as they are properly regarded as part of the consent.\nThus, even disregarding condition 13 (on which I agree with Lord Hodge), I see no reason why the requirement to construct in accordance with the consent should not include compliance with the terms of the condition 14 design statement.\nBy condition 14 the design statement must be submitted to the Scottish Ministers for their written approval, and it must provide guiding principles for the deployment of the wind turbines, including such matters as layout location and detailed assessment of visual impacts.\nAlthough it does not in terms provide that development must be constructed in accordance with the design statement, such a requirement must as a matter of common sense be implicit, since otherwise the statement would have no practical purpose.\nFor these reasons, in addition to those given by Lord Hodge, I would dismiss the appeal.\n","output":"Trump International Golf Club Scotland Ltd (TIGC) has developed a golf resort at Menie Estate and Menie Links, Balmedie, Aberdeenshire.\nIn 2011, Aberdeen Offshore Wind Farm Ltd applied for consent under s.36 of the Electricity Act 1989 (the 1989 Act) to construct and operate the European Offshore Wind Deployment Centre in Aberdeen Bay.\nThe application concerned the construction of up to 11 wind turbines, which might be of different sizes, with a maximum power generation of 100 MW.\nThe proposed windfarm would be located about 3.5km from the golf resort and would be seen by people at the resort.\nTIGC opposed the application.\nIn March 2013, the Scottish Ministers granted consent (the Consent) for the development and operation of the windfarm subject to conditions.\nTIGC challenged the Consent on various grounds in the Scottish courts without success [1].\nTIGC appealed to the Supreme Court on two remaining grounds, arguing that the Consent should be quashed: (a) because the Scottish Ministers had no power under the 1989 Act to grant consent to the windfarm application as only the holder of a licence to generate, transmit, or supply electricity granted under s.6, or a person exempted under s.5 from holding such a licence may apply under s.36 (the Section 36 Challenge); and (b) because condition 14 of the Consent, which requires the submission and approval of a design statement, is void for uncertainty (the Condition 14 Challenge) [2].\nThe Supreme Court unanimously dismisses the appeal by TIGC.\nThe leading judgment is given by Lord Hodge, with whom Lord Neuberger, Lord Mance, Lord Reed and Lord Carnwath agree.\nLord Mance and Lord Carnwath each give concurring judgments.\nSection 36 Challenge TIGCs Section 36 Challenge is rejected.\nIt is not supported by the structure and language of the 1989 Act [8 13].\nFurther, there is nothing in the policy background to the 1989 Act which requires the Court to take a different view of the statutory provisions.\nThere are five reasons for this [14]: (1) The 1989 Act aimed to liberalise the British electricity market by privatisation.\nThe policy did not address who would construct generating stations, and it was not a necessary part of the policy that the persons who built generating stations would also be the persons generating the electricity [15]. (2) The 1989 Act contains two separate regulatory regimes: (a) one for the construction of generation stations and overhead lines, and (b) one for the licensing of electricity supply, including generation.\nSince devolution, there have been separate regulators for those activities in Scotland [16].\n(3) Parliament did not create a regulatory gap by allowing persons who are not subject to environmental duties under para 3(1) of Schedule 9 to apply for construction consents under s.36.\nThe Scottish Ministers have a duty when considering a s.36 application to have regard to environmental matters, and wide powers to impose conditions to protect the environment [17]. (4) There is no need to require a s.36 applicant to hold in advance a generating licence or exemption, as the Scottish Ministers may (pursuant to s.36(5)) include appropriate conditions in a consent [18]. (5) It is established practice in both British jurisdictions for commercial organisations to apply for and obtain s.36 consents before they seek a licence to generate electricity, or an exemption [19].\nCondition 14 Challenge The short answer to this challenge is that, even if condition 14 were unenforceable, the Consent would not be invalidated.\nCondition 7 requires that the development be constructed in accordance with the supplemental environmental information statement (SEIS) which covers important elements of the benefits promoted by condition 14, and the Scottish Ministers can insist on compliance with the SEIS.\nFurther, the scope of the development is defined by Annex 1 of the Consent and the SEIS specifies the maximum size and location of the turbines.\nCondition 14 is not therefore a fundamental condition determining the scope and nature of the development which, if invalid, would invalidate the Consent [24 26].\nEven if condition 14 could not be enforced, a planning condition is only void for uncertainty if it can be given no sensible or ascertainable meaning.\nThis cannot be said for condition 14, which provides that the Scottish Ministers must approve the design statement before the development can begin [27].\nFurther, condition 14 is not invalid owing to any uncertainty as to what amounts to compliance with its terms.\nConstruing the conditions as a whole (in particular conditions 13 and 24), it is clear that the Consent contains a mechanism enabling the Scottish Ministers to use both the construction method statement and the design statement to regulate the design of the windfarm in the interests of environmental protection, and to require compliance with those statements [28 30].\nGiven those conclusions, it is unnecessary to consider whether terms could be implied into the Consent [31].\nHad it been necessary, however, an inference would have been drawn that the Consent read as a whole required the developer to conform to the design statement [37].\nThere is not a complete bar on implying terms into planning permissions, and the planning legislation cases relied on by TIGC which suggest otherwise are not directly applicable to conditions under the 1989 Act given the different statutory language [32].\nWhether words are implied into a document depends on the interpretation of the express words and, while restraint is required when implying terms into public documents with criminal sanctions, there is no reason for excluding implication altogether [33 36].\nFinally, the flexibility conferred on the Scottish Ministers in conditions 7 and 13 to modify the way in which the windfarm is constructed and operated does not invalidate those conditions, as the Scottish Ministers are not able to alter the nature of the approved development [38 39].\nLord Mance provides some comments on the process of implication of terms [41 44].\nLord Carnwath agrees that the planning cases do not assist in this appeal, given the differences between the statutory schemes [67 70], but he provides some guidance on the principles of interpretation derived from them [45].\nHe considers that the process of interpreting a planning permission does not differ materially from that appropriate to other legal documents and that there is no reason to exclude implication as a technique of interpretation where it is justified [46 66].\n","id":77}
{"input":"This appeal is concerned with the interpretation and application of a double taxation agreement between the United Kingdom and the United States of America.\nThe appellant, Mr Anson was at all material times resident but non-domiciled in the UK for UK tax purposes.\nHe was liable to UK income tax on his UK sourced income and on foreign income remitted to the UK.\nHe was non-resident in the US for US tax purposes, but was liable to US federal and state taxes on his US sourced income.\nMr Anson was at all material times a member of a Delaware limited liability company, which was classified as a partnership for US tax purposes.\nAs a member of an entity classified as a partnership, Mr Anson was liable to US federal and state taxes on his share of the profits.\nMr Anson remitted the balance to the UK, and was therefore liable to UK income tax on the amounts remitted, subject to any double taxation relief which might be available.\nThe respondent Commissioners decided that Mr Anson was not entitled to any double taxation relief, on the basis, put shortly, that the income which had been taxed in the US was not his income but that of the limited liability company.\nThe question is whether they were correct to do so.\nThe facts\nThe relevant period comprises the seven UK tax years running from 6 April 1997 to 5 April 2004.\nThroughout that period, Mr Anson was a member of HarbourVest Partners LLC (the LLC), a limited liability company formed under the law of Delaware and carrying on business in Boston, Massachusetts.\nThe LLC was originally formed in 1996, when its founder members, including Mr Anson, provided the necessary capital.\nThe amount paid was returned to the members in 1999 by way of distribution.\nThe business of the LLC consisted of the management of a number of venture capital funds.\nIt had no economic interest in the funds, or in the gains or losses from fund investments, but earned fees from its investment management activities.\nIts accounts were made up in respect of calendar years, which were also US tax years.\nThe LLC was established under the Delaware LLC Act (the LLC Act), and under the terms of a limited liability company agreement (the LLC agreement) governed by Delaware law.\nThe most significant provisions of the LLC Act will be mentioned shortly.\nThe LLC agreement was an agreement between the members: the LLC itself was not party to it.\nArticle IV dealt with members capital accounts.\nIn particular, section 4.1 provided for the crediting to each members capital account of his capital contributions, and for the debiting to his account of all distributions made to him.\nSection 4.2 required the members capital accounts to be adjusted, at least annually, in specified respects.\nIn particular, it provided (read short) that all gross income and gains realized during the period in question shall be credited, and all losses, deductions and expenses during the period in question shall be debited, to the respective capital accounts of the members pro rata, in accordance with ratios prescribed in the agreement, and subject to specified adjustments.\nMr Ansons profit share was 11.5%, which was similar to his ownership interest.\nArticle V set out the provisions relating to distributions.\nSection 5.1 provided: Subject to the provisions of this article V, to the extent cash is available, distributions of all of the excess of income and gains over losses, deductions and expenses allocated in accordance with section 4.2 with respect to any calendar year will be made by the company at such time within seventy-five (75) days following the end of such calendar year and in such amounts as the managing members may determine in their sole discretion.\nThe managing members may from time to time in their discretion make additional distributions in accordance with the provisions of this article V. Mr Anson was not a managing member during the relevant period.\nAmong the other provisions of the LLC agreement, it is necessary to note article XI, which dealt with dissolution, and made provision in that eventuality for the sale of the assets, the allocation of losses or gains to members in accordance with section 4.2, and distributions to the members.\nUnder article 12.2, members were entitled on request to access to the books and records and to information about the business.\nDuring each calendar year, all the LLCs income and gains were credited, and all losses, deductions and expenses were debited, to its members capital accounts on a quarterly basis, in accordance with section 4.2.\nThe excesses of the income and gains over the losses, deductions and expenses that is to say, the profits - were distributed to the members on a quarterly basis in arrears, in accordance with section 5.1, on the basis of the ratios set out in the LLC agreement.\nThe following matters of Delaware law were agreed by the expert witnesses who gave evidence before the First-tier Tribunal (Judges John F Avery-Jones CBE and Ian Menzies-Conacher FCA) (the FTT) and were found as facts: i) The LLC was a legal entity which was brought into existence by executing a certificate of formation, filing of that certificate with the Delaware Secretary of State, and entering into an LLC agreement.\nii) The business of the LLC was carried on by the LLC itself, rather than by its members, in the sense that the LLC as an entity with separate legal existence was engaged in business.\nThe members were however active in the business, each member being required by the LLC agreement to devote at least 90% of his full business time to the advancement of the LLCs business and interests.\niii) The assets used for carrying on the business of the LLC belonged beneficially to the LLC and not to the members.\niv) The LLC was liable for the debts incurred as a result of carrying on its business.\nThe members had no liability for the liabilities of the LLC.\nThe FTT made the following additional findings in relation to the nature of a members interest in a Delaware LLC, and in the LLC in particular: i) A Delaware limited liability company interest is defined by section 18-101(8) of the LLC Act as a member's share of the profits and losses of a limited liability company and a member's right to receive distributions of the limited liability company's assets.\nii) That interest is in principle assignable, except as provided in the LLC agreement.\nThe assignee has no right to participate in the management of the business except as provided in the agreement and with the approval of all the other members.\nAn assignee does not become a member but becomes entitled to the same economic interest as the assignor.\niii) In the present case, the LLC agreement provided that a member's interest could not be transferred except for sales by a former member (a) under provisions giving the LLC a right of first refusal before any such sale, (b) to a person engaged in the full time business of the LLC, with the written consent of the managing members and two-thirds of the other original members, or (c) on death.\niv) Section 18-503 of the LLC Act provides that the profits and losses of a limited liability company shall be allocated among the members, and among classes or groups of members, in the manner provided in a limited liability company agreement.\nv) A limited liability company interest is personal property.\nA member has no interest in specific limited liability company property (section 18- 701 of the LLC Act).\nvi) Subject to the LLC agreement, the members manage the LLC and vote in proportion to their interest in profits.\nvii) The LLC agreement provided that the operation and policy of the LLC was vested in the managing members, who had power to contract on its behalf, but certain matters, such as mergers and incurring liabilities of more than $500,000 in a year, required the consent of the members.\nviii) The interest of a member in the LLC was not similar to share capital, but was more similar to partnership capital in an English partnership.\nThe parties expert witnesses were asked to address a number of questions which had been listed in an Inland Revenue tax bulletin 39 issued in February 1999 (and subsequently repeated in later bulletins), following the decision of the Court of Appeal in Memec plc v Inland Revenue Comrs [1998] STC 754, as factors which would be considered for the purpose of deciding whether a UK resident with an interest in a foreign entity should be taxed on his share of the profits of the foreign entity as they arose or only when he received a distribution of profits from the entity.\nOne of those questions was the following: Are the persons who have an interest in the entity entitled to share in its profits as they arise; or does the amount of profits to which they are entitled depend on a decision of the entity or its members, after the period in which the profits have arisen, to make a distribution of its profits?\nMr Ansons expert, Mr Abrams, treated the question as asking whether there was an automatic entitlement to share in profits, or whether any such entitlement depended, as in the case of a dividend, upon a decision taken after the end of the relevant period.\nHe focused particularly upon section 4.2 of the LLC agreement, since it addressed how profits were allocated among members, and upon section 5.1, since it governed distributions.\nApplying the approach to contractual interpretation which, according to his evidence, applied under Delaware law, he concluded that section 5.1 created a mandatory requirement (subject to the other provisions of article V, and to cash being available) to distribute the excess of income and gains over losses, deductions and expenses allocated in accordance with section 4.2, in respect of each calendar year, ie the profit.\nThat was consistent with the earlier crediting of the income and gains to the members capital accounts, and the debiting of losses, deductions and expenses, under section 4.2.\nThe members were therefore entitled to participate in a share of the LLCs annual profits as they arose.\nThe witness was clearly not referring to a proprietary entitlement.\nThe Commissioners expert, Mr Talley, treated the question as asking whether the members had a proprietary interest in the profits as they arose.\nHe noted that, in terms of section 18-701 of the LLC Act, the members had no interest in specific property of the LLC.\nIt followed that they had no beneficial interest in the LLCs assets.\nIn that proprietary sense, they were therefore not entitled to a share in the profits prior to a distribution.\nIn a joint statement to the tribunal, each expert responded to the view expressed by the other in relation to this question.\nMr Abrams pointed out that assets and profits were distinct concepts in general and under the LLC Act.\nSection 18- 101(8) defined a members interest in an LLC as including a members share of the profits and losses.\nThe members entitlement to share in the profits was not affected by section 18-701, which concerned a different issue, namely the ownership of specific property of the LLC.\nMr Talley, on the other hand, disagreed with Mr Abramss construction of section 5.1 of the LLC agreement: in his opinion, distributions were made at the discretion of the managing members.\nIn his oral evidence, Mr Abrams said that the law of Delaware drew the same distinctions between a loss and a liability, and between a profit and an asset, as had been explained in Reed v Young [1986] 1 WLR 649, 654; [1986] STC 285, 289.\nIn cross-examination, he observed that the questions put to him, which linked entitlement to profits to ownership of the LLCs income receipts as they were received, commingled two different concepts.\nWhen the LLC earned fees, the dollars went into the companys bank account.\nThose assets were the property of the company, just as the companys debts were the liability of the company.\nWhether the dollars translated into profits was a different issue.\nProfits and losses were an accounting concept.\nThe LLC Act recognised the distinction between profits and assets in section 18-101.\nThe LLC agreement imposed an obligation to distribute the profits at the end of each year.\nMr Talley, in his oral evidence, accepted that profits and assets were distinct concepts in the law of Delaware, and that profits were an accounting measure.\nHe maintained that profits nevertheless had to be reflected in the assets on the balance sheet, and in that sense formed part of the assets.\nHe stated, however, that his primary reason for considering that the members had no entitlement to share in profits prior to a decision to make a distribution was his interpretation of section 5.1 of the LLC agreement as rendering distributions discretionary.\nIn its discussion of this issue, the FTT stated that it accepted the contention, advanced on behalf of Mr Anson and supported by Mr Abrams, that in summary article IV allocated the profit to the members as it arose and article V required payment to be made.\nIt referred first to sections 18-101(8) and 18-503 of the LLC Act.\nAs explained earlier, section 18-101(8) defines limited liability company interest as a members share of the profits and losses of a limited liability company and a members right to receive distributions of the limited liability companys assets, while section 18-503 provides that the profits and losses of a limited liability company shall be allocated among the members, and among classes or groups of members, in the manner provided in a limited liability company agreement.\nThe FTT also noted that the whole of the profits were allocated to the members capital accounts.\nIt continued: This means that the profits do not belong to the LLC in the first instance and then become the property of the members because there is no mechanism for any such change of ownership, analogous to the declaration of a dividend.\nIt is true, as Mr Talley has said, that the assets representing those profits do belong to the LLC until the distribution is actually made but we do not consider that this means that the profits do not belong to the members; presumably the same is true for a Scots partnership.\nConceptually, profits and assets are different, as is demonstrated by the reference to both in the definition of limited liability company interest [in section 18-101(8) of the LLC Act].\nThere is a corresponding liability to the members evidenced by the allocation to their capital accounts.\nAccordingly, our finding of fact in the light of the terms of the LLC operating agreement and the views of the experts is that the members of [the LLC] have an interest in the profits of [the LLC] as they arise.\n(para 10)\nHaving reached its conclusion on the basis of the legislation and article IV of the LLC agreement, the FTT did not regard the dispute as to whether distributions under section 5.1 were mandatory or discretionary as relevant.\nIt nevertheless considered the matter, and concluded that distributions were mandatory.\nIn relation to US tax treatment, as the profits generated by the LLC were connected with the conduct of a US trade or business, they were subject to US federal and Massachusetts state taxes, under the US Internal Revenue Code (the Code) and the General Laws of Massachusetts respectively, regardless of the residence or tax domicile of the recipient of the profits.\nUnder the US entity classification rules set out in the US Treasury Regulations, the LLC was classified as a partnership for US tax purposes (it might have elected to be classified as a corporation, but made no such election).\nThe Code states that in such circumstances the partners are liable to tax, rather than the partnership: in other words, the LLCs members, rather than the LLC itself.\nAs a result, each member, including Mr Anson, was personally liable for US federal and Massachusetts state tax on his share of the profits, as his income, whether or not that sum was actually distributed to him.\nAs required by the Code, the LLC filed an annual federal partnership income tax return, reporting the profits of the partnership.\nMr Anson was also required to file an annual federal income tax return, in which his share of the LLCs profits was reported as his income.\nThe federal income tax due by Mr Anson in respect of his share of the profits was withheld by the LLC at the rate of 39.6% applicable to withholding tax on foreign partners share of effectively connected income.\nThat withholding tax was remitted to the federal tax authorities, as required by the Code and authorised by the LLC agreement.\nThe LLC was required to file an annual return for partnership withholding tax for each member, and also to complete the foreign partners information statement of withholding tax, which foreign partners needed to furnish with their US federal income tax return in order to claim a withholding tax credit for the tax paid.\nThe distributions made to Mr Anson were accordingly reduced by the amount of the tax withheld and remitted on his behalf.\nMr Anson was then credited with the amount of tax withheld, when the amount of federal tax due by him on his share of income was assessed.\nIn relation to state taxes, the LLC was required to submit an annual state income tax return recording the profits of the partnership, using the Massachusetts partnership return of income, together with a partners Massachusetts information schedule for each partner, setting out each partners share of the profits.\nMr Anson was also required to file annual state income tax returns, in which he reported his share of the profits.\nHe paid the state income tax directly to the state tax authorities.\nDouble taxation relief\nMr Anson was at all relevant times UK resident and ordinarily resident but non-domiciled.\nHe was consequently liable to UK income tax under the Income and Corporation Taxes Act 1988 (the 1988 Act), section 18, Schedule D Case V, on income arising from possessions out of the United Kingdom which he remitted to the UK.\nHe paid taxes in the US on his share of the profits at the rate of 45%, and remitted the balance to the UK.\nThe question is whether he is liable to pay UK income tax on that balance at the rate of 40%, producing what he would say is an effective rate of taxation of 67% (ie 45 in US taxes for every 100 of income, plus 22 in UK tax, calculated as 40% of the 55 remitted after payment of US taxes), or is entitled to double taxation relief.\nMr Anson claims double taxation relief in respect of US federal income tax under article 23(2)(a) of the UK\/US Double Taxation Convention of 31 December 1975 (the 1975 Convention), for all of the relevant UK tax years up to the year ended 5 April 2003.\nFor the year ended 5 April 2004, he claims double taxation relief under article 24(4)(a) of the UK\/US Double Taxation Convention of 24 July 2001 (the 2001 Convention).\nBoth Conventions are given effect in UK law, in the context of this appeal, by Orders in Council made under section 788 of the 1988 Act or the predecessor provision (SI 1980\/568 and SI 2002\/2848 respectively).\nMr Anson also claims unilateral relief in respect of both US federal income tax and Massachusetts state income tax under section 790(4) of the 1988 Act for all of the relevant UK tax years.\nArticle 24(4)(a) of the 2001 Convention is in terms which are not materially different from those of article 23(2)(a) of the 1975 Convention.\nIt is common ground that the relevant provisions of the two Conventions have the same effect, and that the same arguments apply to both, mutatis mutandis.\nIt is also common ground that there is no material difference, so far as the present case is concerned, between the tests imposed by article 23(2)(a) of the 1975 Convention and section 790(4) of the 1988 Act.\nIn those circumstances, the present discussion, like the parties submissions, will focus only on the 1975 Convention.\nArticle 23(2)(a) of the 1975 Convention provides: United States tax payable under the laws of the United States and in accordance with the present Convention, whether directly or by deduction, on profits or income from sources within the United States (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits or income by reference to which the United States tax is computed.\nThe dispute between the parties concerns, in particular, the question whether the UK tax to which Mr Anson is liable is computed by reference to the same profits or income by reference to which the US federal tax was computed, within the meaning of article 23(2)(a), and the analogous question, under section 790(4) of the 1988 Act, whether the UK tax is computed by reference to the same income as the Massachusetts state tax.\nThe proceedings before the FTT\nThere were three issues before the FTT.\nThe first was whether Mr Anson was entitled to relief under the double taxation agreements and section 790(4) of the 1988 Act.\nThe second was whether, if he failed in respect of that claim, he was nevertheless entitled to rely on section 739 of the 1988 Act.\nThe third was whether discovery assessments raised by the Commissioners were valid.\nIn relation to the first issue, counsel for the Commissioners invited the FTT to find that the LLC was opaque rather than transparent, applying the terminology and the approach adopted by the Court of Appeal in the case of Memec, to which it will be necessary to return.\nCounsel argued that the LLC was opaque, since it, and not its members, carried on its business, was liable for the debts and obligations incurred, owned the business, and had a beneficial interest in the profits of the business.\nAlthough the US tax had been charged in respect of the profits of the LLC, UK tax was charged in respect of income derived by Mr Anson from his rights as a member of the LLC.\nIt followed, counsel argued, that the UK tax was not computed by reference to the same profits or income as the US tax, within the meaning of the Conventions and section 790(4).\nThe FTT said that it would address the issue applying the Memec approach, although it preferred to concentrate on the words of the treaty rather than ask whether the LLC was transparent or opaque.\nIt had found as a fact that the LLC carried on business as a principal; that it, and not its members, was liable for its debts and obligations; and that it, and not its members, owned the business.\nBut it had also found that the LLC had nothing equivalent to share capital, and that the members were entitled to the profits as they arose.\nThere was, it said, a spectrum running from an English partnership, where the partnership had no separate personality and the partners owned the assets jointly and carried on the business, and were entitled to the profits, through the Scottish partnership, where the partnership was a legal person which owned the assets, but the partners were entitled to the profits, to the UK company, where the company was a legal person which owned the assets, and the members were normally entitled to profits only after a dividend had been declared.\nThe LLC stood somewhere between a Scottish partnership and a UK company, having the partnership characteristic of the members being entitled to profits as they arise and owning an interest comparable to that of a partnership interest, but also some of the characteristics of a company.\nIt was in their view on the partnership side of the dividing line, particularly in relation to its income.\nThe factor which, the FTT said, it was mainly concerned with in relation to the Conventions was whether the profits belonged to the members as they arose.\nIt had concluded that that was the effect of the LLC agreement and the LLC Act.\nAccordingly, it said, the appellant is taxed on the same income in both countries.\nHe was therefore entitled to double taxation relief under the Conventions in respect of the federal income tax, and to unilateral relief under section 790(4) in respect of the state taxes.\nMr Anson therefore succeeded on the first issue.\nThe FTT went on to hold that, if it had been necessary to decide the other issues, it would have decided them against Mr Anson: [2010] UKFTT 88 (TC).\nThe Upper Tribunal\nThe Commissioners appealed to the Upper Tribunal, and Mr Anson cross- appealed in respect of the section 739 issue.\nThe Upper Tribunal (Mann J) allowed the Commissioners appeal and reversed the decision of the FTT: [2011] UKUT 318 (TCC); [2011] STC 2126.\nMann J construed the FTTs finding that the profits belonged to the members as they arose as meaning that the profits vested in the members as their property, rather than as meaning that the members had an entitlement to the profits under the LLC Act and the LLC agreement.\nIn doing so, he laid stress on the FTTs comparison of the LLC with English and Scottish partnerships: a comparison which, he said, would not be nearly as relevant as the FTT plainly thought it to be if it were concerned with a contractual rather than a proprietary entitlement.\nIt appears to be implicit in that comment that Mann J understood the partners in a Scottish partnership to have a proprietary interest in the assets of the partnership, and assumed that the FTT had shared that understanding.\nHaving construed the FTTs finding in that sense, Mann J noted that there was nothing in the evidence to support such a finding.\nMore fundamentally, as Mann J pointed out under reference to Reed v Young, profits are an accounting measure rather than specific assets.\nIf the assets were owned by the LLC, as the FTT found, there could be no distinct entity, profits, owned by the members.\nHaving construed the FTTs decision as being based to a material extent upon a finding of fact which was unsupported by any evidence and was in any event illogical, Mann J concluded that the matter had to be re-considered.\nThis reasoning respectfully appears to me to be open to criticism.\nFirst, given a finding by an expert tribunal which was ambiguously expressed, I would hesitate to attribute to the tribunal a conclusion which involved an elementary error on a matter falling squarely within its expertise and which, furthermore, had no basis in the evidence.\nIt is clear from the FTTs decision that it understood that, as it said, conceptually, profits and assets are different.\nIt also understood that the assets of the business were the property of the LLC.\nIt based its conclusion that the profits belong as they arise to the members not upon a confusion between profits and assets, but upon the expert evidence as to the combined effect under Delaware law of sections 18-101(8) and 18-503 of the LLC Act, which respectively defined a members interest in an LLC as his share of profits and losses, and required the profits and losses to be allocated among the members in the manner provided in the LLC agreement, and article IV of the LLC agreement itself, which required all income and expenditure to be respectively credited and debited to the members capital accounts in accordance with their profit shares.\nThe natural reading of the FTTs decision, in those circumstances, is that when it described the profits as belonging to the members it was referring to a right in personam rather than a right in rem.\nThat would be consistent with the evidence of Mr Abrams.\nIt would also be consistent with the comparison which the FTT made between the LLC and a Scottish partnership.\nAlthough taxed in the same way as an English partnership (Commissioners for General Purposes of Income Tax for City of London v Gibbs [1942] AC 402), and having many points of similarity to an English partnership, a Scottish partnership differs in possessing separate legal personality.\nThe partners do not, therefore, have any direct proprietary interest in any of the partnership assets (unless they happen to hold assets as trustees for the partnership).\nThey have no title to sue for damage to partnership property, and they have no insurable interest in partnership property: see MacLennan v Scottish Gas Board, First Division, 16 December 1983 (unreported on this point); Arif v Excess Insurance Group Ltd 1987 SLT 473; Mitchell v Scottish Eagle Insurance Ltd 1997 SLT 793.\nWhat the partners do own is a share of the partnership.\nThat share is an incorporeal moveable right or ius crediti (Clark, A Treatise of the Law of Partnership and Joint Stock Companies According to the Law of Scotland (1866), I 178; Bell, Commentaries on the Law of Scotland, 7th ed (1870), II 536): the right is a debt or demand against the partnership, as Bell described it.\nAs long as the partnership continues, a partner is entitled under statute to require that the partnership's assets be applied for partnership purposes (Partnership Act 1890, section 20(1)), and to his share of the profits of the partnership business (section 24(1)).\nOn a winding up, a partner is entitled to claim his portion of the net proceeds of sale of partnership assets.\nThose rights are broadly analogous to those of a member of the LLC under the LLC Act, as found by the FTT: an interest, which is personal property, entitling the member to share in the profits of the LLC in accordance with the LLC agreement, and to share in the net proceeds of sale of the LLCs assets in the event of a dissolution of the LLC.\nThere are, of course, also some differences: in particular, the partners in a Scottish partnership, other than a limited partnership, have an unlimited liability for its debts, whereas the members of the LLC had no liability for its debts beyond their initial capital contributions, prior to their repayment.\nNevertheless, given the points of similarity, the comparison made by the FTT between the LLC and a Scottish partnership was understandable, and did not carry the implication which Mann J supposed.\nOn the basis, however, that the FTT had erred in law in this respect, and that it was therefore open to the Upper Tribunal to consider the matter afresh, Mann J accepted that, on the FTTs findings, there was no intermediate step in the form of a third party act, analogous to the declaration of a dividend, which stood between Mr Anson and whatever he was entitled to.\nThe more difficult question was whether the income on which the US tax was paid was the same income, for the purposes of the double taxation treaty, as that which the Commissioners sought to tax.\nMann J considered that it was not.\nThe fact that the members of the LLC did not have a proprietary right in the underlying assets seemed to him to be crucial.\nIn the absence of such a right, the profits were owned by the LLC, and a contractual obligation to credit them to the members accounts and to distribute them did not make them the property of the members, at least for English tax purposes.\nThe US taxes and UK income tax were therefore not computed by reference to the same profits.\nIn a separate judgment, Mann J upheld the decision of the FTT on the section 739 issue: [2012] UKUT 59 (TCC); [2012] STC 1014.\nThe Court of Appeal\nMr Anson then appealed to the Court of Appeal in respect of the issues concerning relief from double taxation.\nThe court refused the appeal for reasons given by Arden LJ, with which Laws and Lloyd LJJ agreed: [2013] EWCA Civ 63; [2013] STC 557.\nThe Court of Appeal stated that the relevant test for determining whether a person is taxed on the same profits or income in both jurisdictions is whether the source of the profits or income in each jurisdiction is the same (para 30), the source being the source for the purposes of UK tax law (para 37).\nIt derived that test from the case of Memec, which was described as the leading authority on this point (para 30).\nAs I shall explain, that case was concerned with the equivalent of article 23(2)(b) of the 1975 Convention, rather than article 23(2)(a).\nThe issue was whether a dividend had been paid to a UK company by an overseas company in which it held a qualifying interest.\nIt was in that context that, in Memec, the court laid emphasis upon identifying the source of the UK companys income, and on the question whether its partnership (governed by foreign law) with a foreign subsidiary, which received the dividends in question and then made payments to the UK company in accordance with the partnership agreement, was transparent, in the sense that the payment of the dividends to the foreign subsidiary, and its payment to the UK company of the sums due under the partnership agreement, were equivalent to the payment of the dividends directly to the UK company itself.\nOn the basis that the case of Memec had established the approach to be adopted, the court derived from that case the following proposition: Where the taxpayer became entitled to the profit of an entity because of some contractual arrangement to which he is a party, he must show that the contract is actually the source of the profit, rather than a mechanism to secure a right to a profit derived from another source.\nThis will in general mean that, as the judge held, he has to show a proprietary right to the profits.\n(para 38)\nThis is not easy to follow.\nAt first sight, the first sentence appears to be suggesting the opposite of what was decided in Memec, namely that the taxpayer did not qualify for relief because the source of its income was the contract constituting the partnership, rather than the contract being a mere mechanism for the payment of income derived from the overseas company: see, in particular, the dictum of Lord Asquith in Stainers Executors v Purchase [1952] AC 280, 291, cited by Robert Walker J at first instance in Memec [1996] STC 1336, 1350.\nThe second sentence might also be contrasted with the approach of the Court of Appeal in Memec.\nAs will be explained, the court adopted in that case an approach to transparency which involved analysing the characteristics of the partnership agreement under the governing foreign law, comparing those characteristics with the characteristics of paradigm examples of arrangements which were transparent (such as English and Scottish partnerships) or opaque (such as UK companies), and determining whether in the light of that comparison, having regard to all relevant factors, the foreign partnership was relevantly similar to the transparent or opaque UK entities.\nThat was the approach followed by the FTT in the present case.\nThe Court of Appeal, on the other hand, treated the ownership of business assets as decisive, Arden LJ stating: in order for a member of an entity to show that he was entitled to profits from the moment that the profit arose he will have to show that he has an interest in the assets to the value of the profit.\nThis will necessarily be a proprietary interest.\n(para 59)\nThe court accepted (at para 70) the Commissioners submission that the FTTs finding, that the effect of the LLC agreement and the LLC Act was that profits of the LLC belonged to the members as they arose, was a holding on UK domestic law, with which the Upper Tribunal was entitled to interfere, rather than a finding of fact as to the position under Delaware law.\nArden LJ explained: Delaware law governs the rights of the members of [the LLC] as the law of the place of its incorporation, and the LLC agreement is expressly made subject to that law.\nHowever, the question whether those rights mean that the income of [the LLC] is the income of the members is a question of domestic law which falls to be determined for the purposes of domestic tax law applying the requirements of domestic tax law .\n(para 71)\nApplying this approach, Arden LJ considered that the Upper Tribunal had been correct to conclude that the profits of the LLC did not belong to the members.\nThe source of the LLCs profits was its trading.\nMr Anson was merely entitled to a distribution out of those profits.\nHe had no proprietary interest in the assets of the LLC, and was therefore said to be in a different position from the partners in an English or Scottish partnership.\nMr Anson was refused permission to advance a potentially material argument, not raised below, relating to an exchange of notes between the UK and the US dated 24 July 2001, concerned with the application of article 24 of the 2001 Convention in situations where a person was taxed as a resident of one contracting state on income derived through an entity which was fiscally transparent under the laws of either contracting state.\nA number of criticisms might be made of the Court of Appeals reasoning.\nFirst and foremost, the court did not directly address the only relevant question, namely whether the UK tax was computed by reference to the same profits or income by reference to which the US tax was computed.\nIt began by identifying that question, but then appears to have been diverted by a consideration of the issue which it understood to have been decided in Memec, and the approach adopted in that case.\nAs a consequence, the remainder of its judgment focused on the question whether Mr Anson had a proprietary right to the profits of the LLC as they arose.\nThat question not only appears to demonstrate the persistence of the conceptual confusion between profits and assets, but does not address the critical point, namely whether the income taxed in one country is the same as the income taxed in another.\nThe reasoning summarised in para 47 also appears to elide two distinct issues.\nFirst, the questions whether the members had a right to the profits, and as to the nature of that right, were questions of non-tax law, governed by the law of Delaware.\nThe FTTs conclusion, whether correctly construed as a finding that Delaware law had the effect of conferring on the members of the LLC an automatic statutory (or contractual) entitlement to the profits of the LLC, or as a finding that Delaware law vested the members with a proprietary right to the profits as they arose, was on either view a finding of fact.\nSecondly, domestic tax law - in this case, the relevant double taxation agreements as given effect in UK law - then fell to be applied to the facts as so found.\nThis approach was explained by Robert Walker J in Memec at [1996] STC 1336, 1348-1349.\nIt is well illustrated by the contrasting decisions in Baker v Archer-Shee [1927] AC 844 and Archer-Shee v Garland [1931] AC 212, where the taxpayer lost in the House of Lords in the first case, and then succeeded in the House of Lords in the second case, because of the introduction in the second case of evidence establishing that the trust law of the state of New York differed from English trust law.\nThe present appeal\nMr Anson now appeals to this court.\nIn the course of the initial hearing of the appeal, counsel were asked about the possible significance of the words in parentheses in article 23(2)(a) of the 1975 Convention (excluding, in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid), and of article 23(2)(b), which allows relief for tax on the profits out of which a dividend is paid in the case of a dividend paid by a US corporation to a UK company controlling at least 10% of voting power in the US corporation.\nCounsel were also asked whether the form of words employed in article 23(2)(a), in allowing relief in respect of tax computed by reference to the same profits or income, might permit a less technical approach than that ordinarily adopted in UK tax law.\nEquivalent provisions are contained in the 2001 Convention, and similar provision is also made, in relation to unilateral relief, by section 790(5) and (6) of the 1988 Act.\nCounsel were given the opportunity to make additional submissions in writing in relation to these points.\nAs a result, substantial submissions were made in writing after the hearing of the appeal, following which a further hearing was held at the request of the Commissioners.\nTwo distinct grounds of appeal are now advanced on behalf of Mr Anson.\nThe first is that, even assuming that US tax was charged on the profits of the LLC, and that Mr Anson was liable to UK tax only on distributions made out of those profits, the US and UK tax were nevertheless charged on the same profits or income, within the meaning of the 1975 and 2001 Conventions.\nThis ground was not advanced below.\nThe second ground is that, as a matter of UK tax law, and on the findings which the FTT made and was entitled to make, Mr Anson was liable to tax in the UK on his share of the profits of the trade carried on by the LLC, which was the same income as had been taxed in the US.\nThe Vienna Convention on the Law of Treaties\nIt is a matter of agreement that, as international treaties, the 1975 and 2001 Conventions have to be interpreted in accordance with articles 31 and 32 of the Vienna Convention on the Law of Treaties (Vienna, 23 May 1969; TS 58 (1980); Cmnd 7964).\nThat is so notwithstanding that, although the US is a signatory of the Vienna Convention, the US Senate has not given its consent to it: the provisions of articles 31 and 32 can in any event be applied, since they have been accepted by the International Court of Justice (and also, in this country, by the House of Lords) as being an accurate statement of customary international law.\nArticles 31 and 32 of the Vienna Convention are in the following terms: Article 31 General rule of interpretation 1.\nA treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.\n2.\nThe context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes: (a) Any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty; (b) Any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.\n3.\nThere shall be taken into account, together with the context: (a) Any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions; (b) Any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; (c) Any relevant rules of international law applicable in the relations between the parties.\n4.\nA special meaning shall be given to a term if it is established that the parties so intended.\nArticle 32 Supplementary means of interpretation Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31: (a) Leaves the meaning ambiguous or obscure; or (b) Leads to a result which is manifestly absurd or unreasonable.\nPut shortly, the aim of interpretation of a treaty is therefore to establish, by objective and rational means, the common intention which can be ascribed to the parties.\nThat intention is ascertained by considering the ordinary meaning of the terms of the treaty in their context and in the light of the treatys object and purpose.\nSubsequent agreement as to the interpretation of the treaty, and subsequent practice which establishes agreement between the parties, are also to be taken into account, together with any relevant rules of international law which apply in the relations between the parties.\nRecourse may also be had to a broader range of references in order to confirm the meaning arrived at on that approach, or if that approach leaves the meaning ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable.\nThe object and purpose of the Convention\nThe purposes of the 1975 Convention, as stated in its preamble, are the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains.\nThe preamble does not indicate more precisely what is meant by double taxation: in particular, whether the Convention is restricted to juridical double taxation, or can also extend to economic double taxation.\nThe former is usually considered to arise where two jurisdictions impose income taxes on the same person in respect of the same income.\nThe latter is usually considered to arise where there is taxation of the same or derivative income in separate hands.\nContext\nThe contemporary background of a treaty, including the legal position preceding its conclusion, can legitimately be taken into account as part of the context relevant to the interpretation of its terms: see, for example, Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd [1961] AC 807, 836; Effort Shipping Co Ltd v Linden Management SA [1998] AC 605, 624-625.\nThe 1975 Convention replaced an earlier double taxation convention between the UK and the US, signed at Washington on 16 April 1945: TS 26 (1946); Cmnd 6902 (the 1945 Convention).\nThe 1945 Convention, to which effect was given by the Double Taxation Relief (Taxes on Income) Order 1946, SR & O 1946\/1327, had been amended by a number of protocols, including a Supplementary Protocol signed at Washington on 17 March 1966: TS 65 (1966); Cmnd 3128 (the 1966 Protocol).\nAs I shall explain, article 23(2) of the 1975 Convention repeats almost verbatim a provision of the 1966 Protocol.\nIn interpreting article 23(2), it is therefore necessary to understand the intended effect of the relevant provision of the 1966 Protocol.\nThat in turn requires consideration of the provision of the 1945 Convention which the 1966 Protocol was designed to amend.\nThe background to the 1945 Convention\nThe logical starting point is the background to the 1945 Convention.\nThe UKs income tax legislation taxed income arising from foreign possessions, as I have explained.\nRelief in respect of foreign taxes was only partial, and was in any event confined to income from the Dominions.\nPartners in the UK, whether Scottish or English, were assessed jointly, in the name of the partnership, on the total tax due by the individual partners on their shares of the profits of the firm: Commissioners for General Purposes of Income Tax for City of London v Gibbs [1942] AC 402; MacKinlay v Arthur Young McLelland Moores & Co [1990] 2 AC 239.\nA partners share of the profits of a foreign partnership, on the other hand, was treated as income from a foreign possession: Colquhoun v Brooks (1889) 14 App Cas 493.\nSo far as companies were concerned, the income tax legislation applied an imputation system to ordinary dividends paid by UK companies to UK resident shareholders.\nIn other words, dividend income from a UK company was treated as franked by the companys payment of income tax on its profits.\nThe rationale was that since ordinary dividends were paid out of profits on which the company had paid income tax, it was unjust to subject them to income tax in the hands of the shareholders.\nAs Lord Atkin explained in Cull v Commissioners of Inland Revenue [1940] AC 51, 56: My Lords, it is now clearly established that in the case of a limited company the company itself is chargeable to tax on its profits, and that it pays tax in discharge of its own liability and not as agent for its shareholders.\nThe latter are not chargeable with income tax on dividends, and they are not assessed in respect of them.\nThe reason presumably is that the amount which is available to be distributed as dividend has already been diminished by tax on the company, and that it is thought inequitable to charge it again.\nLord Wright gave a similar explanation at p 75: ... the shareholder is not taxed under Schedule D in respect of that part of his income which consists of dividends.\nThe profits have been charged to tax in the hands of the company and that fact is deemed to redound to his benefit.\nUK tax law did not, therefore, carry the principle of separate corporate personality to its logical conclusion.\nIf it had done so, the profits of the companys trade would have been taxable in the hands of the company, and distributions of the net profits in the form of dividends would also have been chargeable under Schedule D in the hands of the shareholders.\nAs Lord Phillimore noted, however, in Bradbury v English Sewing Cotton Co Ltd [1923] AC 744, 769: Their taxation would seem to be logical, but it would be destructive of joint stock company enterprise. ... The reason for their [scil, the shareholders] discharge may be the avoidance of double taxation, or to speak accurately, the avoidance of increased taxation.\nDividends paid by overseas companies to UK resident shareholders did not benefit from similar treatment under the express terms of the legislation, but they were held nevertheless to do so, by virtue of an implied term, to the extent that the profits out of which the dividends were paid had already borne UK income tax: Gilbertson v Fergusson (1881) 7 QBD 562.\nSome limits to the scope of the decision in Gilbertson v Fergusson were set by the House of Lords in Barnes v Hely Hutchinson [1940] AC 81.\nThe case differed in two respects from Gilbertson v Fergusson.\nFirst, UK taxes had not been paid by the overseas company paying the dividend, but by UK companies in which it held shares.\nSecondly, the dividends received by the taxpayer were preference dividends rather than ordinary dividends, and were therefore paid at a fixed rate, undiminished by the taxes paid by the UK companies.\nIn these circumstances, the taxpayer was held to have been correctly assessed on the full amount of the dividend.\nIt was also emphasised in Barnes that, notwithstanding the concept of franked dividend income, the income received by the shareholder was not the same income as that of the company.\nLord Wright explained at pp 94-95: The English company is taxed on the balance of its profits or gains, that is on its income; the shareholder is taxed on his own income.\nThe shareholder is never taxed on the companys fund of profits, but only on the dividend which comes to him in payment of the debt which is created when the company declares the dividend.\nThe tax is in every case on the individuals income, not on a fund possessed by another person, the company, even though it is the fund of profits of that company, from which the individual's income or part of it will be paid. ... This principle must not be obscured by reason of the circumstance that in the way already noted, the dividend is treated as franked by the tax paid by the company.\nThe fund which is taxed in the hands of the company and the dividend which is declared by the company in favour of the shareholder are separate items for taxation law.\nIt is only the latter which is the shareholders income.\nThe decision in Gilbertson v Fergusson was overruled in Canadian Eagle Oil Co Ltd v The King [1946] AC 119, decided a few months after the 1945 Convention had been signed.\nThe facts of the case were similar to those in Barnes v Hely Hutchinson, except that the dividends in question were ordinary dividends.\nThere was held to be no basis for implying into the statute the limitation which had been implied by the Court of Appeal in Gilbertson: there was no necessary implication that economic, as distinct from juridical, double taxation was not intended.\nNo sooner had Gilbertson been overruled, however, than Parliament legislated to restore the relief, limited to ordinary dividends paid by an overseas company which had itself paid UK income tax on part of its profits (so preserving the limitations imposed by the decision in Barnes v Hely Hutchinson): Finance Act 1946, section 31.\nThe relief survives, in an amended form, in current legislation.\nThe 1945 Convention\nThe 1945 Convention (Cmd 6902) was negotiated during 1944 and 1945.\nThe background, and the travaux prparatoires, are discussed in Avery Jones, The History of the United Kingdoms First Comprehensive Double Taxation Agreement [2007] BTR 211.\nThe Convention sought to address a number of issues, including double taxation relief.\nAs I have explained, the UK allowed only partial relief, and confined its scope to the Dominions.\nThe US also allowed partial relief, but on a worldwide basis.\nApart from the general desire to extend the scope of the relief, there was a specific concern in relation to the taxation of dividend income, at a time of substantial UK investment in the US (and vice versa) and historically high rates of taxation in both countries.\nThe two countries had fundamentally different systems of taxing dividends.\nThe UK, as I have explained, had an imputation system, assessing UK companies to income tax (at a standard rate of 50%, plus 5% national defence contribution), and treating their dividends as income which had already been taxed.\nThe US, on the other hand, had a classical corporation tax system: the corporation paid tax on its profits (at a rate of 40%), and dividends were paid to shareholders under the deduction of a withholding tax (at a rate of 30%).\nGiven the prevailing rates, the taxation of dividends received by UK shareholders in US corporations, without relief in respect of US taxation of the profits out of which the dividends were paid (except to the limited extent permitted under the Gilbertson principle), presented a serious problem.\nThere was a similar problem for US shareholders in UK companies: they had been held by the US Supreme Court in Biddle v Commissioner 302 US 573 (1938) not to qualify for foreign tax credit relief in respect of the income tax paid by the UK company, since they had not paid the tax (an exception being made for US corporations holding 50% of a UK company).\nThe structure of the 1945 Convention, followed in the 1966 amendments and in the 1975 Convention, was to avoid double taxation primarily by means of distributive provisions allocating the right to tax specified categories of income to one or other of the contracting states.\nProvisions of that kind covered, in particular, the industrial and commercial profits of enterprises engaged in business in one of the contracting states (article 3), and dividends derived from US corporations and UK companies (article 6).\nSituations where income continued to be taxable in both countries were addressed by article 13.\nArticle 6 of the 1945 Convention sought to achieve parity of tax treatment for UK shareholders in US corporations, and for US shareholders in UK companies, by reducing the withholding tax on dividends paid to the former to 15% (so that the effective tax charge imposed by the US was 40% on the profits of the corporation, plus 15% withholding tax on the remaining 60%, producing an effective rate of 49%), and by exempting the latter from UK surtax (so that the effective tax charge imposed by the UK was the standard 50% on company profits).\nAs I have explained, article 13 of the 1945 Convention addressed double taxation relief in situations where income might be taxed in both contracting states.\nArticle 13(1) addressed the position in the US: Subject to section 131 of the United States Internal Revenue Code as in effect on the first day of January, 1945, United Kingdom tax shall be allowed as a credit against United States tax.\nFor this purpose, the recipient of a dividend paid by a corporation which is a resident of the United Kingdom shall be deemed to have paid the United Kingdom income tax appropriate to such dividend if such recipient elects to include in his gross income for the purposes of United States tax the amount of such United Kingdom income tax.\nThe first sentence set out the general principle.\nSection 131 of the US Internal Revenue Code was the provision which had been in issue in the case of Biddle.\nIt allowed foreign tax credit relief in respect of income taxes paid or accrued during the taxable year to [a] foreign country.\nThe second sentence resolved the particular problem which had previously existed in relation to relief for US shareholders in UK companies, by deeming them to have paid the UK income tax paid by the company on its profits.\nThis effectively reversed the decision in Biddle, and so enabled US shareholders to benefit from the general principle stated in the first sentence.\nArticle 13(2) addressed the position in the UK: Subject to such provisions (which shall not affect the general principle hereof) as may be enacted in the United Kingdom, United States tax payable in respect of income from sources within the United States shall be allowed as a credit against any United Kingdom tax payable in respect of that income.\nWhere such income is an ordinary dividend paid by a United States corporation, such credit shall take into account (in addition to any United States income tax deducted from or imposed on such dividend) the United States income tax imposed on such corporation in respect of its profits, and where it is a dividend paid on participating preference shares and representing both a dividend at the fixed rate to which the shares are entitled and an additional participation in profits, such tax on profits shall likewise be taken into account in so far as the dividend exceeds such fixed rate.\nThe first sentence established a general principle that US tax on income from sources within the US was allowable as a credit against UK tax on that income, in other words the same income.\nThe second sentence dealt with the particular case of dividend income, and required such credit the credit against UK tax on the same income - to take into account, in addition to any withholding tax deducted from the dividend, the US tax paid by the corporation on the profits out of which the dividends were paid.\nThis approach, in deeming the tax on the profits of the corporation to have been charged on the shareholders income, followed the imputation approach adopted in the UK case law since Gilbertson v Fergusson.\nThe remainder of the second sentence dealt specifically with preference shares, and limited the relief to any additional participation in profits above the fixed rate payable, in accordance with the decision in Barnes v Hely Hutchinson.\nArticle 13(2) thus introduced a new general relief for US taxes paid on the same income, and applied it to dividend income in accordance with the approach then adopted in UK tax law to relief for UK taxes paid by overseas corporations.\nUK shareholders in US corporations thus benefited under article 13(2) from similar relief to that accorded to US shareholders in UK companies under article 13(1).\nArticle 13(2) required income to have a source within the US in order to be eligible for relief.\nThe 1945 Convention contained provisions deeming particular types of income to have their source within the UK or the US, in articles 3(3) and 13(3).\nThe 1966 Protocol\nIn 1965, the UK tax regime in relation to dividends changed fundamentally, with the introduction of corporation tax.\nRelief based upon an imputation system became inappropriate.\nThe 1945 Convention was accordingly amended by the 1966 Protocol, to which effect was given by the Double Taxation Relief (Taxes on Income) (USA) Order 1966 (SI 1966\/1188).\nThe new article 6, as inserted by the 1966 Protocol, sought to achieve parity of tax treatment for UK shareholders in US corporations, and for US shareholders in UK companies, by subjecting the dividends in each case to a withholding tax of not more than 15%.\nposition in the US, provided: In relation to double taxation relief, the new article 13(1), dealing with the ... Subject to the provisions of the law of the United States regarding the allowance as a credit against United States tax of tax payable in a territory outside the United States (which shall not affect the general principle hereof), the United States shall, however, allow to a citizen, resident or corporation, as a credit against its taxes, the appropriate amount of United Kingdom income tax paid and, in the case of a United States corporation owning at least 10% of the voting power of a corporation resident in the United Kingdom, shall allow credit for the appropriate amount of United Kingdom tax paid by the corporation paying such dividend with respect to the profits out of which such dividend is paid .\nThe first part of that provision (down to paid, where it first appears) repeated the general principle established by the 1945 Convention.\nThe withholding tax imposed by the UK on dividend income would fall within its scope.\nIn the remainder of the provision, the general relief for dividends, in respect of UK tax on company profits, which had appeared in the 1945 Convention was not repeated.\nThe rationale of that relief - the imputation system - no longer applied in a situation where UK tax was charged on the dividend itself.\nAn exception was however made, in the concluding clause, for cases where the shareholder was a company with a substantial trade investment in the company paying the dividend.\nThe new article 13(2), dealing with double taxation relief in the UK, provided: (2) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof), (a) United States tax payable under the laws of the United States and in accordance with the present Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within the United States (excluding, in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the United States tax is computed; (b) In the case of a dividend paid by a company which is a resident of the United States to a company which is resident in the United Kingdom and controls directly or indirectly at least 10% of the voting power in the United States company, the credit shall take into account (in addition to any United States tax creditable under (a)) the United States tax payable by the company in respect of the profits out of which such dividend is paid.\nComparing the 1966 version of article 13(2) with the 1945 version, there are a number of significant differences.\nFirst, the introduction of the words in parentheses in para (2)(a) made it clear that the only credit to be allowed in the case of US dividends was in respect of the withholding tax, which fell within the scope of the general principle (United States tax payable whether directly or by deduction), and that credit was no longer to be given in respect of the tax paid by the US corporation on its profits.\nThat followed logically from the UKs abandonment of the imputation system.\nSecondly, para (2)(b) created an exception for cases where the shareholder was a company with a substantial trade investment in the company paying the dividend.\nArticle 13(2) thus continued to provide similar relief, under UK law, to that provided under US law in terms of article 13(1).\nA third change was the use of the phrase computed by reference to, in article 13(2), in place of the words payable in respect of, which had been used in the 1945 version.\nThe modified wording was introduced following the decision of the House of Lords in Duckering v Gollan [1965] 1 WLR 680.\nThe case concerned a double taxation agreement between the UK and New Zealand, which contained a provision in similar terms to article 13(2) of the 1945 Convention, allowing a credit against UK tax payable in respect of that income.\nThe taxpayer was liable to UK tax on his income, including income arising in New Zealand, for the year 1958- 1959.\nThe tax was computed, on a preceding year basis, by reference to his income in 1957-1958.\nHe had not paid tax in New Zealand which had been computed by reference to that income: as a result of a change in tax law there, his New Zealand tax for 1957-1958 had been computed on a preceding year basis, by reference to his income arising in 1956-1957, and his tax for 1958-1959 had been computed on a current year basis, by reference to his income arising in 1958-1959.\nHe successfully sought a credit against his UK tax for 1958-1959 for the tax paid in New Zealand in 1958-1959, on the basis that he had paid tax in both countries in respect of the same income, despite the fact that the income by reference to which his tax liability was computed in the two jurisdictions was not the same.\nIn the light of that decision, the 1966 Protocol used the phrase computed by reference to.\nThe 1975 Convention\nThe 1975 Convention was subsequently entered into in order to address matters unrelated to the issues which I have been discussing (including, in particular, the introduction in the UK of advance corporation tax in 1973).\nArticle 1(3) introduced a new provision: Notwithstanding any provision of this Convention except paragraph 4 of this article, a contracting state may tax its residents ... and its nationals as if this Convention had not come into effect.\nArticle 1(4) provides that nothing in article 1(3) affects the application of a number of specified provisions, including article 23.\nThe net result is that income may be taxed on the basis of residence or nationality (except where otherwise specified in article 1(4)), as well as on the basis of one of the distributive articles, but double taxation is then to be avoided by applying article 23.\nThe distributive articles include provisions covering business profits (article 7) and dividends (article 10).\nThe latter provision retains the 15% ceiling on withholding tax.\nArticle 23(1), dealing with double taxation relief in the US, provides: In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof), the United States shall allow to a resident or national of the United States as a credit against the United States tax the appropriate amount of tax paid to the United Kingdom; and, in the case of a United States corporation owning at least 10% of the voting stock of a corporation which is a resident of the United Kingdom from which it receives dividends in any taxable year, the United States shall allow credit for the appropriate amount of tax paid to the United Kingdom by that corporation with respect to the profits out of which such dividends are paid.\nWith some minor differences of expression, this provision is in substance the same as article 13(1) of the 1945 Convention as amended by the 1966 Protocol.\nArticle 23(2), dealing with double taxation relief in the UK, provides: (2) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (as it may be amended from time to time without changing the general principle hereof): (a) United States tax payable under the laws of the United States and in accordance with the present Convention, whether directly or by deduction, on profits or income from sources within the United States (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits or income by reference to which the United States tax is computed; (b) in the case of a dividend paid by a United States corporation to a corporation which is resident in the United Kingdom and which controls directly or indirectly at least 10% of the voting power in the United States corporation, the credit shall take into account (in addition to any United States tax creditable under (a)) the United States tax payable by the corporation in respect of the profits out of which such dividend is paid.\nThese provisions repeat almost verbatim the terms of article 13(2) of the 1945 Convention, as revised by the 1966 Protocol.\nThe only change is the deletion of the references to chargeable gains.\nIt is also relevant to note article 23(3): For the purposes of the preceding paragraphs of this article, income or profits derived by a resident of a contracting state which may be taxed in the other contracting state in accordance with this Convention shall be deemed to arise from sources within that other contracting state, except that where the United States taxes on the basis of citizenship, the United Kingdom shall not be bound to give credit to a United States national who is resident in the United Kingdom on income from sources outside the United States as determined under the laws of the United Kingdom and the United States shall not be bound to give credit for United Kingdom tax on income received by such national from sources outside the United Kingdom, as determined under the laws of the United States.\nThis provision is of wider scope than article 13(3) of the 1945 Convention, but has the same function of enabling it to be determined whether income has its source within the UK or the US for the purpose of applying article 23(1) and (2).\nThe first ground of appeal\nIn relation to the first ground of appeal, the argument advanced on behalf of Mr Anson focused on the provision made in article 23(2)(a) in respect of dividends.\nThe argument runs as follows.\nWhen UK tax is payable on a dividend received from a US corporation, and US tax has been paid by the corporation on the profits out of which the dividend was paid, there can be no question of the UK tax being computed by reference to the same profits or income as the profits of the corporation, if the source of the income is identified on the basis of UK (or, indeed, US) tax law.\nA dividend is a paradigm case of income which does not have the same source, under UK or US tax law, as the profits out of which it is paid.\nIf the question whether income is the same is to be determined by applying domestic law, there is therefore no need for article 23(2)(a) to contain a provision expressly excluding underlying tax that is to say, tax paid by a corporation on the profits out of which a dividend is paid - from the scope of the relief: it would in any event be excluded by the requirement that the UK and US taxes should be computed by reference to the same profits or income.\nThere appear accordingly to be two possibilities.\nOne is that the provision in relation to dividends adds nothing of substance.\nThe second is that the existence of that provision implies that the underlying tax on dividends would otherwise be within the scope of the relief, and that the identity of income is not therefore determined according to domestic law.\nThe first possibility is not initially attractive, since it is a general principle of treaty interpretation ut res magit valeat quam pereat.\nFollowing the jurisprudence of the International Court of Justice (eg United Kingdom v Albania (Corfu Channel) [1949] ICJ 1, 24), the court would be reluctant to conclude that a provision in an agreement made between two governments was otiose, if that conclusion could reasonably be avoided.\nThe point is strengthened when regard is had to article 23(2)(b).\nWhere a dividend is paid by a US corporation to a corporation resident in the UK which controls at least 10% of its voting power, article 23(2)(b) provides that the credit shall take into account, in addition to any US tax creditable under para (2)(a), the US tax payable by the corporation in respect of the profits out of which such dividend is paid.\nThe words the credit refer back to the credit described in para (2)(a), which is a credit against any United Kingdom tax computed by reference to the same profits or income by reference to which the United States tax is computed.\nSince it is that credit which is to take into account the underlying tax, the apparent implication is that the UK tax paid by the shareholder on his dividend is computed by reference to the same profits or income, within the meaning of the Convention, as the US tax paid by the corporation on the profits or income out of which the dividend was paid.\nSo runs the argument.\nIf article 23(2) is considered in isolation from the remainder of the Convention, and without regard to the context, this is indeed a powerful argument.\nAs I have explained, however, article 23(2) replicates article 13(2) of the 1945 Convention, as amended by the 1966 Protocol.\nThe history of the provision makes it clear that the express treatment of underlying tax on dividends reflected the changes necessitated by the UKs adoption of corporation tax in place of the previous imputation system.\nRelief for underlying tax had previously been allowed, providing similar relief in the UK to that available in the US under article 13(1).\nOnce the imputation system was abandoned, relief for underlying tax logically went with it.\nThe words in parentheses in article 23(2)(a) of the 1975 Convention served to make clear the alteration in the relief available.\nThere is nothing in the context to suggest that they were intended to have any wider implication.\nOn the contrary, the context suggests that article 23(2) was intended to provide similar relief to that available in the US under article 23(1), as had been the case under the 1945 Convention; and it was always clear from the Biddle decision that the US did not afford relief for underlying tax unless the Convention provided otherwise (as article 13(2) of the 1945 Convention in its original form did, but the later provisions did not).\nThe argument, and this ground of appeal, must therefore be rejected.\nThe second ground of appeal: sources\nIn relation to the second ground of appeal, an argument was advanced on behalf of the Commissioners concerning the meaning of the word sources, as used in article 23(2)(a).\nGiven that the paragraph is concerned with relief against UK tax, they argued, the word sources must be intended to bear the same meaning as it bears in UK tax law.\nIt was therefore necessary to determine the source of the income taxed in each jurisdiction in accordance with UK tax law.\nThat was also consistent, they argued, with article 3(2) of the 1975 Convention, which provides: As regards the application of this Convention by a contracting state any term not otherwise defined shall, unless the context otherwise requires and subject to the provisions of article 25 (Mutual agreement procedure), have the meaning which it has under the laws of that contracting state relating to the taxes which are the subject of this Convention.\nSince the expressions sources was not defined by the Convention, it was submitted that it must be given the meaning which it had under UK tax law.\nThis argument is inconsistent with the sense in which the word sources is used in article 23(3).\nThat provision explains how the expression, profits or income from sources within the United States, in article 23(2), is to be applied.\nThe general rule is that income or profits derived by a resident of a contracting state which may be taxed in the other contracting state in accordance with this Convention shall be deemed to arise from sources within that other contracting state.\nAs I have explained, one has to look elsewhere in the Convention in order to discover whether particular profits or income may be taxed in the US in accordance with the Convention, and are therefore profits or income from sources within the United States for the purposes of article 23(1) and (2).\nArticles 6 to 22 of the Convention contain distributive provisions allocating taxing powers between the UK and the US in relation to a range of different types of profits and income, and different categories of taxpayer.\nThis has nothing to do with the schedular source doctrine of UK tax law.\nIt is only where the United States taxes on the basis of citizenship that article 23(3) refers, exceptionally, to sources ... as determined under the laws of the United Kingdom.\nAs Arden LJ observed in Bayfine UK v Revenue and Customs Comrs [2011] EWCA Civ 304; [2012] 1 WLR 1630, para 23, article 23(3) contains its own rule as to how source [is] to be determined, save where tax has been imposed on the basis of citizenship.\nThe case of Bayfine concerned the question whether a UK company was entitled under article 23(2)(a) to a credit, to set against UK tax on its profits, in respect of the US tax which had been paid by its US parent on the same profits.\nThe Commissioners are recorded as having submitted in that case that domestic law did not apply to source for the purpose of article 23, because article 23 contained its own comprehensive clause for defining source: it was a free-standing treaty concept which applied for all the purposes of that article.\nThat submission was accepted by the Court of Appeal, subject to the exception in respect of taxation on the basis of US citizenship.\nThe same reasoning disposes of the Commissioners argument that article 3(2) of the 1975 Convention requires the term sources to be given the meaning which it bears under UK tax law.\nArticle 3(2) directs that, unless the context otherwise requires, any term not otherwise defined is to be given by each contracting state the meaning which it has under the laws of that contracting state.\nAs I have explained, however, article 23(3) explains how the source of profits or income is to be determined for the purposes of article 23, and that explanation is unrelated to the source doctrine of UK tax law.\nMemec\nFurther arguments were advanced by both parties on the basis of the case of Memec.\nThat case concerned a double taxation agreement between the UK and Germany, originally entered into in 1964 and amended by protocol in 1970, which contained a provision in almost identical terms, mutatis mutandis, to article 13(2) of the 1945 Convention between the UK and the US as amended by the 1966 Protocol.\nThe only difference was that the voting control required to qualify for exceptional relief in respect of underlying tax on dividends, under the equivalent of article 23(2)(b) of the 1975 Convention, was 25% rather than 10%.\nThe provision was therefore for all material purposes also similar to article 23(2) of the 1975 Convention.\nThe taxpayer, Memec plc (Plc), was a partner in a German silent partnership (stille Gesellschaft).\nThe partnership had no separate legal personality, but was a contractual arrangement under which Plc had the right to receive a share of the profits of the business carried on by the other partner, in return for a capital payment.\nThe other partner, Memec GmbH (GmbH), was a German company, wholly owned by Plc.\nIt alone carried on the business of the silent partnership.\nIt alone owned the assets of the business, and the income from those assets as it accrued.\nIt had wholly owned subsidiaries, which were also German companies.\nThe subsidiaries paid dividends to GmbH, and that income formed the principal source of the profits of the partnership, which were shared between the partners in accordance with their agreement.\nThe question was whether Plc could claim credit under the double taxation agreement for German taxes paid by the subsidiaries of GmbH on their trading profits.\nThe first point on which issue was joined (and the only one relevant to the present case) was whether the dividends paid by the trading subsidiaries to GmbH should be treated as having been paid by them to Plc.\nIt was conceded by the Commissioners that, if that premise were established, relief would then be due.\nThe basis of the concession is not recorded in the judgments, but must have been the provision in the UK\/German treaty corresponding to article 23(2)(b) of the 1975 Convention (as was submitted on behalf of Mr Anson, and not disputed, in the present appeal).\nWhat was being sought was relief in respect of underlying tax on the profits out of which dividends were paid.\nSuch relief was only available under the equivalent of article 23(2)(b), and was only available under that provision in the case of a dividend paid by a company which is a resident of the Federal Republic to a company which is a resident of the United Kingdom.\nIt could hardly have been argued that relief was available under the provision in the treaty corresponding to article 23(2)(a) of the 1975 Convention, since (apart from any other consideration) article 23(2)(a) does not provide relief in respect of the underlying tax on profits out of which dividends are paid.\nThe question under the treaty, therefore, was the one arising under the provision corresponding to article 23(2)(b): were the dividends paid by GmbHs subsidiaries paid by a company which is a resident of the Federal Republic to a company which is a resident of the United Kingdom? The critical issue was whether the dividends were paid by the subsidiaries to Plc, for the purposes of the treaty, notwithstanding that the payments were made to GmbH.\nThe arguments on that issue focused on the question whether the source of the relevant income of Plc was the dividends from the trading subsidiaries, or its contractual right under the agreement to payment of its share of the partnership profits.\nAnother way the argument was expressed was in terms of whether the partnership was transparent, so that its existence could be disregarded in determining whether the dividends were paid by the subsidiaries to Plc.\nIn deciding that relief was not available on this basis, Robert Walker J considered that the decisive point was the absence of any proprietary right enjoyed by Plc in the shares of the trading subsidiaries, or in the dividends accruing on those shares.\nThe shares and the dividends belonged to GmbH. Plc did not therefore receive, or become entitled to, the dividends paid by the trading subsidiaries.\nIts contractual right to a share of the profits of the partnership must be regarded as a separate source of income.\nIn the Court of Appeal, the approach adopted by Peter Gibson LJ was to consider the characteristics of an English or Scottish partnership which made it transparent, and then to see to what extent those characteristics were shared or not by the silent partnership, in order to determine whether it should be treated for corporation tax purposes in the same way.\nIn that regard, it was observed that the absence of a proprietary right in the shares of the subsidiaries, or in the dividends accruing on those shares, was less obviously a point of distinction from a Scottish partnership than an English one.\nA clearer distinction was that, unlike an English or Scottish partnership, Plc and GmbH did not carry on business in common: the business was carried on solely by GmbH. Peter Gibson LJ acknowledged that the absence of what English or Scots law would regard as a partnership was not in itself determinative of transparency, but concluded that he saw insufficient justification present in the circumstances of the silent partnership for treating the share of the profits of the GmbH business received by Plc as the same as the profits of the subsidiaries or the dividends which were paid to GmbH alone as shareholder and not to Plc (p 766).\nHenry LJ agreed, and Sir Christopher Staughton gave a concurring judgment on this issue.\nThe present case is not concerned with a claim to relief under article 23(2)(b).\nIf it were - if, for example, the taxpayer were Anson plc, a UK resident company holding at least 10% of the voting power in the LLC, and the question was whether it was entitled to relief from corporation tax in respect of underlying tax paid in the US by subsidiaries of the LLC then it would be necessary, as in Memec, to consider whether Anson plc could be treated as having been paid the dividends received by the LLC from its subsidiaries.\nBut that is not this case.\nThe issue in this case is not whether the receipts of the LLC from third parties are to be regarded as having been paid to the members of the LLC, but whether the income on which Mr Anson paid tax in the US is the same as the income on which he is liable to tax in the UK.\nAs I shall explain, answering that question involves considering whether income arises to Mr Anson, for the purposes of UK income tax, when his share of profits is allocated to his account, or when he receives distributions of profits.\nThat issue is different from the issue considered in Memec.\nThe answer to the question whether the receipts and expenditure of an entity are paid to and by its members does not necessarily determine whether, when a profit arises in a given accounting period, that profit constitutes the income of the members.\nThe answer to the latter question depends on the respective rights of the entity and its members in relation to the profit, and therefore on the legal regime governing those rights.\nThe correct approach to the present question\nArticle 31(1) of the Vienna Convention requires a treaty to be interpreted in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.\nIt is accordingly the ordinary (contextual) meaning which is relevant.\nAs Robert Walker J observed at first instance in Memec, [1996] STC 1336, 1349, a treaty should be construed in a manner which is international, not exclusively English.\nThat approach reflects the fact that a treaty is a text agreed upon by negotiation between the contracting governments.\nThe terms of the 1975 Convention reflect the intentions of the US as much as those of the UK.\nThey are intended to impose reciprocal obligations, as the background to the UK\/US agreements from 1945 onwards makes clear.\nThe terms of article 23(2), in particular, broadly reciprocate those of article 23(1), and are important to businesses in the US as well as to the UK investors who may receive dividends or other income from them.\nIn that context, one would be predisposed to favour an interpretation which reflected the ordinary meaning of the words used and the object of the Convention.\nThis is indeed a point which has been repeatedly made, in other cases concerned with the construction of the UK\/US double taxation conventions, in the face of narrow and technical constructions: see, for example, Strathalmond v Inland Revenue Comrs [1972] 1 WLR 1511, 1517-1518, and Inland Revenue Comrs v Commerzbank AG; Inland Revenue Comrs v Banco do Brasil SA [1990] STC 285, 303.\nIn that connection, it is also relevant to note that, by virtue of section 788(3) of the 1988 Act, the arrangements made in a double taxation treaty given effect by an Order made under that section are, subject to the provisions of Part XVIII of the Act (the double taxation provisions), to have effect notwithstanding anything in any enactment.\nThe provisions of the 1975 Convention therefore override inconsistent provisions in domestic UK tax legislation, other than those concerned with double taxation relief.\nIt has not been suggested in this appeal that there is any conflict between the 1975 Convention (on any of the interpretations canvassed in argument) and the provisions of Part XVIII of the 1988 Act.\nGiving the words used in article 23(2)(a) their ordinary meaning, it is necessary to identify the profits or income by reference to which the taxpayers UK tax liability is computed.\nThat is primarily a question of UK tax law (I say primarily, because the meaning of terms used in the Convention may not be a question of UK tax law: United Kingdom tax, for example, is a defined term).\nIt is then necessary to identify the profits or income from sources within the US on which US tax was payable under the laws of the US and in accordance with the Convention.\nThat is primarily a question of US tax law.\nIt is then necessary to compare the profits or income in each case, and decide whether they are the same.\nThe words the same are ordinary English words.\nIt should however be borne in mind that a degree of pragmatism in their application may be necessary in some circumstances if the object of the Convention is to be achieved, for example where differences between UK and foreign accounting and tax rules prevent a precise matching of the income by reference to which tax is computed in the two jurisdictions.\nIt appears that some potential difficulties of this kind are in practice avoided by the Commissioners accepting that the profits on which foreign tax is computed and in respect of which relief can be claimed are not confined to those arising under UK tax principles in individual UK chargeable periods: see Munro, UK Tax Treaties (2013), para 4.26.\nRelief under the Convention in the present case\nMr Anson is liable to UK income tax under Case V of Schedule D in respect of income arising from possessions out of the United Kingdom.\nThere is no dispute that he had a possession out of the UK for this purpose, although the parties differ as to how it should be described.\nMore importantly, the parties differ as to the stage at which Mr Ansons income, and therefore a liability to tax, arises.\nMr Anson maintains that income arises as profits are earned by the LLC, regardless of whether they are distributed.\nThe income which is liable to tax is therefore Mr Ansons share of the profits.\nThe Commissioners argue that income arises only as and when profits are distributed.\nIf no distributions are made, then on the Commissioners argument no tax liability arises.\nThe income liable to tax is therefore the distributions.\nThere is no doubt that taxpayers can be liable to tax in respect of income to which they are entitled without receiving payment of that income.\nExamples include the income of an interest-in-possession trust (Baker v Archer-Shee) or of a partnership (Reed v Young [1986] 1 WLR 653-654; [1986] STC 285, 289-290; Padmore v Inland Revenue Comrs [1987] STC 36, 51).\nThe Commissioners distinguish partnerships from the present case on the basis that the business of a partnership is carried on by the partners themselves, who are therefore automatically entitled to the profits.\nThere is a dispute between the parties whether that is a correct analysis of a Scottish partnership, but it is unnecessary to resolve that question in the present appeal.\nThe Commissioners distinguish the case of an interest-in-possession trust on the basis that the business (or other profit-generating activity) is carried on by one person on behalf of another, who is automatically entitled to the profits.\nThe present case is different, it is said, because there is no similar entitlement.\nExpressing the same idea in a different way, in the case of a partnership or an interest-in-possession trust, the source of the taxpayers income is the business carried on by the firm or the trustees respectively, whereas in the present case, it is said, the source of Mr Ansons income is his rights under the LLC agreement.\nThe premise of the Commissioners submissions is that, because the business of the LLC is carried on by the LLC, it necessarily follows that the profits generated by the business belong to the LLC.\nOn that premise, the effect of the LLC agreement must be to require the LLC to transfer its profits to the members.\nAs the Commissioners state in their printed case: If a trader carries on a trade beneficially, the profits belong to him and any instrument which obligates the trader to pay on those profits creates a source for the payee which is a distinct source from that of the trading entitys trade. ... A trader who agrees contractually to pay all, or a part of, his profits to a third party remains taxable on all of his profits.\nThe profits do not belong to the third party and he is not taxable on them.\nThe difficulty with this argument is that it is contradicted by the findings made by the FTT.\nIt is relevant to note, in the first place, that the rights of a member of the LLC were found to arise from the LLC Act, combined with the LLC agreement.\nSecondly, that agreement was not a contract between the LLC and its members: the LLC was not a party to it, but was brought into being by it, on the terms set out in it and in the provisions of the LLC Act.\nIt was thus the constitutive document of the LLC.\nIt was against that background that the FTT made findings which contradict the premise that the profits belong to the LLC in the first instance and are then transferred by it to the members.\nTheir conclusion, on the contrary, was that, under the law of Delaware, the members automatically became entitled to their share of the profits generated by the business carried on by the LLC as they arose: prior to, and independently of, any subsequent distribution.\nAs the FTT stated: The profits do not belong to the LLC in the first instance and then become the property of the members. ... Accordingly, our finding of fact in the light of the terms of the LLC operating agreement and the views of the experts is that the members of [the LLC] have an interest in the profits of [the LLC] as they arise.\nAs I have explained, the evidence as to Delaware law entitled the FTT to make that finding.\nThe Commissioners challenged it in this court, as they did below, on two bases.\nThe first was that the FTT was describing a proprietary right, as the Upper Tribunal had held.\nSince there was no basis in the evidence for such a finding, the FTT had erred in law.\nI reject that criticism for the reasons explained at paras 38-40.\nSecondly, it was argued that the FTTs finding constituted a holding on domestic law, not a finding of fact on foreign law.\nI reject that criticism for the reasons explained in para 51.\nIf, then, Mr Anson was entitled to the share of the profits allocated to him, rather than receiving a transfer of profits previously vested (in some sense) in the LLC, it follows that his income arising in the US was his share of the profits.\nThat is therefore the income liable to tax under UK law, to the extent that it is remitted to the UK.\nThere is no dispute as to the income which was taxed in the US: that was Mr Ansons share of the profits of the LLC.\nMr Ansons liability to UK tax is therefore computed by reference to the same income as was taxed in the US.\nHe accordingly qualifies for relief under article 23(2)(a).\nConclusion\nFor these reasons, I agree with the conclusion reached by the FTT, and would therefore allow the appeal.\n","output":"The question on this appeal was whether the appellant, Mr Anson, was entitled to double taxation relief on income he remitted to the UK from the US.\nThis depends on the interpretation of article 23(2)(a) of the UK\/US Double Taxation Convention 1975 and its successor, article 24(4)(a) of the UK\/US Double Taxation Convention 2001.\nThe relevant question under both provisions is whether the UK tax is computed by reference to the same profits or income by reference to which the United States tax is computed.\nThe relevant period was the seven UK tax years running from 6 April 1997 to 5 April 2004, during which Mr Anson was a member of a Delaware limited liability company (the LLC), classified as a partnership for US tax purposes.\nAs such, Mr Anson was liable to US federal and state taxes on his share of the profits.\nMr Anson remitted the balance to the UK and was liable to UK income tax on the amounts remitted, as income arising from possessions outside the UK, subject to any double taxation relief which might be available.\nThe respondents, the Commissioners, decided that he was not entitled to any double taxation relief on the basis that the income that had been taxed in the US was not Mr Ansons income, but that of the LLC.\nOn Mr Ansons appeal, the First tier Tribunal (FTT) found that the combined effect of the Delaware LLC Act (the LLC Act) and the LLC agreement made between the members was that profits of the LLC belong to the members as they arise.\nIt concluded that Mr Anson was taxed on the same income in both countries, so he was entitled to double taxation relief.\nThe Upper Tribunal allowed the Commissioners appeal.\nThe Court of Appeal dismissed Mr Ansons appeal.\nThe Supreme Court unanimously allows Mr Ansons appeal.\nLord Reed gives the leading judgment, with which Lord Neuberger, Lord Clarke, Lord Sumption and Lord Carnwath agree.\nThe Upper Tribunal construed the FTTs finding that the profits belonged to the members as they arose as a legally erroneous finding that the profits vested in the members as their property.\nIt was however clear from the FTTs decision that it based its conclusion that the profits belong as they arise to the members not upon a confusion between profits and assets, but upon expert\nevidence as to the combined effect under Delaware law of the LLC Act and the LLC agreement.\nThe natural reading of the FTTs decision is that when it described the profits as belonging to the members it was referring to a personal right rather than a proprietary right.\nThis is consistent with Mr Ansons expert evidence and with the comparison that the FTT made between the LLC and a Scottish partnership. [38 40] The Court of Appeal focused on whether Mr Anson had a proprietary right to the profits of the LLC as they arose, rather than addressing whether the income taxed in one country is the same as the income taxed in another.\nThe Court of Appeal also accepted the Commissioners submission that the FTTs finding that the profits belonged to the members as they arose was a holding on UK domestic tax law, with which the Upper Tribunal was entitled to interfere.\nHowever, questions about whether the members had a right to the profits, and if so, what is the nature of that right, were questions of non tax law, governed by Delaware law.\nThe FTTs conclusion on them was a finding of fact.\nDomestic tax law then fell to be applied to the facts as so found. [47 51] The Court of Appeal was also diverted by its consideration of the case of Memec plc v Commissioners of Inland Revenue [1998] STC 754, which was concerned with article 23(2)(b) of the 1975 Convention, not article 23(2)(a). [43, 50, 101 109] If the words used in article 23(2)(a) are given their ordinary meaning, it is necessary to identify the profits or income by reference to which the taxpayers UK tax liability is computed, primarily a question of UK tax law.\nNext one must identify the profits or income from sources within the US on which US tax was payable under the laws of the US and in accordance with the Convention.\nThat is primarily a question of US tax law.\nThen it is necessary to compare the profits or income in each case, and decides whether they are the same. [113] While Mr Anson maintains that his income arises as profits are earned by the LLC, so that the income liable to tax is his share of the profits regardless of whether they are distributed, the Commissioners position is that his income arises only when profits are distributed by the LLC, so that the income liable to tax is the distributions.\nThe premise of the Commissioners submissions is that, because the business of the LLC is carried on by the LLC, it follows that the profits generated by the business belong to the LLC.\nThis argument is contradicted by the FTTs finding that the members of the LLC have an interest in the profits of the LLC as they arise.\nThe FTT was entitled to make that finding.\nTherefore, Mr Anson was entitled to the share of the profits allocated to him, rather than receiving a transfer of profits previously vested (in some sense) in the LLC.\nIt follows that his income arising in the US was his share of the profits.\nThat is the income liable to tax under UK law, to the extent that it is remitted to the UK.\nMr Ansons liability to UK tax is therefore computed by reference to the same income as was taxed in the US.\nAccordingly he qualifies for double taxation relief under article 23(2)(a). [115 121] The Court dismisses an alternative ground focused on a provision in article 23(2)(a) relating to the treatment of dividends.\nThe history of that provision makes clear that the treatment of dividends reflects changes necessitated by the UKs adoption of corporation tax; nothing in the context suggests they were intended to have any wider implication. [60 96]\n","id":78}